COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BIRMINGHAM COUNTY COURT
HIS HONOUR JUDGE McKENNA
London. WC2A 2LL
B e f o r e :
LORD JUSTICE WILSON
SIR JOHN CHADWICK
| SHARON JAMES
|PETER ANTHONY THOMAS
Mr Angus Withington (instructed by Lanyon Bowdler) for the Respondent
Hearing date: 17 May 2007
Crown Copyright ©
Sir John Chadwick :
The underlying facts
" The difficulty with [the submissions made on behalf of the Claimant], as it seems to me, is that a Constructive Trust can only arise when land is purchased for the use of two or more persons, only one of whom is registered as the legal owner. It does not seem to me that the Claimant can rely on later indirect contributions to the mortgage by her labour as constituting in some way the acquisition of the Property for these purposes.
 ... The Claimant and the Defendant did not know each other at the time the Defendant acquired the Property in 1986. As such, the Property was not acquired for joint use. There cannot have been any common intention, whether actual or presumed, that the Claimant should have any beneficial interest in the Property. Moreover, it is not alleged by the Claimant that there were any discussions between the parties either at the time of the acquisition or subsequently to the effect that they had an agreement or an understanding that the Property would be shared. On the contrary, when, on the Claimant's evidence, she raised the issue of putting the Property in joint names, the Defendant was evasive and, she accepted, unwilling."
In so far as paragraph  contains findings of fact, those findings are not challenged in the grounds of appeal.
"22 Further or alternatively, the Claimant has acquired a beneficial interest in the property by way of the doctrine of proprietary estoppel, in that:
(a) the assurances given by the Defendant that she should have some form of interest in the property include: the fact that he assured her at various points 'this will benefit us both' and that in the event of his death 'you will be well provided for'; his suggestion that they should sell up and jointly invest in a new property together; that he had a new will drafted in her favour
(b) in reliance upon these matters and in the belief that she would have a share in the property, the Claimant expended considerable efforts and energy on both the property and business over a period of fifteen years, and also made financial contributions which are set out above
(c) she thereby altered her position to her detriment."
"15 Whenever the parties discussed carrying out improvements to the property and matters relating to the business, the Defendant would say to the Claimant 'this will benefit us both'. He told her that in the event of his death 'you will be well provided for'."
The allegation that Mr Thomas had suggested that they should sell up and jointly invest in a new property is pleaded at paragraph 11:
"11 In or about 1997, the Defendant suggested to the Claimant that they should sell the property after completing the works, and jointly invest in another property. This suggestion was rejected by the Claimant and it was not pursued."
And the reference to the preparation of a new will is taken from paragraph 17:
"17 In or about 2003 the Defendant gave instructions to solicitors that his will should be altered so that the property was to be left to the Claimant in the event of his death. A will was so drafted but was never signed by the Defendant."
"19 Paragraph 17 [of the particulars of claim] is admitted. The reason the will was not signed was because the Claimant terminated the relationship in October 2003."
" More significantly are the disputes between the parties as to whether or not the Defendant offered to sell the Property and invest the proceeds in another property. The Claimant says he did, the Defendant denies this saying there was no way in which he would have sold the family home. If another property were to be bought it would be in addition to and not in substitution for the Property.
 On this issue I have to say that I much prefer the evidence of the Defendant than that of the Claimant. It seems to me inconceivable that the Defendant, having lived in the Property virtually the whole of his life and having gone to the trouble of acquiring the interests of his siblings in it, and having expended so much time and effort (partly with assistance from the Claimant) in improving it and establishing his business at it, he would simply suggest that it be sold and the proceeds reinvested in another property."
There is no challenge to that finding of fact.
" What of the assurances which are relied on as evidence of the parties' common intention and/or that the Claimant should be entitled pursuant to the doctrine of Proprietary Estoppel? As it seems to me, the assurances that works done to the Property would benefit both the Claimant and the Defendant and the assurance that, on the Defendant's death, the Claimant would be well provided for, are insufficiently specific to give rise to an Estoppel. They are not expressed in terms which enable any objective assessment to be made of what is being promised. Words to the effect that 'this will benefit us both' are insufficient, reasonably to be understood, to mean that the Defendant was going to transfer a specific interest in the Property to the Claimant. Equally, words to the effect of 'you will be well provided for' in the event of the Defendant's death are similarly insufficient to establish a belief that the Claimant would obtain a specific interest in the Property. So far as the drafting of the two wills in 1999 and 2003 are concerned, if anything, they tend to confirm that the parties did not consider that the Claimant had a present interest in the Property at the times they were prepared."
And at paragraph  he said this:
" As for the suggestion made by the Claimant and denied by the Defendant, that the Defendant suggested that they should sell up and jointly invest in a new property again, as it seems to me, this suggestion even, if it had been made, confirmed' that the Defendant believed that he owned the Property both legally and beneficially to the exclusion of the Claimant."
The issues raised by the grounds of appeal
"The proposed appeal faces difficulties on the facts. Nevertheless the grounds of appeal raise arguable issues. In particular, it is arguable that (as contended in ground 5) in paragraph 55 of his judgment the judge took too restricted an approach in apparently proceeding on the basis that in order to support a proprietary estoppel/constructive trust a representation must be specific as to the extent of the beneficial interest intended to be conferred."
At ground 5 in the grounds of appeal annexed to the appellant's notice filed on 27 July 2006 it is asserted - correctly in my view - that: "As a matter of law, an estoppel or constructive trust may arise in circumstances where the legal owner has assured the claimant that he or she has or will obtain a beneficial interest in the property, even though the extent of that interest is not specified". It is said that the judge erred, at paragraph  of his judgment, "in holding that assurances, for the purposes of a claim in proprietary estoppel or constructive trust, must be of a specific interest in a particular property". The relevant question, in this context, is whether, in referring - as he did, in paragraph  - to "a specific interest in the Property", the judge is to be taken to have held that it was necessary to find an assurance (or assurances) which were specific as to the extent of the interest which Miss James was to have; or whether he appreciated that it would be sufficient to find that she had been led to think that she would have some beneficial share (albeit unqualified) in the property.
(1) Did the judge fail to recognise and give effect to any of the following propositions of law: (i) that the common intention necessary to found a constructive trust (or to provide a base for proprietary estoppel) may be formed at any time before, during or after the acquisition of the property; (ii) that such common intention may be inferred from evidence of the parties' conduct during the whole course of their dealings in relation to the property: or (iii) that an estoppel or constructive trust may arise in circumstances where the legal owner has assured the claimant (or led him or her to believe) that he or she has or will obtain a beneficial interest in the property, even though the extent of that interest is not specified?
(2) (a) Did the judge fail adequately to consider whether there was evidence from which it could be inferred that the parties had a common intention that Miss James should have an interest (the extent of that interest being unspecified) in the property; in particular, should he have held that the assurances pleaded at paragraph 15 of the particulars of claim (taken with other evidence) were sufficiently specific to give rise to proprietary estoppel or a constructive trust? If so, (b) should the judge have held that Miss James had acted to her detriment in reliance on that common intention in circumstances rendering it inequitable for Mr Thomas to deny her that interest?
Did the judge err in law?
"... Such statements do not on their face relate to any specific property, they plainly do not amount to a representation which binds the whole of Mr Downing's property, and they are not expressed in terms which enable any objective assessment to be made of what is being promised. In this last respect they are to be contrasted with statements made to unpaid or underpaid workers or business partners, encouraged to work on because they would be 'treated right', and for whom a commensurate reward could be objectively assessed."
Should the judge have held that the assurances given by Mr Thomas (taken with other evidence) were sufficiently specific to found proprietary estoppel or a constructive trust?
"JUDGE McKENNA: It is a question of quantification only. Is that what you are saying? You accept that the claimant is entitled to a share in the property by virtue of what she has contributed to the business and/or the improvements made to the property, but you disagree with her on how much. That is what you are saying, really. A. Legally I have no idea about how I stand with the property at all. I haven't a clue. All I'm saying is she did work in the business. There was the £5,000 for the tax. She is----
Q. Looking at it fair-mindedly she is entitled to something. A. Yes, but I do not think it is fair that I should lose my business and my home to----"
The judge had that interchange in mind when he came to deliver judgment. He said this, at paragraph :
"I was . . . struck by [Mr Thomas'] concession, made expressly in ignorance of the legal position, and very much contrary to his interest, that he felt by virtue of her contribution to the business and the work done on the Property, the Claimant was entitled to an interest - where he was at odds with the Claimant was as to the extent of that interest...."
It is said that the judge ought to have reflected Mr Thomas' own view of what would be fair in an order recognising that Miss James was entitled to a share in the property and quantifying that share.
Lord Justice Wilson: I agree.
Lady Justice Smith: I also agree.