McGrath v Wallis

The presumption of advancement in a parent-and-child purchase of a home is a judicial instrument of last resort. It is readily rebutted by comparatively slight evidence. The court must examine all the circumstances, including why legal title was placed in the child’s sole name, whether the parent communicated any decision to abandon a proposed trust, and whether there was a reason to divest the parent of an interest. An unexecuted declaration of trust is the best evidence of intended shares, but does not necessarily determine them. Where actual contributions differ from the proposed proportions, beneficial interests may be divided in proportion to those contributions.

The plaintiff, acting as administratrix of her father’s estate, claimed a beneficial share in a bungalow purchased in the defendant son’s sole name. The father provided the proceeds of sale of the former family home, while the son obtained the mortgage required for the purchase. A solicitor prepared, but the parties never executed, a declaration of trust proposing an 80 per cent share for the father and 20 per cent for the son.

The county court dismissed the claim, holding that the presumption of advancement had not been rebutted. The appeal concerned the father’s actual intention and, if he retained an interest, the extent of that interest.

Lord Justice Nourse gave the leading judgment. Lord Justice Hirst and Sir Ralph Gibson agreed with his reasons. The appeal was allowed.

1. The presumption of advancement, in its application to a house acquired for joint occupation, is a judicial instrument of last resort. The court must examine all the circumstances to determine the parent’s actual intention. The evidence here was substantially more than the comparatively slight evidence capable of rebutting the presumption.
2. The county court’s inference that the father had instructed the solicitor not to proceed with the declaration of trust was not supported by the rejected recollection of the solicitor. The decisive circumstances pointed the other way. The son alone was acceptable as a mortgagor, which explained why the property was conveyed into his sole name despite the proposal for an 80/20 beneficial division. That circumstance was probably sufficient in itself to rebut the presumption.
3. The father had never told the son that he had abandoned the proposed trust. It was almost inconceivable that he would have done so without informing him. No real reason had been shown why the father would have divested himself of all interest in the property. The retention of the unexecuted declaration on the solicitor’s file was therefore probably inadvertence.
4. [1970] AC 777 was applied. The observations that the relevant presumptions remain useful but are readily rebutted were treated as applicable to a father-and-child case. The presumption was rebutted.
5. The unexecuted declaration was the best evidence of the intended proportions, but its proposed 80/20 division was based on the gross sale price and net acquisition cost. The parties’ beneficial interests were more properly assessed by reference to their actual contributions. The father contributed approximately 70 per cent and the son approximately 30 per cent of the acquisition cost. The plaintiff was entitled to a declaration that the property was held 70 per cent for the father’s estate and 30 per cent for the defendant, subject to credit for the £2,000 already paid.

The appeal was allowed with costs here and below, subject to leave for enforcement, with legal aid taxation for both parties.

• Court of Appeal (Civil Division): [1995] EWCA Civ 14. Appeal from the Luton County Court allowed, with costs here and below.
• Luton County Court: His Honour Judge Simmons dismissed the claim, holding that the presumption of advancement had not been rebutted.