IN THE CAMBRIDGE COUNTY COURT
Friday, 10th May 2002
B E T W E E N:
- and -
HOLBECH (instructed by Messrs. Penman Johnson, Watford)
appeared on behalf of the Claimant.
BUCK-PITT (instructed by Messrs. Keer-Keer, Hemel Hempstead)
appeared on behalf of the Defendant.
(Draft for Revision)
The issue for determination in this case is as to whether or not the claimant, Timothy Peter Barton, is entitled to any interest in the freehold property, 10 Hobletts Road, Hemel Hempstead, Hertfordshire, and if so, what interest.
The property is vested in the sole name of the defendant, Mrs. Hilary McIntyre, formerly Wray, subject to a mortgage with the Nationwide Building Society.
The claimant alleges that he is entitled to a beneficial equal share with the defendant. The defendant's case is that the property is solely owned by her and that the claimant has no interest in it.
Many of the background facts are not seriously in issue. The parties met in February 1992. Mr. Barton was then aged 26 and Mrs. Wray (as she then was and by which name I shall continue to call her for convenience notwithstanding her subsequent marriage in August 2001 to Mr. McIntyre) was aged 29. A friendship developed between them and in September or October 1992 Mr. Barton moved into Mrs. Wray's former matrimonial home, 32 Stratford Way, Boxmoor, Hemel Hempstead.
Mrs. Wray's marriage had broken down. Mr. Wray had moved out, though they were still married. Mrs. Wray remained there with her two young children, Jody and Zoe, then aged 9 and 6 respectively.
It is clear that by mid-June 1993 the parties were contemplating buying together a property, 55 Longlands, Hemel Hempstead. Mr. Barton had been on the Dacorum Borough Council housing list, since he was aged 16. As a result, he was eligible to buy certain properties under that authority's discount scheme. 55 Longlands was available under that arrangement and Mr. Barton would have been entitled to a 10% discount, which the parties agreed would represent his initial contribution, as he had no other capital.
Mrs. Wray would provide monies from sums she would be entitled to in respect of her interest in 32 Stratford Way.
It is quite clear that by the end of July 1993 at the latest, the possible purchase of 55 Longlands had fallen through because the local authority discount was not available to Mr. Barton, as he was living with Mrs. Wray, who had another property in which she was living.
In about the second week of August 1993 the fact that 10 Hobletts Road was for sale was drawn to the parties' attention by Mr. Barton's mother, as she lived in the same road. The parties viewed it. An offer was put in subject to contract. The agents wrote to the conveyancing solicitors, Penman Johnson, who were then and indeed still are, Mr. Barton's solicitors, referring to the proposed purchasers as being Mr. Barton and Mrs. Wray.
A purchase did proceed, but in the sole name of Mrs. Wray. From the documentation in the conveyancing file, it is clear that the conveyancer received instructions from someone by about the end of August 1993 that that was to be the position. There has been no evidence from the conveyancer and there is nothing on the conveyancing file to explain how this came about. Mr. Barton's evidence is that he told the solicitors that the purchase was to be in Mrs. Wray's name and that may well be right.
The purchase was completed on 19th November 1993 at a purchase price of £53,000, with the aid of a mortgage with Nationwide Building Society of £47,700. The transfer did not contain an express declaration of trust, nor is there a separate deed containing an express declaration of trust.
The monies required for the deposit and completion, including legal costs, survey and arrangement fee, were provided by Mrs. Wray and totalled £6,126. That money came from her husband, Mr. Wray, who gave her £10,000 on account of any interest she might have in 32 Stratford Way.
The mortgage with the Nationwide Building Society was a term mortgage and not a repayment one, and therefore involved the payment of interest only. From the bank statements it would appear that during the period relevant to this claim the monthly instalment fluctuated between £268 and £286.
Although interest only, there was no assignment to Nationwide of the benefit of any other form of security such as a pension or life policy.
The parties did not move in straight away. Renovations and repairs were carried out to the property. These were done, to a large extent, before they moved in in February 1994. I will return to that shortly.
Unfortunately, in January 1996, nearly two years after moving in, disagreements between the parties came to a head. The question of ownership of the property arose. There are differing accounts to who first raised it. It does not much matter. Mrs. Wray was saying Mr. Barton had no beneficial interest in the property and he was saying he had.
There was discussion about him leaving, and it was agreed he would find somewhere else for himself, and eventually did so, leaving in 1997. He now has a property which he indicated in evidence had a value of about £116,000. He had bought it for some £57,000. His property must be very similar, so far as values are concerned, to 10 Hobletts Road. Indeed, like Hobletts Road, it has doubled, approximately, in value. 10 Hobletts Road now has an equity not far short of £80,000.
Subsequent to Mr. Barton leaving, Mrs. Wray has changed the mortgage to a repayment one, so has now paid off a very small amount of the capital.
One of the most important factual issues (and there is serious disagreement between the parties as to this) is as to why the property was put into Mrs. Wray's sole name if Mr. Barton was to have an interest.
Mr. Barton's case is that there was an express agreement between Mrs. Wray and himself that he should have a beneficial interest in the property in equal shares, and that the only reason for the property and the mortgage being in the sole name of Mrs. Wray was to protect the property from claims by creditors in the event of his business collapsing. He asserts that there was an express agreement that the property should be purchased as a joint venture and that it was expressly discussed with Mrs. Wray.
She denies it was discussed. She says that whilst it was agreed that a purchase, if it took place, of 55 Longlands would be in joint names because Mr. Barton could make an initial contribution towards the purchase by means of his local authority discount, that purchase fell through and a totally different situation arose. With the purchase of 10 Hobletts Road there was no discount available.
Mr. Barton had no initial contribution to make. Mrs. Wray says, therefore, that the matter was never discussed and she just assumed that the purchase would be in her sole name, which indeed it was. She denied that there was any agreement that the property should be in her sole name to prevent any possibility of future creditors of Mr. Barton getting their hands on it.
So far as the law is concerned, a substantial number of authorities was cited to me by counsel, many of them turning on their own facts and sometimes illustrating how judicial discretion has been exercised in particular circumstances. The most recent authoritative statement as to how the court should approach cases such as the present is that of Lord Bridge in Lloyds Bank plc v. Rosset  AC 107 p.132:
The first and fundamental question which must always be resolved is 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 has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel.
In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as to the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment or mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do.
It is accepted by Mr. Holbech, on behalf of Mr. Barton, that the first step is for the court to ascertain whether or not the claimant has a beneficial interest in the property. If he has, the second step is to quantify such share.
Dealing with the first step, and applying the approach Lord Bridge indicated, the first question I have to decide is whether or not there was any agreement, arrangement or understanding between the parties that the property was to be shared beneficially. A finding to that effect should only be made on the basis of evidence of express discussions between the parties.
Whether or not I can make a finding that there has been any such agreement, arrangement or understanding involves a consideration of the credibility of the parties (and I will refer to that later) and whom I believe. But that consideration has to take place against the background facts and other circumstances that may give a pointer as to which account I should accept.
If Mr. Barton is to be believed, there was a clear agreement between the parties. If Mrs. Wray's evidence is accepted, there was not. If I were to conclude that there was no express agreement or arrangement, I then have to decide whether or not a common intention to share the property beneficially can be inferred from the conduct of the parties. If it can, a constructive trust will arise.
I propose to consider the specific matters which the parties submit are relevant to these issues, and not in any particular order.
The defendant submits is it likely that Mrs. Wray would have agreed with Mr. Barton that he should have had an equal beneficial interest in 10 Hobletts Road? She had separated from her husband, Mr. Wray. That marriage had broken down. She had to provide a home for herself and her two young daughters. Mr. Barton, at the time, was aged 27, she three years older. There was no talk of or commitment to marry between them.
He had been out of work for substantial periods immediately prior to the purchase of 10 Hobletts Road. Some of that time, he was on Income Support, some six months or so, he said in evidence. He was able to make no immediate direct contribution to the purchase price. It was totally funded by Mrs. Wray. She alone was liable to the Nationwide Building Society for payment of the mortgage.
True, she had agreed to the proposed purchase of 55 Longlands in joint names, but in respect of that, Mr. Barton had had something tangible to put in. With 10 Hobletts Road, however, the situation was different; he had nothing.
All those arguments seem to me to carry substantial weight and I regard it as unlikely that Mrs. Wray would have agreed expressly to 10 Hobletts Road being owned by the parties beneficially in equal shares.
The claimant relies, apart from what he says was agreed and which is very much in dispute, principally upon three matters. Firstly, the fact that for approximately two years he paid the defendant £400 per month, which sum was either paid in cash or by cheque made out to "H. D. Wray". There is evidence that some of the cheques at least were paid into the defendant's H. D. Wray No. 2 account at Barclays Bank, Hemel Hempstead.
The £400, the claimant said, represented a figure agreed between the parties to cover one half of the outgoings on the property and represents a direct contribution by him to the purchase price.
The defendant accepts that the £400 per month was paid, but asserts that the sum was merely in respect of what could fairly be described as the claimant's keep. Under that general umbrella there were numerous elements of which an element for accommodation was only one. Others were, for example, the cost of his food and carrying out other functions for him such as preparing his meals, doing his washing and so on. Mrs. Wray accepts that she used the H. D. Wray No. 2 account for payment of the mortgage. She accepts that the payments of £400 helped her to pay the mortgage instalments, cost of food for herself and the utility bills and council tax.
One has to comment that any person living in a property and contributing towards the general outgoings is no doubt helping to pay the relevant bills. But that does not mean that such a person should automatically acquire a beneficial interest in the property. Indeed, I am satisfied that payment of the £400 per month does not lead me to draw the inference that there was a common intention that the claimant should have a beneficial interest in the property.
Whilst I think it probable that the likely expenditures that the defendant would have to meet were considered by the parties when the £400 sum was agreed, I am satisfied that none of that figure was earmarked for expenditure in any particular way. In particular, none of it was specifically designated or earmarked for payment of the mortgage or any part of it. The defendant did not have to use it for payment of the mortgage. She could have spent it on anything she wanted. How she paid the mortgage and out of what funds was entirely a matter for her.
I am satisfied that the defendant, too, was not dependent on receipt of the sum of £400, or any part of it, to enable her to pay the mortgage. She herself had an income of about £17,000, made up of her own income of £14,000-15,000 as an accounts manager, together with maintenance for the children from Mr. Wray of £60 per week (£3,l20 per annum). There would also be statutory child benefit, the precise figure for which was not before the court.
Mr. Barton challenged whether the defendant had income from her employment of £17,000 per annum. She accepts she did not, but I am satisfied that her total income from all sources amounted to £17,000 per annum or thereabouts. The mortgage of £47,000 was less than three times her annual income, which would be within normal lending criteria commonly applied by building societies.
That she would manage without his income was demonstrated by the fact that when he arbitrarily reduced his weekly payments to £50 per week in January 1996 and when she had no income from him after he left in 1997, she nevertheless continued to pay the mortgage.
The claimant's estimate of his own income, according to his witness statements, was that a 40 hour week would give him £325. Whilst one treats that figure with some caution, bearing in mind that the claimant had had substantial periods out of work, assuming that he was indeed earning that amount, payment for keep and contribution generally to the home of just under £100 per week would not be unreasonable. It certainly does not indicate that he was buying a beneficial interest in the property and that after allowing for keep, any substantial payments were being made by way of mortgage payments.
Although a figure of £400 may have been agreed, it clearly did not represent an exact 50-50 division of outgoings and mortgage, as it did not fluctuate over the two years with changing amounts or in changing interest rates.
The mortgage payments made by the defendant were of interest only, no capital was being paid off at all. I have come to the conclusion that the payments of £400 per month made by the claimant were not direct contributions to the purchase price by the claimant which would justify the inference necessary to the creation of a constructive trust (see Lord Bridge in Lloyds Bank v. Rosset p. 133A).
Considerable emphasis has been laid by the claimant during the hearing on the pension and insurance arrangements which it is said supports the claimant's case that the purchase of the property was a joint venture.
In June 1993 the parties saw a Mr. Roberts, a friend of Mr. Barton, who was a financial adviser then working for a firm called General Portfolio. Mr. Roberts' recollection was that the parties were talking about buying a house together and he advised that any mortgage required should be paid off as part of pension arrangements.
He saw Mrs. Wray on 28th June and she signed up on the same day for a pension that would provide an anticipated £25,000 lump sum at the end of 25 years, the term of the proposed mortgage. The policy also included life cover of £50,000 so that in the event of earlier death, during the term, that sum would be available.
Mr. Barton had taken out a pension policy earlier in 1990, but changes were made to include life cover for £50,000, those changes being effected by 19th July 1993. In his original witness statement, Mr. Roberts referred to the property being bought as 10 Hobletts Road. I am quite satisfied that he was mistaken as to that. At the time Mr. Roberts saw the parties, the only purchase in contemplation was 55 Longlands, which was on the market for about £57,000. 10 Hobletts Road was not even known about, let alone considered as a potential property for purchase, until August.
I do not blame Mr. Roberts particularly because, in fairness to him, he had not had sight of his original papers when he made his draft statement. I think it probable that he did advise in line with what he said, but very importantly, about a proposed purchase of 55 Longlands, not 10 Hobletts Road.
Once the 10 Hobletts Road property proceeded, those arrangements had far less significance as the purchase was not in Mr. Barton's name. Importantly, there was no assignment to Nationwide of the benefit of any pension or life policy, nor any deed assigning Mrs. Wray's benefits to Mr. Barton or vice versa.
Indeed, a request as to death benefits forms signed by Mrs. Wray in respect of her pension policy and life cover nominated Mr. Wray, Jody and Zoe as potential beneficiaries, not Mr. Barton. Mr. Barton's similar nomination was in favour of his mother and father, not Mrs. Wray.
These policies, and the way they have been dealt with, cannot, in my judgment, assist the claimant in an assertion that there was common intention he should have a beneficial interest in the property 10 Hobletts Road.
No document committed the claimant to the building society at all, save that he was required to sign the document (which he did) postponing any rights of occupation he might have to the rights of the building society. That is a document invariably required to be signed by adults who might be residing in, or who would be residing in, a mortgaged property and who were not parties to the actual mortgage deed.
Of considerable significance is the fact that the claimant has not, in his pleadings, statement or evidence, Suggested he should bring into account any value attributable to the pension or policy. If, in some way, the pension or policy was said by him to be significant as evidencing a common intention, then one would have expected the value (if any) attributable to them to have been brought into account.
Whilst, clearly, the pension and policy would have been relevant if a purchase of 55 Longlands had proceeded in joint names, I am satisfied that in relation to 10 Hobletts Road those pension and policy arrangements do not assist the claimant in asserting the common intention.
Thirdly, the claimant refers to works of renovation and improvement carried out principally by him with the assistance of his father, brother and friends. The parties did not move in straight away and from the completion date, 19th November 1993 to when they moved in in early February 1994, renovations and repairs were carried out.
Mr. Barton was in the building trade. As already mentioned, he had been out of work for considerable periods. With no outside work, it was obviously sensible that he carry out the renovation works. During the relevant period, apart from one week when he was doing a job for someone else, he applied himself to working on 10 Hobletts Road.
The work done was broadly as set out in the schedule attached to the claimant's statement of case. I am satisfied that, initially at least, the defendant paid for the materials required. She had about £4,000 left over from the £10,000 paid to her by her husband from her former matrimonial home. She used that, together with a further £1,000 loan from Mr. Wray, making £5,000 in all with which to pay for specific items such as radiators, the bathroom suite, kitchen cupboards, etc.
Mr. Barton's case is that he spent about £5,000-6,000 of his own money in buying materials in addition to putting in his own labour. He said in evidence that that sum was expended on the property over the period of living at Hobletts Road, and about £2,000-3,000 would have been spent by him before the parties actually moved in. Presumably, the remainder would have been spent over the rest of the period that he was there.
Mrs. Wray does not dispute that he did this work, broadly speaking, nor that over the period from 1993 through to the time he left, he may have spent some £5,000 of his own monies on materials and the like. She does dispute the quality of the workmanship. She argues that because the work was badly done, it did not add much to the value of the property. Happily, it has not been necessary to go into that dispute as to the quality of the works in any detail.
Clearly, the works were of some value and no doubt helped to improve the house at the time. Are they, however, evidence of a common intention to give the defendant a beneficial interest?
The general rule is that if a person expends money or labour on another's property, that does not entitle the person expending money or labour to an interest in the property in the absence of express agreement, or as a common intention to be inferred from the conduct of the parties (see Thomas v. Fuller-Brown  1 FLR 237).
I am satisfied, having heard the parties, that there was no express agreement that the claimant should have an interest as a result of doing these works. Should I infer a common intention? I remind myself of Lord Bridge's observation in Lloyds Bank v. Rosset p.l30D that neither a common intention by spouses that a house is to be renovated as a joint venture, nor a common intention that the house is to be shared by parents and children as the family home, throws any light on their intentions with respect to the beneficial ownership of the property. That observation is equally applicable to unmarried co-habitees.
There is ample reason, it seems to me, for the claimant to have done the work. He was a builder, largely unemployed. He was living with the defendant who had, no doubt, been generous towards him during that unemployment. It was natural and sensible that he should do that work. I am satisfied that he has not established that his conduct in doing the work was explicable only in the light of a common intention that he should have a beneficial interest in the property. The facts, indeed, have many similarities with those in Thomas v. Fuller-Brown.
One area where the facts did differ is the question of money put into the property by the claimant, because he says (and it is accepted) that over this period he put in some £5,000 over the years by way of buying materials. In particular, the £2,000-3,000 during the early stages of the renovation works.
In relation to that, I regard it as significant that the defendant did not know that the claimant had such monies at all until the works were underway. In evidence, the claimant accepted that he had put away some £5,000-7,000. It was hidden money. It was in cash and stored away by him. He accepted that it had not been declared to the tax man and that he had not told the defendant about it.
That makes it even less likely, in my view, for it to be said that there was a common intention to confer upon the claimant a beneficial interest. Mrs. Wray had no knowledge, when matters were discussed no doubt at about the time when the property was acquired, that he had any monies that he could possibly have put into the property to pay for materials or labour.
I have come to the conclusion that I cannot draw the inference that I am being asked to do by the claimant.
I should add, as an addendum to this, in relation to 55 Longlands that the evidence clearly was that if that property had proceeded, some works (the extent of which is totally unknown) would have been required. The claimant accepted that when giving evidence. Therefore, it cannot, it seems to me, be said that the only distinction between the two properties is that in one the discount was available, and in the other, building works were being done. That is not right, because, in my view on the basis of the evidence that I heard, if 55 Longlands had proceeded, building works would have been required there.
I have not, as yet, addressed specifically my view as to the credibility of the parties, because that is very important in relation to questions of agreement between them and the view I take of them.
In relation to the claimant, I have to say that I was not impressed with the truthfulness and reliability of him. He accepted that he had not made proper disclosures to the tax authorities. I have no doubt that the cash he held had been derived from the black economy, and also that materials and the like had been bought through his business, thus gaining tax advantages. At one point in evidence he said of course there was a tax fiddle going on. He accepted that he had not disclosed to the DSS, when applying for Income Support, the cash he had hidden away. He accepted that he had not been entirely honest at that particular point. Nor had he told the defendant of his cash hidden away at the time there was contemplation of buying a property.
That lack of frankness does not support his contention that the purchase was a joint venture and, as was submitted to me on his behalf, a pooling of resources put forward on an equal basis.
I have to conclude that the claimant was someone who, when it suited him, was not honest about matters. I must treat his evidence with very considerable caution.
So far as the defendant is concerned, she underplayed, in my view, her relationship with the claimant to some extent. It is clear that they were living together in a sexual relationship, at least until they fell out. I am satisfied that most of the criticism that was made of her in relation to her income stated on her application for a mortgage, whilst technically correct in the sense that at the relevant time she did not have an income of £17,000 from her job, was in fact not such a substantial criticism because she did have indeed an income of that amount from all sources, as I have already referred to.
Having heard the parties, although I approach the defendant's evidence with some caution, I am satisfied that broadly speaking I prefer her evidence to that of the claimant, where they disagree. In particular, I am satisfied that there was no express or implied agreement, understanding or arrangement between the parties that the claimant should have a beneficial interest in the property. Further, I am satisfied that there was no common intention that the claimant should have such an interest, nor was the conduct of the parties such that I should infer a common intention to share the property beneficially so as to give rise to a constructive trust.
Furthermore, the reason put forward by Mr. Barton for the property being put in Mrs. Wray's name, namely that he was concerned about creditors taking action against the property if his business went wrong, is one that I find very difficult to accept. At that time, apart from a £2,000 (approximately) overdraft and a credit agreement in relation to his motor car, he had no other debts of any significance. He had, of course, the £5,000-7,000 cash that he had hidden away and which he disclosed during the course of his evidence. It seems highly improbable that he would have been concerned about this possibility of creditors creating difficulties at that time.
In any event, whatever may or may not have been in Mr. Barton's mind, I accept Mrs. Wray's evidence that it was not discussed with her and she did not agree to such an arrangement.
I should add that the subsequent events militate against any finding of a constructive trust. A car was purchased for Mrs. Wray's use, and in February 1996, after the parties had fallen out, the claimant sold the car and kept all the proceeds, including £2,500 which he had intended to be for a deposit on a new house he was going to buy.
I accept Mrs. Wray's evidence that Mr. Barton said that he wanted to be paid for the improvements and work he had done at the house. She accepts that the words "full and final settlement" were not used when it was agreed Mr. Barton should have such monies. A request for payment for improvement works is totally inconsistent, in my view, with Mr. Barton's current position that he has a 50% beneficial interest in the property.
I should add that the car that was sold was in fact sold for a figure of about £4,000 or slightly over, and the £2,500 that I have referred to is the amount which would have been otherwise returnable to the defendant.
Subsequently, in June 2000, there was a discussion between the parties and the claimant asked for an additional £3,500 and prepared a document, never signed, referring to the payment in full settlement of the above property. That money was never paid or agreed to be paid by the defendant. The wording of the document is ambiguous. It could be referring to full settlement of a beneficial interest, or it could be referring to full settlement of a claim for the improvements and work done to the property. Whichever it was, the document made clear that upon payment the claimant was agreeing to forego any claim to the property on payment.
That claim to £3,500 seems to me, again, inconsistent with the claimant's current case that he has an equal 50% beneficial interest in 10 Hobletts Road. Indeed, in evidence, when cross-examined he said at one point that what he wanted back was what he put in. Again, that was inconsistent with asserting a 50% beneficial interest in the property.
As a final comment, I refer again to the records of the claimant's solicitors, who were and still are his solicitors. It is at the very least surprising that there is no record on the original conveyancing file that notwithstanding the property transfer being taken in Mrs. Wray's sole name, Mr. Barton was to retain a 50% interest if that was to be the case. That would be important to record.
The fact that there is no such note may well be indicative, therefore, of the fact that there was no doubt at the time that the property was being bought by Mrs. Wray as her property and no question of any suggestion that Mr. Barton was to have a beneficial interest ever arose.
Mr. Barton says he did not discuss it with his solicitors. One would have thought it surprising if no query had been raised by the solicitors about the apparent change of plan. If, as I have said, there was an agreement that notwithstanding the taking of the transfer in Mrs. Wray's sole name, there was still to be 50% division in equity, one would have expected that to appear noted in some place or other.
In conclusion, I am satisfied that the claimant has not established to me on the balance of probabilities that he has a beneficial interest in 10 Hobletts Road, and I therefore dismiss his claim.
MR. BUCK-PITT: Your Honour, the main matter that arises is the question of costs. In my submission, clearly costs should follow the event and the claimant should pay the defendant's costs in the action. It is a multi-track case, so you do not need to be troubled with costs schedules.
JUDGE SENNITT: I think there are some schedules in the file, I think from both. I do not think it is an appropriate case to deal with that today, assuming I make the order. Mr. Holbech, is there anything you can say about costs?
MR. HOLBECH: I cannot resist in principle an order for costs against my client. I would think it would be appropriate for there to be detailed assessment rather than anything else.
JUDGE SENNITT: I would have thought so.
MR. BUCK-PITT: On the point of costs on assessment, your Honour, there were two without prejudice save as to costs offers. One from the claimant on 12th November 2001 seeking in short 33% of the equity and all his costs. The response to that, again without prejudice save as to costs, I can hand up. In response to that, on 21st November 2001 that offer was rejected:
Our client puts forward a counter proposal whereby she will pay your client a sum of 5% of the equity. That equity is to be calculated by obtaining a valuation from a jointly appointed valuer and thereafter our client will deduct the sums of money representing the outstanding mortgage together with associated legal costs and disbursements. The above offer is conditional upon the fact that each party has to bear their own legal costs.
The offer in response was an offer of 5% and walk away on legal costs. In my submission, that was a sensible offer, a generous offer, and an offer which the claimant clearly has wholly failed to beat.
JUDGE SENNITT: I suppose that has some relevance to the £3,500? Whether it was intended to be that, I do not know.
MR. BUCK-PITT: Your Honour, it is that sort of figure. I will just take instructions. (Pause) My instructions are it was not scientific. The defendant did not want the expense of litigation and was trying as best she could to get rid of any further legal costs, although even by that stage the costs would have been quite significant.
In my submission, that was not a Part 36 offer but it is a without prejudice save as to costs offer in the old-fashioned way. One should perhaps allow them three weeks from the date of the offer, 21st November, to accept it. But from the date three weeks thereafter the costs should be assessed on an indemnity basis.
JUDGE SENNITT: Mr. Holbech, do you want to say anything about that?
MR. HOLBECH: The submission is that costs should be on an indemnity basis. I would submit that is simply not appropriate in these circumstances. It is just a straight forward case in which my client has lost and is liable to pay the costs on the standard basis.
MR. BUCK-PITT: Your Honour, in my submission that is not the case. Both parties made offers to try to sort this case out. The claimant's offer was wholly unrealistic, which has been reflected in your Honour's judgment today. The defendant's offer was rather better than the claimant has done today, and certainly far worse than the defendant has done today. The defendant has succeeded in dismissing the claim and she is going to get all her costs on a standard basis.
JUDGE SENNITT: It was not a formal Part 36 offer.
MR. BUCK-PITT: No, it was not a Part 36 offer, but it must have some impact upon assessment of costs. The rules acknowledge that you can still make without prejudice save as to costs offers. It may be that if your Honour is not minded to say from that date, perhaps from a later date. Certainly, the costs of the hearing itself. It should have some impact. The offer was rejected and the defendant did try to avoid costs thereafter, when it was clear that the matter was looming towards a trial. I would urge this should have some impact on the assessment of costs. Otherwise, this discourages parties from trying to make offers of that kind.
In my submission, a Part 36 offer in a case of this kind is quite difficult to make, because there is no science to it. It is just picking a figure. I would urge your Honour to say either from that date, or to say from the date of the trial itself. All sides were represented and that was the time when the parties should have seen sense and taken what had been on the table some time before.
MR. HOLBECH: May I just come back on that?
JUDGE SENNITT: I am going to say that the costs should be on a party and party basis, Mr. Holbech, the standard basis.
What I am going to say is that the claimant, pays the defendant's costs on the standard basis, to be subject to a detailed assessment.
MR. BUCK-PITT: There is still a caution on the property. There are two ways of dealing with that. Obviously, because of your judgment, the Land Registry can remove that itself. But your Honour has power to direct, because of your decision here, that the caution be removed. The caution is on the basis of this claim. I would ask that you direct that the caution registered against the property shall be removed. It makes life a lot easier.
JUDGE SENNITT: Do you have any objection to that, Mr. Holbech?
MR. HOLBECH: I think it is going to follow anyway from your judgment.
JUDGE SENNITT: It saves people writing lots of letters of explanation to the Land Registry, does it not? I will say that second caution be removed. One was removed.
MR. HOLBECH: There is only one caution.
MR. BUCK-PITT: Only one caution presently registered against the property in favour of the claimant. That must be removed and I think that will suffice. Your Honour, the costs of the action are on a standard basis.
JUDGE SENNITT: Are there any other matters?
MR. HOLBECH: Yes, your Honour. I am instructed to ask for permission to appeal in this matter. I would submit there are perhaps one or two issues which might be worthy of appeal.
First of all, your Honour has accepted that there was an agreement in respect of 55 Longlands that they should be joint or beneficial owners, or have be beneficial owners in equal shares. Mrs. Wray accepted in her evidence that she did not then say thereafter, prior to the purchase of 10 Hobletts Road, to my client that the position was different in respect of that property.
I did submit to your Honour that one has to look at it from the position of an objective observer. A reasonably objective observer would have thought they were proceeding on the same basis as they had been in respect of the previous property and that would be sufficient to infer some common intention that he should have a beneficial interest in the house.
Secondly, as your Honour has found, there was an agreement between the parties that my client would pay £400 a month to help pay the mortgage. You found, as a matter of law, that is not sufficient to give rise to any inference of any common intention. I did rely upon a case called Le Foe v. Le Foe and Woolwich plc before your Honour, which said that the contributions did not necessarily have to be direct and they could be indirect if they were part and parcel of an arrangement to help pay for the mortgage and that could give rise to the inference of a common intention to have a beneficial interest in the property.
In my submission, on those two grounds and perhaps others which I have not yet thought of, there is a reasonable chance of success on appeal. There are difficult questions of law. Lots of authorities were cited to you. There may be difficult questions of fact, or at least, inferences from the primary facts in all the circumstances. I ask for permission to appeal.
JUDGE SENNITT: What do you say about that, Mr. Buck-Pitt?
MR. BUCK-PITT: Your Honour, in order for you to grant permission to appeal you have to be satisfied that an appeal has a realistic prospect of success.
On the first ground of appeal that my learned friend puts before you as a basis of asking for permission, is 55 Longlands there was an arrangement and we had to say that is no longer on offer. That might have a degree of merit if that were his client's case. It is not. He did not stand in the witness box and say this was outrageous, we agreed on 55 Longlands, this was the arrangement and I went into the new property thinking that was the arrangement. That was not even a hint of his case.
His case was completely different. We sat down and discussed this property. Because of my credit problems, my concerns, we discussed it expressly and I said it would go in her sole name. That is a completely different case. He cannot go before the Court of Appeal and say even though my client did not mention this, there is some mileage in it. Even if he could, in my submission, objectively (using my learned friend's test) this man was going to put in half the deposit (a substantial contribution) by way of a discount. Both parties agree that. The came completely changes when we come to this property. He is putting in nothing at all. He is not on the mortgage. It is not going to be in his name. Objectively, was it obviously different? In my submission yes, it was obviously different, if there is such a test that there is some obligation upon the defendant to say things have now changed. In my submission there was not anyway.
Your Honour has heard the case. You have heard both parties. It is a finding of fact, at the end of the day, as to whether there was an express arrangement. You have said clearly not. It is also a question of whether you can draw inferences from their conduct and from what was or was not discussed at the time. They are findings of fact.
Dealing with the case of Le Foe, that case suggests that the court may draw an inference from indirect contributions on the particular facts of the case. It does not say that because there are indirect contributions the court has to draw that inference. Your Honour has considered the case, considered the evidence, and it is common intention. Both parties have to intend; the defendant and the claimant. In my submission, with respect as reflected in your Honour's judgment, there was no evidence to suggest that the defendant herself intended that because he paid £400 a month keep that he would have some share in the property. It is a two way thing.
In my submission, if my learned friend went before the Court of Appeal on that, he would get nowhere. I would urge your Honour to dismiss his application. If he wants to renew it elsewhere, that is a matter f or him and his client.
JUDGE SENNITT: Do you want to say anything further, Mr. Holbech?
MR. HOLBECH: I do not think so. I have made my points.
JUDGE SENNITT: I think largely it is matters of fact and inferences that I have had to decide as the trial judge. In the circumstances, I have come to the conclusion that I should not grant permission on the basis that there is no real prospect of success or other compelling reason why I should grant permission. This, of course, does not preclude Mr. Holbech and his client going to the Court of Appeal and making a further application if they so wish.
MR. HOLBECH: Your Honour, you do have power to direct the period within which any appeal notice should be lodged with the Court of Appeal. If you do not make any direction, it is 14 days. If you do make a direction you can extend the period.
JUDGE SENNITT: How long are you saying you want, then?
MR. HOLBECH: I was going to ask for 28 days.
MR. BUCK-PITT: Your Honour, if my learned friend wants 28 days, there is no point in rushing into an appeal.
MR. HOLBECH: I think we need to consider the position.
JUDGE SENNITT: It is sensible that it is considered properly, rather than cobble together a notice just to keep the time going.
MR. BUCK-PITT: If he wants a clear month or whatever, we are not going to cause any problems
JUDGE SENNITT: What I will say is, today is 10th May, time for lodging application for permission to appeal to the Court of Appeal will be extended to 7th June, which I think will be 28 days from today.
MR. HOLBECH: I am happy with that. The order is dismissal of the claimant's order, the costs order on the standard basis, caution removed and permission refused and time for lodging 28 days from today.
JUDGE SENNITT: Thank you very much.