Culliford and another v Thorpe

Property – Constructive trust – Proprietary estoppel – Claimant personal representatives seeking order for possession of deceased’s property from defendant – Whether defendant establishing interest in property by way of constructive trust and/or proprietary estoppel – Claim dismissed The claimants were the personal representatives of the deceased, who died intestate in March 2016, owning a residential property known as 9 Clover Road, Wick St Lawrence, Weston super Mare. From November 2010, the deceased and the defendant lived together. In May 2012, they made an informal oral agreement that they would share their properties and other assets. However, there was no discussion of changing the legal title to any property or whether they were to share their property rights as beneficial joint tenants (with the benefit of survivorship on the death of the first to die) or as beneficial tenants in common (so that the share of each would pass on death under the applicable inheritance rules, testate or intestate, as the case might be). The defendant and the deceased formed a plan to refurbish both their properties, using funds which the defendant had inherited. After the deceased died, the claimants brought a claim for possession of the property, alleging that the deceased was freehold owner of the property, the defendant had only a licence to be in the property and the licence had been terminated by notice in writing. The defendant claimed to occupy the property, not by virtue of a licence, but by virtue of a proprietary interest in it. He argued that there was a common intention constructive trust, based on the alleged agreement between the deceased and himself to pool their property and other resources, and on monies then spent and work done by the defendant on the property in reliance on that agreement. Alternatively, he claimed a proprietary estoppel based on an alleged assurance by the deceased that they owned the property together and that if the deceased died the defendant would inherit the property, which assurance the defendant relied upon by spending money and doing work on the property. He sought a declaration as to his beneficial interest in the property and an order that the property be transferred to him. Held: The claim was dismissed. (1) The first and fundamental question was 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 had at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding between them that the property was to be shared beneficially. The finding of such an agreement or arrangement could only be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms. Once such a finding was made, it was only necessary for the partner asserting a claim to a beneficial interest to show that he had acted to his detriment or significantly altered his position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel. In the present case, the court was satisfied that the agreement to share their respective properties, followed by the detrimental reliance of the defendant, gave rise to a common intention constructive trust of the property in his favour. The defendant plainly relied upon that agreement in carrying out the significant works which he did on the property, using his own labour and his own money to purchase materials, as well as occasionally paying others to do work. There was no principle that agreements for half shares had to be construed as for joint tenancy. Each case turned on its facts. In this case, the court was not satisfied that the half share agreement should give rise to a joint tenancy of the beneficial interest in the property, rather than a tenancy in common. If, at the time of the agreement, the parties had considered what might happen if one of them died, then it might have been different, but they had not: Church of England Building Society v Piskor [1954] Ch 553, Stack v Dowden [2007] 2 AC 432, Thorner v Major [2009] 2 EGLR 111, Gallarotti v Sebastianelli [2013] EWCA Civ 865, Jones v Kernott 2011 UKSC 53; [2011] PLSCS 264; [2012] 1 AC 776 and Southern Pacific Mortgages Ltd v Scott (Mortgage Business plc intervening) [2015] EGLR 3 considered. (2) In cases of common intention constructive trust, it was enough to show that the promisee had relied to his or her detriment on the agreement between the parties, such that it was unconscionable for the legal owner to renege on the agreement. In the present case, the defendant had done a great deal of building work which he would not have done if he and the deceased had not made their agreement. There was no doubt that it would be unconscionable for the estate of the deceased not to give effect to the agreement made. (3) This was first and foremost a case of common intention constructive trust. The normal remedy was to hold that the property in question was held by the legal owner on trust for the parties in the agreed proportions. Here that meant 50-50. However, the deceased was now dead, and the original purpose for which the agreement was entered into was at an end. There was no evidence to show that the defendant would suffer any especial hardship in moving out. Those entitled under the deceased’s estate, whether as creditors or beneficiaries, should not have to wait longer than necessary to be paid. The appropriate remedy was for the property to be sold, and after discharge of any outstanding mortgage or other security interest, the net proceeds of sale be divided between the defendant and the deceased’s estate, but deducting from the defendant’s share one half of the occupation rent from the date of death to the date on which possession was given up by the defendant or the deceased’s personal representatives ceased to be excluded from the property: Gissing v Gissing [1971] AC 886 and Davies v Davies [2016] EWCA Civ 463; [2016] EWCA Civ 463  [2016] PLSCS 148 applied. Neesom v Clarkson [1844] 4 Hare 97, Hopgood v Brown [1955] 1 WLR 213 and Jennings v Rice [2003] 1 P & CR 100 considered. Adam Boyle (instructed by Porter Dodson, of Yeovil) appeared for the claimants; Joss Knight (instructed by Burnetts) appeared for the defendant. Eileen O’Grady, barrister Click here to read a transcript of Culliford and another v Thorpe.