Mr R Floyd (Appellant/Claimant) v Uchendu (Respondent/Defendant)
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE NEUBERGER |
| Judgment Date | 30 May 2002 |
| Neutral Citation | [2002] EWHC 2180 (Ch) |
| Court | Chancery Division |
| Date | 30 May 2002 |
| Docket Number | No: 6765 of 1998 |
[2002] EWHC 2180 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
The Strand
London WC2A 2LL
Mr Justice Neuberger
No: 6765 of 1998
MR J BOWLING appeared on behalf of the Appellant/Claimant
MR T SMITH appeared on behalf of the Respondent/Defendant
Wednesday, 30 th May 2002
This is an appeal brought by Mr Richard Floyd in his capacity as the trustee in bankruptcy of the estate of the first respondent, Mr Cipria Uchendu, against a decision of Mr Registrar Baister of 19 th December 2001. The Registrar concluded, basing himself on the presumption of resulting trust, that the beneficial interest in a property known as 106 Highbury Park, London N5, which I will call "the property", was vested 55% in favour of the third respondent, Mrs Veronica Uchendu, the bankrupt's wife, and 45% in Mr Floyd, in his capacity as trustee for Mr Uchendu, subject to an inquiry. That inquiry would concern the equity of exoneration and would almost certainly result in Mrs Uchendu's share being significantly reduced, and the trustee's share being correspondingly increased. The equity arises from two charges over the property, dated 10 th May 1988 and 7 th March 1989.
After property was acquired, it was subsequently charged with borrowings, and the borrowings were, at least I part, apparently spent on the property by Mr Uchendu. That may result in the shares of the beneficial ownership in practice being altered, because of the way in which the equity of exoneration should be satisfied on discharges of the charges.
The essential issue, however, is whether the Registrar was right to conclude (subject to the equity of exoneration point, which I will for the rest of his judgment ignore) that, when that the property was acquired, the beneficial interest was held as to 55% in favour of Mrs Uchendu and 45% in favour of Mr Uchendu.
The basic relevant history of the matter is uncontroversial and it is as follows: In 1965 Mr and Mrs Uchendu married. On 21 st May 1971 the freehold of 26 Lordsmead Road, London N5 ("Lordsmead"), was registered in their joint names at HM Land Registry, after they had purchased it for about £5,000. £4,500 of that purchase price was provided by the Greater London Council, the GLC, who, on the evidence and as a matter of common-sense, advanced the £4,500 to Mr and Mrs Uchendu jointly, and had it secured on Lordsmead. According to the evidence on behalf of the Uchendus, the balance of £500 was provided by Mrs Uchendu's father in Nigeria, effectively as compensation for the fact that she would not, as a married woman, inherit anything from his estate on his death.
In May 1979, Mr and Mrs Uchendu sold Lordsmead for approximately £22,000. On or about the same date the property was transferred to Mr Uchendu alone for £23,000. The Registrar found, as a matter of common-sense and on the basis of the evidence, that the proceeds of sale of Lordsmead provided the great majority of the £23,000 paid for the property.
Initially, Mr and Mrs Uchendu lived in the property. Subsequently, Mr Uchendu decided that he wished to convert the property into a bakery, and this was done. Although there were flats above, they at some point moved out of the property. One of the flats is, and has been, occupied by their son, Augustin.
Mr Uchendu was subject to a bankruptcy petition issued on 10 th September 1998, and he was made bankrupt by order of the Court on 19 th August 1999.
After correspondence and debate, the trustee issued these proceedings against Mr Uchendu, Mrs Uchendu and their son, for a determination as to whether, as he contended, he was entitled, as the trustee, to a 100% beneficial interest in the property, or whether Mrs Uchendu or Augustin had an interest in the property. The Registrar determined that although Augustin had entered into agreement with Mr Uchendu, which involved Augustin paying off some of the mortgage payments, these payments were in effect a quid pro quo for his being able to live in one of the flats in the property, and that they gave him no interest in the property. There is no appeal against that conclusion, which in my view was plainly right. The appeal is against the Registrar's conclusion that Mrs Uchendu had a 55% beneficial interest in the property.
Mr James Bowling, who appears on behalf of the trustee on this appeal, contends either that that decision should be reversed and replaced by a determination that the trustee has the whole beneficial interest, or else the decision of the Registrar should be set aside and the matter sent back to another Registrar for rehearing. Such a rehearing would involve cross-examination and, possibly, further disclosure. Under the new regime of the CPR this is normally an appeal by way of review, and I am not asked to hold rehearing. I think that any application for a rehearing would have faced serious difficulties, and, accordingly, this is a review.
The Registrar's conclusions were as follows. Lordsmead, having been purchased in joint names and having been jointly owned, subject to the balance of £500 said to have come from Mrs Uchendu's father, was jointly owned legally and beneficially by Mr and Mrs Uchendu. When it was sold, the proceeds of sale were jointly owned by them and were then used to buy the property. Although the property was in the name of Mr Uchendu alone, the doctrine of resulting trust meant that Mrs Uchendu's beneficial share in Lordsmead Road, as it had been, into the proceeds of sale of Lordsmead, was then translated into a beneficial interest by virtue of a resulting trust into the property. He found that her interest was not 50% but 55% because although Mr and Mrs Uchendu shared liability equally for the mortgage of £4,500, the £500 came from Mrs Uchendu alone.
As a matter of principle I do not understand Mr Bowling to quarrel with the proposition that, if there was no evidence whatever, and ignoring for the moment the issue of the £500, the Registrar's position would be unassailable. In my view that is correct. Whatever may be the justification or otherwise for the rule, it is very well established that if a husband purchases property in his name alone, with money provided equally by himself and his wife, then the presumption is that the beneficial interest in the property is held on equal shares. He has purchased property, partly with his wife's money, and to that extent the presumption is that there is a resulting trust in his wife's favour. If the arrangement were the converse, the presumption would be the opposite, because, if the husband's money is used to acquire an asset in the wife's name, the presumption is that the husband intends it as a gift.
In Stockholm Finance Limited v Garden Holdings Incorporated noted at [1995] NPC 162, Mr Justice Robert Walker is helpfully recorded in summarsing the effect of Pettit v Pettit [1970] AC 777 and Gissing v Gissing [1971] AC 886, in the following way in relation to the acquisition of property:
"1. There were no special rules of law applicable to family property.
2. It was not for the Court to make a bargain for the parties or substitute its own view of what would be fair.
3. The presumption to the resulting trust and advancement are presumptions of fact only, which will rarely be decisive today where there is evidence of the parties intentions. They were instruments of last resort."
Having been taken to Gissing v Gissing and Pettit v Pettit it seems to me for as one would expect, that that is a fair summary of the law. As I have said, in the absence of any other evidence, Mr Bowling would therefore be constrained to accept the Registrar's conclusion. He says, however, that the Registrar's conclusion is assailable and I should reverse his finding; alternatively, that the conclusion is unsafe and that I should send it back for a rehearing.
His first reason for so contending is that the Registrar rejected as "made to mislead" assertions in effectively identical words, mutatis mutandis, by Mr Uchendu and Mrs Uchendu in their respective witness statements. They said...
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