Drake v Whipp

Yet again this court is asked to rule on a dispute between a man and a woman, who cohabited but were not married to each other, as to their respective beneficial interests in a property which they purchased to be their home but which was put into the man's name only. The usual lengthy litany of authorities as well as more recent additions have been recited to us and, as is notorious, it is not easy to reconcile every judicial utterance in this well-travelled area of the law. A potent source of confusion, to my mind, has been suggestions that it matters not whether the terminology used is that of the constructive trust, to which the intention, actual or imputed, of the parties is crucial, or that of the resulting trust which operates as a presumed intention of the contributing party in the absence of rebutting evidence of actual intention. I therefore like Waite L.J. in ( Midland Bank v Cooke [1995] 4 All E.R. 562 at pp. 564, 5)) welcome the announcement earlier this year that the Law Commission is to examine the property rights of home-sharers (Item 8, Sixth Programme of Law Reform: Law Com. No. 234).

The facts of the present case are unusually simple. In September 1985 the Plaintiff, Mrs. Drake, and the Defendant, Mr. Whipp, left their respective spouses to live together. For 3 years they lived in property provided by Mr. Whipp. They did not find this satisfactory. So they looked for accommodation elsewhere. Mrs. Drake knew of a barn which might be for sale and which might be converted into a dwelling-house. But as the Judge found, "It would need planning permission and a mint of money spending on it before it would be a suitable home." They decided to buy it. On 6 September 1988 Mr. Whipp contracted to buy in his sole name the property now known as Coley Barn, Norwood Green, Halifax. The total purchase price including costs was £61,254. Mrs. Drake provided £25, 000 (or 40.1% of that total), Mr. Whipp the remainder. The property was conveyed into Mr. Whipp's sole name on 8 October 1988. Neither the contract nor the conveyance made any mention of a trust.

Even before the conveyance, works of conversion began. £129,536 was spent on those works. Of that sum only £13,000 was contributed by Mrs. Drake. Mr. Whipp provided the remainder. In October 1989 they moved into the partially converted barn which was not substantially completed until 1991. Both contributed to the conversion work by way of direct labour. Of the total hours they devoted to that work, Mr. Whipp contributed 70% and Mrs. Drake 30%. When Mrs. Drake left her husband she had no job or money. Mr. Whipp had her name added to his current bank account. Into this account he paid his salary as a company director which was between £200 and £400 per week. Mrs. Drake's capital contributions were also paid into it. She worked as a textile worker receiving about £80 per week in cash out of which she paid for food and household expenses for both of them. But he took care of the household accounts and paid the tax and insurance on her car.

In September 1991 Mr. Whipp formed another relationship and from June 1992 the parties lived separately within Coley Barn. Mrs. Drake later left Coley Barn. On 8 January 1993 Mrs. Drake commenced proceedings in the Halifax County Court against Mr. Whipp by originating application. There were therefore no pleadings. The orders she sought, so far as material, were a declaration that Mr. Whipp held Coley Barn in trust for Mrs. Drake and himself in equal shares or such shares as the court might think fit, an order for sale and division of the net proceeds, alternatively a payment by Mr. Whipp to Mrs. Drake of a sum equal to her interest in Coley Barn.

Before I recount what occurred at the trial before His Honour Judge Walker, it is convenient to set out the latest statement of the highest authority on the task of any judge required to resolve a dispute between former partners as to the beneficial interest in the home they formerly shared. In Lloyds Bank plc v Rosset [1991] 1 A.C. 107 at pp. 132–3 Lord Bridge said:

"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 be only necessary for the partner asserting the 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.

In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do."

This passage was read twice to the Judge. But nevertheless it was the submission of Mr. Carlisle for Mrs. Drake that Mr. Whipp held Coley Barn not on a constructive trust but as trustee on a resulting trust, both parties having made contributions to the purchase price, on the application of the principle of Dyer v Dyer (1788) 2 Cox Eq. Cas. 92. However that principle could not apply if (1) there was a common intention to share the property beneficially found to exist on the application of the guidance given by Lord Bridge, whether by dint of a finding of an agreement, arrangement or understanding on evidence of express discussions between the partners or by ready inference from direct contributions to the purchase price by the partner who is not the legal owner, and (2) that partner has acted to his or her...