Insol Funding Company Ltd v Cowlam & Ors

By a Part 20 Claim dated 20^th December 2016 and subsequently amended pursuant to my order of 13^th January 2017, the Part 20 Claimant, Ms Sacha Fairfax Cowlam (Ms Cowlam) seeks a determination of the extent of her interest in a property at 11 South Croxted Road, West Dulwich, London SE21 (the Property) and a further determination of her rights, if any, over, or in respect of, such interest in the Property as is found to have been held by her co-owner and previous domestic partner, the First Part 20 Defendant, Mr Christopher William Cowey (Mr Cowey). This judgment pertains to that Part 20 Claim.

Mr Cowey, although served and aware of the proceedings, has elected not to participate. However, the Claimant and Second Part 20 Defendant, Insol Funding Company Limited (Insol), which has an equitable charge over his interest in the Property and which will seek to recover some part of the monies secured by that charge out of the proceeds of his share in the Property upon the sale of the Property, appeared by Counsel, Mr Wright, put in evidence (to which I will later refer) and made submissions having the potential effect of limiting Ms Cowlam’s share and defeating her argument that, in the events that have occurred, she can assert additional proprietary rights over Mr Cowey’s share. Those submissions, which I heard de bene esse, were made against the background of a submission by Mr Swirsky, for Ms Cowlam that, notwithstanding Insol’s earlier joinder as Second Part 20 Defendant, Insol had no locus to be heard.

The procedural and litigation history of this matter is complicated.

The original litigation between these parties commenced in 2009. Prior to that date, Mr Cowey had been made bankrupt and had approached Insol, then known as Annulment Funding Company Limited, to borrow funds, of some £138,000, in order to procure the annulment of his bankruptcy. As security for that borrowing Ms Cowlam and Mr Cowey, as joint owners of the Property, purported to charge their legal and beneficial interests in the property by way of a second charge in favour of Insol. Although the intention had been that the funding by Insol should be short term and that the sums secured by the second charge and the then existing first charge by way of a conventional remortgage, that remortgage was never effected, Insol called in its loan and, in the absence of repayment, brought proceedings for possession of the Property in the Lambeth County Court.

Those proceedings were defended by Mr Cowey and Ms Cowlam on a number of grounds. For present purposes, however, the material ground and that which, at first instance and in the Court of Appeal, was found to be made good was that Ms Cowlam had entered into both the loan and the second charge in support of the loan by reason of the actual undue influence exercised over her by Mr Cowey, that Insol were fixed with notice of that undue influence and, therefore, that, as against Ms Cowlam both the loan and the charge should be set aside. It is material to note that both at trial and in the Court of Appeal, Mr Cowey and Ms Cowlam were unrepresented, albeit that they had the benefit of the assistance of a Mr Bennett as a McKenzie friend. That said, it is evident that at some stage they had had legal assistance, since their Defence is signed by Counsel.

Although, as against Ms Cowlam, Insol’s case was dismissed in its entirety and although, as against both Ms Cowlam and Mr Cowey, Insol’s claim for possession was dismissed, a money judgment was entered against Mr Cowey in respect of the loan and of costs.

Following the decision of the Court of Appeal, [2010] EWCA Civ 711, handed down on 23^rd June 2010, and in circumstances where Mr Cowey had elected, in December 2009, to make himself bankrupt, further proceedings were brought against Mr Cowey in the Lambeth County Court for a declaration that, notwithstanding the setting aside of the legal charge, his beneficial interest in the Property was subject to an equitable charge in respect of the loan monies advanced to Mr Cowey. That declaration was granted by HH Judge Welchman, in the County Court, in July 2011 and upheld on appeal in July 2012.

The current proceedings, issued in June 2014, were brought against both Mr Cowey and Ms Cowlam to enforce that equitable charge. By that date, the sum outstanding in respect of the loan secured by the equitable charge, having regard to the terms of the loan, which provided for interest at 1.5% per month, had increased to some £640,000. By that date, also, and, indeed, well before that date, as is set out in Ms Cowlam’s written evidence, she and Mr Cowey had long since separated and, save that his son, by Ms Cowlam, lives with his mother at the Property, Mr Cowey had long since severed any connection with the Property.

The proceedings came before Deputy Master Henderson in October 2014. Mr Cowey, as has been the case throughout the current proceedings, both in respect of the Claim and the Part 20 Claim, did not appear. The Deputy Master directed, among other things, that Ms Cowlam have permission to serve an Additional Claim against Mr Cowey in relation to their respective beneficial interests in the Property and in respect of any equitable accounting. Pursuant to that order so called Additional Particulars of Claim were served by Ms Cowlam in December 2014. Being then acting in person, however, she did not, at that stage, formally issue a Part 20 Claim. That deficiency has, by my order of 13^th January 2017, now been resolved.

In the Summer of 2015, the proceedings not having further advanced, Insol and Ms Cowlam came to terms, following a mediation. Mr Cowey took no part in the mediation, or in any settlement negotiations. The terms of settlement were set out and contained in a settlement agreement dated 25^th June 2015, to which I shall later return. In short, however, under the terms of the agreed settlement, the proceedings would be stayed and Ms Cowlam would pay Insol the sum of £325,000. Payment was to be made by 31^st December 2015. In the event of non-payment, the settlement sum would increase to £330,000 and the Property would be placed upon the market for sale at such price as would enable the now enhanced settlement sum to be paid. In the absence of a sale within six months of 1^st January 2016, either party was entitled to apply to the court to lift the stay and to seek directions as to sale. To protect Insol’s position, pending either payment or sale, Ms Cowlam would, as she has done, enter into an equitable charge over her beneficial interest in the Property as security for the payment of the settlement sum.

Pursuant to the settlement agreement, by my order of 6^th July 2015, the Claim was stayed. At that date Ms Cowlam had envisaged, or, at least, hoped, that the Property could be re-mortgaged in order to effect payment of the settlement sum. Such a re-mortgage has, however, proved impossible.

For reasons which are in some dispute between Ms Cowlam and Insol, but which are not relevant to this judgment, there were considerable delays in placing the Property on the market. A particular problem lay in the fact that the agent instructed felt that instruction by Mr Cowey, as joint owner, was also required.

Be that as it may, in October 2016, Insol issued an application for the sale of the Property, pursuant to their equitable charge, but purportedly under the liberty to apply as to enforcement contained in the order of 6^th July 2015. The application came before me and I took the view that the enforcement of the equitable charge arising from the settlement agreement was distinct and different from the enforcement of the settlement agreement and could not properly be dealt with under the liberty to apply. In consequence, I made an order lifting the stay in respect of the proceedings and giving Insol permission to amend the proceedings so that the Claim for sale arising under the equitable charge over Ms Cowlam’s beneficial interest could be advanced in tandem with the original claim for sale arising under the equitable charge over Mr Cowey’s beneficial interest. I also gave directions allowing, or enabling, the appointed estate agent to market the Property without instruction, or authority, from Mr Cowey.

Additionally, by my order of 2^nd December 2016 and pursuant to the liberty to apply as to enforcement contained in the 6^th July order, I gave judgment for the settlement sum, which, accordingly, now carries accruing interest

The question of sale was finally determined by my order of 13^th January 2017. By that order, which was not, ultimately, in contest, I directed the Property be sold, but, unusually, given that Ms Cowlam, herself, recognised the need for sale and was already marketing the Property, I directed that, at least in the first instance, she should have the conduct of the sale. The Property is subject to a first charge which stands at approximately £379,000 and is on the market at just under £1.3M. On a sale there will, therefore, be some £900,000 left for distribution after the first charge is redeemed.

In that context and given that Ms Cowlam’s share of the proceeds will be subject to the payment of the settlement sum of £330,000, secured by the equitable charge arising from the settlement agreement (and given, further, that, as already stated, judgment for that sum has been given against Ms Cowlam, by my order of 2^nd December 2016 and, therefore, that interest on that sum is accruing from 2^nd December 2016), the extent of her beneficial interest and the extent, if at all, to which she is entitled to call upon Mr Cowey’s share in the Property is plainly crucial in determining the monies that Ms Cowlam will have available to rehouse herself and her son (who lives with her at the Property) when the sale is concluded.

Conversely, from the perspective of Insol, the extent of Mr Cowey’s residual share and the extent to which that share is, or is not, subjected to any prior rights of Ms Cowlam, is, potentially, highly relevant to any recovery that Insol may be able make from Mr Cowey out of his share of the proceeds of the Property and, correspondingly, affords a clear prima facie justification for Insol’s participation as a Part 20 Defendant in the Part 20 Claim. Insol has, to date, achieved no recovery at all from Mr Cowey in respect of its original loan to Mr Cowey, notwithstanding its equitable charge over his share and notwithstanding that the sum secured by that share, given the incidence of interest under the terms of the original loan, is now a very substantial sum.

I have characterised Insol as having a clear ‘prima facie’ justification for its participation because, as foreshadowed earlier in this judgment, Mr Swirsky contends that notwithstanding Insol’s apparent interest in the outcome of the Part 20 Claim and in, in effect, minimising the extent of Ms Cowlam’s entitlements out of the Property in favour of Mr Cowey and, through him and through the equitable charge over his interest, itself, Insol has, nonetheless, in law, no standing to participate.

That contention is said to derive from the terms, or some of them, of the settlement agreement. Those terms are also said (by Insol, on this occasion) to be both relevant to and adverse to, Mr Swirsky’s further contentions and submissions, that Ms Cowlam has rights over and against Mr Cowey’s residual share in the Property arising out of either, or both, of the equity of exoneration, or of an equitable right of subrogation.

The terms of the settlement agreement, more precisely, the relevant recitals to the settlement agreement, which are said to be material to the foregoing are summarised and, as necessary, set out below.

Following recitals that Insol and Ms Cowlam are in litigation in these proceedings, that Mr Cowey is also party to the proceedings and that Insol and Ms Cowlam are desirous of settling this litigation as between themselves and in relation to Insol’s claim for sale or possession of the Property, the recitals continue:

Arising out of these recitals and, specifically, recital (C), Mr Swirsky submits that Insol has agreed that, as between Insol and Ms Cowlam, the effect of the settlement agreement, once performed, is to exhaust Mr Cowey’s beneficial interest in the Property ‘such that’ Insol has no further interest in’ Mr Cowey’s interest in the Property. The consequence of this, he submits, is that Insol, having agreed with Ms Cowlam that it was to have no further interest in Mr Cowey’s share in the Property has no locus, now, to advance arguments before me having the effect of enhancing Mr Cowey’s entitlement from the Property and, correspondingly, reducing Ms Cowlam’s

Mr Wright, for Insol, meets that argument in two ways.

Firstly, he points out that any agreement, arising out of recital (C), as to the exhaustion, as against Insol, of Mr Cowey’s interest in the Property, takes effect only upon Ms Cowlam’s performance of the agreement, by which, he submits, is meant the payment of the settlement sum. That sum not having been paid, there is nothing, he submits, at this stage, to debar Insol from participating in the Part 20 Claim and from advancing arguments which, if upheld, have the result of increasing Mr Cowey’s interest to the advantage of Insol as equitable chargee of that share.

Secondly, he submits that, even when performance, by way of payment of the settlement sum, has taken place and even if, at that point, Insol, as against Ms Cowlam, has no interest in Mr Cowey’s share, Insol, nonetheless, retains, as against Mr Cowey, its equitable charge over Mr Cowey’s share, such that it remains interested in the proceeds of sale of that share and such that, notwithstanding the terms of recital (C), it has a legitimate interest in enhancing the extent and value of that share.

In this regard, Mr Wright points out and prays in aid the further terms both of recital (C) and recital (E), to the effect that the settlement with Ms Cowlam does not prevent the continuation of the Claim (meaning these proceedings) as against Mr Cowey, or its entitlement to pursue Mr Cowey for ‘the balance due’ pursuant to the orders made against Mr Cowey in the County Court in 2009 and 2012.

The current proceedings, as they relate to Mr Cowey, are for the enforcement, as against him, of the equitable charge over his share, arising from the original loan transaction, and the monies due under and pursuant to the two County Court orders (or any balance of those monies) are and can only be the monies secured by that equitable charge. The 2009 money judgment, itself, save as secured by the equitable charge, will have been extinguished by reason of Mr Cowey’s December 2009 bankruptcy.

The proper construction of the settlement agreement (and its effect) is not without difficulty. While the express reservation to Insol of its continued rights of suit as against Mr Cowey, in respect of the equitable charge, is a powerful indicator that Insol had no intention, in entering into the settlement agreement, of releasing its equitable charge and while the fact that Mr Cowey was not party to the settlement agreement has the effect, as I see it, that Mr Cowey is not entitled to the benefit of any of the terms of that agreement, between Insol and Ms Cowlam acknowledging the exhaustion, or exoneration, as against Insol, of any liability to Insol out of his share, it, nonetheless, seems to me to be clear that the intention and effect of the settlement agreement, at least in the circumstance that the settlement sum had been paid without a sale, was that Insol would, in practice, if not in law, be deprived of its right to seek sale pursuant to its equitable charge over Mr Cowey’s interest.

It seems to me that recital (C) was primarily directed to that circumstance. Had payment been made of the settlement sum without the need for a sale, then it would have been impossible for Insol to enforce its equitable charge over the interest of Mr Cowey. In that circumstance, any application for a sale of the Property pursuant to the equitable charge would have been met, by Ms Cowlam, by Insol’s acknowledgment that its rights over Mr Cowey’s share had been exhausted with the resultant dismissal of the application. While, de jure, the charge might, as against Mr Cowey, have continued to exist, in practical terms it would have been extinguished. That this was understood by Insol to be the case seems to me to derive support from recital (D), which expressly sets out Insol’s understanding that, on payment of the settlement sum, Ms Cowlam would seek to secure the transfer of the entire legal and beneficial interest into her own name. While, looked at technically, such a transfer might well have been subject to Insol’s equitable charge, it seems to me that, reading recital (E) with recital (C), Insol and Ms Cowlam plainly envisaged a situation whereby, on payment of the settlement sum, the Property would, or might, be transferred into Ms Cowlam’s sole name, legally and beneficially, and whereby any rights, that Insol might otherwise have had over and in respect of Mr Cowey’s share, would, as against Ms Cowlam be treated as exhausted by payment, with the result that Insol would not have been able, any longer, to enforce its equitable charge over Mr Cowey’s share by way of a sale.

It cannot have been the intention either of Insol or Ms Cowlam that, the settlement sum having been paid and Insol having acknowledged to Ms Cowlam that it had ‘no further interest’ in Mr Cowey’s share, Insol could, nonetheless, seek to secure a sale of the Property by way of enforcement of its equitable charge over Mr Cowey’s interest.

On that footing, it seems to me that Insol’s reservation of its rights to pursue Mr Cowey for monies, or the balance of monies, secured by the equitable charge must have been directed at the situation which has now arisen, namely the situation whereby the Property is to be sold and whereby, on a sale, the proceeds of that sale will fall to be divided.

If that be right, as I believe it to be, then Insol, having reserved its right to enforce its equitable charge over Mr Cowey’s interest in the Property, is and remains entitled to enforce its charge upon a sale of the Property by claiming, in priority to Mr Cowey, what would, otherwise be his share of the proceeds of sale and, correspondingly, to be heard as to the extent of that share.

In this regard, I do not accede to Mr Swirsky’s submission that Insol is estopped, by reason of the relevant recitals, from advancing arguments, or adducing evidence, bearing upon the extent of Mr Cowey’s share. It seems to me that any estoppel (whether by convention, or otherwise) arising from recital (C) is subject to the reservation of Insol’s right to pursue Mr Cowey for the monies, or the balance of the monies, secured against his share by the equitable charge and that, to that end and to achieve the largest measure of satisfaction of the monies so secured, Insol is entitled to be heard and to adduce evidence as to the extent of that share, even if the corollary of so doing is to reduce, or minimise, Ms Cowlam’s share

That is not to say, however, that Insol’s acknowledgments, as contained in recital (C), have no further effect than that set out in paragraph 28 of this judgment.

As foreshadowed earlier in this judgment, Ms Cowlam seeks to assert proprietary rights over Mr Cowey’s share, whatever that share may be, pursuant either to the equity of exoneration, or equitable subrogation. Fundamental to the applicability of either doctrine to the facts of this case is her contention that, in charging her interest in the Property with the payment of the settlement sum and in paying, in due course, the settlement sum she will have charged her interest with the payment of some part of Mr Cowey’s secured indebtedness to Insol, such that payment of the settlement sum, out of her share in the Property, will have the effect of reducing and partly satisfying the sums secured against Mr Cowey’s share of the Property and such as to entitle her to be exonerated, or indemnified, out of that share, or to be subrogated to Insol’s equitable charge, to the extent that Insol’s equitable charge is satisfied by her payment. That is disputed by Insol, which submits that any payment by Ms Cowlam is additional to the sums secured against Mr Cowey’s share, that such payment, therefore, will not reduce, or operate in part satisfaction of, the sums secured against Mr Cowey’s share and that, in those circumstances, no equitable subrogation or equity of exoneration can arise.

I cannot accept that submission. I think that it is telling that recital (C) both sets out an acknowledgement, as between Insol and Ms Cowlam, that the settlement payment is to be treated as made by Ms Cowlam upon behalf of Mr Cowey and in exhaustion of his interest and provides that the recital does not preclude Insol from pursuing the ‘balance due’. It seems to me to be manifest from this language that (certainly as between Insol and Ms Cowlam) the settlement payment is to be regarded as a payment to Insol in part satisfaction and reduction of the sums due to Insol secured against Mr Cowey’s share and that, on payment, Insol’s entitlement to recover any sums from Mr Cowey’s share is limited to the ‘balance’ of the sums secured after giving credit for the settlement sum.

I do not think that that analysis is to be disturbed or modified by reference to recital (E), which merely acknowledges Insol’s entitlement to continue its Claim (meaning this Claim) against Mr Cowey to enforce its equitable charge. The recital says nothing as to whether the indebtedness secured by the charge and which is sought to be recovered from Mr Cowey, by way of the Claim to enforce the charge, is to be regarded, as between Insol and Ms Cowlam, as part satisfied or wholly unsatisfied.

Recital (C) has a further importance in respect of Ms Cowlam’s claim to a proprietary interest over Mr Cowey’s share pursuant to the equity of exoneration, or equitable subrogation.

In the ordinary way any priority, as between Insol’s equitable charge and any equitable proprietary interest, or lien, arising from the equity of exoneration would be dictated by the date in which such an interest came into being. In the case of the equity of exoneration that date would be no earlier than the date that Ms Cowlam charged her beneficial interest with the payment of the settlement sum and, accordingly, Insol’s equitable charge would, ordinarily, carry priority, as being first in time.

In respect of subrogation, the position would be different, since priority is, ordinarily, dictated by the priority attaching to the charge to which the party claiming subrogation is subrogated. Here, Ms Cowlam is seeking to be subrogated, in equity, to Insol’s equitable charge over Mr Cowey’s interest, to the extent that she has satisfied that charge, so that, as it seems to me, if subrogation took place, her charge, by subrogation, would, or could, other things being equal, stand pari passu with Insol’s charge.

The effect of recital (C), however, is to acknowledge and record, as between Insol and Ms Cowlam, that, upon payment of the settlement sum, Insol will have no further interest in Mr Cowey’s share and, hence, no subsisting interest, in respect of which it can assert priority. On that footing, it seems to me that, once payment of the settlement sum has been made, Insol will no longer be in a position to assert any priority and, therefore, that, both in respect of any equity of exoneration and in respect of any subrogation of Ms Cowlam to Insol’s charge, Ms Cowlam’s equitable rights will have priority

In this regard and finally in respect of this aspect of the matter, I have considered whether, because recital (C) refers to the settlement payment being made upon Mr Cowey’s behalf, there is any argument that that payment should be treated, as between Insol and Ms Cowlam, as Mr Cowey’s and, therefore and in any event, precluding Ms Cowlam from raising any claim either to an equity of exoneration, or to equitable subrogation. I have concluded that, in circumstances where it is plain that the payment will be made by Ms Cowlam and secured by and paid out of her share, no such argument exists. The payment, although expressed to be paid on behalf of Mr Cowey, is not paid by Mr Cowey but in his behalf. That does not preclude either an equity of exoneration, or a right to equitable subrogation, arising upon such payment, if such rights would otherwise arise.

Over and above the availability in favour of Ms Cowlam of any equity of exoneration, or any equitable subrogation, the primary submission made upon behalf of Ms Cowlam was as to the extent of her share in the Property and, in particular, that that interest extended, in any event, to an 80% share in the beneficial interest. That argument was advanced on constructive trust principles, alternatively upon the basis of the satisfaction of an equity arising in favour of Ms Cowlam on principles of proprietary estoppel. Ms Cowlam’s Part 20 Claim also raised issues of equitable accounting as between Ms Cowlam and Mr Cowey. Those issues were, however, by agreement between counsel, put over for further consideration, if need be, after the court had made its determination upon the other issues in play.

The factual basis upon which Ms Cowlam advanced these claims was not made the subject of serious challenge. The Part 20 Claim has proceeded as a Claim under Part 8 and no order for cross examination has been made. At the outset of the hearing a question arose as to whether Mr Wright, for Insol, wished to cross examine and for such an order to be made. In the event, cross examination was not pursued. At a later stage, when Mr Wright was pressing his submissions on the facts, I questioned whether, in fact, Insol was advancing a serious challenge to Ms Cowlam’s account and, if so, whether he was, or should be, seeking to cross examine Ms Cowlam. Mr Wright elected not to take the matter further.

In the result, while I have taken into account a number of documents produced by Insol and which were said by Insol, to be potentially inconsistent with some aspects of the account given by Ms Cowlam in her written evidence, I approach the matter upon the basis that, in substance, Ms Cowlam’s evidence is not in dispute. It would, in my view, be wrong in principle, to reject that evidence, unless obviously wrong and implausible, where the evidence has not been challenged in cross examination and where Ms Cowlam has not had the opportunity to meet, or explain, points made against her.

Ms Cowlam’s evidence is set out extensively in writing in her witness statement dated 20^th December 2016, together with her Additional Particulars of Claim, dated 12^th December 2014, and is summarised here only to the extent required for the proper understanding of this judgment.

The starting point, for present purposes, is 1994, when Mr Cowey, began to live with Ms Cowlam, upon at least a semi-permanent basis, at her then home at 71 Copleston Road SE15. There is no suggestion that Mr Cowey had any interest in that property, which was owned legally and beneficially by Ms Cowlam.

In 1994, Ms Cowlam became pregnant with her son by Mr Cowey. Her son was born in June 1995.

In 1997, Ms Cowlem and Mr Cowey decided that they should buy a property together as a joint home for themselves and their son. To that end, 71 Copleston Road was placed on the market and sold. After repayment of the mortgage on that property, Ms Cowlam was left with some £63,000, which, pending the purchase of a joint property, Ms Cowlam placed in a savings account with First Direct. Pending such a purchase, Ms Cowlam and Mr Cowey moved into rented accommodation. At this stage, Mr Cowey was still married and his expressed intention was that, upon a divorce, he would secure a proportion of the value of the house he owned with his wife in Sunderland and inject that sum into the joint purchase.

In November 1998, Ms Cowlam and Mr Cowey saw and decided to purchase the Property, at an agreed price of £225,000. The Property was in need of substantial renovation and was not immediately habitable. The deposit of £22,500 was paid by Ms Cowlam and the balance of the purchase price was made up by way of a joint mortgage. Ms Cowlam and Mr Cowey opened a joint account in respect of joint and household expenditure. In regard to renovation, Ms Cowlam and Mr Cowey agreed that, in the first instance, her funds would be used to effect the necessary works, but that, in due course and following his divorce, Mr Cowey would inject funds for further renovation, such that, overall, he would become a 50/50 contributor to the Property. The purchase and the joint mortgage was completed in February 1999.

The Property was purchased in joint names. The TR1 effecting the transfer records, by way of purported declaration of trust, that the transferees were to hold the Property as beneficial joint tenants. Contrary, however, to the notes contained in the TR1, neither Ms Cowlam nor Mr Cowey appear to have executed the transfer. Ms Cowlam’s evidence is that her then solicitor did not explain the difference between a joint tenancy and a tenancy in common, or the implications, in regard to beneficial shares on severance, arising out of a transfer to herself and Mr Cowey as beneficial joint tenants. She maintains, further, that, it was Mr Cowey who had the main dealings with their solicitor and that, at that date, as later, she was, as she put it, ‘under the spell’ of someone that she perceived to be a high flyer at the BBC. Mr Cowey is, or was at the material time, a television producer.

Following the purchase and while the Property remained uninhabitable, Ms Cowlam and Ms Cowey lived rent free with Ms Cowlam’s mother. By the autumn of 1999, the balance of Ms Cowlam’s funds had been exhausted. Mr Cowey had made no contribution. On the strength, however, of a rising property market and the value of the work done to the Property, they were able to increase their borrowing by £40,000. That advance, coupled with monies advanced by way of a joint credit card obtained from John Lewis, of which £12,000 went towards a fitted kitchen, allowed Mr Cowey and Ms Cowlam to move into the Property in December 1999.

In 2000, Mr Cowey was divorced. He had made no arrangements for proper representation and did not inform Ms Cowlam of the impending proceedings until three days prior to a hearing dealing, as I understand it, with financial relief. In the result, Mr Cowey, did not receive any financial settlement upon his divorce and was, accordingly, left in no position to make his intended and agreed contribution. Rather, taking advantage of a bonus payment of £35,000 and subsequent severance pay of £46,000, Ms Cowlam was able to pay off a substantial part of the John Lewis account and fund, to the extent of a further £30,000, additional works to the Property.

In 2001, there was a further re-mortgage. At that stage the Property was revalued at £400,000 and, by increasing the joint borrowing to £350,000, a further £60,000 was released to pay off credit cards and outstanding bills. By that stage, therefore, Mr Cowey had made no contribution, other than by way of the joint borrowings, while Ms Cowlam had, in addition to the joint borrowings, invested some £100,000 in the Property.

Ms Cowlam’s evidence, not, in terms, challenged by Insol, was that, in November 2001, there was a discussion between herself and Mr Cowey, apparently in their kitchen at the Property, as to their respective shares, in the light of their respective contributions. It was agreed that, to reflect their then respective contributions, the Property was to be regarded as owned as to 80% by Ms Cowlam and 20% by Mr Cowey.

In regard to this agreement, Mr Wright drew my attention to a number of documents arising out of the earlier litigation between these parties, which, he submitted, were, or might be, inconsistent with the agreement.

He pointed out that the Defences filed in the original litigation did not advert to there being an unequal beneficial ownership. That is true. The Defences did not deal with the parties beneficial interests at all. Subject to Ms Cowlam having a beneficial interest, which has never been disputed, the extent of each co-owners interest was not in play in those proceedings.

He further drew my attention to the fact that, in a witness statement dated 8^th May 2009, in the original proceedings, Mr Cowey (not Ms Cowlam) described the Property as having a substantial equity and as affording, as he put it, a sufficient target for his trustee in bankruptcy. That was true, whether his share was 50% (there is no suggestion that it was any more), or 20%. According to Mr Cowey’s figures, there was an equity of some £240,000. Mr Cowey’s share, at 20% would have been £48,000.

He drew to my attention, also, a witness statement of Ms Cowlam’s in the original proceedings and dated 7^th May 2009. In that witness statement she stated that although the equity from her previous property had gone into the Property she had been content that the Property be purchased as joint tenants. In reference, as I read it, to the bankruptcy proceedings which gave rise to Mr Cowey’s original bankruptcy, Ms Cowlam further stated that ‘given that he (Mr Cowey) was a joint half owner’ there was a substantial equity in his name. The witness statement, however, went on to say that she had had no legal advice at that time, that her understanding now was that she might have argued, in those proceedings, that his share was significantly less than a half share, but that, at that time, she had not realised that the security of her family home might be affected. Later in her witness statement, Ms Cowlam also made plain that she had no understanding of beneficial, as opposed to legal ownership.

I am not at all persuaded that these materials force, or support, the conclusion that Ms Cowlam’s evidence as to the November 2001 agreement is wrong. In its context, it is certainly not implausible.

There is nothing either in the Defences filed in the original proceedings, or, in so far as relevant, in Mr Cowlam’s witness statement which is even potentially inconsistent with the existence of the November 2001 agreement.

In regard to Ms Cowlam’s witness statement, the material in that statement is, at best, equivocal. While, as conceded by Mr Swirsky, there are some indications that the witness statement was prepared with some level of professional assistance, it is very far from clear, given that Mr Cowey and Ms Cowlam were unrepresented at trial, just what that level of assistance was and the extent, therefore, that her witness statement should be treated as having been prepared under the full advice and guidance of a lawyer. My own impression, simply from the language and layout of the document, is that the statement was, in substance, Ms Cowlam’s own creation.

As to its content, it seems to me that I should be very cautious before treating the use of a term of art, such as ‘joint tenants’, or ‘joint tenancy’, by someone, who, self avowedly, had no understanding of beneficial ownership, as being at all definitive as to her, or, for that matter, Mr Cowey’s intentions.

It further seems to me that, on a fair reading, what Ms Cowlam appears to be saying, in respect of her and Mr Cowey’s shares in the Property, is that, while, on the footing, of joint half shares, Mr Cowey had a substantial equity, it had, had she had advice, been open to her to argue, in the context of Mr Cowey’s original bankruptcy, that his share was significantly less than a half. That is far from being a concession that the Property was owned, at the date of Mr Cowey’s original bankruptcy, as equal joint owners, or, therefore, that there had been no arrangement, or discussion, between Mr Cowey and Ms Cowlam as to their respective shares, as now alleged by Ms Cowlam.

I add, for completeness, two further points on this. Firstly, it is noteworthy, particularly where all the material from the previous proceedings is not before the court, that, in a further document, upon which Insol placed some reliance (a letter of April 2011 from Ms Cowlam’s then solicitor), her solicitor adverted, in reference to his contention that Ms Cowlam had ‘a far greater’ share than 50%, to earlier evidence ‘in previous proceedings’ to that effect. Secondly, that, in the judgment of the Court of Appeal in the original proceedings, Morgan J, giving the judgment of the court, made reference to the fact that, although it had been assumed in the litigation, that Mr Cowey and Ms Cowlam were equal joint owners, it had not been necessary to determine whether, or not, Ms Cowlam might have a larger share. The plain inference, as it seems to me, is that, although not resolved, the possibility that that was the case had, at some point, surfaced in the litigation.

Taking all these materials together and having regard, as earlier stated, to the fact that Insol has not elected to directly challenge Ms Cowlam’s evidence, I see no proper basis to hold, or determine, that Ms Cowlam and Mr Cowey did not enter into the agreement averred by Ms Cowlam. I do not think that the fact that there has not been, at all times, total clarity by Ms Cowlam as to her position, or as to the discussions that she had, many years ago, with Mr Cowey, comes anywhere near affording a good reason to reject her account. The court’s experience in cases of this type, where the law has been in a state of continuing development and where, as is often the case in such cases, including, as it seems to me, this one, litigants very often do not have the benefit of the best advice, is that the material facts are often late to emerge.

Reverting to the chronology, in 2003, Mr Cowey was placed on unpaid ‘gardening leave’. The consequence of that was that by the beginning of 2004, there were difficulties in paying the mortgage and payments had to be made by way of credit card. Ms Cowlam explains that her anticipation was that that borrowing would be repaid when, in due course, Mr Cowey received severance pay.

Such a payment was, eventually, made to Mr Cowey, in April 2004, in a sum of about £85,000. However, although Ms Cowlam suggested that those monies, or some of them, be used to repay credit card borrowings and to redress the balance of their respective financial contributions to the Property, Mr Cowey made it clear that, to him, the Property was a millstone, that he had no interest in putting money into the Property, that, rather, he intended to and would put the money into his own business, and, apparently, that he had no interest in marrying Ms Cowlam.

In accordance with that intention, Mr Cowey used his severance pay to start a new business in television production. It was not, however, successful and by the end of 2004 it would appear that the money was exhausted. By that time, Ms Cowlam and Mr Cowey were completely estranged. Throughout 2005, Mr Cowey barely worked and Ms Cowlam provided, in effect, the sole support for the household via her jobs, first with Sony Music and then with V2 Records.

In January 2006, Mr Cowey secured a job as a television presenter on ITV. The job paid £50,000 for six weeks. By that stage, however, he had substantial tax debts and, in May 2006, he was made bankrupt by the Revenue. In those circumstances Ms Cowlam had no option but to make arrangements to take all the services for the Property, as well as the previously existing joint credit cards into her own name. From that point and even although in 2007 Mr Cowey secured further television work, his payments into the household and in respect of the mortgage became erratic. From 2007, those mortgage contributions ceased altogether and, from that date onward, Ms Cowlam has taken full and sole responsibility for those payments.

It was in 2007 that the arrangements with Insol that gave rise to the original litigation were entered into. Those arrangements resulted in the annulment of Mr Cowey’s original bankruptcy. As set out at the outset of this judgment, it has been the non-repayment by Mr Cowey of the monies advanced to achieve that annulment which has given rise to the chain of litigation between these parties of which, it is to be hoped, this is the last part.

Throughout the years 2007 until 2010 and as just set out, Ms Cowlam paid all the mortgage and other expenses pertaining to the Property, as well as her son’s school fees. Mr Cowey lived at the Property, separately from Ms Cowlam, but made no contribution. To keep the Property afloat, at a time when her income, now from a company called Eagle Rock Entertainment had diminished, Ms Cowlam cashed in a Woolwich Endowment policy and borrowed £20,000 from her family.

From the end of 2010 until January 2012, Ms Cowlam worked in Canada. Mr Cowey stayed at the Property until December 2011. He did not, however, contribute to the mortgage or other household expenses, all of which were paid by Ms Cowlam by direct debits. Ms Cowlam also paid an allowance to her son, who was then sixteen years of age.

Since January 2012, Ms Cowlam has, at various times, tried to sell the Property. She continues to take full responsibility for the Property, its mortgage and its outgoings. Mr Cowey has, as she puts it, taken no interest in the Property, even although it provides a home for his son. His only contribution, for many years, has been a one off payment of £2000, made in 2014, towards the maintenance of his son.

Ms Cowlam’s hope and intention, after the inception of the current proceedings and following the execution of the settlement agreement, had been to re-mortgage and retain the Property. As explained earlier in this judgment, however, that has proven to be impossible and she is currently marketing the Property for sale.

Against these facts, the first question for determination is the effect, in law, or equity, of the language of the TR1 and, in particular, of course, the statement in the TR1 that Ms Cowlam and Mr Cowey were to hold the Property in trust for themselves as joint tenants.

There is no doubt that, if that statement constitutes a binding declaration of trust, then its effect would have been to create an express equitable joint tenancy, such that, when severed by the grant of an equitable charge over Mr Cowey’s share, each of Mr Cowey and Ms Cowlam would have had a beneficial half share.

There is, equally, no doubt, in my view, that such an express trust could not be displaced by a constructive trust, developed upon the principles identified and explained in Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2011] UKSC 53. That this is the case is made clear both in Stack v Dowden and in Jones v Kernott.

In paragraph 52 of her speech in Stack, Baroness Hale makes plain that the long standing problems as to joint ownership and as to shares in jointly owned properties would have been very largely resolved if there had been an invariable and mandatory compliance with the requirement that the form of transfer should contain an express declaration of trust duly executed. In that circumstance the express trust would resolve the question of ownership and of shares in ownership and there would neither be room for, or the need for, any determination of ownership under principles of constructive trust.

In similar vein, paragraph 51 of the judgment of Baroness Hale and Lord Walker, in Jones v Kernott, makes clear that the determination of beneficial interest by the application of constructive trust principles only operates where the joint owners have not, when purchasing, entered into an express declaration of the trusts upon which the property is to be held. Where they have, that trust is determinative of their interests, albeit that, as explained, further, by Baroness Hale, at paragraph 49 of her speech in Stack, the effect of the express trusts may be qualified, or, in her word, affected, by the application of the different, but related, principles of proprietary estoppel.

The foregoing postulates, however, the existence of a valid and effective express declaration of trust and, therefore, that there has been due compliance with section 53(1)(b) of the Law of Property Act 1925 and the requirement, contained in that section, that that a declaration of an express trust ‘must be manifested and proved by some writing signed by some person who is able to declare such a trust’.

In this case, as already stated, there is no evidence of any execution of the TR1 by either Ms Cowlam or Mr Cowey, with the apparent consequence that the purported declaration of a beneficial joint tenancy is unsupported by the necessary writing signed by Mr Cowey and Ms Cowlam which would have been required, pursuant to section 53(1)(b) of the 1925 Act in order to create an express trust to that effect and in order to displace, therefore, any different determination of the beneficial interests, more favourable to Ms Cowlam, under principles of constructive trust.

Mr Wright, in support of the proposition that there might, nonetheless, have been an effective express declaration of trust, made two submissions. Firstly, that, although the copy of the TR1 before the court disclosed no execution by either Mr Cowey or Ms Cowlam, the document might not be complete and might have contained other pages upon which the requisite execution had been effected. Secondly, that Ms Cowlam’s witness statement, referred to at paragraph 55 of this judgment, in which she had stated that she had been content for the Property to be purchased by herself and Mr Cowey as joint tenants, constituted a sufficient written and signed manifestation and proof of the declaration of a beneficial joint tenancy as to satisfy the statute.

I reject both those submissions.

There is no evidence at all that the copy of the TR1 before the court was not a complete copy. The fact that, contrary to the Land Registry instruction, it has not, apparently, been executed, is no evidence that the original TR1 must have included other pages containing that execution. It is all too commonplace, as both case law and judicial strictures, over many years, make clear, for conveyancing solicitors, particularly in the highly competitive conveyancing market, referred to by Baroness Hale in paragraph 52 of her speech in Stack, to fail to deal, either properly, or at all, with the procedures required to define and to give effect to the beneficial interests intended by joint purchasers. In that context, the fact of apparent non execution, in circumstances where execution ought to have taken place, raises no inference that execution, albeit on missing pages of the TR1, did, in truth take place. Additionally, there is absolutely nothing, in the copy of the TR1 before the court, to suggest that it is anything other than a complete copy of the original document.

In regard to whether, the contents of Ms Cowlam’s witness statement of May 2009 might constitute a sufficient written and signed manifestation or proof of the purported declaration of trust, the short answer is that, although there is ancient authority for the proposition that, because the requirement of writing is evidential rather than substantive, a later written manifestation, or proof, of the trust signed by the person able to declare the trust, will be sufficient to satisfy the statute, in this case the witness statement does not have that effect. To have that effect, it would have had to be signed by both Mr Cowey and Ms Cowlam, as being the legal owners capable of declaring the trust. It was not.

The absence, however, as I find, of any express declaration of a joint beneficial tenancy does not, of course, negate the application, in this case, of the presumption, made explicitly clear in both Stack and Jones v Kernott, that, where a domestic property, such as the one with which this court is concerned, is purchased in joint names, but without an express declaration of trust, equity will follow the law, such that, unless a different common intention is established, the property will be held by the co-owners as beneficial joint tenants. That presumption, as is explained in both cases, is not simply the formulaic application of a lawyers’ mantra, but reflects, at least in the case of the purchase of a family home, the core likelihood that, when a couple choose to purchase such a home, they do so in pursuance of an economic and emotional commitment to a long term joint enterprise, which overrides a mathematical calculation of each party’s specific contribution and which eschews the idea that, over the years, the parties should, or should intend to, maintain, through changing circumstances, a balance sheet of their contributions.

That presumption does, however, remain a presumption. It can be displaced by evidence that the parties, from the outset, acted with a different intention. It can, further, be displaced by evidence that, over time, their common intention altered. The burden of establishing a different intention, whether at the outset, or later, rests upon the party who seeks to establish that intention. Stack, in particular, makes it plain that the burden is not a light one.

The starting point, therefore, in this case is the presumption of a beneficial joint tenancy and the burden is upon Ms Cowlam to establish that either at the outset, or later, that intention was displaced.

In my view, there is nothing to indicate that, at the point of purchase, the intentions of Mr Cowey and Ms Cowlam were anything other than the norm. This was, at its inception, the purchase of a family home for Mr Cowey, Ms Cowlam and their son and reflected, on its face, exactly the type, or kind, of mutual committed enterprise that, as explained in Stack and in Jones v Kernott, one would expect to see reflected in a purchase as joint tenants. The fact that, at the outset, there was a significant discrepancy as to contributions, affords, as is clear from those authorities, no reason for displacing the usual presumption. Ms Cowlam’s own evidence seems to me to support, rather than displace, the presumption. Her expectation, at the point of purchase, was that, in due time, the imbalance of contributions would be made good and the Property would have been purchased by herself and Mr Cowey equally as their family home. A conveyance as equitable joint tenants would reflect that expectation and that intention.

That, though, is not the end of the matter, given that, as set out above, it is now clear law that an equitable joint tenancy, arising out of the purchase of a family home in joint names, can be displaced in circumstances where the initial, or original, common intention, that such a joint tenancy arise, is replaced by a different common intention. In that event, the application of constructive trust principles gives rise, or can give rise, to a trust under which the beneficial interests are not held jointly but in common and in such shares as properly reflect the altered common intention.

In this case, I have no doubt, on the evidence, that there was a change in Ms Cowlam’s and Mr Cowey’s common intention and that from 2001 onward they were no longer, each of them, mutually and equally committed to the shared ownership of the Property, as a long term joint commitment, such as to reflect a continued common intention as to their equal joint ownership of the Property.

A key factor in forming this conclusion is, of course, the agreement that Mr Cowey and Ms Cowlam reached as to their respective shares in November 2001. That agreement is, manifestly, in itself, wholly inconsistent with an intention that the property be owned equally as joint tenants. It represented, as it seems to me, a recognition by Mr Cowey, accepted by Ms Cowlam, that, given his level, or lack, of contribution towards the purchase and renovation of the Property, he could not continue to expect to be entitled to be treated as an equal joint owner and to reflect a new agreed intention that his rights in the Property be limited to 20% and Ms Cowlam’s correspondingly increased.

That change of position seems to me to be further reflected and confirmed by the approach taken by Mr Cowey to the use to be made of the severance payment that he received in 2004. Specifically, he chose, rather than investing in the Property, or in reduction of liabilities relating to the Property, to put the payment into his own new business. Rather than the Property being a joint and equal asset towards the purchase of which each of Ms Cowlam and Mr Cowey were equally committed, Mr Cowey, as he said, regarded the Property as a millstone and one into which he was no longer prepared to put his money. That approach seems to me to indicate that the arrangement that he and Ms Cowlam had come to as to their intended shares was not a temporary arrangement, reflecting a short term difference of contribution, but, rather, a continuing and complete change in their joint intentions as to the Property and a complete disavowal by Mr Cowey of any equal interest in the Property, in favour of the limited interest that he and Ms Cowlam had agreed.

That conclusion seems to me to be wholly consistent with the behaviour of both Mr Cowey and Ms Cowlam subsequent to 2004. Ms Cowlam has, at all times, behaved as one would expect the substantial owner of the Property to behave. Throughout 2005, while Mr Cowey was barely working, she made all the mortgage and other payments necessary to retain and maintain the Property. From 2006 onward, other than some erratic payments made by Mr Cowey in 2006, she has taken on and maintained the sole burden of the mortgage and of the other household expenses. To do so, she has had to borrow money from her family and to raise money by cashing in her endowment policy.

By contrast, other than his erratic contributions in 2006, Mr Cowey, from 2005 ceased to contribute to the Property, or to the expenditures related to the Property, even although he remained in occupation of the property, albeit separately from Ms Cowlam, until 2011.

Nothing in that conduct seems to me to suggest that, post 2004, there was any resumption by Ms Cowlam, or Mr Cowey, of their original common intention as to joint equal ownership. Rather the entirety of their collective behaviour seems to me to reflect a continuing common intention, post, at latest, 2004, that Mr Cowey retain, at best, the 20% interest agreed in November 2001 and that the balance of the beneficial interest be held by Ms Cowlam.

I add, in the light of Mr Cowey’s overt disinterest in the Property from 2004, that I have considered whether that disinterest, coupled with the full responsibility for the Property undertaken by Ms Cowlam from that date, raises, or supports, the inference of an implicit agreement, or arrangement, that Mr Cowey abandon all his interest in the Property and a consequent common intention that Ms Cowlam hold the entire beneficial interest.

I have concluded that the material does not safely sustain such an inference and that, while the conduct of the parties and their discussions plainly show and support the continuing common intention that Ms Cowlam hold 80% of the beneficial interest, as agreed between herself and Mr Cowey in 2001, it would be stretching matters too far to hold that the conduct of the parties, post 2004, evinces a common intention that even Mr Cowey’s limited 20% interest be surrendered to Ms Cowlam.

The existence of a continuing common intention, that Ms Cowlam hold an 80% beneficial interest in the Property, is not, however, in my view, the end of the matter, in the determination of her beneficial interest. Such a beneficial interest, if it arises, does not arise as an express trust, since it is not supported by a signed writing in compliance with section 53(1)(b) of the Law of Property Act 1925, but can only arise by virtue of the application of constructive trust principles. Those principles, as is well understood, require, in circumstances where the beneficial interest is not to follow the legal interest, that the party asserting a constructive trust interest different to the legal interest, in reliance upon a common intention, must show that he, or she, has acted in reliance upon that common intention in such a way as to render it inequitable that he, or she, not obtain the intended interest. Although the focus of attention in both Stack and Jones v Kernott was on the proof of the common intention, whether by agreement, or imputation, there is nothing in either authority to abrogate the requirement of reliance, or the requirement that such reliance render it inequitable that the party asserting the trust be deprived of his or her intended interest.

In this case, the original trust arising on the purchase, reflecting the original common intention and the transfer into joint names, was a beneficial joint tenancy. The new and different trust, said to arise by reason of the parties’ change in their common intentions, is a trust under which Ms Cowlam’s beneficial interest does not follow the legal estate. For that trust and for her extended interest under that trust to take effect, the trust must, therefore, satisfy the requirements of reliance, as set out above, in order to create, or give rise, to an effective constructive trust.

I am satisfied that the reliance requirement is made out. Although, in her evidence, Ms Cowlam does not, in terms, state that her conduct in respect of the Property from 2001 onward was conduct carried on by her in reliance upon the November 2001 agreement, it seems to me that the course of conduct, pursuant to which, after the 2001 agreement and after Mr Cowey’s confirmation, in 2004, that he had no interest in further investing in the Property, she took effective control of all matters relating to the Property and all payments required to sustain and retain the Property, is indicative, not merely, of the parties’ continuing common intention that, pursuant to their agreement, she was to be regarded as the 80% owner of the Property, but also evidence of her reliance upon that agreement, in such a way as to render it inequitable that the agreement be not given effect by way of constructive trust.

Even allowing for Ms Cowlam’s desire, as a parent, to maintain her home for her son, it seems to me to be a clear and proper inference from her conduct in respect of the Property in the period 2004 and onward that she was not acting in the belief that her interest in the Property was limited to 50%, but rather that she was acting in the belief that, as agreed with Mr Cowey in 2001 and as reflected, or confirmed, by Mr Cowey, in his election, in 2004, to invest no further in the Property, it was both of their continuing intention that she was to have an 80% interest in the Property. I do not think that, if she had believed that her interest was limited to 50% and was not 80%, as agreed, she would have acted, so comprehensively, as the effective owner of the Property, in the way that she did. The fact, that, over the years, Ms Cowlam has, even from the incomplete papers before me, regularly asserted her contention that she was entitled to a larger than 50% interest, is, as it seems to me, a further factor pointing to her belief that she had the larger interest agreed between herself and Mr Cowey and to her actions being founded upon that belief.

In the result, I am satisfied that Ms Cowlam did act, in respect of the Property, in reliance upon the agreement as to the ownership of the property that she reached with Mr Cowey, that that agreement reflected, thereafter, their continuing common intention as to the ownership of Property and that, having acted upon the basis of that common intention, it would be inequitable to deny Ms Cowlam the 80% interest in the Property that had been agreed.

In consequence, I am satisfied that a constructive trust has arisen, in this case, such that Ms Cowlam is the 80% beneficial owner of the Property.

In the light of that determination and my earlier determination that the TR1 did not give rise to an express declaration of trust, a number of other arguments raised upon behalf of Ms Cowlam do not now call for decision. It may, however, be helpful to the parties if I indicate, albeit in summary form, how those arguments would have been determined.

The first of those arguments, had I held that the TR1 did give rise to, or contain, an express declaration of trust was that that declaration should be set aside upon grounds of undue influence and, thereafter be determined upon the principles of constructive trust that I have discussed and applied. The second such argument was that, even in the face of an express declaration of trust and an express beneficial joint tenancy under such a trust, Ms Cowlam should, nonetheless, be granted an 80% interest in the Property by way of the satisfaction of an equity arising in her favour upon principles of proprietary estoppel.

I would have rejected the first of those arguments, but acceded to the second.

In regard to undue influence, the short answer to that contention is that an express beneficial joint tenancy, in the context of the purchase of a family home by Ms Cowlam and Mr Cowey for themselves and their son, would not have been a transaction calling for explanation. For all the reasons discussed in Stack and in Jones v Kernott and as outlined and explained, in the context of this case, in paragraphs 83 to 86 of this judgment, far from calling for explanation, a transfer of a property to co-owners, as a family home, by way of a beneficial joint tenancy reflects the expected norm.

In regard to proprietary estoppel, there is no conceptual reason why, if a joint beneficial owner represents to, or assures, or promises, his co-owner that, notwithstanding the terms of their beneficial joint tenancy, the latter co-owner will have a larger beneficial interest and if that co-owner then acts in reliance upon that assurance to his detriment, an equity will not arise in his favour, or that, in satisfaction of that equity, the court could not order the severance of the beneficial joint tenancy and direct that the property be held by the co-owners in accordance with the representations, or assurances made.

Accordingly, in this case, where, as I have found, Mr Cowey agreed that Ms Cowlam was to have an 80% interest and where, as I have found, Ms Cowlam acted in reliance upon that agreement (and, hence, Mr Cowey’s representation, or promise, that he would, in effect, transfer 30% of his interest to her) in a way that she would not have done, had the agreement/promise not been made, and where, had Mr Cowey reneged upon his agreement/promise, Ms Cowlam would, to her detriment, have made the payments in respect of the Property that she made in reliance upon Mr Cowey’s promise without securing the enhanced interest upon the basis of which those payments had been made, I would have been prepared to direct the severance of the joint beneficial tenancy and order that Mr Cowey transfer 30% of his beneficial interest to Ms Cowlam, such that the Property was, thereafter, to be held on a tenancy in common under which Ms Cowlam was entitled to 80% of the beneficial interest. I do not think, in the context of this case, that any lesser remedy would have adequately satisfied the equity which, in my view, would have arisen in her favour.

I turn now to the question, foreshadowed earlier in this judgment, as to whether Ms Cowlam has, or will have, upon sale of the Property and upon payment out of the proceeds of the settlement sum, any rights over Mr Cowey’s residual 20% share in the Property that she can exercise in priority to Insol’s equitable charge over that share.

As earlier set out, those rights are said to arise either by reason of the existence of an equity of exoneration, or pursuant to principles of equitable subrogation.

In regard to the suggested equity of exoneration, the argument advanced is that, in charging her equitable interest as security for the payment of the settlement sum, in circumstances where, as earlier discussed, the payment of that sum, by Ms Cowlam, out of her share in the Property will constitute a partial satisfaction of Mr Cowey’s indebtedness, secured against his share, she has, to the extent of the settlement sum, charged her interest with his secured debts, in such a manner as to render herself a guarantor, or surety, for his indebtedness, to the extent of the settlement sum and is, therefore, entitled to be exonerated out of his share in respect of that sum.

There is no doubt but that an equity of exoneration can arise in circumstances where property is charged for the benefit, not of the chargor, but as security for the debts of another and that, where such an equity arises, the chargor is to be regarded as a guarantor, or surety, for the debtor and can look to the debtor for indemnity, or exoneration, in the event that the charge is called upon. There is, equally, no doubt that, where the equity arises and where the debt which is secured is secured also upon the interest of a co-owner, the right of indemnity, or exoneration, is not merely a personal right against the co-owner, but takes effect as a proprietary right over the interest of the co-owner. In this latter situation, it does not appear to matter whether the co-owners collectively charge their legal and beneficial interests, or whether each, separately, charges his, or her, beneficial interest: Re a Debtor (No 24 of 1971) [1976] 2 AE 1010 at 1014 below b. Conceptually, I can see no reason why, in circumstances where the equity arises, the right of equity or exoneration should not entitle the party entitled to exoneration to security over the interest of the exonerating party in other and separate property.

All of the foregoing, however, is premised upon the situation being one in which the equity arises. My difficulty, in this case, however attractively the matter has been presented by Mr Swirsky, is that the equity of exoneration only arises, as is clear from the authorities, out of the express, implied, or presumed, intentions of the parties: Re Pittortou [1985] 1 AE 285 at 288 at f; Re a Debtor (No 24 of 1971) supra at 1013 below f; Gee v Liddell [1913] 2 Ch 62 at 72. Where, as here, Ms Cowlam has elected to charge her interest with the payment of a sum of money in part satisfaction of monies secured against Mr Cowey’s interest in the Property but without any arrangement having been made, to that effect, with Mr Cowey and without any involvement, by him, at all, in the matter, I can see no proper basis upon which it can be inferred that the right to exoneration reflected the presumed, expressed, or implied intentions of Ms Cowlam and Mr Cowey, or any mutual intention that Ms Cowlam, in acting as she did, became a guarantor, or surety for Mr Cowey. The reality is that she entered into the settlement agreement, in her own right and for her own reasons and was, in so doing, acting purely as a volunteer. I am not persuaded that any equity of exoneration arises on these facts.

Turning to equitable subrogation, Mr Swirsky’s submission is that, upon payment of the settlement sum in part satisfaction of the sums secured against Mr Cowey’s interest by Insol’s equitable charge, Ms Cowlam should be subrogated, in equity, to Insol’s rights under that charge, to the extent that her payment satisfies the charge, and that that charge, by subrogation, should have priority over Insol’s charge over Mr Cowey’s interest in the Property in respect of the unsatisfied balance of the sums secured by the charge. The effect of such a charge by subrogation, in the context of the limited extent of Mr Cowey’s interest, the amount of the settlement sum and the value of the Property would be that Ms Cowlam, on a sale, received the entirety of the proceeds of Mr Cowey’s share in the Property and that, other than the settlement sum, Insol received nothing.

Mr Swirsky based his submissions as to equitable subrogation upon the application of principles of unjust enrichment, relying, in essence, upon Lord Hoffman’s analysis, in Banque Financiere de la Cite v Parc (Battersea) Ltd and others [1999] 1 AC 221 at 231 below G, that equitable subrogation is a remedy to reverse, or prevent, unjust enrichment and upon the similar approach to subrogation, as a flexible equitable remedy to be deployed, as appropriate, to prevent unjust enrichment, as explained by the Supreme Court in Menelaou v Bank of Cyprus UK Ltd [2016] AC 176.

As is, I think, clear, however, both from Lord Hoffman’s speech in Banque Financiere and from Menelaou, there is in neither case any suggestion that established principles, as to the applicability to particular facts of equitable subrogation, be disregarded. In Banque Financiere, Lord Hoffman was seeking to explain, in terms of restitution and unjust enrichment, the rationale underlying the authorities which have developed the court of equity’s approach to equitable subrogation and to scotch, for the future, the contention, ‘propped up by presumptions which can verge upon outright fictions’ (see page 234 below B) that the availability of equitable subrogation, in contrast to contractual subrogation, is to be determined upon the basis of either the mutual, or the unilateral, intentions of the relevant participants. He was not, in so doing, seeking to set aside established principles as to the applicability of equitable subrogation, in particular circumstances, nor to create new principles. As explained by Lord Clarke, in Menelaou (at paragraph 50), Banque Financiere rationalised the older cases through the prism of unjust enrichment. Likewise, in Menelaou, Lord Neuberger, while accepting and endorsing the flexibility of the remedy of equitable subrogation and the fact that the remedy was not confined only to hitherto recognised situations, made it clear that the remedy must be granted in a principled fashion (paragraph 94). In Cheltenham & Gloucester Plc v Appleyard [2004] EWCA Civ 291, cited with approval by Lord Clarke, in Menelaou, he had, in giving the judgment of the court in that case, set out those principles (at paragraphs 30 to 49) and, at paragraph 31, expressed the clear view of that court that, as set out above, there had been nothing in Banque Financiere which conflicted with any of those principles.

In light of the foregoing, in considering, in this case, whether a right to equitable subrogation arises in favour of Ms Cowlam, the court should, as it seems to me, apply to the facts of this case existing principles of equitable subrogation, as derived from the authorities, but should, in so doing, test the proper application of those principles against corresponding, or related, principles of unjust enrichment.

The two situations, in which it is well understood that equitable subrogation will, or may, apply and which are, or may be, relevant to this case, are, firstly, where a guarantor, or surety, pays the principal debtor’s debt and, secondly, where a lender, in the expectation of security in respect of his lending, advances money in payment of a debt, or towards the purchase of property, but where, for one reason, or another, the expected security does not arise. In the first case, the guarantor, or surety, in addition to a personal right of indemnity, as against the principal debtor, is entitled to be subrogated to any security that the paid off creditor might have in respect of the principal debt. In the second case, the lender is entitled to be subrogated to the security held by the person, or party, who’s debt has been repaid, or, in the case of a purchase, to the unpaid vendor’s lien, held by the vendor of the property purchased immediately prior to payment by the lender of the purchase price. In this second case, the lender is not entitled to obtain greater security, by way of subrogation, than he would have had if the need for subrogation had not arisen and, correspondingly, where the lending was intended to be unsecured, no right to subrogation would arise.

Neither of those situations apply in this case.

Ms Cowlam did not charge her interest in the Property, or make her promise to pay the settlement sum, as guarantor, or as surety, for Mr Cowey. She acted in her own right, without reference to Mr Cowey, in the hope, or expectation, that the settlement agreement would enable the retention of the Property.

Similarly, Ms Cowlam’s promise to pay the settlement sum was not a promise to advance money to Mr Cowey and, upon payment, it will not be a payment by her, by way of an advance to Mr Cowey. Nor was Ms Cowlam’s promise to pay made, nor will any payment, pursuant to that promise, be made in the expectation of security. This is a case, where, for what was perceived as her own good reasons, Ms Cowlam has simply promised to pay, in her own right, a sum of money, in part satisfaction of Mr Cowey’s indebtedness, and, where, in due course and pursuant to her promise, such a payment will be made.

It follows that this case does not fall within the usual parameters in respect of which equitable subrogation would normally apply.

It remains to consider, however, whether this is a case, where, having regard to the flexibility of the remedy of equitable subrogation and to the fact that the circumstances of its application are not, necessarily, solely confined to previously understood situations, there is, here, a principled case, for extending, or advancing, the availability of the remedy.

In this regard and, as noted by Lord Neuberger, in Menelaou, at paragraph 93, Banque Financiere was itself a case where the security to which the bank was subrogated, a first legal charge, was greater than the security which it had expected, but which it had failed to achieve, that security being no more than a letter of postponement in respect of other and prior securities. Likewise, in Menelaou, where the defendant bank was held to be subrogated to the unpaid vendor’s lien, in circumstances where the purchase monies had not been paid, directly, by the bank, but where the bank had released charges over another property to allow the purchase monies to become available, the remedy of equitable subrogation was held to be sufficiently flexible as to meet that situation and to apply.

It seems to me, however, that, whereas, in those cases, the extensions of the application of the remedy were at the margins, the extension which would be required in this case would take the remedy far beyond the circumstances in which it has, hitherto, been contemplated as applying.

It further seems to me that the postulated extension of the remedy is not, in this case, justified by reference to principles of unjust enrichment.

In this regard, Mr Swirsky submitted that the effect of the payment of the settlement sum would be to unjustly enrich Mr Cowey at the expense of Ms Cowlam. I cannot agree.

As I see it, in deciding the availability of the remedy of subrogation, the court should look to substance not form. In this case, although the effect of the settlement payment will be to reduce the sum secured by Insol’s equitable charge, it will not, in reality, benefit Mr Cowey. Payment of the settlement sum will not translate into any actual enrichment of Mr Cowey, given that, on the figures before me, even taking the amount secured by Insol’s equitable charge as being the amount so secured at the commencement of the proceedings in 2014, that sum, even after payment of the settlement sum, will comfortably exceed the value of his 20% share.

The payment will, at least in one sense, enrich Insol. It will receive a sum of £330,000 in reduction of Mr Cowey’s secured indebtedness. It will also, absent subrogation, recover, on the sale of the Property, the value of Mr Cowey’s 20% share. It will, accordingly have achieved a larger recovery than it would have achieved had it not settled with Ms Cowlam. On another view, however, Insol is not enriched, in that, even adding in the settlement sum, it will still not recover anything near the entirety of the sums owed by Mr Cowey and secured by his equitable charge.

Even treating Insol as enriched, it cannot, in my view, be right to treat Insol as unjustly enriched. Insol entered into a valid contractual bargain with Ms Cowlam under which she agreed to pay the settlement sum. It is hard to see that payment to Insol of an amount agreed to be paid to Insol, under a contract which has not, in itself, been impugned, can be said to unjustly enrich Insol.

Rather, it seems to me that, if Ms Cowlam was subrogated to Insol’s charge, even on the basis that the sums recovered from Mr Cowey were shared pari passu with Ms Cowlam, the effect of that subrogation would, for the reasons set out below, be unjust to Insol. I add that, were any charge by subrogation to rank behind Insol’s charge, the remedy of subrogation would have no value, since, on the available figures and as set out above, Mr Cowey’s interest would be exhausted before any charge by subrogation was reached.

As set out earlier in this judgment, Insol has, very clearly, in its agreement with Ms Cowlam, reserved its right to continue its Claim against Mr Cowey for the recovery of the sums secured by its equitable charge. The effect of subrogating Ms Cowlam to Insol’s charge, even if, in terms of recovery, they shared an equal priority, would be to reduce the amount that Insol would recover under its equitable charge. It would, borrowing the language of recital (E), ‘affect’ Insol’s Claim against Mr Cowey, contrary to the agreement made between Ms Cowlam and Insol. If, as explained earlier in this judgment, Ms Cowlam’s rights by subrogation had priority to Insol’s, then this position would be exacerbated.

Putting the matter shortly, Ms Cowlam and Insol agreed that Ms Cowlam would pay £330,000 to Insol. That agreemen , however, was, expressly, not intended, in the events that have occurred (that is to say the sale of the Property), to affect Insol’s right to make a further recovery out of Mr Cowey’s share, in respect of, or towards, the balance of his secured indebtedness. Equitable subrogation in favour of Ms Cowlam, if it were to have any value at all, that is to say, if it were to rank equally, or in priority, to Insol’s charge, would displace, or, at the least, diminish, the intended effect of the agreement. That would be unjust to Insol and would, in itself, afford a defence to any claim otherwise arising for unjust enrichment.

Be that as it may, I am satisfied, for all the reasons that I have given, that this is not a case where equitable subrogation should be available to Ms Cowlam.

In the result, I propose to declare that the beneficial interest in the Property is held on a constructive trust, as between Ms Cowlam and Mr Cowey, as tenants in common, in the proportions 80% to Ms Cowlam and 20% to Mr Cowey. I will, if called upon, declare that Ms Cowlam has no further rights over Mr Cowey’s share, whether by way of the equity of exoneration, or equitable subrogation.