Unmarried couple – Constructive trust – Parties purchasing house for occupation with children – Parties conveying property into joint names without declaring beneficial interests – Parties’ relationship ending – Respondent occupying house with children – Court attributing 90% interest in property to respondent as fair and just – Whether court properly imputing beneficial ownership of property in unequal shares where no express agreement between parties – Appeal dismissed
The appellant and the respondent were unmarried. In 1984, they bought a property in joint names that they occupied with their two children. The purchase was funded partly by the respondent and partly by an interest-only endowment mortgage. The parties shared household bills, including the mortgage repayments. They subsequently took out a further loan to extend the property; the extension was built and paid for mainly by the appellant.
In October 1993, the parties’ relationship ended and the appellant moved out of the property. The respondent continued to occupy the property and pay the mortgage and supported the children with little or no contribution from the appellant. She did not apply any child support payments. The parties cashed in a life insurance policy and divided the proceeds, partly to enable the appellant to purchase a second property in his sole name. The appellant made all mortgage payments and paid all other expense, in connection with that property.
The appellant subsequently served a notice of severance in respect of the first property and the respondent made a claim under the Trusts of Land and Appointment of Trustees Act 1996 in respect of both properties. It was common ground that the parties had held the beneficial interest in the first property in equal shares until October 1993 and that the respondent did not acquire a beneficial interest in the second property. An issue arose as to whether the parties’ beneficial interests in the first property had changed when the appellant vacated it, stopped contributing to the mortgage and other outgoings and purchased the second property. In the circumstances, the county court held that the respondent was entitled to 90% of the value of the first property on the ground that it was fair and just. The appellant appealed.
Held: The appeal was dismissed.
Where a property was conveyed into the sole name of the partner, there was a presumption that he or she was intended to be the sole beneficial owner. However, if the property was in joint names, it was presumed that the parties had intended that each should have legal and beneficial interests in equal shares.
If that presumption was displaced, the court would quantify those interests, assuming that no express agreement as to the respective amounts of the parties’ interests had been reached, by reference to the entire course of dealing between the parties, taking into account all conduct indicating the parties intention.
However, it was clear that the court’s duty was to decide what the parties common intention had been, or should be taken to have been, and on that basis to reallocate their interests in the property as appropriate. The same rule applied where there was no evidence of actual intention. Whatever the beneficial interests might have been at the time of acquisition, a trust might be ambulatory in that the parties’ intentions could change, or be taken to have changed, over time.
Although it was not for the court to override the intention of the parties in favour of what the court itself considered to be fair, it was entitled to consider what was fair in order to supply any missing elements. The court could not assume that two parties who had not clarified their intentions fully did not intend considerations of fairness to be relevant in determining their eventual interest. On the facts of any particular case, all relevant financial circumstances could, but would not necessarily be relevant, including incidence of financial responsibility for the children: Oxley v Hiscock [2004] EWCA Civ 546; [2004] 3 WLR 715 and Stack v Dowden [2007] UKHL 17; [2007] 18 EG 153 (CS) applied.
In the instant case, the attribution of 90% of the value of the first property to the respondent was justified as according with the common intention of the parties. It would not be reasonable for the appellant to have, and the parties could not be taken to have intended that he should have, a significant part of the increased value of the first property in addition to the entire the capital gain from the second. Therefore, it was not reasonable for him to retain more than a small interest in the first property, and the 10% assessed by the county court was within the range of what was fair. The fact that the appellant had not contributed to the maintenance of the children was not a relevant factor.
Andrew Bailey (instructed by Francis Thatcher & Co) appeared for the appellant; Richard Power (instructed by A I Sampson & Co, of Benfleet) appeared for the respondent.
Eileen O’Grady, barrister
