Co-ownership: common intention constructive trust and proprietary estoppel


Culliford v Thorpe [2018] EWHC 426 (Ch)

The deceased’s same-sex partner successfully established that he had a 50% beneficial interest in a property registered in the deceased’s sole name pursuant to a common intention constructive trust and/or proprietary estoppel as a result of an oral agreement they had reached and of the significant renovation works the partner had carried out.

The facts

In 2002 the deceased, Mr Culliford, purchased a property at 9 Clover Road, Weston-Super-Mare, with the assistance of a mortgage. In 2010 he met Mr Thorpe online. They began a relationship and later that year Mr Thorpe moved into the property with the deceased. The deceased was employed by British Airways as a flight attendant. Mr Thorpe was not employed and the couple’s lifestyle was therefore funded mostly by the deceased. Mr Thorpe was the more practical of the two and did repairs and decoration jobs round the house.

In April 2012 Mr Thorpe’s father died. On his death the family home in Devon passed to Mr Thorpe’s mother by survivorship. However, the family did not immediately realise this and instead believed for around two years that the father’s will had given the father’s half share in the Devon property to Mr Thorpe and his two siblings, as well as some cash. In May 2012, the deceased and Mr Thorpe discussed their financial circumstances, believing at the time that Mr Thorpe owned a one-sixth interest in the family home in Devon in addition to the cash he had inherited. The deceased told Mr Thorpe “this is it, it is time we joined forces properly” and the couple agreed to share their properties and other assets so that “what’s mine is yours, and what’s yours is mine.” The agreement was an informal one, and there was no discussion of changing the legal title to the property or of whether Mr Thorpe should have a beneficial interest in the property and, if so, whether his interest should be as a tenant in common or a joint tenant. The deceased and Mr Thorpe planned to refurbish the property in order to rent it out, and also to convert the top floor of Mr Thorpe’s family property in Devon into a self-contained flat in which they could live. Mr Thorpe planned to help fund the works with the money he had inherited from his father, and the hope was that the deceased could then reduce his working hours to help him cope with the ill-health he was suffering from as a result of being HIV positive.

The following month (June 2012) Mr Thorpe began to undertake works to the property. Although he had already done some more minor work to the property before this, the judge described these works as being “of a different order of magnitude”. They included removing and replacing carpets, skirting boards and radiators; sanding and painting walls, ceilings and woodwork; fitting and wiring in downlights; laying wooden flooring in two bedrooms; assembling mirrored wardrobes and knocking two rooms into one. The expert evidence indicated that the works had increased the value of the property by about £30,000.
In April 2014 the mistake regarding Mr Thorpe’s father’s estate came to light and the family entered into a deed of variation. This provided that a half share in the Devon property be held on trust for Mr Thorpe’s mother for life, and then for Mr Thorpe and his two siblings in equal shares, so that Mr Thorpe’s one-sixth interest in the Devon property was confirmed (subject to his mother’s life interest).
During 2015 the deceased developed a habit of taking recreational drugs. Mr Thorpe did not approve but did not interfere. The deceased died on 25 March 2016as a result of a drug overdose. He died intestate and his estate passed to his two siblings under the intestacy rules, who took out a grant of administration in respect of his estate.

Mr Thorpe continued to live at the property after the deceased’s death. His relationship with the deceased’s siblings ultimately broke down and the siblings issued possession proceedings against Mr Thorpe. Mr Thorpe counterclaimed a declaration that he had a proprietary interest in the property, either as a result of a common intention constructive trust or of a proprietary estoppel.

The decision

HHJ Paul Matthews (sitting as a Judge of the High Court) dealt first with Mr Thorpe’s claim based on a common intention constructive trust. He referred to Stack v Dowden [2007] 2 AC 432 and Kernott v Jones [2012] 1 AC 776, which he referred to as the “leading cases”, but pointed out that both involved a property registered in joint names, whereas “the most recent case at the third level in England of a case of common intention constructive trust where the legal title was in the name of one party only is Lloyds Bank v Rosset [1991] 1 AC 107.”

He held that Mr Thorpe had successfully established that he and the deceased had reached an express oral agreement in relation to the property, which combined with the renovation works he had carried out to the property gave rise to a common intention constructive trust: “I am satisfied that the agreement to share their respective properties, followed by the detrimental reliance of [Mr Thorpe], gave rise to such a trust of the Weston property in his favour. [Mr Thorpe] 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.” He went on to hold that “The normal remedy [in relation to common intention constructive trust] 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.” However, he was not satisfied that the agreement gave rise to a joint tenancy as opposed to a tenancy in common: “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. But I am not.”

The judge concluded that an order for sale should be made and that, after redemption of any mortgage, the net proceeds of sale should be divided equally between Mr Thorpe and the deceased’s estate save that Mr Thorpe should pay occupation rent to the estate in respect of the period after the deceased’s death during which he had excluded the deceased’s personal representatives from the property.
Although his decision on Mr Thorpe’s common intention constructive trust claim made it strictly unnecessary to decide Mr Thorpe’s proprietary estoppel claim, HHJ Paul Matthews held that he would have found that claim made out too.

Comment

The case is yet another illustration of the problems – and bitterly fought litigation – which can arise where a person has made informal agreements with, or representations or promises to, another which his affairs on his death do not give effect to. Whilst common intention constructive trust claims often concern cohabitants whose relationship has come to an end, many proprietary estoppel claims involve agreements, promises or representations made by an (often older) property owner to a (often younger) claimant which are then not carried out by the landowner’s testamentary dispositions: see e.g. Jennings v Rice [2002] EWCA Civ 159, Thorner v Major [2009] 1 WLR 776 and more recently James v James [2018] EWHC 43 (Ch). The take-home point for those advising elderly clients is to ensure (in so far as possible) that one is given a clear picture about what promises the client may have made to others in relation to his property and that these are addressed when, for example, the client decides to make his will.

(Author: Edward Hewitt)

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