Ely v Robson [2016] EWCA Civ 774

Analysis

The defendant (D) appealed against an order of His Honour Judge Blair QC whereby he made a declaration as to the extent of the parties’ beneficial interests in a property (the property).

D met the claimant (C) in 1986. A year later, C moved with his three sons into D’s house (37 Ashley Road). That year, C also purchased the property with a mortgage and conveyed it into his sole name. D made no contribution to the purchase price.

In 1989, D purchased another property (89 Bournemouth Road). C maintained that he contributed c.£16,000 to the purchase price, but D disputed that.

By 2005, C and D were estranged but continued to live in the Property with their two daughters and, for a time, C’s three sons. D’s aunt (A) moved in and D’s elderly mother (M) would stay.

C asked D to move out but she refused. C issued a claim for possession in 2007. D defended the claim and counterclaimed that she and C owned the beneficial interest in the property in equal shares as was their common intention.

Before trial, C and D discussed settlement in a park without solicitors present. D maintained that no agreement was made, whereas C claimed that a compromise was agreed the terms of which were set out in a letter from his solicitors to D’s dated 14 August 2007. The essence of the compromise was that C would hold the property on trust for himself for life, the remainder of 80% to his heirs and assigns and 20% to D; that D would have the right to occupy the property for as long as either A or M were alive; that C would have power to sell following termination of D’s right to occupy and C would relinquish any claim to an interest in 37 Ashley Road or 89 Bournemouth Road.

On 30 August 2007, a letter signed by both parties’ solicitors was sent to the court requesting that trial be vacated and relisted for first available date after 1 October 2007 because the parties were relatively close to reaching settlement and believed they would be able to finalise terms before the end of September. The court vacated the hearing but the matter was not relisted. The court log indicated that in January 2008 the court received a letter on behalf of D indicating the case had settled. D’s solicitors had no record of any such letter. D maintained that she did not send one.

A and M died in 2014, and so C issued this claim for declaratory relief as to the parties equitable interests in the property and an order for sale. D asserted that the claim was dishonest. D denied that there was a final settlement agreement and asserted that they had agreed to vacate the hearing so discussions could continue but they did not pursue discussions further because C could not continue to pay his solicitors. D alleged that from the outset the parties’ common intention was that they owned the property in equal shares, she contributed to costs of the family by way of upkeep of the property, children’s needs and general housekeeping costs. D said that C had always reassured her that ‘what is mine is also yours’.

C disputed all D’s assertions. He maintained that D had made no contribution to the purchase of the Property, household expenses or maintenance; he denied ever suggesting that D had any interest; he maintained that a binding agreement had been reached and there was no trial because the agreement was binding. C sought a declaration in accordance with the agreement. Alternatively, on the assumption the agreement was not binding, he sought a declaration that D had no interest in the property or right to reside and that D held 89 Bournemouth Road on trust for them both in such shares as the court might think fit. Further in the alternative, C said that he and D had reached an agreement that all of their property and assets would be owned equally and declarations be made to that effect. He asserted that in reliance upon her representations that she would abide by the settlement agreement, he had not pursued his claim for possession and allowed her to occupy the Property. If the settlement agreement lacked the necessary formalities then it nevertheless gave rise to a constructive trust or proprietary estoppel that it would be unconscionable for D to resile from the representations.

At the trial of the preliminary issue as to whether the parties had reached a binding settlement in 2007, the judge rejected D’s evidence and accepted C’s, finding that D did lead C to believed she agreed to the principles of the settlement, C relied on that by not pursuing his claim and acted to his detriment. The judge made a declaration in terms sought by C.

On appeal, D submitted that:

1. (a) the judge failed to fully appreciate that C’s case was based entirely upon the discussions in 2007. Whatever the outcome, they were incapable of amounting to a binding agreement which satisfied the requirements of s.2(1) of the Law of Property (Miscellaneous Provisions) Act 1989;
2. (b) the proposed terms of the agreement were uncertain and incomplete;
3. (c) further terms relating to the parties’ interests had yet to be agreed;
4. (d) the whole agreement had to be committed to writing and the necessary formalities complied with;
5. (e) the parties did not expect the agreement to be immediately binding;
6. (f) it was incumbent on the judge to address what it was that converted the discussions referred to in correspondence into an agreement sufficient to found a constructive trust or proprietary estoppel falling within the scope of s.2(5) of the Law of Property (Miscellaneous Provisions) Act 1989;
7. (g) there was no proper basis to find that D led C to believe she agreed the matters set out in the letter. If, as D asserted, she and C owned the beneficial interest in equal shares then any assessment of the effect of the August 2007 events would require an analysis of the whole course of dealing between the parties including subsequent behaviour.

Held:

1. 1) This is an unusual case because the party seeking the declaration was already the legal owner. In the circumstances, it is not easy to see how the judge thought the case was one of proprietary estoppel because, at least as generally understood, the term describes the equitable jurisdiction by which a court may interfere in cases where the assertion of a legal right would be unconscionable. It is far from clear that D’s claim to an interest constituted an interest in land to which s2(1) of the 1989 Act could have any application.
2. 2) D’s central argument was that after the August 2007 letters, further terms of the agreement were yet to be agreed, that the parties intended the terms to be put in a formal agreement and did not expect them to be immediately binding. However, D’s evidence was that there was no agreement resulting from the discussions and that she made it clear to C that they owned the beneficial interest in equal shares. The judge rejected D’s account and was justified in doing so. He had the benefit of seeing and hearing C and D give evidence. In the circumstances, the judge was entitled to accept C’s evidence.
3. 3) Notwithstanding the contents, neither of the August letters precluded the possibility that the parties had in the course of their meeting agreed terms of compromise and intended them to be binding. This was not a commercial transaction, rather an attempt by two persons who had for a number of years happily lived together to resolve costly litigation.
4. 4) The terms of the 14 August letter are sufficiently clear to form the basis of a binding agreement. D did not identify any other matter upon which the parties had still to agree.
5. 5) In the circumstances, the judge was entitled to find that the parties did intend the oral agreement to be binding; that they both understood and intended that it should be acted upon; and that all that remained was to put in place the mechanics. C held the property on constructive trust for them both. D’s interest was limited to that in the declaration. It would be unconscionable for D to assert otherwise and she is estopped from doing so.
6. 6) Regarding whether the judge should have considered the whole course of dealing, it was never suggested that the parties reached any other common understanding. To the contrary, both continued to act according to the terms of the agreement.
7. 7) Appeal dismissed.

JUDGMENT KITCHIN LJ: Introduction [1] This is an appeal by the defendant, Ms Robson, against the order of His Honour Judge Blair QC made on 12 October 2015 whereby he made a declaration as to the extent of the beneficial interests which she and the claimant, Mr Ely, held in a property at 6 Torbay …

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