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The Claimant advanced her father (the Deceased) monies some 15 years ago to assist him in buying a substantial property with his then new partner, the Defendant. The Deceased told the Claimant that if she advanced him these monies, she and her brother would inherit his 50% share in the property when he died. The Deceased said that he would make a will to that effect, and also enter into a co-ownership agreement with the Defendant to give effect to the agreement he had reached with the Claimant.
The Deceased subsequently made a will on the terms he had promised the Claimant, but he did not appear to execute any co-ownership agreement with the Defendant, although he did at least appear to have discussed doing so with his solicitors, and drafts had been prepared. Several years later, the Deceased seemed to have forgotten about his agreement with the Claimant, he married the Defendant, and shortly before the wedding he made a new will (in contemplation of his marriage), leaving his 50% share in the property to the Defendant. The Deceased did not change his will again before he died, and so he died without a will to give effect to the agreement he had with the Claimant.
The court was satisfied, based on the Claimant and her husband’s oral evidence, together with contemporaneous documentary evidence, that the Claimant did indeed reach the agreement she said she had reached with the Deceased, and that she had advanced monies to him in the clear expectation that she and her brother would receive his 50% share of the property when he died. The court further held that there had been detrimental reliance by the Claimant on the promise in that she had given up monies and been deprived of their use for some 15 years. Finally, the court was of the view that it would be unconscionable for the Deceased (or his estate) to go back on the promise, and the Claimant was therefore successful in her proprietary estoppel challenge.
As to remedy, the court was also convinced that the minimum equity to do justice required an award of the full 50% beneficial interest which the Claimant sought.
The decision is of particular interest because, unusually, the Claimant sought a 50% share in the property not only on her own behalf but also on behalf of her brother who was not a party to the claim and to whom no promise had been made. The promise made to the Claimant was that she and her brother would receive equal shares in the Deceased’s 50% beneficial interest in the property, and the Claimant advanced the monies on that basis. The court was satisfied that it could give effect to that promise to the Claimant and benefit both the Claimant and her brother in accordance with that promise, notwithstanding that her brother was not a party and notwithstanding that no promise had been made to him.
The court was of the view that the claim had to succeed on the basis of proprietary estoppel, and that a constructive trust or a resulting trust route was not open to the Claimant because the Deceased and the Defendant had signed a declaration of trust on the purchase of the property which was conclusive. The property was held by the Deceased and Defendant as beneficial tenants in common in equal shares pursuant to that declaration. The Claimant had contended that it would nonetheless be possible for her, as a stranger to the declaration of trust, to have a beneficial interest under a constructive (sub) trust of the Deceased’s 50% share, the relevant agreement being between the Claimant and the Deceased alone and in respect solely of the Deceased’s 50% share. The decision limits the operation of constructive and resulting trusts, leaving proprietary estoppel as the sole recourse for strangers to a declaration of trust. It will be interesting to see this issue considered and developed in subsequent case law, as the relationship between constructive and resulting trusts and proprietary estoppel continues to evolve.
Proprietary estoppel claims are often brought many years after the promise is made. This makes oral evidence less reliable, and it is very helpful for there to be documentary evidence to support such claims. The court referred to Gestmin v SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) in which Leggatt LJ at [22] stated: “the best approach for a judge to adopt … is … to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.” In Morley, the oral evidence was helpfully supported by contemporaneous documentary evidence.
In Habberfield v Habberfield [2019] EWCA Civ 890, Lewison LJ stated at [33]: “Underpinning the whole doctrine of proprietary estoppel is the idea that promises should be kept.” In Morley, the Deceased’s promise to the Claimant was, ultimately, kept, as the court was able to give effect to the promise through the doctrine of proprietary estoppel. Having given judgment in the Claimant’s favour, the court left the parties to seek to agree the mechanism for realisation of the Claimant and her brother’s beneficial interests.
The decision of HHJ Monty KC was handed down on 30 September 2022.
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News 11 Oct, 2022
Call: 2002
