England and Wales Court of Appeal (Civil Division) Decisions

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

		Royal Courts of Justice Strand London WC2 Thursday, 15th November 2001

Thursday, 15th November 2001

1. LORD JUSTICE CHADWICK: This is a renewed application for permission to appeal from an order made on 31st July 2001 by His Honour Judge Coltart sitting at Lewes County Court in proceedings brought by the applicant, Mr John Maunders, against Mrs Pamela Evans under section 14(2) of the Trusts of Land and Appointment of Trustees Act 1996.
2. Mrs Evans is registered at Her Majesty's Land Registry as the owner of property known as 68 Wallace Way, Horsham, West Sussex. She purchased that property in March 1988 as her home. The purchase was funded in part with her own monies, being the proceeds of sale of an earlier house, and in part with the aid of a building society advance from the Halifax Building Society secured on a domestic mortgage. As the judge found, she was able to meet the outgoings - including the interest on the mortgage loan and the premium payments on the endowment policy linked to it - out of her earnings; and she did so between 1988 and October 1992.
3. In October 1992 the applicant, Mr Maunders, moved into 68 Wallace Way. He was then in serious financial difficulties and was facing bankruptcy proceedings. He was adjudicated bankrupt in November 1992. Between October 1992 when Mr Maunders moved in and July 2000, or thereabouts, Mr Maunders and Mrs Evans lived at 68 Wallace Way as man and wife. But they did not marry. Mr Maunders made monthly payments to Mrs Evans. It is common ground - and the judge so found - that the amount of those payments was £330 per month, calculated on the basis that £300 was one half of the cost to Mrs Evans of discharging the outgoings on the house, including the endowment premiums and the mortgage interest as well as utilities (gas, electricity and telephone, and no doubt council tax), together with an additional £30 for food to be consumed by Mr Maunders.
4. On the basis of those contributions, made over a period of nearly eight years, the applicant claims a beneficial interest in the property. The point is put this way in the particulars of claim dated 16th August 2000. First, it is said that the financial contributions as set out in the schedule have created and have subjected the property to a resulting trust, entitling Mr Maunders to a beneficial share of the property directly equivalent to the proportion of his contributions to its purchase. Second and in the alternative, it is said that the common intention of the parties previously referred to and the conduct of the defendant in accepting from the claimant his contributions to the purchase of the property, which the claimant paid to his detriment, are such as to entitle the claimant to a beneficial half-share in the property by way of constructive trust.
5. The "common intention of the parties previously referred to" is the intention pleaded in paragraph 6 of the particulars of claim in these terms:

"At the commencement of their cohabitation it was, and remained so throughout, the common intention of the parties that they were partners, as would be a husband and wife, and that the ownership of the property would be shared jointly."

6. So there is a claim to a beneficial half-share, arising from the allegation that the property was to be shared jointly; that is to say, that there was a beneficial joint tenancy followed by a severance of the joint tenancy, resulting in equal beneficial half-shares as tenants in common. That is the basis of the claim under paragraph 2.1 of the prayer. The other claim is a claim to a proportionate share arising from a resulting trust. If there were to be a claim arising from a resulting trust it would, as it seems to me, necessarily be a claim to a proportion of the endowment policy to which the contributions were going to keep up the premiums. It is, to my mind at least, impossible to see how there could be a resulting trust affecting the property in those circumstances.
7. It is important to keep in mind that this is a case in which - long before the earliest date upon which it is said that there was any agreement, understanding or common intention as to the beneficial ownership of 68 Wallace Way - the property had been purchased by Mrs Evans in her own name and with her own monies or with monies borrowed from the building society the repayment of which she was solely responsible as borrower. This is not a case in which any beneficial interest claimed by Mr Maunders could have arisen out of the circumstances in which the property was acquired. At the time when the property was acquired it is quite plain that Mrs Evans was both legal and beneficial owner. So, if the applicant were to acquire a beneficial interest in property formerly owned beneficially by Mrs Evans, that could only be on the basis of an agreement between the applicant and Mrs Evans. Such an agreement might be made expressly or, in the absence of express agreement, might be inferred from the circumstances: see the well-known passage in the speech of Lord Bridge of Harwich in Lloyds Bank Plc v Rosset [1991] All ER 1111, at page 1118 H.
8. The judge addressed the question whether the applicant had established on the evidence that there was a common intention or agreement that Mr Maunders should have a beneficial interest in the property. He was right to do so because it was plainly for the applicant to establish either an agreement made expressly or some agreement or common intention to be inferred from the events. It was not for the defendant, Mrs Evans, to establish that there was no agreement. Her position was that, as the legal owner, she was also the beneficial owner, unless she had agreed to part with the whole or some part of her beneficial interest.
9. After hearing the evidence of both parties the judge came to the conclusion that there was no agreement that Mr Maunders should have or acquire any beneficial interest in the property 68 Wallace Way. After setting out the evidence of each party, the judge said this:

"13Of those two versions I have to make a choice, bearing in mind where the burden of proof lies and that is upon the Claimant, on the balance of probabilities. But I do not, in this particular case, need to rely upon the precise balance of the standard of proof to decide the issue because I unhesitatingly prefer the evidence of Mrs Evans in this regard. I am satisfied, and find as a fact, that at the outset of the relationship, when what he was going to pay for his contribution to the expenses was discussed, that it was made perfectly clear and agreed between the two of them that her property would remain her property and that what he was doing was paying money for use and occupation which would be something that he could get the Trustee in Bankruptcy's agreement to take from his monies that he earned in order to provide himself with reasonable accommodation.

14On the figures I am also satisfied that he would not have been able to house himself anywhere else more cheaply. Indeed, it is very doubtful that he would have been able to house himself anywhere else at that rate or anything like it. So I am satisfied that there was an express denial of any common intention for him to acquire a beneficial interest in her property when they started to live together."

10. On the basis of that finding of fact - namely, that it was agreed that the property would remain in the beneficial ownership of Mrs Evans and that Mr Maunders' contributions would not lead to the acquisition of any beneficial interest - the judge was bound to come to the conclusion on the law to which he did come: that the contributions which Mr Maunders made did not give rise to any inference of an intention that he should have a beneficial interest. There is simply no room for any inference of any such intention in the circumstances that the judge found an express agreement that there was to be no beneficial interest.
11. The judge, in the passage to which I have referred, mentions the position of the trustee in bankruptcy. The impending bankruptcy, and the subsequent bankruptcy order, are of considerable importance when considering the sort of agreement that these parties would be likely to make at the time when they began to cohabit in October 1992. The agreement pleaded in paragraph 6 of the particulars of claim would, for example, be a most remarkable agreement for Mrs Evans to make. If she had agreed at a time when Mr Maunders was facing bankruptcy that he was to be a joint tenant with her of her property, the consequence would be that, on bankruptcy, the trustee in bankruptcy would be bound to seek realisation of the property so that Mr Maunders' half-share in it could be released and applied for the benefit of his creditors. For Mrs Evans to make such an agreement in October 1992, knowing that there was a real possibility of bankruptcy within the foreseeable future, would be not merely unlikely; it would be quite bizarre. She would, in effect, be giving away half of her property, not for the benefit of Mr Maunders, but for the benefit of his creditors. Further, to agree to an arrangement under which Mr Maunders would acquire a beneficial interest incrementally by contributions made over time - that is to say the other ground of his claim - would be to disregard the requirements of section 310 of the Insolvency Act 1986.
12. Section 310 of the 1986 Act is addressed to post-bankruptcy income. The trustee is empowered to apply to the court for an order that post-bankruptcy income is paid to him for the benefit of the creditors. But no such application would be made, or if made no order would be made, until an allowance had been given for income needed to meet the reasonable domestic needs of the bankrupt: see section 310(2). So a trustee in bankruptcy would be bound to take the view that it was reasonable for payments to be made out of Mr Maunders' income to meet his expenses of living. But equally, he would be bound to take the view that it would not be reasonable for part of the income to be used in order to enable Mr Maunders to acquire a post-bankruptcy asset. If surplus income was available, that should have been applied to the discharge of the bankruptcy debts.
13. Against that background the agreement which Mr Maunders relies upon is an extremely unlikely agreement for the parties to have made. The position adopted by Mrs Evans - that their financial affairs should remain separate and independent - is very much more likely. The judge came to the conclusion that he preferred Mrs Evans' version. For my part, I do not find that in the least surprising.
14. Mr Maunders criticises the judge's approach on three grounds. First, he says that the judge should not have believed Mrs Evans' evidence in the circumstances that it was not consistent with the witness statement which she had made in advance of the trial. She had not said in her witness statement that there had been an agreement that the parties should remain financially independent so that Mr Maunders was not taken to be acquiring any beneficial interest in the property. The judge referred to that point in paragraph 10 of his judgment. He observed that Mrs Evans was criticised in the course of cross-examination on the basis that her oral evidence was not consistent with her witness statement. He took that into account; but he also took into account that she had said, at paragraph 14 of her witness statement, that the claimant made it very clear from the start that "we should each remain financially independent". Plainly the judge thought that the point had been identified with sufficient clarity, and that it would not have come as a surprise. In those circumstances, he allowed Mrs Evans to give the evidence which she did give; and he refused an application to recall Mr Maunders to give further evidence. He came to the conclusion that he believed Mrs Evans, whom he had seen in the witness box.
15. Mr Maunders' criticisms overlook the fact that the essential question for the judge was not whether Mrs Evans was able to prove that there had been an agreement that Mr Maunders should acquire no interest; but whether Mr Maunders was able to establish either an express agreement that he should acquire an interest or an agreement to be inferred from the facts. Mr Maunders did not establish an express agreement; and, in the light of Mrs Evans' evidence, there was no hope of establishing that an agreement should be inferred from the facts.
16. The second criticism which Mr Maunders would seek to advance on an appeal is that the judge ignored the well established principles set out by the House of Lords in Lloyds Bank v Rosset and in the earlier case, Pettitt v Pettitt. There is no basis for that criticism. The judge approached the matter mindful of the principle that the first and fundamental question to be resolved was whether there had been any agreement, arrangement or understanding between the parties that the property was to be shared beneficially. He decided not only that there had been no agreement that the property was to be shared beneficially, but that there had been a positive agreement that it was not to be shared beneficially. There had been a positive agreement that Mr Maunders was not to acquire a beneficial interest; an agreement which, as I have said, was perfectly understandable in the circumstances of the impending and subsequent bankruptcy. Having decided that, there was no question of any agreement arising from inference as a result of the payments actually made.
17. The third ground of criticism is that the judge ignored, or failed to give sufficient weight to, the evidence of Mr Barry Martin - a life insurance consultant - that Mrs Evans had taken out life assurance in the sum of £30,000 on Mr Maunders' life. Mr Maunders seeks to introduce further evidence on the appeal, which has been put before me in the form of a supplemental statement by Mr Martin. In my view there is no basis upon which that supplemental statement could be admitted in an appellate court. Mr Martin was called to give evidence, and did give evidence, at the trial. If he had anything to say, that was the occasion for him to say it. An appellate court should not admit further evidence in those circumstances. The further evidence is not evidence of anything which has happened subsequently, or of anything which could not have been said at the trial and can be said now. The underlying point, however, does not depend on Mr Martin's further evidence. The underlying point is whether it is to be inferred from the fact that Mrs Evans did effect a whole of life policy on Mr Maunders' life, that she must have recognised or intended that he would have a beneficial interest in the property.
18. I have been unable to understand why it should be thought that the question whether Mrs Evans had an insurable interest in Mr Maunders life is linked to the existence of Mr Maunders'
19. beneficial interest in the property. The position was that, at the time the policy was taken out, the applicant and Mrs Evans were living as man and wife. He was making a substantial contribution to the household expenses. No doubt she, at least, thought that that situation would continue. In those circumstances she plainly had an interest to protect in the sense that, if he were to die prematurely, his contributions would come to an end and her financial position would be significantly less favourable than it had been during his lifetime. Less favourable, because there would be only one person contributing to the outgoings of the household rather than two persons. In those circumstances it seems to me plain that she had a sufficient insurable interest to justify the taking out of the whole of life policy which, in the event of Mr Maunders' death, would enable her to discharge her obligations to the building society; and, indeed, rather more than that. The existence of the whole of life policy does not seem to me to lead to the conclusion that Mrs Evans either recognised or intended that Mr Maunders would have a beneficial interest in the property.
20. In those circumstances, I find nothing of substance in the grounds upon which the applicant seeks to challenge the judge's decision. The inescapable fact is that the judge reached the conclusion, on the evidence before him, that these parties had agreed that Mr Maunders would have no beneficial interest. That is a finding which he made after having had the advantage of hearing each of them give their evidence before him. It is not a finding which can sensibly be challenged in an appellate court. This is a case in which there is no real prospect of success on an appeal on the substantive point.
21. There is a further application for permission to appeal against an order for costs made on 2nd March 2001 by the District Judge at an interlocutory stage. The District Judge, on an application for the case to be reallocated to the multi-track and for the extension of time for the exchange of witness statements, decided that the applicant should pay Mrs Evans' costs of that hearing, which he assessed summarily at £934. Mr Maunders says that the District Judge ought to have held that the costs should be costs in the case; alternatively that he ought to have awarded the costs to Mr Maunders.
22. There is nothing before the court to indicate why the District Judge made the order which he did make. I am prepared to assume that that was an unusual order. It may well be that there were unusual circumstances which justified the making of an unusual order; but, even in the absence of such circumstances, the question for me is whether this is a case in which permission for a second appeal on that point should be granted.
23. The point was disposed of by Judge Coltart when -in the discussion at the end of his judgment - he pointed out that the difference between an order that Mr Maunders pay the costs and an order for costs in the case had become quite academic in circumstances that Mr Maunders, having lost the case, would have to pay the costs anyway. That seems to me to be a very sensible approach. There is simply no point in an appeal to this Court in order to decide whether the District Judge was right or wrong in the circumstances that whether he was right or wrong, makes no difference in practice. Mr Maunders has to pay the costs of the hearing of 2nd March in any event. Certainly the appeal for which this permission is sought does not raise an important point of principle or practice. Nor is there any other compelling reason why the Court of Appeal should decide whether the District Judge was right to make the order which he did make on 2nd March. What is plain is that the county court judge was right to deal with that question in the way that he did.
24. For those reasons, this application for permission to appeal is refused.
Order: Application dismissed.