Trusts – Common intention – Evidence – Respondent trustees in bankruptcy of ex-husband applying for possession of former matrimonial home – Appellant wife claiming common intention trust relying on agreement in financial remedy proceedings – District judge making order for possession – Appellant appealing – Whether appellant entitled to rely on copy of transcript in financial remedy proceedings – Whether appellant establishing common intention trust – Appeal allowed
The appellant was married to the bankrupt and they had a child together. In July 2004, they were registered as joint proprietors of the family home at 39 Horseshoe Drive, Cannock, Staffordshire, which was subject to charges in favour of two mortgage companies.
In 2011, the appellant and the bankrupt separated with the bankrupt moving out of the property. The appellant remained living at the property with their child, who was then aged 13. The appellant contended that there had been an oral agreement at the time of their separation that the entire beneficial interest in the property going forward would be hers if she assumed sole responsibility for payment of the mortgage and outgoings associated with the property, which she did (the 2011 agreement).
In June 2016, the bankrupt petitioned for divorce. In September 2016, he was declared bankrupt on his own petition. During the financial remedy hearing in May 2017, the bankrupt admitted, through his counsel, that the 2011 agreement was valid.
In January 2018, the respondents were appointed as trustees in bankruptcy and applied for orders for possession and sale of the property in order to realise the bankrupt’s 50% interest in it, the property being the only significant asset. The appellant opposed the application.
A district judge declared that the appellant and the respondent trustees in bankruptcy each had a 50% beneficial interest in the property. He made an order that the property be sold; and that the appellant/bankrupt to deliver up vacant possession.
The appellant appealed contending that a common intention trust had been created based on the 2011 agreement and seeking permission to rely on a copy of the transcript of the May 2017 financial remedy hearing.
Held: The appeal was allowed.
(1) It was a long-settled principle, stated and restated in domestic and wider common law jurisprudence, that an appellate court should not interfere with the trial judge’s conclusions on primary facts unless it was satisfied that he was plainly wrong. An appellate court was bound, unless there was compelling reason to the contrary, to assume that the trial judge had taken the whole of the evidence into his consideration. An appellate court would, as a general rule, leave alone the trial judge’s assessment of the credibility of the witnesses and his findings of primary fact when they were based on, or significantly influenced, by the oral evidence: McGraddie v McGraddie [2013] UKSC 58; [2013] 1 WLR 2477 and Henderson v Foxworth Investments Ltd [2014] UKSC 41; [2014] 1 WLR 2600 followed.
An appellate court would, as a general rule, leave alone the trial judge’s assessment of the credibility of the witnesses and his findings of primary fact when they were based on, or significantly influenced, by the oral evidence. In the present case, the bankrupt did not give evidence at trial having chosen to play no active part in the proceedings. Therefore, the only witness, who was seen and heard by the district judge, as to the alleged 2011 oral agreement, was the appellant: Transview Properties Ltd v City Site Properties Ltd [2009] EWCA Civ 1255; [2009] PLSCS 325 considered.
The district judge’s finding of the appellant’s intention was not challenged. However, the district judge found that the appellant had failed to establish that her intention was shared by the bankrupt. That particular finding was not based upon any oral evidence from the bankrupt but upon an evaluation of what the bankrupt had or had not said in the then available printed evidence being his statement of affairs and an exchange of emails with the appellant in 2016.
In those circumstances, the appellate court could properly undertake that evaluation exercise afresh to include consideration of the transcript that was not available to the district judge.
(2) The Equal Treatment Bench Book helpfully explained the difficulties faced by litigants in person and how the court ought usefully to assist them particularly by giving appropriate guidance/assistance at case management hearings upon the importance/use of documentary evidence. It was unfortunate that, having been identified by the appellant at an early stage in these proceedings as a relevant document, the court failed at the multiple case management hearings to provide any guidance/assistance as to what steps the appellant needed to take to ensure that the transcript was available for the trial.
It was also regrettable that the appellant, upon learning that she could obtain the transcript, was then told by court staff that she required the permission of the judge to do so. It was perfectly understandable that the appellant proceeded under the mistaken belief that the permission of the district judge, rather than the Family Court judge, was required. On balance, notwithstanding the significant interests in fostering finality in litigation, it was just that permission be granted to the appellant to rely upon the transcript in accordance with the overriding objective of doing justice and striking a fair balance between the need for concluded litigation to be determinative of disputes and the desirability that the judicial process should achieve the right result.
(3) On balance, in 2011 there was an agreement made between the appellant and the bankrupt that any appreciation in the value of the property after he moved out, and before the property was sold, would belong to the appellant. In making that finding, the court attached significant weight to the transcript. It was important to note that, unlike in the present proceedings, the bankrupt actively engaged with and participated in the Family Court proceedings in which he was under an absolute duty to provide full, frank and clear financial disclosure.
The transcript fully corroborated the appellant’s claim that an agreement was made with the bankrupt in 2011. Further, such an agreement was entirely consistent with the appellant’s and the bankrupt’s expressed and shared intention not to disrupt or unsettle their daughter after they separated and whilst she was still at school; and their undisputed dealings with the property post separation. Furthermore, the appellant had acted to her detriment (assuming sole responsibility for paying the mortgage instalments/outgoings) sufficient to give rise to a common intention constructive trust.
Richard Power (instructed by Direct Access) appeared for the appellant; Andrew Brown (instructed by Irwin Mitchell LLP) appeared for the respondents.
Eileen O’Grady, barrister
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