Trustees’ appeal dismissed

Trustees in bankruptcy failed to overturn the decision of a district judge, that the bankrupt’s former home had passed into the sole ownership of his ex-wife.

The bankrupt and his wife bought the property in 2001 and held it as joint tenants. In 2009, they separated and reached an understanding that the wife would keep the whole of the property. It remained registered in joint names, but the wife took over payment of all mortgage repayments and spent over £10,000 on home improvements.

The couple did not divorce until early 2018. Later that year the husband was declared bankrupt. His trustees in bankruptcy claimed a 50% beneficial interest in the property. His ex-wife was successful in seeking a declaration that the 2009 understanding gave rise to a common intention constructive trust and/or a proprietary estoppel, so that she was now the sole owner.

On appeal, it was held that the district judge had been right to make the declaration. An express declaration of trust is conclusive unless varied by "subsequent agreement" or affected by proprietary estoppel. The term "subsequent agreement" is not limited to a formal agreement which complies with the requirements of the Law of Property (Miscellaneous Provisions) Act 1989 but was capable of including an informal common intention constructive trust.

The district judge had also been entitled to find that the wife’s actions in taking over the mortgage repayments and paying for the home improvements amounted to a detriment, which was sufficiently great as to form the basis of a proprietary estoppel.

In reference to the matter of Nilsson v Cynberg [2024] EWHC 2164 (Ch).

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