Chapman v Jaume

Where an agreement to repay money is established but its precise repayment conditions are not proved, the claim does not necessarily fail. The court may infer that the money was a loan repayable within a reasonable time after demand, assessed according to the facts. Payment between persons without circumstances giving rise to advancement ordinarily imports an obligation to repay. There is no presumption of advancement between unmarried cohabitants, as recognised in Seldon v Davidson [1968] 1 WLR 1083 and Stack v Dowden [2007] UKHL 17. Where the claim is for repayment of a loan, resulting or constructive trust analysis is unnecessary.

Mr Chapman and Mrs Jaume were former cohabitants. After property occupied by Mrs Jaume was transferred into her sole name, Mr Chapman paid for substantial improvements. He claimed that the payments were loans repayable on sale of the property or when Mrs Jaume’s youngest child reached 18, whichever was earlier. Mrs Jaume said the expenditure was a contribution to household costs.

The County Court rejected Mrs Jaume’s account but found that some agreement existed and that the precise repayment conditions had not been proved. It dismissed the claim. Mr Chapman appealed, raising whether the finding of an agreement supported an obligation to repay within a reasonable time and whether any presumption of advancement applied.

Appeal allowed. Lord Justice Lewison gave the reasons with which Lord Justice Thorpe and Lord Justice Etherton agreed. The matter was remitted to the County Court to determine the amount repayable.

1. The judge had rejected the contention that the payments were contributions to household expenditure. Mrs Jaume had not alleged that the payments were gifts. The judge had nevertheless found that there was some form of agreement, although it was not completely finalised or consistently expressed.
2. Failure to prove the precise conditions said to govern repayment did not justify dismissing the claim entirely. The proper inference from the findings was that the money was a loan repayable within a reasonable time after demand. What constituted a reasonable time depended on the facts. In this case, the latest reasonable time was when the property was sold.
3. The court applied the principle discussed in Seldon v Davidson [1968] 1 WLR 1083, that payment of money prima facie imports an obligation to repay unless circumstances support advancement. The judge’s attention had not been drawn to that authority.
4. The argument that a presumption of advancement applied was rejected. Stack v Dowden [2007] UKHL 17 confirmed that there is no presumption of advancement between unmarried cohabitants. The judge’s findings also contradicted the characterisation of the expenditure as a household contribution.
5. The law of resulting trusts had no real relevance because the claim was for repayment of money said to have been lent. The case was not one requiring analysis of constructive trusts.

• Court of Appeal (Civil Division): Appeal allowed and the matter remitted to the County Court to determine the amount repayable.
• Central London County Court: HH Judge Hand QC dismissed the claim after finding that some agreement existed but that the precise repayment conditions had not been proved.