Case Law Update – Wodzicki v Wodzicki

By Christopher McCauley

Wodzicki v Wodzicki [2017] EWCA Civ 95

The Background

The appellant and her children had, since its purchase in 1988, exclusively occupied a house (‘the property’) that was registered in joint names of appellant’s father (‘the father’) and his second wife. The father visited the property but never stayed there and the father’s second wife, the respondent, had never visited the property.

The appellant had been actively involved in the preparatory steps relating to the purchase of the property (for example, the survey report had been addressed to her) but the father had been named as the sole purchaser in the contract and the property was registered in the joint names of the father and the respondent. The funds used to purchase the property had been provided by a loan to the father and the respondent from a bank, in France, and had been secured by a mortgage against their jointly-owned property in France. The the loan was repaid in eight annual instalments and the respondent stated in her witness statement that she and the father had repaid the loan over its term.

At trial, the appellant provided evidence to show that between 2001 to 2007 she had spent £5,000 on improvements to the property and produced evidence of loans of larger amounts that were stated to be for home improvements. She also paid the council tax, utility bills and service charges.

In 2010, the father died intestate and the respondent suggested, in a letter, that if the appellant gave up any entitlement under French inheritance law the respondent would gift the property to her. However, this was not pursued by the appellant.

In 2013, the respondent commenced proceedings for possession. The appellant defended the action and counterclaimed; seeking a declaration that she had the sole beneficial interest in the property and averred that, in any event, by virtue of a promise made by the father, she had a life interest in the property.

The respondent’s solicitors came off record in March 2014 and her claim was struck out for non-payment of Court fees. The matter, therefore, proceeded on the counterclaim only. The respondent filed a witness statement but did not attend the trial and was not represented.

Decision at first instance

At first instance Her Honour Judge Faber held that, following the passing of the father, the respondent held the legal title to the property on trust for the appellant and herself. Further the learned Judge ordered an account to be taken, at a hearing before a District Judge, to determine the parties’ beneficial interests.

The learned judge’s order treated the father’s beneficial interest as having passed to the appellant in equity but, as Lord Justice Richards noted, the learned judge did not explain how this was achieved. Although it appeared to be suggested in the the trial judge’s judgment that this resulted from the father’s death which Lord Justice Richards noted was a conclusion that was “not self-evident as a matter of legal analysis.”

In reaching her decision, the learned judge accepted as fact that the father had agreed to transfer the property to the appellant when he had repaid the the mortgage and when he thought she was ready. In view of the fact that the mortgage had been repaid in 1996, but the father had not transferred the property to the appellant, the learned judge inferred that he must have thought that she was not ready to take sole ownership of it. The learned judge also found that there was no evidence that father had informed the respondent of his wish to transfer the property to the appellant or that she had agreed to this course of action.

Further, the judge found that the fact that the property was registered in joint names was evidence that he “intended his wife to be the joint owner and never made known to her expressly or impliedly that his daughter was to be the sole owner.” The learned judge also found that the respondent’s letter, in 2010, was consistent with a belief that the respondent had a beneficial interest in the property.

The appellant appealed seeking an order that she had the sole beneficial interest.[1]

Court of Appeal

On appeal, the appellant sought to advance the following arguments:

1. The learned judge should not have adopted a solution based on a resulting trust but should have instead followed the steps set out in Jones v Kernott;[2]
2.  The learned judge should have considered the evidence with a view to inferring an agreement as to the respective beneficial interests rather than imputing an agreement;
3. Stack v Dowden[3] disapproved of the adoption of a resulting trust in a non-commercial setting;
4. As the father and the respondent were joint tenants, the respondent was bound by the father’s promise because joint tenants share an indivisible share of the whole; and
5. The learned judge had failed to consider the appellant’s case that she had the sole beneficial interest by virtue of proprietary estoppel.

In a judgment delivered by Lord Justice Richards, with whom Lady Justice Gloster and Sir Stephen Tomlinson agreed, the Court of Appeal held that:

1. The appellant was not a registered proprietor of the property. The onus was, therefore, on her to establish that she had any beneficial interest in the property.
2. The findings of fact were clearly open to the judge on the evidence.
3. The judge made a finding on the evidence as to the actual intention of the parties. She did not impute an intention but rather the intention was one that she was able to infer, as a fact, on the evidence before her. Pursuant to this there was “no room to go to consider, essentially as a fall-back, the intention that may be imputed to the parties on a basis of fairness.”
4. Their Lordships accepted that the approach in Jones v Kernott “may be applied outside the precise confines of co-habiting couples, notwithstanding the terms of the judgments in that case.”[4] However, they held that this was not a case where the principles should be applied.
5. Their Lordships rejected the appellant’s argument that the respondent was bound by the father’s promise as they were joint tenants and therefore are to be treated indivisibly by the world at large. In rejecting the argument their Lordships stated “it is a startling proposition that the beneficial interest of one joint owner of a freehold property could be terminated without his knowledge by the other joint tenant” and that the argument gained no support from Hammersmith & Fulham LBC v Monk.[5]
6. In relation to the proprietary estoppel argument, their Lordships stated that proprietary estoppel requires “A to act to his detriment, to the knowledge of B, as a result of an expectation created or encouraged by B.” Pursuant to this their Lordships also rejected the proprietary estoppel argument as the appellant would need to establish that the respondent had knowledge of the father’s promise and the learned judge, below, had found that the respondent did not have the requisite knowledge.

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[1] The learned Judge also declared that the appellant had a life interest in the property and was entitled to occupation of it but there was no appeal of this declaration.
[2] [2012] 1 AC 776
[3] [2007] UKHL 17
[4]  For example, see Gallarotti v Sebastianelli [2012] EWCA Civ 865
[5] [1992] 1 AC 478