(Family Division; Black J; 31 July 2008)
The matrimonial home, worth about £2 million, was registered in the name of the husband's brother. Both the husband and the wife claimed that the property was beneficially owned either by the husband or by the husband and the wife jointly. The property had originally belonged to the husband's father; the father had transferred the property and other assets to the husband and the husband's brother in order to avoid inheritance tax. However, the father had privately attached conditions, with the aim that he would retain control of the transferred assets. When the husband got into financial difficulties, the husband's interest in the property was transferred to the brother to protect it from the husband's creditors. Subsequently, the husband and wife agreed to sell their own home, and move into the property, spending their own money on renovating the property, which was in a terrible state, in return for an assurance that the property would become their home. Documents, including a deed of gift whereby the brother gave his beneficial interest in the property to the husband, were prepared, and a number of shares were earmarked to go to the brother on the father's death. However, on the father's instructions the property transfer, although signed and stamped, was not registered by the brother with the Land Registry. The father and brother claimed that the property had been held by the brother on trust for the father and that the husband had, at best, a right to occupy the property.
The husband and wife had acted to their detriment in reliance on the agreement with the father and the brother; further, the contemporaneous documentation established clearly that the common intention at the time had been that the husband was to receive the beneficial interest in the property. The facts gave rise to both a clear proprietary estoppel and a constructive trust. The father's claim that he had retained the beneficial ownership of the property even after transferring legal ownership to the husband and his brother could not be pursued because, in effect, the father was pleading an illegal purpose.