Property – Right to buy – Joint interest – Local authority granting secure tenancy of property – Respondent secure tenant exercising right to buy at discount – Authority conveying property into joint names of respondent and appellant daughter – Parties taking out mortgage in joint names and letting out property – Respondent managing property and making mortgage payments out of rental income – Parties failing to agree respective beneficial interests – Whether judge erring in law in awarding appellant 4.28% share in property – Appeal allowed
The respondent and her husband had been secure tenants of a local authority property since before the birth of their daughter, the appellant. When her husband left the property, the respondent applied to have the secure tenancy transferred into her sole name. As the sole tenant, she exercised her right to buy under Part V of the Housing Act 1985.
Since the respondent could not afford to fund the purchase, she agreed with the appellant, who at that stage had her own income, to buy the property together under section 123 of the 1985 Act. The property was transferred into their joint names; a mortgage that had been taken out to fund the purchase was also in joint names. The parties intended to let the property and use the income to service the mortgage, so, immediately after the purchase, the respondent moved out to live with another daughter. The respondent managed the property; she kept the rent, paid for repairs and met the mortgage payments. Following a serious quarrel between the parties, the appellant applied to the court for a declaration of her interest in the property. The judge assessed the appellant’s financial contribution at 4.28% of its value.
The appellant appealed, contending, in reliance upon the judgment of the House of Lords in Stack v Dowden [2007] UKHL 17; [2007] 2 WLR 831, that the property was owned jointly in equal shares both legally and beneficially. She argued that: (i) there was a presumption of joint ownership; (ii) she as well as the respondent had been legally entitled to the benefit of the right-to-buy discount; and (iii) the judge should have regarded the mortgage as though both parties had contributed half of the purchase price.
Held: The appeal was allowed.
The presumption that the legal and beneficial interests in a domestic property conveyed into joint names were, in the absence of an agreement to the contrary, joint and equal did not apply to commercial properties or to properties purchased as an investment, even where the purchasers belonged to the same family. The presumption was restricted to a family home occupied by cohabitants: Stack considered.
The burden of proof was on the party that sought to establish that the beneficial interests were not equal. It was not clear that the principle in Stack applied where the parties in question were a mother and daughter living independent lives. The aim of the purchase was not to provide them with a home. The respondent had not lived at the house at the time of the purchase and the house was mainly an investment. This case was midway between cohabitation cases and those concerning commercial properties.
Stack should not apply where the primary purpose of the purchase was one of investment, even where there was a family relationship. The presumption of advancement could apply to a mother and daughter, but the presumption that the mother intended to make a gift to the daughter could easily be rebutted where a child was living independently and, as in this case, where the respondent also had other children: see Pettitt v Pettitt [1970] AC 777.
In the absence of any agreement, the shares were held according to the contribution that each party had made to the purchase price. On the facts of the present case, the discount on the purchase price was attributable only to the respondent’s status as a secure tenant of long-standing. The mortgage should be treated as an equal contribution of each party. Accordingly, the appellant’s contribution would be assessed as being 33% of the value of the property.
Simeon Thrower and Andrew Veen (instructed under the direct access scheme) appeared for the appellant; Richard Colbey (instructed under the direct access scheme) appeared for the respondent.
Eileen O’Grady, barrister
