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(Court of Appeal, Lloyd, Jackson LJJ, Sales J, 29 July 2013)
The unmarried couple were in a relationship since 1990. The woman worked for the man's company and they cohabited for a period. They had one child together and were engaged.
In 2002, the man promised to marry the wife and they purchased a property in joint names, conveyed as tenants in common and accompanied by a formal declaration of trust. The man provided £15,000 towards the purchase price and the balance was met by way of a mortgage in respect of which he agreed to bear sole responsibility. The woman gave up her rented accommodation with the intention that they would live together as a family in the new property. Other properties were owned by the man and his company but at this stage of the relationship he assured the woman that although the properties were not held jointly in their names, all of their assets were equally owned by them.
When the couple separated the woman sought a declaration and quantification of her beneficial interest in the other properties owned by the man and/or the company on the basis of a constructive trust or proprietary estoppel. At first instance the judge found the woman was entitled to a half share of one of the properties and that she had been underpaid by £21,000 in relation to her share in a second property. The man appealed.
In respect of the underpayment ordered to be made good by the husband no pleaded case in relation to that issue had ever been made and no reasoned case management decision was taken to allow it to proceed. The man had been prejudiced in being deprived of the opportunity to adduce evidence against the claim and, therefore, fairness required the appeal to be allowed.
It was not possible for the woman to prove detrimental reliance necessary for a constructive trust on the man's promise of equal ownership based on his asserted intention to marry her or in her giving up rented accommodation to live with the man at no expense.