Ann Nilsson & Anor v Collette Cynberg

An express declaration of trust is conclusive as to beneficial ownership unless rectified or rescinded, varied by subsequent agreement, or affected by proprietary estoppel. A subsequent agreement is not limited to a formal agreement complying with the Law of Property (Miscellaneous Provisions) Act 1989; it may include a later common intention constructive trust. The timing of the equity is critical. A prior or contemporaneous understanding cannot override the express declaration, but a later equity may do so. For proprietary estoppel, detriment must be assessed in the round. It may include assuming mortgage liabilities, foregoing financial remedy proceedings and home expenditure. The relevant question is whether the assurances caused the detriment and made it unconscionable to resile from them.

The parties bought a property in joint names in 2001 and executed a TR1 declaring that they held it as joint tenants. After their separation in 2009, the husband told the wife that the property was hers. She thereafter paid the mortgage and household expenses, refrained from pursuing matrimonial financial remedy proceedings and carried out improvements.

The husband was later made bankrupt, and his trustees claimed an interest in the property. The County Court found that a common intention constructive trust and, alternatively, proprietary estoppel had arisen in 2009, leaving the wife as sole beneficial owner. It dismissed the trustees’ counterclaim under section 339 of the Insolvency Act 1986. The trustees appealed on four grounds concerning the effect of the express declaration, detriment, the parties’ understanding and the date on which the equity arose.

1. Ground 1. The application for permission to appeal was dismissed. An express declaration of trust is conclusive subject to rectification or rescission, subsequent agreement or proprietary estoppel. A subsequent agreement may consist of an informal common intention constructive trust arising after the declaration. It is not confined to an agreement satisfying section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Clarke v Meadus and the reasoning in Bahia v Sidhu supported that conclusion. The contrary view in Re Iqbal (Nilsson v Iqbal) was respectfully rejected.
2. Ground 2. The appeal was dismissed. Detriment for proprietary estoppel is assessed in the light of all relevant circumstances. The material detriment was not confined to relatively modest improvements. It included foregoing ancillary relief proceedings and assuming the entirety of the mortgage repayments, while on the trustees’ case only half the resulting equity would accrue to the wife. Those matters were sufficient to make it unconscionable for the husband, or his trustees, to claim the remaining beneficial interest.
3. Ground 3. The appeal was dismissed. The trial judge was entitled to find, on the evidence of both parties, that the 2009 understanding was that the property was then the wife’s alone. Later correspondence in which solicitors described an offer to transfer the property did not alter the true legal position found to have arisen in 2009.
4. Ground 4. The appeal was dismissed. Although the improvements occurred within the five-year period relevant to sections 339 and 341(1)(a) of the Insolvency Act 1986, the more significant detriment of paying the mortgage began in 2009. The elements of proprietary estoppel were therefore established at or shortly after the separation. The counterclaim for a transaction at an undervalue consequently failed.

• Chancery Appeals (ChD), High Court: Permission to appeal was refused on Ground 1 and granted on Grounds 2–4. The renewed application on Ground 1 and the appeals on Grounds 2–4 were dismissed.
• County Court at Central London: District Judge Wilkinson found that the wife was the sole beneficial owner, granted declaratory relief and dismissed the trustees’ section 339 counterclaim and possession and sale application.