Joint ownership of land – Unmarried couple – Beneficial interests – Parties purchasing house in joint names without declaring beneficial interests – Parties’ relationship ending – Respondent continuing to occupy house with children – Court attributing 90% interest in property to respondent as fair and just – Decision reversed on appeal and presumption of equal shares applied – Correct approach to determination of parties’ shares in jointly owned property – Appeal allowed
The respondent and the appellant were an unmarried couple who, between 1985 and 1993, lived with their two children in a property that they had purchased in their joint names. The purchase was funded partly by the appellant and partly by an endowment mortgage in joint names; the parties later took out a further joint loan to build an extension. The household bills and mortgage payments were paid out of the parties’ joint resources.
After the parties’ relationship ended in 1993, the respondent moved out of the property. The appellant took over the entirety of the mortgage payments and household expenses and the respondent ceased to make any contribution to the property. The children continued to live with the appellant, who supported them with little or no contribution from the respondent. The parties cashed in a life insurance policy and divided the proceeds; with those funds and a mortgage loan, the respondent purchased his own property in 1996.
In 2006, the respondent subsequently served a notice of severance in respect of the jointly owned property. On an application by the appellant, under the Trusts of Land and Appointment of Trustees Act 1996, the court was asked to declare the parties’ respective beneficial interests in that property. It was common ground that they had held equal beneficial shares until 1993. However, the county court found that the parties’ beneficial interests had changed once the appellant moved out, stopped contributing to the mortgage and other outgoings and purchased another property in his sole name, such that the respondent was now entitled to a 90% beneficial share. That decision was upheld by the High Court ([2009] EWHC 1713 (Ch); [2010] 1 All ER 947) but was subsequently overturned by the Court of Appeal, which held that the parties’ conduct subsequent to purchase was insufficient to displace the equitable presumption in favour of equality: see [2010] EWCA Civ 578; [2010] PLSCS 148. It therefore concluded that the parties held the severed joint tenancy as tenants in common in equal shares. The appellant appealed to the Supreme Court.
Held: The appeal was allowed.
(1) The principles applicable in cases where a family home was purchased in the joint names of a cohabiting couple who were both responsible for the mortgage, but without any express declaration of their beneficial interests, were as follows: (i) the starting point was that equity followed the law and the parties were presumed to intend a joint tenancy both in law and in equity; (ii) that presumption could be displaced by showing either that the parties had a different common intention at the time when they acquired the home or that they later formed an intention that their respective shares would change; (iii) their common intention was to be deduced objectively from their conduct; (iv) in cases where it was clear that the parties had not intended a beneficial joint tenancy at the outset or had changed their original intention, but where their actual intentions as to the beneficial shares could not be ascertained from direct evidence or by inference, each party would be entitled to such share as the court considered fair having regard to the whole course of dealing between them in relation to the property; and (v) each case turned on its own facts and, while financial contributions were relevant, there might be many other factors that enabled the court to determine what shares were either intended or fair: Gissing v Gissing [1971] AC 886, Oxley v Hiscock [2004] EWCA Civ 546; [2005] Fam 211 and Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432 applied.
(2) The court’s search was primarily to ascertain the parties’ actual shared intentions, whether expressed or to be inferred from their conduct, and it could not impose a solution that was contrary to the evidence of what the parties actually intended. However, where it was clear that the beneficial interest was to be shared, but it was impossible to divine a common intention as to the parties’ respective proportions, the court might be driven to impute to the parties an intention that they may never have had and might give effect to the common intention to share beneficial ownership by determining what was a fair share in all the circumstances. That was a fallback position that might have to be applied where the parties’ intentions could not be deduced, in order to fulfil the court’ duty to come to a conclusion on the dispute before it.
(3) In the instant case, the intention to be imputed to the parties was that the respondent’s interest in the jointly owned property crystallised when the life insurance policy was cashed in and he bought a property of his own; from then on, the appellant would take the sole benefit of any capital gain in the jointly-owned property while the respondent would have the sole benefit of his new property. That was the fair result in all the circumstances. On that analysis, the judgment of the county court at first instance should be restored. Per Lord Walker and Lady Hale: that intention could also be inferred from the conduct of the parties.
Richard Power (instructed by AI Sampson & Co, of Benfleet) appeared for the appellant; Andrew Bailey (instructed by Francis Thatcher & Co, of Leigh-on-Sea) appeared for the respondent.
Sally Dobson, barrister
