Chapman v Jaume [2012] EWCA Civ 476

Case No B2/2011/1235[2012] EWCA Civ 476
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
HH JUDGE HAND QC)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Thursday, 29 March 2012
Before
LORD JUSTICE THORPELORD JUSTICE ETHERTONLORD JUSTICE LEWISON
Between
CHAPMANAppellantJAUMERespondents
(DAR Transcript ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr John McLanachan (instructed by Messrs Pitmans Solicitors) appeared for Appellant.Mr Alan Barton appeared for Respondent.
Judgment
[1]Mr Chapman and Mrs Jaume met in 1997 or 1998. Mrs Jaume was married at the time, but her marriage was breaking down. She and her husband had separated and he had moved out of the matrimonial home at 6 The Denningtons in Worcester Park, leaving Mrs Jaume in occupation with her three young daughters.[2]The relationship between Mr Chapman and Mrs Jaume developed gradually. Mr Chapman had his own home at 28 Hansler Road in Dulwich. There was a dispute about how much time Mr Chapman spent at 6 The Denningtons, which Judge Hand QC resolved in Mrs Jaume's favour. He found that by 2001, Mr Chapman was largely living with Mrs Jaume at No 6 The Denningtons. He also found Mr Chapman had based his office at the property in a room that he used for that purpose.[3]In about October 2002, as part of the financial arrangements consequent on her divorce, that property was transferred in Mrs Jaume's sole name. Shortly afterwards, Mr Chapman paid for substantial building works to be carried out to 6 The Denningtons. These included the installation of fire places, the refurbishment of bathrooms and the construction of an extension. According to Mr Chapman, the total expenditure was more than £130,000, although the judge made no findings about the precise quantum.[4]The issue before the judge was: what were the legal consequences of that expenditure? The judge recorded his impression of Mr Chapman and made some findings about his relationship with the family. He said:
"The claimant is, as might be expected of someone who acts as an accountant, a precise man. His schedules and the supporting documents disclose an orderly mind. On the other hand, he is generous and impulsive. He spent considerable sums on the defendant by way of holidays and giving her gifts. In my judgment, he is very single minded. He has his own views on life. He is not interested in family life in the sense that he has no ambition to have children and his involvement with the defendant's children … did not include any financial contribution towards their maintenance. He had a clear view that this was the responsibility of the defendant's former husband. This, of course, is a perfectly acceptable point of view but it seems to be an illustration of his wish to establish clear lines of demarcation. Another illustration of that … was his ability to lock himself away and not be subject to the calls of domestic life outside the door of his office."
[5]In his claim form issued on 29 October 2009, Mr Chapman claimed repayment of £162,589.42, “being money lent by the claimant to the defendant between 2001 and 2005 together with interest thereon.” This was amplified in paragraph 5 of the Particulars of Claim as follows:
"At all material times, it was expressly agreed in discussions between the claimant and the defendant that the sums spent by the claimant as set out above would be repaid by the defendant upon the sale of the property or upon her youngest child attaining the age of 18, whichever was the earlier."
[6]In other words, his primary case was that the money he spent was a loan; and that there were express terms about the time at which it was repayable.

The judge recorded the evidence that Mr Chapman gave in support of that case:

"We agreed in 2011, prior to the work commencing on the fireplace and bathrooms, that I should pay for refurbishment of the property and other enhancements such as the plasma TV, now a fixture in the house. Its future sale would provide the initial funds for any future joint purchase. However, should we have separated, she agreed to repay the monies upon future sale or upon the date of her youngest daughter's 18th birthday, whichever was the earlier. This was agreed before the work commenced on the fireplace and bathrooms and on subsequent occasions and was understood to be the case by both of us. It was not set down in writing but was agreed verbally between us in the course of our conversations…"
[8]He amplified the reasoning in other parts of his witness statement. He said:
"I only made the payments for the property to be renovated because I had received the defendant's explicit assurance that the money would be repaid to me in full and I felt and believed that it would be repaid to me in full. I have no doubt that the defendant understood clearly that the money I was to spend on the house was not a gift as she was explicitly told what items given to her were gifts, presents, i.e. cars, watches, jewellery, clothes, holidays, etc."
[9]Mrs Jaume's case, on the other hand, was that Mr Chapman paid for the work in lieu of a contribution to the running costs of the household. Her evidence, which

the judge recorded, was:

"Then in 2003 Chris announced that the kitchen was far too small for all of us and for entertaining in and that he was going to extend it. He said that I had hassled him for long enough about contributing to the household and this was going to be his contribution."
[10]The judge also found that while Mrs Jaume was still embroiled in divorce ancillary relief proceedings, Mr Chapman had lent her £14,000 or thereabouts to pay her legal costs or part of them. Mr Chapman said that this was part of the general agreement. The judge made no finding about that, but he recorded that Mrs Jaume accepted that whether it was a freestanding agreement or part of the general agreement it had happened, and that the money had been repaid.[11]Mr Chapman and Mrs Jaume's relationship came to an end in 2006. The judge recorded evidence that on 24 August 2006 Mrs Jaume came to 28 Hansler Road using very bad language. The judge found that some such incident did take place, but he was not satisfied that the witness who gave evidence about it had accurately recalled the actual words in which the argument between them took place.[12]In 2009 Mr Chapman instructed solicitors. On 20 March 2009 his solicitors attempted to enter a unilateral notice at Her Majesty's Land Registry. The form used was form UN1, which requires the applicant to justify the entry of such a notice. In this case the form said:
"The applicant has acquired a beneficial interest in the property as he has financed an extension to the property as well as extensive improvements. It was agreed with the proprietor that in return he would have a beneficial interest in the property."
That application was subsequently cancelled.[13]A few days later, a further application to the Land Registry was made for the entry of a restriction. Once again, it was asserted that it had been agreed between Mr Chapman and Mrs Jaume that as a result of his expenditure Mr Chapman would acquire a beneficial interest in the property. On 17 April 2009 Mrs Jaume lodged objections to Mr Chapman's application. In her letter she said:
"I totally refute any suggestion that Mr Christopher Gifford Chapman has any interest in my property whatsoever. It is quite possible that Mr Chapman's lawyers can formulate some sort of moral claim or even a legal claim against me for monies spent on holidays or gifts from which I benefited and money given to me when I had an extension added to my property all in the course of our relationship, but the idea that he has an interest in my property is quite wrong."
[14]Mr Chapman did not pursue his application to the adjudicator and it was also subsequently cancelled. Clearly, the allegations made in these applications to the Land Registry were not the case that Mr Chapman advanced before the judge. The judge recorded that Mr Chapman distanced himself from the basis on which the applications to the Land Registry were put, saying that he had gone to see solicitors and explained the situation and relied on their advice; and that they had formulated a claim and he was not responsible for that formulation. But the judge did not accept Mr Chapman's evidence in that respect. He found that Mr Chapman's solicitors were acting on instructions that he gave them.[15]Equally, it is of interest that in her letter of 17 April, Mrs Jaume acknowledged a moral claim or even a legal claim for monies spent and money given to her when she had the extension added to her property.[16]The judge rightly said that his narrow task was to decide what agreement, if any, Mr Chapman and Mrs Jaume had reached. He rejected Mrs Jaume's case that the payments made by Mr Chapman had been contributions to her household costs. He said:
"I ought to say that I do not accept the defendant's version of the agreement either. I find it implausible that the claimant ever agreed that he would expend large sums of money as a contribution towards the running of the family unit at 6 The Denningtons."
[17]In the light of his findings about Mr Chapman and his relationship with the family that finding is, in my judgment, unassailable. Mrs Jaume did not allege that Mr Chapman's expenditure was a gift to her, although in her oral evidence she did say that some item, especially pictures, were gifts. That is indeed what Mr Chapman himself had said; that is that gifts were specifically designated as such.[18]What then of Mr Chapman's case? The judge made the following findings. i) There probably was some sort of agreement, although he doubted that it was ever completely finalised or ever completely or consistently expressed. ii) The express conditions upon which Mr Chapman said that reimbursement might be triggered, that is to say the sale of a house or the youngest child reaching her 18th birthday, were never discussed at the time. iii) If there were such a precise agreement as Mr Chapman relied upon, a precise man, as the judge found he was, would have put that agreement to his solicitors when they were making applications to the Land Registry. iv) The pleaded case was a way of rationalising a situation which by then was not proceeding smoothly because of the difficulty with the Land Registry.[19]The judge was referred to a passage in Snell’s Equity dealing with resulting trusts. Since Mr Chapman's case was that the monies he spent were a loan, and since by the time of trial the 6 The Denningtons had been sold, it does not seem to me that the law about resulting trust has any real relevance to this case. Nor is this a case about constructive trusts. Mr Chapman's primary case is that he is simply entitled to have his money back.[20]The nub of the judge's decision seems to me to have been that since Mr Chapman had failed to prove the precise conditions about the time at which the money would be repaid, his case must fail entirely. Thus, he dismissed Mr Chapman's claim with the result that Mrs Jaume has been entitled to retain the benefit of Mr Chapman's expenditure, which even on her own pleadings is at least £60,000. Given that the judge had rejected Mrs Jaume's case that the money had been Mr Chapman's contribution to household expenditure and that it was not alleged that the monies were a gift, the judge's ultimate decision is in my view very surprising. It seems to have turned on what was in effect a detailed pleading point.[21]The judge's key finding was that there had been some sort of agreement. Since Mr Chapman had failed to prove the precise conditions which, he said, restricted the time at which he could require repayment, his whole case failed. But in my judgment, if the judge came to the conclusion (as he did) that the precise conditions had not been proved but there had been some sort of agreement, then the obvious inference was that the monies were a loan repayable within a reasonable time after demand.[22]Mr McLanachan, appearing for Mr Chapman, has referred to the decision of this court in Seldon v Davidson [1968] 1 WLR 1083. In that case, Willmer LJ said:
"Payment of the money having been admitted, prima facie that payment imported an obligation to repay in the absence of any circumstances tending to show anything in the nature of a presumption of advancement. This is not a case of father and child, or husband and wife, or any other such blood relationship which could have given rise to a presumption of advancement."
[23]Edmund Davies LJ said:
"…I ask myself what is to be inferred as to the nature of the transaction when the simple payment of money is proved or admitted between strangers. I entirely agree with my Lord that, on that bald state of affairs, proof of payment imports a prima facie obligation to repay the advance in the absence of circumstances from which presumption of advancement can or may arise."
Unfortunately, the judge's attention was not drawn to this authority.[24]Mr Barton, appearing on this appeal on behalf of Mrs Jaume, submits that on the facts of this case there was a presumption of advancement, but there are a number of difficulties in the way of that submission. First, as Etherton LJ pointed out in the course of argument, it is contradicted by the judge's express finding that the monies were not Mr Chapman's contribution towards the household expenses; and Mrs Jaume never alleged that they were a gift. Secondly, although Mr Barton referred to the decision of the House of Lords in Stack v Dowden [2007] UKHL 17 as supporting his submission, on examination it does not in my view do so. In paragraph 112 of her speech Baroness Hale said of a particular argument:
"… while Lord Reid's suggestion in Gissing at 897B that the notion that equality is equity is no more than a "high-sounding brocard" may be a little extreme, the invocation of such a notion as between cohabitants, who have contributed unequally to the acquisition of a home, appears to me to be inconsistent with principle. It is almost a resurrection of the "family assets" hypothesis disposed of in Pettitt - see at 795B, 809H-810H, and 816G-817H. It involves invoking a presumption of advancement between unmarried cohabitants, where such a presumption has never applied, and at a time when, as I have mentioned, the court is increasingly unenthusiastic about the presumption, even in relationships where it does apply." (Emphasis added)
That is authority at the highest level. There is no presumption of advancement between co-habitants.[25]In my judgment, on the facts found by the judge, he ought to have drawn the inference that the money was repayable within a reasonable time after demand. What would be a reasonable time would of course depend on the facts of the particular case. But on the facts of the present case, a reasonable time would have elapsed at the very latest when the house was sold. Accordingly, by the time the case came to trial, the monies that Mr Chapman had expended on 6 The Denningtons were in my judgment repayable by Mrs Jaume. We cannot, of course, decide the precise amount of money that is repayable since that is in dispute. However, I would allow the appeal and remit the matter to the County Court to determine issues of quantum.[26]I agree.[27]I also agree.

Order

Appeal allowed

Cited in 2 later judgments