Kean v McDonald & Ors

This case concerns a dispute as to the ownership of a freehold property at 1B Charnley's Lane, Banks, Nr. Southport, Merseyside (""the property").

The property was originally owned by the first defendant ("Mr. McDonald") who acquired it in or around 1988. He does not claim any continuing interest in the property. The claimant ("Mr. Kean") claims to be the beneficial owner of the property. His claim is disputed by the fifth defendant ("the CPS").

On 11 August 2005 the first to fourth defendants were debarred from defending the claim by the Court. The sixth defendant informed the Court by letter dated 28 July 2005 that it was content to be bound by the decision of the Court in this matter.

This claim came on for hearing with a two-day estimate on 21 February 2006. On 21 and 22 February 2006 I heard opening submissions and the oral evidence of five witnesses. At my suggestion, the parties agreed to produce written closing submissions. On 3 March 2006 I was provided with written submissions on behalf of the CPS (and a full transcript of the oral hearings). I was provided with Mr. Kean's detailed closing submissions on 10 March 2006. I am grateful to the parties for the industry and thoroughness with which the closing submissions have been prepared.

Mr. Kean does not contend that his interest in the property arises from any contract in writing with Mr. McDonald. He relies instead on the species of constructive trust which is based on "common intention". This doctrine is discussed by Lord Bridge in Lloyds Bank PLC v Rosset [1991] 1 A.C. 107, 132 and by Robert Walker LJ in Yaxley v Gotts [2000] Ch 162, 176B-177G and 180C. It requires a claimant to establish an agreement, arrangement or understanding actually reached between the parties and relied on and acted upon by the claimant. In these circumstances the absence of a contact in writing is not fatal to the claim.

The arrangement relied upon by Mr. Kean is pleaded in paragraph 9 of his amended particulars of claim and the alleged detrimental reliance is pleaded at paragraph 10. In short, Mr. Kean alleges that in early 1997 he reached an arrangement with Mr. McDonald through the latter's brother Tommy whereby in return for the payment of £10,000 Mr. Kean would become the owner of the property. Mr. Kean also alleges that he arranged for Mr. Richman to pay £10,000 in cash to Mr. McDonald on Mr. Kean's behalf and to collect the Land Certificate, Title deeds and other documents relating to the property. Mr. Kean says that the second defendant ("Mr. Sansom") reimbursed Mr. Richman the £10,000 from monies held by him for Mr. Kean and received the documentation concerning the property from Mr. Richman for safekeeping on Mr. Kean's behalf.

In this case the Court has heard oral evidence from the parties who are alleged to have come to the arrangement. Both Mr. Kean and Mr. McDonald were cross-examined in detail by Leading Counsel for the CPS. Their evidence, if accepted by the Court, clearly establishes the pleaded arrangement. However, the CPS strongly submits that I should reject that evidence as unreliable and untruthful on a variety of grounds. These include the previous differing ways in which Mr. Kean's case has been put, inconsistencies in their oral testimony, their criminal records and the lack of any or any reliable contemporaneous documentation.

Of course, all of these matters merit serious consideration, which I have given to them. But at the end of the day I have come to the conclusion, having seen and heard Mr. Kean and Mr. McDonald in the witness box, that they did come to the arrangement in 1997 pleaded by Mr. Kean in his amended particulars of claim.

I now turn to the alleged payment of £10,000 to Mr. McDonald. The oral evidence of those involved (Mr. Kean, Mr. Richman, and Mr. McDonald himself) was that it was paid and the Mr. McDonald handed over the documentation relating to the property. The CPS relies upon the absence of any or any reliable contemporaneous documentation and invites me to reject the oral evidence which I heard on this point. This I am not prepared to do. Nor am I prepared to find that the source of the funds used to reimburse Mr. Richman was not legitimate.

I am satisfied that £10,000 was paid to Mr. McDonald in cash on behalf of Mr. Kean as a result of the arrangement. Accordingly, Mr. Kean has established detrimental reliance by him on the arrangement.

I now turn to two other alleged owners of the property.

In January 1998 Stableclock Ltd ("Stableclock") became the registered owner of the property. It was struck off the register of companies on 2 January 2001. Hence the joinder of the sixth defendant to these proceedings.

Any entitlement of Stableclock to the property turns entirely on the genuineness or otherwise of a Form 19 Transfer purportedly executed by Mr. McDonald on 15 January 1998 whereby in consideration of £1 Mr. McDonald transferred the property to Stableclock.

Mr. McDonald has given both witness statement and oral evidence to the Court to the effect that he did not execute the Transfer. I found his oral evidence on this point to be clear and compelling and I accept it.

The purported witness to Mr. McDonald's signature, a Mr. Joseph Siner, gave a witness statement to the effect that he had not witnessed Mr. McDonald's purported signature. But he proved reluctant to attend Court and I therefore attach no real weight to his evidence. Mr. Sansom was plainly involved in relation to the Transfer. However, he has not been prepared to vouch for the authenticity of the Transfer.

I am satisfied that the Transfer was not genuine and Stableclock acquired no rights in relation to the property purportedly pursuant to it.

The CPS submits that the forth defendant ("Mr. Gerrard") is the owner of the property. It contends, on the basis of a letter dated 18 September 1996 countersigned by Mr. Gerrard, and on a Mr. Hornby's evidence that in 1996 Mr. Gerrard was representing to Mr. Hornby that he was the owner of the property. He certainly had access to a set of keys. But Mr. Hornby, the prospective letting agent, told the Court that he had made no inquiries as to whether Mr. Gerrard indeed had any interest in the property and the letter countersigned by Mr. Gerrard is no adequate basis on which the CPS can demonstrate that he had such an interest.

Mr. McDonald, whose evidence I accept on this point, denies that he transferred the property to Mr. Gerrard. And the CPS do not say when, why or for what consideration Mr. McDonald allegedly transferred the property to Mr. Gerrard.

For completeness I should mention this. Mr. Gerrard is a fugitive from justice. His solicitors wrote to Mr. Kean's solicitors on 16 January 2006 asserting that Mr. Gerrard had no interest in the property. I do not propose to attach any weight to these assertions.

In all the circumstances I do not accept that Mr. Gerrard has ever had any legal or beneficial interest in the property.

I am accordingly satisfied that Mr. Kean has made out his claim to be the sole beneficial owner of the property.

The parties are therefore invited to agree the appropriate form of an Order which the Court should make in the light of this Judgment. If any difficulty arises it can be mentioned to me when I sit to hear argument as to costs at 11.30 a.m. on 23 March 2006.