Culliford & Anor vThorpe

An informal agreement to share beneficial ownership of property may give rise to a common intention constructive trust where the claimant proves detrimental reliance. The agreement may be made after the legal owner acquired the property. Informality, uncertainty about the parties’ existing property rights, and the absence of an immediate transfer are not necessarily fatal. The central question is whether it would be unconscionable for the legal owner or estate to resile from the agreement. Where the agreement is established, subsequent conduct is relevant principally to show whether the parties varied their common intention. In an intimate relationship, ordinary benefits of shared occupation are not generally set off against detriment arising from reliance on the agreement. The normal remedy is to give effect to the agreed beneficial shares, subject to appropriate accounting for wrongful exclusion.

The claimants, personal representatives of Rodney Culliford, sought possession of a residential property formerly owned solely by the deceased. Jocelyn Thorpe accepted the claimants’ legal title but claimed a beneficial interest under a common intention constructive trust and, alternatively, proprietary estoppel.

Thorpe relied on an agreement made in May 2012 that the parties would share their properties and other assets. He alleged that he relied on that agreement by undertaking substantial refurbishment works at the property and at another property in Devon. The principal issues were whether the agreement existed, whether the parties’ mistaken understanding of Thorpe’s interest in the Devon property invalidated it, whether the works amounted to detrimental reliance, and what remedy should follow.

1. Common intention constructive trust. The defendant proved an agreement to share the parties’ respective properties and detrimental reliance on it. He carried out substantial works, using his labour and money, which he would not otherwise have undertaken. The agreement therefore created a common intention constructive trust of the Weston property in equal shares.
2. The agreement was not invalid because both parties mistakenly believed that the defendant already owned a share in the Devon property. The claim was equitable rather than contractual. The relevant question was whether, in the circumstances, it would be unconscionable for the deceased’s estate to deny the defendant the promised share.
3. An agreement to share beneficial ownership may be made after acquisition of the property. The reference in Lloyds Bank plc v Rosset to an agreement made after acquisition being exceptional did not establish a rule preventing such an agreement.
4. The words used in context were sufficiently clear. An informal promise need not create an immediate proprietary interest. Once acted upon to the promisee’s detriment, it may become unconscionable for the legal owner to resile from it.
5. There was no sufficient evidence that the parties intended beneficial joint tenancy with survivorship. The defendant therefore held a one-half beneficial interest as tenant in common. Subsequent conduct did not show any variation of the established agreement.
6. The court rejected an arithmetical set-off based on free accommodation and ordinary household benefits. Those benefits largely arose from the parties’ relationship or from implementing the agreement. The appropriate deduction was one-half of the occupation rent for the period after the deceased’s death during which the defendant excluded the personal representatives.
7. The property was to be sold. After payment of secured liabilities, the net proceeds were to be divided equally, subject to the occupation-rent deduction. The same practical remedy would have been appropriate on the proprietary-estoppel analysis.