Trust Principles: There are different ways to skin a cat

01 Jan 2018


A daughter’s claim to be the sole beneficial owner of a property registered in the name of her late father and his second wife was considered by the Court of Appeal in Wodzicki v Wodzicki [2017] EWCA Civ 95.

The Court of Appeal dismissed an appeal against a County Court decision that the extent of the appellant’s beneficial ownership in a property which she had exclusively occupied with her children for nearly 30 years but which was registered in the joint names of her late father and his second wife, the respondent should be determined by an accounting process. It rejected the appellant’s argument that she was entitled to sole beneficial ownership by way of either an inferred common intention constructive trust or proprietary estoppel. It agreed with the County Court that the respondent held the property on trust with appellant having a life interest and the extent of her further beneficial ownership could be determined by an accounting process.

Juliette was the adult daughter from her father’s, George’s, first marriage. When she decided to settle down, George and Monique (his second wife) agreed to buy her a home. The home was bought in the joint names of George and Monique. What was not agreed was the extent of the Juliette’s interest in the property, if any. George promised to transfer the legal title to Juliette when a purchase loan had been paid off. Monique had no knowledge of that promise.

Juliette lived in and maintained the home for many years. Neither George nor Monique ever contributed to its upkeep. George visited occasionally, but Monique never did.

George died in 2010, legal ownership had not been transferred and Monique brought possession proceedings, relying on survivorship. Juliette counterclaimed for a beneficial interest by way of constructive trust or proprietary estoppel.

The County Court held that Juliette had a life interest in the home and any additional beneficial interest was to be determined on the basis of a resulting trust after an accounting process. Monique provided no evidence of contribution in that accounting process but the court refused to declare Juliette 100% beneficial owner.

There were two issues on the appeal:

  • whether the County Court was right to use a resulting trust mechanism to determine each party’s beneficial share when this had been disapproved of by Lord Walker in Stack v Dowden [2007] UKHL 17, [2007] All ER (D) 208 (Apr)
  • whether the principles of proprietary estoppel could bind a passive joint owner to the representations of their joint owner

The Court of Appeal decided that a resulting trust mechanism was appropriate here. It held that it would not be appropriate in the instant case to apply the approach laid down in Jones v Kernott [2011] UKSC 53, [2012] 1 All ER 1265 to determine the extent of the beneficial interests under an inferred common intention constructive trust. That case had concerned co-habiting couples, although the approach had subsequently been applied in Gallarotti v Sebastianelli [2012] EWCA Civ 865, [2012] All ER (D) 55 (Jul), a case concerning close friends. The court in this case held that there was a distinction between a situation where the parties were once very close and one where the parties were part of a family but had never been close. It was the closeness that was more important than the family connection. Even though this was a non-commercial situation, resulting trust principles should apply.

The court also found that the indivisibility of joint tenants in landlord and tenant law did not extend across into equity, and so it was necessary to reject the appellant’s argument, relying on Hammersmith and Fulham LBC v Monk [1992] 1 All ER 1, that the respondent was bound by her late husband’s promise to transfer the property to the appellant, even though the respondent had not been aware of that promise.

The court consequently rejected Juliette’s case for sole beneficial ownership based on proprietary estoppel for the same reason as the case based on an inferred common intention constructive trust: she had not established that her George’s promise was made with Monique’s knowledge.

Finally, Richard LJ indicated that, on the current evidence, he could not understand why the accounting process to determine the extent of the parties’ beneficial interests had not achieved 100% beneficial ownership for Juliette.

This judgment explains that resulting trust principles apply more extensively in a non-commercial context than many commentators may have realised.

What the judgment leaves unresolved is why, in equity, it is appropriate to bind a single owner to their unconscionable conduct but that exactly the same conduct on the part of a joint owner leaves the victim with no remedy. In this case there was no finding of unconscionable conduct as the trial judge had been able to grant the appeal beneficial ownership under a common intention trust.

Michael Paget appeared for Juliette.