James v Thomas [2007] EWCA Civ 1212
Constructive Trust – Proprietary Estoppel – Cohabiting – Beneficial Interest – Common Intention – Property
Facts
The defendant, Mr Thomas, owned the cottage in dispute as the sole registered proprietor of the property. Mr Thomas had inherited this property on the death of his parents; he had subsequently bought the remaining shares from his siblings. He later formed a relationship with the claimant, Ms James and she moved into the cottage. He also ran his business from the cottage. The complainant had worked with the defendant in his business without receiving wages and later became a partner. She gave him £5,000, which he used to pay a tax bill. The parties disputed whether it was a loan or a gift. Mr Thomas had made assurances to the claimant that she would be ‘well provided for’ in his will and that the work she carried out on the cottage would ‘benefit them both.’
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Issues
The trial judge had dismissed the claim of beneficial interest under Section 14 of the Trusts of Land and Appointment of Trustees Act 1996. The appeal concerned whether the judge had erred and misunderstood when a constructive trust could arise from circumstances.
Decision/Outcome
The Court of Appeal dismissed the appeal. A common intention to share ownership can arise after one party acquires the property and can be inferred from the parties’ dealings with it. On these facts, the work and the way the parties met the mortgage and household expenses did not show such an intention. The assurances about mutual benefit and future provision did not amount to a promise of an interest in the cottage and did not establish proprietary estoppel.
Ms James’s entitlement to a share of the business assets as a partner was distinct from her claim to an interest in the cottage.
