High Court judge Agnes Actie has delivered a ruling in a case brought by two former lovers, for proceeds from their investment in a property in Bailles Bacolet, St David.
Legal proceedings were instituted by Paul Christopher against his former female companion, Judlyn Smith.
Attorney-at-law Jasmin Redhead appeared for Christopher while Hazel Hopkin represented the defendant.
The main issue of contention was whether Christopher holds a beneficial interest in the property which is registered in the name of the Smith.
In delivering her ruling, Justice Actie said:-
It is therefore ordered and declared as follows:
(1) The claimant, Paul Christopher, and the defendant, Judlyn Smith, are joint beneficial owners of property situate at Bailles Bacolet, St. David in shares of Twenty (20%) for the claimant and Eighty (80%) for the defendant, respectively.
(2) A valuation of the property situate at Bailles Bacolet shall be conducted by a jointly agreed and paid valuator to determine the value of the claimant’s 20% share interest as at the year 2021.
(3) The defendant shall provide the claimant with an account of the rental income received from the apartments and shall pay his 20% share entitlement, if any, in the rental income collected, less $5,000.00
As a public service, THE NEW TODAY reproduces in full the Actie judgment on the issue:-
JUDGMENT
[1] ACTIE, J.: This case raises the issue of constructive trust in the determination of whether the claimant holds a beneficial interest in property situate at Bailles Bacolet, St. David, which is registered in the name of the defendant.
Brief Facts
[2] A brief outline is necessary to put the issue in perspective. The claimant and defendant were in an intimate relationship, the period of which is in dispute. Nevertheless, during that relationship, a dwelling house was constructed on land which the defendant is the registered title owner.
[3] It is the defendant’s evidence that the land was purchased in 1998 prior to the commencement of their relationship. In 2001, the parties obtained a joint mortgage from the Grenada Development Bank (hereafter referred to as “GDB”) to which the defendant’s previous outstanding mortgage balance of $45,000.00 was included, to construct the dwelling house on the lot of land.
[4] In 2005, the parties obtained a refinance of the mortgage with the National Insurance Board (hereafter referred to as “NIS”) for the construction of a two-bedroom rental apartment at the downstairs of the dwelling house.
[5] All the mortgage payments from the different lenders were by way of salary deductions from the defendant’s salary. However, the claimant states that he paid fifty percent (50%) of the mortgage obligation.
[6] The relationship between the parties came to an end sometime between 2009/2010, however the claimant continued to reside in the dwelling house for approximately ten(10) years, until he eventually moved out completely in 2021.
[7] The claimant claims that there existed a common intention between the parties, and that the defendant holds the property on trust as he is beneficially entitled to fifty (50) percent of the property and the rental income received from the apartments.
Claimant’s Case
[8] It is the claimant’s case that he shared an intimate relationship with the defendant for approximately fifteen years from 1996 to 2011, and that it was sometime in the years 1999 to 2000 that he and the defendant agreed to construct a dwelling house together on the lot of land.
[9] The claimant contends that the defendant is currently in receipt of rental income from the property and the sole person benefiting therefrom. The claimant avers that the monthly rental income received by the defendant for the apartment for the period 2004 to 2006 was $700.00, for the period 2007 to 2010, $1,000.00, and for the period 2016 to present the monthly income received is $800.00.
[10] The claimant further contends that he was responsible for the payment of water, internet and telephone bills, while the defendant was responsible for the electricity bill. He states that both parties contributed equally towards the purchase of food.
[11] The claimant contends that the parties equally contributed towards the purchase of the property and the construction of the house with the common intention that they will both have a beneficial interest in the property.
[12] The claimant asserts that the defendant would be unjustly enriched, and it would be inequitable for him not to be duly compensated for his contributions towards the property.
Defendant’s case
[13] The defendant denies that the claimant is the beneficial owner of fifty percent (50%) share of the property. The defendant asserts that the purchase of the lot of land was in 1998 prior to the commencement of her relationship with the claimant. The defendant asserts that their relationship was for a period of nine years, beginning in or about the year 2000 and ending in 2009.
[14] The defendant admits that the claimant co-signed the mortgage with the GDB to construct the house in 2001 but avers that all payments towards the mortgage were deducted from her salary. The defendant admits to receiving $1,250.00 monthly from the claimant which she states was to assist in the payment of bills, and out of love and affection.
[15] The defendant contends that the apartment which was built at the downstairs of the primary building was not always occupied with tenants to have been generating income. The defendant further avers that the rents received were used to maintain the property and to finance the defendant, given that she was servicing the home related loans.
[16] The defendant avers that she was responsible for the electricity, cable and part of internet bills, while the claimant was responsible for the water, telephone and part of internet bills. The defendant further states that the claimant contributed $250.00 for food monthly, although their food bill was in excess of $800.00 a month.
[17] The defendant asserts that the claimant was not paying 50% of the mortgage as alleged, and that the issue of compensation for 50% share in the property was only raised with her in a letter written to the defendant by the claimant’s attorneys.
Legal Analysis
Whether the claimant holds an equitable interest in the property
[18] The case of Hussey v Palmer establishes the principle that where it is inequitable on the grounds of justice and good conscience that the legal owner of property should take the property for themselves and exclude another from it, the law would impose a trust for the other’s benefit. The trust may arise at the outset when the property is acquired or later on, as the circumstances may require.
[19] In this case it is the evidence that the defendant purchased the land prior to the commencement of the relationship and is the registered paper title holder. In Jones v Kennot it was held that:
“Where the property is registered in the sole name of one party, there is no presumption of joint beneficial ownership. In determining what share each party is entitled to, the court must consider the whole course of dealing between them in relation to the property and determine what is fair. In doing so it must be noted that financial contributions are only one of the relevant factors”.
[20] Moreover, in the seminal case of Stack v Dowden, the House of Lords stated as follows:
“Just as the starting point where there is sole legal ownership is sole beneficial ownership… The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. So in sole ownership cases, it is upon the non-owner to show that he has any interest at all.”
[21] The claimant contends that he has fifty (50) percent beneficial interest in the property and that the defendant is holding the property on a constructive trust in equity on his favour. Considering all the evidence, the court accepts the evidence that the lot of land was purchased in 1998 by the defendant prior to the commencement of the relation with the claimant in or about 2000. Their relationship escalated to a commitment to build a home together. A joint mortgage taken in 2001 for the construction of the dwelling home incorporated the balance of the purchase price of the said land. Further refinancing for the construction of the apartments was co-signed by both parties although the mortgage payments were all deducted from the defendant’s salary.
[22] In Grant v Edwards it was held that a constructive trust is demonstrated by a common intention that parties should both have a beneficial interest in property and also that the claimant had acted to his detriment on the basis of that common intention, and on the belief that by so acting he would acquire a beneficial interest. The claimant may prove that a constructive trust arises by demonstrating that the legal owner induced him to believe that he would be entitled to a share in the ownership by an (i) express agreement or (ii) contribution to the acquisition of the property.
[23] In the instant case considering all the evidence, it is pertinent for the court to examine whether the claimant satisfies the requirements for a constructive trust.
Common Intention
[24] The House of Lords in the case of Lloyds Bank Plc v Rosset & Anr, in resolving a dispute between two persons who shared a home in circumstances where one party was entitled to the legal estate and the other party claimed to be entitled to a beneficial interest, held that the fundamental question to be resolved was whether, on the basis of evidence of express discussions between the partners and independently of any inference to be drawn from their conduct in the course of sharing the property and managing their joint affairs, there had been at any time prior to the acquisition of the property, or exceptionally at some later date, any agreement, arrangement or understanding reached between them that the property was to be shared, beneficially coupled with detrimental action or alteration of position on the part of the person claiming the beneficial interest. Failing that, the question was whether there had been direct contributions to the purchase price by the person claiming the beneficial interest from which a constructive trust could be inferred.
[25] In the Privy Council decision in Abbott v Abbott, it was emphasized that the parties’ whole course of conduct in relation to the property must be taken into account in determining their shared intentions as to its ownership. The Board favoured the reasoning of the trial judge Mitchell J., who relied on the fact of the payment of couple’s income into a joint account from the time of the acquisition of the property, as well as the fact that the husband’s mother intended that the land should be a gift to both parties, to declare a common intention.
[26] Furthermore, in Stack v Dowden, Lord Walker remarked:
“The law has indeed moved on in response to changing social and economic conditions. The search is to ascertain the parties’ shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it”.
[27] The claimant argues that it was always understood by him through discussions, conduct and course of dealings that the house on the property would belong to the parties jointly. Though there is a dispute as to when the relationship between the parties commenced, the court accepts that in the year 1998 the defendant solely obtained a loan to purchase the lot of land in Bailles Bacolet, however in 2001, the parties jointly obtained a loan from the GDB to construct a two-bedroom house on the property which incorporated the outstanding balance remaining on mortgage in relation to the land purchased by the defendant.
[28] The court finds that claimant had no direct contribution or involvement in the acquisition of the lot of land. However, the conduct of the parties in obtaining joint loans and refinancing suggests a common intention to build their home on the parcel of land, owned by the defendant. Conversely, there is no evidence of the share agreement between the parties in relation to the dwelling house especially in light of the fact that the defendant who purchased the land paid the mortgage by way of salary deduction.
[29] In Lloyds Bank Plc v Rosset & Anr, it was stated:
“In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust. In this situation, direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do.”
[30] The case of James v Thomas demonstrates that a judge’s aim should be to find an agreement that the parties made rather than to impute an agreement to them. A judge cannot ascribe intentions which the parties never had.
TO BE CONTINUED