Morris v Morris [2008] EWCA Civ 257

[2008] EWCA Civ 257

Case No B2/2007/1471

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

Venue ON APPEAL FROM CARDIFF CITY JUSTICE CENTRE

(MR JUSTICE WYN WILLIAMS)

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date Friday, 22nd February 2008

Before

LORD JUSTICE PILL

LORD JUSTICE MAY

SIR PETER GIBSON

Between

MORRIS(Appellant)

MORRIS(Respondent)

(DAR Transcript of

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Mr G Adams (instructed by Messrs Howells Solicitors) appeared for Appellant.

Mrs S Gowling (instructed by DFLP Solicitors) appeared for Respondents.

Judgment

Sir Peter Gibson:

[1]This is an appeal against parts of the order made on 11 June 2007 by Wyn Williams J in the Cardiff County Court. The judge was sitting as a county court judge when the trial was heard but had been elevated to the High Court bench by the time he gave judgment.

[2]The claimant Catherine Morris, who is the second wife of the first defendant, Richard Morris, claims in these proceedings a beneficial interest in the assets of a farming partnership of which Mr Morris and his mother, the late Olive Morris ("Mrs Morris Senior"), were the partners. That partnership was called E M Morris (the name of Mr Morris' father) and it is convenient to refer to that partnership by that name. Among those assets, it was claimed, was a property known as Ty Canol Farm ("the Farm") near Caerphilly. The claimant's claim is based on the grounds of constructive trust, alternatively proprietary estoppel. The judge accepted the claimant's claim on both grounds, holding that she was entitled to a beneficial interest in the Farm, which he quantified at 25%. The defendants to the claimant's claim are Mr Morris, the second defendant, described as the estate of Mrs Morris Senior, the third defendant, E M Morris, and Mr Morris' children by his first marriage, the third and fourth defendants, Robert and Sarah Morris respectively.

[3]The paragraphs of the order which are the subject of appeal are the first paragraph, declaring that a freehold interest in the Farm is held by Mr Morris as executor upon trust for the claimant, amongst others, the second, quantifying her share at 25%, the third, directing an inquiry as to the value of that share, the fourth, giving directions as to the valuation, the tenth directing the payment by the defendants to the claimant of £65,000 on account of the value of her share, and the eleventh giving the claimant her costs against the defendants and ordering an interim payment of £20,000. The judge refused permission to appeal to this court. Such permission was granted by Arden LJ on the papers.

[4]The Farm has been owned and farmed by three generations of Mr Morris' family. His grandfather first farmed it, and his father succeeded to it and farmed it until his death in 1974. Mrs Morris then farmed the farm and Mr Morris initially worked for her on the farm and then with her in the E M Morris partnership. On 8 December 1980, Mrs Morris Senior and Mr Morris entered into a partnership agreement as equal partners. On the same day, Mrs Morris, as landlord, entered into a tenancy agreement in respect of the Farm, with herself and Mr Morris as tenants. The agreement was for a tenancy of the Farm for one year from 1 January 1980 and thereafter from year to year. In 1987 the original farmhouse and twenty acres were sold for development. From the proceeds a new farmhouse on the Farm was built by Mrs Morris Senior. She moved to a house in Caerphilly when Mr Morris entered into his first marriage in 1987. The claimant met Mr Morris in the early 1990s when he was either separated or divorced from his first wife. The claimant was then a secretary/receptionist for a firm of estate agents in Caerphilly. She and Mr Morris soon began to cohabit at the Farm. They became engaged in 1992. They did not marry until 19 May 2001. After the cohabitation began, the claimant continued working at the estate agency for a while but then she gave up work there. In the early years she substantially assisted the farming enterprise, which consisted of a flock of sheep and laying hens, and did this without pay. However, she loved horses. She began to buy and sell horses and in 1995 she formulated a plan to provide riding tuition. Before obtaining her qualifications she provided such tuition and that brought her into trouble with the authorities early in 1997. But she did obtain her qualifications and, from 1997 onwards, she established a very successful riding school at the Farm. Her farming activities diminished as the riding school business flourished, but she continued to assist in the farming business when necessary although her primary role was to operate the riding school. In 1997 a manège was constructed on the Farm. At least £4,500 drawn from the claimant's own business account, was provided by her to Mr Morris for him to construct the manège. But the judge makes no finding as to the total cost incurred in that construction.

[5]In 2002 the claimant thought it appropriate that an indoor riding school should be built at the Farm. An ADAS consultant was instructed to provide a farm business development plan to support an application by E M Morris for a grant from the Welsh Development Agency. The consultant produced a report dated 20 March 2002. I shall return to the significance of that report later. In 2003 and 2004 the indoor riding school was built. It was funded by a grant of £26,366 from the Welsh Development Agency and a loan to E M Morris of £28,366 from Caerphilly Riding School and Trekking Centre Limited ("the Company"). The Company was incorporated on 18 May 2003 and the claimant transferred her riding school business to it. The Company commenced trading on 1 August 2003. The incorporation of the Company appears to have been on the advice of accountants. The claimant was the sole director and shareholder of the Company. Very shortly afterwards, E M Morris transferred the hen laying business to a company, Ty Canol Farm Limited, which commenced trade on 1 September 2003. Mr Morris is the sole director and shareholder of that company.

[6]In 2004 the claimant discovered that Mr Morris had committed adultery. She commenced divorce proceedings on 27 September 2004 and sought ancillary relief. She moved out of the farmhouse in December 2004. For a year she continued to run the riding school business, but, because of poor relations with Mr Morris and his obstructiveness, she ceased to trade in December 2005 and sold her horses in May 2006. In fact, it must have been the Company which did those things and not the claimant.

[7]Mrs Morris Senior died on 11 January 2005. By a will made by her in 1986 Mr Morris was to be the executor and beneficiary and so would have inherited the farm. However, by a second will, dated 9 September 2004, Mrs Morris Senior revoked the earlier will. While Mr Morris was named as an executor, she left her estate to the fourth and fifth defendants. The judge justifiably inferred that the second will was designed to minimise recovery by the claimant in the pending divorce proceedings. The judge formed a strongly adverse view of Mr Morris because of disingenuous remarks made by him in his witness statement in the current proceedings as to his mother's intention to pass the Farm to her grandchildren at a time when Mr Morris knew that he was the intended heir to the Farm.

[8]These proceedings commenced on 16 June 2006. The claimant's original claim was that she and Mr Morris had an equal beneficial interest in the Farm. By amendment at the trial the further claim was made that she was entitled equally with Mr Morris and the estate of Mrs Morris Senior to a beneficial interest in the E M Morris assets. The amended particulars of claim and the claimant's witness statements made no assertion that there was any agreement between her, Mrs Morris Senior and Mr Morris, nor of any discussions with them nor of representations as to the claimant acquiring a beneficial interest in the Farm nor, for that matter, in the partnership assets. Nor did she claim that the ownership of the Farm was discussed by her with Mr Morris or with Mrs Morris Senior. She made clear that it was only when she consulted solicitors to deal with the divorce that she learnt from the solicitors, who had made enquiries of the Land Registry, that Mr Morris did not own the Farm. That, she said, came as a complete shock, and nothing was ever said or happened that made her even suppose that Mrs Morris Senior owned the Farm, and she said that she assumed that Mr Morris was the owner of the Farm. The pleadings assert a common intention between Mr Morris, Mrs Morris Senior and the claimant that the claimant should have a beneficial interest in the Farm.

[9]The judge, in his reserved judgment, made a number of findings. First, the partnership agreement and the tenancy agreement are authentic. Second, in the early years the claimant provided substantial assistance for the farming enterprise, and after 1997 she continued to provide such assistance as was necessary and consistent with her primary role to operate the riding school business. Third, whatever work the claimant did on the Farm she did for no pay. Fourth, the claimant paid £4,500 towards the construction of the manège. Fifth, at least part of the money for the indoor riding school was provided by a loan of £28,000 from the company, the claimant and Mr Morris being content that no repayment of the loan should be made. Sixth, the ADAS consultant produced the development plan in support of the application for grant. Seventh, so far as the accountancy and fiscal arrangements were concerned, the claimant with her riding school business and Mr Morris with the farming business maintained entirely separate businesses. Eighth, for most, if not all, of her period of cohabitation with Mr Morris, the claimant believed that the Farm was owned by Mr Morris and his mother equally and in partnership. She understood that Mr Morris and Mrs Morris Senior intended that the Farm would devolve on the fourth and fifth defendants in due course, but it would first devolve on Mr Morris. Ninth, the claimant was aware of the E M Morris partnership but not its terms, and she was not aware that the legal estate in the Farm was vested in Mrs Morris Senior. Tenth, all of the major decisions affecting the enterprises conducted at the Farm were discussed between the claimant and Mr Morris, and when a proposal impacted upon the ownership of Mrs Morris Senior she was also consulted. Eleventh, there were no express discussions between the claimant on the one hand and Mr Morris and Mrs Morris Senior on the other as to the claimant acquiring a beneficial interest in the Farm, or becoming a partner in the partnership. Twelfth, the claimant believed that she was an integral part of all the enterprises on the Farm, and Mr Morris and Mrs Morris Senior knew that and encouraged that belief by their conduct and words. Thirteenth, Mrs Morris Senior was delighted at the prospect of the claimant setting up the riding school and was always supportive of the work undertaken by the claimant. Fourteenth, the claimant made a financial contribution, operated the riding school and assisted Mr Morris in the farming enterprises in the belief that she was furthering the interests of a partnership of which she had become an integral part. Fifteenth, she believed that, as a result of her involvement, she was entitled to a share of the partnership assets. Sixteenth, Mr Morris made life difficult for her following her discovery of his adultery and this caused the claimant to cease to trade and sell her horses. Seventeenth, at all material times legal title to the Farm was vested in Mrs Morris Senior. Eighteenth, Mr Morris did not have a beneficial interest in the Farm, but throughout the period of cohabitation and marriage both he and Mrs Morris Senior encouraged the claimant to believe she had such an interest. Nineteenth, Mrs Morris Senior encouraged such belief by discussing important decisions about the Farm in such a way so as to suggest that the claimant had a substantial interest in the Farm. Twentieth, the construction of the manège and indoor riding school probably had the effect of enhancing the capital value of the Farm.

[10]The judge dealt with the law on constructive trusts in two paragraphs. He quoted Lord Bridge in Lloyds Bank v Rosset

[1991] 1 AC 107

at page 132 to the effect that, where there is no evidence to support a finding of an agreement or arrangement to share the beneficial interest in property which is in the name of one spouse or cohabitant, the court must rely entirely on the conduct of the parties, both as the basis from which to infer the claimed common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust. The judge referred to the fact that two other House of Lords decisions, Pettitt v Pettitt

[1970] AC 77

and Gissing v Gissing

[1971] AC 886

, contemplated the possibility that conduct other than a direct contribution towards the purchase price might, depending on the circumstances, sufficiently raise the inference of an agreement between the parties. The conduct which the judge relied on as showing the common intention of the claimant, Mr Morris and Mrs Morris Senior was first that the claimant made a financial contribution of a payment of £4,500 towards the construction of the manège, second, the Company loaned £28,666 to E M Morris towards the construction of the indoor riding school and, third, the claimant gave assistance to Mr Morris in the farming enterprise for no payment, as well as operating the riding school.

[11]The judge, having found that the claimant had acted in the way that she did in the belief that she was furthering the interests of the partnership of which she had become an integral part, went on to say this:

"70. In all the circumstances I have reached the firm conclusion that there is a sound factual basis from which to conclude that it must have been the common intention of [Mr Morris] [Mrs Morris Senior] and the Claimant that she should acquire a beneficial interest in [the Farm]. In my judgment that conclusion is reinforced by my finding that both [Mr Morris] and [Mrs Morris Senior] led the Claimant to belief that [Mr Morris] had a beneficial interest in the farm. The Claimant's conduct in providing a financial contribution and devoting time and effort to the farming enterprise was obviously conduct which was detrimental to her."

[12]The judge then turned to proprietary estoppel. He referred to statements made in Taylors Fashions Ltd v Liverpool Victoria Trustees Co. Ltd

[1982] QB 133

by Oliver J, Re Basham

[1986] 1 WLR 1498

by Mr Edward Nugee QC and Gillett v Holt

[2001] 1Ch 210

. The judge continued:

"74. It seems to me that the doctrine [of proprietary estoppel] is obviously applicable in the present case. On my finding the true legal owner, [Mrs Morris Senior], knew that the Claimant had an expectation that she was acquiring an interest in [the Farm] by virtue of her financial contribution and her work. [Mr Morris'] mother did nothing to disabuse the Claimant of that belief at minimum but on my findings encouraged that belief. The Claimant clearly acted to her detriment. She provided direct financial contribution to the construction of the manège and she made a loan to the partnership to facilitate the setting up of the riding school. She undertook that expenditure in the belief that she was helping to promote a business in which she had a direct interest and which she cared for a great deal. The business was not just the business of the riding school but the whole of the farming enterprises as I have indicated. Further she carried out unpaid work on a scale which went way beyond that which was normally to be expected of a cohabitant or wife. In my judgment there can be no doubt but that [Mr Morris] and [Mrs Morris Senior] behaved unconscionably towards the Claimant when the matter is 'looked at in the round' when in 2004 and following the separation of [Mr Morris] and the Claimant they did their best to prevent the Claimant enjoying any interest in the farm."

[13]The judge also referred to Oxley v Hiscock

[2005] Fam 211

for the proposition that, just as in the case of a constructive trust claim, the court, to ascertain the share of the person asserting a beneficial interest, should have regard to the whole course of dealings between the parties in relation to the property, so in deciding what is the minimum requirement to satisfy the equity if the doctrine of proprietary estoppel is relied on, the court is engaged in much the same process. The judge then considered what was the appropriate share of the claimant in the Farm and held that it was 25%.

[14]Mr Guy Adams who appears for the only appellant, Mr Morris as executor, as he did below, submitted that the judge's inferences as to the common intention of the relevant parties was not supported by the evidence. He argued that the judge was wrong to find, on the claimant's own evidence, that she believed that she was acquiring and had the intention of acquiring, a beneficial interest in the farm; that it cannot be said that Mrs Morris Senior had the necessary intention that the claimant should acquire an interest in the land, that the reasonable objective observer would conclude that there were reasons other than that the claimant would acquire a beneficial interest in the Farm to explain her conduct on which the judge relied, that Mrs Morris Senior would not have realised that the claimant believed that she was acquiring a beneficial interest and that no duty arose on Mrs Morris Senior to disabuse the claimant of that impression and that the judge, in effect, has sought to impose his view of what was fair in the circumstances rather than searching for what must have been the parties' intention. He further criticised the judge's order giving the claimant as much as 25% of a farm valued for probate purposes at January 2005 at £650,000. He submitted that that was wholly disproportionate.

[15]Mrs Serena Gowling appears before this court for the claimant as she did before the judge. She supported the judgment of the judge and his conclusions which, she submits, he was fully entitled to reach and which were entirely consistent with the relevant authorities. She said that there was no other credible explanation for the claimant's conduct other than the belief which the judge found. She supported the judge's finding that Mr Morris and Mrs Morris Senior encouraged the claimant's belief that she was acquiring an interest in the Farm. She also supported the judge's figure of 25% of the Farm as appropriate.

[16]I would make some preliminary observations. Firstly, the judge remarked in paragraph 56 that, for all practical purposes, the claim was about the farm and whether the claimant could establish a beneficial interest in the Farm. He made no order on the claimant's claim to an equal share between Mr Morris and Mrs Morris Senior of the E M Morris assets. The judge had said that the partnership's assets included the Farm and its contents. The judge's remarks are difficult to reconcile with the fact that he found that the 1980 partnership agreement and tenancy agreement were authentic. The judge, as I have indicated, accepted that Mrs Morris Senior was always the owner of the Farm and that the E M Morris partnership was the tenant. I cannot help but feel that in treating the Farm as a partnership asset the judge started to go wrong. He no doubt recognised that to succeed on her primary claim the claimant had to show that she was entitled to a beneficial interest in the Farm, even though the claimant's evidence was to the effect that she was participating in a joint venture with Mr Morris and that she believed that she was an integral part of the business carried on at the Farm. It is one thing to say that the claimant believed herself to be an integral part of a business conducted on particular land. It is another to find that the claimant has established an interest in the land itself.

[17]Second, the judge attached significance to the consultant's report. That report is a curious document. It refers to "Mr and Mrs Morris" and the judge has found, and it is not disputed on this appeal, that "Mrs Morris" is the claimant. But nowhere does the report's author recognise that the partnership business carried on by E M Morris as the farming enterprise as distinct from the riding school business was the business of E M Morris, that is to say, of the partnership between Mr Morris and Mrs Morris Senior. The only reference to Mrs Morris Senior is on the last page of the final appendix where, in tiny print, reference is made to her incorrectly as a retired partner. The partners are said to be Mr Morris and the claimant. The impression sought to be given by the report for the purpose of E M Morris obtaining the grant is that this was a single but diversified enterprise comprising both the farming business and the riding school business. But the legal and commercial reality was that those were two separate businesses, separately owned, as should have been apparent from the many references in the report to the need for the riding school business to pay a proper rent to the farming business for grass keep, hay, silage and feed, as well as a rent for the premises which the riding school business occupied. The payment of such rent would have been quite unnecessary if this was a single partnership comprising both the farming business and the riding school business. The fact that the report was based on information from both Mr Morris and the claimant does not detract from the conclusion that inferences from the contents of the report should be drawn with extreme caution in view of the obvious divergence between what is said in the report and the reality.

[18]Third, there was no accountancy evidence before the judge. The fact that buildings and land were included in the E M Morris accounts at a substantial figure (for example, at 31 December 2004 they were included at £208,021) does not seem to me to establish that the freehold or the entire beneficent interest in that property was included as an asset of that partnership when the notes to the accounts expressly stated that the owner of the land was Mrs Morris Senior. It may be that a farming partnership's agricultural tenancy from year to year, with the security of tenure thereby provided, can properly be included at a substantial value.

[19]I start with the claim for a common intention constructive trust and for a beneficial interest thereunder. That requires that the court should be satisfied that the relevant parties each had the intention, communicated to each other, that, notwithstanding the paper title in Mrs Morris Senior and notwithstanding the absence of any writing, there should be a disposal of a beneficial interest in land to the claimant. As I have noted, this is not a case where there has been any agreement or discussion on the point by the relevant parties. The events relied on by the claimant are, of course, events which occurred long after the land was acquired by Mrs Morris Senior. That the court can find that a beneficial interest is subsequently acquired by reason of conduct alone has been confirmed by this court in James v Thomas

[2007] EWCA Civ 1212

. However, I would respectfully emphasise what Sir John Chadwick, giving the only reasoned judgment of the court, said in paragraph 24. Having referred to Gissing v Gissing supra at page 901 D-E and Bernard v Josephs

[1982] Ch 391

at 404 E-F, Sir John added this:

"But, as those cases show, in the absence of an express post-acquisition agreement, a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition."

[20]Mrs Gowling was unable to tell us of any decision where it has been held that such a variation of beneficial interests has occurred in such circumstances. I cannot help but wonder whether the judge realised what a rare bird he had discerned in the unpromising factual circumstances of this case.

[21]The task of the court is as Lady Hale said in Stack v Dowden

[2007] 2 AC 432

at paragraph 60… "to ascertain the parties' shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it."

[22]Lady Hale referred with approval with what was said by the Law Commission in "Sharing Homes: A Discussion Paper" at paragraph 427 on the quantification of beneficial entitlement, which suggested a holistic approach to quantification, the court undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intended. Lady Hale then said this:

"That may be the preferable way of expressing what is essentially the same thought, for two reasons. First, it emphasises the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. Second, therefore, it does not enable to the court to abandon that search in favour of the result which the court itself considers fair. For the court to impose its own view of what is fair upon the situation in which the parties find themselves would be to return to the days before Pettitt v Pettitt [1970] AC 777 without even the fig leaf of section 17 of the [Married Women's Property Act 1882]."

[23]Those comments were, of course, directed to what is always regarded as the second question relating to quantification of beneficial entitlement, the first question being whether an agreement arrangement or understanding that the claimant was to acquire a beneficial interest in the land has been shown. The authorities make clear that a common intention constructive trust based only on conduct will only be found in exceptional circumstances. The evidence in the present case seems to me, with respect to the judge, to be wholly inadequate to establish any such common intention, whether one considers the claimant, Mr Morris or Mrs Morris Senior. One looks in vain in the claimant's evidence, whether by way of her witness statements or the evidence which she gave orally, to find a clear statement that she herself had the belief or expectation that she was entitled to an interest in the land itself even though she believed that she had an integral part to play in the farming and riding school enterprises carried on at the Farm. It is quite impossible, to my mind, to see how it could be said that that was the inference to be drawn from her taking an active part in the farming business, given that the land was owned by Mrs Morris Senior subject to the tenancy agreement; still less if one has regard to the riding school business which the claimant conducted. That riding school business was her own business as she herself asserted in her evidence. That is confirmed by the fact that that business was transferred in 2003 to the company of which she became the sole owner.

[24]Mr Morris denied that he ever had the intention that the claimant should acquire an interest in the Farm. His evidence I, of course, acknowledge, is to be viewed with some suspicion because of the judge's finding as to his credibility. But, on this, it would appear to me to be clear that he could properly be accepted as telling the truth. As for Mrs Morris Senior, I find it impossible to see in the evidence before the judge that she said anything or acted in any way that would encourage the claimant to believe or expect that she had an interest or was acquiring an interest in the Farm. The fact that Mrs Morris Senior was pleased about the claimant's embarking on the riding school business, and expressed approval of that, or that important decisions relating to the activities at the Farm when discussed with her, does not lead to the conclusion that the claimant was being encouraged by Mrs Morris Senior to believe or expect that, through the claimant's activities, she was acquiring an interest in the land. Nor do I see that any reasonable objective observer, looking at what occurred, would find that it must have been the belief of the claimant that she was acquiring an interest in the Farm. The circumstances were not such that any duty arose on Mrs Morris Senior, or indeed Mr Morris, to disabuse the claimant of a mistaken belief. Had there been something said by the claimant to Mr Morris or Mrs Morris Senior that positively pointed to the claimant believing that she was acquiring such an interest in land, the position might have been different. But that is not this case.

[25]Nor do I see that the conduct that is relied on by the claimant must lead to the conclusion that she was acquiring an interest in land. It has been said in a number of cases that the court should be cautious before finding that the activities of a wife or a cohabitant can only be explained on the footing that she believes that she was acquiring an interest in land. Thus, in James v Thomas, where Miss James had performed work of a heavy nature (for example, she drove a tipper, dug trenches, picked up materials, laid concrete, tarmac and gravel and generally undertook manual work associated with the business of Mr Thomas with whom she was cohabiting) Sir John Chadwick, at paragraph 36, said this:

"The true position, as it seems to me, is that she worked in the business, and contributed her labour to the improvements to the property, because she and Mr Thomas were making their life together as man and wife. The Cottage was their home: the business was their livelihood. It is a mistake to think that the motives which lead parties in such a relationship to act as they do are necessarily attributable to pecuniary self interest."

[26]Certainly, so far as the activities of the claimant in support of the farming business conducted by the man with whom she was living are concerned, I cannot see that they are of such an exceptional nature as to lead to any inference such as that contended for by Mrs Gowling that the claimant must have acted in the belief that she was acquiring an interest in the Farm. As for the financial contributions, the £4,500 which came from the claimant's account and was paid towards the building of the manège served to benefit the claimant in conducting a profitable riding school business on the Farm without, it seems, paying any proper sums by way of rent for the benefits which she received, including the use of the land on which the business was conducted. That was for her own financial benefit, even though it can be acknowledged that improvements, such as the manège and the indoor riding school building, did add to the capital value of the Farm. The loan of £28,366 was not made by the claimant but by the Company. It has not been suggested that the Company has thereby acquired a beneficial interest in the land. Again, I make the same point that it was in the claimant's interest though the riding school business to have an indoor riding school building on the Farm. In my judgment the reasonable observer would not be bound to draw the inference that the claimant's conduct could only be explained on the footing that she believed she was acquiring a beneficial interest in the land.

[27]Accordingly, I am satisfied that the judge did not have the material on which he could properly base a finding that there was a common intention constructive trust in the circumstances of the present case.

[28]I turn then to the proprietary estoppel claim. The claimant must demonstrate three elements: a representation or assurance of rights, a reliance or a change of position, and an unconscionable disadvantage. The first difficulty facing the claimant lies in respect of the requisite representation or assurance. Effectively, the same points are relied on by the claimant to establish that there was some such representation or assurance as was relied on in support of a constructive trust. It is well-established that the representation or assurance must be specific, such as would entitle the person to whom it was made reasonably to rely on it or change his or her position. But for the same reasons as those for which I have found that the circumstances of the present case do not come near to showing that there has been a common intention through conduct in relation to the acquisition by the claimant of a beneficial interest in land, so it seems to me plain that what was said and done in the present case falls well short of showing that the requisite first element in proprietary estoppel has been satisfied.

[29]Nor am I satisfied that there has been reliance on any representation or assurance or any consequential change of position, with any unconscionable disadvantage. I fully accept that Mr Morris behaved badly after the parties split up, but I do not see that that, by itself, is enough to show that there has been unconscionable disadvantage in the present case for the purposes of proprietary estoppel.

[30]For these reasons it seems to me that, with all respect to the judge, he was beguiled by the submissions made to him into believing that he could produce what he regarded as a reasonable or fair result in favour of the claimant. I am afraid that he did not have that luxury. The law would be in a hopelessly unsatisfactory state if that were the basis on which decisions in this area were made. The court's approach must always be principled. The court must be satisfied that the requisite tests have been satisfied with sufficient certainty and any inferences must be founded on findings of fact which can be sustained. For these reasons I have reached the clear conclusion that this appeal must be allowed and the challenged paragraphs of this order made by the judge set aside. Lord Justice May:

[31]I agree that this appeal should be allowed for the reasons given by Sir Peter Gibson. I gratefully adopt his account of the facts and the circumstances.

[32]Mrs Olive Morris was, before her death, the freehold owner of the legal estate in the farm. On 8 December 1980, Mrs Olive Morris and her son, the first defendant, entered into a partnership agreement, so that they became partners in the business of farming at the farm. On the same day Mrs Olive Morris as landlord entered into a tenancy agreement of the farm, with herself and her son -- that is, the partners, as tenants.

[33]Although it was the claimant's case in the alternative that she had a beneficial interest in the farming business -- that is, in the partnership -- the only order which the judge made was that she had a beneficial interest in the farm. There is no respondent's notice seeking to sustain a different result.

[34]It had been the claimant's case that the written agreements of 8 December 1980 were a sham or otherwise ineffective, but the judge found otherwise. There was no basis he said, at all, for concluding other than that both documents are entirely authentic (see paragraph 23 of his judgment). This being the judge's finding, there is no reasoned basis in the judgment for the finding in paragraph 56 that the partnership's assets included the farm and its contents. It appears to have been the claimant's case that there were additional reasons for concluding that the partnerships' assets came to include the farm, and Mrs Gowling referred us to some material upon which this may have been based. But the judge did not so find by any sustainable process of analysis.

[35]In these circumstances, in my judgment, the judge's finding as to the farm being a partnership asset cannot be sustained. There was no intrinsic reason why, in the circumstances, the farm -- as opposed to the tenancy of it -- needed to be an asset of the partnership. That would have been inconsistent with the tenancy agreement which the judge had held was authentic. It was also inconsistent with the judge's finding in paragraph 61 that it would not be right to conclude that the first defendant had a beneficial interest in the farm. He would have had such an interest if the farm was an asset of the partnership of which he was a partner.

[36]It is therefore necessary to the claimant's case in this court that she sustain a finding of constructive trust or proprietary estoppel against Mrs Olive Morris who, or whose estate, was throughout the legal and beneficial owner of the farm. As to this, there was nothing in the nature of an express discussion or representation relied on by the claimant or found by the judge to sustain such findings (see paragraphs 48 and 52 of the judgment). The judge made certain findings about the claimant's beliefs; for instance, that she was an integral part of the partnership. But these beliefs, if they were held, were not induced by anything expressly said to her by Mrs Olive Morris or the first defendant. I am inclined to think that the judge's findings about the claimant's belief had an insecure evidential basis -- this exemplified by Mrs Gowling's submission to us that the claimant had very little idea what was going on with the business and the accounts. However that may be, for the purpose of constructive trust -- at least since Stack v Dowden and as Sir John Chadwick said in James v Thomas -- in the absence of an express post acquisition agreement, a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition. Although the analytic incidents of proprietary estoppel and constructive trust are not the same, in a case such as this the two usually stand or fall together.

[37]I agree with Sir Peter Gibson for the reasons he has given that the conduct found by the judge, or unassailably available on the evidence to which we have been referred, falls well short of that which would unusually sustain the mutual intention which, in substance, the claimant's claim to a beneficial interest in the farm requires. This is especially so when the conduct has to embrace Mrs Olive Morris, who alone was the owner of the farm.

[38]As to the riding school, this was the claimant's business, which from 2004 she ran through a limited company. She and the first defendant maintained separate accounts to distinguish between the riding school operation and the other farming enterprises. The judge found that the claimant herself had provided £4,500 in 1997, drawn from her business account, towards the construction of the manage. That was clearly for the benefit of her separate riding school business. After the production of the business plan, a loan of £28,366 was made, not by the claimant but by her company; and a further £26,366 came, not from the claimant, but from a grant made to the partnership by the Welsh Development Authority.

[39]The suggestion on behalf of the first defendant -- that the company was granted a tenancy of the indoor riding school and some stables at a rent of £800 per month -- was disputed on behalf of the claimant and not so found by the judge. But, even without this evidence, the intervention of the limited company and the substantial loan by it largely removes the financial contributions to the improvement of the riding school as material available to support the claimant's case.

[40]In conclusion, I would only observe that this case has proceeded in a Chancery jurisdiction alone. I say nothing about whether the matters relied on by the claimant would deliver better success in a Matrimonial jurisdiction.

Lord Justice Pill:

[41]The issue in this case is whether Mrs Catherine Morris -- wife of Mr Edward Morris -- has a beneficial interest in Ty Canol Farm near Caerphilly. The legal title until her death was in Mrs Marjory Morris (Mr Edward Morris' mother), described during the hearing as the Senior Mrs Morris. She has now died, so that it is her estate which is a party to these proceedings. The judge found that Mrs Catherine Morris had a beneficial interest in Ty Canol Farm to the extent of 25%. His findings of fact are at paragraph 52 of his judgment:

"All that said, there is no suggestion there were any express discussion between the claimant on the one hand and the first defendant and/or his mother on the other [the claimant being Mrs Catherine Morris and the first defendant, Mr Edward Morris] about the claimant acquiring an interest in the farm and/or the claimant in formal terms becoming a partner in the partnership. That said, I have no doubt that the claimant believed that she was an integral part of all the enterprises conducted at Ty Canol Farm, and the first defendant and his mother knew that full well and encouraged the belief by their conduct and words. I also accept that the claimant believed that, just as she was an integral part of the partnership, so she was entitled to a share of the assets." 42. "

In all the circumstances I have reached the firm conclusion that there is a sound factual basis from which to conclude that it must have been the common intention of the First Defendant, his mother and the Claimant that she should acquire a beneficial interest in Ty Canol farm."

The judge had stated at paragraph 56:

"For all practical purposes it seems to me that this claim is about whether or not the Claimant can establish a beneficial interest in Ty Canol Farm."

[43]The case proceeded on that basis. I agree with Sir Peter Gibson that there was no sound basis of fact from which it could be concluded that there must have been a common intention in Mr Edward Morris, his mother and Mrs Catherine Morris that Mrs Catherine Morris should have a beneficial interest in Ty Canol Farm. It is common ground that the common intention test was and is the correct one to apply. Stack v Dowden

[2007] 2 AC432

was decided in the House of Lords on 25 April 2007 -- that is, after the hearing before the judge and before judgment was given. The judge was not referred to it before giving judgment. The leading speech was delivered by Baroness Hale, with whom Lord Hoffman, Lord Hope of Craighead and Lord Walker of Gestingthorpe agreed.

[44]At paragraph 61 Baroness Hale referred to the decision of this court in Oxley v Hiscock and the judgment of Chadwick LJ, to which it will be necessary to refer. She also referred to a discussion paper entitled "Sharing Homes", prepared by the Law Commission. Having done so, Baroness Hale preferred the formulation of the test stated by the Law Commission:

"That may be the preferable way of expressing what is essentially the same thought, for two reasons. First, it emphasises that the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. Second, therefore, it does not enable the court to abandon that search in favour of the result which the court itself considers fair. For the court to impose its own view of what is fair upon the situation in which the parties find themselves would be to return to the days before Pettit v Pettit [1970] AC 777 without even the fig leaf of section 17 of the 1882 Act."

At paragraph 69 Baroness Hale stated: 46. "…that the circumstances in which an interest in the property may be transferred in the circumstances are very unusual."

[45]In James v Thomas

[2007] EWCA Civ 1212

, Sir John Chadwick, in a case decided after the judge's decision, considered a similar situation. A man and woman had cohabited for fifteen years. Sir John Chadwick stated at paragraph 24:

"…as these cases show, in the absence of an express post-acquisition agreement, a court will be slow to infer from conduct alone that parties intended to vary existing beneficial interests established at the time of acquisition."

At paragraph 36 Sir John Chadwick stated: 48. "The true position, as it seems to me, is that she worked in the business, and contributed her labour to the improvements to the property, because she and Mr Thomas were making their life together as man and wife. The Cottage was their home: the business was their livelihood. It is a mistake to think that the motives which lead parties in such a relationship to act as they do are necessarily attributable to pecuniary self interest." Sir John Chadwick's conclusion at paragraph 38: 49. "Her interest in the property (if any) must be determined by applying principles of law and equity which (however inadequate to meet the circumstances in which parties live together in the twenty-first century) must now be taken as well-established. Unless she can bring herself within those principles, her claim in the present case must fail. As Baroness Hale of Richmond observed in Stack v Dowden it is not for the court to abandon the search for the result which reflects what the parties must, in the light of their conduct, be taken to have intended in favour of the result which the court itself considers fair."

[46]The analysis of Sir John Chadwick, when considering this type of relationship, reflects that of Lord Diplock, in Pettit v Pettit, at pages 822G and 823E. The present case appears to have been conducted on the basis that, provided it was established that there was a joint business venture on and at the farm, it followed -- if not necessarily then very easily -- that there was a common intention that Mrs Catherine Morris should have a beneficial interest in the farm. We have been referred, in some detail, to the evidence and Sir Peter Gibson has mentioned it. Mr Morris was cross-examined about the joint venture at considerable length. The debate was about the nature of that venture with contributions to it. When asked about ownership, he asserted that it was his mother who was the owner of the property. That answer was not followed up by cross examination with respect to ownership that one might have expected on an application of the correct test as to intentions.

[47]The evidence of Mrs Catherine Morris herself (whose evidence the judge preferred and was entitled to prefer) was, as summarised by the judge himself, not asserting a specific belief in the ownership of the property. Moreover, there were complications in this case. As Sir Peter Gibson has pointed out, a tenancy was involved and a business at the farm which appeared to be that of Mrs Catherine Morris alone. Those features do not assist her in establishing a common intention with respect to the property.

[48]The advisers of Mrs Catherine Morris and the court itself may have been influenced by the earlier statement of Chadwick LJ, cited by Baroness Hale. Before making the statement of principle, with which other members of the House agreed, Baroness Hale referred to Chadwick LJ's statement at paragraph 69 of Oxley:

"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."

Sir John Chadwick's conclusion at paragraph 38:

[49]That approach was in substance rejected by Baroness Hale in the passage to which I have referred. It was also rejected by Lord Neuberger who, though dissenting on another issue, agreed with the finding of Baroness Hale on this one. Lord Neuberger, agreeing with Baroness Hale, stated at paragraph 142 that "fairness is not the guiding principle" and added at paragraph 144 "fairness is not the appropriate yardstick". In the context of a relationship between husband and wife, a step is still to be taken between establishing the existence of a joint venture on the premises and establishing an intention with respect to their ownership. The issue here was further complicated by the fact that the legal title was not in Mr Morris himself but in his mother.

[50]That being so, I agree that it is not possible to conclude on the evidence that there was a common intention that Mrs Catherine Morris should have a beneficial interest in the property. I also agree, and as Sir Peter Gibson said for substantially the same reasons; that it is not possible to establish a proprietary estoppel. It follows that I agree that the appeal should be allowed.

Order

Appeal allowed