PROPERTY CHAMBER
FIRST – TIER TRIBUNAL
LAND REGISTRATION DIVISION

IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY

LAND REGISTRATION ACT 2002
2013/0388
BETWEEN
DAVID OLIVER HANSFORD
APPLICANT
and
LOUISE RACHEL DAWSON
RESPONDENT

Property Address: 46 Pine Vale Crescent, Bournemouth BH10 6BH

Title Numbers: DT263104 and DT265078

Before: Mr Simon Brilliant sitting as Judge of the Property Chamber of the First-tier Tribunal

Sitting at: 10 Alfred Place, London WC1E 7LR 

On: 11 March 2014

Applicant’s Representation:	In person.
 
Respondent’s Representation:	Mr Ian Neville (lay representative).

DECISION

Resulting or constructive trusts – respondent the sole registered proprietor of a property – parties in a relationship prior to respondent purchasing the property and becoming engaged to marry – parties live together in the property for over five years –- applicant contributing to the costs of the household including the mortgage instalments - applicant carrying out works to improve the property - claim by applicant to have a beneficial interest in the property - issues as to whether the parties had a common intention as to ownership prior to the purchase of the property or as a result of the works being carried out – issue as to whether the parties agreed the applicant should have a beneficial interest in the house at the time of separation - effect of the engagement.

Macclesfield Corporation v Great Central Railway [1911] 2 KB 528, Pettit v Pettit [1970] AC 777, Grant v Edwards [1986] Ch 638, Lloyds Bank plc v Rosset [1991] 1 AC 107, Oxley v Hiscock [2005] Fam 211, Stack v Dowden [2007] 2 AC 432, Dibble v Pfluger [2010] Fam Law 1279, Jayasinghe v Liyanage [2010] 1 WLR 2016, The Chief Land Registrar v Silkstone [2012] 1 WLR 400, Jones v Kernott [2012] 1 AC 776.

Introduction

1.	These proceedings concern the ownership of a house at 46 Pine Vale Crescent, Bournemouth BH10 6BH (“the house”) which was purchased in the sole name of the respondent on 11 July 2006.  On 25 July 2006 the respondent was registered at Land Registry as the sole proprietor of the house under title numbers DT263104 and DT265078.

2.	The applicant claims to have a beneficial interest in the house on the basis of a common intention constructive trust.  The parties were in a relationship between 2003 and 2011.  The applicant is now aged 48 and the respondent is now aged 47. The parties lived together at the house between July 2006 and August 2011, when the applicant left. The applicant, who has never married, has a daughter, Carla, by an earlier relationship who is now 7 years old. Carla now lives with the applicant, but she never lived with the parties at the house.  The respondent, who has twice been married, has a son, Sam Joy, who is now almost 23 years old.  He lived at the house with the parties and remains living at the house. 

3.	On 17 September 2012 the applicant applied to Land Registry in form RX1 to enter a Form A restriction in each of the registers of the house (“the original application”).  In panel 13 of the form the applicant claimed to have made a financial contribution to the improvement of the house. He said the parties chose the house together, and he lived in it with the respondent and worked on it for over six years. He also said that he took on the responsibility to repay a double glazing loan, which he would not have done had it not been agreed that he would have an interest in the proceeds of sale.

4.	On 20 September 2012 the respondent objected to the original application.  She said that there was never any agreement that the applicant would acquire an interest in the house and he had not made any financial contribution to the improvement of the house. The applicant had taken on responsibility for the double glazing loan as part of an agreed financial settlement at the time of their separation and it was not agreed that the applicant would be entitled to redeem the loan from the proceeds of any sale of the house.

5.	On 25 May 2012 the dispute was referred to the Adjudicator to HM Land Registry under section 73(7) of the Land Registration Act 2002.  Since 1 July 2013 that jurisdiction is exercised by the Property Chamber of the First-tier Tribunal.

The witnesses

6.	The applicant gave oral evidence.  He called no other witnesses.

7.	The respondent gave oral evidence.  She called her son, Sam, to give oral evidence. 

8.	The trial bundle contained a substantial number of bank statements and some details of the work carried out at the house by the applicant.

The law: common intention

9.	The propositions below are derived from Oxley v Hiscock [2005] Fam 211, Stack v Dowden [2007] 2 AC 432, and Jones v Kernott [2012] 1 AC 776 and the analysis contained in paragraphs 11-023 and following of Megarry & Wade’s The Law of Real Property, eighth edition 2012.

10.	It frequently happens that land is purchased in A’s name alone, but B claims an interest in the property by reason either of some contribution direct or indirect to its acquisition or from having made some improvement to it.  To succeed, B will have to demonstrate (1) a common intention that both parties should have a beneficial interest in the property; and (2) that B acted to his detriment on the basis of that common intention so that it would be inequitable for A to deny B an interest.

11.	The burden is on the applicant to show that it was intended that he was to have any beneficial interest in the house at all.

12.	Common intention is relevant both as to whether a party has an interest in the property and to the amount of that share if he does. 

13.	The common intention that both A and B should have a beneficial interest in the property despite it being in the sole name of one only, may arise by express agreement or by inference. 

14.	For a common intention to be inferred there must be objective evidence from which the court can reasonably infer that the parties had a common intention, even though they did not articulate it as such.

15.	A common intention will be inferred in two situations.  The first case is where B contributes directly to the purchase price or by paying mortgage instalments.  Authority for this proposition is to be found in Lloyds Bank plc v Rosset [1991] 1 AC 107, 132 and Grant v Edwards [1986] Ch 638, 647.

16.	Secondly, it is now clear that the common intention may be inferred from the parties’ whole course of conduct in relation to the property.

17.	Where the court infers a common intention that the contributor should have an interest in the property it may then have regard to the whole course of conduct between the parties to determine the actual share of the parties.  The task is to determine the parties’ common intention as to the shares they should have.  This common intention may, and usually will be, inferred. It will arise from an objective assessment deduced from all of their conduct.

18.	In those cases where it is clear that the parties intended to share the beneficial interest, but it is impossible to infer a common intention as to the size of each of their shares, then it is permissible to impute such an intention.  Each party is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation of the property.

The law: works of improvement and engaged couples

19.	It is a well-established principle that a volunteer who does work on another person's property without request cannot claim in respect of the work done or for the cost incurred and acquires no interest in the property: Macclesfield Corporation v. Great Central Railway [1911] 2 K.B. 528. In Pettit v Pettit [1970] AC 777 the House of Lords in applying this principle held that, upon the facts disclosed by the evidence in the case between husband and wife before it, it was not possible to infer any common intention of the parties that the husband by doing work and expending money on materials for the house should acquire any beneficial proprietary interest in the house; and that, accordingly, in the circumstances the husband’s claim to have a beneficial interest by virtue of that work failed. 

20.	This part of the decision was reversed by section 37 of the Matrimonial Proceedings and Property Act 1970 which is headed, Contributions by spouse in money or money’s worth to the improvement of property.  It provides:

	It is hereby declared that where a husband or wife contributes in money or money’s worth to the improvement of real or personal property in which or in the proceeds of sale of which either or both of them has or have a beneficial interest, the husband or wife so contributing shall, if the contribution is of a substantial nature and subject to any agreement between them to the contrary express or implied, be treated as having then acquired by virtue of his or her contribution a share or an enlarged share, as the case may be, in that beneficial interest of such an extent as may have been then agreed or, in default of such agreement, as may seem in all the circumstances just to any court before which the question of the existence or extent of the beneficial interest of the husband or wife arises (whether in proceedings between them or in any other proceedings).

21.	This change of the law, in so far as it applied to husbands and wives, was extended to engaged couples by section 2(1) of the Law Reform (Miscellaneous Provisions) Act 1970 which is headed, Property of engaged couples:

	Where an agreement to marry is terminated, any rule of law relating to the rights of husbands and wives in relation to property in which either or both has or have a beneficial interest, including any such rule as explained by section 37 of the Matrimonial Proceedings and Property Act 1970, shall apply, in relation to any property in which either or both of the parties to the agreement had a beneficial interest while the agreement was in force, as it applies in relation to property in which a husband or wife has a beneficial interest.

22.	In Dibble v Pfluger [2010] Fam Law 1279 the parties were engaged but never married. The defendant claimed an interest in a Polish property to the improvement of which he said he had contributed £6,000.  At first instance neither the judge nor counsel had considered section 2(1) of the 1970 Act.  As Ward LJ said in the Court of Appeal, it had not crossed their radar until he drew it to their attention.  It was held that the court ought to have considered whether the £6,000 was a contribution to the improvement of the Polish property, whether it was a contribution of a substantial nature and whether, subject to any contrary agreement, a beneficial interest in the property was acquired.

The purchase of the house and the parties finances

23.	In August 2002, the respondent purchased 12 Glenmeadows Drive, Bournemouth BN10 5HQ.  It was bought in her sole name, following her divorce, and before she had met the applicant. She was living there with Sam when she met the applicant, and in March 2003 the applicant moved into 12 Glenmeadows Drive.

24.	In 2006 the respondent decided to move.  I accept her evidence that the decision to move was hers and that the reasons for buying the house were its larger size, it’s better location, its school catchment area and its southerly–facing rear garden.

25.	The purchase price of the house was £270,000. The costs of purchase, including stamp duty and solicitors fees, amounted to £9,543.23. Thus the total cost of the purchase was £279,543.23.  Of this sum the respondent paid £74,073.23, and the balance of £205,470.00 was advanced by Barclay’s Bank. The £74,073.23 contributed by the respondent came out of the £91,452.40 received by her as the net proceeds of sale from 12 Glenmeadows Drive apart from a further cash payment by her of £300.

26.	The applicant made no financial contribution at this stage to the purchase of the house.

27.	Whilst living together at 12 Glenmeadows Drive the parties had combined their earnings and operated joint accounts in respect of household expenditure.

28.	The respondent is a manager at the Royal Bournemouth General Hospital.  The applicant is a builder specialising in ground works.  He has worked for a number of different companies and/or on his own account.  The respondent’s work is more secure than that of the applicant and is better paid.  

29.	The breakdown of the parties’ relationship was an acrimonious one and caused considerable upset to the respondent. As I explained at the hearing, the reasons for the relationship ending have no bearing on the decision I have to make. But the hurt felt by the respondent has led her to feel that the applicant did not pull his weight financially during the relationship and she places reliance on this in objecting to the applicant’s case.  

30.	However, whilst it is true that the applicant did not earn as much as respondent, I have no reason to doubt that he worked hard physically and that he contributed what he was able to towards the combined budget.

31.	During their time together at the house the parties had two joint accounts with Barclays Bank. The first, account 1048-0169, was referred to as the shopping account. The parties had their earnings paid into this account.  So, for example, in December 2008 the applicant’s weekly take-home pay of £337.75 from Kavell Civil Engineering is shown going into this account, as is the respondent’s monthly take-home pay of £2,033.92 from the Royal Bournemouth Christchurch Trust. The closing balance of this account on 21 July 2011 was £503.51 overdrawn.

32.	The second account, 3030-2236, was referred to as the utilities account. The parties would transfer about £2,000.00 each month from the shopping account into the utilities account. The payments from the utilities account included the monthly mortgage instalments of capital and interest as well as other household outgoings. For example, during 2009, £1,179.90 is shown as being paid out of this account each month in respect of the mortgage payments.

33.	There is no doubt therefore that during the entire time that the applicant was living at the house he was a contributing to the payment of the mortgage instalments.  It is true that as he did not earn as much as the applicant his share was not as great as hers.  Nevertheless, such contribution as he did make is material which he is entitled to put before me in support of this case.

The applicant’s case

34.	The applicant puts his case in two ways. First, he relies upon an inferred common intention from the outset. This is evidenced by his contributions to the payment of the mortgage instalments and the other household outgoings and by the improvements he carried out. Secondly, he relies upon an express agreement made after the relationship ended made in connection with a double glazing loan.

The improvements carried out by the applicant

35.	The property was not connected to a gas supply when the parties moved in.  The applicant spoke to the gas company and was told that the connection would cost £2,850.00.  When the applicant told the gas company of his qualifications they agreed to let him carry out the necessary works within the boundary of the property and the gas company only had to carry out the work on the public highway at a cost of £450.00.  I accept the applicant’s evidence that the value of the work he carried out is in the region of £2,500.00. The respondent accepts that this work was done and does not criticise the quality of it.

36.	The applicant demolished an old garage and I accept his evidence that the value of this work was £800.00. The respondent accepts that this work was done and does not criticise the quality of it.

37.	The applicant also demolished part of an old wooden conservatory and I accept his evidence the value of this work was £4,000.00. The respondent accepts that this work was done and does not criticise the quality of it.

38.	The applicant also did work to the front drive and began the construction of an annexe.  In respect of this work the parties are not agreed as to its quality or efficacy.  The respondent says the work was of no benefit to the property. The applicant has not sought to rely upon any independent expert evidence as to the quality or value of this work.  I prefer the respondent’s evidence as to its quality and efficacy and do not find this work in any way enhanced the value of the property.

An inferred common intention from the outset

39.	The applicant, very frankly, did not seek to rely on any express agreement, oral or written, between the parties that they would share the beneficial ownership of the house. The highest he put it in that regard is that the respondent would refer to the house as being ours.  But the applicant sought to persuade me that there was a common intention, supported by his financial contributions outlined above as well as by the improvements he made to the property which I have also outlined above, that he would have a beneficial interest in the house.

40.	The respondent strongly rejects the suggestion that there was any such common intention.  First, she says that the costs of the improvements to the house which were carried out were paid for from the balance of the net proceeds of 12 Glenmeadows Drive and from an inheritance of £53,470.00 received from the estate of an aunt who had died. Secondly, she says that she was particularly careful as a single mother still supporting a child at school, and as someone who had suffered financial losses as a result of the breakdown of previous relationships, to protect her own financial security by never again agreeing jointly to own her home.

41.	In many cases a contribution made to the payment of the mortgage instalments would be very persuasive evidence of a common intention that the payer would have some beneficial interest in the property.  But I have reached the clear conclusion in this case that there was no such common intention, and that the applicant was never under any misapprehension that he was a part owner of the property.

42.	I unhesitatingly accept that part of the respondent’s evidence where she says that she was very concerned about her financial security and that she had no intention whatsoever of sharing the ownership of the house with the applicant.  The applicant had every reason to contribute to the mortgage instalments even without becoming a joint owner.  The respondent was providing him with a roof over his head and I find that the contributions that he made were for board and lodging and were not made on the basis that he was a co-owner.

43.	I am also satisfied that the decision to move to the house was that of the respondent and she was entirely responsible for organising and arranging the mortgage. I reject the applicant’s evidence otherwise.

44.	I therefore do not find that the applicant has proved his case in so far as he relies upon an inferred common intention.

The repayment of the double glazing loan

45.	When the parties separated they went to the bank in order to sort out the accounts to which I have referred. On 21 June 2010 the respondent had taken out an £8,000.00 loan from Barclays to pay for double glazing. The loan was repayable over five years at an APR of 10.9%. When the parties separated in August 2011 the balance of the loan, which was then £6,894.47, was repaid to Barclays. In order to repay the loan and to raise further money the applicant took out a new £10,000.00 loan from Barclays.  This loan was repayable over seven years at the much higher APR of 21.4%.

46.	The applicant says that the parties reached an express agreement whereby the respondent promised to pay the applicant the sum of £20,000.00 in return for this arrangement when she eventually sold the property.  Although he has not formulated the argument with any precision the applicant goes further and suggests that this arrangement entitles him to a beneficial interest in the property reflecting the agreement reached.  This is an ambitious argument that the agreement he relies upon was not just a loan but actually conferred a property interest on him.

47.	The respondent says that there was no such agreement.  The applicant was prepared to pay off the double glazing loan as it made their finances more straightforward and reflected the fact that the applicant kept a Honda 4x4 she had purchased for him.  The respondent had also previously purchased a flatbed truck for the applicant.

48.	I unhesitatingly prefer the respondent’s version of events.  It is not credible to suggest that the respondent would have taken on a liability of almost £20,000.00 to discharge a liability of less than £8,000.00. For all the reasons cogently set out in paragraph 23 of the respondent’s statement of case I am unable to accept that she entered into the agreement alleged by the applicant.  Even if I had found that such an agreement had been entered into, I do not consider that the applicant would have come anywhere near to establishing that the agreement conferred a proprietary interest in the property on him.

The consequence of the engagement

49.	It was no part of the applicant’s pleaded case that he had any interest in the property as a result of his being engaged to be respondent.  Indeed the suggestion that the parties were engaged is nowhere to be found in the written evidence.  To my surprise the applicant said in his oral evidence that the parties were engaged and the respondent very frankly accepted that this was true.

50.	It might be said that as the applicant had never put forward his being engaged as part of his case, he should not now be entitled to a finding in his favour dependent upon that engagement. But this would be to ignore the approach of the Court of Appeal in Dibble v Pfluger [2010] Fam Law 1279 referred to in paragraph 22 above.

51.	I accept that the applicant did carry out improvements to the property, that the value of those improvements is £7,300.00, that this was a contribution of a substantial nature and that the parties did not have an agreement that such contribution should not confer any beneficial interest in the property on the applicant. There is no formal evidence of the value of the property but it is suggested that it has increased from £270,000.00 to £295,000.00 during the ownership of the applicant. In my judgment a just share of the property to be awarded to the applicant would be a share of 2.75%.

52.	My conclusion is that for this reason alone the applicant does have a beneficial interest in the property.  The parties own the property in the ratio 2.75% to 97.25%.

53.	The parties are invited to send in written submissions on costs within the next 14 days but my preliminary view is that there should be no order as to costs.  The applicant has succeeded, but only on the basis of a case which he never relied upon prior to the hearing.

Dated this 17th day of April 2014

BY ORDER OF THE JUDGE OF THE PROPERTY CHAMBER OF THE FIRST-TIER TRIBUNAL