Case study: beneficial interest dispute resolved by mediation

Our property litigation solicitors helped to resolve a property ownership dispute between the owners and a former close friend who was claiming beneficial interest.

Dispute about property ownership

Our clients, Mr and Mrs J, were the registered freeholders of the property. A former close friend of our clients, Ms D, believed she had a beneficial interest in the property, stating she had obtained this through a resulting or constructive trust arising from financial help she provided Mr and Mrs J to purchase it.

Case study | Dispute over beneficial interest and property ownership between mother and daughter

Ms D lived at the property with our clients, as their lodger. She did not contribute to any of the household expenses such as the mortgage or bills but did sometimes purchase shopping/food for the property.

After our property litigation solicitors assisted Mr and Mrs J with evicting Mrs D, she made a claim for a beneficial interest in the property. Our solicitors were instructed in respect of pre-action correspondence, however, after some initial correspondence, there was no response and our clients believed that Mrs D was no longer pursuing her alleged claim.

However, Mrs D issued court proceedings 18 months later and Mr and Mrs J reinstructed our team.

Establishing ownership

Our clients stated that the funds paid to them by Ms D to buy the property were a loan made to them as individuals, rather than a contribution to the purchase of the property, which they were due to repay. In respect of the loan, it was our client’s position that the loan repayment date has not yet occurred.

Ms D believed that, because she had loaned money to our clients and that some of the money had gone towards the property, she was owed an interest in the property. It was Mrs D’s position that she was not named on the property/mortgage due to her status of residency and working, but otherwise, she believed the intention was that she would have been a registered owner of the property.

Our property litigation lawyers considered the following key issues in establishing ownership:

• The terms of the (oral) loan agreement; and
• Whether there was an agreement (and/or a trust could be established) between our clients and Mrs D regarding Mrs D having an interest in the property (as part of the loan agreement or otherwise).

Resolving the beneficial interest dispute

Mediation

Due to the sum in dispute and the complexity of other loan agreements between the parties being added to the dispute, our property litigation solicitors proposed mediation.

It was clear from the case management conference within the claim (where the parties prepare for the trial), that it was not cost-effective to proceed to trial. Our solicitors felt that the claim was capable of settlement, but progress was being disrupted by delays in correspondence from Mrs D and the urgency of the court deadlines. Therefore, our clients were, to an extent, incurring unnecessary costs.

Mediation was agreed upon, which allowed the parties a day to discuss the claims (and defence) through the mediator and their respective legal representatives.

Settlement

Following a lengthy day at mediation, our clients and Mrs D reached an agreement in full and final settlement of the claims (and defence). This brought an end to the dispute between the parties.

Contact our property litigation solicitors

If you’ve had a claim brought against you for a beneficial interest in a property, our property litigation solicitors might be able to help. Contact us on 0117 325 2929 or fill out our online enquiry form.