LYSIS
LEGAL ANALYSIS- CASE REVIEW

IS LLOYDS BANK V. ROSSET[1] STILL GOOD LAW?

Thesis

Lord Bridge’s ruling has for two decades witnessed a barrage of scholarly criticism, albeit correctly as the decision opened a window to deny the application of justice. It is no longer important in law as jurisprudence has developed.

Introduction

This paper sets to look at the ever evolving legal jurisprudence[2] in the courts, as one of the sources of the law in England. Having been decided in 1990, there have been several developments in the legal and international circles to warrant a re-look at the then precedent setting decision of the House of Lords concerning land law. Being a member of the EU, the UK has had to align most of its laws and regulations to fit into the EU treaty[3]. This is due to the superiority of the region’s law over municipal law[4]. The foregoing case, Lloyds Bank v. Rosset, (Plummer, 1990) shall herein be referred to as the Rosset case.

Facts of the case

A couple, Mr. and Mrs. Rosset undertook to jointly buy a family house, which was to be financed from a family trust fund in the name of the husband, in whose name the trust was. The house required patchworks and renovations after the purchase and the couple undertook to jointly manage the renovations from the site, a side of internal house renovations that they did. Unbeknown to the wife, the trust was unable to comprehensively fund the house repairs forcing the husband to acquire an overdraft facility from Lloyds Bank which also meant the execution of a charge on the house in the banks’ favour. Mr. Rosset defaulted in payment and bank sought to acquire possession which the wife contested citing her overriding interest as an occupier under the Land Registration Act, s.70 (1) (g).

The court’s decision

The question that the Court Appeal had relied upon to award Mrs. Rosset was that she was in actual possession at the time of the charge and therefore had an interest. The House of Lords however did not discuss section 70(1) (g), but however only dealt with and held that she did not have an interest in the house as an occupier. This was so because generally, couples never sit down to agree on joint ownership of family property.

Criticism and analysis

Glover[5] and Todd[6], (1995) contend that courts are prevented from “…reaching an equitable solution based on a law” whose intention was not as is currently envisaged, not just merely based on estoppels[7]. This legal opinion was however brought over its head when the European Court of Human Rights obliged the UK to enact laws that allow for same sex property ownership under the Civil Partnership Act 2004, which invalidated the decision in this case, (Wong, 2007).

It is therefore argued that the argument is too narrow, as was the case in Petitt v. Pettitt[8], Gissing v. Gissing[9] and McFarlane v. McFarlane[10] which all sought the intervention of equity or the realization of fairness, (Ibid). The reliance on contributions led to an injustice being committed in Burns v. Burns[11], a widow who was the sole bread winner but lost her case. This is so despite the fact that women are a weaker sex and have little control. They on most occasions relinguish their assets to their husbands[12], (Wells, 2001).

The current legal regime based on Rosset has been aptly described as an unhappy marriage between estoppels and trust, which was only put in place to compensate for the shallowness of English law on cohabitation property,(Dyson, 2008:151). Several decisions have been made to try and qualify this argument, and to make the worth the justice it is supposed to serve, (Thompson, 2002).

The wrong legal argument

Lord Bridge seems to have let jurisprudence out through the window when he dealt with matters that are not judiciable. In his judgment, he said,

“In these circumstances, it would seem the most natural thing in the world for any wife, in

the absence of her husband abroad, to spend all the time she could spare and to employ

any skills she might have.. in doing all she could to accelerate progress of the work quite

irrespective of any expectation she might have of enjoying a beneficial interest in the

property.”[13]

The contention by Lord Bridge that a wife would not have known what to do in the absence of her husband is what is thought to be a sexist interpretation of the law. This was done, as put forth by his Lordship, in consideration with Mr. Rosset’s earnings. The question that one asks is why only consider his earnings and not the contributions by his wife, like the renovations are not held in such high regard? The assertion that the wife’s contributions were made as a gift to Mr. Rosset and not as a reserve that should be claimed in trust was not founded on any jurisprudential basis and only acts to term the common la developed by Lord Bridge as outdated.

Midland Bank v. Cooke[14]

The Court of Appeal made a decision to the effect that Mrs. Cooke, a widow of the deceased was also entitled to half of the matrimonial property by virtue of ‘third party mortgage’ despite the fact that she did not make any contributions to the same property, and neither was there express discussion and agreement between her and husband to the same effect. In passing the judgment, Waite LJ was of the opinion that the standard set forth by the Court of Appeal in Springette v Defoe[15] concerning there being express discussions before such an order is not always the case.

The facts of the case were that Mr. Cooke bought a house before they got married in 1971, and his wife never made any contribution except a minimal wedding present. She however concerned herself with household chores. She later signed a consent form with the Midlands Bank postponing her interest in the mortgaged property, although the property was later conveyed in both the couple’s names in 1984. In 1987 the bank sought to acquire the property due to outstanding mortgage payments, but Mrs. Cooke claimed a half beneficial interest, an action that overrode the banks’ claim.

Lord Bridge had found that “…In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage installments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do,” which was contrary to other initial precedents. Fox and May LJJ had said in Burns v. Burns[16] that any substantial contribution, whether direct or indirect suffices in this case. It is therefore important to note that estoppels was not considered in this case as Lord Bridge had alluded since it does not affect third parties.

Lloyds Bank plc v Carrick[17]

In this case, the Court of Appeal held that Mrs. Carrick’s interest only arose out of an estate contract which in this case was not legally registered in accordance with the statutory requirements was unenforceable hence her constructive trust did not arise. This decision was evidently following the common law as established by Lord Bridge in Rosset.

The facts of the case were that Mrs. Carrick paid her brother-in-law, Mr. Carrick, after the demise of her husband in 1982, monies which he used to acquire a maisonette, which was initially his and she moved in with her children. She later financed renovations on the house, but the title was however not registered or conveyed to her. The property was later charged as security for a bank loan by Mr. Carrick in 1986, as he purported to be the owner of the property. When the bank later sought to repossess and Mr. Carrick claimed to have held the property in Mrs. Carrick’s trust, an assertion that the court did not see as tenable.

It was however established that the bank never inquired on the property, as any inquiry would have affirmed the statement by Vaughan William in Hunt v Luck[18] at page 33:

“… if a purchaser or a mortgagee has notice that the vendor or mortgagor is not in possession of the property, he must make inquiries of the person in possession ... and find out from him what his rights are, and if he does not choose to do that, then whatever title he acquires as purchaser or mortgagee will be subject to the title or right of the [person] in possession."

Morritt LJ however asserted that Mrs. Carrick’s interest would only have arisen if the title was registered as under the Land Registration Act 1925. This was a decision that created an injustice to a widow, based on Lord Bridge’s estoppels and constructive trust analysis. It therefore is unfortunate that an injustice was created in a matter that was evident as this as if the title was not registered, so did the bank over look the cardinal duty of performing an inquiry on the charged property.

Stack v. Dowden[19]

The House of Lords decided that Stack had no remedy against the decision of the Court of Appeal. In arriving at the decision, the position of the Law Commission was cited by Baroness Hale, (Para 46), that, “It is widely accepted that the present law is unduly complex, arbitrary, uncertain in its application. It is ill-suited to determining property rights of those who, because of the informal nature of their relationship, may not have considered their respective entitlements” as cited by Dunlop, (2007). This was an affirmation of the fact that “…equity follows the law [so that]…in joint ownership cases, the onus is on whoever alleges to prove as such,” (Pawlowski, 2007).

The facts of the case were that the two parties had had four children from a relationship that dated back from the year 1983, in which they had four children. They purchased a property from savings solely made by Ms. Dowden, proceeds from the first property owned solely by Miss Dowden and a mortgage to which the two were both liable in 1993, without any discussions or reference to the word trust. In the case, Stack sought judgment to the effect that the property was jointly held by them in joint trust, a legal opinion that the court of first instance agreed with. The court of Appeal took the view that the intentions of the parties need to have been investigated by the trial Judge, an approach that Lord Bridge never intended to explore, as his leaning was mainly on the existence of an estoppel. This decision calls upon the courts to continue participating in the development of common law and “…also increases the pressure on parliament to create legislation specifically for cohabitants, many of whom do not understand that they do not share same rights as married couples, (Da Costa, 2007: 10).

Adekunle v. Ritchie[20]

A mother and son jointly bought their property in 1989, although this as not written anywhere. The son claimed ownership of the property under the survivorship doctrine when the mother died intestate. The other nine children however contended that the property has to be liquidated and the proceeds shared accordingly amongst them. Copies were given in court on the ownership of the property but as had been held in Huntingford v Hobbs[21], was not conclusive evidence for the existence of a trust. It was held this could only be used to identify the intentions of the parties. It was then held that there being no express declaration of the trust, then the decision and formula set forth in Stack v. Dowden by Baroness Hale applied. In the case of Le Foe v. Le Foe[22], the High Court was of the opinion that when one makes indirect contributions, they may qualify as a beneficial entitlement.

Conclusion

The decision by Lord has been widely criticized. Lord Walker in Stack expressed his doubt about the assertion by Lord Bridge having said he took account of Gissing v. Gissing in arriving at his decision as being jurisprudentially lame as the two cases were two decades apart. He said this allowed scholarly criticism on the House of Lords but the law had moved. Rosset was an opportunity to remedy the unjust principles set forth in Gissing v. Gissing but the opportunity was wasted until recently, when Stack attempted to correct the anomaly, albeit one that was long overdue.

The case of constructive trust therefore as enunciated by Lord Bridge to be dependent on estoppels and not equity or fairness has been surpassed with events and time. This was aptly put forth by Lord Walker in Stack who contended that “…whether Lord Bridge was right in 1990 or not, the law had now moved on,” (Pawloski, 2007). This confirms the fact that the decision in Lloyd Banks v. Rossett is no longer good law. Jurisprudence has changed and there should be no more injustices as used to happen after Lord Bridge to widow and persons who could not prove otherwise expressly, contrary to whatever whoever alleges the existence of a trust does.

It is of utmost importance for there to be justice in all cases. Any preconceived personal opinions or prejudices on the part of a Judge effectively deny the development of common law, an area that is very important to the development of the law. Feminist scholars have made this argument fodder for roadside and town hall discussions, without losing track of the fact that the judgment by Lord Bridge affected jurisprudence for two more decades, a time when many injustices were committed to innocent law abiding citizens who had no other recourse other than in law. It is jurisprudentially safe to say that Lloyds Bank v. Rosset is no longer a good law.

Works cited

Andrew Dyson. All’s fair in love and law: An analysis of the common intention constructive

trust. Cambridge Student Law Review (2008) 149-166

Elissa Da Costa. Stack v. Dowden revisited. Family Law Journal, (June, 2007).

Hamish Dunlop. Stack v Dowden [2007] UKHL 17. 3 Paper Buildings, (April 2007).

http://www.3paper.co.uk/downloads/Stack-v-Dowden.pdf

Mary Rose Plummer Barrister. Lloyds Bank plc v Rosset and another. All England Law

Reports/1990/Volume 1 /Lloyds Bank plc v Rosset and another - [1990] 1 All ER 1111

M. P. Thompson (2002) ‘An Holistic Approach to Home Ownership’, 66 Conv., 273-285.

Pawlowski, Mark. Beneficial entitlement after Stack. Property Law Journal, 197. pp. 22-24.,

(2007) ISSN 1461-0752

Nicola Glover and Paul Todd. Occupation for life: satisfying for equity. Web Journal of Current

Legal Issues, (1995). http://webjcli.ncl.ac.uk/articles5/todd5.html

R. Wells (2001) ‘The Element of Detriment in Proprietary Estoppel’, 65 Conv. 13-30

Simone Wong. Would you care to share your home? Northern Ireland Legal Quarterly 58. ISSN

0029-3105. (2007)

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[1] (1991) AC 107, House of Lords
[2] Defined by Richard A. Posner, (1993: xi) as the “…most fundamental , general and theoretical plane of analysis of the social phenomenon called law,” In The Problems of Jurisprudence, Harvard University Press.
[3] This includes all the substantive law of the EU parliament, legislature and all the protocols that are antecedent to the treaty.
[4] Sweet and Maxwell, (1997). Limited in ‘European law review, Volume 21’, Sweet&Maxwell pp.36
[5] LLB, University of Manchester
[6] MA BCL, Cardiff Law School.
[7] The principle that applies under estoppels that of ‘minimum equity to do justice to the plaintiff’
[8] (1970) AC 777
[9] (1971) AC886
[10] (1972)NI59
[11] (1984) Ch.317
[12] Burgoyne. ‘Money in marriage: How patterns of allocation both reflect and conceal power’. The Sociological Review, (1990)38:634.
[13] Lord Bridge at 1118b.
[14] (1995) 4 All ER 562
[15] 1992) 24 HLR 552
[16] [1984] 1 Ch 317
[17] (1996) 146 NLJ 405
[18] [1902] 1 Ch 428
[19] (2007) UKHL 17
[20] (2007) FW Misc 5 (EWCC)
[21] (1993) 1 F.C.R 45
[22] (2001) 2FLR 970