Van Laethem v Brooker & Anor

A beneficial interest may arise through common intention constructive trust or proprietary estoppel where assurances or conduct induce detrimental reliance. The court assesses the parties’ objectively understood intentions and whole course of dealing. Detriment may include substantial non-financial contributions. Where precise shares are uncertain, the court determines a fair outcome. Relief must remain proportionate to the expectation, detriment and unconscionability, providing no more than the minimum equity needed to do justice.

The claimant sought a declaration under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 that she had interests in Caradoc Court and adjoining development land. She relied on common intention constructive trust and proprietary estoppel.

The parties had undertaken several property ventures during their long relationship. The claimant had provided security for part of Caradoc’s purchase price and contributed money and labour to its restoration. The defendants contended that her interest was limited to a secured loan and that Oakleigh had settled all claims. The court also considered a counterclaim alleging misrepresentation and overpayment.

The issues were whether the claimant had acquired equitable interests, their extent, and the appropriate relief.

1. The claimant was induced to believe that she would have security and an interest in Caradoc Court. She relied on those assurances by mortgaging Basildon House, applying its proceeds to the ventures and contributing substantial labour. That reliance was detrimental, and it was unconscionable to deny her interest. A proprietary estoppel therefore arose in relation to Caradoc Court.
2. The 1993 documents contemplated converting her secured interest into a 50 per cent equity interest in the Development Land. Although no written agreement was completed, the parties subsequently proceeded as if the arrangement existed, or the defendant led her to believe that it did. An interest therefore arose by constructive trust, alternatively by proprietary estoppel.
3. Constructive trust and proprietary estoppel could produce the same outcome. Where shares were not agreed, the court assessed the whole course of dealing, including financial and non-financial contributions and benefits already received.
4. Relief had to be proportionate to expectation and detriment. The appropriate overall figure was £700,000. After crediting £280,000 retained from Oakleigh, a further £420,000 was due. The form of relief was left for further argument.
5. The counterclaim was dismissed. There was no settlement agreement, misrepresentation or withholding of the Garden House proceeds.

First-instance judgment of the High Court (Chancery Division). No earlier decision in the same proceedings is stated.