Morley v Morley & anr [2023] WTLR 299

Analysis

In 2007, the claimant gave her father (Ray) a sum of £150,000. The payment was a contribution towards a house (the property) that Ray intended to purchase with his wife, the first defendant.

The claimant alleged an agreement by which, in exchange for the payment of £150,000, Ray would leave his half-share of the property to the claimant and her brother.

The purchase of the property was completed using a TP1 transfer form. The form was signed by the third-party transferor and the box was ticked providing for the transferees, Ray and the first defendant, to hold the property as tenants in common in equal shares.

Ray initially made a will which left his half-share of the property to the claimant and her brother. But when the claimant mentioned the agreement to Ray in 2015, he denied any knowledge. This resulted in an estrangement. Ray’s final will left his half-share to the first defendant. Ray then died and the first defendant stood to inherit the entire beneficial ownership of the property.

The claimant claimed for an interest in the property by way of a constructive trust or proprietary estoppel; alternatively, she sought repayment of the £150,000 as a loan.

HHJ Monty KC allowed the claim in proprietary estoppel and, had it not been for that, would have ordered repayment of the loan. The claim for a constructive trust was dismissed.

Held:

1. (1) The court warned itself against over-reliance on witness evidence after such a lengthy passage of time. The court would look first to the documentary evidence and test the witness evidence accordingly. The Ocean Frost [1985] and Gestmin SGPS SA v Credit Suisse (UK) [2013] applied.
2. (2) As a matter of fact, Ray did promise the claimant that she and her brother would receive an interest in the property if she advanced the sum of £150,000.
3. (3) The TP1 form contained a conclusive declaration of trust, which could only be impeached on the grounds of fraud, undue influence, mistake or proprietary estoppel. Following Taylor v Taylor [2017], it did not matter that the TP1 was only signed by the transferor, not the transferee. This had been doubted by the Court of Appeal in Ralph v Ralph [2021]. Insol Funding Company Ltd v Cowlam [2017] reached a different conclusion entirely: that a TR1, whose wording was materially the same, was ineffective because it was not signed by the transferees, the legal owners capable of declaring the trust. HHJ Monty KC followed Taylor and distinguished Insol. The TP1 contained an express declaration of trust and the doctrine of constructive trusts could not circumvent such a declaration. The constructive trust claim failed.
4. (4) Ray’s promise was sufficiently clear to found an estoppel. The claimant relied on the promise to her detriment by advancing the £150,000. It would be unconscionable for Ray or his estate to renege on the promise.
5. (5) The fact that Ray had previously gifted £150,000 to the claimant as an inheritance tax planning exercise did not prevent an estoppel arising. The estoppel was based on Ray’s subsequent promise.
6. (6) The minimum equity needed to do justice was to give effect to Ray’s promise and declare that a 50% share of the property belonged to the claimant and her brother.
7. (7) The court would not make an order for sale immediately and would allow the parties time to consider its judgment.
8. (8) Had the proprietary estoppel claim failed, the court would have ordered repayment of the £150,000 as a loan.

JUDGMENT HHJ MONTY KC: Introduction [1] In 2007, the Claimant gave her father £150,000 which was used towards the purchase of a house which he was buying jointly with his new partner (who later became his second wife). The Claimant’s case is that her father promised her that she (and her brother) would have an …

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