AIB Group (UK) Plc v Turner & Ors

A common intention constructive trust requires an agreement, arrangement or understanding that the property is to be shared beneficially, followed by detrimental reliance. Proprietary estoppel requires an expectation or assurance of an interest in land, reliance, detriment and unconscionability in allowing the assurance to be denied. Actual occupation under the Land Registration Act 2002 is a fact-sensitive question. Relevant considerations include physical presence, permanence and continuity, intention, the length and reason for absence, the nature of the property and the claimant’s circumstances. Prolonged residence elsewhere may defeat actual occupation, even where the property remains furnished and is regarded as a home. Abuse of process is determined by a broad, merits-based assessment of all the circumstances.

AIB obtained a consent possession and money order against Mr and Mrs Turner in respect of Etwall Lawn, including The Cottage. Maxine Turner was later joined and counterclaimed for a declaration that The Cottage was held for her absolutely and free from the Bank’s charge.

She alleged a common intention constructive trust or proprietary estoppel based on payments made after her first husband’s death and her occupation of The Cottage. Alternatively, she argued that any equitable interest was overriding because she was in actual occupation when the Bank’s mortgage was granted. The Bank relied on a consent deed, subrogation to earlier mortgagees’ rights and abuse of process.

1. The counterclaim was dismissed on the merits. Maxine Turner failed to establish either a common intention constructive trust or proprietary estoppel. The evidence did not establish an agreement, arrangement or understanding that she would acquire a beneficial interest, nor any representation or promise which made it unconscionable for the Turners to deny such an interest.
2. The payments of the death-in-service benefit and the proceeds of sale of 21 Paskin Close were more consistent with family support, investment in the Company and protection of Maxine Turner’s finances than with payment for The Cottage. Her statements in 1998, 2006 and 2014 that The Cottage belonged to the Turners materially contradicted the alleged beneficial ownership.
3. If an equitable interest had existed, it would not have bound the Bank as an overriding interest. Actual occupation is a question of fact requiring evaluation of all relevant circumstances. Maxine Turner had been living in Barbados for a substantial period before 11 October 2005. The Cottage remained furnished and available to her, but she had moved to her second home and was only an occasional visitor. Her son’s use of The Cottage did not amount to her occupation.
4. If the court had been wrong on both the equitable-interest and occupation issues, the Bank would have been entitled in principle to subrogation to the priority rights of Coutts Finance and, where applicable, Coutts Bank. Subrogation is an equitable and flexible remedy directed to reversing or preventing unjust enrichment. Any recovery would require accounts and inquiries as to the secured debt actually discharged.
5. The counterclaim was not an abuse of process. Although Maxine Turner could have sought joinder before the 2013 possession order, the court applied the broad, merits-based approach in Johnson v Gore-Wood. Her lack of independent advice, vulnerability, assurances from the Turners and the circumstances in which she learned that The Cottage might be repossessed made it unjust to strike out the counterclaim.

First-instance decision. The judgment records that the Bank obtained a consent possession and money order against Mr and Mrs Turner on 12 December 2013. Maxine Turner was joined as a defendant by order dated 20 October 2014 and brought the counterclaim determined in this judgment.