Summary

A possession order was granted in favour of a claimant where the defendant occupier of the property had failed to demonstrate circumstances which would make it inequitable or unconscionable for her not to be given some interest in the property.

Facts

The claimant (T) sought an order for possession of a property occupied by the defendant (J). The property had been purchased by J's late mother (D). T was D's third husband and J's stepfather. At the time of the purchase J had been estranged from her husband and D had bought the property to enable J to leave her matrimonial home and to move to a new home. J had moved into the property only a few days before D died and the sale of the former matrimonial home had taken place three days after D's death. D's will left the property to T. The validity of that will was not challenged. J claimed that the property was held on a common intention constructive trust which had arisen at or after the purchase of the property as a result of D's intention that J should occupy the property as her home, or from D's belief that she had a legal or moral obligation to repay to J a sum of £75,000 arising from the sale of two earlier properties. Further, in reliance on statements and assurances by D that the property would be hers, J had occupied the property, and T was estopped from resiling from those assurances and the property was subject to a constructive trust in J's favour and should be conveyed to her. Alternatively, the moneys belonging to J as a result of the sales of the earlier properties could be traced into the purchase so as to give J a claim based on a resulting trust. J submitted that a constructive trust could be based on a common intention between the parties that one or both should have an interest in the property and which was acted on by the party seeking to establish the trust; such intention or agreement would usually exist at the date of acquisition, but could arise at a later date.

Held

D had not intended or represented that the property would be a gift to J. Nor did J ever indicate to D that she had that belief or was acting in reliance on it. Authorities emphasised that the boundaries between the creation of a constructive trust by agreement and the operation of the doctrine of proprietary estoppel which might have led to the creation of an interest in property were closely linked and might have common characteristics, Yaxley v Gotts (2000) Ch 162 CA (Civ Div) considered. In recent cases of proprietary estoppel the emphasis had been on whether it would in all the circumstances have been unconscionable for the maker of the representation to be allowed to go back on what had been promised, Habib Bank Ltd v Habib Bank AG (1981) 1 WLR 1265 CA (Civ Div) and Jennings v Rice (2002) EWCA Civ 159, (2003) 1 FCR 501 applied. J had not established circumstances which made it inequitable or unconscionable for her not to be given some interest in the property, or some other form of compensation. The question of unconscionability required the court to look at all the relevant circumstances and not at individual factors in isolation. The belief that D had not properly accounted to J for the moneys due to her from the earlier property sales had coloured the presentation of J's claim. There was no claim made against D's estate in respect of those moneys based on breach of trust, and the fact that there was such a liability was not sufficient in itself to raise a constructive trust based on agreement or estoppel in relation to the property. (2) J had to show that the trust moneys were preserved by D and then applied towards the purchase of the property. J was beneficially entitled to the sum of £75,000 which had been retained by D and transferred to her deposit account where it had been mixed with other funds belonging to D. Various payments were made from that account until only approximately £10,500 had remained and it was J's case that she was entitled to treat at least that £10,500 as having been applied to the purchase of the property. Where, as in the instant case, the trustee had maintained in a mixed running account an amount equal to the remaining trust fund, the beneficiary's right to trace was limited to that fund. It was not open to a beneficiary to assert a lien against an investment made using moneys out of a mixed account unless the sum expended was of such a size that it must have included trust moneys. Under the rules of tracing J's lien remained attached to the deposit account fund and not to the property, Hallett's Estate, Re (1879-80) LR 13 Ch D 696 CA and Oatway, Re (1903) 2 Ch 356 Ch D applied. Accordingly, the claim to an interest under a resulting trust was not made out.

Judgment for claimant