England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EDMONTON COUNTY COURT
(His Honour Judge Tibber)

		Royal Courts of Justice Strand London WC2 Wednesday, 24th October 2001

1. SIR MARTIN NOURSE: This is a dispute between an unmarried couple as to the beneficial ownership of a house in which they formerly lived together. The man is Atley Wright and the woman is Yvonne Fay Johnson. The house is 7 Parkhurst Road, Wood Green, London, N22, a freehold property registered at Her Majesty's Land Registry.
2. One of the unusual features of the case is that the house was acquired as long ago as 1976 by a transfer to Mr Wright and Miss Johnson jointly. Regrettably, neither the transfer nor any copy of it has come to light. It is not known whether it contained any declaration as to the intended beneficial interests in the property, a matter as to which the register is necessarily silent. However, it does contain a restriction in the following familiar form:

"No disposition by one proprietor of the land (being the survivor of joint proprietors and not being a trust corporation) under which capital money arises is to be registered except under an order of the Registrar or of the Court."

3. I will return to the implications of that restriction in due course.
4. The appeal which is now before us is by Miss Johnson against an order made by His Honour Judge Tibber in the Edmonton County Court on 3rd December 1997, whereby, in implementation of a consent order for the sale of the house made on 17th February of that year, he ordered that it be sold at the earliest practicable date after the conclusion of a period of eight weeks from the date of the order, subject to a proviso that, if Miss Johnson should pay a specified sum to Mr. Wright, together with his costs, within that period, there should be no obligation to sell the house. The judge also ordered the net proceeds of sale of the house to be divided between Mr Wright and Miss Johnson in equal shares, save that Mr Wright's share should be increased by the sum of £5,486.67 and Miss Johnson's share reduced by the like amount. It is now clear that that was a slip and that the correct figure ought to have been one quarter of that sum, i.e. £1,371.67, in each case.
5. The appeal, together with a cross appeal by Mr. Wright, first came on for hearing before Simon Brown and Robert Walker LJJ on 2nd November 1999. They questioned the judge's decisions on a number of points, and in the absence of transcripts or notes of evidence felt grave concern as to whether the trial had produced a fair result and whether Miss Johnson had had the opportunity of putting to the judge all the points on which she wished to rely. It seemed to them that they had no alternative but to adjourn the matter and not to attempt finally to decide it on the material available to them.
6. That was nearly two years ago. It is greatly to be deplored that the transcripts of the major parts of the evidence and of the judge's notes of the remainder, which are now before us, were only obtained shortly before this hearing, a previous hearing fixed for 6th April 2001 having already been vacated. Mr Wright, through his counsel, Mr Colin Wright, to whom I will refer simply as counsel, has blamed Miss Johnson for this delay. However, it is not clear whether the complaint is justified or not.
7. Here it must be pointed out that, although Miss Johnson has appeared before us and on 2nd November 1999 in person, she was represented by counsel and solicitors at the trial before Judge Tibber. Moreover, her grounds of appeal have been prepared with professional assistance. Although I fully understand this court questioning the judge's decision on a number of points, with one exception to which I will refer, I do not myself share their concern that Miss Johnson's counsel did not have the opportunity of putting to the judge all the points on which he wished to rely.
8. On 2nd November 1999 the leading judgment was given by Robert Walker LJ. We have a transcript of it, which runs to 15 pages. It contains a full statement of the essential facts, the contentions of the parties, the progress of the proceedings to date and the points on which the judge's decisions were questioned. In general, it is unnecessary for these matters to be repeated.
9. The proceedings were commenced by an originating application issued by Mr Wright on 30th June 1995, in which the primary relief sought was a declaration that the house was held

"by the applicant and the respondent on trust for sale for the applicant and the respondent as tenants in common in equal shares; alternatively in such shares as the court shall determine".

10. In an affidavit in support of the application, Mr. Wright's then solicitor exhibited an office copy of the entries on the register and referred to the first entry on the proprietorship register as showing Mr. Wright and Miss Johnson as joint proprietors of the house. He then referred to the second entry containing the restriction to which I have referred, and said that it:

"indicates that the Applicant and the Respondent hold the premises as joint tenants at Law as Trustees for sale for themselves as tenants in common in equity."

11. In giving his judgment on 2nd November 1999, Robert Walker LJ said, at page 5B of the transcript:

"The Land Registry entries did not contain any express declaration of trust, but they did contain the usual restriction on a disposition by the survivor of the joint proprietors, which is one pointer to the parties having intended their beneficial ownership to have been as tenants in common rather than as joint tenants."

12. I agree. Moreover, in the light of the way in which Mr. Wright's case was originally presented, it would have been possible to infer that the lost transfer contained an express declaration of trust, not simply for the two proprietors as tenants in common, but as tenants in common in equal shares, in which event, as Lord Upjohn said in Pettitt v Pettitt [1970] AC 777, 813, that would necessarily have concluded the question of the beneficial title as between the parties for all time; see also the decision of this court in Goodman v Gallant [1986] Fam 106.
13. It is not, however, necessary for us to decide whether that inference ought to have been drawn by the judge, nor whether we should now draw it ourselves. The reason for that appears from this passage at the end of Judge Tibber's judgment:

"What is the proper order? Left to myself, I would have said that the respondent has no interest in the proceeds of sale, but counsel for the applicant submitted that the applicant contributed more to the purchase but it is clear that in this case the parties intended the property to be held in equal shares."

14. The judge then said that the only accounting that was needed was for the payment of the instalments under the first mortgage from Mr. Wright's departure to the United States in 1976 until it was paid off in February 1992, they having amounted to the £5,486.67 referred to in the order.
15. In this court counsel has evidently not regarded his submission as having been a concession in the true sense because he has not sought leave to withdraw it. For my part, I am certainly willing to proceed on the assumption that it was not a concession in that sense, but simply a stance adopted in closing submissions. However, I am entirely satisfied that the submission was correct and that counsel's attempt to submit before us that the parties did not, at the time that the house was acquired, intend that it should be held in equal shares fails utterly. Again, I agree with Robert Walker LJ, who, in reference to counsel's concession that between 1966 and 1971 the parties were pooling their resources, a concession in the true sense, said:

"In those circumstances I think it was almost inevitable that the judge should conclude, as he was asked to, that the original intention was for beneficial ownership in equal shares."

16. The first and most beneficial consequence of holding, as I do, that at the date of the acquisition the parties intended that the house should belong to them as tenants in common in equal shares is that it makes it unnecessary for us to decide what have become the vexed questions of what was the purchase price and how and by whom it was provided. Miss Johnson's evidence at the trial was that the price was £4,800, that £3,800 of it was raised on the first mortgage from the London Borough of Haringey and that the balance was provided as to £800 by herself and £200 by Mr Wright. She has also told us that the second mortgage from Temple Avenue Mortgages Limited was only for £300, which appears to have been used to pay the expenses of the purchase.
17. Mr. Wright's evidence at the trial, and the judge's finding, was that the price was £3,800 and that the whole of it was provided by the London Borough of Haringey on the first mortgage, a balance of £27 having been paid by him. The unsatisfactory feature of this is that we now have an office copy of the land certificate itself, which clearly shows that the purchase price was £4,800. From what we have been told by Miss Johnson and counsel, it is unclear exactly what the position was before the judge in regard to that document, though I incline to believe that it was in court and that the judge was at least told what it contained. What is, however, clear is that counsel for Miss Johnson did not have the opportunity of putting it to Mr. Wright in cross-examination, and that if he had put it to him the judge might have formed a different view of the reliability of Miss Johnson's evidence on that point. Be that as it may, once the common intention at the date of the acquisition was as I have held it to have been, it does not matter that Miss Johnson may have contributed considerably more to the initial purchase price than Mr. Wright.
18. In addition to the grounds in her notice of appeal, Miss Johnson has put in a single sheet of paper headed "appeal grounds". She has also addressed us at some length, principally in reply to counsel's supplementary skeleton argument.
19. The first two grounds of appeal claim that the judge was wrong in law in rejecting Miss Johnson's contentions based on estoppel and waiver. Those contentions were supported primarily by reference to the handing over of the keys of the house by Mr Wright to Miss Johnson in 1982 and to the contemporary correspondence, particularly a letter of April 1984, in which Mr. Wright said:

"Ok Yvonne I do not want nothing out of that house it is for you and the children you understand ok."

20. As to that, Robert Walker LJ said:

"It seems to me very doubtful, although I express no final view on it, that the letter of April 1984, even if signed by Mr Wright, would be construed as an assignment of his beneficial interest either to Miss Johnson or to all or any of the children. I think that what Mr Wright said and wrote might have given rise to an estoppel if Miss Johnson and her elder daughter had as a matter of fact relied on it and on the strength of Mr Wright's assurances laid out substantial sums of their own money. However, as I have already noted, the judge rejected Miss Johnson's evidence about her expending her own money on the house and accepted Mr Wright's evidence as to his contribution of $13,000."

21. Again, I entirely agree and would reject the first two grounds of appeal. I am also of the opinion, notwithstanding the arguments of Miss Johnson to the contrary, that it is impossible for this court to interfere with the findings of the judge in regard to, first, the £80,000 claimed by her to have been spent by her on repairs and perhaps improvements to the house and, secondly, the $13,000 claimed by Mr Wright to have been paid by him to Miss Johnson in 1984. The judge rejected the first claim and acceded to the second. It is clear that both findings were open to him on the evidence.
22. On the footing that, at the date of the acquisition, the parties intended that the house should belong to them as tenants in common in equal shares, counsel's position is this. Founding on what was said by Griffiths LJ in Bernard v Josephs [1982] Ch 391,405, he submits that, as from the departure of Mr. Wright for the United States is 1976, there must be equitable accounting between the parties and a reflection of that account in the division of the proceeds of sale. Griffiths LJ said:

"When the proceeds of sale are realised there will have to be equitable accounting between the parties before the money is distributed. If the woman has left, she is entitled to receive an occupation rent, but if the man has kept up all the mortgage payments, he is entitled to credit for her share of the payments:if he has spent money on recent redecoration which results in a much better sale price, he should have credit for that, not as an altered share, but by repayment of the whole or a part of the money he has spent. These are but examples of the way in which the balance is to be struck."

23. The broad effect of counsel's submission, as I understand it, is to erect those observations of Griffiths LJ into a rule governing the legal relationship of every couple in this situation between the date on which they part and the date on which the house is sold. But that cannot be correct. The intention of the parties remains paramount. There is nothing in the judgment of Griffiths LJ, nor in any other judgment that I know of, which holds that there must be equitable accounting where it is shown that the parties' intention was to the contrary. The equitable accounting imposed by the judge was in respect of the instalments payable under the first mortgage from 1976 until it was paid off in 1992. The judge found that the payments were all made by Mr. Wright and, despite the absence of any documentary evidence of payments made after 1985, I will certainly assume that that finding was correct. Counsel says that Mr. Wright ought also to have been credited with interest, but that point will not arise if there is no liability to account in respect of the principal. I interpose here to say that the second mortgage was paid off in 1973.
24. The question whether there should be equitable accounting in this case therefore depends on the intention of the parties to be inferred from all the facts of the case. It may be that those facts are, in the context of these cases in general, somewhat unusual. Those which are material to this question are as follows. The judge recorded Miss Johnson as saying that when they purchased in 1966 she never once thought of selling. She said the house would go to the children. He recorded Mr Wright as saying that the house was being bought for the sake of the children. At the time of the acquisition there were two children, Twilight aged 4 and Robin aged 2. The third child, April, was born in 1967. Until 1971 the family lived in the house together. When Miss Johnson moved out in 1971 she left Mr Wright in possession with the children, a state of affairs which continued until Mr Wright left for the United States in 1976. The children then went to live with Miss Johnson.
25. The judge said that he was not clear about the occupation of the house after 1976 but that it appeared to have been empty until about 1982 when some refurbishment was started. There seems, however, to have been a short period, or perhaps two short periods, when it was occupied by others. At the beginning of his judgment the judge said:

"The respondent contends that the applicant gave up what interest he had in the house when, in 1982 he gave the keys to her and said he was giving his share of the property to his daughter because she had started a family and that he had discussed the matter with the Council."

26. The judge said that Mr. Wright denied that and clearly he denied having given up his interest in the house. But there would have been nothing improbable in his giving up the keys or in his saying what Miss Johnson asserted he had said, Twilight, the elder daughter, being then aged 20. Indeed, it is entirely consistent with what Mr Wright said in the letter of April 1984 already referred to:

"It is for you and the children."

27. The judge added that, since the mid or late 1980s, the house had been lived in by children and grandchildren, no rent being paid.
28. Against that background the only inference which can reasonably be drawn is that the separation between the parties was of no real significance, and that in providing money, not only for the maintenance of the children but also for the payment of the mortgage instalments, Mr Wright was seeking to benefit the children. Conversely, he was not intending that, as between himself and Miss Johnson, he should be given credit for the mortgage instalments. Any other view of the matter would be wholly unrealistic. In the circumstances, I reject Mr. Wright's claim for equitable accounting in respect of the mortgage instalments.
29. On the appeal I would therefore hold that the net proceeds of sale should be divided between Mr Wright and Miss Johnson in equal shares without adjustment.
30. I turn to Mr. Wright's cross appeal, the three elements of which can be introduced by reading what Robert Walker LJ said about them:

"first, that the judge, having found that Miss Johnson had made no contribution to the purchase of the property, should have held Mr Wright solely entitled; second, that there should have been an adjustment by way of occupation rent, at least since 1995 when Mr Wright asked for the house to be sold; and, third, that Mr Wright's contributions to paying off the mortgage should have been converted to their present value by some sort of index linking before the adjustment by way of equitable accounting."

31. Neither he nor Simon Brown LJ gave Mr. Wright any encouragement in the pursuit of his cross appeal. However, it has been strenuously pursued by counsel in argument before us and it must therefore be dealt with. For the reasons already given the first point fails and the third does not arise.
32. The second point requires some deeper consideration. Before us counsel sought, again by way of equitable accounting, to have Miss Johnson's share of the proceeds of sale debited with half the rental value of the house from 1st June 1995 [the originating application was issued on 30th June] until the date of sale. The answer to this claim is similar to, though not quite the same as, the answer to the claim in respect of the mortgage repayments. The judge, when faced with this claim, said:

"It is alleged that the applicant has been kept out of occupation since he asked for the house to be sold in 1995, but as it has been occupied by the parties children and grandchildren, I do not propose to allow any compensation for this."

33. I respectfully agree, but would add that, in not seeking an order for possession against Twilight and the other occupants as opposed to Miss Johnson herself, and by not making a demand against them for rent, Mr Wright must be taken to have been content that they should remain in occupation rent free until the house was sold. That is a complete bar to any relief against Miss Johnson for an occupation rent.
34. There is one further point on equitable accounting which arose only at the end of counsel's submissions. It appears that Miss Johnson has been asked by Mr Wright's solicitors to say whether or not she has received any rent in respect of the house but that she has not made a reply. Clearly, if rent has been received by Miss Johnson from any of the occupants, she must account for half of it in the division of the net proceeds of sale. In my view, Mr Wright is entitled to an inquiry and account as to the sums, if any, received by Miss Johnson by way of rent for the house or any part thereof from 1st July 1995 until the date of sale.
35. For the reasons I have given I would allow Miss Johnson's appeal to the extent of deleting from paragraph 3 of Judge Tibber's order dated 3rd December 1997 all the words beginning "save that the applicant's share" and to that extent only. Amendments will also be required to paragraph 1 which I propose should be discussed with the parties after judgment. I would dismiss Mr Wright's cross appeal. I would order an inquiry and account in the terms stated, with a provision in the order for a reflection of the sum, if any, found due thereon in the division of the net proceeds of sale of the house. It will also be necessary to consider an order made by Chadwick LJ on 2nd July 1999.
36. LORD JUSTICE POTTER: I agree.
Order: Appeal allowed to extent indicated in the judgment; Mr Wright's cross appeal dismissed; no order for costs save that Miss Johnson shall pay the sum of £3,000 in respect of Mr Wright's costs to be paid out of her share of the proceeds of sale; order of Chadwick LJ to be discharged and Miss Johnson's application for a stay of execution dismissed with costs; minute of order to be prepared by counsel and submitted to the court. (Order not part of the judgment of the court)