KERRY ANDRE GEORGE v SUSAN ANNE SZYCZAK [2009] EW Misc 5 (EWCC)

IN THE LEEDS COUNTY COURT
[2009] EW Misc 5 (EWCC)Case No CASE NO: 8WF 02440
Between
KERRY ANDRE GEORGEClaimantSUSAN ANNE SZYCZAKDefendant
Before
His Honour Judge BehrensDate 3 July 2009
[1]Introduction In this case Mr George seeks a share of the proceeds of sale of 33 The Grove Hipperholme ("the property"). The claim is brought under well-known principles of constructive trust or proprietary estoppel.[2]It is common ground that Mrs Szyczak and Mr George cohabited for approximately 10 years between late 1996 and late 2006. It is common ground that that from about the end of 1996 the property was vested in the sole name of Mrs Szyczak subject to a small mortgage. All of the mortgage instalments were paid by Mrs Szyczak.[3]Between 1997 and the separation very substantial work was carried out to the property. The majority of the work was carried out by Mr George who is a builder. Initially Mr George worked on the property during evenings and week-ends. However in July 2000 he gave up work and devoted himself full time to improving the property. In late 1991 or early1992 £30,000 was borrowed by Mrs Szyczak on the security of the property to help finance the improvements. Although it is common ground that the improvements are substantial it is common ground that they were not completed by the date of separation. Although there is some dispute as to the extent and value of the improvements it is not seriously in dispute that they will have increased the value of the property.[4]Following the final separation Mrs Szyczak sold the property. The net proceeds of sale amounted to just under £200,000. In these proceedings Mr George seeks a share of those proceeds. As already noted he asserts either a constructive trust or proprietary estoppel. He asserts that there was an express agreement that he would be entitled to a share in the property, and that he acted to his detriment in reliance on that express agreement. In the alternative he asserts that this is one of those rare cases where the court ought to infer such an agreement.[5]Mrs Szyczak disputes the claim in its entirety. While she acknowledges in the main the work carried out by Mr George she denies that there was ever any express agreement or representation that he would have a share in the property and that this is an appropriate case for the court to imply such a share. In those circumstances there is no constructive trust or proprietary estoppel. 2. Representation[6]Mr George was represented by Miss Julia Beer instructed by Messrs Armitage & Guest of 30 Cheapside, Wakefield WF1 2TD. Mrs Szyczak was represented by Mr Jonathan Walker-Kane instructed by Messrs Wilkinson Woodward, 11 Fountain Street, Halifax Hx1 1LU.[7]Both Counsel produced full and extremely helpful skeleton arguments and I am grateful to them for the way in which this by no means straightforward case has been conducted. 3. Witnesses[8]The principal witnesses to be called were, of course Mrs Szyczak and Mr George. Indeed they were the only witnesses who could give any evidence of the existence or otherwise of the alleged agreement between the parties. However Mr George called 4 further witnesses in support of his case – his mother Violet George, his daughter Zee George, his sister Katreen Hammond and a friend Shaun Schofield who did not actually attend to give evidence. Mrs Szyczak called one witness in support of her case – her son Edward Szyczak.[9]A joint expert – Peter Green of Brearley Greens – produced a report dated 29 th April 2009 based on separate instructions from the two firms of solicitors involved. 4. The Facts 4.1. Mrs Szyczak[10]Mrs Szyczak was born in 1955. She has known 33 The Grove Hipperholme for most of her life. Her parents bought it in about 1965 and she lived there until 1974 when she married. In 1985 together with her husband she bought it from her parents. It was vested in the joint names of Mr and Mrs Szyczak.[11]Mrs Szyczak has 3 children – Benjamin (32), Edward (28) and Kimberley (24). She describes her relationship with her husband as being stormy, violent and volatile. They separated in 1992, were reconciled and finally separated in 1996. On 23 rd November 2006 after subjecting Mrs Szyczak to a violent assault in front of 2 of the children Mr Szyczak committed suicide by hanging himself in the property. This had a profound effect on Mrs Szyczak. She suffered from depression and required extensive counselling.[12]Following the death of Mr Szyczak: 1. 33 The Grove Hipperholme became vested in the sole name of Mrs Szyczak 2. Mrs Szyczak received various sums of money totalling £69,264.23. Much of this was used to pay off the outstanding mortgage leaving only about £5,000 outstanding. After buying a car and giving small sums to Benjamin and her father she was left with savings of about £23,000.[13]Mrs Szyczak has, at all material times been employed as a Council Housing Officer. For a period of about 18 months after the death of her husband Mrs Szyczak was unable to work due to depression 4.2. Mr George[14]Mr George was born in 1954. He has never been married. He has a daughter – Zee George who is 31. He had a relationship with Pamela Ward for about 9 years. During that period they lived in a property in her sole name. In addition they acquired an investment property – 115 Midland Road, Royston which was vested in joint names.[15]The relationship broke down in 1995 or 1996. Following the breakdown Pamela Ward transferred her share in the property to Mr George. According Mr George Pamela Ward kept the house and he kept the shop. According to Mr George he had carried out work to her house and in any event had paid for the shop even though it was in joint names. According to Mr George the shop was little more than a shell. It has been unoccupied since 1996. Nevertheless he has continued to pay the outgoings such as council tax.[16]Mr George was the tenant of council property known as 74 Aysgarth Drive when he met Mrs Szyczak. Despite co-habiting with Mrs Szyczak for 10 years he did not give up his tenancy. He has thus continued to pay the rent and other outgoings.[17]Mr George is a builder. He accordingly has high standards – especially where his own home was concerned. He worked on a contract basis. He has not produced any accounts so it is not possible to form a reliable guide as to his earnings. According to his witness statement he had gross earnings of £44,000 in 1996. His bank statements reveal that he had approximately £5,000 in his account when he started to cohabit with Mrs Szyczak. He also said he had monies kept in a safe. It was not clear quite how much was in the safe. Mr George indicated there was about £11,000 at one time.[18]In circumstances to be considered in more detail below Mr George gave up remunerative employment in late June 2000 to work on the property. After this Mr George made a number of claims for state benefits. These included job seekers allowance, incapacity benefit, and housing benefit. In the course of his evidence Mr George admitted that the claims that he made were fraudulent as he was knowingly claiming housing benefit when he was not living at 74 Aysgarth Drive, and he did not disclose his assets (the shop and the monies in the safe) when he claimed means tested benefits. 4.3. The relationship[19]Mrs Szyczak and Mr George had a relationship that lasted from October 1996 till October 2006. For most of that period they cohabited. There is some dispute when the cohabitation began but nothing turns on it. It is common ground that there was a separation in 2004. There is a dispute as to whether it was at the beginning of 2004 or in the autumn of 2004. There is a dispute as to whether it lasted 2 months or 5 months.[20]When the relationship started Mrs Szyczak was not living at the property. She could not face returning to it initially after the suicide of her husband. However by the end of the year she had returned to live there. According to Mrs Szyczak she could not face being alone in the property; as a result Mr George moved in. Initially she describes the relationship as platonic but she accepts that within a relatively short space of time there was a full sexual relationship between them.[21]Mrs Szyczak describes the relationship between herself as turbulent and volatile. She accuses him of being violent and intimidating. He was critical of her manner of dressing, how her hair was, how she put things away. She describes his approach to things as being obsessive and she says that in arguments he resorted to violence. There is some corroboration for this in the shape of a report from her doctor reporting that in November 2004 she presented to her GP at a time when she had separated complaining of two incidents of domestic violence by Mr George.[22]In his evidence Mr George admitted that there was a separation and that there were arguments. He does not accept that he was violent. He describes the relationship as loving and makes the point that Mrs Szyczak was very much involved in everything and every decision. 4.4. The Property.[23]At the time of her husband's suicide the property was on the market. It had been valued by Whitegates and was on the market for £74,950. An offer of £72,000 was made in or about March 1997. This offer did not proceed because at about that time Mrs Szyczak withdrew the property from the market. She withdrew it because Bryant Homes plc, the owner of an adjoining plot wished to negotiate for the release of a right of way enjoyed by the property. Those negotiations were somewhat protracted but were successful. As a result on 20 th May 1998 Mrs Szyczak received a net sum of £16,660.74 in respect of the release of the right of way. This was paid into her Nationwide Invest Direct Account. As at that date she had savings of £29,736.71 in that account. 4.5. Initial Discussions as to work[24]It is common ground between the parties that the initial discussions took place in March 1997 and related to the decoration of the property. The idea at that time was to "tart the property up" for when it was placed back on the market.[25]There is a dispute between the parties as to who initiated the discussion but there is no doubt that Mrs Szyczak was an enthusiastic and willing party to the decision to decorate. It is also clear that Mr George was willing to help with the decorating without charge or obtaining any interest in the property.[26]It soon became apparent that the property needed more than decoration. When the wall paper was removed it became apparent that the plaster work was loose and significant replastering was required. It was also discovered that the original windows that had been installed in the 1930s were rotten.[27]At or about this time Mr George looked at the loft. The loft had been the subject of an amateur conversion in or around 1995 which had been carried out by Mr Szyczak and his father. Those works did not have building regulation approval and were seriously defective. When Mr George inspected the loft he noted the defects set out in paragraph 17 of his witness statement. In summary there were no floor joists, no RSJ's, no proper staircase, the velux window was too small and too high, the brickwork was unstable, the headroom was too low, the chimney had "spread and the water tanks were in danger of falling through the floor.[28]In the result Mr George on behalf of Mrs Szyczak instructed a structural engineer and an architect to prepare calculations and plans for a proper regulation compliant attic conversion. Those plans and calculations were prepared in November 1997. 4.6. The discussions following the receipt of the plans.[29]These discussions are central to Mr George's claims and there is a significant conflict of evidence between the parties. It is accordingly necessary to set out the rival versions.[30]Mr George's version of events only emerged in detail on the first day of the trial. Indeed it had not emerged in Miss Beer's opening. Miss Beer very properly opened the case in accordance with the then evidence. At the end of the opening she, however, made it clear that she wished to ask Mr George a number of supplementary questions relating to these discussions and as to the express agreement between the parties. As this was a central area of dispute I directed that a supplementary witness statement be prepared so that Mr Walker-Kane could – at least – have the opportunity to take instructions on it before the evidence was given.[31]In his original witness statement Mr George deals with the discussions in paragraphs 18, 19 and 42. In paragraphs 18 and 19 he makes the point that it was a joint decision and that it was a wholly different proposition from a bit of decorating. He says: We decided that I would carry out the work rather than engaging contractors. At the time I was still working and we knew that we would have to do most of the work at week-ends and in between contracts.[32]In paragraph 42 he says: When it became apparent that we were not going to get away with [superficial decorating] we took a decision to renovate it properly. We had a specific conversation at that point …We agreed that I would carry out the work for our joint benefit – we would be saving the cost of hiring a contractor. The burden was obviously going to fall on me and we agreed that while I would do the work I would not be "wasting my time" as I would benefit financially from the work. It was on this basis that I agreed to carry out the work.[33]It is to be noted that this statement makes no reference to any interest in the property or to the value of any such interest.[34]In the supplemental witness statement Mr George puts the matter thus: 3. The conversation took place on a bench outside. … we agreed that I would carry out the work instead of a contractor. I would financially contribute to the work as I had some savings. We both therefore agreed that I would have an interest in the property 4. Specifically we agreed that the house was hers to start with but after that we would benefit equally from the work we were to carry out. 5. We talked about a figure of £70,000 as this was the offer she had received for the property … I was happy to agree this ball park figure. It was therefore agreed that as it was her house to start with she would have the benefit of those monies when we came to sell it; thereafter it was a fresh start, we would both benefit equally[35]In cross-examination Mr George repeated that version of events.[36]Mrs Szyczak accepts that there were conversations about doing the work at about that time. She specifically denied that there was any agreement along the lines suggested by Mr George. She was cross-examined in considerable detail and with great care by Miss Beer on this point. In the course of her answers she made number of points: 1. There were a number of discussions between the parties. She did not accept they were on the bench but they may have been. 2. Mr George did explain the work required to be done and she did agree to it. 3. The work would be carried out by the whole family at week-ends and in the evenings. She accepted that Mr George was a professional builder with the necessary expertise but she made the point that there would be assistance from her, her 2 sons. Her eldest son was a plumber. 4. There were discussions about how the work would be financed. As a result of the death of her husband she had money in the bank [about £23,000 at the beginning of 1998 but she knew she would receive further monies from Bryant Homes]. She was going to pay for the materials. There was no discussion that Mr George would contribute financially. There was no discussion about how much the work was going to cost. Mr George knew how much money she had. He was able to get materials at cost. Furthermore she knew she could borrow money on the security of the property if necessary. 5. There was no discussion that Mr George would get any interest in the property. She was at that time in a very vulnerable state. She was suffering from depression following the suicide of her husband; she still had 3 children living at home. She regarded the property and the money she had received as being part of the children's inheritance and would never have agreed to give a share of it to Mr George. 4.7. The Work[37]Work on the property commenced in late 1997. As discussed the work was carried out at week-ends. Mr George was, of course a professional builder and in overall control of the work. He was however assisted by the rest of Mrs Szyczak's family.[38]There is no doubt that the scope of the project increased. There is equally no doubt that at least until the end of 1999 Mrs Szyczak was fully in agreement with the increase in the scope of the work. Thus Mrs Szyczak agreed to the decision to rewire the whole house, and the decision to put French windows downstairs. In August 1999 Mrs Szyczak was granted planning permission for an extension to the kitchen.[39]When the work commenced in late 1997 it became impossible to live in the top of the house. As a result the whole family attempted to live downstairs having to go outside to get access to the bathroom facilities. By March 1999 this had become intolerable. Although Mr George suggested living in a caravan Mrs Szyczak was not willing to do that and they moved to rented accommodation. As things turned out they remained in rented accommodation and never returned to the property. It is Mrs Szyczak's case that she had at all times funded the rent and other outgoings of this accommodation and in fact counterclaimed for these costs to be reimbursed by Mr George. Mr George did not dispute that Mrs Szyczak had made the majority of the rental payments though he did provide evidence that he had paid at least two. Mrs Szyczak suggested that she had reimbursed Mr George for these two payments. The Counterclaim was abandoned by Mr Walker-Kane during the course of the trial. It had no legal basis in law. The decision to move out was a joint one. It was the common understanding of the parties that the cost of the alternative accommodation would be met by Mrs Szyczak. There is no basis for a claim for re-imbursement.[40]According to Mrs Szyczak things started to go wrong in late 1999 or early 2000. It was at that time that the arguments began. She describes Mr George as controlling and intimidating. He would explain what he wanted to do and not listen to any suggestions from her. He would be aggressive and verbally abusive describing Mrs Szyczak as "a moron", "brain dead". Accordingly Mrs Szyczak came to realise that the only thing to do was to agree with everything Mr George wanted. She also says that there were long periods of silence between them.[41]In late June or July 2000 Mr George completed a contract in Scarborough. He decided to give up paid work and to work on the property full time. There is a dispute as to whether this was a joint decision or was a decision made solely by Mr George. Mr George describes a conversation in which Mrs Szyczak agreed to pay the mortgage, the lion's share of the rent and the food shopping and he would work on the house. He could not remember precisely when this conversation took place. However there was no discussion at this time about his obtaining a share in the house. The only discussion was the one already described in late 1997 or early 1998.[42]Mrs Szyczak accepts that she was paying the outgoings. She also accepts that there was a conversation when he gave up work. My note of her evidence reads: We were at the house. He was in the back garden. He was looking at the house He said I am not going back to work until I have finished this. He said it would be about 6 months. I was elated. I thought I am going to get my home back and I am going to get back to normality.[43]By about August 2000 Mrs Szyczak had run out of money. I shall in fact deal with the financial position in more detail below. According to her she suggested to Mr George that she borrow money from the building society but he was unwilling to do this and, according to Mrs Szyczak, it was at this stage that Mr George started to pay for the materials. [He also provided materials to the value of £1,493.86 free of charge. These materials were received as a result of the insolvency of the employer in the Scarborough contract]. Mrs Szyczak accepts that these payments went on until April 2002 and that Mr George spent a total of £11,322.63 on materials.[44]In October 2001 Mrs Szyczak applied to Nationwide Building Society for a flexible advance secured on the property. Included with the application was a letter signed by Mrs Szyczak setting out 18 items of work that had been carried out and a further 12 that still needed to be done. The list comprised: Roofs (to include replacing new felt to main house roof) 1,700.00 UPVC windows and doors 4,500.00 Rendering dash 1,000.00 Pointing - house extension chimney 1,100.00 Wiring 1,000.00 Central Heating 2,500.00 Full replaster 3,000.00 Staircase 1,250.00 Casings internal doors skirting and architraves 1,500.00 Kitchen 5,000.00 Bathroom 3,500.00 En suite 2,500.00 28,550.00[45]Mrs Szyczak agreed that she had written this letter. She said that he figures had been provided by Mr George. In any event it is common ground that she was offered a flexible loan of up to £30,000 which was secured on the property. In evidence Mr George agreed that there were no discussions at this time about putting the property in joint names. He said he regarded himself as being jointly liable for the loan and if anything had happened he would have felt morally bound to contribute. The loan was however made solely to Mrs Szyczak. Mrs Szyczak drew down from the loan and made payments for materials thereafter.[46]Work continued on the property after the loan. According to Mrs Szyczak she continually asked Mr George when it would be finished. Not all of the work was done by Mr George. As already noted he was assisted by members of the family. Edward is now a joiner; Ben is a plumber. An electrician was employed to do the first fix electrical work; a stonemason or other builder was employed to help with the kitchen extension. Between 2002 and 2003 Edward worked full time on the property for a period of about 12 months.[47]Mrs Szyczak (supported by her son Edward) blames Mr George for the delays in completing the work. She accepts that she was in agreement with the work to start with. She also accepts that the job grew and that she approved the variations or at least most of them. She also accepts that the quality of workmanship was high. However she describes Mr George as obsessional and a perfectionist. He took too long to make decisions. She cites as an example the time spent in deciding which windows were to be bought. He also required to be redone work which was perfectly adequate. In the result the work was never completed and she never got her house back.[48]The length of time that the work was taking took its toll both financially and mentally on both Mrs Szyczak and Mr George. The arguments continued. The parties separated in November 2004. Mrs Szyczak alleges one or two incidents of physical violence by Mr George. There were no discussions at this time as to the ownership of the property[49]The parties finally separated in November 2006. By this time Mrs Szyczak had borrowed money from friends and relations. Mr George had borrowed moneys from his mother. Mr George wanted to continue the works after the separation but Mrs Szyczak would not let him.[50]It is common ground that substantial work was still needed at the time of the final separation. There is some dispute as to the extent of the work. When he gave evidence Mr George said he estimated that there was about 6 months work remaining.[51]The property was sold by Mrs Szyczak for £225,000 in July 2007. After repaying the mortgage the net proceeds of sale amounted to £193,571 4.8. Financing[52]Work on the property seems to have started at the beginning of 1998. At or about that time Mrs Szyczak commenced to keep records of the expenditure on the property. Those records were kept primarily in a ledger which was written up on a weekly basis. However Mrs Szyczak also kept the receipts which formed the basis of the information which went into the ledger.[53]According to the ledger Mr George made no contribution to the costs of materials until August 2000. Between August 2000 and April 2002 most of the materials were paid for by Mr George. Mrs Szyczak was cross-examined in some detail about the ledger. It was suggested that it was incomplete and there were other contributions not included. To a large extent Mrs Szyczak's evidence was unshaken. Mrs Szyczak made the point that Mr George was fully aware of the ledger and he provided her with much of the material that went into it. It was made up almost contemporaneously with the expenditure. She had book keeping experience and it was her evidence that it was an accurate record of expenditure on the property. A number of challenges to items on the ledger proved unsuccessful though Mrs Szyczak did agree that the 3 items of material received free of charge in the summer of 2000 had not been included.[54]Mr George presented a rather different picture. He made the point that he was working until June 2000 earning (as he said) more than Mrs Szyczak. He said he had £11,000 in cash in a safe. He has produced bank statements which show a credit balance of £5,105.77 in January 1997, £562 in December 1997, £20,000 in July 2000 and £627 in December 2001. He also says that he borrowed some £4,500 for his mother. In his witness statement he invited the Court to infer that the £5,000 from January 1997, the £20,000 from June 2000, the £11,000 cash savings and the £4,500 from his mother were spent either on the property or for the benefit of the family. He also made the point that he obtained materials at cost and in some cases provided them free of charge. Other than his bank statements Mr George has produced no documentary evidence in support of his assertions. He has not produced any accounts or Inland Revenue statements so that it is not possible to know what his business expenses were. It has to be remembered that on his own admission he made fraudulent claims for benefit when he was out of work. His bank statements reveal a number of other withdrawals such as BUPA. He plainly had outgoings in relation to his tenancy his shop and his van. He also was paying £20 per week to his daughter. 4.9. Expert Reports[55]Mr George employed an expert at the outset and exhibited his report to the Particulars of Claim. In that report the property was valued at the time of sale at £250,000. However that expert was not relied on by Mr George.[56]The jointly instructed expert – Mr Green reported on 29 th April 2009. In his report: 1. he assessed the value of the property in July 2007 at £175,000 (that is to say some £50,000 less than the price achieved by Mrs Szyczak) 2. he assessed the value of the property in 1996 at £55,000 (that is to say some £20,000 less than he asking price set by Whitegates and £17,500 less than the offer received by Mrs Szyczak) 3. he assessed the value of the property in 2007 if no work had been done as being £130,000 (thus valuing the increase in value as a result of the work at £45,000 (being £175,000 - £130,000)) 4. he assessed the cost of completing the work at about £50,000 and that the value of the property would then have been £225,000.[57]Mr Green did not in fact see the inside of the property. His valuation is based on a conversation with Mr Brown the new owner of the property. 4.10. Other Evidence[58]None of the other evidence was of great assistance in determining the extent or otherwise of any agreement between the parties. Zee George gave evidence of the relationship between Mrs Szyczak and Mr George. In effect she felt that Mrs Szyczak was very excited about the work until about 2 years before the relationship ended. She accepts that Mrs Szyczak complained then about how long it was taking. She also gave evidence about a conversation with Mrs Szyczak before the final parting when Mrs Szyczak referred to Mr George contributing about £20,000 towards the cost of refurbishment. She said that always pay him back. In cross-examination she said that Mrs Szyczak said she would pay back the cost of the materials and would try to pay back for some of the work he had put in.[59]Mrs Hammond's evidence was to the effect that Mrs Szyczak was actively involved in the work that was being carried out. She referred to the property as "our house". It was obvious to Mrs Hammond that it was their house. She agreed that after 7 years Mrs Szyczak ceased to be happy about the project. Both Mrs Szyczak and Mr George were under pressure financially. She also said in cross-examination that on more than one occasion Mrs Szyczak said she would sign the house over to both of them. This point was not put to Mrs Szyczak in cross examination and (in my view properly) not relied on by Miss Beer in her closing submissions.[60]Mrs Violet George confirmed she had lent her son £4,500 which had not been repaid. She also confirmed that she had lent Mrs Szyczak £1,400 and that it had been repaid following the sale of the property.[61]Edward Szyczak corroborated his mother's evidence about Mr George. He confirmed her evidence as to Mr George's manner. Jobs were to be done his way or not at all. He confirmed the obsessive nature of Mr George. He did not accept that as Mr George was the professional builder he would know if a finish was acceptable. He himself has 4 years shop fitting experience and knows the difference between an acceptable and a perfect finish. He thought Mr George's standards were too high and that delayed the work.[62]He confirmed the intimidating nature of Mr George. He never witnessed violence. He made the point that if he tried to challenge Mr George's view he would be abusive and would not speak. He described him as a very intimidating person when confronted. 5. The Law. 5.1. Constructive trust[63]There was little if any difference between Counsel as to the relevant law. The starting point of course is the fact that the property was vested in the sole name of Mrs Szyczak and that it is common ground that prior to late 1997 it is not suggested that Mr George had any interest in the property. The question of obtaining an interest as a result of improvements has been considered on a number of occasions by the Courts[64]In Bernard v Joseph [1982] 3 AER 162, 171 Griffiths LJ put the position thus: It might in exceptional circumstances be inferred that the parties agreed to alter their beneficial interests after the house was bought; an example would be if the man bought the house in the first place and the woman years later used a legacy to build an extra floor to make more room for the children. In such circumstances the obvious inference would be that the parties agreed that the woman should acquire a share in the greatly increased value of the house produced by her money. But this depends on the court being able to infer an intention to alter the share in which the beneficial interest was previously held; the mere fact that one party has spent time and money on improving the property will not normally be sufficient to draw such an inference.[65]In 2 recent cases – James v Thomas [2007] EWCA Civ 1212 and Morris v Morris : [2008] EWCA Civ 257 the law has been reconsidered. Paragraphs 19 to 21 of Sir Peter Gibson's judgment in Morris v Morris sets out the position thus: 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.[66]In these passages it is recognised that there may be cases where there is a post acquisition agreement to vary an existing beneficial interest. In such a case, as Lord Bridge pointed out in Lloyds Bank v Rossett [1991] 1 AC 107 at 132. 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 proprietary estoppel.[67]It is accepted by Mr Walker-Kane that if there was a post acquisition agreement as alleged by Mr George then Mr George's conduct in carrying out the work over the 9 year period from 1997 was more than sufficient to amount to a detriment or an alteration of position. Thus the questions that arise under the head of constructive trust may be summarised thus: 1. Can Mr George establish on the balance of probabilities that there was a post acquisition agreement as set out in his Supplementary Witness Statement. If not 2. s this one of those rare and exceptional cases where the Court can infer from their conduct that the parties shared intention was to grant Mr George a beneficial interest in the property 3. the assessment of any interest found to exist under either of these heads. 5.2. Proprietary Estoppel[68]In her closing submissions Miss Beer accepted that on the facts of this case the alternative allegation based on proprietary estoppel added little to the first head of the claim for a constructive trust. In particular she accepted that in order to found an estoppel she had to establish a representation that Mr George would acquire a beneficial interest in the property. She accepted that representation was precisely the same as the agreement she sought to establish under the first head of constructive trust. She accepted that if there was no such representation the claim for proprietary estoppel must fail. If there was the claim for constructive trust would succeed.[69]In those circumstances she agreed that it was not necessary to consider the claim for proprietary estoppel any further. 6. Post Acquisition Agreement[70]Whether there was a post acquisition agreement is ultimately a question of fact depending on the credibility of Mrs Szyczak and Mr George. As already noted the burden of proof on this issue lies on Mr George.[71]I had the benefit of seeing Mrs Szyczak and Mr George being cross-examined for approximately three-quarters of a day each. On the crucial question of the post acquisition agreement I preferred the evidence of Mrs Szyczak. There were a number of reasons for this: 1. the evidence of the post acquisition agreement emerged for the first time on the morning of the trial. There were hints of it in paragraph 17 of the Particulars of Claim but it was not set out in evidence until the Supplementary Witness Statement. I would have expected such a central area of Mr George's claim to have appeared in his principal witness statement especially as paragraph 42 of the witness statement was expressly dealing with the discussions in late 1997/ early 1998. 2. Mr George is a man who has admitted making dishonest and fraudulent applications for housing benefit and other benefits. Thus his honesty is questionable and his evidence has to be approached with considerable care. 3. In my view Mrs Szyczak's ledger supported by the receipts is a far more reliable guide to the expenditure on the property than the vague evidence of Mr George supported only by his bank statements and the assertion of £11,000 cash in the safe. If the ledger is correct it corroborates Mrs Szyczak's evidence that Mr George did not contribute financially to the costs of the improvements until August 2000 when Mrs Szyczak ran out of money. It was part of Mr George's case that he would financially contribute to the work. In fact he did not. This militates against the existence of the agreement as alleged by Mr George. 4. At the time of the alleged agreement there was no question of Mr George giving up work. All that was being proposed was that he would provide his labour and expertise at week-ends. He was to be assisted by other members of Mrs Szyczak's family. He was at that time in love with Mrs Szyczak. His actions are consistent with that love. Furthermore I agree with Mrs Szyczak that having acquired the property as a result of her husband's tragic death she was likely to think long and hard before she agreed to pass on part of her children's inheritance to a third party. She was at the time in a vulnerable state and, as she says, off work as a result of the depression. I think it inherently unlikely that she would have entered into the sort of agreement alleged by Mr George. 5. It is to my mind remarkable that if there was an agreement such as is alleged by Mr George it was not mentioned when he agreed to give up work in June 2000 or again in late 2001 when Mrs Szyczak applied for the £30,000 loan from Nationwide. If, as Mr George alleges, it was regarded as a joint loan why was the question of the interest in the house not raised at that point. Yet according to Mr George the only time the post acquisition agreement was mentioned was on the one occasion on the bench outside the outside in late 1997 or early 1998. 6. Mrs Szyczak was subjected to detailed cross-examination both as to the alleged agreement and to the financial payments that were made. She struck me as an impressive witness on these areas. She was prepared to concede points where appropriate. She accepted, for example, that the free issue materials were not included in the ledgers. She accepted that Mr George explained the things he said needed to be done. She was in my view impressive when answering questions over the ledgers and appeared to me to have quite good and honest recollection of what payments were made. 7. Mr George's approach seemed to me to be more blinkered. On an number of occasions he explained matters that he said he had explained to Mrs Szyczak and did not appear to accept that his view might have been wrong. I thought there was force in the criticism levelled at Mr George by both Mrs Szyczak and her son Edward.[72]It follows that the claim based on the post acquisition agreement fails. It also follows that the claim based on proprietary estoppel also fails. Mrs Szyczak never made any representation to Mr George that he had or would acquire an interest in the property. 7. Beneficial Interest implied from conduct[73]As I have already noted it requires an exceptional case for such an interest to be implied from conduct. Largely for the same reasons as I have set out above I am not satisfied that this is such an exceptional case: 1. As already noted any intention to be inferred by conduct has to be the joint intention of the parties. The intention of one of the parties - Mr George – is not sufficient. I am far from convinced that it can be inferred that Mrs Szyczak ever intended to grant Mr George a beneficial interest in the property 2. The factors pointing against inferring such an intention to my mind include: 1) The vulnerable state of Mrs Szyczak 2) The circumstances in which she acquired the property 3) The payments made solely by Mrs Szyczak between 1997 and 2000 for the materials 4) The fact that all the family were working on the property at the week-ends and that Mr George did not give up work until 2000. There were no discussions when he gave up work to indicate any change in his interest. 5) The fact that it was Mrs Szyczak who applied for the loan of £30,000.[74]It follows that I am not able to infer from conduct alone that the parties jointly intended that Mr George should have a beneficial interest in the property.[75]In those circumstances it is not necessary for me to attempt the by no means straightforward task of assessing the interest. 8. Conclusion[76]It follows that the claim fails and falls to be dismissed. As already noted the Counterclaim was abandoned and also falls to be dismissed.[77]I am conscious that there will be those – not least members of Mr George's immediate family – who may consider that the outcome of this case is not fair to Mr George. He did, after all, work on the property for the best part of 9 years and on any view his labour and skill have added to the value of the property. I have some sympathy with that view. There is little doubt in my mind that if Mrs Szyczak and Mr George had been married and there had been an application for ancillary relief the result would have been different. The Law Commission has reported in detail on the rights of cohabiting parties such as Mrs Szyczak and Mr George and made recommendations for a change in the law. As yet Parliament has chosen not to follow the recommendations. Thus as the law stands applications between cohabiting couples have to be determined on the basis of strict property rights. Ultimately in a case such as this the outcome turns on the intention of the parties and not what would be a fair outcome as between them.