Richards v Wood
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
- LORD JUSTICE AIKENS LORD
- LORD JUSTICE LEWISON
Areas of Law
- Contract Law
- Property and Real Estate Law
2014
COURT OF APPEAL (CRIMINAL DIVISION)
United Kingdom
CORAM
AI Generated Summary
Mr and Mrs Wood, with funds from their son-in-law Mr Richards, bought their council house under a statutory right to buy and entered a declaration of trust detailing the division of sale proceeds. They sold the property in 2006 for £102,000, prompting Mr Richards to sue for breach of trust. The court upheld the original judgment, determining that the sale was not undervalued and that the statutory discount should be considered a contribution to the purchase. The appeal was dismissed.
J U D G M E N T
LORD JUSTICE LEWISON:
The Issue.
When Mr and Mrs Wood decided to exercise their right to buy their council house they did so with the aid of monies provided by their son-in-law, Mr Richards. The three of them entered into a declaration of trust. The main issues raised on this appeal are what its effect was and whether Mr and Mrs Wood were in breach of its terms.
The Facts.
Mr and Mrs Wood were the tenants of 61 Park Avenue in Chadderton in Oldham. It was a council house of which Oldham Borough Council were the freeholders. They exercised their statutory right to buy in 1989. That entitled them to buy the freehold at a discount from its market value. Mr and Mrs Wood did not have the funds with which to complete the purchase. They obtained the necessary funds from their son-in-law, Mr Richards.
When the purchase was completed the three parties entered into a declaration of trust. The declaration began by reciting the transfer from Oldham Borough Council to Mr and Mrs Wood and the agreement to hold the property on trust for themselves and Mr Richards "as to the shares herein after mentioned" and continued:
"3. At the date of the said transfer the market value of the property agreed with the Oldham Borough Council was £23,500. The agreed discount to which the purchasers were entitled was £14,100 and the purchase price paid by the purchasers to the council was therefore £9,400. Part of the said purchase price of £5,000 has been provided by Mr Richards and the balance of £4,400 by the purchasers."
Clause B of the declaration said that on the sale of the property the proceeds would be divided:
"on the basis of the initial respective contributions set out in clause 3 above provided always that if the purchasers or Mr Richards shall expend further monies on the property by way of improvement such monies shall be regarded as an increase in the interest of the person so providing the same and shall be taken into account in any division of the proceeds of sale."
Clause C contained a covenant by Mr and Mrs Wood to keep the property in repair. Clause D provided for the property to be sold "at the then full market value "on the happening of certain events. Clause E provided for the destination of the property in the event that it had not been sold before the death of the survivor of Mr and Mrs Wood. In that event the property was to go to Mr Richards' two sons, Mark and Glenn, in equal shares.
In fact the whole of the sum of £9,400 came from Mr