Unmarried couple – Joint legal ownership of property – No express declaration of beneficial interests – Respondent providing deposit and paying mortgage and household bills – Appellant spending income on children and optional items such as holidays and special occasions – Mutual wills leaving interests in property to each other – Judge finding entire beneficial interest owned by respondent on basis of financial contributions – Whether erring in principle – Whether respondent rebutting presumption of equal shares – Appeal allowed
The parties were in an unmarried relationship for 23 years until 2005, when they separated. The relationship had begun when the appellant was 17 and the respondent was 47. In 1998, the parties purchased a freehold property for £64,950 to provide a home for themselves and their 10-year-old son; they later had also a daughter. They decided to put the property into joint names, but did not take legal advice as to the consequences of doing so, neither did they discuss how the property should be held. They executed mutual wills in which each left their interest in the property to the other. The respondent provided the deposit on the property together with a further sum from the proceeds of sale of his flat, in which the parties had previously been living. The remainder of the purchase price was funded by a £35,000 mortgage taken out in the parties’ joint names. The respondent paid the mortgage instalments and running costs such as council tax and utilities, from a pension received in respect of his former employment. The appellant spent her income on herself and the children, with additional expenditure on gifts, school trips, holidays and special occasions. The parties did not have had a joint bank account.
After they separated, an issue arose as to their respective entitlement to the property; the appellant brought proceedings to determine that issue. The judge found that the respondent had put the property into joint names so that the appellant should benefit in the event of his death. In the absence of any express declaration of trust, the judge concentrated on how the purchase money had been provided; he found that the appellant had made no contribution, whether directly or indirectly, but had deliberately kept her finances separate. He concluded that the entire beneficial interest lay with the respondent.
The appellant appealed, contending that the judge had erred in law in his approach to the parties’ beneficial shares. The issues on appeal were whether: (i) the judge had erred in seeking to determine the parties’ intentions with respect to their shares in the property by reference to their financial contributions; and (ii) the respondent had discharged the burden of showing that the parties had not intended the appellant to have a one-half share.
Held: The appeal was allowed.
In the absence of an express agreement, the parties’ shared intentions with regard to the property had to be ascertained by reference to the entire course of their conduct in relation to it: Stack v Dowden [2007] UKHL 17; [2007] 2 WLR 831 applied. The judge had erred in principle in concentrating on the parties’ financial contributions. The parties put the property into joint names, and the joint legal ownership gave rise to a presumption of joint beneficial ownership. The burden of rebutting that presumption fell on the respondent as the party asserting that the shares were not equal. The court had to consider whether the facts were inconsistent with the inference of a common intention to share the property equally to an extent that would be sufficient to discharge the civil standard of proof. Any secret intention on the respondent’s part that the appellant should benefit only in the event of his death, if the parties were then still living together, did not provide an evidential basis for rebutting the presumption since it was not evidence of the parties’ shared intention. For the same reason, any mistaken belief by the respondent as to the effect of putting the property into joint names, or failure on his part to appreciate that it would give to the appellant an immediate and absolute entitlement to a beneficial interest, was immaterial since he had not communicated that belief to the appellant: Gissing v Gissing [1971] AC 886 applied. It was necessary to be aware of the potential unreliability of evidence concerning beneficial interests given by the parties after the event, and to the possibility of former cohabitees reinterpreting the past, whether consciously or subconsciously: Stack considered.
Although the appellant had not contributed to the cost of acquiring the property either directly or by paying the mortgage, the amount of the parties’ contributions was not the critical factor. The appellant had spent much of her income on the children and on meeting “optional expenditure”, such as gifts, school trips, holidays and special occasions. Those payments were her contribution to household expenses for which both parties were responsible, while the respondent paid for other items. The parties had largely treated their incomes and assets as a pool from which household expenses would be paid. The proper inference was that the parties had not intended that it should make any difference which of them paid for what expense and that the respective size of each other’s contributions was irrelevant. Further, the execution of mutual wills indicated that the parties believed they each had a beneficial interest to convey. On those facts, the presumption of equal beneficial interests was not rebutted: Stack distinguished on the facts. Although opinions might differ as to whether it was fair for the appellant to have an equal share, that was not the question to be decided.
Dirk Van Heck (instructed by George Ide Phillips, of Bognor Regis) appeared for the appellant; Marc Living (instructed by Staffurth & Bray, of Bognor Regis) appeared for the respondent.
Sally Dobson, barrister
