Law Report: Compensation for lost home: Baker v Baker and another - Court of Appeal (Lord Justice Dillon, LJ Beldam and LJ Roch), 19 February 1993.

Where a person contributed to the purchase of a house under an arrangement that he was to have a lifelong right of free accommodation there, but was then forced to move out after a dispute with the owners, his equitable right to compensation was to be measured by reference not to the amount of his initial contribution but to the value of the right to free accommodation which he had lost.

The Court of Appeal allowed an appeal by the defendants, Peter Baker and Julie Baker, against the decision of Judge Hywel Moseley QC, sitting as a deputy High Court judge in Bristol on 8 July 1992, who awarded the plaintiff Edward Baker pounds 33,950 plus interest, such sum to be charged on the defendants' property at 32 Rowley Road, St Marychurch, Torquay.

Richard Buswell (Hooper & Wollen, Torquay) for the defendants; Wayne Clark (Woollcombe Beer Watts, Torquay) for the plaintiff.

LORD JUSTICE DILLON said that in 1987, the plaintiff was the tenant of a council house, living alone and enjoying security of tenure, while the defendants (his son and daughter-in- law) were living in rented accommodation.

They made an arrangement under which the defendants bought a house in Devon using money provided by the plaintiff from his savings and a mortgage taken out by the defendants. The plaintiff moved into a 'granny room' in the house. He paid no rent but contributed to housekeeping expenses.

But in June 1988, as a result of a family dispute, the plaintiff moved out. He brought an action, originally claiming a beneficial interest in the house, by way of resulting trust. That claim failed but he did succeed on an alternative claim based on equitable estoppel.

In such cases, the court must look at the circumstances to see how the equity could be satisfied. The judge held that this should be by a repayment of the plaintiff's contributions to the house, totalling pounds 33,950, on the basis that this was what he had lost.

But the plaintiff had given the money to the defendants to achieve two aims: the provision of a family home for the defendants and their children, as well as rent-free occupation of the granny room for life by himself. What the plaintiff had lost was not the whole pounds 33,950, but merely the right to rent-free occupation of the room for the rest of his life. The judge's award was therefore excessive and should be set aside. The case would be remitted to the judge for an inquiry as to the amount payable to the plaintiff.

LORD JUSTICE BELDAM and LORD JUSTICE ROCH agreed.

Paul Magrath, Barrister