David and Audrey

Question:
For many years Audrey ran her own hairdressing business from a salon located on
the ground floor of her house. She lived there alone after all her family had moved
to other parts of the country. In 2009 Audrey’s grandson, David, completed his
training course to become a specialist hair and make-up artist. He went to live with
Audrey temporarily. He was saving up for a deposit to buy a flat in London. David
had always wanted to move to London to establish a career doing hair and make-
up in the TV and film industry.
In 2010 Audrey contracted a severe skin allergy that would gradually affect her
nervous system. She asked David to carry on living with her. Audrey told him that
if he stayed to look after her she would ensure that he was ‘well provided for after
I’m gone’. David was so worried about leaving his grandmother alone that he
agreed to stay and take care of her.
Over the next nine years Audrey’s health gradually deteriorated. She eventually
became housebound and in need of increased care and support, which David
provided. When Audrey became too ill to work David began to run the
hairdressing salon for her. Audrey had insisted on paying him a salary of £18,000 a
year. Audrey regularly expressed her gratitude for all that David was doing. On a
few occasions she would even refer to the property as ‘your salon’ or ‘your home’.
Audrey died last week. Her will leaves her house to David and her other two her
grandchildren in equal shares. David believes he is entitled to the house but the
other two grandchildren are demanding their share.
Advise David.
Answer:
David will be advised in regards to his claim of implied co-ownership being
created either under constructive trust or proprietary estoppel. Whether D is
entitled to the house will be determined after establishing and proving his claims
successfully under either of the concepts. Each issue will be scrutinized
chronologically.
Facts mention that David came to live with his grandmother in 2009. David will be
informed that he can only have a sole claim on the property if he can prove himself
to be a co-owner. Co-ownership arises when two or more people are
simultaneously entitled for possession due to an interest in the property. Interest
can either be legal or equitable and the absolute owner is the person who is
registered in the deed as the paper owner having both the interests. This is in
compliance with s.53(1) of LPA 1925 satisfying the formalities requirement. In the
given case, A was the registered sole owner of the property. D will be advised that
since he, initially, did not have any monetary contribution towards the house and
since his name is absent from the deed, he needs to rely on the exception of s.53(2)
of LPA 1925 supported by s.2(5) of LP(MP)A 1989 which allowed implied
creation of co-ownership either by way of resulting trust or constructive trust.
Here, RT is unlikely to succeed as there is no evidence of D contributing towards
the purchase price (Tinsley v Milligan) or the mortgage (Lasker v Lasker). Hence,
he will have a better claim under constructive trust. According to Lloyd’s Bank v
Rosset, CT required the satisfaction of common intention and detrimental reliance.
Express discussion and common intention from payments were the traditional
indicators to establish common intention. Here, it is mentioned that A said that D
would be “well provided for” after she left, which may be said to be an express
discussion, as per Rosset, but since it was not specific, it is unlikely to succeed.
Here, common intention by course of conduct is more likely to succeed as the two
traditional indicators will not back up this claim. Stack v Dowden confirmed in
Jones v Kernott introduced a third route to identify common intention through the
parties’ entire course of conduct. Baroness Hale stated that “context is everything”
and now additional payments made towards renovating the property and paying
utility bills also amounted to common intention.
It is mentioned in the facts that D provided care and support for his grandmother
when her health deteriorated and when she became bedridden, he began running
the salon. This conduct may be said to have established common intention on D’s
part by way of conduct.
In addition to proving common intention, D must show detrimental reliance based
on the common intention. D can show that he had left his long-term dream of
moving to London to establish his career in order to take care of A. This shows that
D suffered a detriment to his career and as per Greaseley v Cooke, since there is
evidence of detriment, there will be a presumption of reliance. It is clear that D
behaved in a manner in which he would not have done if there was no common
intention. Further, as D was worried about his grandmother and stayed with her out
of love for her, it will establish reliance as per the case of Chun Ho.
In addition to constructive trust, D may have a better claim under proprietary
estoppel. In Oxley v Hiscock, Chadwick LJ emphasized that the concept of PE and
CT are not the same, however, the outcome may be similar. PE will play the role of
stopping the other grandkids from exercising their legal rights against D (Crabb v
Arun DC). It is an equitable concept which focuses on delivering a fair decision by
striking a balance between the claim of the claimant and the legal owner.
In order to have successful claim under PE, the conditions set out in Taylor
Fashions v Liverpool must be satisfied. First, it must be shown that there was an
assurance made to the claimant that they would have some right over the property
in the future. Here, it is mentioned that A would often refer to the property as D’s
i.e. D’s house or D’s salon. Further, she promised D that he would be well
provided for after her death. This may be said to be assurance as there were
promises made by A to D (Flowermix v Site).
Further, it is clear that D relied on this statement as he continued living with his
grandmother and took care of her, without pay, for many years. Due to this
reliance, D also suffered major detriment to his career as he put his move to
London on hold in order to take care of his grandmother. All three of these
conditions are interwoven as per the cases of Gillett v Holt and Jennings v Rice
and they can all said to be satisfied in this scenario.
The main difference between the concepts of CT and PE is the requirement of
proving unconscionability. Oliver J, in Taylor Fashions, considered
unconscionability to be the very essence of PE. Cornwath J emphasized that what
is instrumental is the promisor’s knowledge that a detriment has been suffered in
reliance of his promise by the promisee for which it is now unfair/unconscionable
for him to go back on his promise.
This scenario is analogous to the facts of the case of Thorner v Majors where the
claimant was allowed PE even though the defendant changed his will and left
nothing for the claimant, who had taken care of the defendant without any pay, for
years, upon the belief that he will have entitlement to stay in the property after the
defendant’s death. This is similar to D’s case as he had taken care of his
grandmother and ran her salon, without pay, for many years and hence, if this
principle is applied, D should be awarded and allowed PE for looking after the
property and his grandmother for which he has suffered a detriment and it would
now be unconscionable if no remedy is provided.
Therefore, from the discussion provided above and the case analysis, it may be said
that D will have a successful claim of implied co-ownership under proprietary
estoppel.
Question 5:
In 2016 Alec, Ben, Cath, Dina and Ed, five aspiring actors, contributed unequal
amounts towards the purchase of a large house in London for them to live in
together. Title to the house was registered in Alec, Ben and Cath’s names; and they
executed a declaration that the beneficial estate was held for all five of them as
joint tenants.
In Jan 2017 Cath gave birth to a child, Zanthe. Six months later she was offered a
small part in a film when she visited Hollywood. She sent the others a post card
saying she wanted to sell her interest quickly so that she and Zanthe could move to
live in America. The next day Cath’s agent telephoned with the bad news that the
film had been cancelled. Cath immediately emailed the others to tell them to
disregard her postcard because she and Zanthe would not be leaving after all.
In May 2018 Ben took out a loan from the City Bank when he bought a collection
of movie memorabilia at auction. City Bank required Ben to charge his interest in
the house to secure the loan.
In December 2018 Dina collapsed and died on stage during the performance of the
musical Les Miseries. In her will she left all her property to a charity that supports
retired actors. A few weeks later Ed, who was grief-stricken at Dina’s death, told
the others that he wanted to sell his interest in the house. Ben said that he could not
afford to buy it. Alec made an offer but Ed rejected it as too low. Cath spoke to her
bank manager, who advised her against the investment. Alec raised his offer price,
but Ed changed his mind and decided not to sell.
Three months ago, Ben defaulted on his loan repayments. The City Bank now
wants the house to be sold but all the residents want to stay in the house.
Advise the City Bank: (a) as to the allocation of the beneficial ownership in the
house; and (b) whether it is likely to succeed if it seeks to have the house sold.
Answer:
In answering this question, City Bank (CB) will be advised as to their rights to the
house in relation to the joint tenants and possible tenants in common namely, Alec
(A), Beth (B), Cath (C), Dina (D) and Ed (E).
Co-ownership arises when two or more people are simultaneously entitled with an
interest and possession of the same property (Gore & Snell v Carpenter) (Tinsley v
Milligan) (Stack v Dowden). Under English law, joint tenancy and tenancy in
common are the only two types of co-ownership that exist. In the given scenario,
A, B, C, D and E paid unequal amounts towards the purchase price of the house,
with A, B and C being registered and all five of them having beneficial interests
(Goodman v Gallant). As all the parties were joint tenants, this indicates that they
all had 100% ownership of the house and right of survivorship applies. The
principle of right of survivorship focuses on the fact that if a joint tenant dies,
before severance, their interest in the property dies with them and is left with the
remaining joint tenants (Re Caines). However, if severance is completed, then a
joint tenancy can be transformed into a tenancy in common and the party shall
enjoy a fair share of his property, where the right of survivorship does not apply.
Thus, upon the death of the tenant in common, the share of the property can be
transferred to their estate by way of a will.
Answer to Question 5(a):
Since, after the purchase of the house, many events have taken place, the final
allocation of the ownership shall be discussed in chronological order as advise to
CB.
In 2017, C sent a postcard to the others which stated her intention to sell her
interest in the house. According to s.36(2) of Law of Property Act 1925 (LPA
1925), there must be a clear expression of the intention to severe immediately.
Here, since she intended to ‘quickly’ sell her interest, there was immediacy in the
letter and showed clear intention (Burgess v Rawnsley). According to s.196 of
LPA 1925, the writing must be properly served to the other joint tenants. Here,
since facts mention that she sent her notice to the others, it may be said to be
served properly and it is deemed to be served the moment it arrives. However,
here, C may argue that since she sent an email revoking her severance, she is still a
joint tenant. If she can successfully argue this point, she will still be deemed to be a
joint tenant, but chances are unlikely.
Further, B may be said to have severed his interest by an unilateral act of severance
as identified by the case of William v Hensman by Page Wood VC, by mortgaging
his share, which amounts to acting upon his share by partial alienation, and since B
defaulted on loan repayments, he may be said to be declared bankrupt and his joint
tenancy may be said to be severed. Therefore, he will no longer be a joint tenant,
rather a tenant in common.
In D’s case, her death may have extinguished her interest in the property for which
the right of survivorship will apply, unless it is established that she successfully
severed her right in the property by will. According to Re Caines, severance cannot
be by will as by the time the will comes into operation, the interest in the property
will already have disappeared under the right of survivorship (Study Guide).
Hence, D's interest in the property, in this scenario, died with her and went to the
remaining joint tenants.
Next, it must be seen whether E has successfully severed his interest in the
property by mutual agreement (Burgess v Rawnsley). According to this
requirement, there will need to be a mutual agreement which implies severance.
Facts mention that E told the other joint tenants that he wanted to sell his interest in
the property which shows his intention. According to Burgess, the intention of the
parties is given priority rather than a formality. Therefore, if intention is present,
severance can occur. However, since no price was good enough for E and he later
changed his mind, he may argue that there was no severance and that he is still a
joint tenant as he no longer had the intention to sever. However, here, the others
may argue that since E had the intention to sever the tenancy in the first place, it
does not need to be acted upon to affect the severance (Hunter v Babbage).
Therefore, it may be said that E is no longer a joint tenant but rather, a tenant in
common.
Therefore, CB will be advised that it is likely that A will be the only joint tenant in
the given property and the others will be considered as tenants in common.
Answer to Question 5(b):
In case of selling the property, CB will be advised that they can go ahead and sell
the property, as E has defaulted the mortgage payments (Achampong), by making
an application under s.14 and s.15 of Trusts of Land and Appointment of Trustees
Act 1996 (TOLATA 1996). Under s.15, the court will consider a number of factors
before ordering an immediate sale. They will see whether the property was used as
a family home, whether there was an infant involved, whether there were any
creditors involved and whether there was an urgency to sell.
Facts mention that C’s daughter, Zanthe (Z) lived with her in the house. This will
work in favour of not selling the house as there was a child involved. However, it
was not a family home. Even though there are creditors involved, the amount of
the loan is not mentioned. Therefore, CB will be advised that the higher the
amount of loan, the higher the chance that they will be able to sell the property.