Wodzicki v Wodzicki (handed down on 24 February 2017) concerned a property registered in the joint names of the appellant’s late father and his second wife, the respondent. The appellant had argued that she was the sole beneficial owner of the property on the basis of an assurance made to her by her father when the property was purchased that when he had finished repaying the loan secured on a French property owned in the joint names of the Appellant’s father and second wife and when he thought she was ready, he would transfer the property to her. The Judge at first instance took a resulting trust approach and ordered that there be an account taken at a further hearing before a District Judge.
The Court of Appeal upheld the decision of the Judge at first instance that this was not a case that was appropriate for an application of the constructive trust approach laid down in Jones v Kernott, whilst accepting that the constructive trust approach may be applied outside the precise confines of a co-habiting couple. The Judge had correctly taken a resulting trust approach. David Richards LJ stated: “… there was nothing close about the relationship between the appellant and the respondent. There is no evidence that they even saw each other once the appellant had settled at the property. …”.
The case is curious in that it appears that the Judge at first instance conflated the two principles of resulting trust and equitable accounting. Having decided that the interests were held by the respondent upon trust for herself and the appellant the Judge appears to have directed that “there be an accounting process to determine the extent of the parties’ beneficial interests to be carried out by a District Judge who must determine as best as can be done the respective contributions invested by the Claimant in mortgage payments and the amount invested by the Defendant in maintenance and utilities and any other equitable payments due to the Claimant by way, for example, of occupation rent. To that end the Defendant will probably have to spend time and money on getting her full bank statements to show the extent of her investment over the years and the Claimant will have to produce hers to evidence the extent of her contribution to the mortgage payments.”
As set out in Snell’s Equity (33rd edition) at 20-080: “Equitable accounting is the process by which the financial burdens and benefits of land shared by co-owners are adjusted between them, often but not always by way of the division of the proceeds of sale. The process is distinct (emphasis added) from an enquiry as to the extent of the parties’ respectie beneficial interests in the property. It can usually only take place once those interests have been determined, where necessary, because the accounting is usually proportionate to them.”
It also appears that, as a result of the conflation of the two principles, the Judge at first instance, was prepared to countenance a wider range of financial contributions as being relevant to the size of the beneficial interest by way of resulting trust than would traditionally be the case: not only direct contributions to the purchase price, usually including mortgage payments, but also including “maintenance and utilities.”
This issue was not considered by the Court of Appeal and the issue of quantification was, in the event, rendered somewhat academic. A Deputy District Judge had stayed the quantification hearing pending the appeal. David Richards LJ held that the DDJ should have dealt with the matter on the basis that the Respondent had taken no part in proceedings and unless she sought belatedly to file evidence as to any financial contribution the appellant should at the resumed hearing of the account and enquiry be entitled to a determination that she has a 100% interest in the property.