Proprietary Interests Under Section 10A POCA 2002 – Hughes v The King [2024] EWCA Crim 357

Ronan Hughes pleaded guilty to 39 offences of manslaughter and one offence of conspiring to assist unlawful immigration.

xIn confiscation proceedings the Judge made a determination, pursuant to section 10A POCA 2002, of the extent of the appellant’s interest in the property where he lived with his wife and children.[1]  The focus of the appeal concerned that determination.

Background and the arguments at first instance 

The property in Ireland was on farmland which was owned by the appellant’s mother, Catherine Hughes. The appellant had paid for the construction of the property and had lived there since 2006.  The prosecution contended that the appellant and his wife each owned an equitable half-share in the house.

Mrs Hughes stated that she remained the owner of the land and would continue to be the owner of the land upon which the property was built and argued that the defendant did not therefore have a proprietary interest in the land or the house.

The Judge’s decision

The Judge concluded that the defendant had an “equitable interest” in the property built on the land and thus an equitable proprietary interest in the land itself. He reasoned “anyone looking on the situation would see the defendant, his wife (and their children) living in a house they paid to be built on land owned by another.  Most bystanders would say they have an asset in the house – an equitable interest”.

The Judge relied upon the conclusion of Lord Denning MR in Inwards v Baker [1965] EWCA Civ 465. In that case a son had at his own expense built a bungalow upon land owned by his father and lived there for 20 years.  His father died and the trustees of his will sought to evict the son from the house.  Lord Denning concluded that the son had “an equity well recognised in law… [that] arises from the expenditure of money by a person in actual occupation of land”.

The Appeal

The appellant and Mrs Hughes appealed against the Judge’s finding.  The Court of Appeal quashed the Judge’s determination, holding:

1. Under Irish law as well as English law, a house built upon land becomes part of the land, and therefore belongs in law to the person who owns the land. It is not possible to separate ownership of the house from the land upon which it is built and to sell the house alone.  Therefore, merely paying for a house to be built upon land owned by another does not, of itself, give the person paying for the building works any equitable interest in the completed house, still less in the land upon which it sits (paragraph 38).
2. The Judge’s reliance upon Inwards v Baker was misplaced. Lord Denning’s finding of “an equity” was not determinative of the issue of whether the person in question should be entitled to any proprietary interest in the land.  The equity can be satisfied by ordering that the individual has a personal right to remain in occupation of the house, or by a monetary award.
3. One possibility might have been for the Judge to have found that there was an agreement, promise or assurance that if the appellant built a house on the land, the land upon which the house was built would belong to him. That would have required the court to engage with the principles of common intention constructive trust (Jones v Kernott [2012] 1 AC 776) or to intervene on the basis of proprietary estoppel (Guest v Guest [2020] EWCA Civ 387).  That was not, however, the basis of the Judge’s finding.
4. In any event, Mrs Hughes denied the existence of any such agreement, promise or assurance. She had not been cross-examined and had been denied the opportunity to respond to any argument that there had been such an agreement or promise.   The evidence before the court was therefore insufficient to support a finding that the appellant had a proprietary interest in the property.

Commentary

This case highlights the care which must be taken when resolving complex issues of equitable interests under section 10A of POCA and provides a helpful reminder to practitioners as to the starting point when assessing equitable interest in property.

As the Court of Appeal made clear, the existence of a shared intention is not simply a solution to be imposed upon the parties.  There must actually be a shared intention.  Similarly, the first and essential element of proprietary estoppel is a finding that a promise or assurance was actually given by the legal owner.

Establishing a proprietary interest by either of those routes required that Mrs Hughes be cross-examined upon her affidavit.  The decision of the court not to hear from Mrs Hughes inevitably led to the conclusion that the evidence below was insufficient to establish a proprietary interest.

The judgement also clarified the broad powers of the Court of Appeal to remit a matter to the Crown Court for a fresh hearing, upon a successful appeal by a defendant or a third party against a determination under section 10A POCA 2002.

Redmond Traynor

[1] Section 10A POCA concerns the determination of the extent of a defendant’s interest in property.   The court is required by section 10A (2) to give anyone whom the court thinks is or may be a person holding an interest in the property a reasonable opportunity to make representations to it.