Lightfoot v Lightfoot-Brown [2005] EWCA Civ 201

Case No A3/04/1046

[2005] EWCA Civ 201

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue BIRMINGHAM DISTRICT REGISTRY

MR. JOHN MARTIN Q.C.

Venue Royal Courts of Justice

Date Tuesday, 8th February 2005

Strand

London, WC2

B E F O R E:

LORD JUSTICE AULD

LADY JUSTICE ARDEN

MR JUSTICE WILSON

Between

DEREK KEITH LIGHTFOOTAppellant

-v-

Between

SEONA LIGHTFOOT-BROWNRespondent

(Computer-Aided Transcript of the Stenograph Notes of

Smith Bernal Wordwave Limited

190 Fleet Street, London EC4A 2AG

Tel No: 020 7404 1400 Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

MR JOHN DE WAAL (instructed by (Messrs Morton Fisher, Halesowen, West Midlands) appeared for Appellant.

MISS KAREN WALDEN-SMITH (instructed by Messrs Cripps Harries Hall, Tunbridge, Kent) appeared for Respondent.

J U D G M E N T

LADY JUSTICE ARDEN:

This

[1]is an appeal, with the permission of Neuberger LJ, from the order dated 16th April 2004 of Mr John Martin QC sitting as a deputy judge of the High Court of Justice, Chancery Division, Birmingham District Registry. This appeal is brought by Mr Derek Lightfoot ("Mr Lightfoot"), the claimant in the action. By the action he sought a declaration that he was entitled to a 50% share in Mitchelswood Farm ("the property") which was registered in the name of his former wife and respondent to this appeal ("Mrs Lightfoot-Brown"). Following the three day trial the judge gave a reserved judgment and made an order dismissing Mr Lightfoot's claim for a declaration that he had a beneficial interest in the property. THE JUDGMENT BELOW.

[2]The judge set out the background. The property was the former matrimonial home of Mr Lightfoot and his first wife. He and Mrs Lightfoot-Brown met in approximately 1984. In about 1985 Mr Lightfoot purchased his first wife's share interest in the property. The parties moved into the property in about 1985. It became their home for the remainder of their relationship. This came to an end in September 1998. Meanwhile, in about 1988 Mrs Lightfoot-Brown sold her own flat at 36 Lansdowne Place, Hove, East Sussex. She paid the proceeds of sale of £24,000 to Mr Lightfoot in return for a charge on part of the property.

[3]The parties had four children. Their daughter and two sons were born between 1988 and 1992. Thereafter the parties married. However, the marriage was not a success and on 21st June 1994 a decree nisi for divorce was made on the grounds of Mr Lightfoot's adultery. Subsequently, however, the parties were reconciled, and their fourth child was born in November 1995. On 18th May 1996 the parties entered into a consent order in the ancillary relief proceedings subsequent to the grant to them of a decree nisi. The consent order recognised that the parties were the joint beneficial owners of the property. By virtue of the order the parties agreed, in full and final settlement of all claims that they might have against each other, that Mrs Lightfoot-Brown would pay all instalments and monies due to the Halifax Building Society and Lloyds Bank Plc in respect of charges on the property, and that Mr Lightfoot would transfer his interest in the property to Mrs Lightfoot-Brown and make periodical maintenance payments for her and the children. He also agreed to settle a sum of cash and land on the children. The consent order was approved by the Brighton County Court on 9th September 1996, and on that date the decree absolute was granted.

[4]There was a further attempt at reconciliation. In about September or October 1997 the parties discussed remarriage. They paid a deposit for a reception following their expected remarriage to take place in June 1998. However, the remarriage was called off in about November 1997. The relationship between the parties finally came to an end when Mrs Lightfoot-Brown discovered that Mr Lightfoot had had a relationship with their childrens' nanny. She discovered this in March 1998. Meanwhile, Mr Lightfoot transferred the property to Mrs Lightfoot-Brown on 27th May 1997 in pursuance of the consent order. Between September 1996 and September 1998 Mr Lightfoot made a number of regular payments in respect of the Halifax and Lloyds' loans charged on the property. The judge found that these amounted to about £24,000. Moreover, on 17th September 1997 he made a capital repayment of £41,000 to the Halifax. Mr Lightfoot also paid for improvements to the property. The judge does not say when Mr Lightfoot paid for these improvements.

[5]The judge noted that the case for Mr Lightfoot was based primarily on two discussions which he said had taken place between himself and Mrs Lightfoot-Brown. The first was in September 1996. According to Mr Lightfoot, Mrs Lightfoot-Brown came to him and asked to carry on living in the property, in return for which they would do a deal on the property. The second discussion was in February 1997, in the course of a celebration over a victory in a court case. On Mr Lightfoot's case the parties then agreed that, despite the decree absolute and the consent order, they would get back together again and put everything back into joint names. The judge referred to the fact that the parties paid a deposit for a reception to celebrate their wedding in Cornwall and made a joint offer to purchase a house nearer Powys where Mr Lightfoot was working for much of the time, the intention being that the property would be sold and the proceeds used to help to buy or renovate the new house which would itself be in joint names. However, that offer did not apparently proceed.

[6]Mr Lightfoot's evidence as to the discussions was contested by Mrs Lightfoot-Brown on the basis that there had been no firm agreement at any stage to restore Mr Lightfoot's interest in the property. Mrs Lightfoot-Brown accepted that in the late spring or the summer of 1997 she and Mr Lightfoot had a discussion, in the course of which Mr Lightfoot had suggested that they should redistribute their assets. However, Mrs Lightfoot-Brown's evidence was that she said nothing because she knew that if she did Mr Lightfoot would arrange matters to suit himself. She accepted that she did subsequently consider remarriage and that her understanding was that on remarriage their assets would become jointly owned. However, she did not say anything that amounted to an acceptance that the property should be shared, nor did she know that Mr Lightfoot had made a payment of £41,000 to reduce the mortgage debt.

[7]The judge preferred Mrs Lightfoot-Brown's version of the facts. He gave a number of reasons. First, Mr Lightfoot's case was largely inconsistent with his pleaded case. Second, Mr Lightfoot had not mentioned the February 1997 agreement before he was cross-examined. Third, Mr Lightfoot did not mention the discussion in September 1996 or February 1997 in his witness statement. The judge did not accept his explanation, which was that he did not have supporting documentary evidence, as a good reason for this omission from his witness statement. Fourth, Mr Lightfoot's assertion of an agreement in February 1997 was inconsistent with the transfer of the property to Mrs Lightfoot-Brown in May 1997. Fifth, likewise in a financial statement in Form E filed in the Brighton County Court on 11th October 2002 in support of his own application to vary the maintenance provisions of the consent order, Mr Lightfoot stated that all his interest in the property had been transferred to his former wife. This statement was also irreconcilable with his case at trial. Sixth, Mr Lightfoot had brought a number of proceedings against Mrs Lightfoot-Brown. It is not necessary for me to go into these, but I note that the judge did not regard the history of these proceedings as justifying a refusal to accept Mr Lightfoot's evidence. The judge simply said that the history justified approaching Mr Lightfoot's evidence with a certain scepticism. Seventh, Mr Lightfoot's statements had been contradicted by a number of documents written by him or by the solicitors.

[8]The judge then dealt with the evidence in support of Mr Lightfoot's case. He referred to certain letters written by Mrs Lightfoot-Brown. He found that they could not be read as an acknowledgement that an agreement to share the assets had previously been reached. The judge accepted Mrs Lightfoot-Brown's evidence that she thought that if they remarried their assets would be jointly owned. They expressly found that Mrs Lightfoot-Brown did not go any further than this in their discussions. The judge also found that there had been an agreement between Mrs Lightfoot-Brown and Mr Lightfoot that Mr Lightfoot would remain faithful to Mrs Lightfoot-Brown if she gave him her support in relation to litigation in connection with two disputes. He found that Mr Lightfoot had wrongly chosen to take a statement by Mrs Lightfoot-Brown, in a letter written by her, as referring to his asserted agreement about the redistribution of assets and constructed a sequence of events around it.

[9]The judge then turned to consider Mr Lightfoot's payments in respect of the mortgage loans on the property. He held that the payments in respect of the regular payments were readily explicable. They were partly a substitute for the maintenance payments due under the consent order and partly an acknowledgement that Mr Lightfoot was continuing to live in the house. As for the payment of £41,000, the judge accepted that this was harder to explain. He found that while it implied a belief that Mr Lightfoot would have an interest in the property, this was on the basis that he and Mrs Lightfoot-Brown were going to remarry. He held that there was no agreement that Mr Lightfoot would receive a beneficial interest if the parties did not remarry.

[10]The judge placed emphasis on the fact that Mrs Lightfoot-Brown did not know about the payment -- that was her evidence -- and in addition, the overwhelming impression gained by the judge from the evidence was that Mr Lightfoot was in charge of family finances, and that neither he nor Mrs Lightfoot-Brown expected her to have anything but a general knowledge of how they operated. The judge went on to find that Mr Lightfoot's reason for making the payment of £41,000 was to ensure that the whole remaining balance of the mortgage debt qualified for tax relief.

[11]The judge thought that it was most unlikely that Mr Lightfoot would have thought that either the fact of the payment or the reason for it was a matter which Mrs Lightfoot-Brown needed to know. The judge found that the sum of £41,000 and the cost of the improvements were made by Mr Lightfoot out of his own income. However, he held that the mere fact of the payments could not give rise to an equitable interest unless there was some understanding or arrangement that Mr Lightfoot should have one. The judge held that, as he had already indicated, the only understanding or agreement was in effect conditional on a remarriage which never occurred. The Appellant's Submissions.

[12]In his written submissions Mr John de Waal submits that the judge failed to deal with all the material evidence; in particular, on his submission, the judge failed to deal with the fact that in June 1997 the parties made a joint offer for a property in Powys and the fact that they paid a deposit for the venue in Cornwall chosen to celebrate their marriage in June 1998. However, these submissions were not pursued, and they may indeed be outside the permission to appeal which was granted by Neuberger LJ. In any event, in my judgment the judge did indeed refer to the evidence of remarriage and the offer for the house in Powys. I have already referred to these matters in my summary on his judgment.

[13]In his written submissions Mr de Waal also submits that the judge mistakenly conflated the concept of beneficial ownership with that of legal ownership, and thus posed for Mr Lightfoot a higher test for satisfaction of the ingredients necessary to establish a common intention constructive trust than was required at law. He submits that the judge thought that it was necessary for there to be a firm agreement between the parties. This point, too, has not been pursued on this appeal in oral submissions, in my judgement properly so because the expression "no firm agreement" comes within the judge's summary of Mrs Lightfoot-Brown's submissions to him.

[14]Mr de Waal's further main submission in his skeleton argument is that the judge failed to draw the correct inferences from the primary facts that were found or agreed. Mr de Waal further submits in writing that the judge failed to give reasons for rejecting the argument based on the payment of £41,000. As I have explained in my summary of the judge's judgment, the judge did indeed give reasons for his finding that Mrs Lightfoot-Brown did not know about the payment of £41,000. Mr de Waal further submits in his skeleton argument that the judge failed to apply the law as subsequently established in Oxley v Hiscock

[2004] 3 All ER 703

. In that case Chadwick LJ, with whom Mance and Scott Baker LJJ agreed, held that where an unmarried couple live together, financial contributions should really lead to the inference that there was a common intention that the party making the contribution should have a beneficial interest in the property. That was Mr de Waal's submission in the Oxley case, and I must make further reference to that case below.

[15]In his oral submissions Mr de Waal relies on three draft reamended grounds of appeal. As to the first draft reamended ground of appeal, he submits that the judge misdirected himself that he had to find an express communication of a shared common intention. In support of this he relies on a passage at paragraph 5 of the judgment which I will set out below. His submission is based on two passages from the judgment of this court in Springette v Defoe

[1992] FLR 388

, 393D-G and 394G-395B. These were the passages relied upon by the judge. Mr de Waal submits that in Oxley v Hiscock this court held that those passages did not represent the law.

[16]As to the second draft reamended ground of appeal, Mr de Waal submits that the judge failed to give adequate consideration to whether there was a common intention constructive trust to be inferred from the payment of £24,000 and £41,000 referred to above.

[17]Under his third draft reamended ground of appeal, Mr de Waal submits that the judge should have concluded from the payments of £24,000 and £41,000 that there was indeed a common intention constructive trust.

[18]This court announced at the start of the hearing that it would hear Mr de Waal's submissions, as it were, de bene esse, and give its decision on the application to reamend to introduce these three new grounds of appeal in its judgment on this appeal. The Respondent's Submissions.

[19]Miss Karen Walden-Smith appears for Mrs Lightfoot-Brown. We did not call on her to address us orally but she made the following submissions in writing. She submits that the judge was entitled to conclude on the evidence before him that there was no express agreement or understanding that Mr Lightfoot would obtain an interest in the property, other than one conditional on a remarriage that never occurred. She accepts that, alternatively, the judge could have inferred an agreement or understanding to that effect. However, that would have been inconsistent with the allegation made by Mr Lightfoot of an express agreement. The judge was entitled to conclude that no agreement or understanding was to be inferred. The fact that a contribution was made to the purchase price does not give rise, on her submission, to an irrebutable presumption of an agreement that the party making the contribution should obtain a beneficial interest; nor indeed is there a rebuttable presumption to that effect. Such contributions are, on her submission, merely facts which can give rise to an inference that each party is to have some beneficial interest in the property.

[20]However, Miss Karen Walden-Smith submits that there would not be an inference of a common understanding or agreement from the payment of £41,000 unless both parties knew about the payment. The judge was entitled to conclude that Mrs Lightfoot-Brown did not know of the payment. However, Miss Walden-Smith further submits that the judge did not apply the wrong legal test or conflate the concepts of beneficial legal ownership. The judge did not fail to draw the correct inferences from the facts. The judge gave sufficient reasons for accepting the payment of £41,000 and those reasons were such that an agreement or arrangement should not be inferred from it.

[21]As for the decision of this court in Oxley v Hiscock, Miss Walden-Smith submits that this was primarily a case about the size of the beneficial interest obtained as a result of a common intention constructive trust. The appellant in that case was unsuccessful in contending that, in the absence of express discussion, the court was bound to hold that the property was held on resulting trust for the persons contributing to the purchase price in proportion to their contributions. She submits that this court held that, once the common intention constructive trust was established, then, if there is no evidence of a discussion as to the amount of the share, each is entitled to that share which the court considers fair having regard to the whole course of dealings between them in relation to that property (see Chadwick LJ at paragraph 69).

[22]Thus, Miss Walden-Smith submits that the decision of the Court of Appeal in Oxley v Hiscock does not alter the analysis that this court must make when determining whether there is evidence from which to infer a common intention. She also submits that it was in connection with the further question, namely the extent of the parties' respective beneficial interests, that the Court of Appeal did not follow its earlier decision in Springette v Defoe, referred to above. On the question whether there was a common intention constructive trust, however, the law, she submits, is not changed by the Oxley case. She further submits that in the Oxley case Chadwick LJ held that the common intention had to be communicated by one party to another. For all these reasons Miss Walden-Smith seeks to uphold the judgment of the judge. Conclusions.

[23]Where, as here, the claimant alleges that the beneficial ownership of a property is subject to a common intention constructive trust:

"the first and fundamental question which must always be resolved is whether, independent of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has any time prior to the acquisition or exceptionally at some later date been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially."

Per Lord Bridge in Lloyds Bank plc v Rossett

[1991] AC 107

at 132. The fact that an agreement or arrangement is reached as a result of express discussions which are imprecise in their terms does not prevent the court from finding that there was an express agreement that a party should have a beneficial interest even though he or she is not the legal owner.

[24]In many cases, however, there is no evidence of express discussions, and the intent to share the beneficial interest has to be inferred from the parties' conduct. In this respect the expenditure has to be referrable to the acquisition of the house. Lord Bridge said in Lloyds Bank v Rossett: "In sharp contrast with this situation -- [that is the situation of a common intention derived from express discussion] is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is extremely doubtful whether anything less will do." (see Lloyds Bank v Rossett 132-133). In addition, the person making the expenditure must show that he acted on the basis of the common intention and did so to his detriment. In the absence of a common intention, no common intention constructive trust will arise. Contributions made by the non-property holding party may be relevant for a number of purposes: first, as evidence from which an intention can be inferred; second, as corroboration of direct evidence of intention; third, as evidence that the claimant has acted in reliance on the intention and, fourth, to quantify the size of the beneficial interest: see Grant v Edwards

[1986] Ch 638

,655 per Sir Nicolas Browne-Wilkinson VC.

[25]It is not necessary on this appeal to consider whether any indirect contributions to the purchase price would be enough, as the contributions relied on by Mr de Waal in the present case are the total of £65,000 paid in discharge of the mortgages on the property.

[26]The principal submission of Mr de Waal is that the decision in the Oxley case has in some way changed the law on the question of how a common intention constructive trust can be shown. That case has been the subject of a penetrating case note in [2004] Law Quarterly Review 541, by Dr Simon Gardiner. It will, however, be unnecessary for me to examine the interesting arguments which Cr Gardiner puts forward.

[27]The detailed facts of the Oxley case are not important. The issue was this. The parties lived together as man and wife. They bought a house, to which they contributed in the proportions of approximately 60% (Mr Hiscock) and 40% (Mrs Oxley). The trial judge held that there was a common intention constructive trust but that there was no agreement as to the amount of their respective shares. She held that the property should be divided between the parties in equal shares. On appeal Mr Hiscock, relying on Springette v Defoe above, contended that the parties were entitled to an interest equal to their proportion of the purchase price. As already stated, Chadwick LJ, with whom Mance and Scott Baker LJJ agreed, held that if there was no express agreement as to the size of the parties' beneficial interest, the court should determine what was a fair outcome, having regard to the whole course of dealings between the parties in relation to the property. In reaching his decision Chadwick LJ reviewed, with great clarity and thoroughness, the authorities on the ingredients of common intention constructive trust. It is not necessary for me to analyse that review. It is sufficient for me to state his useful summary at paragraph 68 of the decision:

"I have referred, in the immediately preceding paragraphs, to 'cases of this nature'. By that, I mean cases in which the common features are: (1) 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 Rosset's case. 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."

It is in my judgment quite clear that Chadwick LJ did not dispense with the requirement for communication of the common intention when determining whether a common intention constructive trust had arisen. Indeed, the concept of communication of common intention has much in common with the manifestation of intention. An intention to share a beneficial interest in property has to be manifested to give rise to a rival obligation. As Lord Diplock said in Gissing v Gissing

[1971] AC 886

,906:

"As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words of conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party. On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct. It is in this sense that in the branch of English law relating to constructive, implied or resulting trusts effect is given to the inferences as to the intentions of parties to a transaction which a reasonable man would draw from their words or conduct and not to any subjective intention or absence of intention which was not made manifest at the time of the transaction itself. It is for the court to determine what those inferences are."

In other words, the need for communication was only held to be unnecessary in the Oxley case in respect to the size of the parties' beneficial interest. As Chadwick LJ held at paragraph 40 of his judgment:

"The appellant seeks support in that passage for two propositions: (i) that cases in the first class are confined to those in which there is evidence of discussions between the parties directed not only to the question whether each should have some beneficial interest in the property but also, expressly, to the extent of their respective interests and (ii) that, in cases which do not fall within that first class, direct contributions to the purchase price by the party who is not the legal owner will both justify the inference of a common intention to share the property beneficially and, necessarily, define the extent of the respective beneficial interests. In my view that passage in Rosset's case supports neither of those propositions. As I have said, a case will not fall within the first class unless there is evidence of some agreement, arrangement or understanding, usually prior to acquisition, that each party should have some beneficial interest in the property; but it is not necessary that that agreement, arrangement or understanding extends to defining the extent of the respective shares. If a case does not fall within the first class it may, nevertheless, fall within the second class if common intention can be inferred from conduct; and direct contributions to the purchase price will be conduct from which such common intention can readily be inferred. But the relevant common intention is that each party should have some beneficial interest. Direct contributions to the purchase price may lead to an inference that each party should have some beneficial interest without necessarily leading to the further inference that their respective shares should be proportionate to the amount of the direct contributions. When the passage in Rosset's case on which the appellant relies is read in the light of Lord Bridge's indoresement of the analysis in McFarlane v McFarlane and the reasoning in Grant v Edwards it will not bear the construction which the appellant seeks to put upon it."

This court in the Oxley case distinguished the Defoe case so far as the latter had held that the court was bound, in the absence of any express agreement or agreement to be inferred from the parties' conduct as to the size of their beneficial interests, to find that their interests were proportionate to the contribution which they had made, respectively, to the purchase price.

[28]I now return to the present appeal. This appeal turns on paragraphs 5 and 10 of the judge's judgment:

"5. There is no dispute between the parties as to the applicable law. In order to succeed, Mr Lightfoot must establish that he has acted to his detriment on the faith of an agreement or understanding that the property was to be shared beneficially. This agreement or understanding may be established by evidence either of discussions amounting to an agreement or understanding, however imperfectly expressed, or of conduct from which the inference of an agreement or understanding may be drawn. For these propositions my attention was drawn to the well-known cases of Pettitt v Pettitt [1970] AC 777, at p818b-f; Lloyds Bank Plc v Rosset [1991] AC107, at pp127g-h and 132g-133b; and Grant v Edwards [1986] Ch 638, at pp 652g-h and 656g-h. In addition, I was reminded that it is not enough that each party may coincidentally have the same intention as to the beneficial interests: in order to form the basis of a claim the intention must not only have been shared by the parties but also communicated between them. See Springette v Defoe [1992] 2 FLR 388, at pp393D-G and 394-395B. 10. It is in the light of these findings that Mr Lightfoot's payments in respect of the mortgage loans must be viewed. The payments in respect of the regular instalments are readily explicable; they were partly a substitute for the maintenance payments due under the consent order and partly an acknowledgment that Mr Lightfoot was continuing to live in a house that was no longer his. The £41,000, which I accept was paid, is harder to explain: it can only have been made in expectation that Mr Lightfoot would benefit from it, and that implies a belief that he had or would have an interest in Mitchelswood Farm. It seems to me, however, that that belief stems from the fact that he believed that he and Mrs Lightfoot-Brown were going to remarry, and he knew from his discussions with her that if that happened she would retransfer to him a share in Mitchelswood Farm. In the absence of an agreement or understanding that he would have such a share whether or not they remarried (and I have already said that there was no such agreement or understanding), that is not enough to give him a beneficial interest. That is particularly so because Mrs Lightfoot-Brown did not know about the payment. Her evidence was to that effect, and I accept it. The overwhelming impression I gained from the evidence of both parties was that it was Mr Lightfoot who had charge of the family finances, and neither he nor Mrs Lightfoot-Brown expected her to have anything but a general knowledge of how they operated. Mr Lightfoot's reason for making the payment of £41,000 was to ensure that the whole remaining balance of the mortgage debt qualified for tax relief either as a business loan or through MIRAS; and on my understanding of their relationship I think it most unlikely that he would have thought either the fact of payment or the reason for it something that it was relevant for Mrs Lightfoot-Brown to know. By the same token, I accept that the payments, both of the regular instalments and the £41,000, and for that matter the cost of the improvements (which seem to me to have been paid for by Mr Lightfoot in the same belief that there would be a remarriage), are to be treated as having been made by Mr Lightfoot alone. It is true that the parties ran some of their business activities through the medium of a partnership; but I accept Mr Lightfoot's evidence that the family income was almost entirely derived from his earnings as a computer consultant; and it seems to me that he is entitled to regard those earnings as the true source of the payments. However, the mere fact of the payments cannot give rise to an equitable interest unless there was some understanding or arrangement that Mr Lightfoot should have one; and, as I have indicated, I consider that the only understanding or agreement was in effect conditional on a remarriage which in fact never occurred."

In my judgment it is clear from these two paragraphs, read together, that the judge does 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. I note that in paragraph 5 he states:

"This agreement or understanding may be established by evidence .... of conduct from which the inference of an agreement or understanding may be drawn"

. Thus he considered both types of trust identified by Lord Bridge in the Rosset case. Moreover, there is nothing in the words used by the judge in the final sentence of paragraph 5 of his judgment to limit communications to express verbal communications only.

[29]Mr de Waal's argument that there was no need for communication rested purely on the basis that this proposition was directly established by this court in the Oxley case. For the reasons that I have already given, I do not accept that submission. Moreover, the judge's reliance on the Springette case (paragraph 5 of his judgment set out above) was for a different purpose, and in my judgment the purpose for which he relied on it was not rendered improper by virtue of the decision of this court in the Oxley case.

[30]In short, the first draft re-amended ground of appeal is in my judgment unsustainable in law, and I would therefore refuse the application to amend the grounds of appeal in relation to that ground.

[31]As to the second draft reamended ground of appeal, this too in my judgment is unsustainable for the reasons given above. As my Lord, Auld LJ, pointed out in the course of argument, there would be no reason for the judge to consider the matters considered in paragraph 10 of his judgment unless he was indeed addressing the question whether a common intention constructive trust could be inferred. The fact that he was considering such a trust is apparent from such passages in that paragraph as:

"The payments in respect of the regular instalments are readily explicable."

[32]As to the third draft re-amended ground of appeal, the judge gave his reasons for rejecting any notion that a common intention constructive trust was to be inferred from the payments of £24,000 and £41,000. He recognised, rightly, that the position regarding the £41,000 payment was harder to explain, but nonetheless he gave his reasons in paragraph 10 as set out above. In my judgment he was entitled to reach his conclusion. His conclusion was not outside the ambit of fact finding accorded to trial judges for, where a decision turns partly on oral evidence heard at trial and the witnesses' credibility, this court does not interfere unless it is shown that the judge was clearly wrong (see for example Assiscurazioni Generali SpA v Arab Insurance Group (BSC)

[2003] 1 WLR 577

). For the reasons given above, I would dismiss the application and the appeal.

MR JUSTICE WILSON: I agree.

LORD JUSTICE AULD: I also agree.

ORDER

Application refused; appeal dismissed with costs summarily assessed.