[View without highlighting]
[Printable RTF version]
||Neutral Citation Number:  EWCA Civ 95
||Case No: B2/2015/0751
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON
||Royal Courts of Justice
Strand, London, WC2A 2LL
||24 February 2017
B e f o r e :
LADY JUSTICE GLOSTER
Vice President of the Court of Appeal, Civil Division
LORD JUSTICE DAVID RICHARDS
The Rt. Hon. SIR STEPHEN TOMLINSON
|| Juliette Malisz Wodzicki
||- and -
Michael Paget (instructed by Fisher Meredith) for the Appellant
The Respondent did not appear and was not represented
Hearing dates : 3 November 2016
HTML VERSION OF JUDGMENT APPROVED
Crown Copyright ©
DAVID RICHARDS LJ :
- This appeal arises out of a claim by the appellant to be the sole beneficial owner of a house (the property) registered in the joint names of the appellant's late father and his second wife, the respondent, but occupied since its purchase in 1988 exclusively by the appellant and her children.
- Following a trial with oral evidence from the appellant and other witnesses called by her, HH Judge Faber, sitting in the County Court at Central London, held that, following the death of the appellant's father (George), the respondent held the property on trust for the appellant and herself as beneficial owners. Paragraph 5 of the judge's order provides that "[t]o determine the extent of the parties' beneficial interest[s] there be an account taken at a further hearing before a District Judge." Although not stated in the order, the basis of the account was set out in the judgment:
"that there should be an accounting process to determine the extent of the parties' beneficial interests to be carried out by a District Judge who must determine as best as can be done the respective contributions invested by the Claimant in mortgage payments and the amount invested by the Defendant in maintenance and utilities and any other equitable payments due to the Claimant by way, for example, of occupation rent. To that end the Defendant will probably have to spend time and money on getting her full bank statements to show the extent of her investment over the years and the Claimant will have to produce hers to evidence the extent of her contribution to the mortgage payments."
- The appellant appeals with leave granted by Arden LJ against the order as to beneficial ownership. She seeks an order that she is the sole beneficial owner of the property. The judge also declared that, in addition to her beneficial interest in the reversion, the appellant has a life interest in the property and is entitled to occupation of it. There is no appeal against that part of the order.
- The appellant was born in 1962. After her parents (George and his first wife) were divorced in 1971, she had a somewhat disrupted childhood, living first with her mother in Mexico until 1974, when she was sent to Switzerland to live with her father shortly after his marriage to the respondent. However, the respondent did not accept this arrangement and from 1975 the appellant lived in Poland with her paternal grandparents until they died in 1978-79. She continued to live in Poland, marrying in 1983 and having two children, in 1983 and 1984. She left Poland in 1985 and her husband and children left Poland for Italy in 1986 where the appellant joined them. Her marriage broke down in 1987 and after living for a short time in Switzerland in a flat owned by her father, the appellant moved to the UK with her two children in 1987. She has lived in this country since then and has four further children, born in 1988, 1990, 1992 and 2000.
- Meanwhile, George and the respondent had moved from Switzerland to France, where they lived until George's death in 2010 and where the respondent still lives. George was a successful theatre designer and his work brought him to the UK from time to time.
- The property was purchased in 1988. George was named as the sole purchaser in the contract but the property was registered in the joint names of George and the respondent. The funds for the purchase were provided by an eight-year term loan by a bank in France to George and the respondent, secured by a mortgage on their jointly-owned house in France. The mortgage stated that the purpose of the loan was "to partially finance the purchase of a house located in England....to be occupied as a primary residence by the daughter of the borrower: Ms Malisz born Juliette Wodzicki". Repayment was due in eight annual instalments, and the respondent said in her witness statement that she and George repaid the loan over its term.
- The appellant was actively involved in the process of purchasing the house. The survey report was addressed to her, and the solicitors instructed on the purchase reported to her as well as to George.
- The appellant provided evidence that between 2001 and 2007 she spent some £5,000 on improvements to the property. She also provided evidence of loans totalling a larger amount taken out for the stated purpose of home improvements. She paid the outgoings for the property, such as council tax, service charges and utility bills.
- George visited the appellant and his grandchildren at the property from time to time but never stayed there, while the respondent never visited the property at all. In her witness statement, the respondent described her contact with the appellant as sporadic.
- George died intestate in France in 2010. The appellant was informed by the respondent in a letter dated 26 August 2010. In that letter, the respondent suggested that if the appellant gave up any entitlement under French inheritance law, "I could gift the London house to you through a solicitor (without declaring it in France). You would have the house for yourself alone without sharing it." This suggestion was not pursued by the appellant.
- The proceedings were commenced in 2013 by the respondent for possession of the property. The appellant defended and counterclaimed on the basis that she was the sole beneficial owner of the property and was in any event, by reason of an agreement made when the property was purchased, entitled to occupy it indefinitely. As to her claim to beneficial ownership, the appellant's pleaded case was that George had promised her that when he had finished repaying the loan and when he thought she was "ready", he would transfer the property to her and in return she would pay for the upkeep, maintenance and outgoings. But for this promise she would have obtained other accommodation and would not have spent money on the property. The claim was put on the basis of either a common intention constructive trust or proprietary estoppel.
- The respondent's solicitors came off the record in March 2014 and thereafter the respondent has played no part in the proceedings. Her claim was subsequently struck out for non-payment of court fees. The claim proceeded on the counterclaim only and came on for trial before Judge Faber in July 2014, with judgment given on 24 September 2014.
- The judge heard oral evidence from the appellant and three other witnesses called by her. The respondent had filed a witness statement in August 2013, which the judge read and dealt with in her judgment, but the respondent did not attend the trial and did not give oral evidence, nor was she represented.
- The judge rejected the respondent's evidence that the property had been bought as a pied-a-terre for George when he was in England, that the appellant's name had been inserted in the mortgage simply because they needed to name an occupier in order to obtain the loan, and that they let the appellant live in the property provisionally as they had no immediate plans to live there. The judge found that George, the respondent and the appellant intended the property to be the appellant's long-term home.
- The judge did not, however, accept that the appellant was the sole beneficial owner of the property. She said in her judgment at -:
"30. The fact that it was put in joint names of George and the Claimant militates against that intention because it was not necessary to put it in their joint names to secure the mortgage. The loan was secured on the house which they had built in France. The fact that George put the English house in joint names is evidence that he intended his wife to be the joint owner and never made known to her expressly or impliedly that his daughter was to be the sole owner.
31. That would explain the content of the August 2010 letter from the Claimant to the Defendant offering that if the Defendant disclaimed her share of the French inheritance the Claimant would transfer the London house to her alone. That suggests to me that at that time the Claimant was proceeding on the basis that she was not the sole beneficial owner of the London house and that she and the Defendant both had beneficial interests in it. This is contrary to the case pleaded for her that the Defendant had no beneficial interest in the house."
- The judge held that the appellant and the respondent beneficially owned the property in the proportions to which they had respectively contributed to its purchase, maintenance and outgoings. As observed by Mr Paget, appearing on this appeal as he did below for the appellant, the judge determined the question of beneficial interests on the basis of a resulting trust.
- There are two principal grounds of appeal. First, it is said that the judge should not have adopted a solution based on a resulting trust but should have followed the steps set out in Jones v Kernott  UKSC 53,  1 AC 776 to determine the extent of the beneficial interests under a common intention constructive trust. The judge should have properly considered the evidence with a view to inferring an agreement between the parties as to their respective beneficial interests, rather than proceeding straight to imputing an agreement. The adoption of a resulting trust in non-commercial setting was disapproved in Stack v Dowden  UKHL 17,  2 AC 432. Secondly, the judge failed to consider the appellant's case that she was entitled to sole beneficial ownership by way of proprietary estoppel.
- As to the first ground of appeal, the starting point is that the appellant was not a registered proprietor of the property. The onus was therefore on her to establish that she had any beneficial interest in the property. Mr Paget relies on the appellant's evidence summarised above.
- The difficulty for the appellant in that evidence, which was accepted by the judge, is that George agreed to transfer the property to her once he had repaid the loan and "when he thought she was ready". The judge did not ignore this evidence but concluded, in view of the fact that the mortgage loan had been repaid in 1996 but George did not transfer the property, that she could "only infer that he never thought that [the appellant] was ready to take sole ownership". That was clearly a finding open to the judge on the evidence.
- There is the further difficulty that there was no evidence that George had told the respondent that it was his wish or intention to transfer ownership to the appellant in due course or that she had agreed to that course. As the judge found, the fact that the property was in the name of the respondent as well as George was evidence that George "intended his wife to be the joint owner and never made known to her expressly or impliedly that his daughter was to be the sole owner." The judge considered that the respondent's letter dated 26 August 2010 was consistent with a belief by the respondent that she had a beneficial interest in the property. Again, those were, as it seems to me, findings open to the judge on the evidence.
- Nonetheless, Mr Paget submitted that it could be inferred that it was the common intention of all three parties that the appellant was to own the entire beneficial interest, because of the following facts and circumstances: although the funds were provided from a loan secured on the French property of George and the respondent, the property was purchased to provide a permanent home for the appellant: the appellant took the lead in the arrangements for the purchase; George made the promise to the appellant that he would transfer the property to her; the respondent never visited the property; neither George nor the respondent made any contribution to the maintenance or improvement of the property or had anything to do with it beyond servicing and repaying the loan used to purchase it; the Judge rejected the appellant's evidence and she did not attend the trial to support her witness statement.
- In my judgment, none of these facts and circumstances, whether taken singly or together, are sufficient to set aside the judge's findings which, as I have said, were open to her on the totality of the evidence.
- Mr Paget further submitted, as I understood him, that rather than proceeding on a basis of resulting trust, the judge should have gone on to impute to the parties an intention that the appellant should be the sole beneficial owner on the basis that this was in all the circumstances the fair outcome and it can therefore be assumed that it was intended by the parties. This, he submitted, was the course required by the decision and reasoning in Kernott v Jones, applied as here in a non-commercial context.
- This submission meets insuperable obstacles. First, the judge made a finding on the evidence as to the actual intention of the parties. It was not an intention that she imputed to the parties, but was an intention that she felt able to infer as a fact on the evidence. If that finding was fairly open to her on the evidence, as I consider it was, it leaves no room to go on to consider, essentially as a fall-back, the intention that may be imputed to the parties on a basis of fairness.
- Secondly, this is not, in my view, a case that is appropriate for an application of the approach laid down in Kernott v Jones as applicable to cases of co-habiting couples. I accept that the approach may be applied outside the precise confines of a co-habiting couple, notwithstanding the terms of the judgments in that case. It was, for example, applied in the case of two close friends in a platonic relationship sharing a flat that they had jointly bought: Gallarotti v Sebastianelli  EWCA Civ 865. However, there was nothing close about the relationship between the appellant and the respondent. There is no evidence that they even saw each other once the appellant had settled at the property. It would stretch credulity too far to think that the respondent would have intended to make a gift to the appellant if she were in fact to repay the loan or any part of it or if the security against her jointly-owned French property were enforced.
- On the basis that the judge's finding that the respondent did not know of the promise made by George to the appellant stood, Mr Paget advanced in the course of his submissions in this court an argument that, as George and the respondent held the property as joint tenants, the respondent was bound by the promise as against the appellant. Relying on Megarry and Wade: The Law of Real Property (8th ed.) at 13-002, he submitted that she was so bound because joint tenants are treated indivisibly by the world at large. He relied also on the decision of the House of Lords in Hammersmith & Fulham LBC v Monk  1 AC 478 that one joint lessee under a periodic lease can give a notice to quit which is binding on the other lessee(s)
- It is a startling proposition that the beneficial interest of one joint owner of a freehold property could be terminated without his knowledge by the other joint owner. It gains no support either from the general statement in Megarry & Wade, which is of course correct in the sense intended by the authors, or from Hammersmith & Fulham LBC v Monk. That case turned on the analysis of the position of joint lessees under a periodic tenancy. The tenancy could continue only with the consent of all the lessees, so a notice to quit served by one constituted his notice that the lease should not continue. It has no application to a purported disposal of a beneficial interest, as is apparent from what Lord Bridge said at page 490G-H. This submission was also at odds with Mr Paget's submission to the judge, correctly recorded by her in her judgment at .
- In those circumstances, the most generous conclusion available on those findings from the appellant's point of view was the conclusion reached by the judge, namely that the respondent's beneficial interest was limited to the contributions (if any) that the respondent had made to the repayment of the mortgage loan and, beyond that, the appellant was the sole beneficial owner of the property. It may, of course, be that the respondent made no contributions, in which case she will not, under the terms of the judge's order, have any beneficial interest in the property. The order treats any interest that George may have had as having passed in equity to the appellant. The judge does not explain how that was achieved, although paragraph 35 seems to suggest that it results from George's death, a conclusion that is not self-evident as a matter of legal analysis. Be that as it may, it is not challenged by the respondent and it is a conclusion that is highly favourable to the appellant.
- The alternative case advanced by the appellant before the judge, and repeated on this appeal, is that, even in the absence of a common intention constructive trust entitling her to sole beneficial ownership of the property, she was entitled to sole ownership by way of proprietary estoppel. The appellant complains that the judge did not deal with this alternative case in her judgment.
- A case for sole beneficial ownership based on proprietary estoppel founders for precisely the same reason as the case based on a common intention constructive trust, and this may well explain why the judge did not separately address it.
- Mr Paget rightly cites the celebrated statement by Oliver LJ in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd  QB 133 to the effect that proprietary estoppel requires A to act to his detriment, to the knowledge of B, as a result of an expectation created or encouraged by B. To establish this case against the respondent, the appellant must establish that George's promise was made with the knowledge of the respondent, for the reasons given above in relation to the common intention constructive trust. The judge found that the respondent did not know about the promise and, for reasons already given, the finding is not open to successful challenge.
- Accordingly, I would dismiss the appeal on all grounds.
- There is a curious feature of this case. Pursuant to the order made by the judge, a hearing was fixed to determine the respective financial contributions of the appellant and the respondent. The appellant filed evidence to establish her contributions but, in keeping with her past disengagement from the proceedings, no evidence was filed by the respondent. A hearing was fixed before Deputy District Judge Whiteley for 18 February 2015, which was attended by counsel for the appellant, with the respondent being neither present nor represented. In those circumstances, the outcome would seem to have been clear: subject to the possibility of an occupation rent (as to which I express no view) mentioned in the judge's order, the appellant was entitled to a 100% interest in the property. However, on being informed that the appellant was seeking an order to that effect, the Deputy District Judge, of his own motion, stayed the account and enquiry pending the determination of this appeal.
- It is wholly unclear to me why the Deputy District Judge thought that this was the appropriate course, given the terms of Judge Faber's order. When asked why the appellant had not sought to appeal against the stay, Mr Paget informed us that the appellant's position was that the Judge Faber's order was wrong for the reasons advanced on this appeal. Even if the order were wrong, it seems to me that this appeal was, as a practical matter, unnecessary. Unless the respondent seeks belatedly to file evidence as to any financial contribution she in fact made, the appellant should at the resumed hearing of the account and enquiry be entitled to a determination that she has a 100% interest in the property.
SIR STEPHEN TOMLINSON:
- I agree.
LADY JUSTICE GLOSTER:
- I also agree.
Copyright Policy |
Donate to BAILII