Dibble v Urs Bernhard Pfluger

In a claim to a beneficial interest in property, a trial judge must resolve the purpose and use of payments and the parties’ shared intentions where those matters could support the claim. Shared intentions may be actual, inferred or imputed and must be assessed against the parties’ whole course of conduct. A failure to make material findings or explain why no inference should be drawn is a serious flaw, even if other findings stand. Where an agreement to marry has ended, the Law Reform (Miscellaneous Provisions) Act 1970 applies relevant property rules for spouses to property in which either party had a beneficial interest during the engagement. The Matrimonial Proceedings and Property Act 1970 also requires consideration of substantial contributions to improvement and any contrary agreement. An appeal may be remitted for a limited retrial.

The parties cohabited for many years and held English properties under express arrangements. The claimant’s parents later gave her land in Poland, on which a house was built. The defendant made several payments towards the Polish property and related expenses.

After the relationship ended, the claimant sought the sale of Alinora Crescent and an equal division of its proceeds. The defendant counterclaimed for a beneficial interest in the Polish property or repayment of his contributions. The County Court ordered the sale of Alinora, rejected the defendant’s counterclaim and directed itself by reference to Stack v Dowden [2007] UKHL 17. The central issue on appeal was whether the Recorder had adequately determined the purpose, use and legal effect of the material payments.

Ward LJ delivered the leading judgment. Lloyd LJ and Pitchford LJ agreed. The appeal was allowed.

1. The Recorder’s judgment was seriously flawed. He had failed to make adequate findings about the use of the £6,000 payment in March 2004 and the £12,000 payment in June 2006, although each was capable of supporting an inference of common intention. He had also failed to decide whether the £15,000 payment in July 2004 was a loan, to whom it was lent and whether it was repaid. Since that payment had been used to facilitate construction of the roof, its effect on any beneficial interest also required determination.
2. The Court held that the combined effect of section 2 of the Law Reform (Miscellaneous Provisions) Act 1970 and section 37 of the Matrimonial Proceedings and Property Act 1970 should be considered. Following termination of an agreement to marry, the relevant property rules concerning spouses apply to property in which either party had a beneficial interest while the agreement was in force. The court also had to consider whether a contribution in money or money’s worth was substantial, whether there was an express or implied contrary agreement, and what share would be just if no share had been agreed.
3. Lloyd LJ observed that the Recorder was not criticised for failing to address those statutory provisions because they had not been pleaded or raised in the Appellant’s Notice. If relied upon at the retrial, the defendant had to amend his Defence and Counterclaim, with consequential amendments by the claimant.
4. The case was remitted to a different County Court judge for a limited retrial concerning only the effect of the £6,000, £15,000 and £12,000 payments on the claim to a beneficial interest in the Polish property. The proprietary estoppel and restitution claims were not to be reopened. Execution of the order for sale of Alinora was stayed pending determination of the counterclaim, so that the parties’ affairs could be resolved together.

• Court of Appeal (Civil Division): Appeal allowed. The matter was remitted to a different County Court judge for a limited retrial, and execution of the order for sale of Alinora was stayed.
• Central London County Court: Mr Recorder Hockman QC rejected the defendant’s claim to a beneficial interest in the Polish property, dismissed the proprietary estoppel and restitution claims, and ordered the sale of Alinora with equal division of the proceeds.