Woodman v Tracey

Where a person contributes to the acquisition or transfer of a property placed in another’s sole name, the court must determine the parties’ common intention from their conduct. A contribution need not consist of a direct cash payment. Transferring an existing beneficial interest, or procuring the transfer of another co-owner’s interest, may constitute a valuable contribution. The court assesses the parties’ intentions at the time of the transfer. In a constructive-trust claim, illegality in the transaction does not defeat the claim where the claimant can establish the beneficial interest without relying on the fraud. On the conventional approach, the property should ordinarily be sold and the net proceeds divided after appropriate adjustments, although the court may leave an unchallenged alternative order undisturbed.

The parties were formerly engaged and intended to live together in a house previously owned by Anne Woodman and her former husband. David Tracey carried out improvement works and later became the sole registered proprietor and mortgagor. The transfer was achieved through a fictitious payment of £7,000, which formed part of a fraud on the mortgagee.

After the relationship ended, Mrs Woodman claimed that Mr Tracey held the house on constructive trust for both of them. His Honour Judge Poulton found that she had a beneficial half-share, subject to an adjustment for mortgage payments and improvements, and ordered Mr Tracey to pay her £8,770 or face a sale. Mr Tracey appealed, challenging the constructive-trust finding, the effect of the fraud and the valuation adjustments.

1. Appeal dismissed. The finding that Mrs Woodman had a beneficial interest in the property was upheld.
2. The relevant time for assessing the parties’ contributions and intentions was the completion of the transfer in April 1998. The property then had substantial equity. Mrs Woodman contributed by transferring her own beneficial share and securing the transfer of her former husband’s share, even though she made no direct cash payment.
3. Once a contribution was established, the court had to infer the parties’ common intention from their conduct. The parties’ engagement, intended marriage and arrangements for joint occupation supported the judge’s conclusion that Mrs Woodman retained a half-interest. The court found no error of law in applying the principles associated with Gissing v Gissing [1971] AC 886 and in considering the guidance in Lloyds Bank Plc v Rosset [1991] 1 AC 107.
4. The fraud on the Abbey National did not defeat the claim. Mrs Woodman did not need to rely on the fraud in order to establish her beneficial interest, following the approach considered in Tinsley v Milligan [1994] 1 AC 340.
5. The allowance for mortgage payments and improvement works was a factual assessment with which the appellate court had no basis to interfere. Although the conventional order would ordinarily have been a sale followed by division of the net proceeds, as explained by Turton v Turton [1988] Ch 542, neither counsel objected to the judge’s fixed-sum order. It was therefore left undisturbed. The stay was discharged, subject to any application for further time to raise the necessary funds.

• Court of Appeal (Civil Division): appeal from the Canterbury County Court dismissed; the order requiring payment of £8,770 or sale of the property was left in place.
• Canterbury County Court: His Honour Judge Poulton, on 3 February 2000, found that Mrs Woodman had a beneficial half-share subject to adjustments and gave judgment for £8,770.