Quaintance v Tandan  EWHC 4416 (Ch)
An appeal of a decision under TOLATA 1996 for the determination of shares in a property
The parties cohabited from 1992. The property was bought in April 1999 in the parties' joint names with a mortgage. The claimant paid the whole of the deposit and the cost of purchase. Mr Quaintance (the defendant) left the property between 6 and 12 weeks after purchase and did not contribute to the property financially thereafter. The mortgage fell into arrears in 2000 as the claimant could not keep up the mortgage payments due to her depression caused by the breakdown of the relationship. She applied to transfer the property into her own name but this was refused.
The property was repossessed in January 2005 and subsequently sold. The mortgagee paid half of the net proceeds to the claimant and the other half was held pending the outcome of the appeal.
The property was held jointly but there was an unsigned declaration of trust stating that it should be held as tenants in common in equal shares. The judge at first instance held that the common intention at the time of purchase was to share the property equally but that Mr Quaintance demonstrated by his abandonment (leaving the property, providing no contact details either to the claimant or to the bank and making no attempt to discuss matters with the claimant) that he no longer wished to be subject to the trust. The common intention therefore changed.
Decision at first instance: the claimant should receive the entire net proceeds of sale after payment of mortgage (£66,000).
Mr Quaintance contended that the judge was wrong in law or made errors of fact so serious that they amounted to errors of law. Mr Quaintance contended he should have received 50% and he appealed on the grounds that there was no evidence that the common intention had changed and that there was parity between the parties as they had both failed to pay the mortgage.
Held: The judge at first instance was entitled to find that there was an actual change of intention brought about by Mr Quaintance's abandonment and by the claimant's acceptance of that. The judge had not addressed the matter of fairness but in any event that would produce the same result. The appeal was dismissed.
Summary by Kyra Cornwall, barrister, 1 Hare Court
Neutral Citation Number:  EWHC 4416 (Ch)
Claim No: CH/2012/0155
IN THE HIGH COURT OF JUSTICE
110 Fetter Lane,
London EC4 1NL
Tuesday, 24 July 2012
HIS HONOUR JUDGE WAKSMAN QC
(Sitting as a Judge of the High Court)
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MR P WILKINSON appeared on behalf of the Appellant.
MISS P DANIELS appeared on behalf of the Respondent.
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Court Copyright ©
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Tuesday, 24 July 2012
J U D G M E N T
1. This is an appeal brought with the permission of Proudman J granted on 24 May 2012 against an order made by His Honour Judge Ellis after a trial, the order being made on 27 February 2012. What he had before him was a contested application by the claimant, Miss Tandan, and the respondent to this appeal, under the Trusts of Land and Appointment of Trustees Act 1996 for a determination of shares in a property called Flat 2, 32 Cuthbert Gardens, London SE25. The outcome of the decision was that the net proceeds of sale after payment of the mortgage should all go to the claimant and none to the defendant. The total net proceeds of sale were some £66,000-odd, £33,000-odd of which has been paid to the claimant. It is the remaining £30,000 which was in issue before the learned judge. The defendant, Mr Quaintance, a former partner of the claimant, who brings this appeal, contends that the judge went wrong in law or made errors in relation to his assessment of facts so serious that they amounted to errors in law, and that the correct outcome should have been that Mr Quaintance should receive 50 percent, in other words the other £33,000, or at least some part thereof.
2. The judgment is short and to the point, and I make no excuse for reading out much of it, because the reasoning speaks for itself. In paragraph 1 the judge says that the property was bought in April 1999 and registered in the joint names of these parties. A mortgage was taken out which fell into arrears, and in January 2005 the property was repossessed. It was subsequently sold, and five years later the building society paid half of the net proceeds of sale to the claimant, as I have indicated. The other half was held pending the outcome of this case, following an injunction which the claimant had to bring to stop the money being paid over to the defendant.
3. In paragraph 2 the judge noted that there were very few issues of fact. The parties had lived together since 1992 and purchased the property in 1999, with completion in April of that year. The defendant lived there only a short time. According to the claimant, he left at the end of May 1999, or possibly June. The defendant put it slightly later, in June or July. The precise date was immaterial. He lived there for between 6 and 12 weeks. He made no financial contribution to the purchase of the property.
4. In paragraph 3 the judge said that the legal title was held jointly. There was no executed declaration of trust, but there was an unsigned declaration of trust, saying that the transferees were to hold the property on trust for themselves as tenants in common in equal shares. The judge said that was evidence of their intention at the time.
5. In paragraph 4 the judge recited that the claimant paid the whole of the deposit and the cost of the purchase. The common intention at the time of the purchase was that the parties would hold the beneficial interest as tenants in common. There was an issue as to whether respective shares had been discussed at the time of purchase. In a witness statement the claimant had said that there was, in the sense that she would receive back the money she paid towards the deposit and the cost of purchase and the balance would then be divided. The defendant denied that discussion. The claimant had said that it was never intended there would be equal shares, but in cross-examination she agreed that the unsigned declaration of trust did reflect their intention at the time, and that was their intention. In the light of that, the judge held, as he was bound to do, that the common intention at the time of purchase was equal shares.
6. The judge goes on in paragraph 6 to say that her recollection about a discussion to a slightly different effect, as expressed in the witness statement, was not correct. He noted that it had not appeared in any earlier witness statement or affidavit and there was an inconsistency. So he found that there was no discussion at the time of purchase about how the proceeds would be divided, but he found in paragraph 7 that this was not a deliberate lie. This hearing took place in 2012. The purchase took place in 1999. The judge understandably notes that it is always difficult to remember precisely what happened many years previously, and the claimant had been preoccupied. There could be a faulty recollection and he was satisfied that this is what happened here.
7. In paragraph 8 he noted that the intention had been that the property would be purchased for them to live in as their family home, but the intention changed, and within a short period of time the relationship broke down and the defendant moved out permanently and lived elsewhere. There is no dispute that, after leaving, the defendant made no financial contribution of any kind.
8. In paragraph 9 he refers to the well-known case of Stack v Dowden, noting that the presumption was that equity should follow the law where there are joint legal owners, and that such a presumption would be displaced only where the facts were very unusual. He was not prepared to displace that presumption in the face of the unsigned declaration at the time of purchase. But in paragraph 11 he cited the subsequent case of Jones v Kernott and the well-known judgments of Lord Walker and Lady Hale, which I will recite:
"(1) The starting point is that equity follows the law and they are joint tenants both in law and in equity.
(2) That presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home, or (b) that they later formed the common intention that their respective shares would change.
(3) Their common intention is to be deduced objectively from their conduct...
(4) In those cases where it is clear either (a) that the parties did not intend joint tenancy at the outset, or (b) had changed their original intention, but it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property, "the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing…" …"the whole course of dealing..."should be given a broad meaning…"
But it is a whole course of dealing in relation to the property. And, importantly:
"Each case will turn on its own facts. Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended…or fair..."
9. In paragraph 12 the learned judge said that this was an unusual case and that the relationship broke down within a few weeks of purchase. In April 1999, when they purchased the property, their intention was to hold the beneficial interest as tenants in common, but within about two months the purpose for which the trust had been established, i.e. to provide the parties with a joint home, had failed. The relationship had broken down and the parties no longer had any wish to live together.
10. In paragraph 13 the judge said:
"I have come to the conclusion on the facts that the defendant demonstrated by his actions that he no longer wished to be subject to the trust. He made no contribution to the purchase of the property and no significant contribution to the outgoings in the short time they lived in the property together. He moved out of the property to live elsewhere, and gave no contact address, either to the claimant or to the building society. He made no attempt to discuss what should happen to the property with the claimant. He made no attempt to pay anything at all towards the mortgage instalments. In my judgment, the inference to be drawn from the facts is that he wished to have nothing further to do with the claimant or the house.
14. I accept the claimant's evidence to the effect that the breakdown of the relationship had a devastating effect upon her. She was able to keep working and pay the mortgage instalments for a time, but then suffered from depression to the extent she was unable to work with the result that arrears began to accumulate on the mortgage accounts. In April 2000 she applied to have the property transferred into her sole name, but the building society was not satisfied that she had the means to meet the mortgage instalments. She said in evidence she hated living there, but her emotional state was such she had to rely on her mother to extricate her from the difficult situation she was in with regard to the house. Ultimately possession was taken. Fortunately because of the rise in property values there was a net profit. Even after she moved out it took a number of years for her to do what was necessary to recover the net proceeds of sale. She accepts her evidence that because of her emotional state, she had to rely on her mother to sort things out.
15. All this time the whereabouts of the defendant were unknown to her. Mr Wilkinson for the defendant argued the defendant did not abandon his interest in the property. He argues the claimant herself failed to engage with the building society at all after April 2000 when they declined to transfer the mortgage to her sole name. He argued that the defendant simply left the management of the finances to the claimant, as he always had done. He also argued the claimant has the benefit of living in the property, and in all the circumstances the defendant remains entitled to a half share of the proceeds.
16. I do not accept these arguments. The claimant had no means of contacting the defendant. It was his choice to give her no information as to his whereabouts. Conversely, the defendant could easily have contacted the claimant and/or the building society, had he wished to do so. In my judgment, he would have done so had he wished to preserve an interest in the property. I am satisfied that had the claimant been able to pay the mortgage instalments and carry on living in the property, she would have been able to do so indefinitely, without any complaint from the defendant. It was only when the defendant was eventually traced and learned the building society's solicitors were holding one half of the proceeds for his benefit that he saw the opportunity for a windfall and decided to argue for an interest in the property. The truth is that he had abandoned his interest when he left the home voluntarily in the summer of 1999. In summary, I am satisfied that the claimant has discharged the burden of showing that within weeks of the purchase the parties formed a common intention that their respective shares would change. I am satisfied he has relinquished any beneficial entitlement."
He therefore directed that the entirety of the proceeds of sale should be the claimant's.
11. There are a number of grounds of appeal set out in written submissions from Mr Wilkinson, and I have had written submissions from Miss Daniels as well, but I begin with the central point that Mr Wilkinson made in challenging the findings of the judge. The first finding which he challenged and which underpinned certain other findings was to the effect that this defendant had made no financial contribution to the purchase of the property. Mr Wilkinson says that was a finding which the judge was simply not entitled to make at all and that his process of reasoning in reaching it was flawed. The basis of the argument is this. It is plain and not disputed that all the sums which were paid at the outset for the purchase did indeed come from the claimant's own bank account and not any joint account or an account of them both. All the documents show that, and that is in fact what happened. However, Mr Wilkinson says that what that ignored was the fact that the parties had lived together for 7 years previously and they had made contributions towards outgoings. In addition, there was at least a period when the parties were both living in a flat above the pub where the defendant worked, which was provided free of charge by the landlord. I accept, of course, that simply to look at who writes a particular cheque can be misleading and the court has to look at the substance of the matter when it is considering who, in reality, contributed towards the price of a property. Mr Wilkinson's point might have had more force if, for example, during the entirety of their life previously this defendant had paid all or most of the family bills, thereby enabling the claimant to accumulate money which in the end result she used towards the purchase of the property, or something of that kind. But the evidence, which has been summarised before me and which was before the judge, showed that what happened previously was that the parties occupied rental property and they essentially split the outgoings. While it is right to say that there was a period (perhaps 2 or 3 years) when they lived in a flat above a pub provided free of charge by the landlord, there were also occasions when the claimant helped out the defendant, for example when he was out of work and could not pay any outgoings. Moreover, the actual purchase monies came from distinct bank accounts which contained savings from the claimant and, I think in one respect, the proceeds of a life policy. Therefore, on the face of the evidence, how the parties conducted themselves financially before this purchase seems to me to be entirely irrelevant. The fact that the judge did not deal specifically with that matter does not seem to me to matter, so that when he said that the defendant made no contribution to the purchase price, he was well entitled to do so and not to go beyond what appeared to be the case from where the monies had originated.
12. The second factual point which Mr Wilkinson has addressed me about is this. The judge found in paragraph 13 that there was no significant contribution to the outgoings in the short time that they lived in the property together. Mr Wilkinson said that there was some dispute on the evidence about that, and the judge has not resolved the conflict. In my judgment, if there was a conflict he has resolved it. He has not said that the defendant made no contribution at all after the property was purchased. He simply said that he made no significant contributions to the outgoings. It would be surprising if it were otherwise, given the very short period of time in which the defendant occupied the property before he decided to leave it. Accordingly, I can see no conceivable basis for upsetting the judge's finding of fact as far as that is concerned.
13. One then turns to what are effectively the first two grounds of appeal, and Mr Wilkinson's skeleton argument helpfully follows those. This was to the effect that there was, in truth, no evidence of a change of intention from that common intention which the judge had found at the outset. In my judgment, there is nothing in that point for this reason. It is plain from the judge's findings, in particular at paragraph 12, where he said that the purpose for the trust providing the parties with a joint home had failed, and, in paragraph 13, that the defendant had truly abandoned not only the property but any interest in it. The facts are quite remarkable, because not only did he move out to live elsewhere, he gave no contact address either to the claimant or to the building society, as the judge recounts. He made no attempt to discuss the matter. He made no attempt to have anything to do with the mortgage instalments. And when the judge inferred from all of that that he wished to have nothing further to do with the claimant or the house, that seems to me to be an inference which is incapable of challenge. In paragraph 15 he dealt head on with Mr Wilkinson's challenge to the notion of any abandonment on the facts, and rejected it for the reasons that he gave clearly in paragraph 16. It was up to the defendant to make contact or disclose where he lived, and he did nothing of the kind. Indeed, I have been shown other documents which were before the learned judge which show that the way in which the defendant became engaged with all of this is that it was not a case that at some point he enunciated a claim himself to half the proceeds. Rather, it was the mortgagee's solicitors who decided that the appropriate method of distribution of the proceeds was half to one and half to the other, and they were threatening to remit the monies without more to Mr Quaintance, as it were of their own volition and not because of any particular claim which he had intimated.
14. It is not suggested by Mr Wilkinson that there cannot be a concept of abandonment as at least part of finding a changed common intention, and it seemed to me that the judge is well entitled to find that there was such an abandonment here. To the extent that Mr Wilkinson submits that the judge was wrong to conclude (as impliedly he clearly did) that the intention to be inferred on the part of Mr Quaintance is that he abandoned his interest, it seems to me the judge was well entitled to make that finding. To the extent that it was necessary to find that this change on the part of Mr Quaintance was reciprocated on the part of Miss Tandan, that is plain, in my judgment, from what the judge said in paragraph 14. She wanted to keep going and pay the mortgage instalments, but as a result of the depression caused by the break-up, which itself was caused by his departure, she could not work and that is why the arrears began to accumulate within a relatively short period of time. She nonetheless had applied to have the property transferred into her sole name, and that seems to me to be a clear manifestation of what her thoughts and intentions were at the time. Indeed, had she not suffered from these mental difficulties and the other matters referred to in paragraph 14, it seems that it may well have been the position that she would simply have stayed there and, had she done so, there is not a shred of evidence that the defendant would at any stage have come knocking on the door.
15. In those circumstances, I cannot see any grounds for challenging the conclusion of the learned judge that the common intention had changed, and in reaching that view I take into account Mr Wilkinson's sub-challenge, which is to the effect that both parties ultimately failed to pay the mortgage and therefore there was some parity between them, and Mr Quaintance's failure to pay the mortgage should not be held against him. That, if I may say so, is utterly unrealistic, having regard to the entirely different situations in which they found themselves. I have just described the claimant's situation. Mr Quaintance's failure to pay the mortgage was simply part and parcel of his abandonment of the property and anything to do with it.
16. Mr Wilkinson also prayed in aid the fact that the intentions could not be that clear, because Mr Quaintance had signed as one of the parties to the mortgage, and that becoming liable on a mortgage can be regarded as evidence of contribution to the purchase price, or evidence of an intention to retain a share of the property. In that regard, he relies upon the case of Carlton v Goodman, where there are dicta to the effect that becoming liable with another on a mortgage could be regarded as sufficient contribution for the purpose of a resulting trust. First of all, that is a resulting trust case. It is not the same as this case. But, secondly, there are two important matters on the facts here. First of all, while that might have been his intention at the time when the property was purchased, consonant with the common intention then that the judge found to be derived from the draft transfer, it hardly follows that that remained his intention afterwards. In fact, every indication is that he might have signed up to the mortgage, but he certainly was not going to tell the building society where he had moved to, and although Mr Wilkinson says that there was always the risk of the building society coming after him, that would depend on them being able to find him in the first place. So I do not consider that the judge needed to attach any particular weight to the fact that Mr Quaintance was a party to the mortgage.
17. The upshot of that is that in this case the judge found that, on the facts, there was an actual change of intention brought about by the defendant's abandonment, on the one hand, and the claimant's acceptance of that, on the other. That then meant that, following the Jones case, it was for the judge to decide what the relevant shares ought to be. As is plain in Jones, he could do that in one of two ways. He could say, having found that the intention had changed, as to what he inferred the parties had actually intended the change to be, but if there was no evidence about that on which he could safely rely, it would be a matter of fairness, having regard to the course of the parties' dealings in relation to that property. Mr Wilkinson says that the judge does not address the concept of fairness itself. I agree. That, in all probability, is because, on the facts of this case, once there has been an abandonment of the property in the way in which the judge found, the only logical inference is that it is an abandonment for any interest in the property. It is very hard to see how, once the intention has changed, it could change in any other way except to the effect that the defendant was renouncing all his interest in the property. On that basis, the judge has properly followed the principles set out in Jones. But, in any event, even if the judge should have gone on to consider the question of fairness, or even if I had made a finding that the judge had gone wrong and it was for me to assess fairness, and I do not make that finding, it seems to me that the same result would apply. The parties' prior dealings are of no significance for the reasons I have already outlined. Although at the time of the purchase of the property they had a common intention, that was on the footing, no doubt, that they would share it as a family home and share the outgoings and the mortgage for many years in the future. But since that did not happen and failed within a matter of months of the purchase of the property, the court needs to look at the matter afresh. All one knows is that the capital sums which were advanced at the time of the purchase were advanced wholly by the claimant. So far as the defendant is concerned, there was no significant contribution afterwards.
18. In those circumstances, I consider that, had the court addressed it at the time or if I address it, the fair result would be that the claimant should retain the entire proceeds of sale.
19. Mr Wilkinson referred me to the facts of Jones, in which, on the facts, the court found that Mr Kernott, the departing partner, should nonetheless be given an interest which would notionally represent half the value of the property at the time when it was purchased. The Supreme Court adopted a method of calculation different from the judge at first instance (although the result was fairly similar), but it is noteworthy that in that case there was at least some evidence that, apart from the purchase price itself, Mr Kernott had done some labouring work and paid friends and relations to do other work on an extension which increased the value of the property from £30,000 to £44,000. So one could not say that there was not a direct contribution to the value of the property. But even putting that factual difference aside, there is always a danger in drawing too much from the facts of one case. The question of fairness is one which is critically fact-sensitive in my judgment, and I repeat (for it bears repeating) principle (5) in Jones, which the judge set out:
"Each case will turn on its own facts. Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended…or fair (as in case (4))."
20. In a case where two partners purchase a new house with the aim of living there for the foreseeable future but where the only capital sum is paid by the claimant at the outset, where the defendant effectively makes not contributions, where the defendant has renounced any interest in it, and where the claimant's inability to pay results out of the circumstances of the breakdown and not because of any abandonment on her part, I find it quite impossible to say how the fair outcome is anything other than I have described. That, of course, is the outcome in substance which the judge reached.
21. For the sake of completeness, I deal with the residual points which arise in the grounds. Mr Wilkinson says that the judge should have found the claimant to be a liar, in effect, which may have had some impact on such other conflicts of evidence that he had to resolve. I do not accept that. There is nothing illogical in the way in which the judge found the true position to be, and in paragraph 7 explained that as a fault in recollection. The learned judge, like all judges, will deal with such disputes of fact day in and day out, and that is a finding which was well open to him.
22. Mr Wilkinson pointed out that the claimant did stay in the property for some five years. That is true, until it was repossessed, but that was in the circumstances which are set out in paragraph 14, and I do not see that that is a material factor. Of course, by the same token, although ultimately he was liable for it, of course the defendant was elsewhere and able to pay outgoings on a different property.
23. Sub-points have been raised by what was said in cross-examination. The reasoning which I have given above does not turn, in fact, on whether Mr Wilkinson was correct in what he said was the effect of his cross-examination. I am assuming, for present purposes, it is correct. It does not affect any of my findings, but it would obviously have been more helpful if there had been some notes of the cross-examination in case there was some argument about what actually transpired.
24. Accordingly, for all those reasons, I dismiss this appeal.