Wodzicki v Wodzicki

Where a court infers the parties’ actual intention from the evidence, there is no room for a fallback intention imputed on the basis of fairness. The common-intention constructive-trust approach may extend beyond cohabiting couples, but its application remains fact-sensitive.

A proprietary estoppel claim against a joint owner requires proof that the joint owner knew of the relevant promise. Joint tenancy principles do not permit one owner’s beneficial interest to be disposed of without that owner’s knowledge. A periodic-tenancy decision concerning notice to quit does not govern disposal of a beneficial interest.

The appellant claimed sole beneficial ownership of a house registered in the joint names of her late father and his second wife, the respondent. The property had been occupied exclusively by the appellant and her children since purchase. The appellant relied on a common-intention constructive trust and proprietary estoppel, based principally on an alleged promise by her father to transfer the property to her.

The respondent’s possession claim was struck out for non-payment of court fees. On the appellant’s counterclaim, HH Judge Faber held that the appellant and respondent had beneficial interests reflecting their respective contributions, and also granted the appellant a life interest and occupation. The appellant appealed only against the beneficial-ownership decision. The central issues were whether the judge should have applied the approach in Jones v Kernott and whether the appellant established proprietary estoppel against the respondent.

David Richards LJ delivered the judgment of the court. Gloster LJ and Tomlinson LJ agreed. The appeal was dismissed.

1. The appellant was not a registered proprietor and therefore had to establish her beneficial interest. The judge was entitled to find that the alleged promise was conditional on the father deciding that the appellant was ready, and to infer from the fact that the loan had been repaid in 1996 without a transfer that he had not reached that conclusion. The judge was also entitled to rely on the property being registered in the respondent’s name, the absence of evidence that the respondent knew of the promise, and the respondent’s letter indicating that she regarded herself as having a beneficial interest.
2. The appellant’s reliance on Jones v Kernott [2011] UKSC 53 did not assist. Once the judge had inferred the parties’ actual intention from the evidence, there was no scope to impute a different intention on the basis of fairness. The approach may apply outside the precise confines of cohabiting couples, as illustrated by Gallarotti v Sebastianelli [2012] EWCA Civ 865, but this was not an appropriate case because the relationship between the appellant and respondent was not close and there was no evidence that the respondent intended to make a gift of her interest.
3. The argument that the respondent was bound by the father’s promise because they were joint tenants was rejected. The reasoning in Hammersmith & Fulham LBC v Monk [1992] 1 AC 478 concerned notice to quit under a periodic tenancy. It did not apply to a purported disposal of a beneficial interest.
4. The proprietary-estoppel claim failed for the same reason. The requirements stated in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133 included detrimental action, to the knowledge of the person against whom relief was sought, in response to an expectation created or encouraged by that person. The appellant could not establish the respondent’s knowledge of the father’s promise.
5. The existing order left the respondent with an interest limited to any contribution she made to the mortgage, with the appellant holding the balance. If the respondent had made no contribution, the resumed account and enquiry could determine that the appellant held 100%, subject to any occupation rent. The appeal had therefore been practically unnecessary.

1. Court of Appeal (Civil Division) — On 24 February 2017, the court dismissed the appeal against the beneficial-ownership order: [2017] EWCA Civ 95.
2. County Court at Central London — HH Judge Faber held that the appellant and respondent had beneficial interests reflecting their respective contributions, while granting the appellant a life interest and right to occupy the property. The judgment was given on 24 September 2014.