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Home > Judgments > 2005 archive

Supperstone v Hurst & Hurst [2005] EWHC 1309 (Ch)

Appeal by wife against ruling arising from bankruptcy proceedings that matrimonial home was shared equally between her and her former partner.

Case No: CH/2005/APP/0019

Neutral Citation Number: [2005] EWHC 1309 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

IN THE MATTER OF THE INSOLVENCY ACT 1986

Royal Courts of Justice

Strand, London WC2A 2LL

Date: 15 June 2005

Before:

MR MICHAEL BRIGGS QC

(Sitting as a deputy judge of the High Court)

RE: ROBERT ALFRED HURST – IN BANKRUPTCY

Between:

ANTHONY PETER SUPPERSTONE Applicant

- and -

(1) ROBERT ALFRED HURST

(2) ANN STEPHANIE HURST Respondents

Mr Richard Fisher (instructed by Taylor Wessing) for the applicant

The respondents appeared in person

JUDGMENT

(As Approved by the Court)

1. This is an appeal by Mrs Ann Stephanie Hurst against the decision of Mr Registrar Jaques made on 21 December 2004, whereby he declared that the property known as 73 Southway, London NW11 6SB ("the property") was beneficially owned as to 50% by Mr Anthony Peter Supperstone and as to 50% by Mrs Hurst. The learned registrar went on to make orders for vacant possession and for the sale of the property, and that Mrs Hurst should pay 95% of the costs of Mr Supperstone's application.

2. Mr Supperstone is the trustee in bankruptcy of Mrs Hurst's husband Robert Hurst, Mr Hurst was made bankrupt on 12 April 2001, pursuant to a petition presented by his former partners in a solicitors' firm, following litigation between them which concluded, unsuccessfully for Mr Hurst, in the House of Lords, under the title Hurst v Bryk [2002] 1 AC 185. The property is and has since January 1984 been Mr and Mrs Hurst's matrimonial home.

3. Mr Supperstone applied for an order for the possession and sale of the property, and the distribution of the net proceeds of sale between him and Mrs Hurst on a 50/50 basis by ordinary application dated 3 October 2003. It was heard over two days, namely 13 May and 1 July 2004, the first of which was taken up largely by cross-examination of Mr and Mrs Hurst upon their witness statements.

4. There were by the time of the hearing only two issues. The first was whether the property had been owned beneficially in equal shares by Mr and Mrs Hurst at the time of his bankruptcy (as claimed by Mr Supperstone) or in the proportions 85%/15% respectively by Mrs Hurst and Mr Hurst (as they both claimed), it being common ground between all three parties that Mr and Mrs Hurst had been beneficial tenants in common. The second issue was whether Mrs Hurst was entitled against her husband, and as his successor against Mr Supperstone, to an equity of exoneration in relation to the sum of £37,000 borrowed by Mr Hurst in 1989 in order to buy his share in the solicitors' partnership of Malkin Janners, the repayment of which having been secured on the property. The effect of that equity if established would be that the amount due under that security would, as between Mr Supperstone and Mrs Hurst, stand as a charge on his beneficial interest in the property as Mr Hurst's trustee in bankruptcy. As I have described, Mr Supperstone was successful on the first issue, but Mrs Hurst succeeded on the second, Mr Supperstone has not challenged the learned registrar's decision in relation to the equity of exoneration, but Mrs Hurst has appealed his finding as to the beneficial ownership of the property, which is therefore the only issue before me.

5. Mr Supperstone was represented both before me and the learned registrar by Mr Richard Fisher. Mrs Hurst was represented before the learned registrar by Mr Gregory Denton-Cox, but was unable to obtain legal representation on her appeal. At her request, but with some misgivings, I permitted Mr Hurst to speak for her during the appeal. Although a solicitor, he does not hold advocacy rights. The circumstances were far from ideal for him to be her advocate, having regard to his having been a witness of fact in the proceedings, having had his credibility as a witness commented upon adversely by the learned registrar, and having to support his wife in proceedings brought by his own trustee in bankruptcy. My misgivings were nonetheless ill-founded. Mr Hurst proved to be a well prepared, courteous and effective advocate for Mrs Hurst. Although he occasionally strayed into attempts to give evidence, for the most part he supported his submissions with precise and relevant references to the documents before the court, and to the full transcripts of the oral evidence taken on 13 May 2004.

6. It might have been thought that, in determining that the beneficial interests of the parties in the property were 50/50, the learned registrar had an easy task. That is because, although the transfer of the property to Mr and Mrs Hurst contained no express declaration as to their beneficial interests, they each made written statements to that effect in June 2001, in connection with Mr Hurst's then proposed (but in the event unsuccessful) voluntary arrangement ("IVA"). Nonetheless both Mr and Mrs Hurst contended strenuously both before the learned registrar and before me that these statements were, for various reasons which I shall have to describe, by no means determinative of their respective beneficial interests in the property. Basing themselves primarily upon a precise calculation of their respective contributions to the purchase of the property and of its predecessor as their matrimonial homes, they maintained that Mr Hurst's share was no more than 15%.

The law

7. It is and has always been common ground between the parties that Mr and Mrs Hurst each owned beneficial shares in both their matrimonial homes. It was further common ground both before the learned registrar and on appeal that their respective beneficial interests arose under a constructive rather than express or resulting trust. The only issue has therefore been the respective sizes of their beneficial interests as tenants in common. Despite the wealth of authority, and the significant changes in emphasis which the law has undergone on the question of quantifying beneficial interests of cohabiting tenants in common, it was also common ground that the relevant legal principles may safely be extracted from the following paragraphs of the judgment of Chadwick LJ in Oxley v Hiscock [2004] 3 WLR 715, as follows:

"Summary

68. I have referred, in the immediately preceding paragraphs, to 'cases of this nature'. By that, I mean cases in which the common features are: (i) the property is bought as a home for a couple who, although not married, intend to live together as man and wife; (ii) each of them makes some financial contribution to the purchase; (iii) the property is purchased in the sole name of one of them; and (iv) there is no express declaration of trust. In those circumstances the first question is whether there is evidence from which to infer a common intention, communicated by each to the other, that each shall have a beneficial share in the property. In many such cases – of which the present is an example – there will have been some discussion between the parties at the time of the purchase which provides the answer to that question. Those are cases within the first of Lord Bridge's categories in Lloyds Bank plc v Rosset [1991] 1 AC 107. In other cases – where the evidence is that the matter was not discussed at all – an affirmative answer will readily be inferred from the fact that each has made a financial contribution, Those are cases within Lord Bridge's second category. And, if the answer to the first question is that there was a common intention, communicated to each other, that each should have a beneficial share in the property, then the party who does not become the legal owner will be held to have acted to his or her detriment in making a financial contribution to the purchase in reliance on the common intention.

69. In those circumstances, the second question to be answered in cases of this nature is: 'What is the extent of the parties' respective beneficial interests in the property?' Again, in many such cases, the answer will, be provided by evidence of what they said and did at the time of the acquisition. But, in a case where there is no evidence of any discussion between them as to the amount of the share which each was to have – and even in a case where the evidence is that there was no discussion on that point – the question still requires an answer. It must now be accepted that (at least in this court and below) the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property. And, in that context, 'the whole course of dealing between them in relation to the property' includes the arrangements which they made from time to time in order to meet the outgoings (for example, mortgage contributions, council tax and utilities, repairs, insurance and housekeeping) which have to be met if they are to live in the property as their home."

8. Chadwick LJ went on to identify three strands of reasoning as underlying the "fair share having regard to the whole course of dealing" approach which has emerged from the recent authorities. The first is that the parties are taken to have agreed that their shares should be left to be determined at the end of their relationship or upon the sale of the property upon the basis of such an assessment. This is based upon the speech of Lord Diplock in Gissing v Gissing [1971] AC 886, at 909D and the judgment of Nourse LJ, in Stokes v Anderson [1991] 1 FLR 391, at 399-400. The second is that a review of the whole of the parties' course of dealing reveals what was their assumed common intention at the time of purchase. This is based upon the judgment of Waite LJ in Midland Bank plc v Cooke [1995] 4 All ER 562 at 574, The third is an application to particular circumstances of the doctrine of proprietary estoppel, based upon the judgment of Sir Nicolas Browne-Wilkinson V-C in Grant v Edwards [1986] Ch 638 at 656–57, the judgment of Robert Walker LJ in Yaxley v Gotts [2000] Ch 162 at 177 and the decision of the Court of Appeal in Drake v Whipp [1996] 1 FLR 826 at 831.

9. From paragraphs 43 and 73 of the same judgment it is apparent that, to the extent that in identifying the size of each parties' beneficial share, recourse is had to their actual or assumed common intention, that is a reference to their common intention at the time of purchase rather than at any later time, even though recourse may be had to their later conduct as tending to show what their common intention at the time of purchase had been.

10. The present case differs from cases with the common features described in paragraph 68 of Chadwick LJ's judgment in two respects. First, the parties here were married at the time of the purchase of both their matrimonial homes. Secondly, both homes were registered in their joint names, rather than in the name of one of them. But otherwise, this case falls squarely within the class amenable to the test in paragraph 69 of his judgment. Although the fact that the parties are married and that the properties were always registered in their joint names may be relevant factors in a quantification of their respective beneficial interests, those factors make no difference in my judgment to the underlying legal analysis.

11. It does seem to me, however, that the line of authorities of which Oxley v Hiscock is the latest (albeit probably not the last) do tend to by-pass an additional relevant question which lies between a conclusion that the parties had an actual or presumed intention to share the beneficial ownership of a matrimonial home and a quantification of their respective shares, namely whether they had or should have imputed to them an intention to share as beneficial joint tenants, rather than tenants in common, Beneficial joint tenants cannot, of course, hold in unequal shares. The very concept is repugnant to the notion of a beneficial joint tenancy. Furthermore, if their joint tenancy is severed, the consequence is that they hold thereafter as tenants in common in equal shares. It 'is therefore only in cases where the basis of co-ownership of property is that of tenants in common that any question of quantifying respective shares even arises.

12. It may be that the apparent lack of reference to this question in the line of authorities concluding with Oxley v Hiscock is because of equity's traditional dislike of joint tenancy, due to the injustice frequently caused by the principle of survivorship. But joint tenancy is not obviously either unjust or inappropriate as between husband and wife in relation to their matrimonial home, and in such cases it seems to me that a too-ready assumption of a tenancy in common begs an important prior question.

13. It used to be thought the answer to the question whether co-owners of registered land intended to hold as beneficial joint tenants could readily be found from the presence or absence of a declaration in the transfer that the survivor could give a good receipt for monies arising on a sale, or in the presence or absence of a restriction on disposal by the survivor in the property register. This is because, save in the rare case where property is registered in the names of two or more persons as nominees for a third party beneficially, the survivor of two tenants in common cannot give such a receipt: see Re Gorman [1990] 1 WLR 616, per Vinelott J at 621.

14. In Harwood v Harwood [1991] 2 FLR 274, and in Huntingford v Hobbs [1993] 1 FLR 736, the Court of Appeal held that a declaration in a Transfer that a survivor could give a receipt of capital monies on a sale did not amount to a declaration of trust by the registered owners for themselves as beneficial joint tenants, due to the possibility that they held as nominees for a third party, and the inadmissibility of extrinsic evidence as to whether they did or did not. More recently, in Mortgage Corporation v Shaire [2001] Ch 743, at 752–53, Neuberger J held that the presence or absence of such a declaration was not even compelling evidence as to the parties' underlying intentions as to beneficial ownership, albeit that it might be a relevant factor.

15. The learned registrar summarised the applicable law with admirable brevity as follows:

"Oxley v Hiscock is, in my judgment, Court of Appeal authority for the proposition that, where a property is held by two or more individuals on a constructive trust, as opposed to a resulting trust, the size of the parties' respective beneficial interests in the property is to be determined by (1) any oral or written agreement between them, when the property was purchased or at any time subsequent to the purchase (2) their common intention inferred from their conduct at the time the property was purchased or at any time subsequent to the purchase of the property or (3) what the court considers to be fair having regard to the whole course of dealings between them in relation to the property."

16. Subject to two points, that summary cannot in my judgment be faulted. The first is that at stage (2) the learned registrar did not state expressly that the common intention which might be inferred from conduct at the time of purchase or subsequent to the purchase had nonetheless to be a common intention entertained by the parties as at the time of purchase. In this respect his summary of the law leaves open the possibility that he thought that a common intention reached for the first time many years after purchase might suffice. I shall have to return to that possibility when addressing the learned registrar's conclusions.

17. Secondly, the learned registrar made no mention of the logically anterior question whether the parties' intention was to hold as beneficial joint tenants or tenants in common. In this he can hardly be criticised. It was no part of Mr Supperstone's case that Mr and Mrs Hurst had been beneficial joint tenants, nor was this possibility more than touched on very briefly in the cross-examination, beyond the elucidation from Mr Hurst that (as might be expected of a solicitor) he understood the meaning and effect of a beneficial joint tenancy.

The facts

18. Mr and Mrs Hurst married on 28 December 1975, and purchased Fairfax Place on 5 March 1976. The price was £31,000 plus £3,000 for fixtures and fittings. The house was transferred into their joint names and there was no declaration as to their respective beneficial interests. The property register for Fairfax Place shows no restriction upon a disposal by a survivor.

19. The purchase money was raised in the following manner. First, Mrs Hurst paid the 10% deposit from her Lloyds Bank account. Secondly, she and her husband borrowed £14,000 from Abbey National Building Society upon the security of a mortgage of Fairfax Place granted by them both. Mrs Hurst's evidence was that her father would have preferred to contribute the amount borrowed on mortgage himself, but was persuaded that it was more tax efficient for his daughter and son-in-law to have a mortgage. Nonetheless he promised in due course to repay Abbey National, and did in fact do so as to £10,000 in October 1981 and £4,000 in about July 1983. Thirdly, a further £13,400 came from the sale of some investments owned by Mrs Hurst, Finally, there was no evidence as to the source of the remaining £3,500, which the learned registrar described as "something of a mystery". He concluded on the balance of probabilities that Mr Hurst had contributed that sum, first, because he thought that Mrs Hurst had by then "more or less exhausted her investments" and secondly because by then Mr Hurst was "earning a decent salary as a solicitor, practising in the intellectual property field".

20. The other issue about the source of the purchase monies for Fairfax Place was whether Mrs Hurst's father's gift of the amounts necessary to repay the Abbey National mortgage was made to Mr and Mrs Hurst jointly, as the learned registrar held, or merely to Mrs Hurst, as they both contended. Since a similar issue arises in relation to the contributions to the purchase of the property, I shall defer consideration of that issue until then.

21. Mrs Hurst challenged the attribution of the £3,500 to Mr Hurst as contrary to the weight of the evidence, on two grounds. The first was that she had not by then exhausted her investments, and the second was that Mr Hurst, having only recently completed articles, was earning a very modest salary as a solicitor, and not in the intellectual property field. Mr Hurst submitted on her behalf that the £3,500 should have been attributed to both of them equally, in the absence of any evidence that one or the other paid it.

22. Documents before the court demonstrated that Mrs Hurst had indeed not exhausted her investments at the time of the purchase of Fairfax Place. Equally, notwithstanding wage inflation, Mr Hurst was earning only a modest salary as a solicitor, having recently completed his articles. Mrs Hurst's witness statement shows at paragraph 12 that Mr Hurst's annual salary in 1976 was £3,500 whereas hers, as a teacher, was £2,978. In cross-examination about this issue, Mr Hurst said this:

"There was obviously a shortfall of about £2,000 or £3,000, which I assume, but I have no evidence for, but I assume was met out of the savings of my wife and myself. Bear in mind that at that stage I was a solicitor in a large city firm, I was earning in those days a large income. I was living with my parents at home, so I had no outgoings, so I did have some savings left. The same applies to my wife as well. She was a 'successful teacher earning a reasonable salary and she was living rent free in her parents' flat in London, so she had no expenses either."

23. Bearing in mind the fact that Mrs Hurst had contributed both the deposit and a substantial part of the balance of the purchase price from her own savings, I regard Mr Hurst's admission that he was earning "a large income" with no outgoings, and that he had savings himself, as sufficient to justify the learned registrar's conclusion on the balance of probabilities that he funded the whole of the £3,500 in issue, despite the factual inaccuracies in his reasoning for that conclusion.

24. Mr and Mrs Hurst lived at Fairfax Place from 1976 until its sale in 1983. Their first child was born in 1978, and then or shortly thereafter she ceased work in order to concentrate on the upbringing of their children, leaving all outgoings to be paid out of Mr Hurst's earnings.

25. Fairfax Place was sold (by then mortgage free) on 18 July 1983 for £81,000, and the family moved into Mrs Hurst's parents' London residence for about six months while looking for a new home. The property was purchased on 10 January 1984 for £124,000 plus £5,000 for fixtures and fittings. Again it was conveyed into the Hursts' joint names and the transfer which they both signed recorded that a survivor of them could give a good receipt for capital monies arising on a purchase. Mr Hurst said in evidence that the conveyancing was carried out by a solicitor colleague of his at Baker & McKenzie. It was common ground, and the learned registrar so held, that neither on the purchase of Fairfax Place or the property was there any agreement or discussion between Mr and Mrs Hurst as to the nature or amount of their respective beneficial interests.

26. The purchase price for the property was contributed as follows: first, £12,900 by way of deposit was paid out of the proceeds of sale of Fairfax Place. Secondly, a further £66,000 odd from the proceeds of Fairfax Place was contributed to the completion monies. Thirdly, Mrs Hurst's father contributed £20,000. Finally, a mortgage loan of £30,000 was made to Mr and Mrs Hurst, secured on the property.

27. Although servicing that mortgage came entirely from Mr Hurst's earnings, it was common ground that this was made possible by Mrs Hurst's devoting herself to the upbringing of their children, so that the mortgage advance should be attributed to them equally. The only new issue arising from the purchase of the property was whether Mrs Hurst's father intended to give the £20,000 contributed by him to them both or to Mrs Hurst alone. I shall deal with this question together with the similar question in relation to his repayment of the mortgage loan in relation to Fairfax Place.

28. When questioned about the £10,000 paid by her father to Abbey National in October 1981, Mrs Hurst said this:

"A. No, no. It entirely came from my father.

Q. Why had your father put those monies to one side?

A. I do not know. I have no idea. Well, because he wanted to give it to us. I mean, my father was fairly comfortably off and he always had a bit of spare cash, so he …

Q. So he wanted to make, effectively, a gift to both of you for the purpose of acquiring the home?

A. Yes."

29. In relation to the same payment, Mr Hurst said this:

"Q. I suggest to you, Mr Hurst, that it is reasonable in light of the fact that your father-in-law was paying off a joint liability, that he intended that payment to benefit both of you did he not?

Registrar Jaques: How can he say what his father-in-law's intention was?

A. Unfortunately, my father-in-law is no longer here but, yes, he intended it to benefit a happily married couple with two children at the time, yes; two of his grandchildren. The third one had not been born yet.

Mr Fisher: So the intention, as you understand it, was to benefit the family as a whole?

A. Yes."

Slightly earlier however, Mr Hurst had described the £10,000 as "always earmarked for my wife …"

30. As to the £20,000, Mr Hurst's evidence was as follows:

"Q. So, effectively, you believe it might have represented a gift from your father-in-law …

A. A gift from my father-in-law, yes.

Q. ... To both of you to purchase the house.

A. Yes. When you say a "gift to both of you to purchase the house", what it means is that it is a gift to purchase the house. The actual identity of the donees of the gift, again, was not addressed at the relevant time.

Q. But the purchase …

A. So if you are trying to put words into my mouth in an endeavour to persuade the court that this was an outright gift to my wife and myself, the answer to that is the matter was not addressed at the time. All that my father-in-law said was that £20,000 was available to assist us in the purchase of this house."

Mrs Hurst's evidence was as follows:

Q. In paragraph 22, your father indicated his promise to contribute £20,000 towards the purchase of 73 South Way, and he complied with that shortly before completion in January 1984. You state there that you do not have any written evidence for the relevant payment. That remains the case, does it, Mrs Hurst? You are unable to find any written evidence of the payment?

A. I think we could possibly find some more ... we could do a small research on it and find some more written evidence. We do have a cheque here and I do remember my father definitely did give us £20,000.

Q. As you recall, it was again, as with the former money, a gift to his daughter and his son-in-law to help them purchase their next matrimonial home?

A. He did not ... But he did not put that in those words. He just said, "Here is a cheque for £20,000".

31. That was how the evidence stood at the end of cross-examination. Before the resumed hearing on 1 July 2004, Mr and Mrs Hurst managed to find Mrs Hurst's father's relevant Account of a Transfer Value for the purposes of Capital Transfer Tax. That recorded a transfer of £20,000 by cheque in favour of Mrs Hurst from her father and mother. The same account noted payments of £3,000 by each of them in each of the tax years 83/84 and 82/83, although without identifying the donee. This document was relied upon on 15 July 2004, and although the learned registrar makes reference to the exempt transfers to which I have just referred, he makes no reference to the identification of Mrs Hurst as the donee of the £20,000 which, like the previous £14,000, he concluded were paid as gifts to Mr and Mrs Hurst jointly. He relied on Mrs Hurst's evidence to that effect in relation to the £10,000, upon the fact that both the £10,000 and £4,000 were made to discharge a joint liability of Mr and Mrs Hurst to Abbey National, and upon Mr Hurst's admission that the £20,000 was available to assist them in the purchase of the property.

32. In my judgment the Transfer of Value Account completed by Mrs Hurst's father is compelling evidence that, when the completion of that form required him to consider to whom he had made the gift of £20,000, he regarded his daughter as the donee. The probability must be that such was his intention when making all three gifts of £10,000, £4,000 and £20,000, and in that respect I consider that the learned registrar's contrary conclusion was against the weight of the evidence. Nonetheless, it appears to me improbable that Mrs Hurst's father ever explained to his daughter and son-in-law that such was his intention. It is readily understandable that a father-in-law might feel reticent about distinguishing openly between his daughter and son-in-law in that respect, save in a confidential document which would be unlikely to come to their attention.

33. It follows, for all purposes relevant to the ascertainment or imputation of Mr and Mrs Hurst's common intention with regard to the ownership of the property, it must be assumed that, as indicated by them in their evidence, they regarded the three payments by Mrs Hurst's father as having been made to them, rather than to Mrs Hurst alone.

34. From 1984 until 1994 Mr Hurst's earnings provided the source for all outgoings in relation to the property, since Mrs Hurst stayed at home to look after the family. From 1994, when she resumed work as a teacher, her earnings also contributed to those outgoings. No substantial repairs or improvements were carried out to the property during the Hursts' ownership of it.

Previous statements by Mr and Mrs Hurst as to beneficial ownership

35. Mr Hurst's litigation against his former partners at Malkin Janners started in January 1992, and led to a trial before Carnwath J who handed down his judgment on 11 April 1995. Pursuant to that judgment Mr Hurst was liable for his share of post-dissolution liabilities, and for costs. Pending appeal, he commenced settlement negotiations with his former partners, and also corresponded with his own solicitors, Penningtons, both in connection with the settlement discussions, and for the purposes of preparing evidence in connection with an application for a stay of execution pending appeal.

36. By letter dated 14 July 1995 Mr Hurst provided information as to his assets to his former partners, which included a statement that he had a 50% share of the net equity in the property. A revised draft of an affidavit to be sworn by him in connection with his application for a stay of execution, sent to Penningtons on 8 July 1995, contained in substance a statement to the same effect.

37. Susan Dixon of Penningtons responded on the following day in a letter which included the following paragraph:

"I have also advised you to ascertain how the house is held, whether or not you hold it as joint tenants or tenants in common, Stephanie (that is Mrs Hurst) may wish to obtain independent advice as to how to protect her beneficial interest in the home and/or whether or not she has a claim for more than 50% of the beneficial interest."

38. Mr Hurst responded again, on the same day, with a letter which suggested to Miss Dixon that Mrs Hurst probably had a larger share in equity than he did, due to her greater contribution towards the purchase. On 14 September 1995, Mr Hurst wrote to Miss Dixon about the value of his interest in the property, the relevant paragraph of the letter including the following:

"Thirdly, in view of the possibility that we are tenants in common, my wife might argue that her interest in the equity exceeds 50%."

39. After further correspondence between Mr Hurst and Miss Dixon which included references to the Hursts' beneficial interests in the property, Mr Hurst wrote on 20 February 1996 to NJ Treppass, one of his former partners, stating:

"As you know, my interest in the matrimonial home is held in trust for my wife."

Mr Treppass took exception to that letter both in correspondence and in an affidavit sworn on 4 March 1996, and upon receipt of it, Mr Hurst wrote to Miss Dixon a letter including the following passage:

"One matter which I should point out is that my letter of 20 February was written in haste. The words 'the majority of' should have been inserted before 'my interest' on the first line. However, I would rather not draw this error to Nick's attention at this stage. I am anxious to give him as little information as possible, and the error bears no relevance to his application. The only relevant matter is that he is secured by such interest as I might have in the matrimonial home. The extent of that interest will have to be determined in the event of there being proceedings for sale of the house."

Mr Treppass's application had been for a charging order on Mr Hurst's interest in the property, by way of execution of the judgment of Carnwath J.

40. In a further letter to Miss Dixon dated 5 March 1996 Mr Hurst said this:

"Although it is not relevant for present purposes, I have told you on several occasions that my father-in-law contributed the lion's share to such part of the purchase prices of 73 Southway and our first matrimonial home as were not financed by mortgage. Although there is no declaration of trust, Stephanie and I would eventually like to argue (if we are entitled to do so) that a proportionate part of my 50% interest in the house is held in trust for Stephanie."

41. It does not appear that Mrs Hurst played any active part in this correspondence, but its contents, coupled with Mr Hurst's answers to cross-examination about it led to the learned registrar to conclude, in paragraph 12 of his judgment, that Mr Hurst was "a man, who was willing to say whatever best suited his case at the time".

42. Mr Hurst in his submission before me on his wife's behalf readily acknowledged that he had been foolish in some of the answers which he gave in the cross-examination relating to this correspondence but sought to excuse himself on the basis that the correspondence had been disclosed at a very late stage, just before the cross-examination took place. In my judgment that excuse ignores the fact that the hearing before the learned registrar resumed on 1July 2004, after cross-examination on 13 May. Whatever the difficulties which faced Mr Hurst on the earlier date, he had plenty of time to offer a satisfactory explanation when the hearing resumed, but did not do so.

43. Mr Hurst persisted by way of submission before me in a case that his understanding, reflected in the early part of the correspondence, that he and his wife were entitled to equal shares of the equity in the property was the result of slap-dash advice given to him by Penningtons, rather than an assertion of his prior belief. In my judgment the learned registrar was amply justified in concluding, as he did, to the contrary. As he put it, the correspondence:

".. shows quite clearly that it was Mr Hurst who was telling Susan Dixon in what shares the property was owned beneficially, and that she was encouraging him to check the deeds of the property to see if they threw any light on the matter."

44. It follows that there is no basis for challenging the learned registrar's adverse conclusion as to the weight to be attributed to Mr Hurst's oral evidence about the beneficial ownership of the property. Of course, he had the benefit of seeing Mr Hurst being cross-examined under oath, whereas I encountered him only as an advocate.

45. I have already referred to the statements made by Mr and Mrs Hurst in connection with Mr Hurst's unsuccessful IVA. For present purposes it is Mrs Hurst's statement which matters most. It was drafted by or on behalf of Mr Supperstone and sent to Mrs Hurst under cover of a letter dated 1 June 2001 in the following terms:

"Dear Mrs Hurst,

Robert Albert Hurst – a Debtor

I have been instructed by Robert Albert Hurst to assist with arrangements to place a proposal before his creditors and your husband has a copy of the draft proposal for you to study. I understand that you jointly own the above property with Robert Albert Hurst which it is proposed will be sold. Surplus funds attributable to Robert Albert Hurst's interest in the property will be applied to make payment to the creditors under the proposal. Obviously to effect a sale of the property it will be necessary to receive your co-operation and I attach a form of undertaking for your completion and return to me.

You should take independent legal advice regarding the proposal and the attached undertaking."

46. The form of undertaking referred to read as follows:

"Re: Robert Albert Hurst

A Debtor

Of 73 Southway, Hampstead Garden Suburb, London NW11 6SB

I, Mrs Hurst, of 73 Southway, Hampstead Garden Suburb, London NW11 6SB, together with Robert Albert Hurst of 73 South Way, Hampstead Garden Suburb, London NW11 6SB, am the joint owner of the property known as 73 Southway, Hampstead Garden Suburb, London NW11 6SB ("the property").

I have read the draft proposal for Individual Voluntary Arrangement made by Robert Albert Hurst and understand that if the proposal is approved by the creditors then the property will be sold and the surplus attributable to Robert Albert Hurst's interest will be used to pay his creditors.

I confirm that the property is owned in the following shares:

Percentage

Robert Albert Hurst 50%

Mrs Hurst 50%

I undertake to co-operate fully with Robert Albert Hurst and the Supervisor of the Individual Voluntary Arrangement and any agents and solicitors in connection with the sale of the property, including executing all necessary contracts, conveyances and other documents. I further undertake to vacate the property when requested to do so subject to receiving not less than three weeks notice.

I confirm that I have been advised to take independent legal advice in relation to the proposal and the above, and have had the opportunity to take that advice."

Mrs Hurst corrected Mr Hurst's middle name from Albert to A wherever it appeared in the draft, and then signed and dated it at the foot.

47. In cross-examination on this document, Mrs Hurst first said that she supposed that when she had signed it she must have understood it. Later she said that she signed it on her husband's advice and probably did not understand the document. The learned registrar concluded that when signing the document she had known exactly what she was doing and the effect of what she was doing, and he relied on the fact that Mrs Hurst was and had for many years been a teacher. In my judgment the learned registrar was fully entitled to reach that conclusion.

48. On appeal, it was argued for Mrs Hurst that, having drafted the document for a purpose which had failed, Mr Supperstone could hardly thereafter rely upon it to his own advantage once appointed Mr Hurst's trustee. A belated attempt was made before me to suggest that her signature on the statement was obtained by undue influence, but this was, after enquiry by the learned registrar, specifically not relied upon at first instance by counsel for Mrs Hurst. There is no basis upon which that fact- intensive allegation can be introduced for the first time on appeal, in the absence of any explanation (and there is none) why it was not pursued below.

Analysis

49. The learned registrar held that Mr and Mrs Hurst's statements made for the purposes of his unsuccessful IVA constituted written declarations of trust satisfying section 53(1)(b) of the Law of Property Act 1925, and binding upon Mr and Mrs Hurst as to their beneficial interest in the property. This was not a conclusion which had been contended for by Mr Fisher, and was inconsistent with the parties' common stance that the issue as to the respective size of their beneficial interests should be determined by reference to constructive trust principles. It was a conclusion that the learned registrar reached for the first time, tentatively, at the time of preparing his draft judgment and he maintained it after hearing submissions from the parties on that point following delivery to them of the draft judgment.

50. Mr Fisher supported that conclusion on appeal, but without much enthusiasm. In my judgment neither Mr nor Mrs Hurst's statements in connection with his unsuccessful IVA were declarations of trust in relation to the property. Neither of them purported to create a trust where either no trust or some different trust had existed before. They were merely statements made for the purpose of informing Mr Hurst's creditors as to the nature and extent of his assets and as to his wife's readiness to co-operate in the sale of the property and the realisation of his beneficial interest for the benefit of those creditors.

51. The learned registrar's second conclusion was that even if they did not amount to declarations of trust, the same statements justified the court inferring a common intention on the part of Mr and Mrs Hurst to hold the property on trust for themselves in equal shares beneficially. It is not clear from his Judgment whether that inference related to the time, in 2001, when Mr and Mrs Hurst made the written statements in question, or to the time when the property was purchased, some 17½ years earlier. An inference that Mr and Mrs Hurst had a common intention in 2001 that the property should be held by them in equal shares beneficially is almost inevitable, once the learned registrar had concluded that Mrs Hurst knew and understood the effect of her statement, But that would be insufficient for the purposes of defining their beneficial shares at the time of purchase. By contrast, an inference that they had that common intention at the time of purchase would be sufficient, but is by no means an inevitable inference from statements made by each of them after the lapse of such a long period of time.

52. In Mortgage Corporation v Shaire [2001] Ch 743 at 754–45, Neuberger J declined to treat statements by Mrs Shaire in and after 1993 (one of which was made in a witness statement and the other to her solicitor) to the effect that Mr Fox owned a 50% beneficial interest in her house as compelling the inference that she and Mr Fox had a common intention to that effect when Mrs Shaire's former husband transferred his interest to her and Mr Fox in 1987. He declined to do so first because evidence of one co-owner's intention did not establish a common intention, and secondly because her evidence had been as to her present understanding at the time she made the relevant statement.

53. The learned registrar distinguished that part of the judgment in Mortgage Corporation v Shaire only on the first of the two grounds relied upon by Neuberger J. As he put it, there was all the difference between a statement by one co-owner and statements in this case by both of them to the same effect. He made no reference to the fact that neither Mrs Shaire's statement nor Mr and Mrs Hurst's statements purported to express anything other than their understanding at the time they were made. I consider that this is a small but significant pointer towards a conclusion that the learned registrar did not consider it necessary to decide whether Mr and Mrs Hurst shared the common intention expressed in their 2001 statements at any earlier time.

54. Mr Fisher submitted that I should nonetheless conclude that the learned registrar was addressing himself to Mr and Mrs Hurst's common intention at the time of the purchase of the property, because that was how the relevant test had been put to him by both him and counsel for Mrs Hurst. While I accept that this is a possible conclusion, which is not expressly contradicted anywhere in the learned registrar's judgment, I have been unable to satisfy myself that the learned registrar did make a finding as to inferred common intention at the time of the purchase of the property, and it therefore fails to me to consider that question afresh.

55. I do not consider that it would be satisfactory to infer purely from the statements made by Mr and Mrs Hurst in 2001 that they had a shared common intention of equal beneficial ownership at the time of the purchase of the property. There are some other indications that Mr Hurst had that intention, or rather that he imagined that he and Mrs Hurst were beneficial joint tenants. The form of the transfer of the property, containing a declaration that the survivor of Mr and Mrs Hurst could give a good receipt for capital monies arising on a sale, and the content of some of Mr Hurst's correspondence with Miss Dixon of Penningtons all point in that direction, but none of those indications say anything significant about Mrs Hurst's intention at the time of the purchase. In particular the form of the Transfer of the property does not, because it was common ground and accepted by the learned registrar that there was no discussion or agreement between Mr and Mrs Hurst as to the nature or size of their beneficial shares in the property, and the conveyancing was done by a colleague of Mr Hurst's in all probability without the taking of specific instructions from Mrs Hurst. It seems to me inconceivable that she would have so instructed Mr Hurst's colleague, namely that they were to be beneficial joint tenants, without any discussion of the matter with her husband.

56. My principal reason for declining to make the inference that Mr and Mrs Hurst had a common intention as to equal beneficial ownership at the time of the purchase of the property, apart from the very substantial lapse of time between the purchase and the statements in 2001, is precisely that given by Chadwick LJ in the following passage in paragraph 71 of his judgment in Oxley v Hiscock:

"It seems to me artificial – and an unnecessary fiction – to attribute to the parties a common intention that the extent of their respective beneficial interests in the property should be fixed as from the time of the acquisition, in circumstances in which all the evidence points to the conclusion that, at the time of the acquisition, they had given no thought to the matter."

It seems to me unreal to suppose that, without any discussion between each other, Mr and Mrs Hurst came simultaneously, at the time of the purchase of the property, to have the same intention as to its beneficial ownership. This therefore is a case, in my judgment, in which the size of the parties' respective beneficial interests fall to be determined on the basis of what appears to the court now to be fair, having regard to all the parties' conduct with reference to the property, both at the time of and subsequent to its purchase.

57. Applying this test, (against the possibility that he might be wrong on the first two of his grounds for decision), the learned registrar again came to the conclusion that the answer was that Mr and Mrs Hurst had been, and Mr Supperstone and Mrs Hurst now are, beneficial owners in equal shares.

58. Mrs Hurst challenged the learned registrar's application of this test on two main grounds. First, it was submitted on her behalf that the learned registrar had made factual errors in his analysis of the sources of the contributions made to the purchase price of the property. I have already dealt with those issues, in paragraphs 19 to 34 above. Secondly, it was submitted that the learned registrar had given far too little weight to the disparity between Mr and Mrs Hurst's respective contributions to the purchase price, and excessive weight to their written statements in 2001.

59. In my judgment it is impossible to fault the list of relevant circumstances given by the learned registrar in paragraphs 15 and 16 of his judgment, save only in the sense that, as I have already held, the weight of the evidence was that Mrs Hurst's father intended his monetary gift to be a gift to his daughter rather than to his daughter and son-in-law, albeit that he probably did not express that intention to either of them.

60. Mr Fisher submitted that a decision as to beneficial shares in property based on the fairness test enunciated in Oxley v Hiscock was in substance a discretionary matter, so that, on appeal, the learned registrar's judgment should not be reversed merely because the appellate court would have given different weight to the various relevant factors than did the learned registrar. I do not consider that the ascertainment of the respective beneficial shares of co-owners of real property has yet, outside the confines of the court's special powers on divorce, reached the stage where it is truly a matter of discretion. Nonetheless, different judges may reach different views as to what is fair without reaching the conclusion that the first instance judge was wrong in the sense of having made an error of law.

61. The learned registrar described the written statements made by Mr and Mrs Hurst in 2001 as a compelling factor in his assessment of what was fair. In my judgment he was right to do so. Those statements were made for the information of Mr Hurst's creditors, so that they could make an informed decision whether to approve or disapprove his proposed WA. The present stakeholders in the property are now Mrs Hurst and those same creditors, for whom Mr Supperstone as Mr Hurst's trustee is merely a fiduciary. In Oxley v Hiscock the Court of Appeal went out of its way to emphasise that the fairness test applicable to determine the beneficial interests in co-owned property had become almost indistinguishable from the principles applied under the doctrine of proprietary estoppel. With that in mind, it seems to me very unfair that, having made a written statement that she and her husband were equal beneficial owners in the property to Mr Hurst's creditors in 2001, Mrs Hurst should now be able to obtain a determination from the court that her interest exceeded 50%, in litigation between herself and a trustee for those same creditors.

62. It is no answer for Mr Hurst to say on her behalf that the proposed IVA failed. A decision by creditors not to approve the proposed IVA may fairly be said to be just as reliant upon factual statements made in the proposal as a decision to approve it.

63. Were it not for the 2001 statements, and the fact that the persons to whom they were made have in effect succeeded to Mr Hurst's interest in the property, I would have been inclined to think that a 50/50 apportionment of the beneficial interest was a little less than fair to Mrs Hurst. But I find myself just as compelled as was the learned registrar to conclude that in the light of those statements, when evaluated together with all the other relevant conduct at the time and subsequent to the purchase of the property, a 50/50 apportionment is fair both to Mrs Hurst and to Mr Hurst's creditors.

64. Accordingly, I dismiss this appeal.