British Steel Corp v Cleveland Bridge - Case Study Example

Legal Advice There are several issues that Alan can raise in regard to the property at Oldfield Terrace, in order to protect his rights and secure his share of the sale proceeds of the house at Oldfield and these are set out below: The title to the property at Oldfield Terrace has been transferred to Clare and she is registered as the sole owner under the Land registry Act1. However, the major question that rises in this case is: How valid is this transfer of property, especially since Alan and Brenda are not even legally married? When a child is the legal heir of a parent, then the rights of the sole child to the property will be indisputable, however in this case no formal trust was set up and there were no legal guarantees in the first place, that on Alan’s death, the property might be transferred to his surviving spouse or to his child, because this is a non traditional family property issue.2 The issues that arise with unmarried couples are different from those that arise with married couples and their children and certain rights that are granted to the children of legally married couples are not available to children of unmarried parents. However, feminists have argued that contract law should guide the relationship between unmarried couples since they can be viewed as autonomous partners who may enter into an agreement to share rights and responsibilities.3 In reconceptualizing legal notions of the family, one of the tools used is the constructive trust. “A constructive arises where a person who holds title to a property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain it.”4 Alan has strong grounds for approaching the court to determine his share of the property in proceeds of a sale, because he has made a substantial contribution to the purchase price of the property to the tune of 50%. The fact that he has paid some consideration to purchase the property is in itself good grounds for him to be entitled to some a proportionate share of the sale proceeds5. The fact that Alan has left the property and is residing elsewhere is not necessarily a factor that goes against him, since a Court can transfer tenancies between unmarried couples and may order that the person gaining the tenancy should pay compensation to the other6. Therefore Brenda and Clare would be responsible for paying compensation to Alan. The validity of the transfer itself can be challenged by Alan since this is a non traditional family property issue. He can plead on the constructive trust basis to prevent unjust enrichment to Claire and Brenda. Clare holds the property but she has an equitable duty to convey it to Alan, since Alan has taken action for transfer of the property to his own detriment.7 Moreover, there is also the issue of the oral promise that Clare has made, to convey the proceeds of sale of the Old field property to Alan and Brenda, albeit in the form of purchase of another house. This clause has been specifically laid out in the contract, therefore the contention of Brenda and Claire that Alan is not entitled to the sale proceeds because he has moved out is untenable. There is no clause in the contract that states that Alan will not be eligible to receive his share of the proceeds if he moves out of Oldfield and lives in another house apart from his wife. The principle of proprietary estoppel can also be applied to Alan’s case, under which Clare is obligated to fulfil the oral promise that she has made. Since Alan has contributed to the purchase price of the property to the tune of 50%, a Court of equity may declare that in view of his expenditure, he is entitled to an equitable lien for the amount thus expended.8 There is also the issue of Clare’s fiduciary duty which Alan can rely upon in prosecuting the case. In the case of Bristol and West Building Society v Morrow9, Millet J defined fiduciary duty as follows: “A fiduciary is someone who has undertaken to act for or on behalf of another in circumstances which give rise to a relationship of trust and confidence….the principal is entitled to the single minded loyalty of his fiduciary.” Therefore, the transfer of the property was carried out in an atmosphere of trust and Clare, who has come, forward to act on behalf of her parents cannot now eschew her fiduciary duty. Moreover, this would also amount to a violation of Clare’s duty in a Court of equity, as a person in a fiduciary position. For example, in the case of Bray v Ford10, it was stated that “it is an inflexible rule of a Court of Equity that a person in a fiduciary position….is not, unless otherwise expressly provided, entitled to make a profit…..” According to the agreement that exists between Clare and her parents, Clare is only entitled to profit from any amounts that may be over and in excess of what is spent in acquiring a new property from the sale of the Oldfield property. Therefore, for her and Brenda to profit entirely from the sale proceeds would be inequitable. In the case of Balfour v Balfour11, the wife made a move to enforce a payment from her husband that he gave her during a period when the parties were amicably disposed towards each other but the Court denied the wife’s motion specifically on grounds of lack of consideration, since her love and affection did not count.12 There was also a lack of intention to create legal relations, since the parties were living in amity. The transfer of the Oldfield property was made by Alan during a time of goodwill in the family and there was (a) no intention to create legal relations and (b) no consideration paid by Clare for acquiring the title or ownership of the property. The underlying good faith agreement that propelled Alan into transfer of his property belies the intention to commence legal action. In the case of Merritt v Merritt13 Lord Denning the importance of this lack of intention to create legal relations in determining family property issues; “when parties are not living in amity but are separated, or about to separate….{t}hey do not rely on honorable understandings…”9 The assumption made in contract law is that the parties do not intend to create legal relations in family and social agreements, but there must be “an intention to create legal relations for a sufficiently certain contract to be enforceable.”14 Agreements that do not clearly spell out the intention to create legal intentions will not be enforceable. It may be noted that since the arrangement between Clare and her parents was made in an atmosphere of trust and amity, it may not be legally enforceable and the transfer itself may be challenged. The argument of Clare and Brenda that Alan is not entitled to any of the sale proceeds may be challenged on grounds of unconscionability or inequality of bargaining power.16 When Alan has invested in the purchase of the property up to the tune of 50%, he cannot be denied all share in the sale proceeds, because this would amount to unconscionable dealings on the part of his wife and daughter. There is a provision in the Constructive Trust where the Court redistributes the property in order to prevent unjust enrichment15 and if Alan is denied his share of sale proceeds, this would amount to unjust enrichment17. This is actionable even when no formal contract exists18 and therefore Alan has strong grounds to press for his share of sale proceeds on grounds of unjust enrichment of his wife and daughter and unconscionable dealing towards him. “Unconscionability” occurs when a party in a dominant position takes undue advantage of a party in a weaker position. Since Clare has the title to the house while Brenda is in possession of the Oldfield property, there may be said to be in a position of dominance as far as the acquisition of the sale proceeds is concerned. Alan’s moving out of the house cannot be construed as a waiver of his rights to enforce the oral agreement with Clare to receive the proceeds of the sale of the house, albeit in the form of another dwelling. Hence in conclusion, it may be noted that Alan has the following strong grounds to press his suit for a share in the sale proceeds. (a) Constructive trust and the duty of Clare to deal equitably with Alan (b) Clare’s fiduciary duty to not profit from the estate in excess of what has been specified (c) Transfer not valid because there was no intention to create legal relations and there was no consideration (d ) Oral agreement entitling Alan to benefit from the proceeds of sale of Oldfield equally valid even if he does not choose to live in a home with his wife (d) grounds of unjust enrichment of his wife and daughter if he is denied his share in the proceeds (e) Unconscionable dealing on the part of his family. The limitations that exist in this case are the right to ownership which Clare possesses due to the transfer of title in her name and Brenda’s physical possession of the premises. Moreover, the rights to a property remain vested in the transferee – Clare, until Alan exercises a right to rescind the transfer for misrepresentation, which is an equity.19 In this case, proving misrepresentation may be difficult, since it is Alan who may be deemed to be guilty of the misrepresentation rather than Clare or Brenda. References: * Burda, Joan M. (2002). “The New Neighbors: Non traditional Families, Non Traditional estates” Abanet, 19(5). [Online] Available at: http://www.abanet.org/genpractice/magazine/julyaug2002/burda.html; accessed 12/15/2005 * Balfour v Balfour,(1985) 5 OJLS 391) * Bray v Ford (1896) AC 44 * British Steel Corp v Cleveland Bridge and Engineering Co Ltd (1984) 27 BLR 136 * Bristol and West Building Society v Morrow (1998) Ch 1, Court of Appeal * Chalmers v Pardoe [1963] 1 WLR 670, 681-2. (Duggan v. Wetmore, 137 CCA 486, 221 F 916 (Tenn 1915)) * Chen Wishart.(2005) “Contract Law.” Oxford University Press * El Ajou v Dollar Land Holdings Plc (1993) 3 ALL ER 717 at 734 * Merritt v Merritt (1970)1 WCR 1211 * Rose and Frank Co v J.R. Crompton and Bros Ltd [1923] 2 KB 261; [1925] AC 445 * Ramsden v Dyson (1866) LR 1 HL 129, 170 (HL) * Scott, Elizabeth S and Scott, Robert E. (1998) “Marriage as a relational Contract” 84 VA L Review, 1225 at 1231. * Taylors Fashion Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133, [1981] 1 All ER 897, 915; 31 C.J.S., Estoppel and Waiver, ? 106). * Tettenborn, Andrew (2002). From chaos to cosmos – or is it confusion?’2 WEB JCLI * “Unmarried couples”. (No Date), [Online] Available at: http://www.compactlaw.co.uk/free_legal_information/relationships/relatsf14.html * Upton on Severn RDC v Powell (1942)1 ALL ER 220. * Williams v Bayley (1866) L.R. 1 H.L. 200 * Wakeman, Austin and Fratcher, Willian Franklin. (1989) 4th edition. “The Law of Trusts”, p 304 Read More