McDonnell v Loosemore & Anor

A presumed resulting trust arising from a financial contribution to the purchase of property may be rebutted by evidence that the contributor intended an outright gift. Relevant evidence may include the parties’ evidence, contemporaneous solicitor correspondence, the contributor’s decision not to take security, and a legitimate reason for avoiding a proprietary interest. A substantial contribution does not itself compel a beneficial interest. An appellate court should not decide the dispute on a new loan theory that was never advanced below. A conditional gift requires evidence of the conditions said to create a continuing trust.

Edward McDonnell contributed £110,000 towards the purchase of a house bought in the joint names of his son, Mark, and daughter-in-law, Wendy Loosemore. Edward claimed a beneficial interest, or alternatively an entitlement to the sale proceeds. The district judge found that the money was an unconditional gift and that no legal interest arose.

On appeal, HHJ Steel held that the money was a loan. Wendy appealed. Edward cross-appealed against the finding that the presumption of resulting trust had been rebutted. The Court of Appeal therefore considered whether the loan theory was open to the circuit judge and whether the evidence entitled the district judge to find an unconditional gift.

1. Disposition. Wendy’s appeal was allowed because the loan theory had not been advanced at trial or in the notice of appeal. Edward accepted that the circuit judge had been plainly wrong to decide the case on that alternative basis. Edward’s cross-appeal was dismissed, and the district judge’s order was restored.
2. The principal issue was whether Edward’s contribution gave rise to a resulting trust which had been rebutted. The district judge was entitled to consider the evidence of all three interested parties. That evidence supported the conclusion that Edward intended to transfer the money outright, in the expectation that he would live with the family and receive care.
3. The contemporaneous documents materially supported that conclusion. Edward had been advised about securing the money, but did not wish to take security or claim an interest in the property. The correspondence repeatedly treated the money as being given and recorded that Edward did not want security. The court was entitled to regard that evidence as inconsistent with a retained beneficial interest.
4. Edward’s substantial contribution, the absence of a formal declaration, and the possibility that he wished to avoid having capital considered if he required institutional care did not compel a different result. The presumption of advancement played no role. If credible evidence had shown that Edward secretly retained a beneficial interest for the latter purpose, the court would have entered the difficult area identified in Tinsley v Milligan [1994] 1 AC 340, but that issue was not reached.
5. The suggestion of a conditional gift was also rejected. Conditions said to create a trust requiring repayment or a continuing interest would have needed evidential support. The judge was entitled to find that the only arrangements were that the money would fund the family home and that Edward would be provided with care.

1. Court of Appeal (Civil Division): allowed Wendy’s appeal, dismissed Edward’s cross-appeal, and restored the district judge’s order.
2. Liverpool County Court: HHJ Steel, on 15 January 2007, held that the £110,000 was a loan and reversed the district judge’s conclusion.
3. District Judge Humphreys-Roberts: on 14 August 2006, held that the money was an unconditional gift and that Edward had no legal interest in the property.