David Smith v Stephen McCarthy

1. This is my extemporary judgment on the hearing of a substantive appeal from a reserved judgment of District Judge Deane following the trial of extensive preliminary issues in this claim brought by Mr Stephen McCarthy against Mr David Smith in the County Court in Liverpool under case number G71YJ184. A judgment was handed down on 22 May 2024. An Appellant’s Notice was filed on 12 June 2024, with grounds of appeal to be found at pages 26 to 27 of the appeal bundle. Permission to appeal was given by HHJ Cadwallader on 29 July 2024. That led to the filing of a Respondent’s Notice, effectively seeking to uphold the decision of the district judge on grounds which she had rejected, but which only arise if this appeal is to be allowed. On 30 September 2024, Judge Cadwallader gave the Respondent permission to rely upon the Respondent’s Notice, which had been issued out of time. He also granted the Respondent permission to cross-appeal by way of pursuing the appeal set out in the Respondent’s notice.

2. I have a well-prepared appeal bundle that extends to some 188 pages. I also have two lever-arch files of authorities, extending to some 727 pages. I have the benefit of detailed written skeleton arguments from both counsel. Mr Pepin Aslett appears for the Appellant - the defendant in the lower court - who defends the proceedings, and pursues the appeal, through his wife and litigation friend, Mrs Jane Staunton. The Respondent to the appeal - who was the claimant in the lower court - is represented by Mr Andrew Williams.

3. I have had the opportunity, not only of reading the judgment of the lower court, the grounds of appeal, and both skeleton arguments, but also of being able to look at the authorities referenced in those skeleton arguments. Mr Aslett has ably addressed me in support of the appeal for about one hour and 45 minutes. I have come to the clear conclusion that this appeal should be dismissed, for the reasons for that I now will give. In light of that, I found it unnecessary to call upon Mr Williams. It follows that it is also unnecessary for me to address the cross-appeal raised in his Respondent’s Notice. I therefore say nothing about the merits, or otherwise, of the cross-appeal, which relates to the district judge’s rejection of a case based on contract, which she had rejected for non-compliance with the provisions of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 .

4. I can set out the relevant background largely by reference to Mr Aslett’s skeleton argument, for which the court is grateful. The trial of the preliminary issues concerned the beneficial entitlement of the parties to 10 properties in Liverpool. There is no issue on this appeal concerning two of those properties, which were referred to in the judgment as ‘the 2013 Properties’ . The appeal relates entirely to the eight residential properties in the Anfield area of Liverpool which were referred to in the judgment as ‘the 2007 Properties’ . Mr Aslett correctly identifies the question on this appeal as whether District Judge Deane was correct in law to hold that in a case founded upon an agreement-based constructive trust, it is sufficient for the trust to come into existence, and for any proprietary estoppel to arise, where the property, the subject-matter of both the trust and the estoppel, is only conceptually identified in terms of being ‘somewhere within the Anfield area of Liverpool, with the properties to be selected by the defendant’, or whether, as the Appellant contends, the properties needed to have been identified by specific addresses, or individual locations, at the point at which the common intention arose, or the relevant representations were made to the claimant.

5. The Appellant says that the district judge was wrong to find that conceptually identifying the eight properties was sufficient, and that she misapplied the law. It is important to appreciate that the Appellant does not take issue with any of the relevant findings of fact made by the district judge. She found that the parties’ bargain had included a term that the 2007 Properties that were to be acquired by the defendant in the future would all be within the Anfield area of Liverpool.

6. At paragraph 31 of her judgment, the district judge set out the matters which she found had been agreed between the parties. In essence, the claimant was to pay £64,000 to the defendant, who used that sum, together with a further £64,000 of his own money, to purchase eight properties in the Anfield area of Liverpool that the defendant, alone, would select. Those properties would be owned by the claimant and the defendant equally. The defendant would use the total sum of £128,000 to fund deposits, purchase fees, and repairs on the properties as necessary, and they would be purchased with mortgage finance. The properties would be let to tenants, and the rental income would be used to repay the mortgage instalments, with any surplus being used for ongoing repairs, and then to reduce the mortgages. The defendant would make all the necessary arrangements, and would use a particular individual - referred to as Julie - to manage the properties for the two of them. The properties would be sold in 12 to 13 years’ time; and the net sale proceeds would then be split equally between the claimant and the defendant, and would constitute pure profit.

7. The district judge said that in her judgment, the matters agreed upon could reasonably be said to be the bones of an agreement. Although it lacked the type of detail that would be expected from a commercial property agreement between professionals, she was persuaded that the claimant and the defendant intended the agreement to be legally binding. The lack of detail and formality, and the more casual nature of the discussions, were the result of the parties being close friends, and the claimant trusting and deferring to the defendant’s knowledge and experience, describing him as having a large property empire and expertise that the claimant lacked. The district judge was satisfied that they had agreed what they had considered needed to be agreed, and that any finer detail that was missing was not fundamental to the nature or structure of the agreement, and would be dealt with by the defendant.

8. Mr Aslett, for the Appellant, contends that the district judge was wrong in law to hold that a constructive trust relating to the 2007 Properties arose in favour of the claimant, merely on the basis that an identified property that was going to be acquired in the future had been identified, conceptually, at the time of the parties’ common intention.

9. The judge’s key findings are set out at paragraphs 41 and 42 of her written judgment, as follows:

41. In relation to identifying the 2007 Properties, it is clear that they were not identified by address at the time of the agreement, but that is not to say, in my judgment, they were not identified at all. The 2007 Properties being the subject of the agreement were, in my judgment, identified conceptually by the claimant and the defendant as being those eight properties in the Anfield area of Liverpool that the defendant would subsequently select and purchase, following receipt of the claimant’s financial contribution. This is, effectively, an identification by description of properties that were not yet known to the parties. There is no evidence that it would have been possible to identify the 2007 Properties by specific address, or that specific properties had been identified in advance by the defendant; and there is no evidence, and no submissions on behalf of the defendant, that the 2007 Properties were of a different type or nature such that they did not fit the parameters of what the claimant said the agreement was, or that the dates of purchase of the 2007 Properties were such that they could not be referable to the agreement, or even were referable to some other individual business plan of the defendant.

42. I am satisfied that the agreement was that the defendant would, effectively, action the plan that they had agreed upon, which involved the defendant selecting the properties; and I am satisfied that it was a term of the agreement, that the properties would be selected by the defendant. The defendant went on to purchase eight properties over the fairly short period of the next four and a half months, between 9 February 2007 and 6 June 2007.

10. The district judge addressed the constructive trust issue at paragraphs 45 through to 51 of her judgment. At paragraph 45, she acknowledged that the burden rested upon the claimant to displace the presumption that the beneficial interests in the 2007 Properties differed from the legal title, which, in each case, was vested in the sole name of the defendant.

11. At paragraph 46, the district judge said that she had been referred to paragraph 57 of the case of Herbert v Doyle [2010] EWCA Civ 1095 , [2011] 1 EGLR 119 , concerning the need for certainty and completeness. That was in support of a submission by Mr Aslett that there was a need to identify specific properties for any constructive trust or proprietary estoppel to arise and operate. The district judge expressed herself satisfied that the oral agreement she had found amounted to an expressed common intention between the parties that the claimant would have a beneficial interest in the 2007 Properties, and that that beneficial interest would be shared, equally, with the defendant.

12. At paragraph 47, the district judge found that the 2007 Properties were sufficiently identified conceptually and by description. She was not satisfied that it was necessary for the 2007 Properties to have been identified specifically by their address. It was not part of the agreement between the parties that the 2007 Properties would be identified by address, as they were yet to be selected and purchased by the defendant; and that was not, in her judgment, fatal to the operation of a common intention constructive trust.

13. The district judge, at paragraph 48, expressed herself that she was not persuaded that the authorities relied upon by the defendant established that it was necessary for the parties to have identified the 2007 Properties by address. The district judge proceeded to address the various authorities relied upon by Mr Aslett in support of his submission that prior identification of specifically identified properties was necessary, and also the authorities and submissions advanced by Mr Williams, for the claimant, to the contrary.

14. At paragraph 50, reference was made to a Court of Appeal decision in the case of Chan Pui Chun v Leung Kam Ho [2002] EWCA Civ 1075 , reported at [2003] 1 FLR 23 . The district judge referred to the commentary on that authority, both in the text, at paragraph 15-012, and in footnote 126, of the 10 th edition of Megarry & Wade: The Law of Real Property . The district judge regarded Chun v Ho as authority binding on the court, which should be applied to the particular circumstances of the instant case. Very briefly, she said that it had involved the Claimant, Ms Chan, alleging that she had a beneficial interest in a future ‘dream’ house if she looked after the defendant’s interests in various projects; and that her share would be applied to property abroad in the future that was going to be acquired using the proceeds of those projects. Having cited from the leading judgment of Jonathan Parker LJ (at paragraph 96), the district judge expressed herself satisfied that the argument as to the lack of specificity in identifying the 2007 Properties, which was being advanced in this case on behalf of the defendant, was analogous to the argument that had been dismissed by the Court of Appeal in Chun v Ho .

15. At paragraph 51, the district judge said this: I am also satisfied that the ratio of that authority applies not only to a domestic context, but also to a business one, such as the present context. Indeed, the facts of Chun v Ho were not such that it involved an entirely domestic context. There was, indeed, a business context, and I am not satisfied that it can be distinguished on that basis. It was also submitted, on behalf of the defendant, that Chun v Ho could be distinguished on the basis that the money used to acquire the unidentified property in that case came from the proceeds of projects in which Ms Chan had an interest; and, in this case, it is said that the defendant immediately transferred the money received from the claimant out of the current account, into a savings account, and it was not directly paid towards the purchase of the 2007 Properties. I am not persuaded that this is something that can factually distinguish the present case.

16. The district judge went on to address the proprietary estoppel issue at paragraphs 52 through to 58 of her reserved judgment. At paragraphs 54 and 55, the district judge said this: As to the identification of the 2007 Properties being the subject matter of the assurance given by the defendant to the claimant, in entering into the agreement, I am satisfied, as I have set out above, that the 2007 Properties were sufficiently identified, conceptually and by description, as being those eight properties in the Anfield area of Liverpool, that the defendant would select and purchase following the receipt of the claimant’s contribution of £64,000. The defendant went on to complete that agreement by selecting and purchasing the 2007 Properties, following receipt of the claimant’s money. They were the only properties that the defendant purchased in 2007; and there is no evidence that the defendant would have purchased the 2007 properties had it not been for the agreement with the claimant, and the receipt of the claimant’s money.

55. I am, therefore, satisfied that an equity has arisen in the claimant’s favour, by virtue of adopting proprietary estoppel; and that equity should be satisfied in accordance with the claimant’s expectation, under what I have found to be the actual agreement between the parties, that both intended to be binding upon them, being that the defendant shall hold the 2007 Properties upon a remedial constructive trust for the claimant and the defendant in equal shares.

17. At paragraph 56, the district judge referred to Mr Aslett’s reliance upon passages from the speeches of Lord Hoffmann (at paragraph 2) and Lord Walker (at paragraph 61) of their judgments in Thorner v Major [2009] UKHL 18 [2009] 1 WLR 776 . Lord Hoffmann had stated that a claim under the principles known as proprietary estoppel required the claimant to prove a promise or assurance that he would acquire a proprietary interest in specified property. The passage from the judgment of Lord Walker said that, in his opinion, it was a necessary element of proprietary estoppel that the assurances given to the claimant should relate to identified property owned (or perhaps about to be owned) by the defendant. The district judge was not persuaded that those passages established the need to describe the 2007 Properties by address for the purposes of establishing a proprietary estoppel.

18. At paragraph 57, the district judge said this: I am not satisfied that paragraph 61 does have the effect of requiring the addresses of the 2007 Properties to be identified; and in my judgment, it does not exclude the possibility of identifying the subject of the assurances by concept or description, other than by address, in relation to property to be acquired in the future by the defendant, pursuant to the agreement.

19. At paragraph 58, the district judge cited from paragraph 95 of Lord Walker’s judgment in Thorner v Major . (In fact, the passage in question is to be found in the judgment of Lord Neuberger, rather than Lord Walker.) The passage is contained in a section of Lord Neuberger’s judgment headed: ‘Uncertainty as to the Extent of the Property’. It reads: In this case, the extent of the farm might change, but on the deputy judge’s analysis there is, as I see it, no doubt as to what was the subject of the assurance, namely the farm as it existed from time to time. Accordingly, the nature of the interest to be received by David was clear. It was the farm as it existed on Peter’s death. As in the case of a very different equitable concept, namely a floating charge, the property, the subject of the equity, could be conceptually identified from the moment the equity came into existence; but its precise extent failed to be determined when the equity crystalised, namely on Peter’s death.

20. The district judge, having cited that passage, said this: I am not satisfied that, in fact, there is a conflict with the present case because I am satisfied that, as in Thorner v Major , the subject of the parties’ agreement in relation to the 2007 Properties crystalised at the point when the defendant, having received the claimant’s money, selected and purchased the individual properties in accordance with their agreement, the 2007 Properties having been conceptually identified, as I have found, from the moment when the equity came into existence.

21. The Appellant appeals the district judge’s order on the following two grounds, as identified in the grounds of appeal. First, that the district judge was wrong to hold that the conceptual identification of property to be acquired in the future is enough to give rise to a finding that a constructive trust has come into being. The district judge was wrong to borrow that phrase from Thorner as it there applied in very different factual circumstances; and the district judge was in error in following Chun v Ho . Secondly, that for broadly the same reasons, the district judge was wrong to find that the claimant’s claim in proprietary estoppel also succeeded. If the appeal is allowed, the defendant submits that the declarations and order on the enlarged preliminary issues determined by the district judge should be reversed, and the order varied, as set out in section 5 of the Appellant’s Notice, which is to be found at page 18 of the appeal bundle. Mr Alsett notes that the Respondent’s cross-appeal is contingent on the success of his appeal.

22. I turn, first, to Mr Aslett’s submissions on the first ground of appeal, relating to the finding of constructive trust. The claimant’s case was based on an agreement-based constructive trust; in other words, that rights flowed from an agreement made between the parties. The actual way in which the claimant put his claim was by way of a common intention constructive trust, or a constructive trust arising under the equity recognised by Harman J in the well-known case of Pallant v Morgan [1953] Ch 43 . Both of those trusts follow on from an agreement made between the parties which is otherwise legally unenforceable.

23. Mr Aslett points out that a constructive trust of this type is often described in the authorities as ‘institutional’ . It arises by operation of law as from the date of the circumstances which give rise to it. The function of the court is merely to declare that such a trust has arisen in the past. The court has no discretion as to whether there is, or is not, a constructive trust. Its powers are only declaratory as to the existence of the trust having arisen at some given point in the past. Mr Aslett submits, as he did before the district judge, that it is a fundamental requirement that the property, the subject of the parties’ agreement or common intention, should be specified at the time of that agreement.

24. Mr Aslett refers to the reference in Megarry & Wade to the decision of Scott J in the case of Layton v Martin [1986] 2 FLR 227 . In that case, the judge had to consider a claim brought by a mistress against the estate of a deceased partner, that such estate was subject to a constructive trust; and that, additionally, a proprietary estoppel had arisen on the basis of a common intention between them. That intention and assurance had been expressed to be in terms that the deceased would make financial provision for the mistress. Scott J rejected that claim. Dealing with a submission by the mistress’s counsel that the well-known House of Lords’ decisions in Gissing v Gissing [1971] AC 886 and Pettitt v Pettitt [1970] AC 777 had paved the way, Scott J held that in those cases there had been an inferred, or actual, common intention, directed to specific property. He explained that the requirement to specify property was at the heart of the creation of the equitable interest in the specific assets in question. The relevant words attributed to the deceased in that case were the giving of financial security after his death. Scott J held that a promise of financial security was not sufficient to give rise to any form of constructive trust or proprietary estoppel. Mr Aslett submits that that view entirely accords with the need for a constructive trust in the first place. That is because there is no expressed trust that can be identified.

25. Mr Aslett submits that a constructive trust can only be relied upon if there is certainty as to the terms of the trust. He prays in aid observations of Arden LJ, delivering the leading judgment of the Court of Appeal in Herbert v Doyle [2010] EWCA Civ 1095 , [2011] 1 EGLR 119 , at paragraph 57, where what Lord Walker had said in relation to certainty in the context of proprietary estoppel, in the earlier case of Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55 , reported at [2008] 1 WLR 1752 , was applied.

26. Arden LJ’s observations at paragraph 57 are as follows: In my judgment, there is a common thread running through the speeches of Lord Scott and Lord Walker. Applying what Lord Walker said in relation to proprietary estoppel also to constructive trust, that common thread is that if the parties intend to make a formal agreement setting out the terms on which one or more of the parties is to acquire an interest in property, or if further terms for that acquisition remain to be agreed between them, so that the interest in property is not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither party can rely on constructive trust as a means of enforcing their original agreement. In other words, at least in those situations, if their agreement, which does not comply with section 2 (1) , is incomplete, they cannot utilise the doctrine of proprietary estoppel, or the doctrine of constructive trust, to make their agreement binding on the other party by virtue of section 2 (5) of the 1989 Act .

27. In that passage, it seems to me that Arden LJ is addressing the situation where the terms agreed between the parties have not been sufficiently identified, or where the interest in the property has not been clearly identified. In my judgment, those observations do not apply when the parties’ agreement has specified a clear and certain method for identifying the property which is to be the subject matter of the constructive trust. Similar observations apply to Mr Aslett’s reliance upon the Court of Appeal’s refusal, in Generator Developments Ltd v Lidl UK GmbH [2018] EWCA Civ 396 , reported at [2018] 2 P & CR 7, to grant relief in a Pallant v Morgan case because commercial parties, advised by solicitors, had not agreed all of the terms of their bargain.

28. Mr Aslett addressed the decision in Chun v Ho , relied upon by the district judge, at some considerable length, both in his skeleton argument and in his oral submissions to the court. On a proper analysis of that decision, Mr Aslett submits that the Court of Appeal did not actually engage with the point about Hill House being non-specified property in the early part of the parties’ relationship; nor was any argument founded upon the decision in Re Basham [1986] 1 WLR 1498 cited in support of the Court of Appeal’s decision. No reference was made to Layton v Martin , which does not appear even to have been cited to the Court of Appeal, and certainly does not feature in its judgment. Rather, there was what Mr Aslett describes as a ‘holistic’ assessment of the parties’ relationship; in particular, that there had already been detriment suffered at a pre-completion meeting, when the identity of Hill House was not then known.

29. In any event, Mr Aslett submits that by the relevant time for considering both a constructive trust and a proprietary estoppel, Hill House had been sufficiently identified to form the subject-matter of such a constructive trust or proprietary estoppel. Mr Aslett submits that the district judge’s reliance on Chun v Ho was misplaced, as the issue presently before the appeal court was neither addressed by the Court of Appeal, nor was its decision based solely upon that point. Rather, the Court of Appeal’s decision was focused upon the question of detriment, and its timing.

30. Mr Aslett therefore submits that the decision in Chin v Ho is no authority for the proposition that a common intention constructive trust can be found where there is complete uncertainty as to the specific identification of the property to which the trust is said to attach. Mr Aslett consequently submits that the district judge fell into error when, at paragraph 50 of her judgment, she held that the argument advanced in the instant case was analogous to that dismissed by the Court of Appeal in Chun v Ho . Mr Aslett further submits that the district judge was wrong to be attracted by the idea of property being conceptually identified in the context of a common intention constructive trust claim. Those words, as with the concept of crystallisation, derive from the case of Thorner v Major .

31. In all the circumstances, Mr Aslett submits that the reasons advanced in his first ground of appeal should lead to the appeal being allowed. Had the district judge not erred in placing incorrect reliance on Chun v Ho , and had she not been attracted to the fallacy of conceptual identification, the court would have held that no common intention constructive trust had come into being at all. That was the correct result.

32. In the course of his oral submissions, Mr Aslett took me to the re-amended particulars of claim and, in particular, to paragraphs 6b and 6d. He emphasised that the identity of only four of the 2007 Properties had even been known to the claimant at the time of the re-amended particulars of claim. Even by that late stage in the history of the dealings between the parties, the claimant had still not known the identities of the other four properties. It is not a proper recourse to the court to come along and ask it to identify the properties, the subject-matter of an alleged constructive trust or proprietary estoppel. Mr Aslett submits that both in respect of the constructive trust and the proprietary estoppel claims, the district judge was wrong in law to hold that either concept can be invoked where the subject-matter of the trust or estoppel is merely identified conceptually.

33. Mr Aslett emphasised in his oral submissions that the key point is the question of certainty as to the identification of the property subject to the trust. Mr Aslett acknowledged that the promise of financial support, which was in issue in Layton v Martin , is very different, factually, from the situation in the present case; but he submits that the result reached in that case by Scott J is entirely in accordance with the accepted concept of a constructive trust. Mr Aslett accepted that every case turns on its own particular factual circumstances; but he relies upon principles of general applicability, which emerge from the judgments in the cases upon which he relies. They all emphasise, he submits, the need for there to be an identified piece of land for there to be a constructive trust of land. There must be certainty as to the interest in that property. Indeed, not only must there be certainty as to the interest in the property, but there is a prior requirement for there to be certainty as to the identity of the property itself.

34. Mr Aslett criticises the claim advanced by the claimant in these proceedings as leaving it to the court to seek to identify what the subject-matter of the constructive trust is. He says that that is putting the matter completely the wrong way round. There must be certainty as to the subject-matter of the constructive trust, from the point in time at which the constructive trust arises, in order for the claimant to acquire any beneficial proprietary interest. He says that the property must be certain at the time the common intention which is said to give rise to the trust is formed.

35. In his oral submissions, Mr Aslett took me to observations of Lord Browne-Wilkinson in the well-known case of Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at page 705 of the report. Addressing the relevant principles of trust law at (iii), Lord Browne-Wilkinson stated, in terms, that in order to establish a trust, there must be identifiable trust property. Here, the claimant’s case was that he had an interest in inchoate property, which he was looking to the court to identify for him.

36. Mr Aslett submits that the district judge’s finding, at paragraph 58 of her judgment, that the subject of the parties’ agreement, in relation to the 2007 Properties, crystallised at the point when the defendant, having received the claimant’s money, selected and purchased the individual properties in accordance with such agreement, ignores the need for the subject-matter of the trust to be identified at the outset. It ignores Lord Browne-Wilkinson’s requirement for there to be identifiable trust property in order to establish a trust. The district judge’s approach, Mr Aslett submits, cannot fit in with the legal position in relation to the requirements for a common intention constructive trust.

37. Mr Aslett’s second ground of appeal relates to the district judge’s finding of a proprietary estoppel. He accepts that, at paragraph 52 of her judgment, the district judge correctly accepted Mr Aslett’s submissions as to the necessary elements required to found a proprietary estoppel. Mr Aslett emphasises that a proprietary estoppel can be used in a positive way to create a cause of action or, as it is said, as a sword rather than a shield, because the right claimed is a proprietary right. He distinguishes Thorner v Major on the basis that the promise there had been that the claimant would inherit a farm. The argument advanced against the existence of any proprietary estoppel in Thorner v Major had been that there was uncertainty as to the precise extent of the farm because this was liable to fluctuate as development opportunities arose and tenancies came and went. However, the answer to that objection was that there was no reason to doubt the parties’ common intention: that their common understanding was that the assurance related to whatever the farm consisted of at the time of Peter’s death.

38. Mr Aslett recognises that the district judge was plainly attracted by Lord Neuberger’s phraseology in Thorner v Major , where the words ‘conceptually identified’ , and the concept of the crystallisation of an equity, were mentioned at paragraph 95. Mr Aslett says that the district judge clearly regarded paragraph 95 of Thorner and Major as being on all fours with the present case because, as she said at paragraph 58 of her judgment, the subject of the parties’ agreement in relation to the 2007 Properties crystallised at the point when the defendant, having received the claimant’s money, selected and purchased the individual properties.

39. On a proper reading, however, Mr Aslett submits that the positions are very different, and that Lord Neurberger’s observations cannot, in truth, be applied to the present case. That is because, first, no property the subject of the equity was identified in this case. Indeed, there was not even any conceptual identification. All that was referred to in their agreement were residential properties in the Anfield area in Liverpool, where the population is in excess of some 14,000 people. Secondly, Lord Neuberger was concerned with a fluctuating position, which went to the scope or extent of a particular property - the farm in that case. He was not dealing with complete uncertainty as to the identification of the property, the subject of the trust.

40. Mr Aslett submits that the effect of the district judge’s view - that the subject of the parties’ agreement was, effectively, the whole of Anfield - cannot be correct. In Thorner v Major , there had been a foundational asset - the farm - to begin with. It was that which might possibly change over the course of time. At any point in time, however, the then extent of the farm would be clearly identifiable. That is different from the present case when, at the time of the original agreement, there were no particular properties that could conceivably be the subject of the agreement.

41. Mr Aslett refers to Lord Walker’s observation, at paragraph 61 of Thorner v Major , that a necessary element of proprietary estoppel is that the assurances given should relate to identified property owned (or perhaps about to be owned) by the defendant. Mr Aslett submits that the words in parenthesis - ‘or perhaps about to be owned’ - do not qualify the need for the property to be owned actually to be identified. In referring to that passage, the district judge fell into error, at paragraph 57 of her judgment, in finding that there was no requirement to refer to addresses; and that identifying the subject of the assurances by concept or description, other than address, was enough. Mr Aslett objects that that impermissibly extends the bounds of proprietary estoppel.

42. In Thorner v Major , the position was that the assurances related to a farm, albeit one the boundaries and extent of which were known to change over time. He emphasises that in Layton v Martin , the promise of financial security was not enough. Re Basham is not inconsistent with Mr Aslett’s thesis. There, the proprietary estoppel claim related to the deceased’s residuary estate. That estate might fluctuate from time to time; but it would be precisely ascertainable on any given day up to the death of the deceased.

43. For all these reasons, Mr Aslett submits that the appeal should succeed also on the second ground. The district judge was wrong to hold that there was an operative proprietary estoppel in this case. No assurances were made as to any foundational proprietary asset, which was capable of ascertainment at any time. Indeed, he submits that the entire process involved in the preliminary issue in this case, as originally formulated, had been directed to working out what the properties, the subject of the trust or proprietary estoppel, actually were.

44. The fundamental requirement is that the property must be identified. In this case, there was no foundational asset beyond residential properties somewhere within the district of Anfield. This is not a case, unlike Thorner v Major , of a fluctuating identified asset. Rather, there was no identified asset at all. The district judge has taken a wrong turn. She attempted to rationalise the facts of the instant case with those of a very different case, that of Thorner v Major .

45. Mr Aslett submits that Chun v Ho is a very different case from the present. First, the money used to purchase the ‘dream’ house was derived from other equitable interests that had arisen between the parties. Second, there had been far more in the relationship going on between the parties in that case than in the present. They had had interests in various projects and other assets. Third, the ‘dream’ house in that case had been identified before it was acquired. Fourth, the true impact of the arguments on that appeal were concerned with the issue of detriment, rather than the specificity of the property, the subject of the trust. There was no developed argument or analysis, despite a passing reference to Re Basham . Mr Aslett submits that it was not open to the district judge to find that that authority was on all fours with the present case. The issue before the Court of Appeal was all about detriment. Moreover, there was a supervening agreement as to the interest of the claimant in Hill House, before that property was even acquired. It was dangerous for the district judge to rely on that authority because it was distinguishable from the legal position in the present case.

46. Mr Aslett recognised that there are plainly degrees of certainty and uncertainty when it comes to the subject-matter of the assets in a constructive trust or proprietary estoppel case. The concept of financial security is clearly insufficient. It is less certain than the concept of the residuary estate, or a fluctuating parcel of farmland. There, at any point in time, the precise extent of the trust property is capable of crystallisation. Here, there is no clarity or certainty. There was no identification by way of address, or otherwise, of the real property to be the subject of the constructive trust or proprietary estoppel.

47. This is a case analogous to, albeit not as extreme as, the case of Layton v Martin . Here, as in that case, there was no certainty at all. Indeed, the claimant recognised this when he had to bring this claim simply to identify what the subject-matter of the alleged constructive trust or proprietary estoppel was.

48. Those were Mr Aslett’s submissions. At the end of his oral submissions, I asked him to postulate the following scenario: What if, instead of putting forward no properties in Anfield to the claimant at all, the defendant had proffered a list of 16 residential properties, and had said: “I have not decided which eight of those I am going to purchase, but these are the 16 properties I am presently considering.” Would Mr Aslett still have argued that there was insufficient certainty as to the subject-matter of any constructive trust or proprietary estoppel? Mr Aslett - I think inevitably and realistically - had to accept that if there were to be eight properties, even out of a list of 16, then there was no sufficient certainty or clarity to give rise to any constructive trust or estoppel. As I say, I think that that is the inevitable consequence of Mr Aslett’s submissions. But it seems to me that the answer that he provided also demonstrates that his arguments are not well-founded.

49. I acknowledge that in the case of an express trust, the essential elements of the trust must be defined clearly enough to enable the trustees, or, in default, the court, to execute the duties of the trustees. One of those essential elements is that the true subject-matter of the trust must be sufficiently certain. If authority for that is needed, one can simply look to the judgment of Lord Langdale MR in the case of Knight v Knight (1840) 3 Beav 148, at page 173, where there is a discussion of the three certainties required to be satisfied in the case of an express trust.

50. However, a constructive trust is imposed on property by operation of law, when an intended transaction has proceeded to a stage where it would be unconscionable to deny the intended beneficiaries the benefit which that transaction was intended to confer upon them. In my judgment, it is not necessary for the identity of the subject-matter of the trust to be identified with absolute certainty at the time the assurances are first made, or the common intention is formed and communicated between the parties. In my submission, it is sufficient that the property is identifiable at the time when the trust comes to be enforced by the court.

51. In the present case, I am satisfied that the subject-matter of the trust was sufficiently identified by the time the monies were paid over, and applied by the defendant in the purchase of the eight properties. When reference is made to the need for the subject-matter of the trust to be identified, it is not necessary, in the case of property, for there to be a property identified simply by its address. It is sufficient that it is identifiable in accordance with the terms of the agreement reached between the parties.

52. Here, the agreement found by the district judge was that the defendant would use the £64,000 provided by the claimant, together with £64,000 of his own money, to purchase eight properties; and it is clear that what was in the mind of both parties were residential properties, within the Anfield area of Liverpool, that the defendant would select. Once the claimant’s contribution was applied in the purchase of any particular residential property in Anfield, selected by the defendant, then the constructive trust attached to that property, or a proprietary estoppel arose. In my judgment, it would be unjust to arrive at any other conclusion. The claimant is not precluded from relying upon either a constructive trust, or a proprietary estoppel, merely because he left it to the defendant to select the properties, within certain stipulated parameters, to which his money was to be applied.

53. I accept Mr Aslett’s submission that none of the particular authorities relied upon by the district judge is on all fours with the present case. But, as Mr Aslett recognised in his oral submissions, every case has its own factual circumstances. What is relevant are the principles, and the general application to which those particular authorities give rise. In my judgment, as I say, it is sufficient that there is a subject of the trust which is sufficiently capable of identification by the terms of the parties’ agreement for the court to be able to enforce the duties of a constructive trustee in relation to that property.

54. I am satisfied that the district judge fell into no error in arriving at the conclusion that she did in relation to all eight of the 2007 Properties. I would commend her analysis and reasoning. In my judgment, this is not a case where it can be said that the decision of the lower court was wrong, within CPR 52.21 (3) (a). I therefore dismiss the appeal. That concludes this extemporary judgment. ---------------