Unmarried couple — Family home — Property in appellant’s sole name — Extent of respondent’s beneficial interest — Basis for determining beneficial interest — Judge apportioning in equal shares — Appeal allowed
The appellant and the respondent were an unmarried couple. The respondent owned a house that she had purchased under the right-to-buy legislation, and which had been financed entirely by the appellant from the proceeds of sale of his home. Although in the respondent’s sole name, the property was subject to a charge to secure the money provided by the appellant. The respondent later sold the property, and the couple purchased a house, in the sole name of the appellant, as a home for them and the respondent’s children from a previous marriage. The purchase was funded by the proceeds of sale of the respondent’s house, by a building society mortgage and by the appellant’s savings. The mortgage debt was later repaid in full.
The couple subsequently parted, and the house was sold. The respondent brought proceedings in which she sought a declaration that the proceeds of sale were held by the appellant on trust for himself and the respondent in equal shares, or such shares as the court should determine. The judge found, on the evidence, that the parties had intended to share the property. She found that there had been no express agreement as to what those shares should be. However, she held that the existence of positive evidence that the parties had neither discussed the issue nor intended any agreement as to the proportions of their beneficial interests did not prevent her from inferring one, and she went on to deduce an intention to share the beneficial ownership equally.
On appeal, the appellant contended that the judge should have applied the presumption that the property had been held on resulting trust for the persons who provided the purchase money, in the proportions in which they had provided it. He argued that there was no evidence of any discussions between the parties at the time of purchase as to the intended shares, such as to displace that presumption.
Held: The appeal was allowed.
In cases such as the present, the first question to consider was whether there was evidence from which to infer a common intention, communicated by each to the other, that each should have a beneficial share in the property. Where there was evidence of express discussions at the time of purchase, sufficient to establish such a common intention, the court would be entitled to answer the secondary question, as to the intended extent of those beneficial interests, by inference from the parties’ subsequent conduct: Lloyds Bank plc v Rosset [1991] 1 AC 107 and Stokes v Anderson [1991] 1 FLR 391 applied. The judge had not been required, in the absence of a shared intention as to the proportions in which the property was to be held, to find that it was held on a resulting trust for the parties in beneficial shares proportionate to their financial contributions: Midland Bank plc v Cooke [1995] 2 FLR 915 applied; approach in Springette v Defoe [1992] 2 FLR 388 not followed. In cases such as the present, where the parties had not considered the proportions, the court was effectively supplying or imputing a common intention as to the parties’ respective shares (in circumstances where there was, in fact, no common intention) on the basis of what was shown to be fair in the light of all the material circumstances, including the acts and conduct of the parties following the acquisition.
In deciding what was fair, the court was to have regard to the entire course of dealing between the parties in relation to the property, including the arrangements that they had made from time to time to meet outgoings such as mortgage contributions, council tax, utilities, repairs, insurance and housekeeping. An analysis in terms of proprietary estoppel would lead to the same result: Grant v Edwards [1986] Ch 638 and Yaxley v Gotts [2000] Ch 162 considered.
Applying those principles to the present case, the judge’s finding, that the property had been held in equal shares, gave insufficient weight to the fact that the appellant’s direct contribution to the purchase price had been substantially greater than that of the respondent. In respect of the outgoings, it was fair to regard the parties as having made approximately equal contributions to the balance of the purchase price provided by the mortgage. On that basis, a fair division of the proceeds of sale was 60% to the appellant and 40% to the respondent.
Nicholas Francis QC and Christopher Wagstaffe (instructed by The Parry Sharratt Partnership, of Whitstable) appeared for the appellant; David Walden-Smith (instructed by Clarkson Wright & Jakes, of Orpington) appeared for the respondent.
Sally Dobson, barrister
