Constructive trusts of the family home in Culliford v Thorpe [2018] EWHC 426 (Ch)

HHJ Paul Matthews is knocking out the judgments at the moment and we have another recent decision from him, sitting as a High Court Judge in the Bristol District Registry, dealing with a claim to establish a constructive trust, or alternatively proprietary estoppel, this time in a domestic context. HHJ Matthews used to sit as a Chancery Master and is a visiting professor at Kings College London and his very carefully reasoned decisions are deserving of close study.

The defendant, Jocelyn Thorpe, in Culliford v Thorpe [2018] EWHC 426 (Ch) was the partner of the late Rodney Culliford, who died intestate in March 2016. Jocelyn resided with Rodney at his property in Weston-super-Mare, at the date of his death. Rodney’s personal representatives issued possession proceedings against Jocelyn, claiming that he had been a bare licensee and that they were entitled to possession of the property. Jocelyn counterclaimed and sought to establish that he had a proprietary interest in the property pursuant to a constructive trust, or proprietary estoppel, and that he was entitled to the entire beneficial interest in the property.

The factual background

Rodney had purchased the property in his sole name in 2002 with the aid of a mortgage. He met Jocelyn in 2010 and by late 2010, they were living together.

Rodney worked as a flight attendant, although health complications from HIV and anxiety and panic attacks caused him to reduce his working hours. He got into financial difficulty and by October 2011 had entered into an IVA. Jocelyn was not working and this was a source of tension between the couple. He did odd jobs around the house but otherwise was largely supported by Rodney.

In April 2012, Jocelyn’s father died. He and his siblings mistakenly thought that they were each entitled to a one third share of their father’s half share of the matrimonial home in Devon, under the terms of his Will. In fact, the property was held by Jocelyn’s mother and father as joint tenants and passed to his mother, who did not reside in the house but lived in a chalet in the grounds, by survivorship. He did, however, inherit around £80,000 in cash and some furniture.

It was not entirely clear when this mistake was discovered. In any event, a deed of variation was entered into in April 2014 with the intention of achieving what was believed to be Jocelyn’s father’s intention by providing that a half share in the property be held on trust for the three siblings. Slightly cryptically, HHJ Matthews comments: “I do not need to consider whether that actually was the legal effect. It is sufficient for present purposes that everyone (including the defendant) believed it to be.” Jocelyn further expected to inherit a further share on his mother’s eventual death.

It was Jocelyn’s case, which HHJ Matthews accepted, that he and Rodney had discussed their future in May 2012, in the course of moving Jocelyn’s inherited furniture back to Rodney’s property. As they saw it, and mistakenly believing at that time that Jocelyn had inherited a share of his parent’s property, the position had changed in light of Jocelyn’s inheritance. The terms of their discussion are noted as follows [26]:

The deceased told the defendant “This is it, it is time we joined forces properly.” They agreed that they would share their properties and their other assets, so that, as the defendant put it in evidence (although he attributed the words to the deceased) “What’s mine is yours, and what’s yours is mine.”

They planned to do up the Weston property, using the funds Jocelyn had inherited, and to let it out and, with the agreement of Jocelyn’s siblings, to convert the top floor of the Devon property into a flat and to live there. There was some evidence from a third party witness confirming that Rodney had told him that this was the plan.

HHJ Matthews did not accept Jocelyn’s case that he and Rodney had intended to hold the Weston property as beneficial joint tenants, such that the right of survivorship applied nor his alternative case that Rodney had promised him that he would inherit it upon Rodney’s death, but was satisfied that there was an agreement for Jocelyn to have a half share of the property.

Without more, that would not be enough for Jocelyn to establish any interest in the property, since this informal oral agreement would not comply with the requirements of section 53(1)(b) of the Law of Property Act 1925.

Having found that this conversation had taken place and that it was intended to be relied upon, it was necessary to consider whether or not Jocelyn had relied upon this discussion to his detriment such that a constructive trust could be said to have arisen.

It is always interesting, for those running these sorts of cases, to consider the matters said to amount to detrimental reliance in constructive trust cases and how they are evidenced. HHJ Matthews found as follows:

“38. In June 2012, works were done to the three bedrooms at the property, including (i) removing carpets, skirting boards and radiators, (ii) sanding walls, ceilings and doors, (iii) painting walls, ceilings and woodwork, (iv) fitting and wiring in downlights, (v) laying wooden flooring in two bedrooms, (vi) refitting skirting boards and radiators, (vii) assembling mirrored wardrobes in one room, and so on. In September 2012 the kitchen and utility room were knocked into a single room to form a bigger kitchen, the walls having to be made good with plaster board. Radiators were removed, surfaces had to be prepared and then painted, downlights were wired and fitted, new sockets and switches fitted, a new sink and taps were installed, and radiators refitted. In November 2012 the lounge and dining room were knocked into a single room with a new steel lintel to support the weight of the upper floor fitted (by a local builder), the walls having to be made good with plasterboard. Again radiators were removed, surfaces prepared and then painted, downlights were wired and fitted, a new door was hung, and the radiators replaced. A new front door was fitted, again by an outside contractor, for which the defendant paid. Work was also done in the hall, the cloakroom and the understairs space. Most of the work was complete by spring 2014. The only works that were not carried out as originally planned were those to the ensuite bathroom. This is still unfinished. The expert evidence (which I accept) is that the value added to the Weston property is about £30,000.

39. At the Devon property, the first works done were the installation of the bathroom fittings, in late 2012. Further works were carried out in June-July 2014, including removing the original partitions between the rooms and fitting new windows, insulating and plastering the walls, reinforcing the floor joists, installing a new electrical ring main and TV point, and then installing the new internal partitions.

40. The defendant produced a schedule of out of pocket expenditure for the building works he did. This was criticised by the claimants on the basis that it contained items incurred before the agreement of May 2012. There are in fact only three such items, totalling about £160. The total on the schedule is a little under £10,000. A further criticism was that only about £1000 of these items can be clearly linked to building material purchases. The vast majority cannot, and many of the items are in fact cashpoint withdrawals, rather than debits in building related shops for specific items. The defendant was unable to produce actual receipts for the items he claims he bought. I think the criticism is overdone. Most of the value added to the deceased’s house by the works was added by the defendant’s labour, not by work done and materials supplied by others. And I accept that the defendant and the deceased, in an intimate personal relationship, would not have expected to hold each other to account for expenditure of this kind (see Kernott v Jones [2012] 1 AC 776, [22]). The defendant cannot have known that he would need to demonstrate to sceptical relatives of the deceased that the expenditure really was made, and so cannot be blamed for not having kept receipts. In the modern world, few people do, and even fewer can find them when they turn out to matter. The defendant’s evidence that he spent this money on building materials and fittings is plausible and I accept it.”

The works were not, however, finished. Minor matters were left outstanding at the Weston property, however the Devon property was described as a building site. Largely, this was because  there was a breakdown in the relationship in about November 2014. There was a rapprochement between the parties by about February 2015, however by this time another problem had arisen. Rodney had started using recreational drugs. His habit escalated and, sadly, eventually killed him.

The legal arguments: the constructive trust claim

This was a sole name case in which Jocelyn’s claim to an interest in the property fell to be established in accordance with the principles elucidated by Lord Bridge in Lloyds Bank plc v Rosset [1991] 1 AC 107, in which he stated:

“The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel.”

The law has been modernised and has moved on somewhat since Rosset – particularly in so far as the question of the conduct from which an agreement to share the beneficial interest in a property may be inferred so as to give rise to a constructive trust. Lord Bridge was doubtful in Rosset that anything less than payment of mortgage instalments would justify an inference that there must have been an agreement to share the beneficial interest, but it was thought in Stack v Dowden [2007] 2 AC 432, [26], per Lord Walker, [70], per Lady Hale (with whom Lords Hoffman, Hope and Walker agreed) that he had set the bar too high in this respect). Nonetheless, the basic principles in Rosset – that an express agreement to share plus detrimental reliance must be established, or alternatively that conduct from which an agreement to share may be inferred and which also supplies the necessary detrimental reliance must be found – remain the starting point in sole name constructive trust cases.

The claimants, Rodney’s personal representatives, sought to argue that the agreement between Rodney and Jocelyn could not found a constructive trust or proprietary estoppel claim, since it was founded upon the mistaken belief, at the time that it was made, that Jocelyn had a beneficial interest in the Devon property.

HHJ Matthews dissects the claimant’s arguments as follows:

“33. Before I deal with the application of the legal principles of these doctrines to the facts, I will deal with some general points made on behalf of the claimants. The first is that the agreement relied on by the defendant to share properties with the deceased was founded on a common mistake, ie that the defendant at the time did own a one third (or indeed any) share in the Devon property. The claimants say that the result is that the agreement is void. I reject this argument. The parties were indeed mistaken in believing that in May 2012 the defendant had a share in the Devon property under his late father’s will. But the defendant always had “expectations” (as the deceased himself recognised: see Graham Bond’s witness statement of 23 June 2017, [10]). Moreover, the defendant, his siblings and his mother operated on the basis of the mistaken belief, at least until the mistake was discovered. Thereafter, the will variation was entered into, which gave the defendant a one sixth share, the other one sixth to come on the death of his mother. In the circumstances, especially of the close and loving relationship between them at the time, I do not regard this mistake as fundamental to the agreement between the defendant and the deceased. But in any event this is not contract law. It is equity (whether common intention constructive trust or proprietary estoppel) and the fundamental question is whether in the circumstances it is unconscionable for the estate of the deceased to deny the defendant a share in the Weston property. For that purpose, it is more important to consider whether the defendant relied to his detriment on a promise of the deceased intended to be relied upon.

34. The claimants also argue that, since the defendant could not perform his side of the bargain at the time the agreement was entered into, because he was not then in fact the owner of a share in the Devon property, the agreement is not valid in law. This criticism suffers from the same problem as the previous one. It treats the promise made by the deceased as though it was part of a common law contract. But in fact the greater flaw in the argument is that even a contract by which a person promises to do something which at the date of the contract he is not in a position to do is not invalid. For example, A promises to sell to B property which at the date of the contract he does not yet own and indeed may never own. If A does not perform the contract on the due date, the contract is not invalid. On the contrary, it is valid, and he is in breach. This is an everyday occurrence in commercial markets. People frequently sell and promise to deliver things in future which at that date they do not own. Even if the contract is for immediate performance, it is not invalid, though it may well be broken as a result of non-performance.

35. In the context of the promise made by the defendant in relation to the Devon property, it is important also to notice that the defendant subsequently (on the making of the variation agreement) became entitled to an interest in that property. If it mattered, that acquisition of an interest would go to “feed” the estoppel created by the parties’ agreement: see Church of England Building Society v Piskor [1954] Ch 553; Southern Pacific Mortgages Ltd v Scott [2015] AC 385, Sup Ct.”

In relation to this latter point, of feeding the estoppel, HHJ Matthews is speaking of the possibility of an estoppel arising in the other direction – that Rodney might acquire an interest in the Devon property by reason of this agreement. Since Jocelyn was promising something that he could not in fact deliver at the time of the promise, an estoppel, if it arose, would be ‘fed’ by the subsequent acquisition of an interest by reason of the deed of variation so as to automatically make good the promise. Accordingly, this could not be a reason for finding the agreement in respect of the Weston property to be invalid.

The point about the agreement in respect of the Devon property was developed further by the claimants. They argued that if Jocelyn was entitled to an interest in the Weston property, Rodney was likewise entitled to an interest in the Devon property. The described this as a reductio ad absurdum. HHJ Matthews did not agree, it was not absurd if that was what the parties had agreed and the conditions for an interest to arise in Rodney’s favour were met, but the shorter answer was that the claimant’s had not pleaded any such claim so it did not arise.

The more interesting argument was this: the claimants argued that the court could not ignore what happens after an agreement has been entered into between the parties and some detriment incurred on the face of it, particularly when the contemplated arrangement between the parties is not borne out by events.

They relied on Gallarotti v Sebastianelli [2012] EWCA Civ 865. In that case, two friends purchased a flat together. Each made a cash contribution to the purchase price, S contributing 46% and G 14%. The property was conveyed into the sole name of S. The balance of 40% was raised by S as a mortgage loan secured by a charge on the flat. The loan was taken out by S alone, who was in law solely responsible to the bank for its repayment. G agreed that any interest he had was postponed to the security interest of the bank. They agreed that they would own the property 50/50 and that G would pay more of the mortgage instalments. In fact, that did not happen. That friendship having broken down subsequently, and the parties having gone their separate ways, the question arose of their respective beneficial interests in the flat. The judge at trial in the County Court found that there was an agreement between them at the time of the purchase that they should own the beneficial interest in the flat 50-50. On appeal, Arden LJ (with whom Tomlinson and Davis LJJ agreed) held that the agreement of the parties did not apply in the circumstances which had actually occurred.

HHJ Matthews cites the following passage from the judgment where Arden LJ held:

“24. In my judgment, the agreement did not apply in the events which unfolded. It only covered the case where there was a slight imbalance in contributions. Neither party fussed over minor differences in payments made by them. Since they had no formal system of accounting, there was no system for equalising contributions. They did not place much store on that consideration. The Recorder put this down to the strength of their friendship. But the fact that they were strong friends simply meant that one party would not chase each other for money which the other did not have. It did not, in my judgment, mean that they gave up any chance of substantial equality at the end of the day. The express agreement put forward by Mr Gallarotti, and accepted by the Recorder, shows that the parties were concerned that their ultimate shares in the Flat should, broadly speaking, represent their contributions to it.

25. Accordingly, in my judgment, the inference to be made from the parties’ course of conduct was that they intended that their financial contributions should be taken into account but not that there should be any precise accounting.

26. One of Mr Aylwin’s submissions is that the Recorder elided the process of finding a beneficial interest with that of determining its size. That is not how I see it. I conclude that, having found that there was an agreement which applied in particular circumstances, the Recorder did not go on to consider whether those circumstances occurred. Thus, in my judgment, the Recorder failed to pursue the logic of her own findings. She had found that at the date of the acquisition the parties recognised that there was some slight disparity between their contributions. However, in the event, she found that the disparity was much greater than the parties had expected at the date of their agreement. She found that Mr Gallarotti agreed that if he paid less towards the purchase price he would make that up by paying more towards the mortgage. If that was the agreement then she should have looked at the amount of the mortgage payments Mr Gallarotti had paid. He palpably had not made a substantial contribution on her findings. The logical result of the agreement, therefore, was that the agreement for 50/50 sharing was at an end. Miss Parker’s submissions do not meet that point. The Recorder should have held that this was the case when the parties agreed to go their separate ways and Mr Gallarotti left the Flat. By that point in time, the only inference that could be drawn was that the parties intended the beneficial ownership should, in substance, reflect their financial contributions. It was wholly implausible that Mr Sebastianelli should make a substantial gift to Mr Gallarotti. Here were two flat sharers who were not in a family unit. They were people who for convenience lived together until they established their own homes.”

Interestingly, HHJ Matthews expresses some doubts about the Court of Appeal’s reasoning in Gallarotti, which he considered in any event distinguishable:

“61. The Court of Appeal took account of the cash contributions each had made, the mortgage loan taken out by S and the payments actually made by G, and awarded S 75% of the beneficial interest and G 25%. It is not however clear why non-performance by G of his contractual promise meant that the agreement no longer applied. A failure to perform an agreement is not generally a reason to say that. I am not aware of any previous case of common interest and attention constructive trust which has so held. And it is clear from the facts found that G had relied on the promise made by S to share the property 50-50.

62. Further, I do not understand why the court did not enforce the agreement for a 50-50 split, but then make a deduction from G’s share by way of equitable accounting for the payments which he did not make and which S had had to make in his place. Possibly there were no sufficient factual findings at first instance. It seems to me to be a case which turns very much on its own facts, and does not express any principle capable of being followed in another case which does not replicate those facts. It is certainly a case which is very different from the present one. It was a case of a platonic friendship where there was no reason for one party to make a large gift to the other. But the present case is one of a committed, intimate relationship where two people decided to spend the rest of their lives together. Secondly, Gallarotti was a case where G did not in fact make the larger contributions to mortgage repayment instalments which he had promised, whereas in the present case the defendant did a lot of work on the Weston property pursuant to their plan, and even some work on the Devon property, making it available for the use of the deceased in the meantime, until the project was halted by the latter’s sudden and unexpected death. Thirdly, there was no suggestion in the evidence in the present case that the agreement between the defendant and the deceased would only apply if both parties survived a particular length of time, or if the works reached a particular point of completion.”

I have a few thoughts on HHJ Matthew’s reflections on Gallarotti. First, the agreement between the parties in that case was vague in a number of respects and, in particular, the precise contributions that G would have to make had not been agreed. Not only would an oral agreement of this sought founder for lack of the statutory formalities, it is also insufficiently certain to amount to an enforceable contract.

Further, I suspect that there may well be something in HHJ Matthew’s observation that the Court of Appeal did not have enough factual findings from the first instance judge to carry out an accounting exercise, which would have necessitated remitting the case had the Court of Appeal opted to take that route.

My experience is that judges don’t much like dealing with accounting exercises. Post Jones v Kernott [2011] UKSC 53, and the conclusion of the Supreme Court that the parties shares in a property may be varied over time notwithstanding the absence of an express agreement to that effect, let alone one that complies with Section 53(1)(c) of the Law of Property Act 1925 (dealing with the disposition of subsisting beneficial interests), the scope for equitable accounting has been curtailed – certainly, at least, in cases where the parties’ intentions in respect of the property are found to have changed. Per Hale and Walker:

“50. On this approach, there is no scope for further accounting between the parties (which was obviously contemplated as a future possibility by Rimer UJ on his approach). Had their beneficial interests in the property remained the same, there would have been the possibility of cross-claims: Mr Kernott against Ms Jones for an occupation rent, and Ms Jones against Mr Kernott for his half share in the mortgage interest and endowment premiums which she had paid. It is quite likely, however, that the court would hold that there was no liability to pay an occupation rent, at least while the home was needed for the couple’s children, whereas the liability to contribute towards the mortgage and endowment policy would accumulate at compound interest over the years since he ceased to contribute. This exercise has not been done. In a case such as this it would involve a quite disproportionate effort, both to discover the requisite figures (even supposing that they could be discovered) and to make the requisite calculations, let alone to determine what the ground rules should be. The parties’ legal advisers are to be commended for the proportionate approach which they have taken to the preparation of this case.”

Even where there is scope for equitable accounting, it is an exercise that very much turns upon considering the intentions of the parties. Ordinarily, cohabiting parties will not be considered to have intended a micro accounting exercise of the contributions in the course of the relationship. Generally, it will only arise post-separation. Even then, the parties intentions remain relevant (see Snowden J’s meticulous analysis of equitable accounting principles in Davis (as Trustee in Bankruptcy of Jackson) v Jackson and Another [2017] EWHC 698 (Ch)). The parties in Gallaroti were found not to have intended that sort of exercise but further not to have intended the agreement between them to stand in the circumstances as they subsequently unfolded, which would appear to preclude an accounting exercise.

Back to HHJ Matthew’s judgment:

“63. The claimants cite Gallarotti as authority for the proposition that the court cannot ignore what happens after an agreement has been entered into between the parties and some detriment incurred on the face of it, particularly when the party’s contemplation is not borne out by events. I certainly accept that, when the court is considering the existence of a common intention constructive trust, the court must consider the whole of the relationship. But this is because the parties’ intentions may change over time, and interests once agreed may be changed because they have changed their collective intentions: see eg Stack v Dowden [2007] 2 AC 432, [62]; Jones v Kernott [2012] 1 AC 776, [14]. I also accept that, in Oxley v Hiscock [2005] Fam 211, Chadwick LJ held that, in a case where there was no evidence of any discussion between the parties as to their shares, but the court must still find their common intention, that could only be found (as the Law Commission later put it in “Sharing Homes, A Discussion Paper”, para 4.27) by
“undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intended”: see Stack v Dowden [2007] 2 AC 432, [61].
But in a case where the agreement of the parties is established on the evidence, and that evidence does not show or even suggest any subsequent variation of that agreement, I do not see the need to look at the subsequent conduct in order to assess what the agreement was.”

With some hesitation and a great deal of deference to HHJ Matthews, who has probably forgotten more about trusts law (very little most likely) than I’ll ever know, I am not sure that I agree with this aspect of his decision. The question of whether or not the claimants could establish an interest in the Devon property is left open (subject perhaps to any estoppel arguments and whether or not anyone has the appetite for a second round of this litigation). Later on in his judgment, he observes that the claimants may not be able to establish the necessary detriment to acquire an interest in the Devon property – there is something in that, if we are to see the agreement in relation to Devon as a separate agreement, since it would not appear that there was any expenditure or other detriment on the part of Rodney (at least in so far as the evidence in these proceedings went). 

However, I question whether or not it is right to treat the agreement in respect of Weston and in respect of Devon as severable. This would create a situation whereby it is possible that the agreement is upheld in so far as Jocelyn acquires a share in Rodney’s property but not in respect of Rodney acquiring a share in Jocelyn’s interest in the Devon property. That possibility may not have been expressly discussed by the parties, but it cannot be what they intended given that the agreement between the parties was “whats mine is yours, whats yours is mine” and the background to the agreement was the understanding that Jocelyn now had something to bring to the table to justify a sharing of their assets.

The agreement between the parties as to how they would arrange their affairs in the future and their plan to reside in Devon was frustrated by the premature demise of Rodney. It is difficult to be certain without considering the figures in relation to the Devon property and the value of Jocelyn’s interest, but I would argue that they cannot have intended that Jocelyn would acquire an interest in Rodney’s property without there being a reckoning to reflect the value of the interest it was envisaged that Rodney would acquire in the Devon property. In my view, this pulls the matter back into Gallarotti territory. It is unsatisfactory to leave this to be pursued in satellite litigation – it is not proportionate and risks conflicting judgments on the point – of course this may be a reflection on the way the claimants chose to run their claim and I do not know, however, whether or not there was sufficient evidence in relation to the Devon property to deal with the issue.

Conclusions on the constructive trust claim

HHJ Matthews concludes in respect of the contructive trust claim as follows:

“66. Turning then to the application of the principles of common intention constructive trust to the facts which I have found in this case, I am satisfied that the agreement to share their respective properties, followed by the detrimental reliance of the defendant, gave rise to such a trust of the Weston property in his favour. The defendant plainly relied upon that agreement in carrying out the significant works which he did on the Weston property, using his own labour and his own money to purchase materials, as well as occasionally paying others to do work. The defendant says that where there is an agreement to share property equally, the court will assume it is to be a beneficial joint tenancy rather than a tenancy in common, and cites Eves v Eves [1975] WLR 1338. But I do not consider that that case establishes that there is a principle that agreements for half shares must be construed as for joint tenancy. Each case must turn on its facts. In this case I am not satisfied that the one half share agreement should give rise to a joint tenancy of the beneficial interest in that property, rather than a tenancy in common. If I had been satisfied that at the time of the agreement the parties had considered what might happen if one of them died, then it might have been different.”

He considered that there was no scope in a constructive trust claim for an exercise, of the sort in the proprietary estoppel cases such as Davies v Davies [2016] EWCA Civ 463, of weighing the countervailing benefits that Jocelyn had received from the arrangement against the detriment that he had incurred, but, in any event, if he was wrong in that, he considered that there was a net detriment to Jocelyn justifying an award in his favour.

And as to the remedy:

“79. I therefore turn to consider the question of remedy. I remind myself that this is first and foremost a case of common intention constructive trust. The normal remedy is to hold that the property in question (here the Weston property) is held by the legal owner on trust for the parties in the agreed proportions. Here that means 50-50. I can see no reason why that should not be given effect to. But the deceased is now dead, and the original purpose for which the agreement was entered into (first as a shared home for the defendant and the deceased, then to be let to produce income so that the deceased could reduce his hours) is at an end. There was no evidence to show that the defendant would suffer any especial hardship in moving out. Those entitled under the deceased’s estate, whether as creditors or beneficiaries, should not have to wait longer than necessary to be paid. In my judgment the appropriate remedy is for the Weston property to be sold, and after discharge of any outstanding mortgage or other security interest, the net proceeds of sale be divided between the defendant and the deceased’s estate, but deducting from the defendant’s share one half of the occupation rent from the date of death to the date on which possession is given up by the defendant or the deceased’s personal representatives cease to be excluded from the property.”

The proprietary estoppel claim

HHJ Matthews’ comments on the proprietary estoppel arguments are obiter, but nonetheless of interest particularly in relation to his evaluation of the detriments and benefits passing between the parties. He was of the view that the necessary elements (a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his reasonable reliance – per Thorner v Major [2009] 1 WLR 776) were present and that the same remedy would be appropriate, as in respect of the constructive trust claim, on the basis that this was a case where it was appropriate to give effect to Jocelyn’s expectation.

Learning points for practitioners

  • Has the agreement been complied with? In cases where the initially agreement has not been fully complied with by the claimant party, the decision in Gallarotti appeared to open up some space for the court to consider whether or not the parties still intended their agreement to apply and to find that some alternative agreement should be inferred from their conduct. HHJ Matthews prefers a more strict, quasi contractual, approach whereby each side should be put in the position they would have been in if the agreement had been performed. It will be of interest to see whether or not this is a point that is developed in subsequent cases.
  • Litigation after the death of a party. The claimants were at a particular disadvantage in this case given that Rodney had died and it was very difficult for them to produce any positive evidence to refute Jocelyn’s contentions. Judges are often circumspect when dealing with self-serving allegations that are made after the death of the person best positioned to refute them. Here, there was both some third party evidence that supported Jocelyn’s claim and further there was the fact that he had invested considerable time, money and energy in the renovation works, which supported his case in relation to the agreement. The claimants attempted to argue that the case would open the floodgates to allow “post-mortem evidence of secret agreements between parties to govern property rights”. But HHJ Matthews rightly noted that, notwithstanding the Statute of Frauds 1677, those particular gates have been open since about the 17th century.
  • Benefit / detriment. HHJ Matthews rejected the argument that there needed to be an arithmetical exercise of the type entered into in proprietary estoppel of weighing up the advantages and disadvantages of the position in which the promisee now found him- or herself. That is not to say that it will always be irrelevant to look at the benefits that the promisee has received. Particularly in cases where the claimant seeks to establish that a common intention constructive trust had arisen, not on the basis of express agreement, but by conduct, the question of the flow of benefits / detriment may have a bearing on the question of whether or not an agreement to share the beneficial interest in the property can be inferred.

 

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