Pietro Gallarotti and Fabio Sebastianelli bought a flat (apartment) together in 1997. Theirs was not a romantic relationship: they were just friends, as well as business partners in a variety of ventures. Sebastianelli put up 45% of the purchase price, Gallarotti 13%, but the two friends agreed orally that each would have a 50% interest in the property. They later agreed that Gallarotti would pay a larger share of the mortgage payments, but the evidence showed that this didn’t happen; Sebastianelli ended up paying the lion’s share (75%). Their friendship ended in 2008, and Gallarotti claimed his 50% interest in an asset which had appreciated considerably in value.

The trial court found that the parties’ agreement was that they would share the flat 50-50, in spite of their unequal contributions to it. The English Court of Appeal took a different view, interpreting the agreement to have been predicated on an assumption that there would only be a ‘slight imbalance’ in contributions by each of the two: Gallarotti v Sebastianelli, [2012] EWCA Civ 865. The inference from their course of conduct was that they had intended their respective financial contributions to be taken into account, leaving Sebastianelli with 75% under a constructive trust.

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