Hyett v Stanley & Ors

In a cohabitation dispute, an express agreement, arrangement or understanding that property is to be shared beneficially may establish a constructive trust, even where the language is imprecise. Once an immediate beneficial interest is established, the party asserting that it is limited or defeasible must prove that limitation. Constructive trust and proprietary estoppel remain distinct doctrines, although estoppel principles may provide guidance. Beneficial shares are determined by common intention, including the parties’ shared exposure to mortgage liability. Mortgage-protection policy proceeds held jointly must be applied as agreed to discharge the secured debt, leaving the survivor entitled only to the balance.

Miss Hyett appealed from a decision of the High Court, Chancery Division, which rejected her claim to a half beneficial interest in the farm where she had lived with Mr Freeman and held that the entire beneficial interest formed part of his estate. The High Court also rejected her claim to repayment of £91,337 from the proceeds of a mortgage-protection policy. The appeal concerned whether Mr Freeman’s 1992 assurance, given when Miss Hyett became jointly liable for refinancing secured on the farm, created an immediate and absolute beneficial interest; the extent of that interest; and whether the policy proceeds had to be used to discharge the mortgage.

1. Farm. Sir Martin Nourse gave the judgment, with Lord Justice Keene and Lord Justice Peter Gibson agreeing. The appeal was allowed on the beneficial-ownership issue. The judge’s primary findings of fact were not challenged. The question was whether the inferences drawn from those facts were justified.
2. Under the first category identified in Lloyds Bank plc v Rosset [1991] 1 AC 107, express discussions may establish an agreement or understanding that property is to be shared beneficially. Miss Hyett’s agreement to become jointly and severally liable for the Barclays borrowing, together with the assurance that having her name on the mortgage gave her a right to the farm, established an immediate beneficial interest. The evidence did not establish that the interest was limited to the period of the relationship or defeasible on Mr Freeman’s death. The interest was therefore immediate and absolute.
3. The appellate court was entitled to reconsider the inference. Watt v Thomas [1947] AC 484 concerned disputed primary facts and did not prevent review where the primary facts were accepted and the issue was the proper inference from them.
4. Under Gissing v Gissing [1971] AC 886, the extent of the beneficial interest depended on the parties’ common intention, expressed or inferred from all the circumstances. The transaction conferring the interest also placed both parties at equal risk through joint and several mortgage liability. They could only reasonably have intended equal shares. Miss Hyett was accordingly entitled to a half share.
5. Proprietary estoppel was not the appropriate doctrinal basis. The two doctrines remained distinct, although principles of proprietary estoppel could provide guidance on reliance and quantification. In any event, retaining the farm interest while also retaining the Alba policy proceeds was not unconscionable in the circumstances.
6. RSA policy. The appeal was dismissed on the policy issue. The policy was mortgage protection, and the documents and express agreement showed that its proceeds were to discharge the mortgage. The joint-tenancy wording entitled Miss Hyett to the ultimate balance only. She was not entitled to repayment of the £91,337 applied towards the mortgage and was liable to account for the relevant mortgage discharge, retaining the ultimate balance of £8,187. The order was therefore: appeal allowed in part; 80 per cent of the costs in the Court of Appeal and two-thirds of the costs below; permission to appeal to the House of Lords refused.

• Court of Appeal (Civil Division): In [2003] EWCA Civ 942, the appeal was allowed as to the farm and dismissed as to the RSA policy proceeds.
• High Court, Chancery Division, Birmingham District Registry: Her Honour Judge Kirkham rejected the claim to a beneficial interest in the farm and the claim concerning £91,337 of the RSA policy proceeds.