Jonathan Upton wins in the Court of Appeal
1st July 2013
Jonathan Upton represented the successful appellant in Chaudhary v Chaudhary  EWCA Civ 758.
The appellant stepmother (M) appealed against a decision that she did not have a beneficial interest in a property owned by the respondent stepson (S). S had purchased the property for £65,000 in his sole name; the majority of the purchase price was funded by way of a loan, and the remaining sum, of around £5,000, was provided by his father (F) and M. M continued to live in the property after F’s death. S claimed possession of the property, and M counterclaimed that S had no right to claim possession because she had the sole beneficial interest in the property. The judge made findings, including that F had asked S to buy the property in order to provide him and M with a stable home, and that F had said that he hoped to purchase the property from S as soon as he was able. The judge held that the £5,000 paid by F and M was akin to a premium or arrangement fee, and that M had no beneficial interest in the property. M submitted that her and F’s £5,000 contribution meant that she held a beneficial interest in the property to that extent, namely eight per cent. S argued that the judge was correct to conclude that M had no beneficial interest because the evidence demonstrated that it was his and F’s common intention that he would take the property as the sole owner in exchange for allowing F and M to use the property as their home.
The Court of Appeal (Aikens, Sullivan, and Underhill, LJJ) approached the question of whether M had a beneficial interest on the footing that the judge had seen and heard the relevant witnesses, and on the basis that he had made three important conclusions: (i) that the agreement about the property was between F and S alone, and neither M nor anyone else was involved; (ii) that M was an unreliable witness; (iii) that S’s evidence was to be preferred. It was, however, also clear on the judge’s findings that neither F nor S had expressed an intention whether the £5,000 was a gift or whether it would entitle F and M to a beneficial interest in the property. In those circumstances, in the absence of evidence of intention, the law applied presumptions, Lavelle v Lavelle  EWCA Civ 223,  2 F.C.R. 418 applied. There was no basis for the judge’s conclusion that the £5,000 was akin to a premium or arrangement fee. He had held that F had said that he hoped to purchase the property from S as soon as he could, and in those circumstances it was clear that F and M’s subjective intention was that the £5,000 would stand to their credit for when they eventually bought the property, and that they had paid that sum for their own benefit and not as a gift to S. On that basis, it was appropriate to make a declaration that M had an 8% beneficial interest in the property.
The transcript of the judgement is available here.