Summary

Daughter-in-law had an equity in her deceased mother-in-law's flat under the doctrine of proprietary estoppel because she and her husband had funded a right to buy purchase on the understanding that they would be left the flat on the death of the surviving parent.

Facts

The claimant ('P') claimed against the estate of her late mother-in-law ('E'). Her claim was contested by her sister-in-law and her husband, who were the executors named in E's last will. The remaining defendants, who were E's grandchildren and beneficiaries of the will, took no steps in the proceedings. P's claim related to a flat lived in by E and her husband, ('W'), and which formed the principal asset of E's estate. P, whose husband ('B') pre-deceased his parents, alleged that the flat was, or should be declared to be, held on trust for her. She sought a transfer of the flat into her name or as she directed. The 125 year lease of the flat was purchased in 1989 in the exercise of W and E's statutory right to buy. P alleged that she and B had funded the purchase (about £16,000, after the statutory discount), on the understanding that the flat would pass to them on the deaths of W and E. When B had financial difficulties in 1992-1993, he asked W and E to transfer the flat into P's name but they were advised seperately and the transfer did not take place. Their solicitor wrote to P and B's solicitor to say, however, that they had drawn up wills leaving the estate to P and B. In 2001, after B's death, E made a final will, leaving P a residuary gift of £20,000 out of the proceeds of a sale of the flat, and otherwise left the balance of her residuary estate to her four grandchildren in equal shares. The flat was thought to be worth between £100,000-130,000. The executors' case was that the purchase money for the flat had been an unconditional gift. P contended that the 1989 understanding gave rise to a constructive trust of the flat in favour of P and B either at the outset, or that she was entitled to the flat by proprietary estoppel.

Held

(1) The 1989 understanding was as described by P and admitted in the solicitor's letter of 1993. It was not an unconditional gift. (2) In 1993, B and E freely gave an assurance that they would leave the flat to B and P. There was evidence of subsequent regular assurances to that effect. (3) The evidence showed that the intention in 1989 was that the flat would be transferred after a few years, and in particular after it was out of discount claw back. There was no formal trust. Those points were inconsistent with the creation of a constructive trust at the outset. (4) The 1989 understanding, when coupled with the detrimental reliance of paying the cash price for the flat and subsequently giving to E, cash for repairs or improvements, did given B and P an equity in the flat, by proprietary estoppel. Their equity had not been challenged during the years following the 1989 purchase. (5) The 1993 understanding refined the equity, in that the promise or assurance was that the flat would be left to B and P, by the survivor of W and E. There was further detrimental reliance, in not seeking to resolve issues as to the existing equity and further cash contributions. (6) The equity was continuing at the date of E's death. E's estate therefore held the lease on constructive trust for P. (7) There was not a contract invoking the doctrine of mutual wills. (8) The constructive trust saved the informal contract from the requirement that it had to be made in writing (s.2(2) Law of Property (Miscellaneous Provisions) Act 1989). (9) Had the constructive trust argument failed, the judge would have found a resulting trust. (10) P was put to an election in regard to the residuary legacy of £20,000 to her, made in E's last will.