Dr Giuseppe Franco v Dr Elena Sciaroni
| Jurisdiction | England & Wales |
| Judgment Date | 02 December 2002 |
| Judgment citation (vLex) | [2002] EWHC J1202-1 |
| Date | 02 December 2002 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Claim No: HC01 01323 |
[2002] EWHC J1202-1
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand London WC2A 2LL
Before:jonathan Crow
(sitting As A Deputy Judge Of The High Court)
Claim No: HC01 01323
DAVID SHARP (instructed by Scott & Co) for the Claimant
ANDREW YOUNG (instructed by David Gillies) for the Defendant
Approved Judgment
INTRODUCTION
The principal issue in this case consists of a dispute over the beneficial ownership of a leasehold interest in Flat 20, Welbeck House, 2 Mansfield Street, London W1G 9NE, title number NGL629735 ("Flat 20"). There are subsidiary issues relating to the beneficial ownership of the contents of the flat and of an endowment policy with Allied Dunbar, number 1827�354-DFS ("the Allied Dunbar policy").
Flat 20 and the Allied Dunbar policy are in the sole name of the Defendant. Although it is common ground that the Claimant contributed at least something towards the purchase of Flat 20 and some of its contents, and that he also paid at least some money into the account from which the early mortgage instalments were paid in 1988�9, and from which all of the premiums on the Allied Dunbar policy were paid until October 1995, there is a serious dispute as to the level of his contributions, and as to the basis on which those contributions were made. For his part, the Claimant says that he made the contributions on the clear understanding that there was a joint venture in which he and the Defendant were equal owners. By contrast, the Defendant says that any payments made by the Claimant were simply loans that she has since repaid. Indeed, she says that she has more than repaid him. As a result, there is a counterclaim for the repayment of various loans she says she has made to him.
THE LAW
Introduction:
The Claimant puts his claim in three principal ways: on the basis of a resulting trust, of a constructive trust and of proprietary estoppel. He says that the contributions he made towards the purchase of Flat 20 raise a presumption that the property is held on a resulting trust, and that his claim must succeed (at least to some extent) unless the Defendant can prove first that there was a common intention that the money he paid was a loan, and secondly that that common intention was communicated between the parties. By contrast, the Defendant says that the onus of proof is on the Claimant, and that his case can only succeed if he shows that there was a common intention that the beneficial ownership of the property would be shared between them.
Assuming that the Claimant is entitled to a beneficial interest, there are then three further areas of legal dispute:
4.1. First, there is a difference of opinion between the parties as to the date at which their respective beneficial interests fall to be quantified. Should it be done once and for all as at the date of acquisition, or at some later date, and if so when?
4.2. Secondly, there is also a dispute as to the various elements that fall to be taken into account in assessing the respective parties' interests in the property. Should account be taken only of their financial contributions to the acquisition of the property itself and of fixtures and fittings, or should a broader perspective be adopted, taking into account non-financial contributions to the management and running of the property, and financial contributions to expenditure other than in relation to the purchase and to fixtures and fittings (for example, to furnishing and redecoration)?
4.3. Finally, there is a dispute as to the correct approach to equitable accounting since the breakdown of the relationship. Should account be taken of the cost to the parties of any borrowings they have incurred in order to make their various contributions to the purchase and maintenance of the property, or only to the amount of their actual contributions?
Implied trusts:
There was extensive citation of authority before me, from Pettitt v. Pettitt [1970] AC 777 at 813D-814G, 823D-825E and 826, Gissing v. Gissing [1971] AC 886 at 897F-G, 898C-D, 900E-901B, 902B-C, Eves v. Eves [1975] 1 WLR 1338, Grant v. Edwards [1986] Ch 638, and Lloyds Bank Plc v. Rossett [1991] 1 AC 107, in particular at 127 and 132�3. I was also referred to a number of unreported authorities (which add nothing to the reported cases) and to the helpful summary of the relevant principles in the Law Commission's Report of July 2002, 'Sharing Homes: A Discussion Paper'. But in essence the legal principles are not in doubt, and in light of my factual findings it is unnecessary for me to grapple with the many difficult issues that have occupied judges and academics in this field. The following propositions are uncontentious:
5.1. In the absence of an express trust (and there is none here) an implied trust can arise by means either of a constructive trust or (if it is different) a resulting trust.
5.2. A constructive trust is implied to give effect to the common intention of the parties that the property should be shared between them.
5.2.1. The court may ascertain the parties' actual common intention from some express agreement or understanding between them, however informal. Once such an agreement or understanding has been identified, all that is required for the non-owner to succeed in his claim for a constructive trust is that he has relied to his detriment on the agreement. Detrimental conduct may, but need not, consist of a direct financial contribution.
5.2.2. Alternatively, the court may infer the parties' common intention from their conduct. In that situation, it is doubtful whether anything less than a direct financial contribution to the acquisition of the property will be sufficient (both to give rise to the inference and to quantify it) �but it may: see Le Foe v. Le Foe [2001] 2 FLR 970 at 973.
5.2.3. In the absence of any common intention, what the court cannot do is to impose what it considers to be a fair result, however reasonable that result may appear to be. However, this restriction may matter less, given the Claimant's reliance on proprietary estoppel.
5.3. A resulting trust is implied (or presumed) where a person makes a direct financial contribution to the acquisition of property in the name of another. The true doctrinal basis for the resulting trust may be that it is treated as evidence of the parties' common intention. In other words, a resulting trust may simply be a particular illustration of the larger category of constructive trusts. In my judgment, that is now the better view. However, it is unnecessary for me to resolve that issue. For the purposes of this trial, it is sufficient to note that the presumption exists, and that it is rebuttable by evidence that the parties' intentions were that the financial contribution of the non-owner would not give him a beneficial interest in the property (in which case the claim will be defeated) or that their intention was to allow the non-owner a beneficial share by reference not only to his direct financial contributions to the acquisition but also by reference to any other expenditure or conduct which has contributed to the value of the property (in which case his claim will succeed and be so enhanced).
Turning to the quantification of the parties' shares, this again depends on their common intentions (whether express or inferred). In this regard, I was referred to Bernard v. Josephs [1983] 4 FLR 178 at 19lF and 195A-C, Passee v. Passee [1988] 1 FLR 263 at 272A, Springette v. Defoe [1992] 2 FLR 388 at 393B-G, Midland Bank v. Cooke [1995] 4 ALL ER 562 at 574E-F, and Drake v. Whipp [1996] 1 FLR 826 at 830A-B. The following propositions appear to be uncontentious:
6.1. If the express common intention of the parties as to the size of their respective shares was fixed once and for all at the time of acquisition, then subsequent events (such as their respective contributions to mortgage instalments or the cost of refurbishment) will not disturb the proportions then agreed: see Huntingford v. Hobbs [1993] 1 FLR 736 at 745C-746B.
6.2. If the parties reached no express agreement or understanding as to the size of their respective shares, the court may infer their intention by reference to the presumption raised by the size of their respective contributions to the acquisition of the property.
6.3. On the other hand, the parties' intentions as to the size of their respective shares may have been fixed at the moment of acquisition at all. Instead, their intention may have been that they would agree a fair share retrospectively, at the point of sale or of separation, by reference to their respective contributions over time: see Stokes v. Anderson [1991] 1FLR 391 at 399F-400E.
Proprietary estoppel:
In the alternative, the claim was put on the basis of proprietary estoppel. Here, the law is clear: Crabb v. Arun DC [1976] Ch 179 and Coombes v. Smith [1986] 1 WLR 808 at 817H. Although it can be described in a number of different ways, there are essentially four elements to the claim:
7.1. first, that the Defendant should have made representations, or given some assurance, or otherwise encouraged the belief that the Claimant would acquire an interest in the property;
7.2. secondly, that the Claimant should have acted in reliance on that belief;
7.3. thirdly, that such reliance took the form of expenditure or other action to the Claimant's detriment;
7.4. fourthly, that there must be no equitable bar to the claim.
If those elements are satisfied, the court then has a discretion: it may or may not grant an interest in the property in order to give effect to the estoppel.
Judging from the leading speech of Lord Bridge in Rossett, there may now be an increasing degree of convergence between constructive trusts and proprietary estoppel, but there remain essential differences between the two....
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