HX v WX

I am dealing with a preliminary issue, this being day one of a two-day final hearing in respect of financial remedies. The preliminary issue relates to whether the intervenor, IX, has any interest in equity in the former family home.

Representation today is as follows, Ms. Butler for the applicant, Mr. Maxwell-Stewart for the respondent and Ms. D'Arcy for the Intervenor, all of counsel. I thank them all for their very helpful opening notes and oral submissions today.

I will refer to the parties (as did counsel) by their first names which makes life easier, I mean no disrespect and intend no over-familiarity on my part. In this published version of the judgment, I have anonymised them.

IX (who is now aged 92 and too physically infirm to attend court in person) was invited to intervene in this matter by the order of District Judge Wall at the ineffective FDR on 6 February 2025. She duly did and her position is set out in her points of claim, served in accordance with the TL v ML guidance, dated 25 April 2025 and her witness statement of the same date.

IX’s application is supported by WX, her daughter, but opposed by HX her son-in-law. Each of HX and WX deal with the issue of the equity in the former family home in their s25 witness statements which of course also cover the wider canvas in terms of the s25 factors, with which I shall deal tomorrow.

It is IX’s case that a set of agreed facts appears to have emerged from the various witness statements.

In terms of overall chronology, this is a relationship between HX and WX of some 22 or 23 years from around 1999 or 2000 with them being married in 2014 separating in December 2022.

The family home was purchased by HX and WX jointly in 2003. It is IX’s case that in 2020 HX approached her about building a self-contained annexe at the family home which IX would then move into. It is further IX’s case that in early 2020 all three parties agreed that, as IX would be paying for the construction of the annexe, she would be able to remain living there for the rest of her life (IX would have been in her late 80’s at the relevant time). IX goes on to assert that as well as the effective home for life, given the size of the sums she was spending on the annexe, the beneficiaries of her estate would benefit on her death, as the value of the family home would have been enhanced by virtue of the construction works.

It is common ground that IX paid the sum of £176,859.38 to HX for the construction works, which began in October 2020. IX was able to move into her annexe in September 2021. After IX and WX separated, relatively soon afterwards, HX, WX and IX reached an oral agreement that IX would purchase HX’s legal and beneficial interest in the family home for £220,000. Pursuant to that agreement, IX paid on account HX £10,000 on 8 January 2023 and £25,000 on 10 January 2023.

HX left the family home a month or so later in February 2023. An issue then arose about the standard of the works carried out by HX and it is IX’s case that she had to pay third parties £43,743.89 to put things right. As such, IX’s case is based on her having paid out £211,859.38 for her annexe and life interest in the family home.

On the basis of all of this, IX claims proprietary estoppel and asserts an equity in the family home, and seeks the relevant declarations, to include a declaration that after her death, out of the proceeds of sale of the family home, her estate is paid the sum of £211,859.38.

The points of claim are detailed. With respect to IX, his points of defence are the opposite and comprise little more than a bare denial. They are inadequate given that the purpose of pleadings is to nail one’s colours to the mast, to turn one’s cards face up on the table. I remind myself that when laying down the procedure in TL v ML Mostyn J referred specifically to the issues being fully pleaded by points of claim and points of defence, the key word being ‘fully’. As I mentioned during opening exchanges, had this been a free-standing civil claim being case managed by me in the County Court, what is a mere denial defence would have been struck out and the ‘defendant’ directed to re-plead the case fully within 28 days. Of course, in the Financial Remedies Court there is unfortunately no automatic mechanism for paper reviews of pleadings by judges as there is in the County Court (on allocation to track).

HX goes into some more detail in his witness statement, but his evidence as to the actual agreement (if we strip out the issue of the remedial works) is limited to paragraphs 6 to 9 with a brief reprising at para 69. Paragraphs 11-31 deal with the progress of works, but it is not in dispute that those works were done, albeit that there is a dispute as to the necessity for and quality and workmanship of the works (and that is the subject of paragraphs 37-48 of the witness statement).

WX’s points of defence largely consists of admissions, bearing in mind that she supports IX’s application, but does descend into necessary detail where this is required.

The law is uncontroversial- there are three elements necessary to establish a proprietary estoppel, there needs to be a representation, promise, assurance or other encouragement by the defendant (HX and WX in this case) which gave rise to an expectation by the claimant (IX in this case) that she would have a proprietary interest. Secondly the claimant, (IX), relied on that expectation. Thirdly that the claimant, (IX), has acted to her detriment as a consequence of her reasonable reliance on the representation, promise, assurance or other encouragement.

If the three elements are established, then the claimant, (IX), would be entitled to an equity or interest in the subject property.

At the start of the hearing this morning, HX conceded via counsel that IX had a life interest in the family home. He does not concede that she is entitled to any further equitable remedy and that was the focus of the dispute this morning.

In terms of written evidence, I have three statements from the parties. In his witness statement HX goes into more detail than in his points of defence- he could hardly have gone into less- but again I would have expected more than five paragraphs.

As to the parties’ opening positions, it is IX’s submission supported by WX that there are sufficiently serious and important factual concessions on the part of HX which in essence support IX’s claim.

Firstly, Ms. d'Arcy submits, HX accepts that he was one of the three parties to the discussions about the building of the annexe before IX sold her existing cottage. Secondly, HX accepts that there was indeed an agreement and understanding, prior to IX liquidating her cottage, that something in the region of £150,000 (being the figure HX quotes as being the anticipated expenditure- well at least on his own recollection) would be the cost. This reinforces IX’s case that it was agreed that she would sell her cottage, she would pay for the construction works and in return would have a home for life- and as I say this was conceded this morning.

Thirdly, IX relies on something HX says when talking about the arrangement, namely the wish on the part of IX to preserve the sale proceeds of her cottage ‘for the family’, such that her estate would ultimately benefit from the enhanced value of the family home consequential upon the construction of the annexe.

IX also relies on a letter from HX’s solicitors which appears to accept the arithmetic in terms of what was advanced by IX, namely £176,859.38 for construction work and the additional £35,000.

HX’s position in essence (albeit it was not made clear before today-at least to the court) is that it was agreed that IX would move in with HX and WX, to save on potential care-home costs, and that some of the proceeds of sale of her cottage would be used to fund the annexe. The estimated cost would be £150,000. HX disputes that there was ever any agreement by which IX would acquire any legal or equitable interest over and above a life interest.

I heard oral evidence from IX via CVP, everyone else being present in court. This presented difficulties partly caused by the suboptimal microphone arrangements for hybrid hearings in this particular hearing room, and partly in terms of IX being able to hear and understand the questions. As a result, which included Ms. Butler resubmitting her cross-examination questions (cross-examination being limited) to IX via email so that she could have them read out to IX by the trainee solicitor sitting with her on the link and could respond verbally, cross–examination was repeated.

IX accepted that at the inception of discussions there was nothing said about any beneficial interest over and above a home for life, that there were no conversations about IX being an owner, or any discussions as to whether IX’s estate would benefit. IX said that if this was the case paperwork would have been drawn up. Neither she nor the parties had discussed the situation that would occur if HX and WX separated. She confirmed that if the financial remedy proceedings are to be resolved by way of a buyout (of HX), she will be contributing. She does not know how much money she has remaining, after the annexe-spend, from the proceeds of sale of her cottage.

IX was doing her best to assist the court today. I am satisfied that she heard all of the questions and answered honestly but whether she was fully appraised of the consequences of the initial discussions either at the time or now must be open to doubt- not least as she had given no thought to what would happened if there was a divorce, or indeed as sometimes happens a fallout between a family couple on the one hand and an older relative on the other.

HX then gave evidence. Given the court’s criticisms of his points of defence and to a lesser degree his witness statement, I found his evidence to be evasive at times, flippant at others and he was on more than one occasion unwilling to answer the question being asked of him or was intent on giving the answer to the question he hoped he would be asked. At times he was argumentative.

Despite confirmation in his solicitors’ correspondence, as to at least the arithmetic of the sums he had received from IX, at times he sought to move away from that. Much of Mr. Maxwell-Stuart’s cross-examination involved a repeated cycle of questions as to the non-appearance of his company bank statements in the bundle. That took the court nowhere in particular other than to underpin HX’s lack of preparedness and documentary evidence in support, on his part, in putting forward his case. I have seen over the short adjournment Ms. Butler’s email which sets out why this was in part the case, but this takes me no further. I cannot analyse those statements in circumstances where there is now no opportunity to cross-examine HX on them as to the intervenor claim, though they may feature tomorrow when the financial remedy proceedings are dealt with. HX was unable to assist the court with what had actually been spent on the annexe.

The most important and telling answer that HX gave was his response to a question of what the position would have been had IX died on the day that she moved into the annexe. He said that then there would have been discussions within the family (by which I take him to mean understand WX’s two siblings); that indicates that the discussions were not all-encompassing simply because divorce and premature death were not on the agenda.

WX gave evidence. She too accepted that there were no ‘what if’ type discussions but also accepted that there been, the involvement of her sisters would have been necessary. She politely disagreed with IX as to the extent and nature of the discussions, on which there were some contradictions. WX was adamant that the TR1 for the abandoned negotiations (prior to the alleged repair issues coming to light) was drafted in three names and this was established by reference to the bundle, albeit it was a draft only.

I then heard final submissions. To summarise, Ms. Butler submitted that the monies transferred were for the purpose of creating the life interest and nothing more. She pointed out that IX’s own evidence today disavowed any discussions about her estate. The relevant conversations were that occupation would be rent free, and that would save on care home costs. No one anticipated a divorce or how long IX might live. HX's open offer today is essentially now a 50-50 split of the proceeds of sale of the home between HX and WX with £35,000 to be paid back to IX on account of the advance paid within the unconcluded negotiations. As such, to summarise, any claim in equity is extinguished by the life interest- that was HX’s case.

Mr Maxwell-Stewart’s submissions were based on the need for the courts of equity to make good an unconscionable bargain. Notwithstanding the oral evidence today, particularly that of IX, it is clear that the parties did not bottom out the minutiae, let alone document anything, or think through the full legal consequences. It would be inequitable for HX and WX to effectively pocket all of IX’s money that has been spent on their home. Although he submitted the court could resolve this on a pound for pound basis, he inclined towards a remedy based on the independently expertly-evidenced enhancement figure. Mr. Maxwell-Stewart alighted on the one reply from HX which I have mentioned about what (hypothetically) would have been the position if IX had died on day 1 of her moving in. He pointed out that HX conceded that this posited outcome (had it occurred in 2021), namely that IX’s estate would receive nothing would have been unfair- but now the same outcome (in 2025) is in some way fair. That, Mr. Maxwell-Stewart submitted, is not only absurd, but served to highlight the underlying unconscionability – an outcome based on a simple life interest would be disproportionate.

Ms d’Arcy submitted that the concession by HX of IX’s life interest at the eleventh hour was nothing short of astonishing. As per her skeleton argument (paragraph 26) she pointed out that in terms of the proprietary estoppel, HX’s own evidence made out IX’s case for her. There was, she submitted, a clear financial detriment here to IX- the estoppel is made out and an equity has arisen. The life interest can only be in part satisfaction by way of remedy, to rectify the unconscionability which is represented by HX being paid to do the works and then excluding IX from any benefit over and above the life interest. The court, it was submitted, has a wide discretion, but it is not an unfettered one- it has to be principled. She maintained her pleaded pound-for-pound case, though as a fallback suggested the court look at the actual enhancement value and provide a beneficial interest of 18% calculated on an enhancement of £100.000 over £550,000.

I have considered the documents, the oral evidence and the legal principles along with the skeleton arguments and closing submissions.

Clearly, HX must now accept that IX has made her case out as to proprietary estoppel. All of the ingredients are there- promise, reliance, detriment. HX now concedes that the life interest is in effect sacrosanct, albeit only today.

So, the question the court has to consider is this; is the now conceded life interest sufficient remedy for IX? The aim of the court is to remedy unconscionability. It is case-specific, and the court has to have regard to all of the circumstances. The remedy must not be out of all proportion to the detriment. The making good of the promise is the starting point. The authorities make clear that detrimental reliance includes more than simply money and a purely financial comparison may well be inappropriate. For that reason, I am not of the view that a line-by-line comparison of what IX spent on the annexe vis-a-vis what she would have spent in a care home would enlighten.

And in any event, no one is saying that the annexe was a straight binary choice for IX alongside a care home. There is evidence of the family looking at nearby bungalows for IX. The court has to put in the balance the matters which the parties did not for obvious reasons consider themselves at the time the promise was made.

In my judgment, payment by IX of £211,859 should not, on equitable principles (and of course absent agreement to the contrary), entitle IX to a pound for pound remedy or a beneficial interest proportionate to that.

Rather, and this is Ms. Darcy’s fall-back position (and as mentioned by Mr. Maxwell-Stuart we actually have the benefit of empirical evidence of the effect on the value of the home of the enhancement) that should be the guide. It (the enhancement element) is £100,000 according to the expert report.

That in my judgment is what IX’s money ought to have given her in beneficial terms along with the life interest, which of course would be on a scale of one day to, hopefully, many years yet.

As such, I accede to Ms. Darcy’s secondary outcome that IX has an 18% beneficial interest in the family home and will make declarations accordingly. I appreciate this may be a tortious concept and we are dealing in equity here, but standing back by way of cross-check, ‘but for’ IX spending £176,859 on this property, it would only be worth £450000. It is now worth £550,000. To limit her equity to a life interest would not adequately address the reality of the situation.