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Lightfoot v Lightfoot-Brown [2005] EWCA Civ 201

Clear evidence of an understanding or arrangement is required to establish a beneficial interest subject to a common intention constructive trust.

Lightfoot v Lightfoot-Brown [2005] EWCA Civ 201

Court of Appeal: Auld and Arden LJJ, and Wilson J (8 February 2005)

Clear evidence of an understanding or arrangement is required to establish a beneficial interest subject to a common intention constructive trust.

The appellant, Mr Lightfoot, and the respondent, Mrs Lightfoot-Brown, divorced in September 1996. In ancillary relief proceedings, a consent order between the parties had recognised that they were the joint beneficial owners of the former matrimonial home; the order provided that, in full and final settlement of all claims that they might have against each other, the respondent would pay all monies due in respect of charges on the property, and the appellant would transfer his interest in the property to the respondent.

In late 1997, the parties discussed re-marriage, paying a deposit for a reception following their expected re-marriage to take place in June 1998, and apparently discussing the possibility that, on re-marriage, they would sell the property and use the proceeds to purchase a new house in joint names. However, the re-marriage was called off a couple of months later, and the relationship between the parties finally ended in March 1998. Between September 1996 and September 1998 the appellant made a number of regular payments amounting to £24,000 in respect of loans charged on the property; and, in September 1997, unbeknown to the respondent, he made a capital payment of £41,000 to one of the lenders.

The appellant sought a declaration that he had a beneficial interest in the property; in April 2004, that claim was dismissed by the judge at first instance on the basis that the mere fact of the payments could not give rise to an equitable interest in the absence of some understanding or arrangement that the appellant should have such an interest, and the only understanding or arrangement was conditional on a re-marriage that never occurred. By this appeal, the appellant sought to argue that the judge: had misdirected himself that he had to find an express communication of a shared common intention; had failed to give adequate consideration to whether there was a common intention constructive trust; and should have concluded that there was indeed a common intention constructive trust.

The court summarised the judge's findings and reviewed the relevant authorities.

Held, dismissing the appeal, that the judge did not misdirect himself into thinking that he was not required to consider whether a common intention constructive trust could be inferred from the conduct of the parties or into thinking that communication had to be by express words. The mere fact of payments would not give rise to an equitable interest without some agreement or understanding that that would happen. There were other reasons for the payment of £41,000 and the wife's ignorance of it prevented it being supportive of any agreement.

This case gives a useful overview of the authorities on beneficial interests from a Court with a strong civil litigation background. It is another in the increasing number of cases encountered in practice where relationships continue or redevelop post divorce and raises questions for practitioners about the advice to be given after the ancillary relief proceedings are finished - not just "make a will", but perhaps "don't let him move back in" or "don't move back in without talking about money"?

Tacey Cronin, Barrister, Albion Chambers

Read the full text of the judgment