The following article won third prize in the Property Bar Association’s student essay competition 2015
If you could reverse any decision of the House of Lords or Supreme Court in the fields of landlord and tenant or property law which would you choose and why?
This essay will argue that the case of Stack v Dowden [2007] UKHL 17 should be reversed. The reason for this is that it is a missed opportunity to add much needed clarity to the law. It will therefore be argued that instead of focussing on the artificial common intention reasoning, the House of Lords should have decided the case by reference to the unconscionability doctrine used in Australia, as this would provide a clear precedent because it is the best way of reconciling the conflicting case law in this area and does not provide too much judicial discretion.
The decision in Stack v Dowden
The most important aspect of the decision for the purposes of this essay is that a beneficial interest can be acquired in a family home through a common intention constructive trust inferred (or imputed) by the court and that each case will turn on its own facts.
As T Etherington points out in Constructive Trusts and proprietary estoppel: the search for clarity and principle, Conv 2009, 2, 104-126 p126, this is a relaxation of the constructive trust requirements of Lloyd’s Bank v Rosset [1990] UKHL 14, which is to be welcomed because, as discussed by Halliwell (in Equity as injustice: The Cohabitant’s Case, 20 Anglo-Am L Rev 500 (1991)), the judgment of Lord Bridge is overly concerned with restricting the discretion of the courts in such cases. The result of which, Hudson suggests in New Cases on Trusts of Homes, is a splintering of the law into family assets cases, where judges have derogated from Lord Bridge’s approach to do justice in the instant case (see for example, Midland Bank v Cooke [1995] 4 All ER 562, and the balance sheet approach where Lloyd’s Bank has been followed.
Stack is unsatisfactory, however, as it did not overrule any previous case law, leaving this area still littered with contradictions, and neither did it formulate a new test in which the different approaches could be reconciled.
A possible unifying theme: the unconscionability approach.
The contradictions in this area show that “a coherent framework…to provide principled remedies for unconscionable conduct in relation to the acquisition and ownership of land” (T Etherington as above) is needed. However, other jurisdictions such as Australia have achieved such a model through the “unconscionability approach” and it is submitted that this approach would do so in England too.
The approach was summarised by Deane J in Muchinski v Dodds 160 CLR 583 as operating where at the end of a joint relationship one party takes “wrongful and undue advantage of a benefit derived at the other’s expense” [614 – 621]. This approach as Halliwell states allows for non-economic contributions to be taken into account and so would have allowed the House of Lords in Stack to reach the same conclusion, but at the same time provides a more realistic and principled approach to adjudication.
Although it could be argued that this approach would allow for too much judicial discretion, this is not the case. Deane J expressly rejects the imposition of a constructive trust based on general principles of unfairness such as Denning’s “new model constructive trust” (Hussey v Palmer [1972] EWCA Civ 1) and instead confines the doctrine to the principles established in his judgment. Therefore, it is submitted that the unconscionability approach is in fact much more certain than the decision reached in Stack, as Baroness Hale’s non-exhaustive list of factors which can be considered appears to open the door to unfettered judicial discretion.
Furthermore, it is submitted that this is the direction in which English law is already heading. As Hudson notes, the unconscionability approach provides one possible way of reconciling the disparate case law, as the courts have simply been deciding whether it would be unconscionable for one party to derive a benefit from the other. There is also support for such an approach in case law, as in Oxley v Hiscock [2004] EWCA Civ 546; [2004] PLSCS 112 Chadwick LJ seems to cite with approval the suggestion of Nourse LJ in Stokes v Anderson [1991] 1 FLR 391 that the House of Lords may one day follow the unconscionability approach employed by some commonwealth jurisdictions, and indeed this could be said to influence his summary of the law as he stated at [66] that:
“What the court is doing, in cases of this nature, is to supply or impute a common intention as to the parties’ respective shares (in circumstances in which there was, in fact, no common intention) on the basis of that which, in the light of all the material circumstances, is shown to be fair, it seems to me… that an analysis in terms of proprietary estoppel will, necessarily, lead to the same result”
Thus, as proprietary estoppel is based on unconscionability Jennings v Rice [2002] EWCA Civ 159, it is submitted that the fairness to which Chadwick LJ is referring is tacit approval of the unconscionability approach. However, it is unfortunate that instead of explicitly referring to the precise definition of unconscionability formulated by Deane J, a general concept of fairness is used perhaps leading to a resurgence of “new constructive trust” style adjudication. This is reinforced as his reasoning has approval from the House of Lords in Stack.
Conclusion
Stack has exacerbated the uncertainties regarding trusts of family homes by extending the factors that judges can consider in imputing a common intention between the parties.
It is submitted that the reference made to common intention is an unnecessary fiction. Instead the unconscionability doctrine should have been endorsed in Stack, as it acknowledges the artificiality involved in attempting to impute an intention onto the parties where there has never been a common intention, the over-rigidity of purely financial analyses and the dangers of unfettered judicial discretion by creating a realistic and workable alternative to arriving at a just result between the parties.
Adam Waring is a student at the University of Sheffield
