This is an unfortunate dispute between a man and the mother of a woman with whom he lived happily for more than 15 years, the woman having died intestate and the mother being the administratrix of her estate and the sole person beneficially entitled thereto. The dispute has become all the more unfortunate because the decision of His Honour Judge Weeks QC in the court below awarded the man a major share of the spoils, with which, given a degree of magnanimity, he could reasonably have been content.

The claimant in the action is Julian Paul Wade, whom the judge described as having had a successful career in marine insurance. In the 1970s he met Sheila Margaret (nee Grimwood), who was then married to another. Towards the end of the 1970s they formed a relationship. They started living together as man and wife in 1981, she taking the name of Grimwood-Wade. They continued to live together until her death at the age of 56 on 7 ^th October 1998. I will refer to her as “the deceased”.

In 1983 the claimant and the deceased purchased as their joint home a freehold property then known as Cozenfold, Plaistow Road, Dunsfold, Surrey. The name was later changed to Forward Hoe. The property was transferred into their joint names and they were registered as the joint proprietors of it. The purchase price was £108,000, of which the claimant paid £28,000, the remaining £80,000 being advanced by Lloyds Bank plc on the security of a mortgage. Having no doubt been advised, as an unmarried couple, of the prudence of recording their arrangements in writing, they caused a solicitor to prepare an agreement and declaration of trust relating to the property. The judge found that the original proposal was that the net proceeds of any sale should be divided 65% to 35% in the claimant’s favour. Later it was decided to vary the shares to 80% to 20%, again in the claimant’s favour.

The agreement and declaration of trust was made on 21 ^st April 1985. It recited, amongst other things, that the parties had agreed to purchase the property jointly for the sum of £108,000 and for the claimant to contribute £28,000 towards the price and the deceased nil. The proposed advance by the bank was also recited. Clause 1 of the operative part contained an agreement that the parties should hold the net proceeds of sale of the property and the net income until the sale in trust for themselves “as tenants in common in such shares as shall from time to time be appropriate according to the provisions of this Deed”. Clause 2 provided that the parties should jointly occupy the whole of the accommodation at the property personally and as residential occupiers; and Clause 3 that no tenancy should be deemed to be created in favour of either of them. Clauses 4 and 5 must be set out in full:

At all material times the claimant and the deceased maintained a joint bank account, on which each of them had authority to draw. The claimant also had his own bank account, but the deceased did not have a bank account of her own in this country. The judge said that at the time that the agreement and declaration of trust was made the deceased had a considerable income from one of the claimant’s companies, and that that income was paid into the joint account, which was used, amongst other things, to meet the payments due under the mortgage by way of direct debit to a mortgage account with the bank. In his first witness statement the claimant said that the deceased’s income from the company between July 1982 and February 1986 was £32,325. He also said that when the company was sold in February 1986 the deceased received £71,861 as the price of her shares in it. The judge found that that sum (he referred to one of £75,000) also made its way into the joint account.

The following further facts were admitted or proved. Most but not all of the expenses relating to the property were defrayed out of the joint account. After 1986 all payments into the joint account were made by the claimant alone. He was in charge of paying most of the household bills, his normal practice having been to pay them out of the joint account, though some he paid out of his own account. The judge said that there seemed to have been no method or reason for that. The claimant did not say that there was ever insufficient money in the joint account, and indeed there was £10,000 still in it when the deceased died. The judge continued (para 9):

It appears that the deceased was never divorced from her husband. He pre-deceased her. So when she died intestate her estate devolved on her mother, the defendant Kathleen May Grimwood, who obtained a grant of letters of administration to the estate on 22 ^nd June 1999. On 17 ^th January 2000 Forward Hoe was sold for £510,000. The claimant having been advised that he could not complete the sale without the cooperation of the defendant, it was agreed that a sum equivalent to what was then thought to be 20% of the net proceeds should be placed in an escrow account on the completion of the sale. The sum thus agreed was £61,500. No agreement having been reached as to its disposal, on 23 ^rd April 2002 the claimant commenced proceedings against the defendant, seeking a declaration that he was entitled to the whole of the proceeds of the sale; alternatively, an account under clause 4 of the agreement and declaration of trust

The action came on for trial before Judge Weeks, sitting as a judge of the Chancery Division, on 2 ^nd December 2003, when three witnesses, including the claimant, gave oral evidence. In his judgment delivered on the following day the judge recorded that at one stage the authenticity of the agreement and declaration of trust had been hotly contested, but that it was accepted before him that the deceased’s purported signature was her authentic signature. He then referred to a further dispute as to the validity of manuscript alterations from the original typed percentages of 65% and 35% to 80% and 20% respectively. The judge found, on the balance of probability, that the initials against the alterations were those of the claimant and the deceased and, further, that the alterations were there before they were initialled. So that dispute was resolved in favour of the claimant. The defendant not having sought to reopen it in this court, there is nothing more to be said about it.

The judge then turned to consider the construction and effect of clauses 4 and 5 of the agreement and declaration of trust. Shortly stated, he held that those clauses were independent of each other and, further, that the deceased’s 20% share of the net proceeds of sale of Forward Hoe under clause 5 was not liable to be reduced by the amount of any sums for which she might once have been liable under clause 4. He made a declaration accordingly. On the figures on which the judge was working the net proceeds of sale of the property amounted to £380,326, 20% of which would amount to £76,065 leaving a balance of £304,261 for the claimant. Being dissatisfied with that result, the claimant asked for permission to appeal. It was refused by the judge but granted by Lord Justice Jonathan Parker on consideration of the documents.

The outcome of this appeal depends in the first instance on the true construction and effect of clauses 4 and 5 of the agreement and declaration of trust. It is convenient to start with clause 5, which states precisely how the proceeds of a sale of the property are to be dealt with and applied. First, there are to be deducted all charges, fees and expenses connected with the sale. Secondly, the advance made by the bank (or the balance of it) is to be repaid. Thirdly, the £28,000 contributed to the purchase price by the claimant is to be repaid to him. Fourthly, any balance then remaining is to be divided between the claimant and the deceased in the proportions specified. It is notable that there is no provision for the payment of any balance which may be owing by one party to the other under clause 4.

I turn to clause 4. In this court each side has retained leading counsel who did not appear below: Mr Monty for the claimant and Mr Crampin for the defendant. Mr Monty submitted that no cause of action arose under clause 4 unless and until the property was sold, at which point an account was to be taken of the respective liabilities of the parties under that clause, the balance found due being set off against one or other’s share of the net proceeds of sale under clause 5. Mr Crampin submitted that clause 4 imposed mutual but independent obligations on the parties to contribute equally to each cost, expense or outgoing as it became payable, so that if, for example, one party paid the whole of a cost, expense or outgoing, he or she acquired an immediate cause of action against the other party for reimbursement of half.

In my judgment the submission of Mr Crampin is to be preferred to Mr Monty’s. Relying on observations of Buckley LJ in Halesowen Presswork & Assemblies Ltd v Westminster Bank Ltd [1971] 1 QB 1, 46, Mr Crampin said, correctly in my view, that Mr Monty’s submission confused two quite different concepts, those of set-off and account. Having said that where the relationship of banker and customer was a single relationship the situation was not one of lien, Buckley LJ said:

What is the consequence of Mr Crampin’s construction of clause 4? Having said that monies came out of the joint account, in particular for mortgage repayments as soon as the property was purchased, and that that would seem to him to reflect the intention of the parties that the costs, expenses, and outgoings should be borne equally, the judge continued (para 16):

I would be very reluctant to decide this appeal on a technical basis referable to what part or parts of the judge’s decision may or may not have been directly questioned by the claimant. The judge made it clear that he was not deciding that the monies in the joint account were owned equally. On that footing it is well arguable that the right of each party to draw on the account was an unsure foundation for the judge’s decision in regard to the payments made out of it. I therefore propose not to make any distinction between those payments and payments made out of the claimant’s own account.

As to the latter payments, I have already read from para 9 of the judge’s judgment (see para 6 above). In para 17 he said:

So the judge based that part of his decision on an implied waiver by the claimant of his right to reimbursement. Though such a basis appears to be in complete accord with the common sense of the matter, it has been objected to on two grounds: first, on the ground of procedural unfairness; second, on the ground that none of the three requirements for waiver was established.

In regard to procedural unfairness, Mr Crampin has accepted that the waiver relied on by the judge was neither specifically pleaded nor argued below and, further, that it was raised for the first time by the judge in his judgment. As for pleading, although this point was not made by Mr Crampin himself, it is worth noting that para 7 of the amended defence and counterclaim contains a plea of estoppel based on the claimant’s alleged request to the deceased not to work outside the home. Para 7 continues:

As for the suggestion that none of the three requirements for waiver (representation, reliance and inequity) was established, I would emphasise, as did the judge, that this was not a commercial agreement between strangers. The judge, who saw and heard the claimant give evidence, must have thought that he had made it clear to the deceased that he was not going to enforce any right to reimbursement against her and that she had ordered her affairs accordingly. As between parties living happily together, that is surely enough to establish waiver. It is not appropriate to insist on the formalities of waiver in its application to an informal relationship.

It is also worth noting, although the point was not referred to by the judge, that in his first witness statement the claimant gave evidence of the circumstances in which clause 4 came to take the form that it did. The effect of his evidence was that he and the deceased were advised that, since they were unmarried, each of them could, under the law as it then stood, claim the benefit of mortgage interest relief on a borrowing of up to £25,000 (later increased to £30,000). The deceased was told in correspondence by the Inland Revenue that, provided that she was equally liable with the claimant to contribute to the outgoings, she could claim mortgage interest relief up to the maximum amount, whatever her share of the equity might be. It seems very likely that that was the reason for the inclusion of clause 4 in the form that it took and, further, that that is the explanation for the parties’ total disregard of it during their joint lifetimes. Since the judge did not make a finding on the point, it would not be right to attach decisive weight to it. It certainly confirms my view that it would not now be right to allow the claimant to rely on clause 4.

For these reasons, I am of the opinion that the judge’s decision on waiver was correct. It thus becomes unnecessary, as it was unnecessary for him, to consider the defendant’s further defence based on limitation. It only needs to be said that on Mr Crampin’s construction of clause 4, which I have held to be correct, the defence has much to be said for it.

I would dismiss this appeal.

I agree.

I also agree.