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 NORTHAMPTON COUNTY COURT
(HIS HONOUR JUDGE MAYOR QC)

		Royal Courts of Justice Strand London, WC2
		25th October 2004

1. LORD JUSTICE PETER GIBSON: This is an appeal by the claimant, Andrew Curley, from part of the order made by His Honour Judge Mayor QC on 7th January 2004 in the Northampton County Court. The judge by his order determined a dispute between Mr Curley and the defendant, Nicola Parkes, with whom he had co-habited, as to the beneficial interest in the property in which they had been living immediately before their separation and which was in her sole name.
2. The judge dismissed Mr Curley's claim that Miss Parkes and he owned that property, 117 Battalion Drive, Wootton, Northampton, beneficially in equal shares. The judge found that there was neither an agreement nor any common intention that the parties were to share the property beneficially to be inferred from their conduct, so as to give rise to a constructive trust of the property. The judge refused permission to appeal.
3. Mr Curley sought this court's permission to appeal on a number of grounds. They included:

"4. Alternatively, if contrary to the Appellant's case the Court correctly declined to infer an agreement for a constructive trust, the Judge wrongly refused to consider whether he should have applied the principles appropriate to a resulting trust.

5. Further, had he correctly considered the availability of a resulting trust, the Judge would have been bound to perceive a resulting trust."

4. Chadwick LJ on paper refused permission to appeal on all grounds save those two which I have quoted, saying that it was arguable that the judge did not adequately address the contention that, by reason of actual contributions made to the purchase price, Mr Curley was entitled to an interest under a resulting trust. That is the only point live before us on this appeal.
5. The facts can be stated shortly. Mr Curley and Miss Parkes met in September 1998 when they were both working for Vauxhall Motor Company ("Vauxhall") in Bradford. A serious relationship started after a few weeks. She owned a house in Bradford. He had been sharing a flat with another woman. A year later he moved to Durham, living in rented accommodation. Mr Curley and Miss Parkes decided to live together and to move to a location more convenient to both of them. She would sell her Bedford house and purchase another one. They decided on 22 Wellington Way in Richmond which was purchased for £76,630, of which £68,742 was borrowed on mortgage in her own name. The remainder came from the net proceeds of sale of the Bradford house and from her own resources. 22 Wellington Way was registered in her own name. Mr Curley and Miss Parkes moved into the house on 3rd April 2000. As the judge found, they then set up a joint account and both made roughly equal contributions to that joint account. Out of that joint account were met the expenses of the household, including, but by no means confined to, the mortgage instalments. Mr Curley paid Miss Parkes no rent.
6. In February 2001 Mr Curley was asked by Vauxhall to move to Luton. Vauxhall had a relocation scheme and was prepared to make a contribution towards Mr Curley's removal costs and solicitors' fees, and a contribution towards the increased mortgage costs arising from the greater cost of property if the move entailed moving to a more costly housing area.
7. Mr Curley explained to Vauxhall that he wanted to take advantage of that relocation scheme, but that he lived with Miss Parkes in a house in her name, although they shared the costs, including the mortgage, equally. He said that the title to the house could not include his name because the mortgagee would not allow that, Mr Curley having run into financial problems at university.
8. Vauxhall agreed to let Mr Curley take advantage of the relocation scheme. Under the scheme Vauxhall through its relocation company, Cendant Relocation ("Cendant"), purchased 22 Wellington Way from Miss Parkes. Mr Curley and Miss Parkes found 117 Battalion Drive. Contracts for sale were exchanged on 19th April 2001. Completion took place the next day, the property being transferred to Miss Parkes alone. The purchase price was £154,950. The completion statement showed how that sum was paid. The net proceeds of sale of 22 Wellington Way amounting to a little under £9,000 were used. £138,480 was borrowed on mortgage in Miss Parkes' sole name. Further cash totalling some £6,000 was paid by Miss Parkes. No part of the purchase price was paid by Mr Curley. However, he received £8,557.67 under the relocation scheme. Further, monthly sums of about £260 were paid to him in recognition of the higher mortgage payments that would be payable as a result of the purchase of a house in a more expensive area.
9. Between 17th May 2001 and 14th November 2001 Mr Curley paid into Miss Parkes' current account £9,213 in six instalments. He says that it was supposed to compensate her for the deposit she paid. The judge found that £4,393 was paid to Miss Parkes on or about 21st May 2001, and that was all that remained of the monies from Vauxhall which Mr Curley had treated as his own. Mr Curley also paid a total of £8,775 into the joint account between 15th May 2001 and 15th April 2002.
10. The relationship between Mr Curley and Miss Parkes ended in February 2002 on Miss Parkes learning that he had been having a relationship with another woman. He claimed, but Miss Parkes refused to accept, that he was entitled to share in the equity of 117 Battalion Drive. He commenced proceedings in about May 2003, claiming a declaration that he and Miss Parkes were beneficially entitled in equal shares to the net proceeds of sale of the property. Alternatively, he sought a declaration as their respective interests and he asked for an order for sale.
11. At the trial before the judge there was written and oral evidence from both parties. The judge preferred Miss Parkes' evidence to Mr Curley's where the evidence conflicted.
12. The skeleton argument of Mr Garood, appearing for Mr Curley then as he does today, shows that his main submission was that there was an actual agreement between the parties that they were to share the beneficial ownership of the property, or that such an agreement was to be inferred in the circumstances. The judge rejected that submission. Mr Garood had an alternative argument that Mr Curley was entitled under a resulting trust to an interest commensurate with the proportion of the purchase monies he had paid. He has told us that he submitted to the judge under that alternative argument that Mr Curley was entitled to 8.5% of the equity in 117 Battalion Drive. That was made up of three contributions (1) the £9,213 paid to Miss Parkes; (2) the payment of the solicitors' fees and expenses, £2,858; and (3) the payment of removal costs, £1,556. I shall assume that Mr Garood was correct in telling us that that was his submission, even though it does not appear anywhere in the papers and even though Mrs Preston, for Miss Parkes, has no recollection of Mr Garood mentioning the figure of 8.5%. The judge did not deal with the alternative submission.
13. On this appeal Mr Garood submits that the judge erred in ignoring his alternative submission. That is plainly correct and this appeal would have to be allowed and the matter remitted to the County Court if it could be shown that there was substance in that alternative submission. Mr Garood says that the relevant principle is that where property is purchased in the name of one party and all or part of the purchase money is provided by another party, the other party will obtain an interest in the property commensurate with his or her contribution, unless the contribution was a loan or gift or the presumption of advancement applies. Mr Garood says that the issue in this appeal is whether the contributions made by Mr Curley are contributions to the costs of purchase. Those contributions, he says, are the three items to which I have referred.
14. It is to be noted that Mr Garood does not suggest that the contributions to the joint account, in so far as they went to pay amounts payable under the mortgage of 22 Wellington Way or 117 Battalion Drive, are contributions to the purchase money for those properties. In my view that is correct. The relevant principle is that the resulting trust of a property purchased in the name of another, in the absence of contrary intention, arises once and for all at the date on which the property is acquired. Because of the liability assumed by the mortgagor in a case where monies are borrowed by the mortgagor to be used on the purchase, the mortgagor is treated as having provided the proportion of the purchase price attributable to the monies so borrowed. Subsequent payments of the mortgage instalments are not part of the purchase price already paid to the vendor, but are sums paid for discharging the mortgagor's obligations under the mortgage: see Underhill & Hayton, Law of Trusts & Trustees (2003) 16th edition, pages 351 to 352.
15. By reason of that principle and the modern reliance on mortgage finance the importance of the resulting trust has diminished, and instead reliance is generally placed on a constructive trust where an agreement or common intention can be found or inferred from the circumstances: see Underhill & Hayton op. cit. at pages 353 to 354 and the Law Commission's July 2002 Discussion Paper "Sharing Homes", paragraph 2.61.
16. Mr Garood referred us to Marsh v von Sternberg [1986] 1 FLR 526 at page 531, on what may constitute a contribution to the purchase price. In that case a discount from the open market price given to a sitting tenant by the landlord selling a flat was treated as a relevant contribution by the sitting tenant. However, that was in a constructive trust case, not a resulting trust case, and the facts were very different. In a constructive trust case one looks at the entire conduct of the parties and a broader approach as to what constitutes contributions is appropriate. Thus it is clear that payments of mortgage instalments would constitute relevant contributions to be taken into account. I therefore cannot obtain any assistance from the remarks of Bush J in that case.
17. I turn to the three claimed contributions.

(1) The payment to Miss Parkes of £9,213

18. Given that a resulting trust crystallises on the date that the property is acquired, Mr Garood suggested that the payments totalling £9,213 were made pursuant to a liability existing at that date under an agreement between the parties, somewhat similar to the way the liability of the mortgagor under a mortgage can be taken into account. Mr Garood's submission was based on a statement by Miss Parkes in her witness statement, accepting that Mr Curley paid her £9,213 and saying:

"He agreed to pay me this money, not as a way of getting any equity in the property or becoming a joint owner, or receiving an interest in the property. It was just simply agreed that he should assist me because of the huge commitments that I was taking on."

19. On their face, payments commencing a month after the completion of the purchase are not payments of the purchase price. Further, no date is given as to when the agreement was made and it is not to my mind established on the evidence that Mr Curley incurred a liability to pay £9,213 or any other sum at the date of the acquisition of 117 Battalion Drive.
20. Further, I very much doubt if this was intended to be an agreement carrying legal consequences. It is not said what is the consideration for it, and it would appear to me to be an agreement such as is reached between members of a family and others living together which is not intended to have legal consequences. There are no findings of fact to support Mr Garood's submission. I therefore reject the first contribution.

(2) The payment said to have been made by Cendant of the solicitors' fees and expenses

21. There are no findings of fact as to whether the payment was made and when. All we have is a fee note dated 18th April 2001 and addressed to Miss Parkes, care of Cendant, from the solicitors, setting out their fees and disbursements. It appears likely that if Cendant made that payment it would have done so after the date of the acquisition of the property, and so after the date any resulting trust would have come into existence. Any contract to make such payment would have been between Mr Curley and Cendant. The payment was of no part of the purchase price, though I accept that for the purposes of a constructive trust (as distinct from a resulting trust) any ancillary payment, such as the payment of expenses, may be relevant.
22. No authority was drawn to our attention on this point, save for the cautious statement in Underhill & Hayton, op. cit. at page 352, that it seems that such a payment of legal fees and stamp duties should be treated as part of the purchase cost. The only English authority cited for that is Huntingford v Hobbs [1993] 1 FLR 736. In that case this court did its calculations of the respective beneficial shares in a property on the footing that £610 of costs incurred on top of the actual purchase price of £63,250 were to be treated as part of the purchase cost. But there was no discussion by any member of this court of that point. It is not an authority on resulting trusts. It was a constructive trust case. I am not persuaded that this claimed contribution is relevant to be taken into account in the present case in all the circumstances.

(3) The removal costs of £1,556 said to have been paid by Cendant

23. Mr Garood rightly did not press this point. Again, there are no facts found by the judge to support the claim that this contribution is relevant to a resulting trust. Plainly those costs formed no part of the purchase price, and in my judgment there can be no resulting trust of 117 Battalion Drive in respect of that payment.

Conclusion

24. For these reasons, the error of the judge in failing to deal with the resulting trust contention does not require the appeal to be allowed. I would dismiss it.
25. SIR WILLIAM ALDOUS: I agree.

ORDER: Appeal dismissed with costs assessed at £3,900.

(Order not part of approved judgment) ______________________________