Nature of Co-Ownership
Resulting Trust Cases
W. v. W
[1981] I.L.R.M. 202
Finlay P.
This is an issue arising in certain proceedings brought by the plaintiff, who is the wife, against the defendant, who is the husband, pursuant to the provisions of the Guardianship of Infants Act, 1964, the Family Law (Maintenance of Spouses and Children) Act, 1976, and by order, the Married Womens Status Act, 1957.
The issue with which this judgment is concerned is solely confined to a claim made by the wife to be entitled to a beneficial interest in a farm of land registered on a folio in the name of the husband.
Upon this issue evidence was given by the wife and by an agricultural expert on her behalf but no evidence was given by or on behalf of the husband. [At this point the Judge recited the facts of the case and then continued] … I am solely concerned with the claim of the wife for an interest in the main holdings of land.
This claim was presented to me by counsel on behalf of the wife in two alternative and in a sense concurrent forms. It is firstly submitted that insofar as the transfer of the lands originally made to the husband was subject to encumbrances that on the evidence I should hold that the wife had contributed over the years both by her industry, by the bringing into the farm of her own personal savings on marriage and her share in the monies received by way of gift on the wedding; by bringing in her original bloodstock and working with them thus making income for the farm and by her actual work at the ordinary dairy portion of the farm to the general farm income out of which I should assume on the evidence those encumbrances were discharged and that that those facts gave her an interest arising from that transaction in the farm. A similar submission was made in regard to the evidence adduced by the wife that upon the building of the modern milk-parlour a further mortgage was raised on the farm and subsequently discharged and the sums of money brought in by her.
In addition and as I have said not only as an alternative but as a concurrent submission it is claimed on behalf of the wife that since she consistently worked on the farm both in relation to the dairying end of it and in relation to the bloodstock end of it that that work added to the general fund or income from the farm in each year and that insofar as that was used for the purpose of making improvements to the farm in particular represented by improvements in the buildings and yards etc., that that was a contribution by her towards the acquisition of the entity which now constitutes the farm as improved and that as such would give her a claim to an equitable interest in the farm.
In considering this claim on the facts as I have found them I have in particular been referred to and carefully considered the following decisions.
C v C [1976] IR 254
Heavey v Heavey (1977) ILTR 1
McGill v S. [1979] IR 238
From these three decisions, the two former of which are decisions of Kenny J whilst a High Court judge and the third of which is a decision of Gannon J and from the judicial decisions quoted with approval in them, I am satisfied that the following broad propositions of law arise which are applicable to the facts of this case.
1. Where a wife contributes by money to the purchase of a property by her husband in his sole name in the absence of evidence of some inconsistent agreement or arrangement the court will decide that the wife is entitled to an equitable interest in that property approximately proportionate to the extent of her contribution as against the total value of the property at the time the contribution was made.
2. Where a husband makes a contribution to the purchase of property in his wife’s sole name he will be presumed by a rebuttable presumption to have intended to advance his wife and will have no claim to an equitable estate in the property unless that presumption is rebutted. If it is, he would have a claim similar to that indicated in respect of the wife with which I have already dealt.
3. Where a wife contributes either directly towards the repayment of mortgage instalments or contributes to a general family fund thus releasing her husband from an obligation which he otherwise would have discharge liabilities out of that fund and permitting him to repay mortgage instalments she will in the absence of proof of an inconsistent agreement or arrangement be entitled to an equitable share in the property which had been mortgaged and in respect of which the mortgage was redeemed approximately proportionate to her contribution to the mortgage repayments: to the value of the mortgage thus redeemed and to the total value of the property at the relevant time. It is not expressly stated in the decisions to which I have referred but I assume that the fundamental principle underlying this rule of law is that the redemption of any form of charge or mortgage on property in truth consists of the acquisition by the owner or mortgagor of an estate in the property with which he had parted at the time of the creating of the mortgage or charge and that there can be no distinction in principle between a contribution made to the acquisition of that interest and a *205 contribution made to the acquisition of an interest in property by an original purchase.
4. Where a husband contributes either directly or indirectly in the manner which I have already outlined to the repayment of mortgage charges on property which is in the legal ownership of his wife subject to the presumption of advancement and in the event of a rebuttal of that presumption he would have a like claim to an equitable estate in the property.
5. Where a wife expends monies or carries out work in the improvement of a property which has been originally acquired by and the legal ownership in which is soley vested in ther husband she will have no claim in respect of such contribution unless she established by evidence that from the circumstances surrounding the making of it she was lead to believe (or of course that it was specifically agreed) that she would be recompensed for it. Even where such a right to recompense is established either by an expressed agreement or by circumstance in which the wife making the contribution was lead to such belief it is a right to recompense in monies only and cannot and does not constitute a right to claim equitable share in the estate of the property concerned.
6. A husband making contributions in like manner to property originally acquired by and solely owned as to the legal estate by his wife may again subject to a rebuttal of a presumption of advancement which would arise have a like claim to compensation in similar circumstances but would not have a claim to any equitable estate in the property. Applying these principles of law which I believe to be the relevant principles to be derived from the decisions to which I have referred to the facts as so far found by me in this case I am satisfied that the following conclusions and consequences arise.
Whilst the evidence of the wife concerning the encumbrances effecting the property when it was first transferred to her husband, was explicably without detail, it has not been contradicted by any evidence adduced on behalf of her husband nor was she in fact cross-examined about it. I must therefore conclude that such encumbrances did exist and were discharged after the transfer of the farm to the husband. A precisely similar conclusion arises with regard to her evidence as to the raising of a charge and its subsequent redemption at the time of the construction of the modern milking-parlour.
I will therefore direct that a further issue be tried before me as to: (1) the extent of the encumbrances subject to which the lands were transferred to the husband and the time at which they were finally redeemed together with the value of the lands at the date of transfer and at the date of the eventual redemption of these charges; (2) the amount of the charges raised by way of mortgage on the lands at the time of the construction of the milking parlour the value of the lands at the time that mortgage was created; the date on which they were eventually redeemed and the method by which they were redeemed and the value of the lands at the date at which they were redeemed.
In this context I intend of course to deal not only with legal mortgages but with any form of charge raised on the land whether secured by the equitable deposit of title deeds or othrewise.
Since the husband did not give evidence before me on the issues so far tried *206 and since he did not produce, at this or any other stage in the proceedings, any documentary evidence other than certain farm accounts which are irrelevant to this question I will direct that he make discovery of all documents relevant to the issue now still to be tried and I will give liberty to the wife if she is so advised to serve interrogatories on the husband concerning the transactions to which I have referred.
I am needless to say, concerned with the cost of the proceedings which have already been maintained between the husband and wife in this case and with the thought of imposing upon the parties further expense and costs. It seems to me that both discovery and interrogatories should be capable of being properly achieved without formality and that it might be possible for the parties upon full examination of the documentary proofs available to reach agreement on the extent of the share to which as a consequence the wife is entitled in these lands. If such an agreement cannot be reached I will, of course, re-enter the matter for further hearing at a suitable time.
To assist the parties in reaching an agreement which might avoid expense I feel I should indicate that it would be my intention from the evidence I have already heard to hold that the contribution of the wife during the two relevant periods in which prima facie charges on these lands were being redeemed would be approximately 50% which takes into account both her work, the monies brought in by her and in particular the results of her dealing in bloodstock. The proportion or share to which she should be entitled to be declared an equitable owner in these lands would therefore be half of the proportion represented by the amount of the charge redeemed and the value of the lands at the relevant time which would in effect be a combination of the value of the lands at the time of the raising of a mortgage and the value of the lands at the time when it was finally redeemed. This statement of my intention on the evidence already heard by me may assist the parties to reach an agreement as to a share in respect of which the wife is entitled to claim in these lands. Insofar as the wife has claimed an equitable estate in these lands solely derived from her contribution to improvements I must on the authorities hold that it is not sustainable in law.
Stanley v Kieran
[2011] IESC 19,
Judgment delivered on the 7th day of June, 2011 by Denham J.
1. This case raises the query as to whether in all the circumstances there was a resulting trust, whether a presumption arose as to such a trust and, if so, whether the presumption was rebutted.
2. This is an appeal by James Stanley, the plaintiff/appellant, referred to as “the appellant” in this judgment, against an order of the High Court (Laffoy J.) made on the 30th July, 2007, in which the appellant’s claim was dismissed.
3. Mary Kieran, the first named defendant/respondent, is referred to as “the respondent”. River Properties Limited, the second named defendant/respondent, is referred to as “the company”.
4. The appellant brought proceedings claiming, inter alia, that he is the beneficial owner of lands and premises, referred to in these proceedings as “Brownsbarn House”. In the alternative, he sought a declaration that the respondent holds the issued share capital in the company on trust for him.
5. In the statement of claim it was stated that the appellant is a businessman and that he resides in Moscow. It was stated that the respondent is a nurse who resides or “formally” resided at Brownsbarn House. The company was described as a limited liability company registered under the laws of the British Virgin Islands.
6. Between the years 1983 and 1994 approximately the appellant and the respondent cohabited.
7. The High Court (Laffoy J.) delivered judgment in this matter on the 19th July, 2007.
8. The learned High Court judge explained that this was the second of three connected proceedings. The other two were the O’Connor proceedings: John O’Connor v. Mary Kieran and River Properties Limited (Record No. 2004/19479p); and the 2007 proceedings: James Stanley v. John O’Connor (record no. 2007/2451p). The common feature of the three actions was that they concern the ownership of issued shares in the company and of residential property in County Kilkenny. The residential property, Brownsbarn House, is registered on Folio 4444F of the Register of Freeholders, County Kilkenny. The company was registered as full owner on Folio 4444F on 8th August, 2000, but the High Court found that the evidence established that the transfer under which the company acquired the lands from the previous registered owner was dated 12th January, 1990. These proceedings were registered as a lis pendens on Folio 4444F on 30th January, 2001. The O’Connor proceedings were also registered as a lis pendens on Folio 4444F on 22nd December, 2004. These proceedings were further registered as a lis pendens on the lands registered in Folio 18341F, County Kilkenny. The respondent was registered as owner of the lands the subject of that folio on 15th April, 1999.
9. The O’Connor proceedings were heard on 1st May, 2007. The respondent appeared in person, there was no appearance by or on behalf of the company. The High Court gave an ex tempore judgment, making the following orders:-
“(i) a declaration that the plaintiff, John O’Connor, had exercised the option, which the [respondent] granted to him on 17th September 2004, for the purchase of the shares held by [her in the company.] at the price of €1,600,000; and
(ii) an injunction until further order restraining the [respondent] by herself, her servants or agents, from disposing of, charging or otherwise dealing in the shares held by her in the [company.]”
10. The 2007 proceedings, as they were described by the learned High Court judge, in broad terms address issues of priority as between John O’Connor and the appellant. The learned High Court judge stated, on 19th July, 2007, that they remained to be heard.
11. In these proceedings, while the statement of claim was more broadly drawn, at the hearing in the High Court the reliefs pursued by the appellant were:-
(a) a declaration that the appellant is the beneficial owner of the lands registered on Folio 4444F and Folio 18341F, County Kilkenny;
(b) further, or in the alternative, a declaration that the respondent holds the issued share capital in the company in trust for the appellant;
(c) a mandatory injunction directing the respondent and the company, their servants or agents to transfer the lands registered in Folio 4444F and Folio 18341F of the Register of Freeholders, Co. Kilkenny, to the appellant and to execute all documents necessary to effect such transfer; and
(d) further, or in the alternative, a mandatory injunction directing the respondent to transfer all the shares held by her in the company to the appellant.
As regards the relief claimed at (a) above, counsel for the appellant submitted to the High Court that the basis of the claim was that the company has at all times held the lands on a resulting trust for the appellant personally. As regards the relief claimed at (b) above, the basis of the claim was that the respondent held the shares in the company in trust for the appellant.
12. The High Court (Laffoy J.), in a reserved judgment delivered on the 19th July, 2007, set out details of the background to the case. This judgment may be seen in full on www.courts.ie.
13. Very briefly, the appellant claimed that he purchased Brownsbarn House in late 1989. The property was conveyed to the company, the share capital of which is registered in the respondent’s name, and held in trust for him. There were subsequent improvements to the property, all financed by him. In December, 2000 the appellant requested the respondent to join with him in steps to mortgage Brownsbarn House. She refused. It appears she intended to dispose of the property without reference to him. Until May, 2006 there was a solicitor on record for the respondent and the company in the proceedings. The respondent discharged the solicitor in May, 2006. Later, on 6th November, 2006, the solicitor was declared by the High Court to be no longer acting for the company and was allowed to come off record. There were a series of matters pleaded in the defence, including that it was denied that the appellant purchased any of the properties referred to in the statement of claim in the name of the respondent and/or the company in trust for him. It was pleaded that the appellant was estopped by reason of his conduct and representations from asserting or claiming any ownership or beneficial interest in Brownsbarn House; specifically that the appellant was estopped by reason of the express agreement between him and the respondent that, in consideration of the respondent living with him as his common law wife and personal assistant in his business affairs, she would be entitled to the sole and exclusive beneficial interest in the said house and lands. It was also denied, inter alia, that the house and lands were purchased by monies provided by the appellant.
14. The learned High Court judge detailed the course of the hearing in the High Court; how it advanced initially in the absence of the respondent due to her refusal to attend, how the respondent returned to the courtroom and testified; and how she left during her cross-examination by counsel for the appellant and before it was concluded. She did not return at any time thereafter. The learned High Court judge pointed out that in reality the company was not represented at the hearing.
15. The High Court held that the appellant had provided the entire consideration for the acquisition of Brownsbarn House and lands, and that he had also provided the money to purchase the lands in Folio 18341F. The High Court held that these facts, in the absence of a contest as to what the appellant intended in purchasing the properties in the names of the respondent and the company, give rise to the presumption of a resulting trust in favour of the appellant. Further, the High Court held that, in the case of a contest, the onus of rebutting that presumption would normally lie with the person asserting that the presumption did not apply, in this case the respondent and the company. The High Court held that they did not discharge that onus, that there was no appearance for the company, and that the respondent did not participate properly in the proceedings.
16. The learned High Court judge went on to hold:-
“However, the evidence of the [appellant] goes beyond merely establishing that he provided the purchase money. The issue the court has to address is whether the evidence raises questions about the [appellant]’s intentions as to the beneficial ownership of Brownsbarn House when it was acquired in 1989 and the beneficial ownership of the shares in the [company]. In my view, it does.
First, there is the evidence as to the acquisition of the Lower Mount Street apartment in the name of the [respondent]. The [appellant’s] case is that the entire purchase money was indirectly provided by him out of the proceeds of the sale of the Dalkey apartment. On the [appellant’s] own evidence, a resulting trust in his favour would have arisen in relation to that property, subject to the life interest he testified he intended to confer on the [respondent]. Nonetheless, after they separated, he allowed the [respondent] to sell the apartment and retain the entire proceeds of sale. It may be that the [appellant] took a pragmatic view and decided that there was no point in pursuing the [respondent] for his share of the proceeds of sale. Alternatively, it may be that the [appellant] desisted from pursuing the [respondent] out of generosity towards her. The history of the Dalkey apartment and the Lower Mount Street apartment was introduced to give the full context of the [appellant’s] relationship and dealings with the [respondent]. However, it does raise a question mark about the intentions of the [appellant] in vesting property, which he had paid for, in the sole name of the [respondent].
Secondly, the ten year delay in registering the lands registered on Folio 4444 F in the name of the [company] raises questions. On his own evidence, the [appellant] appeared to be unaware of the delay. He claims to be the beneficial owner of the issued share capital in the [company], yet he appears to have had no involvement whatsoever, either directly or indirectly through solicitors acting on his behalf, in the perfection of the title of the [company]. He apparently has not investigated the delay in registration and he cannot explain it.
Thirdly, the element of control which the [appellant] gave the [respondent] over the property and the title deeds is not consistent with the [appellant’s] claim to be the beneficial owner, through the medium of the [company], of Brownsbarn House. According to the folio, the land certificate in relation to the folio issued to the solicitor formerly on record for the [respondent] in these proceedings in 2006. On the basis of the [appellant’s] evidence and the public record, the [appellant] allowed the [respondent], as the sole registered proprietor of the shares in the [company], free rein to dispose of and encumber the lands registered on Folio 4444 F until the lis pendens was registered on 30th January, 2001.
Fourthly, and most significantly, the [appellant] adduced no documentary evidence of the legal or beneficial ownership of the issued shares in the [company] and the only evidence led as to the beneficial ownership was what he testified he told Susan Neill in 1989 and what he told Susan Neill and the [respondent] in 1995. In the O’Connor proceedings a share certificate in relation to what I understand to be the only two issued shares in the [company] was put in evidence. That share certificate showed the [respondent] as the owner of the two issued shares on 8th March, 1999. It was sealed in the presence of Susan Neill, as a director of the [company]. Presumably, the company law code of the British Virgin Islands requires the maintenance of registers of members of the company and the making of returns. It must be assumed that the [appellant] could have adduced documentary evidence to corroborate his contention in relation to the ownership of the shares, for example, a change in the registered ownership from Susan Neill to the [respondent] in 1995. Additionally, his agent in Jersey, presumably, could have given comprehensive evidence about the incorporation of the company, its membership and officers at material times and so forth. The fact that the court has only the [appellant’s] word as to the ownership of shares in a limited company incorporated in a foreign jurisdiction is wholly unsatisfactory.
Fifthly, there is the curious fact that the lands registered on Folio 18341 F, which were acquired in 1999, some four years after the relationship of the [appellant] and the [respondent] had terminated, and which the [appellant] testified were of strategic importance in terms of the development of the lands registered on Folio 4444 F, were acquired in the name of the [respondent], and not in the name of the [company]. That is not consistent with the [appellant’s] explanation for the acquisition of the lands registered on Folio 4444 F in the name of the [company], which was that he was treating the acquisition as an investment because of the development potential of the lands. One would have assumed that the acquisition of contiguous land of strategic importance would also have been taken in the name of the [company].
Finally, there is the proposed settlement in 2003. The [appellant] did give an explanation as to why he was prepared to forgo his claim to Brownsbarn House and lands for a fraction of its value: because he wanted funds to participate in the Russian venture. However, as with the evidence that the [respondent] was allowed to retain the entirety of the proceeds of the sale of the Lower Mount Street apartment, the fact that he wanted to settle on that basis raises questions about what his intentions were in relation to the beneficial ownership of Brownsbarn House when it was purchased.
Leaving aside the question of the conduct of the [respondent] in relation to these proceedings and the absence of the [company], the question for the court is whether the foregoing factors, all of which arise from evidence adduced by the [appellant], separately or in aggregate, raise doubts as to whether the intention of the [appellant] in 1989 was to secure the beneficial ownership of Brownsbarn House to himself by holding it in the name of the [company] and through the beneficial ownership of the shares in the [company]. The combination of those factors suggests to me that, as a matter of probability, the [appellant] intended to benefit the [respondent]. The conduct of the [respondent] rendered these proceedings unsatisfactory. Counsel for the [appellant] acknowledged that, but submitted that it was a factor which was not to be held against the [appellant]. While that is so, it is the [appellant’s] evidence which has raised the questions as to his intentions as to the beneficial ownership of Brownsbarn House.
At the insistence of the [appellant] this case proceeded in the absence of the [company]. The failure of the [appellant], to adduce any evidence of the current incorporated status of the [company], its membership and directors and officers, whether its assets are charged and so forth is difficult to comprehend. If the [appellant] is the beneficial owner of the [company], as he contends, he must surely be in a position to adduce satisfactory evidence of that fact.”
The appellant’s claim was dismissed.
17. The appellant filed a notice of appeal submitting that the learned High Court judge had erred in law or in fact or in a mixed question of law and fact. While there were seven grounds in the notice of appeal, in the written submissions it was stated that they could be reduced to two submissions. These were:-
(i) It was not open to the learned High Court judge to make the inferences and findings against the appellant in circumstances where his evidence was not challenged at the hearing and he had no opportunity to meet the case found against him; and
(ii) That there was insufficient evidence to rebut the presumption that Brownsbarn House (on both folios) was held by the respondents by way of resulting trust in favour of the appellant (as were the two shares in the company, held by the respondent.)
Submissions
18. Written submissions were received from the appellant and the respondent.
19. In the written submissions on behalf of the appellant it was submitted that, in the absence of any challenge by way of cross-examination of the appellant’s evidence, it was not open to the High Court to make any finding adverse to the evidence given by the appellant. Two reasons were given: (a) in the absence of any challenge to his evidence, the appellant’s evidence stood at the conclusion of the hearing as the only direct evidence and that, not having been put in doubt, it could not then be displaced by mere inferences; and, (b) as a matter of fundamental fair procedures, the learned High Court judge was not entitled to take into account any doubts or make adverse inferences where the matters in question had not been put to the witness. It was submitted that it was not open to the High Court to reject the appellant’s evidence. Alternatively, if this Court found it was open to the High Court to enter into a consideration as to whether there was any reason to question the appellant’s evidence, it was submitted that the conclusion reached by the High Court should be reversed. The submissions also considered the inferences drawn by the learned trial judge.
20. Written submissions of the respondent were received. The first set of submissions referred to the appellant, Bula Resources and oil fields and other matters which are not relevant to the issues in this appeal. A second set of submissions was received in court at the opening of the hearing. The Court adjourned for a period so that counsel for the appellant could read the submissions and decide if he wished to make any application. On his return counsel for the appellant informed the Court that he had read the submissions; that they raised new issues; and that the High Court had heard and determined the case on the issue of a resulting trust. He asked the court to proceed with the appeal as there had been many delays in the case.
21. This case was heard and determined in the High Court on the basis that the issue to be determined was whether there was a resulting trust in favour of the appellant. In the new submissions filed on behalf of the respondent at the hearing of the appeal it was stated that the case raised the question as to what principles of law determine the rights of cohabiting partners to property purchased during their relationship. The submissions considered the correct approach to determine the property rights of cohabitants and the issue of proof of a witness. It was submitted that the presumption of a resulting trust was the incorrect starting point for an analysis of the respective interest of property purchased by the cohabitants. Reliance was sought to be placed on the House of Lords decision Stack v. Dowden [2007] 2 AC 432. Also, the submissions addressed the issue of proof of a witness, and it was stated that regardless of whatever presumptions the law might apply in a particular case, the onus is on a party to prove his case. In this instance the respondent contended that the appellant had failed to prove his case. In particular, the appellant’s reliance on oral testimony in light of the lack of documentary evidence put forward in support of his case was, it was claimed, fatal to the contentions he made.
Pleadings
22. The plenary summons is drafted as a claim that the appellant is the beneficial owner of property. The defence filed is in the form of generally denying the claim of the appellant and asserting that the respondent owns the stated properties. It was denied that the appellant provided the monies for the purchase of Brownsbarn House, or provided funds for its improvements. It was claimed that the appellant was estopped from claiming beneficial ownership in Brownsbarn House. In paragraph 14 of the defence it was pleaded:-
“The [appellant] is further estopped from asserting or claiming the alleged or any ownership or beneficial interest in the aforesaid Brownsbarn House and lands by reason of the express agreement between the [appellant] and the [respondent] that in consideration of the [respondent] living with the [appellant] as his common-law wife and personal assistant in his business affairs, the [respondent] would thereafter and irrevocably be entitled to the sole and exclusive beneficial interest in the said house and lands. The said agreement was affirmed and fully implemented by the [appellant] when he terminated the relationship between the [respondent] and himself in or about the year of 1989.”
Absent from Court
23. However, as referred to in the judgment of the High Court, the respondent knew the case was proceeding but absented herself from the first day of the proceedings, returned to court on the second day, but left before her cross-examination had concluded. She stated that Brownsbarn House was her house. She repeatedly said these proceedings were about other matters. As the respondent left during her cross-examination the learned High Court judge disregarded her evidence.
24. While the learned High Court judge was entitled in law to disregard the evidence of the respondent, it is notable that the respondent merely asserted that she owned Brownsbarn House but gave no evidence of any express or other agreement with the appellant, that, in consideration of her living with him as his common law wife and personal assistant, she would be entitled to be the sole beneficial owner of the said house and lands, or that any such agreement was affirmed or implemented.
25. Thus issues on the status of cohabitee were not determined by the High Court. This is an appellate court which is hearing an appeal from the decision of the High Court. A new case cannot be pleaded and submitted at this stage in this Court. Consequently, the issues for determination arise out of those matters heard and determined by the trial court.
26. The fundamental issue before the Court is whether the respondent and the company hold Brownsbarn House in a resulting trust for the appellant. This question requires to be determined on the evidence given in the High Court.
Law
27. The law as to the nature of a resulting trust is stated clearly in Delaney, Equity and the Law of Trusts in Ireland: 4th Ed., (Dublin, 2007), starting at p.135. It is described as:-
“Resulting trusts can be said to arise by implication and are founded on the unexpressed but presumed intention of the settlor.”
The traditional approach has been to find the real intention of the settlor. However, as Delaney points out at p.136, there has been some modern analysis. Dr. Chambers, Resulting Trusts (1997), at p.2, reached a conclusion that:-
“All resulting trusts come into being because the provider of property did not intend to benefit the recipient.”
Following that analysis in Twinsectra Ltd v. Yardley [2002] 2 AC 164, at 190, Lord Millett stated:-
“The central thesis of Dr Chambers’s book is that a resulting trust arises whenever there is a transfer of property in circumstances in which the transferor (or more accurately the person at whose expense the property was provided) did not intend to benefit the recipient. It responds to the absence of an intention on the part of the transferor to pass the entire beneficial interest, not to a positive intention to retain it.”
However, it is not necessary to consider any complex academic analysis in this case. The claim was fought in the High Court and in this Court on the basis that there was a resulting trust, in that the property belonged to the appellant and that he did not intend to benefit the recipient. There was an absence of intent by the appellant to pass the beneficial interest.
Presumption
28. There is a presumption that the provider of funds for the purchase of the property is the beneficial owner. As stated in Delaney at p.161:-
“… where a person provides the purchase money for property, whether real or personal, which is conveyed or transferred to another person or to himself and the other person jointly, it is presumed that the latter holds the property on a resulting trust for the person who provided the purchase money.”
Rebutted
29. The presumption may be rebutted. This may be done by evidence that the provider of funds intended to benefit the other party. Or, the presumption may be rebutted by the presumption of advancement; that, however, does not arise in this case. The parties in this case were not husband and wife. The issue of their relationship as cohabitees was not an issue decided by the High Court.
30. Thus it is necessary to consider the evidence given in the High Court and to apply the applicable law on resulting trusts.
31. In the High Court the appellant was represented by solicitor and counsel. The respondent absented herself from the first day of the proceedings, and then left the court on the second day, during her cross-examination by counsel for the appellant. There was no appearance by or on behalf of the company.
32. The evidence before the High Court was essentially that of the appellant. On 1st May, 2007, the respondent left court when the High Court was giving judgment in the O’Connor proceedings. After she left, the hearing of this case was adjourned until 2nd May, 2007. The solicitors for the appellant were instructed to contact the respondent and inform her that the matter was proceeding on the following day. The respondent did not appear in court on 2nd May, 2007. The solicitors for the appellant had been unable to contact her. However, the appellant, who notwithstanding these proceedings is still in communication with the respondent, had travelled by train to Dublin and met her at Heuston Station shortly after 10.00 am, and told her the action was proceeding and encouraged her to attend, but she made it clear she did not intend to do so. The case proceeded in her absence, and in the absence of representatives of the company. On 2nd May, 2007, the High Court heard the evidence of the appellant and submissions on the law by counsel for the appellant, and a subpoena duces tecum was served on the Property Registration Authority to produce the instrument on foot of which the company was registered as owner on Folio 4444F. When the matter resumed on 3rd May, 2007, the respondent was in court. She was allowed to testify. However, during the course of her cross-examination by counsel for the appellant she refused to participate and she left the court. The witness from the Land Registry attended at 2.00 p.m. on 3rd May, 2007, and produced the relevant instrument.
33. The High Court reviewed the evidence received in oral testimony from the appellant, in the absence of the respondent, and which was not the subject of cross-examination. It was wide ranging evidence as to the relationship between the appellant and the respondent, the acquisition and sale of properties, the appellant’s work and travel.
33(i) In relation to Brownsbarn House, the appellant said he was looking for a summer place or country house in 1989. He purchased Brownsbarn House in 1989 because he thought it had development potential. He saw potential for resale. He paid IR£220,000 for it out of his own money. There was no borrowing in relation to the purchase. The respondent did not provide any part of the purchase money. Brownsbarn House was vested in the company as the appellant decided it would be more convenient to hold in it an offshore company. He asked his agent in Jersey to form an offshore company for him. Initially the two issued shares in the company were held by his agent in Jersey in trust for the appellant. The appellant gave evidence of improvements he carried out on the property.
33(ii) After the relationship between the appellant and the respondent ended in 1995, the respondent continued to live in Brownsbarn House; the appellant maintained personal items and clothing there.
33(iii) The appellant said that the lands in Folio 18341F County Kilkenny were acquired with his money. He gave evidence of the purchase of the additional property, Folio 18341F, County Kilkenny, in 1999; it was land originally acquired by Kilkenny County Council for road widening; the acquisition of this land was of strategic importance to the appellant as regards access to Brownsbarn House. The folio is in the name of the respondent.
33(iv) The appellant gave evidence that in 1995 he varied his instructions to his agent in Jersey, Sue Neill, in relation to the issued shares in the company. He told her that she was to hold the two shares for the respondent. He stated that he told the respondent that she was holding the shares on his behalf. This was done before the relationship ended. His explanation for this was that he feared litigation at that time from a Russian businessman, with whom he had provision dealings, and who knew of Brownsbarn House.
33(v) In 1998 proceedings were instituted by Bula Resources (Holdings) Plc against the appellant and Mir Oil Development Limited. In August, 1998 a Mareva type injunction was granted to Bula Resources (Holdings) Plc restraining the appellant from removing any of his assets within the jurisdiction out of the jurisdiction or from disposing of, transferring, charging, diminishing or in any way dealing with certain specific assets; including Brownsbarn House. The court gave liberty to the appellant’s solicitors to inform various persons, including the respondent. In December, 2000 the orders were discharged and the action against the appellant struck out. The appellant stated that the respondent was aware of the freezing order but did nothing to challenge it.
33(vi) The appellant gave evidence that he had tried to settle these proceedings with the respondent. A business opportunity arose with the Russian businessman previously referred to. The appellant stated that in 2003 he met the respondent and agreed to forego his claim on Brownsbarn House, he gave her a paper setting out his understanding of their agreement, it was a fax transmission signed by the appellant and dated 26th November, 2003; and transmitted to the respondent on 27th November, 2007. It provided that the appellant would give up his claim to Brownsbarn House in return for €450,000 to be paid by 1st December, 2004; if the sum was not paid by then the respondent would sell the property and the appellant would be entitled to €500,000 out of the proceeds of sale; the litigation was to cease; the lis pendens was to be lifted; and the agreement was to be “registered in court”. The appellant’s evidence was that the respondent did not reply to his fax of the agreement. Further, he stated that he met the respondent in August, 2004. He needed €1million for a deal. He struck a deal with the respondent; he said that their agreement was that she would give him €500,000 by the 1st November, 2004, and she would invest €500,000 in the venture, which she said she would borrow. However, the respondent did nothing.
34. The only other evidence given was the evidence of the official of the Land Registry who produced the instrument on foot of which the company was registered on Folio 4444F, County Kilkenny. The transfer to the company was dated 12th January, 1990. There was a delay of ten years in registering the transfer. The High Court held that “on the basis of the evidence, it is not possible to come to any conclusion as to the reason for the delay in registering the transfer”.
35. The High Court referred to the evidence of the respondent. As to why the property was put in the name of the company, the respondent’s evidence was that as the appellant had not obtained a divorce at the time and as she did not have a legal separation, the property needed to be purchased in the name of a company. She asserted that the property was always intended to be for her benefit and that the shares in the company are hers, as is Brownsbarn House and lands. The High Court pointed out that the appellant was not in a position to challenge the respondent on that assertion because she left the courtroom before he had an opportunity to cross-examine her on it. Of course, it should be noted also that the appellant was not cross-examined on his evidence.
Decision
36. This case turns on the question as to whether, on the evidence, the respondent holds Brownsbarn House in trust for the appellant.
Presumption arises
37. The evidence of the appellant was that he provided the money to purchase Brownsbarn House and the lands. There was no evidence contradicting that fact. Indeed the respondent agreed that this was so. The High Court held:-
“I am satisfied on the evidence that the [appellant] provided the entire consideration of IR£235,000 for the acquisition of Brownsbarn House and lands now registered on Folio 4444 F. In the absence of evidence to contradict the [appellant’s] evidence on this point, I also accept that he provided the purchase money to acquire the lands registered on Folio 18341 F. Those facts alone, in the absence of a contest as to what the [appellant] intended in purchasing the properties in the names of the [company] and the [respondent], would give rise to the presumption of a resulting trust in favour of the [appellant] in relation to the lands registered on both folios.”
I would affirm this finding. On the facts the presumption of a resulting trust in favour of the appellant arose.
Rebuttal
38. The next question is whether the respondent and/or the company rebutted that presumption. The company was not represented at the hearing and the sporadic attendance at the hearing of the respondent has been described. The High Court held:-
“In the case of a contest, the onus of rebutting that presumption would normally lie with the person asserting that the presumption did not apply, namely, the [respondents]. The [respondents] did not discharge that onus. There was no appearance for, or representation of, the [company] and the [respondent] did not properly participate in the proceedings.”
I would affirm the finding of the learned trial judge that the respondent and the company did not discharge the burden of rebutting the presumption. Thus the presumption of a resulting trust would stand, and so the appellant would be entitled to succeed on his claim.
39. However, the learned High Court judge took a further step and went on to consider the evidence of the appellant in detail. Counsel for the appellant submitted that it was not open to the learned High Court judge to draw inferences and make findings against the appellant in circumstances where his evidence was not challenged and he had no opportunity to meet the case found against him. Counsel initially submitted that where there was uncontested sworn evidence which was not the subject of cross-examination or conflicting evidence that then it must be accepted by the Court. Reference was made to Antoni & Anor v. Antoni & Ors [2007] UKPC 10 (26 February, 2007).
40. However, I am satisfied that the learned trial judge had a duty to act judicially, to hear and consider any evidence, to make determinations as to issues arising, including as to the credibility of witnesses, and to render a judgment on the case. The decision should be based on the evidence before the Court, and so would be limited by that evidence. I am satisfied that it was within the jurisdiction of the learned High Court judge to consider all the evidence given (which was essentially that of the appellant) and to make a determination thereon.
41. It was open to the learned trial judge to make a decision on the credibility of witnesses appearing before her. As the respondent did not stay for her cross-examination, the learned trial judge made no finding based on her evidence, quite correctly. The appellant gave oral evidence, but was not cross-examined on it as at the relevant time the respondent had absented herself from court. It was open to the learned trial judge to make a finding on the credibility of the appellant and of the evidence of the appellant. However, the learned High Court judge made no express finding as to whether or not she believed him.
42. The learned trial judge drew inferences from the evidence of the appellant. As the High Court made no express finding that the evidence of the appellant was not credible, it must be presumed to have been credible. In those circumstances this Court is in the same position as the learned High Court judge in the drawing of inferences from the evidence.
43. Thus the evidence of the appellant is the foundation for any decision. I will consider seriatim the six matters listed by the High Court, as quoted earlier in this judgment, and the inferences drawn from the evidence.
44. (i) First, there was the evidence as to the acquisition of the Lower Mount Street apartment, which was funded by the appellant, was in the respondent’s name, and of which the appellant gave evidence that he intended the respondent to have a life interest. However, after the separation he allowed the respondent sell the apartment and retain the entire proceeds of sale. The learned trial judge said that this raised a question mark about the intentions of the appellant in vesting property, which he paid for, in the sole name of the respondent.
On this property the appellant had agreed that the respondent could have the apartment for life but that if she predeceased him it would revert to the appellant. It was a specific agreement between them. I would differentiate the two situations – the apartment and Brownsbarn House. There was the express agreement that the respondent would have a life interest in the apartment. There was no such agreement as to Brownsbarn House. I would draw no inference from the agreement as to the apartment and the appellant’s intent in 1989 when he bought Brownsbarn House and stated that the shares of the company were held on trust for him. It seems to me that the learned trial judge erred in drawing any adverse inference from the matter of the apartment. It was a specific separate agreement and irrelevant to the issue of Brownsbarn House. Further, any adverse inference on this basis was contrary to the evidence of the appellant and without any express basis given for rejecting that evidence.
44 (ii) The second matter raised by the learned High Court judge was that the appellant was unaware of the ten year delay in registering the land in Folio 4444F in the name of the company. However, the appellant was out of the county for most of this time, no discovery was made by the respondent, and it transpired that the delay was due to getting s.45 consent. I am satisfied that there is no basis to draw an adverse inference on this matter.
44. (iii) Thirdly, the learned trial judge stated that the element of control which the appellant gave to the respondent over the property and the title deeds was not consistent with the appellant’s claim to be the beneficial owner, through the company, of Brownsbarn House. However, the element of control is consistent with property being transferred to another person in trust. The learned trial judge failed to give sufficient weight to the nature of the personal and business relationship between the parties, and to the fact that the shares were put in the respondent’s name in 1995. Also, there was a failure to give weight to the substantial amount of personal property belonging to the appellant that was kept by him at Brownsbarn House, even after the relationship with the respondent ceased.
44. (iv) The learned trial judge stated that fourthly, and most significantly, the appellant adduced no documentary evidence of the legal or beneficial ownership of the issued shares in the company, and stated that the only evidence led as to the beneficial ownership was what he testified he had told his agent, Susan Neill, in 1989 and what he told Susan Neill and the respondent in 1995. It was stated that his agent in Jersey could have given evidence about the incorporation of the company, its membership and officers. The learned trial judge stated further:-
” The fact that the court has only the plaintiff’s word as to the ownership of shares in a limited company incorporated in a foreign jurisdiction is wholly unsatisfactory.”
However, the respondent had taken control of the company (she had the shares registered in her name in 1999) and she failed to make discovery to the High Court. One wonders whether a person with no registered interest in a company could obtain information from the British Virgin Islands as to the ownership of the shares. The appellant did arrange the calling of a witness from the Land Registry when the learned trial judge expressed concern at the delay in registration. That evidence corroborated the evidence of the appellant. As the respondent held the two shares in the company, and did not cooperate with the Court, it does not seem that any weight could be put on this factor to draw an inference negative to the appellant.
44 (v) The fifth factor referred to by the learned trial judge was that the lands registered on Folio 18341F, which were acquired in 1999, some four years after the relationship of the appellant and respondent ended, were acquired in the name of the respondent. The High Court considered that this was not consistent with the appellant’s explanation for his purchase of Folio 4444F, in the name of the respondent, as an investment for development potential. The High Court stated that one would have assumed the acquisition of contiguous land of strategic importance would also have been taken in the name of the company. There was no direct evidence on this issue. It is true that irrespective of whether the appellant or the respondent was the beneficial owner of Brownsbarn House, it is an anomaly that the additional folio was in the name of the respondent. But the matter was not raised during the hearing. The appellant gave evidence that he purchased Brownsbarn House originally as a holiday home and for development, and that he purchased it in the name of the company. He gave evidence that when he purchased the additional folio he gave the respondent the money to acquire the lands, and that she acquired the lands in her name. This was after their relationship had ended. There is no doubt it could be a factor indicating that the entire property was hers, but a relevant factor also is the continuing good relationship between the parties and in this relationship the appellant has left the respondent to sort out this type of deal. It is a factor which has to be seen in the overall nature of the unusual ongoing relationship between the parties. I do not consider that it has any determinative weight.
44. (vi) The final matter relied on by the learned High Court judge was the proposed settlement in 2003. The appellant had given evidence that he was prepared to forego his claim to Brownsbarn House and lands for a percentage of its value because he wanted funds to participate in a Russian business venture. The learned trial judge stated that the fact that the appellant wanted to settle on that basis raised questions as to what his intentions were in relation to the beneficial ownership of Brownsbarn House when it was purchased.
On this matter the appellant gave evidence as to why he would settle, he wanted €500,000 for a Russian business venture and he needed the money urgently for that purpose. I find that explanation consistent with his evidence of his ownership of Brownsbarn House and with his wish for fast cash for a deal. After all, if the respondent was in fact the beneficial owner why would she have countenanced giving him €500,000? There was no reason why she should give him anything. In fact she did not respond to his suggestion as to a settlement. It is true that the respondent entered into an option agreement with Mr. O’Connor. However, that was evidence in another case to which the appellant was not a party. In this Court the respondent said that she would continue to help the appellant, and that she would have entered into the Russian deal also. However, all of that went sour.
I am satisfied that the evidence of the appellant that he would have taken €500,000 was plausible and consistent with his work and with his relationship with the respondent. He needed the money for a deal. I would not regard it as conduct undermining his claim that the respondent was not the beneficial owner. Indeed it is more consistent with the appellant being the beneficial owner.
I do not consider that the foregoing factors arising from the evidence of the appellant are such as to undermine his evidence that he paid for Brownsbarn House and lands, and intended it to be a holiday home and for development, and for good reason he had the property held by the company in a resulting trust for himself. While originally his agent in Jersey held the two shares in the company, in time these were transferred to the respondent, but he continued to be the beneficial owner.
45. There was no adverse finding as to the credibility of the appellant by the High Court. Yet there were inferences drawn by the High Court that in 1989 the appellant intended to benefit the respondent. It is equally open to this Court to draw or not to draw inferences from the evidence. Such inferences drawn by the High Court were contrary to the evidence, as the result of such inferences meant that the High Court reached a view contrary to the evidence of the appellant. The sworn evidence of a person, which was not subject to cross-examination, even in a situation where there is a lay litigant who has acted to frustrate the court proceedings, where the credibility of the person was not expressed to be in any doubt by the High Court either in court or in the reserved judgment, should not be discounted without reasons to the contrary and should not lightly be set aside by inferences. In this case the learned trial judge erred in setting aside the express evidence of the appellant, without stating that it was not credible, by inferences which do not carry any or any significant weight.
46. The appellant gave unchallenged evidence, not stated to be disbelieved, that he bought Brownsbarn House in 1989 with his money as a holiday home or for development, to be held by the company. This raised the presumption of a resulting trust. The onus was then on the respondent and the company to displace this presumption. This they did not do. While the learned trial judge was entitled to consider all the evidence, for the reasons given, I would not accord weight to the inferences drawn by the High Court. The inferences drawn by the High Court on the evidence of the appellant have little or no weight. They may indicate an unusual relationship between the parties. But the inferences do not discharge the onus or displace the presumption. Thus I am satisfied that Brownsbarn House is held by the company on a resulting trust for the appellant; that the respondent holds the shares of the company in trust for the appellant; and that the respondent holds the property in Folio 18341F in trust for the appellant.
47. For the reasons given, I would allow the appeal.
BM v AM
High Court, April 3, 2003
Judgment of Mr Justice Michael Peart delivered the 3rd day of April, 2003:
By Equity Civil Bill dated 4th April 2001, the plaintiff commenced proceedings in which she seeks the following reliefs:
1. An order for the sale of premises (hereafter referred to as “the premises”), pursuant to the Sections 3 and 4 of the Partition Act, 1868 as amended by the Partition Act 1876;
2. An order directing that all necessary accounts and enquiries be taken as to the rents and profits received by the defendant arising out of his occupation of the premises and leasing of same up to the date of judgment herein;
3. an Order assessing the amount of interest due to the plaintiff in respect of her share of the rents and profits from the premises;
4. An order for the division of the net proceeds of sale between the parties hereto in such proportion as to this Court may seem just and proper;
5. An order giving directions concerning carriage of sale and all ancillary directions;
6. Such further and other relief as to this Honourable Court shall seem fit;
7. The costs of these proceedings.
This matter came before the Circuit Court on 26th June 2002, and the learned Circuit Court Judge made an order that the premises be sold by public auction, and that the net proceeds be divided as to 40% thereof to the defendant, and as to 60% thereof to the plaintiff, and he made certain ancillary orders in relation to the sale. The learned Circuit Court Judge divided the net proceeds of sale in the way he did in order to take into account the rent received by the defendant for a number of years and also the costs of the proceedings. This appears from the Circuit Court Order dated 26th June 2002.
It is against this Order that the matter comes before this Court on appeal by way of re-hearing.
The background to the dispute between the parties arises against the following background facts.
The premises were built by Dublin Corporation in the 1940s, and thereupon the plaintiff’s parents went into occupation of the premises as tenants of the Dublin Corporation. They resided there until they each went to England in 1966 and 1968 respectively. Having moved into occupation of the premises, they raised their six children in the premises, including the plaintiff.
The plaintiff and the defendant were married in 1966. For the first couple of months after their marriage, they lived in other rented accommodation, but in 1966 they moved into the premises the subject of these proceedings, and lived there as husband and wife. It was upon her father’s leaving to seek work in England, that the plaintiff and her husband moved back into the premises. Her mother was living there on her own, and it seemed a sensible arrangement that the plaintiff and the defendant should cease renting separate accommodation and that they should move into the premises with the plaintiff’s mother.
The rent payable to Dublin Corporation was in the order of about £2 per week. The plaintiff did not work outside the home after her marriage, so that the defendant was the sole breadwinner. The arrangement apparently arrived at was that after they moved into the premises, the plaintiff and defendant would pay the rent to Dublin Corporation. It is a fact that being the sole breadwinner at all material times, the rent was paid from the defendant’s wages. The plaintiff gave evidence that it was she who actually paid the rent, but from her husband’s wages.
The plaintiff’s mother moved to England to join her husband in 1968.
The plaintiff and defendant had five children while living in the premises. Their first child was born in 1967, and the others were born respectively in 1968, 1970, 1978 and 1980.
In the early 1970s, perhaps around 1970/71, Dublin Corporation introduced a tenant purchase scheme, so that tenants could purchase the premises from Dublin Corporation. The plaintiff and defendant wanted to avail of this scheme, but the fact is that they were not the tenants themselves, and would not therefore be in a position to avail of the 30% discount on the purchase price which was available to tenants who had been in occupation as tenants for more than 10 years. It was therefore arranged that the premises would in fact be purchased by the plaintiff’s parents, but that the plaintiff and defendant would actually discharge the repayments under the Transfer Order. The plaintiff says that this way of proceeding was in fact suggested by an official of Dublin Corporation. At any rate, this arrangement was put in place, and the plaintiff’s parents were then recorded on the Land Certificate, City of Dublin, as full owners, subject to the charge on the folio in respect of the outstanding purchase monies.
It is of relevance to note at this stage that while in England, the plaintiff’s father, in 1977, made a Will with an English solicitor, in which he left the premises to the plaintiff and the defendant jointly. It is contended by the defendant that it was in fact the plaintiff’s father’s intention originally to leave the premises only to him, and not to the parties jointly. The plaintiff said in her evidence that her father was by nature rather patriarchal in his attitudes and would have automatically thought that the house should be in the husband’s name only, but that when she asked him to leave it to them jointly, he did so. It was put to the plaintiff in cross-examination that it was clear that her father had wanted to leave the house only to the defendant. The plaintiff did not agree and said it was just that her father thought in terms of property being in the husband’s name, because he was an old-fashioned type who thought like that. Indeed some corroboration for this can be gleaned from the terms of her father’s Will, which seems to be worded on an assumption that her father considered himself to be the sole owner of the premises, rather than merely a joint owner thereof with his wife.
The plaintiff said that when she asked him to leave it to both of them he did so willingly. She denied that her father had not wanted her to have any share in the house. This is of some relevance and I shall return to it in due course.
According to evidence given by Mr Seamus Foley, an official from Dublin Corporation (now called Dublin City Council), the purchase price at the time of this purchase was £2275. Allowing the discount of 30% (£682.50), this left a net purchase price of £1592.50. This sum was to be discharged over a period at the rate of £3.61 per week. These payments were discharged from the defendant’s wages, and the purchase price was finally discharged in the month of October 1996.
The next significant event occurred in 1981. In that year the plaintiff’s parents wished to return to Ireland and returned to live out the remainder of their lives at the premises. At that time the plaintiff and defendant were living in the premises with their five children, the eldest being at that time about 14 years old, and the youngest being about one year old. The available accommodation at the premises was inadequate to accommodate the plaintiff’s parents, and accordingly it was decided by all concerned that the best solution was to build on an extension to the premises for her parents. The cost of the proposed extension was between ten and eleven thousand pounds. This sum was raised by availing of a Grant from Dublin Corporation of about £3600, together with an additional loan from Dublin Corporation of £4000, the balance being contributed in equal amounts of about £800 (sterling) from each of four of the plaintiff’s siblings. The additional repayments resulting from the additional loan were discharged out of the defendant’s wages. This additional loan was in turn discharged on 28th February 1996.
The extension was duly completed in or about the month of March 1981, and the plaintiff’s parents moved back into the premises.
The plaintiff’s mother died in 1985.
The next significant event is that due to unhappy differences between herself and her husband, she left the family home in August 1989, and went to stay with one of her sisters in the Isle of Man. She left alone, leaving three of her children in the family home with the defendant. One of other two children was living with one of her sisters in England, and another with her sister in the Isle of Man. The plaintiff was not prepared to return to the family home unless the defendant vacated the family home.
The plaintiff says that during the first year after she left, she returned to Ireland on about six occasions, solely for the purpose of seeing her children. During the second year following her departure, it was more difficult to see her children for reasons which were not given in detail, but she instituted custody proceedings which resulted in her gaining custody of the children concerned. Following November 1992, her children lived with her in England. Since that time she has not returned to Ireland, and neither asked for nor received any maintenance from her husband. It appears that in 1995, the plaintiff obtained a Divorce in England from her husband.
She has been unaware of her husband’s domestic circumstances since 1995, but believes that he has been in a relationship with another lady since some time before her children left Ireland to live with her.
The plaintiff’s father died on the 27th July 1991. She came back for the funeral. In a document stated to be an affidavit answering the plaintiff’s Notice for Particulars (arising out of the defendant’s defence in these proceedings), the Defendant says that on the occasion of her father’s funeral, he and the plaintiff had a conversation described as follows by the defendant:
“I asked her what she intended doing about our family home as there was roughly another three years mortgage outstanding. In reply she said angrily that she was in love with the priest and was about to get divorsed (sic) and had no further interest in me or the mortgage and would prefer if I did not get in touch with her again. Therefore I had no contact with her until I heard from her solicitors in this matter.”
This conversation was put to the plaintiff in cross-examination, but she said simply that it did not take place.
In due course a Grant of Probate issued in respect of her father’s Will on the 28th November 1995 to Mr N. T., solicitor, as the lawfully appointed attorney of her brother, D.R.O’B. who resides in Spain. He is the executor named in her father’s Will. It appears that originally, her said brother had appointed the defendant to be the attorney for the purpose of extracting the Grant, but later Mr T. was appointed and proceeded to extract the Grant.
There was some delay in having the title to the premises altered to reflect the terms of the Will, but on the 11th May 2001, Mr T. wrote to the defendant sending him the necessary forms to be signed by him in order to have him and the plaintiff registered as joint owners of the premises under the terms of the Will. It is a fact that some weeks prior to this letter, the plaintiff had commenced these proceedings since she had not been able to obtain the defendant’s co-operation in the sale of the house. She was seeking the sale of the premises and an equal distribution of the net proceeds of such sale.
Correspondence with the defendant to this end had commenced as far back as 16th January 1996. This correspondence went on for some years without resolution, and these proceedings were then pursued in order to have the matter of the sale of the house resolved.
The plaintiff also called Mr P.M., a Private Investigator, who gave evidence of having been instructed by the plaintiff’s solicitor, to call to the premises in order to ascertain if in fact the defendant was living at the premises. Mr M. said that he had been a member of An Garda Siochana, but now operated a private investigation firm, M.I. Limited. He gave evidence of having called to the premises firatly on 22nd January 2000 and again on the 1st April 2001. He said he had called on another occasion, but had not made any note or record of that third call and could not therefore give any evidence other than in respect of the two dates mentioned. He said that on the 22nd January 2000, he called to the premises, and his report of that visit states that when he called there appeared to be three people living at the house, one male and two female, all appearing to be of oriental origin. Some short time later another man who appeared to be Irish emerged from a room off the kitchen. Mr M. said the foreign persons were very pleasant, and when he asked to speak to the defendant, he was told that he was not there, but one of them gave him the defendant’s mobile phone number. Mr M. also asked to speak to a R.T. but they did not know her, and appeared genuine about this. Mr M. says that a check of the premises revealed that a M. and J.T. were living there. Mr M. also says that he rang the house on several occasions in order to speak with the defendant but on no occasion was he there. He also could see no car at the premises that was registered in the defendant’s name.
In his report dated 26th January 2000, Mr M. says that the average rent in the area for a house of this kind would be in the order of about £850 per month. He says that he cannot say for how long the house had been rented out but that certainly it has been rented out to oriental people for the three years preceding his report.
Mr M. was cross-examined, and it was put to him that the fact that there did not appear to be a car outside the premises did not mean that the defendant’s car might not have been parked on the road, but not immediately outside the house. It was put to him that in fact this house does not have its own driveway in which a car could park, but Mr M. thought it had, but could not be adamant about that. He recalled seeing a motorbike in the driveway, but was sure that there did not appear to be a car outside or near the house, and he therefore was fairly sure that there was no car at or near the house which would belong to the defendant.
Mr M. confirmed in cross-examination that the electricity account with ESB was in the defendant’s name. In relation to M. and J.T. referred to in his report, Mr M. said it appeared from the Register of Electors that these names were shown as being of the address of the premises. He had not checked the Register himself, but someone had checked this for him.
In relation to his further visit to the premises on the 1st April 2001, Mr M. provided a report dated the same day, in which he states that when he called to the premises on that date, he spoke to a young woman who said that she had rented the house from the defendant. He asked to speak to the defendant, but the lady said that he did not live there. She said that he called regularly and would be there in fact on the following day. The lady asked for Mr M.’s mobile phone number so that she could get the defendant to call him. Mr M. says that he asked for the defendant’s mobile number, but the lady declined to give it to him, but said she would ask the defendant to phone him. Mr Mullin said that it did not appear that there was any other person living at the house, and that there was no car in the driveway.
This report also states that on the same date he called to a premises in Dublin city, which I understand to be a house owned at the time by Ms. R.T., the defendant’s current partner. His intention was to see if the defendant was residing at that address. However, he established only that there was a lady named W., and that there was no record of the defendant ever having lived there. He also states that neighbours from whom he had made enquiries did not know the defendant.
The defendant delivered a Defence to these proceedings on the 14th May 2001, and an Amended Defence on the 24th March 2002. In these documents the defendants accepts that D.A.O’B. and L.O’B. are the registered owners of the premises, but he denies that they are what is described in the Defence as “the official owners”, on the basis that it is the defendant who has at all times discharged the mortgages on the premises. The defendant claims that he is the official owner. The defendant also denies that on the death of L.O’B., the said D.A.O’B. became the sole legal owner. The defendant also denies Probate has been extracted to the estate of D.A.O’B. as he the defendant is challenging the contents of the Will. The Defendant in his amended defence denies that the plaintiff has or is entitled to any interest in the premises, either legal or beneficial. He also denies having let the premises, and asserts that at all times the premises have been his family home and sole residence. He claims to have an entitlement to the entire beneficial interest in the premises, or such proportion thereof as the Court shall determine. He asserts this on the basis that it has been he alone who discharged the rent and the mortgages on the premises, including the additional mortgage of £4000 obtained to construct the extension to the premises in or about 1981.
In his amended defence, the defendant also claims that the Partition Acts are unconstitutional and fail to protect the defendant’s rights pursuant to the Family Home Protection Act, 1976. At the commencement I ruled that this latter point was not one appropriate to be dealt with on the hearing of this appeal, being raised for the first time in the amended defence delivered on the morning of the commencement of this appeal. The Attorney General had been served with the required Notice under the Rules in relation to the constitutional issue, but having so ruled, I excused the Attorney General from further participation in this appeal.
Evidence on behalf of the defendant:
Ms. R.T. gave evidence that she has been the partner of the defendant for about 9 years. It would appear that her sister is married to the defendant’s brother, and that at some point after the plaintiff went to England, Ms. T. was asked to help the defendant in relation to minding the children who were then living with him, looking after the house. A relationship developed between her and the defendant in or around late 1992. At that stage it appears that she went to live in the premises along with her two children. Up to that time, however, she says she resided in her house in Finglas, and she says that the defendant resided at all times at the premises. She stated that the defendant had never moved into her house. She also said that the premises had never been rented out by the defendant.
In relation to the evidence that was given by Mr M. about finding tenants in the house, and the defendant not being there on the occasions he called, Ms. T. said that on those occasions they must simply have been out at the time. She said that the M. and J. T. who were in the premises were in fact brothers of hers who had come back for a short while from Canada after the funeral in Canada of a family member. They were not tenants. In relation to Mr M. saying that he found tenants of oriental origin in the premises, she said that she had never seen them there and that the house had never been rented out to anybody. In cross-examination, she also said she could not explain Mr M.’s evidence about tenants being on the premises.
The defendant’s brother, A.M. also gave evidence. He stated that he had resided in the United Kingdom since about 1983, but that he used to return to Ireland about twice a year and would stay with the defendant at the premises on those occasions. During the last five years or so, he has been returning more often, perhaps three or four times. On some of these occasions he would stay with the defendant, on others he would stay with another of his brothers. He said he had never seen anybody else living in the house, except the defendant, Ms. T. and her two children. He was not aware if the house had ever been let to tenants, but as far as he was concerned there had never been tenants there.
In cross-examination, the defendant said that while the plaintiff was still living in the premises, he had not stayed there when he came back to Ireland. He also said he had never visited Ms. T.’s house in Dublin, or stayed there.
The defendant gave evidence also. There is no need to set out all of the defendant’s evidence, as much of it simply conforms to the plaintiff’s evidence as to the history of them both coming to live with the plaintiff’s parents, and the arrangement whereby the premises were purchased from the Dublin Corporation, by the mechanism by which it would be done in the names of her parents, since they were the tenants ( and thereby also gain the benefit of the 30% discount on the purchase price), but that he would discharge the repayments to Dublin Corporation. There is not any relevant disagreement as to that transaction, except that the defendant says that he had a discussion with the plaintiff’s father and that her father told him that the house would be his (i.e the defendant’s). He also said that he was never aware that the plaintiff’s father had made a Will leaving the house to the plaintiff and defendant in their joint names.
The defendant also agreed that when it came to building the extension in 1981/82, an additional mortgage had been obtained in the sum of £4000, and that there was also a Grant given on the basis of the plaintiff’s mother’s illness. He disagrees however with the plaintiff’s evidence that four of her siblings each contributed £800 sterling towards the cost of the extension. He thinks it was more like about £800 or £1000 between the four of them.
The defendant also said in evidence that if he had been aware that the plaintiff’s father had made a Will leaving the premises to he and his wife jointly, he would have taken steps to try and change that situation. He said he would not have stayed there paying the mortgage, only to have nothing at the end of it. He said that it was not until he received a letter in 2001 from the plaintiff’s solicitors that he first became aware that the house was left to them jointly. He said that in the divorce proceedings which the plaintiff had commenced in England, there had been no mention of the premises. He was not aware that the plaintiff had a house of her own in England.
He stated categorically in his evidence that he had never rented out the house to anybody. In relation to Mr M.’s evidence about not seeing any car belonging to the defendant on the occasions when he called to the premises in January 2000 and April 2001, the defendant said that in fact he drives a van, and that it may have been parked elsewhere in the vicinity of the house, and that it was a small cul-de-sac and that there were often quite a number of cars parked along the road.
He also said that he had never resided anywhere other than in the premises.
Under cross-examination, the defendant agreed that the premises was the family home of his family and the plaintiff’s parents. He agreed that following the arrangements for purchase in 1971/72, it was the intention that they would reside there, and that on his death, the plaintiff would continue to reside there as her home. He reiterated that he had had a conversation with the plaintiff’s father to the effect that he would make the repayments and that the house would be his, and that the plaintiff’s father had not stipulated that anybody else would own the house. There was, he says, never any suggestion or agreement that the house would be jointly owned. He said that the house would be primarily his but his wife would reside with him, and that she would get it when he died.
The defendant says that by leaving the house to him and his wife jointly, the plaintiff’s father in effect reneged on his agreement with him that the house would be his alone. The defendant was referred to his Reply to Particulars (which is in the form of an affidavit for some reason), wherein he refers to having had a conversation with his wife at the time of her father’s funeral (a conversation which the plaintiff denies took place) in July 1991. The exact quotation from this document is set out earlier in this judgment. He was asked why, if as he contends, the house was his and that he was not aware of anything to the contrary until he received a solicitor’s letter in 2001, he was asking the plaintiff in July 1991 what she intended doing about the family home. He was in some difficulty in reconciling these matters.
He said that he may have stayed at his partner’s house in Dublin on a few occasions, prior to her moving in with him, but never moved into that house.
Legal Submissions:
Mr Roughan B.L made submissions first of all on behalf of the plaintiff. He said that there was not much dispute between the parties as to the relevant facts upon which this case fell to be decided. He said that it was the defendant’s case that there was a resulting trust in favour of the defendant resulting from the fact that it was he who had paid the rent and discharged the mortgage repayments on the premises. However, he said, this was not the case in fact, because the purchase price for the premises took account of a 30% discount on the price arising because of the fact that the plaintiff’s parents had been tenants for more than ten years. While he accepted that the defendant had paid the rent and the repayments, the fact was also that when the extension was built in 1981/82, a Grant had been received on account of the illness of the plaintiff’s mother, and there had been contributions from some of the plaintiff’s siblings. Even if there was a presumption of a resulting trust (which he submitted there was not), that presumption could be rebutted by evidence of the intention of the parties at the time, and he submitted that it was clear from the evidence, including the terms of the plaintiff’s father’s Will that he intended that the premises would be there for the benefit of both the plaintiff and the defendant. This he submitted was also evidence of advancement, and the Court was referred to the decision of Keane J. (as he then was) in the case of J.C.v. J.H.C. (unreported), 4th August 1982. In that case, the parties to the transaction were husband and wife, whereas in this case the parties relevant to the transaction are the plaintiff’s parents, and their daughter and son in law. In relation to the case Keane J. (as he then was) was dealing with, the defendant husband had put up all the money to purchase a house, and the property had been put into the joint names of the husband and his wife. At page 3 of the unreported judgment, Keane J. (as he then was) states:
“Where property is taken in the joint names of two or more persons, but the purchase money is advanced by one of them alone, the law presumes a resulting trust in favour of the person who advanced the money. This presumption may however be rebutted; in particular the circumstance of the person into whose name the property is conveyed being the wife of the person advancing the money may be sufficient to rebut the presumption under the doctrine of advancement.”
Shortly thereafter on page 4 of the unreported judgment, the learned judge continues:
“It is clear that the defendant intended the property to be jointly occupied by the plaintiff and himself during their lifetimes but also intended the legal ownership to devolve upon her if he predeceased her. It is quite plain that he intended to give it to her; and that accordingly the property has been held from the beginning and is now held by the plaintiff and the defendant on a joint beneficial tenancy.”
As I have said, this case is not on all fours with the instant case. It might be if the plaintiffs in the present case were Mr and Mrs M., and Mr and Mrs O’B. were defendants, in a claim by the former that the latter in whose name the premises were held, in fact held the premises on a resulting trust for former, since they had made all the payments to Dublin Corporation. However, that is not the case. Nevertheless, the case is of some assistance in relation to intention, but I will deal with that matter at the conclusion of this judgment.
Martin Hayden S.C. on behalf of the defendant submitted that questions about whether there was an advancement as a rebuttal to a presumption of a resulting trust did not arise in this case, since the property was in the names of the plaintiff’s parents.
In contending that there was a resulting trust in favour of the defendant arising out of the transaction in 1972 when he says the defendant alone in effect bought the premises, but in the names of the plaintiff’s parents, by discharging all the repayments to Dublin Corporation until their final discharge in 1996, Mr Hayden is relying firstly on a number of very old cases, namely Dyer v. Dyer (1788) 2 Cox Eq 92; In re A Policy No. 6402 of the Scottish Equitable Life Assurance Society (1902) 1 Ch. 282; and In the Matter of John Slattery (1917) 2 IR 278. It is unnecessary for me to deal individually with these cases, save to say that they endorse the accepted principle, referred to by Keane J. (as he then was) in J.C. v. J.H.C. to which I have already referred, wherein the learned judge stated that where property is taken in the joint names of two or more parties, but the purchase money is advanced by one of them alone, the law presumes a resulting trust in favour of the person who advanced the purchase money, a presumption which is capable of rebuttal under certain circumstances, such as, inter alia, advancement or gift. This principle is also set out clearly in Hilary Delaney’s work, Equity and the Law of Trusts, 2nd Ed. at pages 156-157.
Mr Hayden also submits that the alleged contribution to the cost of the extension should be seen by the Court as a buying out by those siblings of their obligation to provide for and assist their parents when they were in England, and not as a gift to the plaintiff to assist in the cost of the extension. He also points to the fact that it was the defendant who continued to look after the plaintiff’s parents until their deaths, after the plaintiff left to live in England. This is a factor, he submits, that ought to be taken into account in the defendant’s favour.
Mr Hayden also submitted that the plaintiff is now seeking to derive a benefit from delay on her part in bringing this claim for partition and sale. In this context he referred to R.F. v. M.F. (1995) 2 ILRM 572 wherein it was held by Henchy J. in the Supreme Court that the fact that the wife in that case had allowed eight years to pass before making any complaint that the transfer of the farm was oppressive or unfair was so tainted with delay as to be inconsistent with her claim that she had acted under undue influence when she executed a transfer of the property in question. That case is a case of undue influence, unlike this case, but Mr Hayden refers to it in relation to the delay on the part of the plaintiff in bringing these proceedings. I shall return to this question of delay in my conclusions.
He submits that in the event that the property is sold and the proceeds divided as the court may decide, the defendant is faced with current house market conditions, compared with those prevailing at and shortly after the death of her father in 1995. Again this is a factor, he submits, to which the court must have regard in exercising its discretion under the Partition Acts. He submits that at the very most, assuming the court decides that the plaintiff has any entitlement to any share in the premises, the plaintiff should be limited to the extent of 30%, being the portion represented by the discount in the purchase price when the premises were purchased from Dublin Corporation in 1972.
Mr Hayden submits that the Court must have regard to the fact that if the premises were to be sold and the plaintiff were to be found entitlement to a joint share in the premises, the effect is that the defendant would not be able to purchase an alternative premises from his share, given his age and present market conditions.
James Dwyer S.C. on behalf of the plaintiff, responded to Mr Hayden’s submissions. He summarised the facts, and submitted that it was clear that the plaintiff’s parents were the tenants of the premises prior to 1972, and that in 1971/1972 it was agreed among the family generally that the premises would be purchased from Dublin Corporation by the plaintiff and the defendant, but that for the reason given in evidence, the house would be bought in the names of the plaintiff’s parents. The fact was that the defendant was the only breadwinner in the marriage of the plaintiff and the defendant, and that it was obvious to all that it would be his wages which would be used to make the repayments. But that cannot be used to exclude the plaintiff from any beneficial interest in the premises, since to do so would be to go against the clear intention of all concerned that the house was being bought so that the plaintiff and defendant could live there with their children, and that on the death of either the plaintiff or defendant, the survivor would have sole ownership. He says that this clear intention is also corroborated by the provisions of the Will executed by the plaintiff’s father in 1977, and which remained unchanged until his death in 1995.
In this regard, Mr Dwyer referred to R.F. v. M.F. (supra) wherein it was held that the equitable doctrine of advancement, as applied to transactions between husband and wife, has the effect that when the husband, at least where the circumstances show that he is expected to provide for the wife, buys property and has it conveyed to his wife and himself jointly, there is a presumption that the wife’s paper title gives her a beneficial estate or interest in the property. Unless the presumption is rebutted by evidence showing a contrary intention on the part of the husband at the time of the transaction, he will be deemed to have entered into the transaction for the purpose of conferring an estate or interest on the wife.
Mr Dwyer submits that the Will speaks from the death of the plaintiff’s father and that from that time the plaintiff was entitled to be registered as joint owner with the defendant. Any delay from that date until 2001 cannot prejudice the plaintiff in his submission. In any event he submits that the defendant has not suffered any prejudice from any such delay, since he was well aware from 1995 that his wife and he had both been left the house under the terms of the Will, and that it was the defendant who had frustrated an earlier resolution of this matter due to his failure to cooperate in the registration by failing to execute the necessary documents when asked to do so by solicitors acting for the plaintiff.
Conclusions:
The first matter I am satisfied on based on the evidence I have heard is that in 1971 it was agreed between Mr and Mrs M., and her parents, Mr and Mrs O’B., that the tenant purchase scheme introduced by Dublin Corporation around that time, should be availed of and that the premises should be purchased at the price stipulated which took into account the discount to which Mr and Mrs O’B. were entitled due to the fact they had been tenants for the required period, which I believe to be not less than ten years. I am also satisfied that, be it correct or not, they were of the belief that this could be done only by the purchase being achieved in the names of Mr and Mrs O’B.
I am further satisfied that the purchase would be on the basis that the repayments should be made by Mr M., but on the basis that he and not Mrs M. was working, but that the intention of Mr and Mrs O’B. was that the house would be bought in this way so that Mr and Mrs M. would be the owners from the O’B.s’ point of view, even if Mr O’B. may have been of the opinion, being that sort of man, that Mr M. would be the owner. I have no doubt that even though he may have been of that view, it was not with a view to his daughter, the plaintiff, being excluded as an owner in any way that would deprive her of any beneficial interest in the premises. It is clear from the evidence that the intention was beyond any doubt that the premises would be the M.s’ family home and that on the death of Mr M., should that occur prior to Mrs M., that she would be the owner of the premises in due course.
Eventually, as we now know, Mr and Mrs M. separated. The reasons do not concern me, except to say that while the prima facie desertion by Mrs M. would, subject to any claim by her that such desertion resulted from any unreasonable behaviour on Mr M.’s part disentitle her from claiming maintenance, it could not, even on the version of events most favourable to Mr M., disentitle her to any pre-existing property rights, and in particular, to any interest she may have had in the premises.
As we know, Mr and Mrs O’B. passed away in the 1980s, Mr O’B. having executed a Will in England in which he left the premises to Mr and Mrs M. jointly. This is consistent with the fact that it was the O’B.s’ intention that the house was in effect being bought from Dublin Corporation, though in the names of the O’B.s, for the benefit of Mr and Mrs M.
It is the defendant’s contention now that since it was he who was discharging the repayments, and did so until all monies had been repaid, including those due on foot of the second mortgage obtained in 1981/82, the premises are in fact his on the basis that his wife provided no consideration. In effect he is saying now that if the purchase had been effected at the time into the joint names of he and his wife, rather than the O’B.s, his wife would be holding her share of the premises on a resulting trust for his benefit, and that therefore she should not be entitled to a beneficial interest therein, even though the premises were left to them both by Mr O’B. Implicit in such a submission is a contention that Mr O’B. was not entitled to leave the premises by his Will either to Mr M. alone or to Mr and Mrs M. jointly, as the O’B.s were holding the premises on a resulting trust for him alone, they having provided no consideration. Leaving aside completely for the moment the fact that the O’B.s had in fact contributed 30% of the consideration by reference to the discount in the price already referred to, and leaving the further matter of the Grant and the contributions from Mrs M.’s siblings in 1982, there is in my view no reality in Mr M.’s contention.
It follows also from Mr M.’s submissions, that if, which he denies, Mrs M. has an entitlement to a joint interest arising from her father’s Will, that there is a presumption of a resulting trust in his favour in respect of her interest. That would imply that the income from which Mr M. paid the repayments was never the family income. The fact is that Mrs M. did not work during the marriage, her job being to be at home to look after the children, and look after the needs of the home.
I conclude from this rather convoluted and difficult set of facts that the O’B.s certainly held the premises in their name on a resulting trust for both Mr and Mrs M. Had Mr O’B. left the premises in his Will to some other party, and had the M.s’ marriage not broken down resulting in a separation and divorce, both Mr and Mrs M. would have been entitled to bring an action to have themselves declared the beneficial owners on the basis of a presumed resulting trust. There is no possible evidence by which the O’B.s’ personal representatives could have rebutted that presumption on the basis either of advancement from the M.s to the O’B.s, or by any evidence of a contrary intention on the part of the O’B.s.
I am also satisfied that Mr O’B. made his Will in the way he did because he knew that the house was in reality belonging to the M.s and that the Will was the easiest way of dealing with the situation that would arise on his death. I do not have to deal with the fact that in his Will at the time he executed it, he ignored the fact that his wife, Mrs O’B., was in fact a joint owner with him of the premises, but it confirms, I suppose, that he was the sort of man who believed the normal thing was for the husband to own the property, but to go any further , as I have said, and conclude that he would not have wanted his daughter to have an interest in the premises, is too far-fetched to be real.
It is not necessary to consider any further the legal authorities to which I was referred in connection with resulting trusts, advancement and so forth. Those concepts are not really relevantly in dispute. I am satisfied that by whatever route one travels in order to unravel the facts of what happened over the years, the result is the same, namely that the plaintiff and the defendant are entitled now to be registered as joint owners of the premises, and that there is no resulting trust arising between the plaintiff and the defendant. Both have a joint interest in the premises, and I will deal later with the respective proportions in which that joint interest ought to held by them.
Having so found, I must then consider the questions which arise under the Partition Acts, since the plaintiff is seeking relief under those Acts so that the premises can be sold, with the proceeds being divided in proportions which the Court would consider just in all the circumstances.
The first thing to be said is that the relief sought by the plaintiff is a discretionary relief.
The Court’s power to order a sale is contained in Section 3 of the Partition Act 1868, which states as follows:
“In a suit for partition, where, if this Act had not been passed, a decree of partition might have been made, then if it appears to the Court that, by reason of the nature of the property to which the suit relates, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of some of those parties, or of any other circumstances, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the Court may, if it thinks fit, on the request of any of the parties interested, and notwithstanding the dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions.”
It is clear from the wording of the section that the Court has a wide discretion in whether it orders a sale of the premises. All relevant circumstances can be taken into account. In addition, when the section states “if it appears to the Court that……… a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them”, it is not just the applicant who must be considered but all those interested in the property. If authority is needed for this, it is found in Drinkwater v. Ratcliffe (1875) LR 20 Eq 533, and Fleming v. Crouch (1884) WN 111.
Section 4 of the same Act gives the Court similar powers as follows:
“In a suit for Partition, where, if this Act had not been passed, a Decree for Partition might have been made, then if the party or parties interested, individually or collectively, to the extent of one moiety or upwards in the property to which the suit relates, request the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale of the property accordingly, and give all necessary or proper consequential directions.”
In the latter section the Court also has a wide discretion, except that a sale is mandated by the words “the Court shall, unless it sees good reason to the contrary, direct a sale of the property” (my emphasis). The onus of establishing a good reason to the contrary rests on the party opposing the application. In this regard see Pemberton v. Barnes (1871) LR 6 Ch App 685.
It would appear that Section 4 is the section most appropriate to the present application, since the Court is being requested to make an order by a “party or parties interested, individually or collectively to the extent of one moiety or upwards.”
It follows therefore that the defendant in opposing the application has the onus of establishing that there is a good reason to the contrary. In this regard Mr Hayden has submitted to the Court that if a sale were to be ordered and a division of the proceeds made, the defendant, bearing in mind the current property market and his age (in the context of his ability to obtain a loan) and the circumstances generally which include the fact that the plaintiff has a house in England, would effectively be left without a home. It is also a factor that the premises were, prior to the separation of the parties, the family’s family home.
I am satisfied that the defendant has discharged that onus in the present case and that there is a good reason why the court should not order the sale of the premises. Even if Section 3 were the appropriate section for this application, I am satisfied that the Court, in the exercise of its discretion, ought not to direct a sale of the premises in all the circumstances.
In my view it is also necessary to address the matters in issue in this case in the light of the provisions of the Family Home Protection Act, 1976 (hereinafter referred to as “the 1976 Act”), although Counsel has not addressed me specifically in relation to the implications of the 1976 Act on the question of relief being claimed under the Partition Acts.
It has been decided that any rights a party may have to seek relief under the Partition Acts must be tempered by the effect of the1976 Act, Section 4 of which provides that the court may dispense with the consent of a spouse if it is unreasonably withheld. In the present case, if this court was being asked to dispense with the defendant’s consent to a sale, as being unreasonably withheld, it would not be prepared to do so in the circumstances of this case, as it would not have any sufficient evidence from which to conclude that any withholding of consent is unreasonable.
Section 2(1) of the 1976 Act defines a family home as “primarily meaning a dwelling in which a married couple ordinarily reside. The expression comprises in addition, a dwelling in which a spouse whose protection is in issue ordinarily resides or, if that spouse has left the other spouse, ordinarily resided before leaving”. It is clear that the premises in this suit come within this meaning.
In the case of AL v. JL dated 27th February 1984, (unreported), Finlay P. (as he then was) was dealing with a very similar set of facts as this case. In that case, it was intended that a family home be purchased in joint names, but in fact the house was put into the name of the husband only, the wife being at the date of purchase under the age of majority. Unhappy differences arose and the wife left the family home to live with another man. During the marriage they had both contributed to a joint pool out of which repayments were made on the mortgage, but following the wife’s departure the husband alone continued the repayments. The husband maintained that the resulting trust upon which the husband in that case held the wife’s interest was a conditional one, namely conditional upon the maintenance of the marriage relationship, and that by leaving her husband, the trust was thereby avoided. The learned President did not agree. At page 4 of the unreported judgment, the learned President (as he then was) states as follows:
“It was the clear intention of these parties that this house should be purchased jointly by them and in my view the events which happened and the circumstances under which it was purchased in the sole name of the husband when viewed through equitable principles must be given the same force and effect as if their intention had been carried out in the first instance, as if they were both grantees under the Deed of Conveyance of an equal share in the house………There is not, in my opinion, in the general principles of equity room for a voidable or conditional trust depending upon the maintenance of the marriage nor can the courts investigate the true reasons for the unfortunate break-up of the marriage in order to ascertain the reality of the beneficial ownership of two people who agree jointly to purchase a house and make each of them contributions towards the redemption of mortgages standing upon it. I am satisfied that the wife is entitled to a 50% share or one half share in the equity of redemption of these premises.”
The facts are sufficiently similar to the present case to make this decision relevant in this case. I have already concluded that Mrs Murphy made an indirect contribution to the household by her involvement at home in the rearing of the children and her running the house, as it were, and this replaces the reference in the above case to both the husband and the wife contributing to a joint pool from which the mortgage repayments were made. I note also that in AL v. JL, there were no children in the marriage.
Finlay P. went on in that case to find that while in the period before the wife left there was a clear entitlement to a 50% joint interest, the husband was entitled to some credit in respect of the period after which the wife left, as he continued to make the repayments on the mortgage from his sole funds. The parties in that case had married in 1975 and the wife had left in 1980. Dealing with the question of what relevantly comprised the equity of redemption in which the wife had a 50% interest, the learned President (as he then was) stated as follows:
“In my view the equity of redemption in these premises as of February 1980 consisted of the then gross market value of the premises, less the amount still outstanding to Irish Nationwide Building Society………Having determined the relationship in terms of percentage between the total amount outstanding on the mortgage as of February 1980 and the gross market value of the premises, it seems to me that the precise form of declaration which I must then make is to declare the wife entitled to one half of the percentage constituting the equity of redemption at that time. To take as a simple example, if the amount outstanding on the mortgage at that time constituted 10% of the gross value of the premises, the wife would be entitled to a 45% share in the ownership of the house.”
Interestingly, the learned then President went on:
“With regard to the claim for a sale of the premises pursuant to the Partition Acts, the position appears to me to be as follows. Having regard to the provisions of the Family Home Protection Act, 1976 in the absence of an agreement between the parties, an order for sale cannot in my view be made under the Partition Acts unless the court is also satisfied that it should dispense with the consent of the non-agreeing spouse under Section 4 of the 1976 Act”.
On the facts of that case, he was not so satisfied. In O’D v. O’D, 18th November 1983 (unreported), Murphy J. had adopted a similar attitude to the impact of the 1976 Act on the question of relief being sought under the Partition Acts in respect of a family home. I respectfully adopt that reasoning for the purpose of the present case.
In the present case, I have already found for the reasons stated that the parties are entitled to be registered as joint owners of the premises. For the purpose of deciding the respective proportions of that interest, the methodology adopted by Finlay P. (as he then was) in AL v. JL seems entirely appropriate for the purpose of doing justice between the parties in this case, given that Mrs M. left the family home in August 1989, after which time Mr M. continued to make the repayments, and Mrs M. was of course no longer at the premises to continue her indirect contribution to the household budget.
It is my view that a valuation of the premises as of August 1989 should be obtained from an independent valuer, and that the amounts outstanding to Dublin Corporation on both mortgages be ascertained as of that date. The court can then calculate what percentage proportion of the market value is represented by the equity of redemption, and will declare the ownership of the premises to be divided on a 50-50 basis of that percentage proportion. I have already found that the O’B.s were entitled to the 30% discount off the purchase price in 1972, and that I am satisfied the plaintiff’s siblings made a contribution of £3200 Sterling to the extension, and that a Grant of £4000 was also obtained derived from the illness of the plaintiff’s mother. Without being necessarily mathematically accurate to the last pound, I am satisfied that all of these matters mean that a 50-50 split between the parties is a fair one, but based on the value of the equity of redemption as at August 1989. As I have said already, this conclusion amounts to the same conclusion I reached when finding that the parties were entitled to be registered as joint owners, there being no resulting trust existing for the benefit of the defendant in respect of the plaintiff’s share, save with the slight modification arising from the methodology emanating from AL v. JL as to the value of the equity of redemption of the premises.
I should just add that I am not satisfied that the evidence is sufficiently clear in respect of the letting of the premises by the defendant after the plaintiff left, in order to make any finding in relation that issue.
Finally, the defendant has said that the plaintiff has delayed in bringing this application and that she ought not to benefit from her delay. I am satisfied that the appropriate way to look at any delay is to see whether the defendant has suffered any prejudice from the delay, even if I were to find the plaintiff to have been guilty of such. I am not so satisfied in the light of my findings and the decision I have come to as to the method of resolving the issues in this case.
I therefore refuse the relief sought by the plaintiff under the Partition Acts, and I also refuse the declaration sought by the defendant that he be entitled to be declared the owner of the entire beneficial interest in the premises. I therefore set aside the order of the learned Circuit Court judge made on the 26th June 2002, and I will adjourn this matter for a period to be agreed with Counsel, at which time I will finalise the order I propose making, when I have received the information I have mentioned, and after I have heard submissions from Counsel as to whether the parties should be registered as either as joint tenants or as tenants in common, in the absence of any agreement being reached between the parties in that regard.
Hickey v O’Dwyer
[2006] 2 I.L.R.M. 81
Judgment of Miss Justice Laffoy delivered on 9th November, 2005.
Background
Two separate and distinct issues are raised on the special summons in these proceedings.
The facts common to both issues are that they arise in relation to the estate of John Hickey (the testator) who died on 30th January, 1999. The testator was the husband of the plaintiff and the father of the fourth defendant, who was born on 5th December, 1990. The third defendant is the mother and, in effect, the next friend of the fourth defendant. The testator and the third defendant were not married. The testator made his last will and testament on 26th May, 1998, wherein he appointed the plaintiff to be his sole executrix and residuary legatee and devisee. She having renounced her right to probate, Letters of Administration with the testator’s will annexed were granted to the first and second defendants on 15th July, 2003. The first and second defendants are party to these proceedings in their capacity as personal representatives of the testator.
The first issue
There were only two dispositive provisions in the will of the testator. The provision which gives rise to the first issue in these proceedings is Clause 4 wherein the testator devised and bequeathed the sum of IR£100,000 to the first, second and third defendants to be held by them in trust as thereinafter set out for his daughter, the fourth defendant, until she should reach the age of 25 years and then to his said daughter absolutely. The first, second and third defendants were appointed as trustees of that bequest and the trusts upon which they were to hold the sum of IR£100,000 were set out. The other dispositive provision was the devise and bequest of the residue to the plaintiff for her own use and benefit absolutely.
In 1993 the testator had taken out a policy of assurance on his life with Prudential Life of Ireland. On 21st June, 1993 he executed a document (the 1993 Trust) which, in effect, was a declaration of trust in a standard form, apparently, produced by the insurer. It was a special condition of the policy that it was issued pursuant to the 1993 Trust. In the 1993 Trust the testator declared that the trustee or trustees for the time being thereof should hold the policy and the full benefit thereof and all monies which might become payable thereunder (the trust fund) upon trust, if the benefit under the policy should become payable in consequence of the death of the testator, which happened, for the benefit of all or one or more of the class of persons named by relationship to the testator (which included the spouse and children of the testator) as the testator in his absolute discretion should “be (sic) deed or deeds revocable or irrevocable appoint”. It is quite clear that the word “be” is a misprint for “by”. It was expressly provided that no appointment should be made nor any power of revocation exercised after the death of the testator. It was provided that, in default of and subject to any such appointment, the trust fund should be held for the absolute benefit of the fourth defendant as to 100% of the trust fund.
The testator did not exercise the power of appointment over the trust fund conferred on him in the 1993 Trust during his lifetime by deed. Following his death, the proceeds of the policy, IR£223,350 (€283,595.99), were paid out by Prudential Life of Ireland to two trustees appointed by the court of the trust fund on behalf of the fourth defendant.
The first issue raised on the special summons concerns the entitlement to the fourth defendant to the proceeds of the policy and under the will of the testator and requires the court to answer the following questions:
(a)(i) Did the testator by the bequest in his will in favour of the fourth defendant, exercise the power of appointment in relation to the proceeds of the policy?
(a)(ii) What is the interest of the fourth defendant in the proceeds of the policy?
(a)(iii) What is the interest of the plaintiff in the proceeds of the policy?
(a)(iv) If the answer to question (i) is in the negative, was the bequest in the testator’s will to set up a trust in favour of the fourth defendant in the amount of IR£100,000 intended to be in whole or in part satisfaction of the monies held upon trust for her pursuant to the terms of the trust funds?
(a)(v) In the light of the answers to the above questions, in what manner are the proceeds of the policy to be distributed?
There is inherent in the first issue an acceptance by the plaintiff that the testator by his will gave a bequest of IR£100,000 in trust for the fourth defendant. No question as to the proper construction of the will arises. The case made is that by operation of the equitable doctrine of satisfaction the fourth defendant is not entitled to both the provision made in the 1993 Trust in relation to the trust fund and also the bequest.
In Williams on Wills, 8th Ed., 2002, the various situations in which the doctrine of satisfaction comes into play are identified as follows in para. 44.1.
“Satisfaction is the donation of a thing with the intention that it shall be taken either wholly or partly in extinguishment of some prior claim of the donee. It may occur (i) when a covenant to settle property is followed by a gift by will or settlement in favour of the person entitled beneficially under the covenant, (ii) when a testamentary disposition is followed during the testator’s lifetime by a legacy or settlement in favour of the devisee or legatee, and (iii) when a legacy is given to a creditor. In all these cases the question of satisfaction is one of the intention of the settlor or testator; and, if he expressly declares that the latter disposition is to be in satisfaction of the earlier obligation or disposition the matter will be governed by this expression of his intention and effect is given to the later disposition accordingly. In the absence of such expression, certain presumptions as to his intention are raised in equity, and evidence, intrinsic and, in certain cases, extrinsic, may be used to rebut or support such presumptions. … The three cases above are shortly described as (i) satisfaction of portions by legacies or subsequent portions; (ii) ademption of legacies by portions; and (iii) satisfaction of debts by legacies. In the first two cases the court leans in favour of satisfaction; in the third case it leans against it.”
Counsel for the plaintiff submitted that circumstances which have arisen in this case fall within the first classification of the doctrine – satisfaction of a portion by a legacy. He acknowledged that the sequence here was that there was a portion followed by a legacy and, accordingly, when the portion was created there was no legacy to adeem. The species of the doctrine of satisfaction on which the plaintiff relies is an aspect of the so called “rule against double portions”.
Counsel for the third and fourth defendants submitted that, as traditionally applied, the rule against double portions is discriminatory and is inconsistent with both the Constitution and the European Convention on Human Rights. The criticisms which may be made of the rule are outlined in Delaney on Equity and the Law of Trusts in Ireland, 3rd Ed., at p. 703, where it is pointed out that it has been expressly preserved by s. 63(9) of the Succession Act, 1965, which provides that nothing in s. 63 shall affect any rule of law as to the satisfaction of portion debts. Accordingly, there is express recognition of the rule in a post 1937 statute. Aside from that, neither the question whether the rule was carried over in 1937 on the coming into force of the Constitution nor whether it is compatible with the European Convention on Human Rights was raised in the pleadings, either generally or by reference to the facts of the case. In the circumstances I consider it inappropriate to express any view on those questions in these proceedings.
The presumption of satisfaction of a portion by a legacy has traditionally been applied in this jurisdiction where the settlor or testator is the father of, or in loco parentis, to the donee, the first gift is a portion and both gifts are substantially of the same nature and in favour of the same person. In this case, I am satisfied that the provision made in 1993 was a portion in the sense of being a gift of a substantial nature relative to the means of the testator and intended to set up the fourth defendant in life. Moreover, I am satisfied that the provision made in the 1993 Trust and the provision made by the testator in his will for the fourth defendant were substantially of the same nature. They were both, essentially, dispositions of money to which the fourth defendant was to be absolutely entitled, albeit in the case of the bequest in the will the trustees would have control until she attained 25 years of age. Although the provision in the will was substantially smaller than what the policy yielded, the doctrine of satisfaction admits of a lesser provision in a will being satisfaction pro tanto of an earlier portion.
There is a helpful commentary on the strength of the presumption of satisfaction in relation to the different classes of satisfaction in para. 44.9 of Williams. It is pointed out that the strength of the presumption against double portions, and what it takes to rebut the presumption, varies according to the nature of the instruments and the order in which they are executed. Presumption is strongest in the case where a testamentary provision for a child is followed by a settlement, which does not arise in this case. The rationale for that proposition is that both provisions are still under the testator’s control when he executes the later instrument. The presumption is less strong where a settlement, which creates an obligation remaining unperformed, is followed by a testamentary provision. I would surmise that the editors of Williams are referring there to an irrevocable settlement. The rationale of the weaker presumption in that situation is that the testator is not free from the obligation of the settlement when he makes the will, and it is not so readily presumed that he meant the latter to take the place of the former. The strength of the presumption is further reduced when the double provision is contained in consecutive settlements, since, in the case of a will, the testator is supposed to be disposing of the whole of his property and distributing it among the different objects of his bounty, but not so in the case of a settlement. Further, if the first settlement contains a power of revocation which is not exercised, this will be an indication that the provisions are intended to be cumulative.
In this case the testator did not expressly declare his intention. Accordingly, it is necessary to consider whether the presumption applies. In relation to the two instruments at issue in this case, and considering the evidence they afford intrinsically without the aid of extrinsic evidence other than evidence of what the personal circumstances of the testator, his age and marital status, were when they were executed, the following seem to be the relevant factors:
(1) When he was a single man aged 28, in the 1993 Trust, the testator put in place an arrangement to provide for the fourth defendant in default of him exercising the power of appointment in relation to the trust funds. The exercise of the power of appointment would have overridden the default provision, so that the trust fund was still under the testator’s control.
(2) In 1998, after he had married, and when he was aged 33, the testator made a will in which he disposed of his entire estate and made provision for the fourth defendant. A will is ambulatory, so that the testator’s estate was still under his control after he made his will.
(3) After he made his will the testator neither revoked the will nor did he exercise the power of appointment under the 1993 Trust. The fourth defendant was his only child.
(4) On his death the entitlement of the fourth defendant to the trust fund under the default provision in the 1993 Trust took effect. At the same time, the testator’s will took effect and the entitlement of the fourth defendant to the provision made for her in it took effect.
In my view, the foregoing circumstances give rise to a presumption that the testator did not intend the fourth defendant to take both provisions. The issue which remains is whether extrinsic evidence is admissible to either support or rebut that presumption and, if it is, what is the effect of the evidence.
Section 90 of the Succession Act, 1965 provides that extrinsic evidence shall be admissible to show the intention of the testator and to assist in the construction of, or to explain any contradiction in, a will. It is well settled that extrinsic evidence may only be adduced pursuant to s. 90 if it assists in the construction of a will or resolves a contradiction in the will and, in either case, the purpose of its admission is to show what the intention of the testator was in the particular context (O’Connell v. Bank of Ireland [1998] 2 IR 596). As I said at the outset, it is accepted by the plaintiff that the bequest in favour of the fourth defendant contained in the testator’s will is a valid bequest. No question arises as to the admission of extrinsic evidence to construe the will. In any event, the will is unquestionably clear and unambiguous.
What the plaintiff asserts is that extrinsic evidence is admissible in support of the presumption that the testator did not intend to make double provision for the fourth defendant. In this connection, counsel for the plaintiff relied on the following passage from Williams at 14.14:
“Parol Evidence cannot be admitted to add to or vary a written instrument; but where from two written instruments, taken in conjunction with the surrounding circumstances, the court raises a presumption of satisfaction, then parol evidence is admissible to rebut the presumption, and therefore also to support it. In the case of a will and a settlement the rule is the same whether the will precedes or follows the settlement.”
The evidence adduced by the plaintiff which it is contended supports a presumption of satisfaction is as follows:
(a) In her grounding affidavit, having earlier averred that prior to and after her marriage she discussed with the testator the provision he had made for the fourth defendant, the plaintiff averred that it was always her clear understanding from the testator that it was his understanding that he had settled his affairs in such a manner that IR£100,000 from the life assurance policy would be held for the benefit of the fourth defendant but that thereafter the balance of the estate would devolve to herself, the plaintiff. In relation to that averment, the factual position is that the proceeds of the policy were not part of the estate of the testator.
(b) Apropos of the averment at (a), the first defendant, in his affidavit filed in response to the summons, averred that he admitted that it was the deceased’s understanding that he had settled his affairs in such a manner that IR£100,000 from the policy would be held for the benefit of the fourth defendant and that thereafter the balance of the estate would devolve to the plaintiff. The first defendant did not identify his means of knowledge as to the testator’s understanding. In relation to the general approach adopted by the first and second defendants on this application, in the same affidavit the first defendant averred that he and the second defendant were willing to abide by any decision of the court in respect of the plaintiff’s application.
(c) The solicitor who acted for the testator in the drawing and execution of his will gave oral testimony to prove the notes of his attendance on the testator on 6th March, 1998 when he took instructions from the testator for the drawing of the will. The attendance notes record the following in relation to provision for the fourth defendant:
“100K to Nicole in trust.
This is available through life policy on J.H.’s life – approx. 280K.
Trust [?] 25 yrs.”
The third and fourth defendants did not seek to cross-examine the plaintiff or the first defendant on their respective affidavits.
In my view, neither the averment of the plaintiff nor the averment of the first defendant is of a probative quality to either support or rebut the presumption. In relation to the evidence of the solicitor, that goes no further than to prove the instructions recorded by the solicitor when he took instructions for the drafting of the testator’s will almost three months before it was executed.
The position adopted by the third defendant in her affidavit was that the attendance notes of the solicitor were not admissible. Further, she averred that she visited the testator in hospital on the Friday afternoon prior to his death, when he assured her that the fourth defendant would be well looked after. She further averred that at all material times she understood that the policy was in place and also that the fourth defendant had been provided for under the terms of the testator’s will. The source of her understanding is not identified. In my view, those averments are not of a probative quality to rebut the presumption.
The only other evidence which might be relevant to rebutting or supporting the presumption is the evidence of the testator’s assets when he made his will. There is no direct evidence of this, but, as he died just eight months after making his will, this can be inferred. The only asset of any substance which the testator had was his dwelling house, which was valued at €114,176.43 (IR£90,000) as of the date of his death on the Inland Revenue affidavit filed with the Revenue Commissioners. The dwelling house was mortgaged but there was a mortgage protection policy in place which would, if it was kept up, and in fact did, clear off the mortgage on the death of the testator. The testator was a member of his employer’s pension plan. Following his death the plaintiff, as the nominated beneficiary, received €69,537.19 on foot of the pension plan, but this did not form part of his estate.
The totality of the relevant evidence in relation to the testator’s age, marital status and personal circumstances and the state of his assets when he made his will, in my view, support the presumption that the testator did not intend that the fourth defendant should receive both the entirety of the proceeds of the policy and the bequest contained in his will. In other words, the presumption stands.
Before answering the questions raised on the special summons in relation to the first issue, it is necessary to explain the consequence of the conclusion that the doctrine of satisfaction applies. It is that an election must be made on behalf of the fourth defendant, who is still a minor, between the provision contained in the 1993 Trust and the provision under the will. On the facts of this case, it must be assumed that the election would be to take the provision under the 1993 Trust the trust fund represented by the proceeds of the policy.
Finally, by way of clarification, it is stated in Delaney at p. 703 that, if the father has actually advanced the portion to the child, a subsequent legacy will not be regarded as satisfaction, the reasoning being that, if the father has already given the child the gift in the nature of a portion, he would undoubtedly intend that child to benefit in addition from any provision made for him under a subsequent will. There is authority for that proposition in Smyth v. Gleeson [1911] 1 I.R. 113 at p. 119. On the facts of this case, the prior portion had not been actually transferred or paid to or on behalf of the fourth defendant when the will was made. The provision in the 1993 Trust was liable to be displaced by the exercise of the power of appointment.
Answers to questions in relation to the first issue
The answers in relation to the first issue are as follows:
(a)(i) The testator did not by his will execute the power of appointment in relation to the proceeds of the policy. By virtue of the terms of the 1993 Trust the power of appointment was exercisable by deed only.
(a)(ii) The fourth defendant is entitled to elect to take the proceeds of the policy or the bequest contained in the will.
(a)(iii) The interest of the plaintiff in the proceeds of the policy depends on the election made by the fourth defendant. On the assumption that she will elect to take the proceeds of the policy and, indeed, the proceeds have already been paid to trustees on her behalf, the plaintiff has no interest in the proceeds.
(a)(iv) The provision in the testator’s will in favour of the fourth defendant was intended to be in part satisfaction of the proceeds of the policy the subject of the 1993 trust.
(a)(v) The distribution of the proceeds of the policy depends on the election to be made on behalf of the fourth defendant. On the assumption that the election is to take the proceeds of the policy, the distribution of the proceeds to trustees on behalf of the fourth defendant will stand.
The second issue
At the date of his death the testator was the sole legal owner of the dwelling house, 9 The Dell, Huntsfield, Dooradoyle, Limerick, which has a current value of €265,000. The testator purchased the dwelling house, as a newly constructed house, around 1994. He financed the purchase price, which was in excess of IR£60,000, by a loan of IR£4,000 from his then employer to pay the deposit, the State grant of IR£3,000 and a mortgage for the balance. On completion of the purchase the testator and the plaintiff moved into the dwelling house and they resided there until the date of his death.
The questions raised on the special summons in relation to the dwelling house are as follows:
(b)(i) At the date of the death of the testator did the testator and the plaintiff own it in all the circumstances in equity as joint tenants?
(b)(ii) Is the plaintiff entitled to a beneficial interest in the dwelling house?
(b)(iii) If the answer to (ii) above is in the affirmative, what is the extent of the plaintiff’s beneficial entitlement?
The basis of the plaintiff’s claim to a beneficial interest is that she made financial contributions to the cost of the acquisition of the dwelling house. It is not in issue that the principles of law to be applied in determining whether the plaintiff’s claim is well-founded are those set out in the judgment of Finlay P., as he then was, in W v. W [1981] I.L.R.M. 202.
The factual basis of the plaintiff’s claim is as follows. The testator purchased the dwelling house “from the plans”. When it was completed the testator and the plaintiff decided to live together there. They considered that they were moving into their “home”. It was decided to leave the house in the testator’s name, the intention being that the plaintiff could buy a house as well. Some time after they moved in, the testator changed his employer, whereupon the loan he had obtained for the deposit became repayable. The plaintiff borrowed a sum of IR£4,000 on a term loan and gave that sum to the testator so that the testator could repay his employer. The testator and the plaintiff had a joint account before they were married. Their respective salaries were paid into the joint account and the mortgage and mortgage protection policy instalments were paid out of the joint account. The mortgage debt was discharged out of the proceeds of the mortgage protection policy.
The basis on which a court will decide that a wife is entitled to an equitable interest in a property in the sole name of her husband on the basis of a contribution of money to the purchase or on the basis of a contribution, either directly or indirectly, towards repayment of the mortgage instalments is subject to the overriding requirement that such a decision will be made only “in the absence of evidence of some inconsistent agreement or arrangement” per Finlay J. in W v. W at p. 204. In this case, the evidence is not consistent with an understanding by the testator and the plaintiff that the plaintiff would have a beneficial interest in the house. First, the assistance the plaintiff gave the testator in relation to repayment of the loan he had borrowed to pay the deposit cannot be construed as a contribution to the purchase price of the dwelling house. Secondly, on the plaintiff’s own evidence, the understanding between them was that each would own and have title to a house, the house in issue here being the testator’s. In fact, the plaintiff did acquire a house in her own name later, which she rented out.
Apart from that the court has been furnished with very little concrete evidence to support the plaintiff’s claim. Copies of the bank statements on the joint account of the testator and the plaintiff dating from 30th October, 1997 to 4th February, 1999 have been put in evidence. From the pagination of the statements I would surmise that the joint account was opened very shortly before 30th October, 1997. Over the period for which statements have been furnished there are gaps. Even if I was satisfied that the plaintiff’s claim for a beneficial interest based on the principles set out in W v. W. had been made out, I would find it impossible to calculate the contribution on the basis of the evidence before the court.
Answers to questions in relation to the second issue:
My answers in relation to the second issue are as follows:
(b)(i) The testator and the plaintiff did not own the dwelling house in equity as joint tenants at the date of the death of the testator.
(b)(ii) The plaintiff was not entitled to a beneficial interest in the dwelling house at the date of the testator’s death.
(b)(iii) This does not arise.
15.5 Even if it were possible to conclude that it was the intention of the plaintiff to execute the right of set-off document not merely as a witness but in a manner which would bind her as one of the beneficial owners of joint deposit account No. 101, and that the document needs to be rectified to reflect that, a question would arise as to whether the Court should exercise its discretion to grant the equitable relief of rectification in circumstances in which the defendant took no steps whatsoever to ensure that the plaintiff understood the implications of executing a document which would have given the defendant the type of security it was seeking over the monies in joint deposit account No. 101. In particular, the question would arise as to whether the defendant should have advised the plaintiff to seek legal advice to avoid being disentitled to equitable relief. While, on the basis of the finding I have made in the next preceding paragraph, the question is hypothetical, I propose to comment on it generally.
15.6 Apart from reference to a text (Hodge on Rectification, 1st Ed., 2010 at para 1 – 41 et. seq.), no authority was specifically cited by counsel for the plaintiff to support their contention that the defendant did not take the steps it should have taken, including advising the plaintiff to obtain independent legal advice. I have noted earlier that the plaintiff did not allege either in the pleadings or in her evidence that Mr. O’Meara exerted undue influence over her or that he took any unfair advantage of her. Her position was that she just signed what Mr. O’Meara put in front of her without seeking or obtaining any explanation. There is authority in the United Kingdom that a bank is always on inquiry when a wife provides security for her husband’s debt and that it must take reasonable steps to satisfy itself that the practical implications of the proposed transaction have been brought home to the wife, in a meaningful way, so that she enters into the transaction with her eyes open so far as its basic elements are concerned and reliance by the bank upon confirmation from a solicitor, acting for the wife, that he advised her appropriately is sufficient to discharge the bank’s obligation (the decision of the House of Lords in Royal Bank of Scotland v. Etridge (No. 2) [2002] 2 AC 773). The manner in which the defendant went about obtaining what it considered as security for the loan it was advancing to Mr. O’Meara solely over a deposit account in the joint names of Mr. O’Meara and his wife, the plaintiff, is so egregiously at variance with the principles enunciated by the House of Lords in Etridge (No. 2), which, as academic commentators have suggested should be applied by the courts of this jurisdiction (Mee (2002) 27 Ir. Jur. 292; Delany Equity and the Law of Trusts in Ireland, 5th Ed. at p. 746), that it is unlikely that a court would afford an equitable remedy to the defendant to perfect its security, if such was necessary and it was appropriate to do so, without seeking to explore in depth the application of those principles in this jurisdiction, having regard to the conduct of the defendant and the potentially improvident nature of what the defendant was requiring the plaintiff to do.
15.7 Finally, it is pertinent at this point to make two general observations in the interests of clarity. First, in the context of the application of equitable principles, in my view, it is necessary to distinguish between the operation of a joint deposit account by the account holders, which banks, understandably, as reflected in condition 3(a) of the general conditions quoted at para. 1.7 above, leave to the account holders, on the one hand, and the creation of what, in effect is a type of security over a joint deposit account, on the other hand. Secondly, I accept the argument advanced on behalf of the defendant that the defendant did not occupy a fiduciary position vis-à-vis the plaintiff and that the plaintiff’s claim, insofar as it is based on alleged breach of fiduciary duty, is misconceived.
16. Estoppel?
16.1 The basis on which counsel for the defendant contended that the plaintiff is estopped from asserting that the monies on deposit in joint deposit account No. 101 were not to be applied in reduction of Mr. O’Meara’s liability to the defendant under loan account No. 128 was that all necessary ingredients of an estoppel are present, namely: a representation by the plaintiff; reliance on the representation by the defendant; and the defendant acting to its detriment. The defendant’s officials appear to have assumed on 23rd December, 2008 that there was an effective right of set-off against the monies in joint deposit account No. 101 in place by reason of the plaintiff’s signature on the right of set-off document. The defendant certainly acted to its detriment in advancing the loan to Mr. O’Meara when, as I have found, it had no right of set-off. The question which remains is what representation was made by the plaintiff, whether by word or conduct, to the defendant which, in the words of Griffin J. in Doran v. Thompson Ltd. [1978] I.R. 223 relied on by counsel for the defendant, amounted to “a clear and unambiguous promise or assurance” that she would participate in granting a right of set-off to the defendant against the monies on deposit in joint deposit account No. 101?
16.2 The defendant’s submission was that it is to be found in the plaintiff’s assent to the lodgement of the Anglo cheque, which was to be “cash backing” for the loan to Mr. O’Meara, and her agreement (in effect) that Mr. O’Meara could mandate withdrawals from that account without reference to her, and her knowledge (if not her explicit assent) of the set-off commitment provided by Mr. O’Meara. All the plaintiff did was that –
(a) she endorsed the Anglo cheque,
(b) she signed the application form to open joint deposit account No. 101, which included the withdrawal instructions, which resulted, in due course, in the joint deposit account being depleted to the extent of €600,000, and
(c) she subscribed her name as a witness to Mr. O’Meara’s signature to the right of set-off document.
Those actions, separately or in conjunction with each other, did not amount to “a clear and unambiguous promise or assurance” that the defendant would have a right of set-off against the monies in joint deposit account No. 101.
16.3 The fundamental problem for the defendant in this case is that it did not get the commitment it required from the plaintiff in order to obtain the security which it sought. In fact, it completely ignored the plaintiff’s interest. The result is that it must suffer the consequences of its own mistake.
17. Ownership/ rights over joint deposit account No. 102
17.1 The monies which the defendant transferred to joint deposit account No. 102 were sourced from loan account No. 128. Sole liability for the sum of €665,873.40 so transferred was assumed by Mr. O’Meara under loan account No. 128. The sole purpose of the drawdown was to meet the security requirement in relation to providing a right of set-off against a joint deposit account with a balance equivalent to the amount of the loan, €1.6m. It was the defendant’s officials, on their own initiative, who put the joint deposit account in place in the joint names of Mr. O’Meara and the plaintiff to meet that requirement. While the “sub-account”, as it was characterised, was opened in the joint names of Mr. O’Meara and the plaintiff, the plaintiff was not a party to it at any time. Therefore, the decision of the Supreme Court in Lynch v. Burke, in my view, does not assist the plaintiff. Moreover, before it was opened, she had no legal or beneficial entitlement to any part of the sum of €665,873.40 transferred by the defendant’s officials to it. Accordingly, in my view, one has to look behind the names on the account.
17.2 On the basis of the doctrine of a resulting trust, as Mr. O’Meara, through the medium of the draw down from loan account No. 128, was the sole contributor to the monies in joint deposit account No. 102, prima facie, he was the beneficial owner of those monies, unless the presumption of advancement overrides the doctrine of resulting trust.
17.3 The plaintiff implicitly relied on the evidence of Mr. Savage in support of its contention that the monies in joint deposit account No. 102 were jointly beneficially owned by Mr. O’Meara and the plaintiff and passed to the plaintiff by right of survivorship. Mr. Savage was asked in cross-examination why a deposit account in the sole name of Mr. O’Meara was not opened to bring up to the level of €1.6m the balance on deposit with the defendant, given that the right of set-off document extended to any account in his name. The response of Mr. Savage was that Mr. O’Meara wanted it that way. He wanted the money to go back into the joint deposit account, which he had set up at the particular time. What he had instructed the defendant to do was to put the money in the name of himself and his wife. That response is inconsistent with the evidence of Ms. Corrigan and Ms. Dwyer, who were the officials of the defendant who were implementing the transactions on 23rd December, 2011 and who, on their evidence, did so without reference to Mr. O’Meara.
17.4 Even if Mr. O’Meara intended that the monies in joint deposit account No. 102 would be beneficially owned by himself and his wife, effect could only have been given to that intention subject to any trust or equitable interest known to the defendant to which the monies were subject. Mr. O’Meara was facilitated by the defendant in the draw down the sum of €665,873.40 from loan account No. 128 and its transfer to joint deposit account No. 102 for a specific purpose – to top up the monies on deposit to the level of the set-off requirement conditioned into the letter of offer of 17th December, 2008. Therefore, the monies in joint deposit account No. 102 must be deemed to have been impressed with an obligation in equity to fulfil that purpose. Accordingly, the right of the defendant to have that purpose fulfilled would have had priority in equity over the beneficial ownership of the monies, whether the beneficial ownership was vested in Mr. O’Meara and the plaintiff jointly or in Mr. O’Meara solely. It follows that, wherever the beneficial ownership was vested, the plaintiff cannot rely on beneficial ownership by right of survivorship to make the case that the defendant did not have a right of set-off as against those monies for Mr. O’Meara’s sole liability on foot of loan account No. 128 on 5th January, 2010.
17.5 The question whether Mr. O’Meara and the plaintiff jointly were the beneficial owners, or Mr. O’Meara was the sole beneficial owner, of the monies on deposit in joint deposit No. 102 subject to the defendant’s right of set-off arises between the plaintiff, on the one hand, and the personal representative of Mr. O’Meara, on the other hand. Representation has not been raised to the estate of Mr. O’Meara and his personal representative was not before the Court. Accordingly, it would be inappropriate for the Court to express any definitive view on that question. Notwithstanding the absence of the personal representative of Mr. O’Meara, it has been necessary to reach a conclusion as to whether beneficial ownership of the monies, wherever it lay, was subject to the right of the defendant to set-off, and I have concluded that it was.
17.6 Consistent with the view I have expressed earlier in relation to the analogy with the liquidation situation addressed by the Supreme Court in Dempsey v. Bank of Ireland, the personal representative of Mr. O’Meara would acquire no better title to the monies in joint deposit account No. 102 than Mr. O’Meara had.
18. Summary of conclusions and orders
18.1 As regards joint deposit account No. 101, I have come to the conclusion that the monies in that account were jointly beneficially owned by Mr. O’Meara and the plaintiff and that they passed to the plaintiff by right of survivorship on the death of Mr. O’Meara. I have further concluded that the defendant was not entitled to set-off the monies due on loan account No. 128 against those monies, as it purported to do in January 2010. Accordingly, the plaintiff is entitled to a declaration that all the monies which were standing to the credit of that account on 28th November, 2009 are the property of the plaintiff. As to how the plaintiff is to be compensated for the breach of contract by the defendant in not paying those monies to the plaintiff on being requested to do so, although the plaintiff claimed interest under the Courts Act 1981, as amended, in the statement of claim, no case was made on behalf of the plaintiff for pre-judgment interest at the Court rate. I consider that the plaintiff will be properly compensated by payment by the defendant to her of interest from 28th November, 2009 to the date of judgment at the rate applicable to six month fixed term deposits with the defendant and thereafter interest at the Court rate.
18.2 There will be judgment for the appropriate sum, the quantification of which should be agreed between the parties.
18.3 Having come to the conclusion that the plaintiff did not have a beneficial interest in the monies lodged in joint deposit account No. 102, the plaintiff is not entitled to any relief in respect of those monies. While, in the absence of the personal representative of Mr. O’Meara before the Court, I think it is inappropriate to make the declaration sought by the defendant in its counterclaim that the defendant was entitled to set-off the monies in that account, I propose that a declaration be made that the plaintiff has no claim to the said monies.
18.4 Subject to that, the defendant not being entitled to rectification of the set-off document, the defendant’s counterclaim will be dismissed.