Elithorn v Poulter & Ors

Where legal title to property is put into joint names and one co-owner funds the other’s share by a loan, the funded party is a true purchaser and obtains the corresponding beneficial interest on completion. The repayment obligation is a separate debt. It does not make the interest conditional on repayment unless that is the parties’ clear arrangement. A trial judge who finds such a loan cannot at the same time treat the funder as sole beneficial owner. Where legal title is joint, the burden of proving that beneficial interests differ from the legal interests lies on the person asserting the difference.

The appellant appealed against an order of His Honour Judge Levy QC in the Central London County Court. The order declared that Rose Hill, although purchased in joint names, was held on resulting trust for the respondents as executors and trustees of Madeline Ettlinger’s estate. It also required transfer of the property, delivery of possession, payment of trespass damages and costs.

Madeline had supplied all the purchase money. The appellant contended that she had lent him the money representing his half share, making him a beneficial co-owner subject to a repayment obligation. The respondents contended that he was to acquire a beneficial share only if he later contributed from the proceeds of selling another property. The central issue was the proper interpretation of the trial judge’s findings.

1. Majority disposition. Rimer LJ, with whom Wilson LJ agreed, allowed the appeal and set aside the order dated 13 October 2006. The form of the further order was to be determined after hearing the parties because the respondents had advanced an alternative claim which the trial judge had not needed to decide.
2. Interpretation of the trial judgment. The majority held that paragraphs 71 and 72 of the trial judgment made one factual finding, followed by alternative legal analyses of resulting and constructive trusts. Properly understood, the judge found that Madeline had lent the appellant an unspecified part of the purchase price from the outset. The finding was open on the evidence, sufficiently clear, and was not challenged by cross-appeal.
3. Beneficial ownership. Once that finding was made, the appellant was a true purchaser who had provided half the purchase price through the loan and had been registered as a joint proprietor. The ordinary presumption was therefore that he acquired a beneficial half share on completion. His continuing liability to repay the debt did not postpone or condition that acquisition. Treating him as having no beneficial interest while leaving him indebted for half the purchase price created an arrangement which had not formed part of the respondents’ case.
4. Burden of proof. Wilson LJ noted that Stack v. Dowden [2007] UKHL 17, [2007] 2 AC 432 made clear that, where legal ownership is joint, the burden lies on the person seeking to show that the beneficial interests differ from the legal interests. The pre-existing position was left unanswered.
5. Dissent. Rix LJ would have dismissed the appeal. He interpreted the findings as establishing a conditional arrangement under which the appellant could acquire up to a half share only by making a later contribution from the sale of Constantine Road. Since no contribution was made, he considered that no beneficial interest arose.

1. Court of Appeal (Civil Division) — By a majority, Rimer LJ and Wilson LJ allowed the appeal and set aside the order of the Central London County Court. Rix LJ dissented. [2008] EWCA Civ 1364
2. Central London County Court — His Honour Judge Levy QC declared that Rose Hill was held on resulting trust for the respondents and ordered transfer, delivery of possession, trespass damages and costs.