In Re Cole [1964] 1 Ch 175, ca



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In Re Cole [1964] 1 Ch 175, CA

Harman LJ

This is an appeal from an order of Cross J. made on March 22, 1963, on a motion by the trustee in the bankruptcy of Theodore Cole by which the court declared that certain articles of furniture specified in the schedule to the notice of motion were the property of the applicant who is the bankrupt's wife. The value of these articles is comparatively small but we are told that the decision will probably cover other articles of very much greater value in respect of which a like claim has been made. These particular articles have been sold by the applicant and the order affects the proceeds of sale.

We first hear of the bankrupt and his wife in 1937 when they were living in a modest rented house at Hendon which, as well as its furniture, were the bankrupt's property. In July, 1940, the bankrupt, being Austrian by nationality, was apprehensive of internment as an enemy alien and he executed a deed of gift transferring the house to his wife and also gave her the furniture. The method of this latter gift is not known and is not in question. The family then moved to Clitheroe in Lancashire where they rented a house which was furnished largely from the Hendon house. The activities of the bankrupt during the war, apparently in the textile trade, resulted in his becoming before its end a very rich man indeed. In July, 1945, the war being over, he acquired a long lease of a large mansion at Hendon which he proceeded to furnish. A few articles were sent down from Clitheroe, three or four thousand pounds worth was bought from the vendor, and the rest to the tune of some £20,000 the bankrupt purchased himself and caused to be installed in the new house, to which he, together with two children and their nannie, removed in September, leaving the applicant and another child who was unwell at Clitheroe. In December, 1945, however, the wife came down to London with the other child and the bankrupt met her at the station and took her to the new home. He brought her into the house, took her into a room, put his hands over her eyes and then uncovered them saying "Look." He then accompanied her into other rooms on the ground floor where she handled certain of the articles - a silk carpet and an inlaid card table: next she went upstairs by herself and examined the rest of the house. When she came down again the husband said: "It's all yours. " She now says that this was a gift to her of the furniture in the house, though apparently not of the house itself, and the judge accepted the evidence of the husband and wife that they had since believed that this was the position. We must accept the judge's finding in this respect, notwithstanding that the house and its contents and also £20,000 worth of furs and jewellery, said to have been other presents to the wife, remained insured in the bankrupt's name. Until the mid-'50s the bankrupt lived the life of a very rich man owning, among other things, a villa at Cannes and a fleet of cars, but the death of one of his associates, one Littman, was followed by a judgment against him by Littman's executors for a very large sum which remained unsatisfied; and in 1961 bankruptcy ensued and there is a very large deficiency. The trustee on behalf of the creditors resists the wife's claim to the furniture in the house, except the small items from Clitheroe, and that was the question tried on this motion: the judge acceded to the wife's claim: the trustee now appeals.

Mr. Megarry on behalf of the wife boldly put forward an entirely novel proposition to the effect that a perfect gift of chattels is constituted by showing them to the donee and speaking words of gift. It is enough, he says, that the donee should be brought to the chattels rather than the chattels to the donee and that she should be "near" the chattels (though what degree of proximity is needful remained vague) when the words of gift are spoken. This amounts to a change of possession, says Mr. Megarry, particularly if you are dealing with a collection of chattels, a fortiori if the chattels are or come under the physical control of the donee; and the case is strengthened if the donee handles some of the chattels in the donor's presence.

This remarkable submission is unsupported by authority and is in my judgment entirely heterodox. It is, I think, trite law that a gift of chattels is not complete unless accompanied by something which constitutes an act of delivery or a change of possession. The English law of the transfer of property, dominated as it has always been by the doctrine of consideration, has always been chary of the recognition of gifts. . . . I need not, I think, for the purposes of this judgment touch further on the question of the transfer of anything except chattels personal. Where consideration is given, possession of these is regulated by the Sale of Goods Act which, broadly speaking, causes possession to pass when the parties intend that it should; but in the absence of consideration, delivery is still necessary except in the cases of a gift by will or by deed, which latter itself imports both consideration and delivery. Attempts have been made to make use of the law of trusts to perfect gifts, particularly in the case of gifts mortis causa, but it has long been the doctrine of equity that it will not assist imperfect gifts by the introduction of the doctrine of trusts. . . .

The leading case on delivery is Irons v. Smallpiece (1819) 2 B. & Ald. 551 an action of trover for two colts said to have been given to the plaintiff by his father under an oral gift. This was rejected by the court, Abbott C.J. saying at p 552 that "... by the law of England, in order to transfer property by gift there must either be a deed or instrument of gift, or there must be an actual delivery of the thing to the donee." Holroyd J. said at p 553: "In order to change the property by a gift of this description, there must be a change of possession: here there has been no change of possession."

The delivery may be what has been called "constructive delivery," as in Winter v. Winter (1861) 4 L.T.N.S. 639 which was a case about a barge which belonged to the plaintiff's father, a lighterman It appeared that the plaintiff had been put into actual possession of the barge by his father and worked it as his father's agent or servant and was so doing when the father gave it him by word. It was held that this was sufficient, the delivery preceding the gift: and this it may do or it may accompany the gift or succeed it - see Alderson v. Peel (1891) 7 T.L.R. 418 and In re Stoneham, Stoneham v. Stoneham. [1919] 1 Ch. 149 In Winter's case Crompton J. went so far as to cast doubt on Irons v. Smallpiece which had indeed been doubted in other cases about that time, but the leading case was fully re-established in the elaborate judgments in Cochrane v. Moore (1890) 25 Q.B.D. 57; 6 T.L.R. 296, C.A This was a case about a quarter undivided share in a horse and the Court of Appeal held that the property did not pass by the gift because there had been no delivery. Fry L.J., in a judgment concurred in by Bowen L.J., reviewed the whole of the cases and came to this conclusion at pp 72-73: "This review of the authorities leads us to conclude that according to the old law no gift or grant of a chattel was effectual to pass it whether by parol or by deed, and whether with or without consideration unless accompanied by delivery: that on that law two exceptions have been grafted, one in the case of deeds, and the other in that of contracts of sale where the intention of the parties is that the property shall pass before delivery: but that as regards gifts by parol, the old law was in force when Irons v. Smallpiece was decided: that that case therefore correctly declared the existing law: and that it has not been overruled by the decision of Pollock B. in 1883, or the subsequent case before Cave J." Lord Esher concurred.

If the chattels be many or bulky there may be symbolical delivery, as, for instance, of a chair - Lock v. Heath (1892) 8 T.L.R. 295, D.C or the case about the gift of a church organ - Rawlinson v. Mort (1905) 21 T.L.R. 774; 93 L.T. 555 where the donor put his hand upon it in the presence of the donee and accompanied his gesture with words of gift.

The question, therefore, for our decision is whether there has been anything here which amounts to an act of delivery or a change of possession either preceding or following or coincident with the words of gift so as to make it perfect. The judge dealt with this point very briefly. He assumed that there must be delivery and that words of gift alone are not enough, but he said he could not decide in the trustee's favour without deciding that a husband cannot give his wife the contents of the matrimonial home without executing a deed of gift. He said he did not see what more Mr. Cole could have done to put Mrs. Cole into the possession of the gift which he thought he was making. It seems to me that this was in fact a reliance on the word or words of gift which was the very thing which the judge said he could not do. Mr. Megarry, however, argued that when the question was of a gift to a wife of chattels in the matrimonial home, the introduction of the wife to the house was itself a putting of her into possession of its contents and that was a sufficient change of possession so that mere words of gift were enough. I reject this view . . . Bashall v. Bashall (1894) 11 T.L.R. 152, C.A shows that delivery is necessary to perfect a gift between spouses. This was an action by a wife for certain articles, notably a pony and trap, and Lord Esher M.R. said this at pp 152-153: "it was clear law that in order to pass property in chattels by way of gift mere words were not sufficient, but there must be a delivery. and this requirement was as essential in a case of husband and wife as in a case of two strangers. But a difficulty arose when they came to consider how a husband was to deliver a chattel to his wife so as to pass the property in it. The difficulty arose, not from the legal relation between them, but from the fact of their living together. When a husband wished to make a present of jewellery to his wife, he generally gave it into her own hands and then it was easy to see that there was a delivery. But in the case of a horse or a carriage, that would not be so. In such a case it was true the husband might wish to make an absolute gift to his wife, but, on the other hand, he might wish to keep the horse or carriage as his own property and merely to let his wife have the use of it. In an action by the wife it was necessary for her to show that the husband had done that which amounted to a delivery."

Similarly, in Valier v. Wright and Bull Ltd (1917) 33 T.L.R. 366-367 an action concerning a motor car said to be the subject-matter of a gift by a husband to a wife: "Held, that after the gift no change had taken place in the custody of the car, and there had been no valid gift because there had been no actual or constructive delivery." . . .

A stronger case is In re Magnus, Ex parte Salaman, [1910] 2 K.B. 1049, C.A. where the husband settled furniture upon his wife by a marriage settlement and covenanted to add further furniture. He purchased a large amount of additional furniture which he installed in the house; he did not formally deliver it to the trustee of the settlement, but the trustee visited the house and saw the furniture there. It was held that this was a sufficient delivery to the trustee and that the wife was enjoying the furniture under the trusts of the settlement. This was enough to defeat the claim of the trustee in the husband's bankruptcy. It does not in my judgment cover the present case.

Perhaps the strongest case in the wife's favour is Kilpin v. Ratley. [1892] 1 Q.B. 582; 8 T.L.R. 290, D.C. In that case furniture belonging to the husband and in the matrimonial home was purchased by his father-in-law who took an assignment of it by deed. Subsequently the father visited his daughter at the house and standing in one of the rooms orally gave her the furniture and then walked out of the house, leaving it behind him, and this was held to amount to a sufficient delivery to the wife. This furniture, until the time of the gift, was owned by the father and was in the possession of the son-in-law, but the father by pointing the furniture out to his daughter and then leaving the house put her and not her husband in possession of it and there was, therefore, a sufficient change of possession.

I cannot find that there was any change of possession here. It is argued that a wife living in her husband's house, and therefore having control to some extent of the furniture in it, is in possession of it, but this, I think, does not follow. In the ordinary case where a wife lives with her husband in a house owned and furnished by him, she has the use of the furniture by virtue of her position as wife, but that gives her no more possession of it than a servant has who uses the furniture.

I conclude, therefore, although I feel considerable sympathy with the wife who has believed this furniture to be hers, that it never became so because the gift was never perfected and that therefore she has no answer to the trustee's claim. I would allow the appeal.



Pearson LJ

Although at one time there were conflicting opinions, it has been established that oral words of gift, or even written words of gift not embodied in a deed or will, are not sufficient to make an effective gift unless there has been or is delivery of possession to the donee. The basic idea is that there must be giving and taking, and if the donor retains possession he has not yet given and the donee has not yet taken . . .

It is also established that the delivery of possession may be prior to or contemporaneous with or subsequent to the words of gift: Cochrane v. Moore 25 Q.B.D. 57, 70; In re Alderson, Alderson v. Peel (1891) 7 T.L.R. 418; and In re Stoneham, Stoneham v. Stoneham. [1919] 1 Ch. 149, 153-154. In the case of prior delivery, it may not be necessary that the delivery should have been made by the donor: a pre-existing possession of the donee, however it arose, may be sufficient. In Stoneham v. Stoneham P O. Lawrence J. said: "From a common-sense point of view it seems to me strange that articles already in the possession of an intended donee could not be effectually given by word of mouth without first removing them from the possession of the intended donee and then handing them back to him." Later he said: "The donor if he wanted to recover the chattels would have to bring an action against the donee whether he had delivered the chattels prior to the gift or the delivery had accompanied or followed the gift, and the donee in such an action could plead the gift as a defence whenever the chattels had been delivered to him and, in the case of a prior delivery, in whatever capacity he had originally received them." . . .

As to what is necessary to constitute delivery from husband to wife, guidance is afforded by the judgment of Lord Esher in Bashall v. Bashall. The earlier part of that judgment has been read by Harman L.J., and so I need only read the concluding part of it: "In an action by the wife it was necessary for her to show that the husband had done that which amounted to delivery. If the facts proved were equally consistent with the idea that he intended to deliver the thing to the wife so as to be her property, and with the idea that he intended to keep it as his own property, then the wife failed to make out her case. He thought there was no sufficient evidence of delivery here, and the appeal must therefore be allowed."

As I understand that passage, it is dealing with delivery, and the effect of it is that an act to constitute delivery must be one which in itself shows an intention of the donor to transfer the chattel to the donee. If the act in itself is equivocal - consistent equally with an intention of the husband to transfer the chattels to his wife or with an intention on his part to retain possession but give to her the use and enjoyment of the chattels as his wife - the act does not constitute delivery.

In the present case the intended gift was from husband to wife. Be it assumed that he spoke words of gift - words expressing an intention of transferring the chattels to her, and not merely an intention to give her the use and enjoyment of them as his wife - and that in the circumstances the chattels intended to be given were sufficiently identified by the words of gift. There was no pre-existing possession of the donee in this case. The husband was the owner of the chattels and therefore considered in law to be in possession of them. No act of delivery has been proved, because the acts relied upon are in themselves equivocal - consistent equally with an intention of the husband to transfer the chattels to his wife or with an intention on his part to retain possession but give to her the use and enjoyment of them as his wife. . . .

In my judgment the applicant, Mrs. Cole, did not establish title to any of the chattels referred to in the motion, and accordingly the motion should have been wholly rejected, and therefore the appeal should be allowed.

Pennycuick J delivered a concurring judgment
Lloyds Bank plc v Carrick [1996] 4 All ER 630, CA

Morritt LJ: This is an appeal of Lloyds Bank plc, to which I shall refer as 'the bank', from the order of Mr Recorder Holmes made in the Cambridge County Court on 5 July 1994. By that order he dismissed the bank's claim as mortgagee for possession of leasehold property known as 7 Derby Way, Newmarket, Suffolk and made a declaration that the mortgagor, the first defendant Mr Carrick, held the lease of that property in trust for the second defendant, Mrs Carrick, so that her interests in and rights over that property were not subject to the bank's charge dated 25 November 1986.

The facts are simple and may be shortly stated. No 7 Derby Way, Newmarket is a maisonette the title to which is unregistered. By a lease dated 4 August 1971 it was demised for a term of 99 years from 25 March 1971 in consideration of a premium and a relatively nominal rent. There were no restrictions on the lessee's ability to assign the term, which, on 2 February 1982, was assigned to the first defendant Mr Carrick who then lived in the maisonette.

Mr Jeffrey Carrick was the brother of Mr Carrick and the husband of the second defendant. Mr Jeffrey Carrick and Mrs Carrick, together with their two small boys, lived in Edinburgh Road, Newmarket. Mr Jeffrey Carrick died in March 1982. After his death but before November 1982 there were discussions between Mr Carrick and Mrs Carrick as to where she should live. Those discussions and their aftermath were described by the recorder in the following terms:

'The first defendant says that he told Mrs Carrick that, effectively, "If you like, you can come and live in this property [ie 7 Derby Way, Newmarket]". She was concerned whether she could afford to do so and whether she could sell her house and what would happen. Suffice it to say that Mr Michael Carrick, the first defendant, said to his sister-in-law "Put the property on the market and what you get from the net proceeds of sale you can pay to this property, which will become yours". Effectively, that is what happened. Mrs Carrick, the second defendant, put her property on the market. She realised a figure, which after deductions of repayment of mortgage (no doubt estate agent's commission and legal expenses and the usual outgoings that one incurs on a sale), amounted to around £ 19,000. As a result of completing that, the £ 19,000 was paid over to the first defendant. The first defendant, being a building contractor, had a number of other properties at the material time and, in fact, went to live at another property, taking his then wife and child with him, leaving Mrs Carrick to come and live in the property.'

Mrs Carrick and her two children moved into the maisonette in about November 1982.

In the course of his judgment the recorder referred to the existence of a charge over the maisonette in favour of the bank existing at that time, but that seems to be an error for the original document is dated 10 November 1983. At all events Mrs Carrick became aware of it and raised the matter with Mr Carrick on a number of occasions when he told her not to worry as he would sort it out. In the event it was redeemed on 11 November 1986 some two weeks before the execution of the charge with which this appeal is concerned. At some time before it was redeemed works were carried out in the maisonette consisting of a kitchen extension, central heating and damp proofing. They were effected by Mr Carrick at a cost of about £ 5,000 but paid for by Mrs Carrick's father.

The legal charge on which the bank relies is dated 25 November 1986 and was made between Mr Carrick and the bank to secure all monies due on any account by the former to the latter. Mr Carrick, as beneficial owner, charged the lease of the maisonette as security for those moneys. The charge was preceded by a questionnaire signed by Mr Carrick to the effect that, to the best of his knowledge, there were no persons other than the mortgagor who would then or thereafter occupy the maisonette.

On 16 January 1991 and again on 9 August 1991 the bank demanded from Mr Carrick the substantial sums then due from him to the bank. They were not paid and the bank commenced these proceedings in the Cambridge County Court by a summons issued on 27 February 1992 seeking against Mr Carrick a judgment for £ 89,010795 and interest thereon accruing at the rate of £ 53718 per day and an order for possession of the maisonette.

By his answer dated 8 March 1992 Mr Carrick admitted the money claim but, in respect of the possession claim, he alleged that he was, and had been since a time before the execution of the legal charge relied on by the bank, a bare trustee of the maisonette for his sister-in-law. Accordingly Mrs Carrick was joined as the second defendant . . .

The bank replied to the effect that the interest of Mrs Carrick was registrable as a land charge of class C(iv), namely an estate contract, and was void against the bank for want of registration. . . .

The action was heard by the recorder on 4 July 1994. . . . He expressed the view that the case turned on the law so far as it relates to registrable interests and later, whether there was a contract between Mr Carrick and Mrs Carrick. In respect of these issues his conclusions were:

'In my view there was a contract that upon payment of the £ 19,000 by the second defendant there arose, in my view, a bare trust. In other words, there was nothing left vested in Mr Carrick (the first defendant) other than the legal title. Mr Carrick had no rights to the property. He simply held the legal title upon trust. Mrs Carrick could have called for the legal title to be conveyed to her by the first defendant as bare trustee. If, as I do, I follow that through, the interest behind the bare trust is not registrable.'

On the basis that there was no registrable interest the recorder then went on to consider whether the bank had notice of the interest of Mrs Carrick so that the legal charge took effect subject to it. [He concluded that it did, and that therefore the bank was bound by Mrs Carrick’s interest]. . . .

The bank appeals . . . It contends that the recorder should have found that the only interest of Mrs Carrick in the maisonette was an estate contract within the Land Charges Act 1972 and accordingly was void for want of registration as against the bank as the purchaser of a legal estate for valuable consideration. . .

It is convenient to consider first the relevant statutory provisions. The 1972 Act replaced the Land Charges Act 1925. So far as relevant it provides:

'. . . 2. (1) If a charge on or obligation affecting land falls into one of the classes described in this section, it may be registered in the register of land charges as a land charge of that class . . .

(4) A Class C land charge is any of the following (not being a local land charge), namely . . . (iv) an estate contract; and for this purpose . . . an estate contract is a contract by an estate owner . . . to convey or create a legal estate . . .

4. . . . (6) An estate contract . . . shall be void as against a purchaser for money or money's worth . . . of a legal estate in the land charged with it, unless the land charge is registered in the appropriate register before the completion of the purchase . . .'

Section 17 incorporates the definitions contained in the Law of Property Act 1925 of 'legal estate' and 'purchaser', which, it is common ground, include a charge by way of legal mortgage and a mortgagee such as the bank . . .

In the light of these provisions and, no doubt, the consideration by each party of the written argument of the other, the issues between them were narrowed considerably. First, it is accepted by Mrs Carrick that if her only interest in the maisonette was derived from the contract which she accepts is void as against the bank as an unregistered estate contract then the appeal succeeds. Second, Mrs Carrick accepts that the original contract between her and Mr Carrick, as found by the recorder, was a valid open contract for the purchase of the maisonette; that it became enforceable by her when she partly performed it by entering into possession and paying the whole of the purchase price but that it remained executory, that is to say uncompleted, at the time of the legal charge to the bank granted in November 1986. Third, the bank accepts that if Mrs Carrick had an interest in the maisonette not arising from but separate and distinct from the unregistered contract, it was and is binding on the bank for, as found by the recorder, the bank had notice of it.

Thus the issue argued on this appeal was whether Mrs Carrick had an interest in the maisonette separate and distinct from that which arose under the unregistered estate contract which was capable of binding the bank as successor in title to Mr Carrick. For Mrs Carrick it was submitted that she did. It was contended that she was entitled to such an interest under a bare trust, a constructive trust and by virtue of a proprietary estoppel.

I shall consider each of these points in due course. But before doing so it is necessary to consider the position of Mr Carrick and Mrs Carrick before the charge to the bank was executed. At the time it was made the contract was valid but, as provided by s 40 of the Law of Property Act 1925, unenforceable for want of a memorandum in writing or part performance. It became enforceable when in or about November 1982 Mrs Carrick paid the purchase price to Mr Carrick and went into possession. One consequence of the contract becoming enforceable was that it was specifically enforceable at the suit of Mrs Carrick. Accordingly Mr Carrick became a trustee of the maisonette for Mrs Carrick. Normally such trusteeship is of a peculiar kind because the vendor himself has a beneficial interest in the property as explained in Megarry and Wade on The Law of Real Property (5th edn, 1984) p 602. But in this case as Mrs Carrick had paid the whole of the purchase price at the time the contract became enforceable Mr Carrick as the vendor had no beneficial interest. Thus he may properly be described as a bare trustee (cf Bridges v Mees [1957] 2 All ER 577 at 581, [1957] Ch 475 at 485). It follows that at all times after November 1982 Mrs Carrick was the absolute beneficial owner of the maisonette and Mr Carrick was a trustee of it without any beneficial interest in it.

The argument for Mrs Carrick relied on the relative position at law and in equity as I have described it to found the argument that such an absolute equitable interest was not itself registrable but bound the bank as they had constructive notice of it. Counsel for Mrs Carrick accepted that such interest came or started from the contract but, he contended, it matured into an interest separate and distinct from the contract as soon as the purchase price was paid in full.

For my part I am unable to accept this analysis. The payment of £ 19,000 by Mrs Carrick to Mr Carrick did not as such and without more give her any interest in the maisonette. Nor, prior to the conclusion of the contract, were the circumstances such that Mrs Carrick could assert that her brother-in-law held the maisonette on any trust for her benefit. The source and origin of the trust was the contract; the payment of the price by Mrs Carrick served only to make it a bare trust by removing any beneficial interest of Mr Carrick. Section 4(6) of the 1972 Act avoids that contract as against the bank. The result, in my judgment, must be that Mrs Carrick is unable to establish the bare trust as against the bank for it has no existence except as the equitable consequence of the contract. Accordingly I reject the contention founded on the bare trust.

The second contention for Mrs Carrick was to the effect that she was entitled to the whole beneficial interest in the maisonette arising under a constructive trust and that that interest was not registrable so that the bank, having had constructive notice of it, took subject to it. For this proposition her Counsel relied on the speech of Lord Bridge of Harwich in Lloyds Bank plc v Rosset [1990] 1 All ER 1111, [1991] 1 AC 107. That case was concerned with the question of what must be established to entitle a wife to an equitable interest in registered land the title to which is registered in the sole name of her husband. Lord Bridge of Harwich said:

'The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been. Once a finding to this effect is made it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel.' (See [1990] 1 All ER 1111 at 1118-1119, [1991] 1 AC 107 at 132.)

Counsel recognised that in this case the contract between Mr Carrick and Mrs Carrick was entered into after Mr Carrick had taken an assignment of the lease into his own name. But he submitted that the same principle applied and for that purpose relied on the statement of Lord Oliver of Aylmerton in giving the opinion of the Privy Council in Austin v Keele (1987) 61 ALJR 605 at 609, where he said

'Although Lord Diplock [in Gissing v Gissing [1970] 2 All ER 780 at 790, [1971] AC 886 at 905] referred to the formation of a common intention "at the time of acquisition", the Court of Appeal expressed the view, with which their Lordships agree, that although it may be more difficult to prove the requisite intention in relation to property already held beneficially by the trustee, there is no reason in principle why the doctrine should be limited to an intention formed at the time of the first acquisition of the property -- an opinion echoed by Mustill L.J. in his judgment in Grant v Edwards ([1986] 2 All ER 426 at 435, [1986] Ch 638 at 651). In essence the doctrine is an application of proprietary estoppel and there is no reason in principle why it should be confined to the single event of acquisition of the property by the owner of the legal estate.'

Counsel for Mrs Carrick submitted that if there had been no contract then on the proper application of these principles there would have been a constructive trust in favour of Mrs Carrick. From this he argued that Mrs Carrick should not be in any worse position just because there was a contract.

In this case there was a trust of the maisonette for the benefit of Mrs Carrick precisely because there had been an agreement between her and Mr Carrick which, for her part, she had substantially if not wholly performed. As between her and Mr Carrick such trust subsisted at all times after November 1982. I agree with counsel for the bank that there is no room in those circumstances for the implication or imposition of any further trust of the maisonette for the benefit of Mrs Carrick. In Lloyds Bank plc v Rosset there was no contract which conferred any interest in the house on the wife. As with all such statements of principle the speech of Lord Bridge of Harwich must be read by reference to the facts of the case. So read there is nothing in it to suggest that where there is a specifically enforceable contract the court is entitled to superimpose a further constructive trust on the vendor in favour of the purchaser over that which already exists in consequence of the contractual relationship.

It is true that on this footing the ultimate position of Mrs Carrick with the benefit of a specifically enforceable contract may be worse than it would have been if there had been no contract. But that is because she failed to do that which Parliament has ordained must be done if her interest is to prevail over that of the bank, namely to register the estate contract. Her failure in that respect cannot, in my view, justify the implication or imposition of a trust after the execution of the charge when the dealings between Mr Carrick and Mrs Carrick before such execution did not. For these reasons I would reject the second point on which Mrs Carrick relied.

The third contention was that Mrs Carrick is entitled to the benefit of a proprietary estoppel. Counsel on her behalf submitted by reference to the principles set out in Snell's Equity (29th edn, 1990) pp 574-576 that such an estoppel arose in her favour by virtue of the facts pleaded in her defence. He submitted that Mrs Carrick had paid the purchase price and carried out the improvements to the maisonette in the belief common to both her and Mr Carrick and to that extent encouraged by him that she either did or would own it. Reliance was placed on the decisions of this court in Inwards v Baker [1965] 1 All ER 446, [1965] 2 QB 29 and E R Ives Investments Ltd v High [1967] 1 All ER 504, [1967] 2 QB 379 as establishing that such an estoppel gives rise to an interest in land capable of binding a successor in title with notice.

This was disputed by counsel for the bank. She submitted that such principles could not be applied to cases in which there was no belief or expectation of having or acquiring an interest in someone else's land. In this context she relied on Western Fish Products Ltd v Penwith DC [1981] 2 All ER 204. Further, she submitted that the facts did not warrant such an estoppel as they did not cover all the elements referred to as 'probanda' in Wilmott v Barber (1880) 15 Ch D 96 and were otherwise insufficient. In addition she submitted that such an estoppel cannot give rise to an interest in land capable of binding successors in title with notice.

I would observe at the outset that it is a matter of some doubt whether the principles of proprietary estoppel differ from those of that species of constructive trust which was referred to by Lord Bridge of Harwich in Lloyds Bank plc v Rosset. In the passage from his speech which I have already quoted he treated the two labels as interchangeable. To the like effect is the passage in the advice of the Privy Council in Austin v Keele (1987) 61 ALJR 605 given by Lord Oliver of Aylmerton, which I have also quoted. However that may be, the case under this head was put somewhat differently and should be considered on its own merits.

With regard to the second submission of counsel for the bank I think that it is now clear that to constitute the requisite estoppel it is not necessary to establish all of the five elements or 'probanda' referred to by Fry J in Willmott v Barber (1880) 15 Ch D 96 at 105-106. In his judgment in Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1981] 1 All ER 897, [1982] QB 133 Oliver J traced through the subsequent cases in which this question had been considered. I do not propose to repeat the process but would respectfully agree with the conclusion of Oliver J that proof of all those elements or 'probanda' is not necessary to found an estoppel. For my part I agree with the proposition stated by Oliver J that --

'the more recent cases indicate, in my judgment, that the application of the Ramsden v Dyson (1866) LR 1 HL 129 principle (whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial) requires a very much broader approach which is directed to ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment rather than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour. So regarded, knowledge of the true position by the party alleged to be estopped becomes merely one of the relevant factors (it may even be a determining factor in certain cases) in the overall inquiry.' (See [1981] 1 All ER 897 at 915-916, [1982] QB 133 at 151-152.)

In Western Fish Products Ltd v Penwith DC the plaintiff carried out works on its own land in reliance on statements made by an officer of the local planning authority that permission would be granted for its development. Planning permission was in due course refused and enforcement notices were served. The plaintiff then instituted proceedings for a declaration that it was entitled to the permissions the officer had represented that it would obtain, in reliance on which the plaintiff had carried out the works on its own land. The claim failed on a number of grounds. In relation to the claim to a proprietary estoppel Megaw LJ giving the judgment of the court said ([1981] 2 All ER 204 at 218-219):

'We know of no case, and none has been cited to us, in which the principle set out in Ramsden v Dyson and Crabb v Arun District Council [1975] 3 All ER 865, [1976] Ch 179 has been applied otherwise than to rights and interests created in and over land. It may extend to other forms of property: see per Lord Denning MR in Moorgate Mercantile Co Ltd v Twitchings [1975] 3 All ER 314 at 323-324, [1976] QB 225 at 242. In our judgment there is no good reason for extending the principle further. As Harman LJ pointed out in Campbell Discount Co Ltd v Bridge [1961] 2 All ER 97 at 103, [1961] 1 QB 445 at 459, the system of equity has become a very precise one. The creation of new rights and remedies is a matter for Parliament, not the judges. In his reply counsel for the plaintiffs seemed to recognise that the reported cases did put limits to the application of the so-called concept of proprietary estoppel. He submitted that the plaintiffs' case was within that concept because what the defendant council, by their officers, had represented had, to their knowledge, caused the plaintiffs to spend money on or in connection with their own land which they would not have otherwise spent. On their own case they have spent money in order to take advantage of existing rights over their own land which the defendant council by their officers had confirmed they possessed. There was no question of their acquiring any rights in relation to any other person's land, which is what proprietary estoppel is concerned with.'

In my judgment the claim of Mrs Carrick fails on a number of grounds. First, as in the case of the constructive trust, I do not see how there is any room for the application of the principles of proprietary estoppel when at the time of the relevant expenditure there was already a bare trust arising in consequence of an enforceable contract to the same effect as the interest sought pursuant to the proprietary estoppel. As the evidence showed Mrs Carrick knew of the need for a conveyance and was content that it should be deferred. Thus at the time that she paid the price and committed herself to the expenditure on the subsequent improvements she believed, rightly, that she was spending the money in respect of her own property, albeit under an uncompleted contract. In this respect I see no relevant distinction between this case and that of Western Fish Products Ltd v Penwith DC.

Second, this is not a case in which the expectations of Mrs Carrick have been defeated by Mr Carrick seeking to resile from the position he had encouraged her to expect. As far as he is concerned he has always accepted that she had contracted to buy the maisonette and had paid the price in full. As against him the contract is still binding and enforceable although, as he is unable to redeem the mortgage, he is in breach of contract for having charged the maisonette and in breach of trust for failing to account to Mrs Carrick for the money raised on the security of the maisonette. Mrs Carrick's expectations have been defeated because the contract was not registered at any time before the charge was granted and Parliament has decreed that in those circumstances the contract is void against the bank.

Third, it was common ground that the right arising from a proprietary estoppel cannot exceed that which the party sought to be estopped encouraged the other to believe that she had or would acquire. The party sought to be estopped is Mr Carrick. In so far as he encouraged Mrs Carrick to believe that she was or would become the beneficial owner of the maisonette there is no further right to be obtained for she was, and, subject to the charge, still is. But counsel for Mrs Carrick submits that Mr Carrick went further and encouraged her in the belief that she was or would become the legal owner of the maisonette. Apart from the facts that this was never alleged in the defence of Mrs Carrick nor explored in evidence at the trial I do not think that it could avail Mrs Carrick. Section 4(6) of the 1972 Act invalidates, as against the bank, any unregistered contract by the estate owner for the conveyance of the legal estate. It cannot be unconscionable for the bank to rely on the non-registration of the contract. I do not see how it could be right to confer on Mrs Carrick indirectly, and by means of a proprietary estoppel binding on the bank, that which Parliament prevented her from obtaining directly by the contract it has declared to be void. To avoid any future misunderstanding I would emphasise that there was and is a valid and enforceable contract as against the vendor. Accordingly this case is quite unlike those which may become more prevalent where there is no contract at all, not because there was no agreement but because the agreement was not in writing as now required by s 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

In my judgment, the claim based on proprietary estoppel fails. In the circumstances it is unnecessary to consider further the submission of counsel for the bank to the effect that a proprietary estoppel cannot give rise to an interest in land capable of binding successors in title. This interesting argument will have to await another day, though it is hard to see how in this court it can surmount the hurdle constituted by the decision of this court in E R Ives Investments Ltd v High [1967] 2 QB 379.

For all these reasons I consider that the recorder was wrong to have held that Mrs Carrick had any interest valid against the bank sufficient to constitute a defence to the claim against her for possession of the maisonette. I would allow this appeal.



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