Barrett v Barrett
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE DAVID RICHARDS,Mr Justice David Richards: |
| Judgment Date | 19 May 2008 |
| Neutral Citation | [2008] EWHC 1061 (Ch) |
| Date | 19 May 2008 |
| Court | Chancery Division |
| Docket Number | Appeal Court ref: CC2007 PTA 196 |
[2008] EWHC 1061 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM
THE CENTRAL LONDON COUNTY COURT
HIS HONOUR JUDGE LEVY QC
The Honourable Mr Justice David Richards
Appeal Court ref: CC2007 PTA 196
Mr Christopher Maynard (instructed by Messrs Owen White & Catlin) for the Appellant
Mr Miles Croally (instructed by Messrs Graham White & Co) for the Respondent
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Thomas Joseph Barrett (Thomas) appeals against the order of His Honour Judge Levy QC, sitting at the Central London County Court, whereby he struck out Thomas' claim against his brother John Joseph Barrett (John) under CPR 3.4(2) on the grounds that the statement of case disclosed no reasonable grounds for bringing the claim. The basis of the claim was that a residential property originally owned and occupied by Thomas but sold by his trustee in bankruptcy to John had been acquired and held by John on trust for Thomas. John denied any such trust arrangement but, relying on Tinsley v Milligan [1994] 1 AC 340 and other authorities, submitted that even if it existed it was made for an illegal purpose and was unenforceable. The judge accepted the submission and accordingly struck out the claim.
The undisputed facts are as follows. Thomas purchased a freehold house at 137 Bilton Road, Perivale, Greenford, Middlesex (the property) as sole legal and beneficial owner in 1977. Thomas lived at the house and from time to time John and another brother, Patrick, also lived there. On 28 June 1993 Thomas was declared bankrupt and the property became vested in his trustee in bankruptcy. On 12 October 1994, on the application of the trustee in bankruptcy, a possession order was made by consent, such order not be enforced for 42 days. John offered to purchase the property at a price which, after discharging a mortgage on the property, would leave the trustee with £15,000. The trustee in bankruptcy accepted the offer. John paid £32,000 to redeem the mortgage and paid £15,000 to the trustee in bankruptcy and, with effect from 1 March 1995, became the registered proprietor of the property. John raised £40,000 from the Woolwich Building Society, secured by a mortgage on the property. The balance of the funds required for the purchase were paid from John's account with the Woolwich Building Society. Thomas was discharged from bankruptcy in June 1996. Non-preferential creditors received a dividend of 38.32p in the pound, so that if Thomas were to succeed in his claim it would be open to a trustee in bankruptcy to claim it for the benefit of the estate. Thomas continued to live at the property until it was sold in September 2005. John was living at the property at the time of the sale by the trustee in bankruptcy and continued to do so until about 2000.
The property was sold in September 2005 for £235,000. After the discharge of one or more mortgages, the balance of the price was paid to John. John paid £115,000 to his sister Bridget in about October 2005. John claimed that Bridget held this sum as his nominee. When Bridget refused to re-pay it to John, the latter issued proceedings for its return. Bridget defended the proceedings on the basis that she received the sum to hold for Thomas. She had paid £21,200 to Thomas and she paid the balance into court, whereupon the claim against her was discontinued. Thomas was joined as a party to the proceedings. The action then proceeded as a claim by Thomas against John for a declaration that the proceeds of sale of the property were held by John upon trust for Thomas and for an account of the proceeds and consequential relief. Thomas served particulars of claim as the Part 20 claimant and John served a defence and counterclaim to which Thomas served a reply and defence to counterclaim.
For the purposes of the application under CPR 3.4 (2), John must accept the truth of the facts pleaded by Thomas, although it is right to mention that most of them are disputed. Both because the order under appeal was made essentially on the grounds that Thomas' claim was unsustainable as a matter of law and because of the underlying principles established by the House of Lords in Tinsley v Milligan, it is important to see exactly how Thomas puts his case. I will therefore set out the essential part of his particulars of claim (substituting Thomas for “the Part 20 claimant” and John for “the claimant”):
“The arrangement for the Re-Purchase of the Property
11. In or about August 1994, the Trustee in Bankruptcy issued an application for possession of the Property. By an order of Mr Registrar Simmonds dated 12 October 1994 and made with the consent of the parties, Thomas was directed to give possession of the Property to the Trustee in Bankruptcy, such order not to be enforced for 42 days from that date.
12. At or about that time, it was expressly agreed between John and Thomas that John would seek to raise sufficient funds by way of a mortgage of the Property to enable him to re-purchase it from the Trustee in Bankruptcy and to redeem the Abbey National Charge, thereby allowing Thomas to remain in occupation of the property.
13. Pursuant to this agreement, John offered to purchase the Property from the Trustee in Bankruptcy for the sum of £15,000, which offer was accepted in principle by the Trustee in Bankruptcy in a letter to John dated 10 October 1994. By a further letter from the solicitors acting for the Trustee in Bankruptcy dated 17 November 1994, it was confirmed that this acceptance was subject to John's also redeeming the Abbey National Charge.
14. John paid the sum of £15,000 to the Trustee in Bankruptcy and applied the sum of £32,000 in redemption of the Abbey National Charge. Accordingly, the Property was transferred to the John, who became the registered proprietor thereof with effect from 1 March 1995. The sums paid by John were raised in part by an advance of £40,000 from the Woolwich Building Society, which was secured upon the Property ('the Woolwich Mortgage').
15. Notwithstanding the transfer of the legal title to the Property in the name of John, there was at or about that time an express agreement, arrangement or understanding between the John and Thomas that John would hold the Property and its proceeds of sale upon trust for Thomas absolutely.
PARTICULARS
(1) There was an agreement, arrangement or understanding between John and Thomas that:
(a) the purpose of the transactions referred to at paragraphs 12 to 14 above was to allow monies to be raised in John's name in order to enable Thomas to re-gain ownership of the Property and to avoid its being repossessed by the Trustee in Bankruptcy or by the chargee of the Abbey National Charge;
(b) Thomas would be responsible for all payments and expenses relating to the property, including utility and other bills and repayments of the Woolwich Mortgage, or would reimburse John for any such payments or expenses actually incurred by John; and
(c) John was to be only the 'paper owner' of the Property.
(2) John told Thomas that the Property was his (i.e. Thomas') house and that he (i.e. Thomas) could sell it or do with it what he wanted whenever he wanted.
(3) The existence of the agreement, arrangement or understanding between John and Thomas is evidenced in part by the 'Report and Valuation for Mortgage' prepared by the Woolwich Building Society and dated 21 October 1994 (a copy of which is served with these Particulars of Part 20 Claim marked “Appendix A”), which refers to the fact that the applicant (i.e. John) was purchasing the Property under a family arrangement.
16. In reliance on the said agreement, arrangement or under standing, Thomas took upon himself sole responsibility vis-à-vis John for the payment of the Woolwich Mortgage instalments out of his own resources (although, in accordance with the original agreement, arrangement or understanding, the Woolwich Mortgage remained in the name of John).
17. In further reliance on the said agreement, arrangement or understanding, Thomas incurred additional expense in relation to the Property.
PARTICULARS
Thomas:
(1) painted and decorated the Property, arranged and paid for the installation of a new bathroom and central heating, and paid for the renewal of the guttering;
(2) personally removed the chimney breast, installed a new boiler and carried out the plumbing necessary to replace old piping at the Property;
(3) carried out and paid for such other maintenance as was necessary from time to time around and about the Property;
(4) undertook responsibility vis-à-vis John for paying the Council Tax and other utility bills in relation to the Property; and
(5) arranged and paid for the buildings insurance in relation to the Property.
18. Further or alternatively, by reason of the matters pleaded at paragraphs 16 and 17 above there is to be inferred a common intention that John should hold the Property and its proceeds of sale upon trust for Thomas.
19. Thomas has acted to his detriment on the faith of the express agreement, arrangement or understanding (alternatively on the faith of the implied common intention) that he should be the beneficial owner of the Property and its proceeds of sale. In the circumstances, he is entitled to claim and does claim such a beneficial interest and it is now unconscionable for John to deny him such an interest.”
A number of points may be noted about the pleading. First, it appears to suggest that there were two agreements or arrangements. One was an express agreement in about October 1994 that John would purchase...
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