Tuesday, April 24, 2012

Chapman v Jaume: There is no presumption of advancement between co-habitants

The case of Chapman v Jaume [2012] EWCA Civ 476, reported today on Bailii, serves as a reminder that there is no presumption of advancement between co-habitants, and that therefore proof of payment by one cohabitant to another imports a prima facie obligation to repay upon the recipient.

The facts were that Mr Chapman moved into Mrs Jaume's property. He then claims to have spent more than £130,000 on renovating and improving the property. After the relationship broke down he instructed solicitors who first tried to register a unilateral notice at the Land Registry, claiming that:
"The applicant has acquired a beneficial interest in the property as he has financed an extension to the property as well as extensive improvements. It was agreed with the proprietor that in return he would have a beneficial interest in the property."
This application was cancelled, and a second application was made, this time for the entry of a restriction, once again asserting that it had been agreed between Mr Chapman and Mrs Jaume that as a result of his expenditure Mr Chapman would acquire a beneficial interest in the property. Mrs Jaume lodged an objection and Mr Chapman did not pursue his application.

Mr Chapman then issued a claim for £162,589.42, "being money lent by the claimant to the defendant between 2001 and 2005 together with interest thereon." He distanced himself from the basis on which the applications to the Land Registry were put, and instead claimed that:
"At all material times, it was expressly agreed in discussions between the claimant and the defendant that the sums spent by the claimant as set out above would be repaid by the defendant upon the sale of the property or upon her youngest child attaining the age of 18, whichever was the earlier."
The judge found that there probably was an agreement, but held that the claim failed entirely, as Mr Chapman had failed to prove the precise conditions about the time at which the money would be repaid.

Mr Chapman appealed.

Giving the leading judgment in the Court of Appeal, Lord Justice Lewison took the view that the judge's decision had been wrong. He said (at paragraph 21):
"...in my judgment, if the judge came to the conclusion (as he did) that the precise conditions had not been proved but there had been some sort of agreement, then the obvious inference was that the monies were a loan repayable within a reasonable time after demand."
He then quoted the authorities, including Baroness Hale in Stack v Dowden, to the effect that proof of payment imports a prima facie obligation to repay upon the recipient, in the absence of any circumstances tending to show anything in the nature of a presumption of advancement, and that there is no presumption of advancement between co-habitants. Accordingly, the judge ought to have drawn the inference that the money was repayable within a reasonable time after demand, at the very latest when the house was sold. (The property had already been sold by the time of the trial.)

Lord Justice Lewison therefore allowed the appeal, and remitted the matter to the County Court to determine issues of quantum.

Lord Justice Thorpe and Lord Justice Etherton gave concurring judgments.

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