Parrott v Parkin [2007] EWHC 210 (Admlty)

[2007] EWHC 210 (Admlty)Case No 2005/321
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 8 th February 2007
Before
THE HONOURABLE MR JUSTICE AIKENS
Between
LINDA MARIE PARROTTClaimantMARK TREVOR PARKINDefendant
Mr John Brooke-Smith (instructed by Pleass Thomson & Company, Solicitors,) for ClaimantMr Philip Riches (instructed by Lester Aldridge, Solicitors, Southampton) for DefendantHearing Hearing dates: 5th, 6 th and 7 th February 2007
Judgment
[1]In this action the claimant, Linda Marie Parrott, claims a declaration that the defendant, Mark Trevor Parkin, holds the motor yacht “UP YAWS” on trust for the claimant absolutely. The Claim Form also asks for an order that the claimant be given possession of the vessel and that the vessel be sold. The yacht, which I shall refer to as “the vessel”, is currently moored at Willows Riverside Park, Windsor. She was built of fibreglass construction in 1999. In October 2006 she was inspected by Mr Andrew Pearson, a yacht surveyor and consultant and partner in John Winterbotham and Partners. In his report prepared for these proceedings he described the vessel as being of “cosmetically moderate – poor appearance”. He estimated the open market value of the vessel in her present condition at £75,000. However it was his view that if some £7,000 to £10,000 were spent in order to bring the yacht up to typical condition for a well kept yacht of her age, then her open market value would be in the order of £120,000.[2]In order to deal with the claim and the defendant’s case, which is that he is both the legal and beneficial owner of the vessel, I will have to set out a great deal of background facts. This is because the purchase of the vessel was only one in a long series of events in the history of the relationship between Miss Parrott and Mr Parkin, which goes back to late 1983.

I. The facts: The purchase of 6 Long Drive

[3]Miss Parrott was born on 8th November 1956. She is now 50. Mr Parkin was born on 6th April 1960. He is now 46. The parties met in the early 1980s, probably in late 1983. At the time, Mr Parkin was a pop musician and in a rock band. Miss Parrott joined the band as a keyboard player. The parties formed a relationship in 1984. They began living, with others, in a rented flat in Acton. At the time both were unemployed and on benefit. The couple subsequently moved to a flat in Ealing.[4]In 1987 Miss Parrott started work (at first on a temporary basis) as a Personal Assistant to the marketing director of Harp Lager. Mr Parkin continued his musical interests. He had no regular income.[5]In 1991, Miss Parrott and Mr Parkin decided to buy a house. In September 1991, 6 Long Drive, Greenford, Middlesex, was purchased. (I will refer to this property as “6LD”). The house was not in good condition. The purchase was made in the sole name of Miss Parrott. The purchase price was £71,500. The reason for the house being registered in the sole name of Miss Parrott is in dispute. However, I am satisfied, having heard evidence from both parties, that the principal reason was that Mr Parkin was not in employment at the time and that he had no regular income. He had, in fact, just started business as a stained glass artist and he therefore had no accounts to show the bank or building society at the time. I am satisfied, on the evidence, that it was Miss Parrott who dealt with all the mechanics of the purchase.[6]A deposit of £3,750 was paid. £3,000 of this deposit was provided by Mr Parkin’s father, Mr Rex Parkin. It is clear from Mr Parkin Senior’s letter to Miss Parrott and Mr Parkin, dated 3rd August 1991, that the sum of £3,000 was provided as a loan. The letter states that the loan was being “handed over to someone in the formal sense outside the family”. The letter continues: “The problem as to who repays it you must sort out between you. You will hopefully end up with one roof over both your heads and the liability to keep it there falls on you both, but the legal liability for repaying this loan is clearly Linda’s”.[7]In a further letter of the same date from Mr Parkin Senior to Mr Parkin (junior) and Miss Parrott, Mr Parkin Senior asks Miss Parrott to sign a Promissory Note. The letter sets out the terms of the loan. These are:
“1. The loan is short-term and should be repaid in full by 7th August 1992 or earlier. 2. No interest will become due if repaid in due by 7th August 1992. Any unpaid balance at that date shall have interest charged from 7th August 191 up to the date of repayment at the APR (Annual Percentage Rate) applicable on an Access loan at 7th August 1992. 3. The money shall only be used for house purchase. 4. Your acceptance of these terms shall be acknowledged by signing and returning this document.”
Underneath that there is a space for Miss Parrott to sign the document.[8]Miss Parrott did sign a Promissory Note. In the bundle (B13) the Promissory Note is dated 5th August 1991. The Promissory Note states:
“On demand I Linda Parrott promise to pay to Rex Leon Parkin …… the sum of £3,000 and hereby acknowledge receipt of the sum of £2,000 thereof.”
The Promissory Note identifies 6LD as the property to be purchased. Miss Parrott’s signature is witnessed by Patricia Mudie.[9]It is convenient to complete the history of this loan. It was not repaid by August 1992. However, on 1st March 1993, Mr Parkin Senior wrote to Mr Mark Parkin. The letter starts:
“Dear Mark We have decided to alter the basis of the £3,000 loaned to you and Linda and treat it as a gift”
. The letter goes on to explain that a similar loan to another son was being converted into a gift and, “to even things out”, a present of the same amount would be given to a third son. The letter also states that it would not be possible for Mr Parkin Senior to give Mark Parkin “any further help”, because that would mean that Mr Parkin Senior’s income from his savings would fall to an unacceptably low level. I will have to deal with the legal analysis and effect of the initial loan and the waiver of repayment later on in this judgment.[10]I return to the purchase of 6LD. The source of the balance for the deposit (i.e. the remaining £575.00) is in issue. Miss Parrott says it came from her savings. Mr Parkin says that this sum came from “our own money”. I find that the bulk of this sum came from Miss Parrott. I also find that Miss Parrott paid for the legal fees and disbursements, land registry fees and stamp duty.[11]The balance of the purchase price, i.e. £67,925 was raised by a loan secured by a mortgage on 6LD and an endowment insurance policy. The loan was provided by Abbey National. I have not seen the mortgage deed but I am satisfied that it is in the sole name of the claimant, so that she is, legally speaking, solely liable to Abbey National to repay the loan in accordance with the terms of the mortgage.[12]Having heard Miss Parrott and Mr Parkin give their evidence, I am satisfied that neither before nor at the time of the purchase of 6LD, was there any express discussion between them which might constitute an agreement or arrangement or understanding as to the beneficial interests of the two parties in 6LD. There was simply no evidence of any kind of discussion, whether imperfectly remembered or otherwise, or whether precise or imprecise as to its terms. (See the speech of Lord Bridge of Harwich in Lloyds Bank plc v Rosset [1991] 1 AC 107 at 132).[13]Immediately following the purchase of 6LD, Mr Parkin worked on the property to get it into a state so that the parties could move in to the house. This work took about 2 weeks. When they had moved in, Mr Parkin began his work as a stained glass artist and he ran this business from the garage of the property. Miss Parrott continued to be in employment and her career went well. By May 2000 she had become a “Human Resources manager” on a salary of £40,000. Subsequently, in June 2002, she became a director of Human Resources.[14]From the time that the parties moved into 6LD the mortgage payments were paid from a bank account in the sole name of Miss Parrott. There is a dispute as to whether Mr Parkin contributed to the mortgage payments at all. It is common ground that Mr Parrott paid a sum for the use and occupation of the parts of the property on which he carried on his business. I am satisfied that Mr Parkin did pay cheques to Miss Parrott from time to time, although not regularly. These cheques (none of which were in evidence) were for varying sums, none of which have been specifically identified. However, I am satisfied, on a balance of probabilities, that the sums were intended to include a figure for “rent” of the business premises, gas, electricity and a contribution towards house insurance.[15]It was Mr Parkin’s evidence that these sums were to go directly to assist in the mortgage repayments. However, there is no evidence before me about what happened to these sums. I have not seen any of the bank accounts of Miss Parrott and I have been unable to make any assessment of whether or not the sums were in fact, used towards paying off the mortgage, as opposed to paying for other, more general, household expenses.[16]When the parties moved into 6LD, it was in a poor state of repair. I am satisfied that Mr Parkin did a great deal of work on the house, both immediately after purchase (and before they moved into the house) and thereafter, in order to improve the condition of the property. I have seen a photograph of the kitchen “before” and “after” work done by Mr Parkin. I am prepared to accept that Miss Parrott assisted in some of this work, but I find that the vast majority of it, as listed in the schedule prepared by Mr Parkin in 2004 (B134 – 140) was done by Mr Parkin.

II. The purchase of “DUTY FREE B”

[17]By 1999 Miss Parrott and Mr Parkin had been living together for about 17 years. Miss Parrott had a good job at a good salary. The gross earnings from Mr Parkin’s stained glass business were running at between £15 - £18,000 per annum. It is in these circumstances that the parties agreed to buy a boat. They looked at several different vessels before purchasing “DUTY FREE B”. The transfer of the legal ownership of “DUTY FREE B” is evidenced by a bill of sale dated 6th June 2000. The bill of sale records the transferee as being Mr Mark Trevor Parkin, self employed of 6 Long Drive, Greenford, Middlesex. The purchase price of the “DUTY FREE B” is stated as £52,000. A certificate of British Registry for the “DUTY FREE B” was issued on 15th August 2002.[18]It is common ground that registration under the Merchant Shipping Act 1995 is only prima facie evidence of title and that equitable interest in the vessel will not be shown on the Register. It is also common ground that equitable interests can subsist in relation to a ship and can be enforced accordingly. (See The Merchant Shipping (Registration of Ships) Regulations 1993, Regulation 6(1); and paragraph 1(1) and (2) of Schedule 1 to the Merchant Shipping Act 1995; see also “The Venture” [1908] P218.)[19]The purchase price of the “DUTY FREE B” was found by raising a new loan of £50,000 from the Abbey National on the security of 6LD. The balance of £2,000 appears to have been provided by raising money from one of the credit cards that Miss Parrott had at this time. I am satisfied that Miss Parrott organised the transfer of the money for the purchase through her employer. She also paid for various ancillary expenses.[20]There was some dispute about the reason for Mr Parkin being the only transferee named on the bill of sale and for him being named as the owner in the certificate of British Registry (B143-4). Miss Parrott’s evidence was that originally she intended to have her name listed as one of the transferees on the bill of sale. Her evidence was that the defendant had told her that the vessel should be registered if it was intended to take her abroad and that a VAT certificate would be needed on foreign trips to prove that VAT had been paid in this country. She said that the defendant told her that they would need pilot’s licences if they were to go abroad and that the pilot’s licences should be in the same names as that of the registered owner. Miss Parrott stated that Mr Parkin persuaded her that, as he was about to obtain pilot’s licences, it was sensible that the vessel be in his name only.[21]Mr Parkin gave evidence entirely to the contrary. His evidence was that Miss Parrott had suggested to him that the transfer should be made to him alone. His evidence was that it was agreed that the vessel should be his alone as he had always had a dream to own a vessel like that one. It was agreed, he said, that the vessel should be in his name, just as 6 LD was in Miss Parrott’s name. Mr Parkin’s evidence was that, in consequence, the bill of sale for “DUTY FREE B” named him only as transferee. He said that was also why, when the vessel was registered in 2002, it was registered into his sole name.[22]I found Miss Parrott’s evidence on the reason for the transfer into Mr Parkin’s name only to be unconvincing. I note that the certificate of British Registry was not completed until 2002. The question of having pilot’s licences and the certificate of British Registry with the same names on all documents could only have arisen at that time. Miss Parrott’s suggestion for the reasons for having only Mr Parkin’s name on the certificate does not explain at all why her name does not appear on the bill of sale which was executed at the time of transfer of ownership in June 2000. I accept Mr Parkin’s evidence that there was discussion between the parties about who should be identified as transferee on the bill of sale and that Miss Parrott suggested that his name should be given as transferee. I am equally satisfied that there was no discussion at the time of purchase about pilot’s licences and taking the vessel abroad. Given that Miss Parrott did all the “paperwork” for the purchase, I am satisfied that there must have been a conscious decision on her part to ensure that Mr Parkin was named as the transferee in the bill of sale. I am equally satisfied that she agreed to his name only being on the certificate of British Registry.[23]After “DUTY FREE B” had been bought, she needed repair and maintenance work. I accept the evidence of Mr Parkin that he did much of the work on the vessel during the period 2000 – 2002. However, it is clear from the credit card statements of Miss Parrott that she paid for materials purchased from the chandlery at the Shepperton Marina. There are frequent references to “MMS 1981 Ltd” in the credit card statements of Miss Parrott during the period August 2001 to December 2002. There are also other references to purchases which I am satisfied were for the maintenance and repair of the “DUTY FREE B”. Furthermore, it is clear that Miss Parrott paid for all the mooring fees for “DUTY FREE B” and also electricity at the mooring.[24]During the same period the parties continued to live at 6LD. Miss Parrott was legally responsible for the mortgage repayments, including the repayments due on the new loan which had been obtained to purchase “DUTY FREE B”. Mr Parkin accepted in evidence that, from the time of the purchase of “DUTY FREE B”, he did much less work in maintenance and repair at 6LD, because he much more interested in the vessel. However, during this period he continued to run his business from 6LD. In the years 2000 – 2003, the gross earnings declined from £16,131 per year to £11,227 per year. (B15). I accept that he continued to make some payments to Miss Parrott for rent, gas, electricity and house insurance by paying cheques to her from time to time. However, I have no evidence about how regular these payments were, nor their amounts.

III. The purchase of “UP YAWS”

[25]Towards the end of 2002 Miss Parrott and Mr Parkin agreed to sell “DUTY FREE B” and to purchaser another vessel. They found a vessel called “ENCHANTRESS”. After a survey (for which Miss Parrott paid), it was agreed that “ENCHANTRESS” would be purchased for £133,000. (The purchase price is stated variously at £132,000 or £133,000 or £134,000 in the documents; I have taken the middle figure). This figure was to be financed first, by a “part exchange” of “DUTY FREE B” for the sum of £60,000, secondly by a further loan from Abbey National of £71,000, on the security of 6LD and lastly by £3,000 in cash.[26]The draft bill of sale evidencing the transfer of ownership of the vessel was originally made out in the names of both Mr Parkin and Miss Parrott as transferees. (This draft was apparently prepared by the brokers who arranged the sale). It is agreed that Miss Parrott instructed the brokers to remove her name from the draft bill of sale. There is a note on the copy of the draft bill of sale at B180 of the bundle which is in Miss Parrott’s writing. This has an arrow pointing to the name “Linda Parrott” and underneath it is written “take name off” in Miss Parrott’s handwriting.[27]I am also satisfied that Miss Parrott was taking the lead on arranging the survey and the transfer details from the moment that a purchase price was agreed in November 2002. There is a manuscript note, in Miss Parrott’s handwriting, on a letter written by the brokers (Harleyford Marine Limited) to Mr Parkin and Miss Parrott dated 11th November 2002. This letter and the note deal with several matters concerning surveys, registration, VAT and insurance. The last item on the note is:
“boat in Mark’s name”
. There is a further letter dated 26th February 2003 from the Maritime and Coastguard Agency which is addressed to Mr Parkin. This concerns an application that Mr Parkin had made on 7th February 2003 to register the vessel in his name as “the new owner”. The Maritime and Coastguard Agency replies, indicating what materials they need in order to effect the registration. On that letter there is another manuscript note, also in Miss Parkin’s handwriting, addressed to a person in the brokers. This says:
“Can you please handle? I will put the original documents in the post with Mark’s signature on. Please let me know if you need anything else. Thanks and regards Linda Parrott”
.

Thanks and regards

[28]In her witness statement, Miss Parrott suggests that originally she had decided that the vessel should be registered in her sole name and she had so informed Mr Parkin and the brokers. Miss Parrott’s evidence was that at this time the parties were going through a difficult period in their relationship and that Mr Parkin was having psychiatric problems. Miss Parrott’s evidence was that she herself was suffering much stress from her work. Her evidence was that as a result of the difficulties she agreed in the end that the vessel should be registered in Mr Parkin’s sole name.[29]I do not accept that that is the reason why the vessel came to be registered in Mr Parkin’s sole name. I am satisfied that Miss Parrott had agreed that the vessel should be in Mr Parkin’s name by the time that the brokers wrote the letter of 11th November 2002 confirming acceptance of the offer to purchase the vessel. That is why Miss Parrott wrote the manuscript note “boat in Mark’s name” at the bottom of that letter. There is no evidence that she subsequently changed her mind. The vessel was registered in Mr Parkin’s name on the certificate of British Registry issued on 5th June 2003.[30]With regard to the finances concerning the vessel, I am satisfied that Miss Parrott paid £2,000 of the £3,000 cash paid for the vessel. The other £1,000 originated from the defendant as “rent” or housekeeping money which was paid by cheque to Miss Parrott into her current account. She used that money to pay the remainder of the deposit. After the vessel was purchased, Miss Parrott paid the mooring fees and electricity for the period April 2003 to March 2004. Miss Parrott also paid for other items including items for the vessel’s galley, her cabins and engine room.[31]I am also satisfied, however, that Mr Parkin did work to maintain and repair the vessel. In this he was assisted by Mr Nicholas Horwill, who gave evidence. I accept that he assisted Mr Parkin in doing work on the vessel such as cleaning the hull, applying anti-foul paint and servicing the engines.

IV. The break-up of the relationship between the parties

[32]In August 2003, Miss Parrott and Mr Parkin got engaged. Miss Parrott gave evidence, which I accept, that they became engaged in the course of a trip in the vessel to ports in northern France and southern Belgium. However, it is clear that by October 2003, the relationship was no longer stable. Miss Parrott sent Mr Parkin a letter dated 10th November 2003 stating she wished to end their relationship. Miss Parrott asked Mr Parkin to leave 6LD and live on board “UP YAWS”. He began living on the vessel on 18th November 2003. However, he still continued with his stained glass business from 6LD, with the agreement of Miss Parrott. This arrangement continued until July 2004, when Mr Parkin moved his belongings and his business equipment from 6LD.[33]In August 2004 Miss Parrott moved out of 6LD and the house was occupied by a tenant for one year. During that time the tenant paid rent to Miss Parrott. 6LD was sold, pursuant to an order of the Family Division, in November 2005. The sale price was £235,000.[34]By that time, the outstanding loans to Abbey National, which were secured by the mortgage on 6LD, totalled £234,294.73. In evidence Miss Parkin told me that her credit card liabilities increased dramatically in 2004, so that, by June of that year her total liabilities on 14 different credit cards totalled £60,085. Miss Parrott’s evidence was that these liabilities were predominantly: the loans on 6LD, household expenditure and the ever increasing interest on credit card debits. However, it is also clear that Miss Parrott’s lifestyle and associated expenditure had become much more extravagant during this period.[35]At some stage, it is not entirely clear when, Miss Parrott arranged to re-finance her debts with a further loan from Abbey National. The details of this are complicated but the net result was, as I have already stated, that the total loan made by Abbey National at the time that 6LD was sold, was £234,294.73.[36]As a result Miss Parrott received nothing from the proceeds of sale. Indeed Miss Parrott had to pay an additional £5,000 to cover the commission of estate agents and costs associated with the sale of 6LD.

V. The current proceedings and the parties’ pleaded cases

[37]The claimant issued a claim form in an Admiralty claim in rem on 19th April 2005. As I have already noted the claimant claimed: i) a declaration that the defendant holds the vessel “UP YAWS” on trust for the claimant absolutely; ii) an order for possession of the vessel; iii) an order for the sale of the vessel; iv) costs. The particulars of claims dated 13th April 2005 plead the facts relating to the purchase of “DUTY FREE B” and “UP YAWS”. The claimant’s case on the reason for the registration of both vessels being in the defendant’s name, ie. that the defendant had pilot’s licences and it was sensible to have the registration of the vessel, a VAT certificate and the pilot’s licence all in the same name, is also pleaded.[38]The amended defence dated 31st January 2006 pleads that it was always the intention of the parties that both “DUTY FREE B” and “UP YAWS” were to be the defendant’s property, whilst the claimant retained title in 6LD. It is alleged that it had never been agreed that either vessel should be owned by the defendant and “held on trust for the claimant”. The defendant also pleaded (by amendment) an alternative case, which is that the defendant held the vessel on trust for himself and the claimant in equal shares by way of a constructive trust. In support of this case the defendant pleads that he and the claimant purchased 6LD; that they lived together in 6LD and the defendant did much maintenance and improvement work on 6LD, thereby acquiring a beneficial interest in the property; that this beneficial interest extended to funds raised and secured by way of mortgage over 6LD, including funds raised to purchase both “DUTY FREE B” and “UP YAWS”.[39]A Reply was served on 17th March 2006. The claimant took issue with the primary and alternative cases of the defendant.[40]At the trial the submissions of the parties were more elaborate. For the claimant, Mr Philip Riches submitted first that, because it is accepted by the defendant that the entire additional purchase price for the vessel “UP YAWS” was paid by the claimant, therefore the legal ownership of the vessel must be with the claimant. He noted that it is not pleaded or alleged that the claimant made a gift of the vessel to the defendant. Secondly, Mr Riches submitted that because the claimant advanced the whole additional purchase price of the vessel, the presumption must be that there is a resulting trust of the beneficial interest in favour of the defendant. He relied on the decision of the Court of Appeal in “The Venture” [1909] P218. Alternatively, Mr Riches submits that in the circumstances of this case there must be a constructive trust in favour of the claimant because if the defendant is the legal owner, he holds this property in the circumstances of the purchase it would be inequitable to allow him to assert full beneficial ownership to the property.[41]On behalf of the defendant, Mr John Brooke-Smith submitted that it is necessary to consider first the question of the beneficial interests in 6LD. In his submission there was an agreement, arrangement or understanding reached between the parties before the acquisition of 6LD that the property was to be shared beneficially. Alternatively, he submitted that the evidence demonstrates that on the conduct of the parties, a common intention to share the property beneficially can be inferred so as to give rise to a constructive trust. In this regard he relies in particular upon the deposit which was at first loaned by Mr Parkin senior and then made a gift. He also relies on the sums paid from time to time by Mr Parkin to Miss Parrott (for rent, gas, electricity and insurance) which, on Mr Parkin’s evidence was to be used directly to assist in the repayment of the mortgage instalments. Mr Brooke-Smith submits that if the Court considers the whole course of dealing between the parties in relation to the ownership and occupation of 6LD, then the only fair conclusion is that each held a 50% beneficial interest in the property.[42]Mr Brooke-Smith submits that the effect of the parties’ agreement to buy “DUTY FREE B”, in circumstances where each party had a beneficial interest of 50% in 6LD, was that the trust in the property would be varied, so that Miss Parrott would be entitled to all the equity in 6LD and Mr Parkin would be entitled to all the equity in “DUTY FREE B”. He submits that when “DUTY FREE B” was sold and “UP YAWS” was bought, the same arrangement was agreed. In the alternative, Mr Brooke-Smith submits that if account has to be taken for the additional purchase price money for “Up Yaw” being supplied by Miss Parrott, then the effect of that will be to give each party approximately 50% beneficial interest in “UP YAWS”.[43]Mr Riches’ response to these submission is that on the evidence, the defendant cannot demonstrate either an express or implied agreement, arrangement or understanding to found a constructive trust in relation to 6LD; nor can one be inferred from conduct. Moreover, the evidence does not show that Mr Parkin acted to his detriment after the acquisition of 6LD. Therefore, the whole basis of the case for “transferring the defendant’s beneficial interest to “DUTY FREE B” and “UP YAWS” does not exist.

VI. The Issues

[44]The ultimate question for decision is whether Miss Parrott has any legal and/or beneficial interest in “UP YAWS”. Mr Riches was inclined to accept, I think, that Mr Parkin, as the registered owner, had the legal interest in the vessel. However, it was common ground that if Miss Parrott had a 100% beneficial interest in the vessel, then she would be entitled to possession. In my view the ultimate question cannot be answered without considering two anterior questions. These are:(a) whether Mr Parkin had any beneficial interest in 6LD, and(b) who had what interest in “DUTY FREE B”.[45]Therefore the issues that I must consider are: i) Did Mr Parrott have any beneficial interest in 6LD at any time up to the purchase of “DUTY FREE B”? ii) What is the proper legal analysis of the parties’ arrangements at the time of the purchase “DUTY FREE B” concerning their respective interests in that vessel? iii) What is the proper legal analysis of the parties’ arrangements at the time of the purchase “UP YAWS” concerning their respective interests in the vessel?

VII. The law

[46]It is agreed by both Counsel that, as Miss Parrott is the person with legal title to 6LD, the question is whether or not Miss Parrott, as sole legal proprietor was, at any stage, a constructive trustee of a share in the beneficial interest in the house for the benefit of Mr Parkin. In relation to unmarried couples where one partner is the sole legal owner of a property, the leading case on the tests to be applied to see if there is a constructive trust is Lloyd’s Bank plc v Rosset [1991] 1 AC 107. The test is set out in a passage of the speech of Lord Bridge of Harwich at pages 132 -3. He said:
“The first and fundamental question which must always be resolved whether, independently 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 at anytime, prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or an arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel. In sharp contrast with this situation 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 at least extremely doubtful whether anything less will do.”
[47]There have been a number of cases in the Court of Appeal since this decision in which various judges have elaborated on or glossed these statements by Lord Bridge. I was helpfully referred to them by both Counsel. Two particular points emerge. First, in Midland Bank plc v Cooke [1995] 4 All ER 562 at 574, Waite LJ confirmed that, in the absence of any express evidence of intention of creating an equitable interest, the partner without legal title who asserts an equitable interest must do so through conduct evidencing direct contribution to the purchase or subsequent payments in respect of the purchase price of the house. However, once an equitable interest is established, in order to decide what proportions the parties must be assumed to have intended for their beneficial ownership, the judge has to take a survey of the whole course of dealing between the parties relevant to their ownership and occupation of the property and their sharing of its burdens and advantages. That exercise is not confined to the “limited range of acts of direct contribution of the sort that are needed to found a beneficial interest in the first place”.[48]Secondly, in Oxley v Hiscock [2004] 2 FLR 669, Chadwick LJ made a comprehensive review of all the authorities concerning the law on the creation of a beneficial interest arising out of some informal arrangement between cohabitees which is said to have led to the existence of constructive trust. At paragraph 68 of his judgment, Chadwick LJ refers to the two categories of situation set out in Lord Bridge’s speech to which I have referred. In respect of the second category, Chadwick LJ appears to pose a broader test for establishing a beneficial share in the property. He says: “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 of Harwich’s second category”.[49]In dealing with the question of how the Court should decide what the two parties’ proportions of the beneficial interest should be, Chadwick LJ states, at paragraph 71, that the cases are not entirely reconcilable. He concludes, as I understand it, that in cases where there is no evidence to make a finding that the parties gave any thought to the amount of their respective shares, either at the time of acquisition of the property or subsequently, then “the necessary inference is that they must have intended that question would be answered later on the basis of what was seen to be fair”. I shall endeavour to apply those principles.[50]With regard to the law on resulting trusts, there was no dispute between Mr Riches and Mr Brooke-Smith. It is agreed that the law of resulting trusts can apply to a vessel, just as it does to any other personal property. It is agreed that the legal owner of the vessel can hold the vessel on trust for another. It is also agreed that if a vessel is bought and the legal ownership is vested in party A, but the purchase price had been paid by party B, then, in the absence of any proof of contrary intention, the legal owner will hold the vessel on resulting trust to the person who advances the purchase money. That is a presumption which can be displaced but it will only be displaced by proper evidence. See “The Venture” [1908] P218at230 per Farwell LJ.[51]I have already stated my conclusion, that on the evidence, there was no express discussion between Miss Parrott and Mr Parkin before the acquisition of 6LD which could amount to an agreement or an arrangement or understanding between them that the property was to be shared beneficially. I therefore have to consider whether or not there is anything in the conduct of the parties from which to infer a common intention to share the property beneficially and to give rise to a constructive trust, if there is also proof of detriment on the part of the party seeking to establish a beneficial interest.[52]There are two points to consider on the facts of this case. The first is the deposit money provided by Mr Parkin senior. I am satisfied that the loan was made to Miss Parrott and she had the legal liability to repay it in accordance with the terms of the loan set out in the letter of 3rd August 1991 from Mr Parkin senior. However, I am also certain that the object of the loan was to enable both parties to buy a house which they would share. In that sense, Mr Brooke-Smith was correct in saying that Mr Parkin senior made a “gift” of the ability of both Mr Parkin and Miss Parrott to buy the house at all. That “gift” was made to both parties.[53]However, in my view the more important question is the legal analysis of Mr Parkin senior’s subsequent letter on 1st March 1993, which discharged Miss Parrott’s liability to repay the loan. Miss Parrott’s evidence on this was not satisfactory. She states that Mr Parkin senior “told me that he would write the loan off”. She also stated that she received a letter from his solicitor, informing her that the previous legal document was withdrawn. The first of those statements is contradicted by the letter of 1st March 1993. I have not seen a copy of any letter from solicitors.[54]In my view the correct construction of the letter of 1st March 1993, which is addressed to Mr Mark Parkin only, is that Miss Parrott’s legal liability to repay the loan is terminated, but the sum of £3,000 is to be a gift to Mr Parkin alone. That is the only way to make sense of the fact that Mr Parkin senior wished all three of his sons to have gifts of £3,000, so that all three would then be entitled to equal shares of anything left on the death of Mr Parkin senior and his wife.[55]In my view the consequence of this gift to Mr Parkin is that Mr Parkin directly contributed to the purchase price of 6LD. The gift by Mr Parkin senior was effectively used by his son on the house. Therefore, there was less money owing to lenders in respect of the property. That, by itself, justifies an inference necessary to the creation of a constructive trust, subject to the question of detriment.[56]The second issue concerns the payments by Mr Parkin to Miss Parrott of sums which were intended to cover rent for Mr Parkin’s business premises and use of gas, electricity and insurance. As I have said, I am satisfied that these sums were paid from time to time, although not on a regular basis. The question is whether or not the payments constitute “direct contributions to the purchase price by the partner who is not the legal owner, ……. by payment of mortgage instalments ….” in the words of Lord Bridge in the Rosset case. In the absence of any firm evidence on how these sums were treated I have concluded, although with reluctance, that it is not proved that these payments constituted a direct contribution to the payment of mortgage instalments on 6LD.[57]As to Mr Parkin’s other work on 6LD, it is clear on the authorities that this itself cannot justify the necessary inference for the creation of a constructive trust. However, such work is relevant to the question of the proportion of beneficial interest that was enjoyed by Mr Parkin by the time that the parties decided to purchase “DUTY FREE B”.[58]I am quite satisfied that Mr Parkin acted to his detriment or altered his position. He worked on the house and he paid money for the use of the premises but on the understanding, at the least, that this was to go to the general financial upkeep of the house itself. But he took no steps to formalise any interest in the house.[59]Therefore, I am satisfied that Miss Parrott held 6 LD on constructive trust on behalf of Mr Parkin to a certain proportion. In my view I do not need to decide the precise proportions of beneficial interest held by each party in 6LD at the time that “DUTY FREE B” was purchased. It is enough to conclude that Mr Parkin held a substantial proportion as beneficial interest perhaps somewhere between 25% and 40%. That, then, was the position on the eve of the purchase of “DUTY FREE B”.[60]I am satisfied that Mr Parkin was the legal owner of “DUTY FREE B”. I am also satisfied that Mr Parkin and Miss Parrott did discuss the question of their respective interests in 6LD and “DUTY FREE B” either before or at the time that this vessel was purchased. Having heard both parties give evidence, I have concluded that the understanding reached between them, however imperfectly remembered and however imprecise the terms may have been, was that Miss Parrott would thereafter be the sole legal and beneficial owner of 6LD. At the same time, it was agreed that Mr Parkin would be sole legal and beneficial owner of “DUTY FREE B”. This fits in with the arrangement to finance the purchase of “DUTY FREE B” by means of a further loan on the security of 6LD. Effectively, Miss Parrott was “buying out” Mr Parkin’s beneficial interest in 6LD by agreeing to take out this further loan, which was secured by a mortgage for which she was alone legally responsible, and by using that money to purchase “DUTY FREE B”.[61]I appreciate that Miss Parrott remained responsible for various expenses concerning “DUTY FREE B”. However, I can understand why the parties would have regarded this as fair, given that Mr Parkin had renounced forever any interest in 6LD, which, like all other property, was increasing in value. He would no longer be able to benefit from that fact. Also, he was continuing to pay sums by way of rent etc to Miss Parrott in respect of 6LD.[62]First of all, I am entirely satisfied that Mr Parkin became the legal owner of “UP YAWS”. That is clear from the evidence which I have already described in some detail. The question is whether or not Miss Parrott obtained any beneficial interest in “UP YAWS”.[63]On the basis of the preceding analysis, there can be no doubt that it was Miss Parrott who provided the additional purchase money, viz £73,000, for the vessel. That was provided by means of raising a loan on the security of 6LD (for £71,000) and by a further £2,000 that came from Miss Parrott. Therefore the presumption must be, unless rebutted, that Miss Parrott has a beneficial interest in “UP YAWS” to the extent of that purchase money.[64]The question I have to consider is whether or not there was some agreement between Miss Parrott and Mr Parkin to the effect that Mr Parkin would not only be legal owner but also the sole beneficial owner of “UP YAWS” as he had been of “DUTY FREE B”. Effectively, Mr Brooke-Smith relies on two matters to displace the presumption that Miss Parrott, as provider of the additional purchase money, has a resulting trust of the beneficial interest to that extent in her favour. The two factors are: first, the evidence that Miss Parrott agreed that Mr Parkin should be the only person named in the bill of sale and the registered “owner” of the vessel. Mr Brooke-Smith submits that this indicates clearly that Miss Parrott intended (as before) to have no beneficial interest in the vessel. Secondly, he relies on the evidence of the witness Mr Bugden and a letter written by Mrs Pam Smith dated 1st June 2005 to support a submission that the parties agreed that Mr Parkin would have sole beneficial interest in the vessel, as with “DUTY FREE B”, because Miss Parrott had the sole legal and beneficial interest in 6LD.[65]I am not satisfied that the parties gave much, if any, thought to the question of who had a beneficial interest in “UP YAWS” at the time the vessel was purchased. I am not prepared to infer from the fact that Miss Parrott agreed to Mr Parkin having the legal ownership of the vessel that it necessarily follow that she thereby agreed to renounce any beneficial interest in “UP YAWS”. The position was that Miss Parrott was advancing £73,000 of the purchase price of the vessel. In doing so she took on a commitment to repay that money loaned from Abbey National, with interest, over a period of some 23 years thereafter. It was agreed, or at least assumed, by both parties that Miss Parrott would continue to pay mooring fees and other costs related to “UP YAWS” at the time she was purchased.[66]Mr Bugden’s evidence was that he had a conversation with Miss Parrott after the relationship had ended in which Miss Parrott told Mr Bugden that she and Mr Parkin had decided that he would keep the vessel and that she would keep the proceeds from the sale of 6LD. This is not evidence of any agreement at the time that “UP YAWS” was purchased. Mr Bugden’s evidence is consistent with a possible agreement on how to split the assets of the relationship after it had ended. It is not evidence that rebuts the presumption of a resulting trust at the time of purchase.[67]The letter from Mrs Pam Smith dated 1st June 2005 came to light in a most unsatisfactory way. The letter was sent by Mrs Smith to the Solicitors acting for Mr Parkin. It was a disclosed document. However it did not find its way into the bundle for the trial. It first came to light in the course of Mr Riches’ submissions after all the evidence had been completed. Mr Brooke-Smith sought leave to call Mrs Smith as a witness. I refused that request, but I said that the letter could go in evidence, providing that Miss Parrott was willing to go into the witness box and give evidence about it. Miss Parrott said she was prepared to do so, and she did.[68]The letter states that there was an occasion when Mrs Smith and her husband and Mr Parkin and Miss Parrott took part in a trip across the channel in 2003 in their respective vessels. This was the occasion (she says) when Mr Parkin and Mr Parrott got engaged. The letter states that there was a conversation between Miss Parrott and Mrs Smith “over a bottle of wine”. In the letter Mrs Smith says that in this conversation Miss Parrott stated that if she and Mr Parkin were to split up then “she would have the house and Mark would have the boat”. The letter says that there were similar conversations over the course of the next two weeks.[69]Miss Parrott’s evidence was that she would not have discussed this kind of matter with Mrs Smith, who was not a close friend of Miss Parrott. Miss Parrott also said that she could not recall having a conversation with Mrs Smith alone, after Miss Parrott and Mr Parkin had made the voyage north to a Belgian port where they had become engaged, and before they went back to join others in a north French port.[70]The evidence from Mrs Smith is unsatisfactory in its present state. I am not satisfied that it is evidence of any agreement by Miss Parrott to waive a beneficial interest in the vessel, either at the time of its purchase, or subsequently.[71]In the end, there are only two pieces of evidence that might displace the presumption that there is a resulting trust in favour of Miss Parrott to the extent of the purchase money provided by her for the acquisition of “UP YAWS”. The first is Mr Parkin’s statement, at paragraph 25 of his witness statement, that the parties talked about ownership of the “UP YAWS” and agreed that “the new boat would be owned by me as the house remained in the claimant’s name despite the length of time that we had been living together in it.” He goes on to say that his understanding was that if anything happened “the boat would remain mine and the house hers and that this was to be reflected in the paperwork”. The second piece of evidence is in an email sent by Mr Parkin to Miss Parrott on 18th January 2005, that is over a year after the relationship ended. At the end of the email, which is largely devoted to 6LD, Mr Parkin wrote:
“My proposal is as it has always been agreed between us, long before you decided to end the relationship. • You keep the house and I will give up all my rights to the property …… • The deposit of £3,000 is repaid to me. • In return you will give up any attempt to claim any part of ownership or rights of ownership to my Motor Cruiser “Up Yaws”, now or at any time in the future.” • You keep the house and I will give up all my rights to the property …… • The deposit of £3,000 is repaid to me. • In return you will give up any attempt to claim any part of ownership or rights of ownership to my Motor Cruiser “Up Yaws”, now or at any time in the future.”
[72]As to the evidence in the witness statement, I am not satisfied that, if there was any discussion between the parties, they were focusing on the issue of beneficial issue in the vessel. The statement is certainly not sufficient to satisfy me that Miss Parrott was making a gift of the £73,000 to Mr Parkin.[73]As for the email, although there is a reference to the proposal being “as it has always been agreed between us”, the actual proposal is clearly one intended to end the dispute over the disposal of property., Again, I do not regard that as sufficient to displace the presumption.

XI. Conclusion

[74]Accordingly, I have concluded that: i) Mr Parkin is the legal owner of the vessel “UP YAWS”. ii) Miss Parrott has a beneficial interest in the vessel to the extent of the purchase money of £73,000 provided by her. I think the parties agree that this amounts to approximately 55% of the total purchase price of the vessel. That will have to be translated into the equivalent of 64th shares of the vessel.[75]In the light of this conclusion, I think it must follow that there can be no Order for possession of the vessel by Miss Parrott. However, I will hear Counsel on the question of whether further orders should be made and, if so, what form they should take.