Archive for the ‘detriment’ Category

The family home. Types of constructive trust. The end of detrimental reliance?

August 22, 2020

Archibald v Alexander: the facts

In Archibald v Alexander ([2020] EWHC 1621) a mother and her three children (Patsy, Brenda and John) orally agreed that a house would be purchased in the name of the mother and one of the siblings. It was to be held on trust for the mother for life and then for the three children equally.

This was for tax-planning reasons and to protect the property from any claim by the mother’s husband should she re-marry. The assumption was that there was no need to take excessive care to formalise the trust given the loving family context.

The property was transferred to the mother and Patsy as joint tenants, neither Brenda nor John was available to attend the solicitor’s office at the time of the purchase.

When the mother died, there was a dispute as to whether Patsy was the sole owner of the property or held it on the terms of the oral trust.

Was there reliance?

If this was a common intention constructive trust, then Brenda and John needed to show detrimental reliance. Fancourt J. held that there was reliance: ‘the non-signing siblings were self-evidently relying on the word and promise of those who did become owners’ ([14]).

Was there detriment?

Given the finding of reliance, the detriment was the decision of Brenda and John not to take steps to legally protect their ownership interest in the house; this was a sufficient change of position ([30]).

Not a common intention constructive trust?

The findings on detrimental reliance were obiter:

‘the instant case is of a different kind, in which a property is transferred (gratuitously) into the name of the owner on the basis of their express agreement to hold the property on trust for another. The owner only obtains the property on the terms of the agreement and equity does not permit them unconscionably to refuse to give effect to the terms. The trust arises from the terms on which the property was transferred, not from detrimental reliance on the agreement by the beneficiary.’ ([32]).

The essential elements of this constructive trust are: ‘property had been transferred to a volunteer on the basis of his promise to hold it on certain terms, and would not otherwise have been so transferred’ ([37]).

Fancourt J. referred to Rochefoucauld v BousteadBannister v Bannister and De Bruyne v De Bruyne.

There is no need to establish detrimental reliance for constructive trusts like this.

Michael Lower

 

Proprietary estoppel and co-habitees: assurance must relate to a specific property

January 3, 2018

Lissimore v Downing ([2003] EWHC B1 (Ch)) concerned the proprietary estoppel claim brought by L on the break-down of her relationship with D, a rock star and the owner of Astbury hall, a large estate in England. The relationship began in 1993 and lasted for seven years. There was an ‘engagement’ but neither party expected to marry.

D was heavily invested in Astbury Hall, both in financial and in psychological terms. Astbury Hall represented the fruits of many years of hard work. Even before the relationship with L deteriorated, D consulted his solicitors as to the steps to be taken to ensure that L would have no claim to an interest in it.

HH Judge Norris QC outlined the law on proprietary estoppel. He emphasised the basic rule that a representation or assurance must relate either to some specific property ([12]) or to the whole of the representor’s property ([15]).

As regards detriment, the judge said, ‘the conduct must be in some sense prejudicial to the party relying on it, or of such a nature that it raises the inference that it must have been induced by some sort of promise.’ ([20]).

The claim failed because there was no representation; it was understood that L could live at Astbury Hall while the relationship lasted. Commenting on the legal effect of the relationship, HH Judge Norris QC said:

‘The fact that that state of affairs happened to endure for several years cannot of itself impose on Mr Downing an obligation to transfer some of his property when he did not undertake such an obligation at the outset. There may be a promissory estoppel (eg a defence to a claim to leave the property before reasonable notice of the change in the nature of the arrangements has expired): but proprietary estoppel is different’ ([37]).

He went on to note the problems that arise in this type of claim:

‘The advancing of a proprietary claim tends to require the claimant to list how much (s)he did, endowing small acts with a great significance whilst at the same time not recording that party’s true contribution to the relationship.’ ([47]).

L’s proprietary estoppel claim failed. D made no statement that would lead her to believe that she was to have a share in Astbury Hall. Nor did L believe that she had any such share ([51]). D’s statements ‘relate almost entirely to the currency of the relationship’ ([53]).

Nor was there any overall detriment: ‘looking at the matter in the round, balancing the burdens assumed in the relationship against the benefits derived from it, and making the assessment after the breakdown of the relationship, no substantial detriment had been suffered’ ([54]).

There is a distinction between property law and family law claims:

‘What I am being invited to do is to make a property adjustment order on the termination of the relationship, not to define what property rights were created during the relationship’ ([55]).

Michael Lower

 

Proprietary estoppel and co-habitation

January 12, 2017

In Southwell v Blackburn ([2014] EWCA Civ 1347, CA (Eng)) B and S began to co-habit in 2002. S bought a house in his name and he alone made the mortgage payments. He did not envisage marriage precisely because he knew that B might then have a claim against the house. Several years later, the relationship came to an end and S excluded B from the house. B’s claim that they had a common intention to be equal beneficial owners failed. In the alternative she relied on proprietary estoppel.

There was no specific assurance that B would have any right to the home. S did, however, assure B that he was making a long term commitment to provide B with a secure home. S’s assurance was that B would ‘have the sort of security that a wife would have, in terms of accommodation at the house, and income.’ ([16])

Before moving in with S, B had accommodation rented from a housing association. She spent GBP20,000 fitting and furnishing the house. Relying on S’s assurances, B left that accommodation. Although her income was much less than S’s, B did contribute to the couple’s joint expenses.

The first issue was whether the assurances were enough for proprietary estoppel purposes. It is clear that the assurance must be clear and unequivocal and relate to the property. An assurance that B would be provided with a secure home was sufficient to give rise to an equity (Greasley v Cooke). S’s assurance was not, in substance, conditional on the continuation of the relationship ([7]).

The fact that the common intention constructive trust claim to an equal beneficial share had failed did not mean that there could not be an assurance as to the security of B’s right to accommodation ([10]).

Then there was the question of detriment. B had enjoyed rent-free accommodation and had been able to take a degree that enhanced her earning capacity. Did this mean that the detriment had been dissipated over the course of the relationship?

First, it is true that ‘detriment has to be assessed over the course of the relationship’ ([13]). It was right to have regard to the benefits that had accrued to B as a result of the relationship ([14]). But S had also benefited from B’s contributions ([15]).

There are cases where, looking at the course of the relationship from the point at which the promisor reneges on his promise, the benefit has been dissipated. That said, ‘cases involving couples living together lend themselves .. less readily to an arithmetical accounting exercise’ ([17]). Benefits flowed both ways and were incidents of the relationship ([18]).

As for unconscionability, S contended that the relationship was not a marriage and was not expected to be permanent. Thus, there was no unconscionability about withdrawing the security of accommodation. This failed. The point was that B had incurred detriment in reliance on the assurances:

‘It is the detrimental reliance which makes the promise irrevocable and leads to the conclusion, at the end of a broad inquiry, that repudiation of the assurance is unconscionable.’ ([20]).

The relief that was awarded was a payment to reimburse her for the money that she had spent on the home that she had left and on S’s property.

Michael Lower

 

 

Proprietary estoppel: expectations and proportionality

May 25, 2016

In Davies v Davies ([2016] EWCA Civ 643, CA (Eng)) a couple owned a farm. E, the second of three daughters, lived with the parents for much of the time up to the time of her final falling out with them. E worked for her parents for little money, although her pay increased over time. Around 1985 her parents assured E that the farmhouse would be hers one day. She later fell out with them and moved out.  E was later reconciled with her parents but left the farm a second time after another falling out. E’s father induced her to return by promising that she could live rent free in the farmhouse. During part of the time that she lived away from the farm she worked as a technician for a company that provided livestock reproduction services. She enjoyed this work and was good at it. After a third dispute with her father, he brought proceedings to evict her from the farmhouse. She relied on proprietary estoppel to claim some interest in the farmhouse and / or the business. The Court of Appeal had already considered the threshold question as to whether or not E had established a right to some form of relief and decided that she had (see here ). These proceedings were concerned with the question as to the form that the relief should take.

The parents made an offer to their daughter which was calculated by reference to the detriment that she had suffered in reliance on the assurances made to her. The daughter sought a much larger sum that would reflect the expectations induced by the assurances. Lewison LJ gave the only full judgment. He set out some core propositions about the law of proprietary estoppel ([38]). He referred to the controversy as to whether expectations or detriment should govern the relief ([39]) and the proportionality test in Jennings v Rice and to the idea that in ‘bargain’ type proprietary estoppel  cases the claimant’s expectations represent a starting point([40]). But where to go from there if the expectation is only a starting point? Lewison LJ accepted the following proposition suggested by counsel as a useful working hypothesis:

‘there might be a sliding scale by which the clearer the expectation, the greater the detriment and the longer the passage of time during which the expectation was reasonably held, the greater would be the weight that should be given to the expectation.’ ([41]).

The assurances that had been given envisaged that the daughter would work long-term in the family farming business but she left the business (twice temporarily and then permanently). This was not like the decades-long arrangements in Gillet v Holt or Thorner v Major ([48]). While E had some expectation of inheriting the business, it was relatively vague and so a modest award would suffice ([64]). Modest sums were also in order in respect of the ‘non-financial detrimental reliance’ involved in giving up her work as a technician and moving from her home to the farmhouse ([65] and to reflect the delay in receiving payments relating to past expectations (such as her unmet expectation that she would be a partner in the farming business) ([68]). So a modest uplift from the payment offered by the parents was in order but this would fall far short of a payment that would reflect E’s expectations in full.

Michael Lower

 

Post-acquisition constructive trust: evidential burden where there is reliance on an express statement. Detriment: where the plaintiff’s benefit outweigh any detriment

June 10, 2015

In Kwan So Ling v Woo Kee Yiu Harry ([2015] HKEC 694, CFI) the plaintiff (a widow) claimed that her parents-in-law had promised to give her and her husband two flats that they owned in Hong Kong. The plaintiff followed her husband to Hong Kong from the mainland. The parents-in-law transferred the title to one of the flats to the plaintiff and her husband. The plaintiff and her husband were allowed to make full use of the other flat (‘the second flat’) for several decades. Sometimes they lived in the second flat and sometimes they rented it out. The plaintiff’s husband and father-in-law died. The mother-in-law, shortly before her own death, transferred the title to the second flat to one of the plaintiff’s nephews. The nephew claimed that the plaintiff was a mere licensee of the second flat and he revoked this licence. The plaintiff claimed that she was the sole beneficial owner of the flat under the terms of a common intention constructive trust. Alternatively, she sought relief on the basis of proprietary estoppel.

The plaintiff’s claims failed for the simple reason that Godfrey Lam J found that there was no common intention / assurance. Nevertheless, he commented on the assertion that a more compelling standard of proof was needed since this would be a post-acquisition constructive trust. He suggested that this idea had no application where the trust was based on an express promise ([24]).

Godfrey Lam J also considered whether there was detriment. The plaintiff and her husband spent several hundred dollars to create internal partitions within the second flat in the 1970s. While this could potentially be detriment, it was not in this case since the income and other benefits that the plaintiff and her husband derived from the second flat far outweighed the expenditure ([53]). The same consideration was also relevant at the level of calculating any relief (53)).

The fact that the plaintiff made significant changes to her life by moving to Hong Kong was potential detriment. There was no causal linkage between this and any possible assurance by the parents-in-law. She moved to Hong Kong because of her love for her husband (54)).

Michael Lower

Proprietary estoppel: holistic approach to detriment

May 23, 2014

In Davies v Davies ([2014] EWCA Civ 568, CA (Eng)) a couple owned a farm. E, the second of three daughters, lived with the parents for much of the time up to the time of her final falling out with them. E worked for her parents for little money, although her pay increased over time. Around 1985 her parents assured E that the farmhouse would be hers one day. She later fell out with them and moved out.  E was later reconciled with her parents but left the farm a second time after another falling out. E’s father induced her to return by promising that she could live rent free in the farmhouse. During part of the time that she lived away from the farm she worked as a technician for a company that provided livestock reproduction services. She enjoyed this work and was good at it. After a third dispute with her father, he brought proceedings to evict her from the farmhouse. She relied on proprietary estoppel to claim some interest in the farmhouse and / or the business.

The English Court of Appeal was concerned only with the threshold question as to whether she had established her right to some form of relief on the basis of proprietary estoppel. The particular issue was that of detrimental reliance. She had received countervailing benefits and the parents disputed her claim that she had been able to earn more from her work as a technician than she had from her work on the farm.

The question was whether the first instance decision that she was entitled to equitable relief was perverse or clearly wrong (Suggitt v Suggitt). In Gillett v Holt, Robert Walker LJ stated that the question of detriment should be approached as part of a broad inquiry. On this basis, the judge at first instance had been entitled to find that there was detrimental reliance:

‘The judge had to determine whether there was substantial detriment by contrasting the rewards of the job at Genus with its better lifestyle with those of working on the farm (including the free accommodation at Henllan) with its greater burdens in terms of working hours and more difficult working relationships. I am not at all persuaded that his conclusion as to where the scales came down in this balancing exercise was wrong.’ (Floyd L.J at [54])

Michael Lower

Proprietary estoppel: ‘detriment’ and countervailing benefits

December 14, 2013

In Mak Ho Fung v Mak Kai ([2013] HKEC 1924, CA) the Court of Appeal had to consider the concept of ‘detriment’ and the linked concept of countervailing benefits.

Two aunts persuaded their nephew (the plaintiff) to move to Hong Kong from Guangzhou in the early 1980s. They assured him that they would give him their flat if he looked after them. In reliance, he officially changed his surname to that of his aunts and became the foster-son of one of them. He moved to Hong Kong. The aunts had looked after him and had given him a substantial amount of cash to start a business. The question was whether this amounted to detriment or not. The Court of Appeal found that it did.

The question had to be assessed as at the date when the aunts sought to resile from their assurance. Countervailing benefits had to be taken into account. The Court referred to Robert Walker LJ’s statement on the subject in Gillett v Holt (Chu JA at [28]). The judge at first instance had been justified in finding that the nephew had incurred detriment.

On the question of countervailing benefits:

‘[A]lthough countervailing benefits should be taken into account in judging detriments, the court should not embark upon a quantified comparison of the benefits received and the detriments suffered by a claimant. The issue is to be approached on the basis of a broad inquiry.

In view of the life-changing consequences of the giving up of the family name and the adoption of a new surname, notwithstanding the countervailing benefits relied on by the defendants, the Judge would be entitled in the exercise of his wide judgmental discretion to conclude that substantial detriment had been suffered by the plaintiff.’ ([37] – [38]).

Jennings v Rice was not relevant to the appeal since it considered the role of countervailing benefits in deciding on the appropriate relief and this was not the point being considered ([36]).

The aunts had sold the flat to third parties (other nephews). The nephews were ordered to transfer the property to the plaintiff.

Michael Lower

Proprietary estoppel: reliance and detriment

June 13, 2013

In Cheung Pak Chuen v Au Yeung Wing Chi ([2013] HKEC 721, CFI) C moved to Hong Kong to be with his father and step-mother. Encouraged by them, he brought his family to live in the property owned by the step-mother. He spent some money on the property and on the upkeep of his parents. In part, this was because of their assurance that the property would pass to him on their death provided he looked after them. Also at their suggestion, he gave up his employment and started his own business at the property. His father died. In her will, the step-mother left the property to her nephew rather than to C. After his step-mother’s death, C claimed that he had an interest in the property and he relied on proprietary estoppel.

The nephew argued that there was no reliance since all of C’s actions alleged to be the result of a reliance on the assurances were things that he would have done anyway as a good son. This failed since the assurances had been at least a partial cause of C’s actions (expenditure of money on the property and on looking after his parents).

The nephew also argued that there was no detriment since C had derived considerable advantages from being able to live at, and carry on his business from, the property. On balance, however, the court found that there was not merely a change of position but also detriment.

There is a summary of the law on proprietary estoppel at [72] – [81].

There was the necessary detrimental reliance in this case:

‘Looked at only in this way the detriment suffered by the Plaintiff is said by the Defendant not to be very substantial. Nevertheless, in my view, it is sufficient. He has spent money on the establishment of a business which, although no doubt primarily of benefit to himself and his own family, provided a basis on which he was able to reside with the Parents and, in due course, take care of them. He has provided financial support to the Parents via the “pocket money” some of which might well have been given in any event, but on the Plaintiff’s unchallenged evidence some not.’ ([86], Recorder Anthony Houghton SC)

When it came to the relief, the fact that there had been a clear assurance that the property would belong to C resulted in his being awarded outright ownership of the property ([93]).

Michael Lower

Pregnancy can be detrimental reliance for proprietary estoppel

January 24, 2013

In Li Yuk Ying v Wong Yuet Kam ([2013] HKEC 92, CFI) P was married to D3 and they had two daughters. D1 and D2 were D3’s parents. They wanted P and D3 to try for a son and so they bought a property next to theirs and assured P that it was intended that she should have a half share in it. In reliance on this, P allowed herself to become pregnant on two occasions (each pregnancy ending in a miscarriage). P and D3 divorced and the property was sold to a third party. P relied on proprietary estoppel to claim an interest in the property (or the proceeds of sale). The question was whether pregnancy could constitute detrimental reliance. The judge found that it could ([61]) and P was awarded a half share in the net proceeds of sale.

Other events that P sought to rely on as detrimental reliance (looking after daughters, giving up a promotion opportunity and giving up her job) were not detrimental reliance on the facts of the case because they were not causally linked to the assurance given to her. The same was true of normal household expenditure and doing the normal things that a daughter-in-law would do to help her in-laws.

Proprietary estoppel. Detriment: balancing advantages and disadvantages. Proportionality of relief.

November 9, 2012

In Henry v Henry ([2010] UKPC 3, PC) G owned a half share in a plot of land. She promised C, her grandson, that he would inherit the property if he cultivated it and looked after her until she died. He satisfied these conditions. C, however, sold the property to T. C claimed to be entitled to the half share on the grounds of proprietary estoppel. The Privy Council looked at whether there had been detrimental reliance (more than simple reliance). C had, it is true, benefited substantially from the arrangement during G’s lifetime (rent-free accommodation and living off the produce of the land). The court had, however, to look at whether there had also been detriment and to conduct a balancing exercise ([53]). This would lead the court in the present case to acknowledge that C had given up opportunities to better his life elsewhere and this outweighed the benefits ([61] – [62]). The claim was made out as against G.

The resulting equity was capable, in principle, of binding a successor such as T (a fact that was confirmed by section 28 of the Land Registration Act (St Lucia)). It was open to T to argue that there was nothing on the facts of the case to make it unconscionable for her to ignore C’s claim but she had not done so.

Proportionality is a relevant factor when granting the relief: ‘Proportionality lies at the heart of the doctrine of proprietary estoppel and permeates its every application.’ ([65] Sir Jonathan Parker) and so C should not get all of G’s half share in the plot but only half of that ([66]).