REF/2006/0882

THE ADJUDICATOR TO HER MAJESTY’S LAND REGISTRY
LAND REGISTRATION ACT 2002

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

BETWEEN
(1)	JOHN TAYLOR
(2)	JULIE WICKS

Applicants
and

RICHARD BALL
Respondent

Property Address: 63a Colton Road, Liverpool, L25 1NH 
Title Number: MS460201

Before Ann McAllister, sitting as Deputy Adjudicator
Liverpool Employment Tribunal,
11th April 2008

Representation: Mr Grundy instructed by Morecrofts appeared for the Applicants: the Respondent did not appear and was not represented.
 ___________________________________________________________________________

DECISION

Application to enter a restriction – property purchased with benefit of right to buy discount – whether held on constructive or resulting trust – effect of discount – Chief Land Registrar ordered to give effect to restriction

Introduction

1.	The Applicants, Mr Taylor and Ms Wicks, are the children of Elsie Taylor (‘Mrs Taylor’) who died on 21 October 2005, aged 59. The Respondent, Mr Ball, is the late partner of Mrs Taylor and the sole registered proprietor of 60a Colton Road, Liverpool (‘the Property’).

2.	Mr Ball had been a tenant of Liverpool City Council for a number of years. The Property was bought under the provisions set out in Part V of the Housing Act 1985 (the right to buy legislation). From documentation made available for the first time at the hearing, it is apparent that Mr Ball obtained a discount of 62%. The balance (£9,500) was, I find, provided by Mrs Taylor. The Property was purchased in August 2002. It is held on a 125 year lease from 29 April 2002. I am told that the current value of the Property is in the region of £70,000 to £90,000.

3.	By an application dated 23 March 2006  Mr Taylor and Ms Wicks applied to enter a Form A restriction. It is their case that the entire beneficial interest in the Property was held by Mrs Taylor by virtue of a constructive trust. In the alternative, for reasons set out below, their case is that the beneficial interest was held in the following shares: 38% as to Mrs Taylor and 62% as to Mr Ball.

4.	Mr Ball, who was until recently represented by Canter Levin & Berg, denied in his Statement of Case (verified by a statement of truth) that the late Mrs Taylor had any interest in the Property. Alternatively, as I understand it, his case is that he and Mrs Taylor intended that the Property should be held as joint tenants in equity. The doctrine of survivorship would result in the Property vesting in him alone.  It is a notable feature of this case that he did not attend the hearing. 

Relevant legal principles

5.	The law in relation to common intention constructive trusts and resulting trusts, at least in a domestic context, has recently been reviewed by the House of Lords in Stack v Dowden [2007] 2 WLR 831. The two stage approach set out by Lord Bridge in  Lloyds Bank v Rosset [1991] 1 AC 107 has been replaced by a new approach. The starting point is a presumption that the beneficial ownership will follow the legal ownership. This can be displaced by showing that this was not intended. Importantly in divining the parties intentions, the court can consider a wide range of circumstances in its search for those intentions, whether ‘actual, inferred or imputed’ (paragraph 60).

6.	In the absence of an express declaration of trust the court can have regard to more than merely direct financial contributions in order to ‘divine’ the parties shared intentions, whether or not articulated. The court is entitled to have regard to a wide range of circumstances. The doctrine of resulting trust as such no longer operates in a domestic context, although in an ‘updated form’ (which means taking into account all significant contributions, whether in cash or kind) it may be reflected in the parties common intentions: (paragraph 31, per Lord Walker).

7.	A separate issue which arises in this case, and which has also been the subject of judicial consideration, is the effect of the discount under the right to buy legislation. In Mumford v Ashe (The Times, November 15th, 2000) the Court of Appeal reviewed earlier cases where this point was considered. The cases are: Marsh v Von Sternberg [1986] 1 FLR 526, Springette v Defoe [1992] 2 FLR 388 and Evans v Hayward [1995] 2 FLR 511. 

8.	 In Mumford the Court held that the earlier cases were not authority for the proposition that there is an absolute rule that the value of the right to buy discount must be taken into account as a contribution towards the purchase price. But where the parties had intended that each should have a beneficial interest but had wholly failed to address the question as to the extent of their respective interests, so that the presumption of resulting trust applied, the value of the discount was a financial benefit which should be taken into account. Or, as Parker LJ went on to say, if the facts were such as to rebut any presumption of resulting trust, that is to say where it was possible to infer an agreement or arrangement as to beneficial ownership, a different result might follow.

9.	On the facts of that case, each of the transactions in issue were found to be shams. In view of that finding, the presumption of a resulting trust was displaced. The case turned very much on its own facts.

10.	It seems to me that, in the usual case of cohabiting couples who contribute, on the one hand, the benefit of the discount, and on the other, the purchase price, the court will readily infer, depending on the evidence,  that it was intended either that there should be tenancy in common in equal shares or a beneficial joint tenancy, or, that each party intended to have an interest equivalent to his or her direct contribution (by way of purchase price) and indirect contribution (by way of the value of the discount).

11.	In order to find that the sole legal owner holds the entire beneficial interest in favour of the other party in such circumstances it seems to me that compelling and cogent evidence of this intention is required.

Mrs Taylor’s Will

12.	There is very little documentary evidence in this case. The purchase file of the Property (produced, as I say, for the first time at the hearing) gives no indication of who provided the purchase price, and makes no mention of Mrs Taylor.

13.	Mrs Taylor did, however, make a Will. This is a home made will made on a pre printed form. It was made on 14 August 2005. Mr Ball was appointed the executor. The Will was witnessed by two neighbours. The relevant part of the Will provides as follows ( I have set out the terms verbatim):

‘I give and bequeath to Richard Ball all my money and Halifax share’s all my jewerey to Julie Wicks, Asheley Taylor, Hannah Taylor then Dylan Taylor £100.00- Taylor Wicks £100.00. Flat’s in Anfield Road 85a shared between Richard Ball, Julie Wicks (note that this was first written as Julie Taylor) John Taylor Elsie May Taylor. If anything happens to Richard Ball all my money and jewerey shared out between Julie Wicks John Taylor all my grandchildren Elsie May Taylor.’

14.	There is no reference to the Property in this Will. The Applicants’ case is that such interest as Mrs Taylor had in the Property fell into residue. As there is no residuary gift in the Will, there is a partial intestacy as to the Property. Mrs Taylor’s beneficial interest in the Property passes to the Applicants in equal shares. I should also note that whilst the Applicants have expressed reservations as to the genuineness of the Will (and/or as to whether there was any undue influence brought to bear on her) there has been no challenge to the validity of the Will. Probate was granted on 25 January 2007. Mr Ball is the executor.

15.	Mr Ball’s case, as set out in his Statement of Case (subsequently verified by a statement of truth)  is as follows. The failure to include the Property in the Will simply means that Mrs Taylor recognised that she had no interest in the Property. Such contribution as she made to the purchase price  was intended to be a gift to Mr Ball. Moreover, whilst there had been some discussion about putting the Property in joint names, it was intended that Mrs Taylor and Mr Ball should be joint tenants in equity, thus ensuring that the entire beneficial interest passed by survivorship. This was not done because of the costs involved. 

The evidence

16.	I heard evidence from Alan Taylor (Mrs Taylor’s ex husband), Mr Taylor, Mrs Wright (Mrs Taylor’s sister in law) and Mrs Woods, a long standing friend. 

17.	I found all the witnesses to be truthful, and to be doing their best to recollect what they had been told by Mrs Taylor. However, none of the evidence was directed to or dealt with what Mrs Taylor and Mr Ball intended at the date of the purchase of the Property. The evidence concentrated on more recent events. Remarks made by Mrs Taylor in 2005, particularly in connection with the very real difficulties she was experiencing in her relationship with Mr Ball, must be treated with some care. 

18.	Alan Taylor and Mrs Taylor divorced, amicably it seems, in 1991. She received a lump sum of £25,000. Alan Taylor divides his time between the UK and Thailand. Over the years he remained in touch with Mrs Taylor and saw her frequently on his visits to this country. 

19.	Mrs Taylor had moved in with Mr Ball in 1990, before the divorce. Alan Taylor knew that this was a council property. He was not aware that the Property had been purchased until April 2005 when Mrs Taylor contacted him in a very distressed state. She told him that Mr Ball was having a relationship with another woman and that he had moved out of the Property. When he expressed concern as to what would happen to her if he decided to come back, Mrs Taylor told him that he would not be able to evict her because she owned the Property. She told Alan Taylor that she had paid £9,500 and that it was now worth £70,000.

20.	The discussion then turned to whether Mrs Taylor had made a will. Mrs Taylor told Alan Taylor that she wanted all her money, belongings and property to be divided between her two children (the Applicants) and her grand daughter, Ashley. She said that Mr Ball would not receive a penny. 

21.	Alan Taylor remained in contact, and learned that Mr Ball had moved back to the Property. He expressed serious misgivings about the Will saying that she never used the name ‘Mary’, and that it was unlikely that she would have understood the terms of the Will.

22.	Alan Taylor left for Thailand in September 2005 and returned following Mrs Taylor’s death. He spoke to Mr Ball with whom he had always had a reasonably good relationship in November 2005. Mr Ball said that the Property was worth £90,000. He confirmed that Mrs Taylor had contributed the purchase price of £9,500. Mr Ball then said that Mrs Taylor had wanted to put the Property into her name, but had not done so because of the cost. There was no mention, according to Alan Taylor, of the Property being held jointly.

23.	Alan Taylor also stated that Mr Ball had not worked between 1990 and 2002 and was drawing invalidity benefit. By contrast, Mrs Taylor worked until she died, unexpectedly, of a heart attack. She had three jobs: two as a cleaner and one as a dinner lady at a school. She was, he says, frugal and careful with money.

24.	As for the flats referred to in the Will, these consisted of 5 properties which had been left to her by her brother, Steve. As I understand it, this lead to some difficulties between her and other members of the family.

25.	The evidence from the other witnesses largely confirmed Alan Taylor’s accounts of the last few months of Mrs Taylor’s life. Her sister in law was close to her until 2002, when there were family difficulties (connected, I believe, with the five flats referred to above). She recalls an occasion when Mrs Taylor withdrew money from her Halifax Building Society account to pay for the purchase of the Property. Mr Ball did not work on a regular basis, but did odd jobs, such as window cleaning. Mrs Wright also said that Mrs Taylor told her that the Property was hers and that she intended it to go to her children, Julie and John. She said she was going to make a will to make sure this was the case. In her own words, Mrs Wright’s evidence was that Mrs Taylor said she had to get something in writing about the flat, because it is for Julie and John: there is no way Richie (Mr Ball)  and his family were going to get it.

26.	Eve Woods was a close friend of Mrs Taylor. She recalls Mrs Taylor telling her that she was buying the Property. When Mrs Woods asked if this was the right thing to do, Mrs Taylor said it was, because they would not have to pay the full amount, and the Property would be an investment for John and Julie. I note the reference to ‘they’ in the context of purchasing the Property.  In 2005 she recalls a conversation with Mrs Taylor when she was very upset, saying that Mr Ball had walked out on her. Mrs Woods had sent them both an invitation to a wedding in August. They both came. Mr Ball had, it was said, told Mrs Taylor that the flat was hers.

27.	Finally, I heard from Mr Taylor. He too has misgivings about the Will and in any event makes the point that his mother did not have the benefit of legal advice when drawing it up, so that the absence of any reference to the Property is not to be taken to mean that she did not believe it belonged to her. He confirmed that he had been told by Mrs Taylor that she paid for the Property and that Mr Ball never worked. He also recalls the time when his mother was upset because of Mr Ball’s affair. Finally he said that he was under the impression that his mother was going to go to solicitors to sort out the ownership of the Property, but he was not able to be more precise: the events were, as he put it, ‘lost in translation’.

28.	The evidence of Mr Ball has not been tested. It seems to me of some significance that he accepts that there were discussions as to putting the Property into joint names. I am not prepared to accept, however, that the proposal was that they should be beneficial joint tenants. 

29.	It seems to me that the following conclusions can be drawn from the evidence. Firstly, I have no doubt that Mrs Taylor contributed £9,500. There is no basis whatsoever for the suggestion that this money was a gift from Mrs Taylor to Mr Ball. Secondly, it appears that Mrs Taylor became anxious to safeguard her position in relation to the Property probably at about the same time as she learnt that Mr Ball was having an affair. She wanted, it seems to me, to ensure that her name was on the deeds, but was unwilling to pay the cost involved. I do not accept that she would have wanted the Property to pass by survivorship. I hesitate to attach too much importance to this apparent proposal, not only because it never took place, but because there is no real evidence as to what declaration of trust might have been entered into. Thirdly, the fact that the Property was omitted from the Will does not mean, in my judgment, that she did not consider the Property to be at least in part hers, but rather may have simply been a reflection of the fact that the Property was not, at that time, in her name.  

30.	In short, I am not prepared, on the information and evidence before me, to find that there was an express agreement that, or to draw an inference that there was a common understanding between Mrs Taylor and Mr Ball to the effect that, the Property was to be held beneficially by her alone. There is simply no direct evidence that this was the intention at the time the Property was purchased. There is no satisfactory evidence to rebut the presumption, which in my judgment applies in this case, of a resulting trust in shares corresponding to the purchase price on the one hand, and the value of the discount on the other. I bear in mind that Mr Ball had been a tenant for some time in the Property and that the Property was acquired as a joint home. These factors militate against any finding that Mrs Taylor was to have the entire beneficial interest.

31.	Mr Grundy, who appeared for the Applicants, did not advance any pressing argument to the effect that the Property was held as beneficial tenants in common in equal shares. On the evidence available, it seems to me that his reticence on this point was entirely justified.

32.	As I have said, Mr Ball chose not to attend. There may be a number of reasons for this, including a possible reluctance to give evidence as to what are, on any footing, very personal matters. But his absence, and the fact that he could not be cross examined, means that, in my judgment, there is no basis for the allegation which he appears to be making that Mrs Taylor had no beneficial interest in the Property.  

 Conclusion 

33.	For the reasons given above I have come the conclusion that Mrs Taylor did have a beneficial interest in the Property equivalent to the proportion of her contribution to the total value of the Property at the time of the purchase, namely 38%. As there is a partial intestacy in relation to this interest, it seems to me clear that the Applicants, as the beneficiaries under an intestacy, are entitled to a restriction in the terms sought, and I will accordingly order the Chief Land Registrar to give effect to their application.

34.	This leaves the question of costs. As I stated at the conclusion of the hearing, I only have jurisdiction to award costs from the date of the reference. It seems to me that in principle the Applicants are entitled to their costs.  A schedule was produced at court, but dated to the date of the objection. A further schedule will therefore need to be served and filed (if it has not been done so already). On receipt of this document the Respondent may however make such representations or objections as he deems appropriate by serving the same on the office of the Adjudicator and on the Applicant’s solicitors within 14 days. I will then consider what order to make.

BY ORDER OF THE ADJUDICATOR

ANN McALLISTER

Dated this 25th day of April 2008