Property in joint names — Determination of beneficial interests — Registrar finding 50:50 split between husband and appellant wife — Appropriate basis for determining shares — Whether statements made in application for voluntary arrangement determinative of beneficial interests — Appeal dismissed
The appellant’s husband, H, was a bankrupt. The respondent was his trustee in bankruptcy. The latter applied for an order for possession and sale of the matrimonial home owned by the appellant and H, with distribution of the proceeds of sale between the respondent and the appellant on a 50:50 basis. It was common ground that the appellant and H held the property as beneficial tenants in common. The transfer to them contained no express declaration as to their beneficial interests, but statements that they had made, in the course of an earlier unsuccessful application by H to enter into a voluntary arrangement, stated that they held the property in equal shares. However, on the respondent’s application, they argued that the correct proportion was 85% to the appellant and 15% to H. They maintained that their earlier statements had stemmed from an erroneous understanding of their position and were not determinative of their interests, and that their shares should be calculated by reference to their respective contributions to the purchase of the property and its predecessor as their matrimonial homes.
The registrar found in favour of the respondent, holding that he was entitled to a 50% beneficial share. He found that the couple’s statements in respect of the voluntary arrangement application constituted binding written declarations of trust, or, alternatively, justified the court in inferring a common intention to hold in equal shares. He further held that such a division was fair on the basis of all the parties’ conduct. The appellant appealed.
Held: The appeal was dismissed.
1. Where, in determining the beneficial interests of tenants in common, recourse was had to the parties’ actual or assumed common intention, the relevant intention was that held at the time of purchase, although later conduct could show what that intention might have been. The court could not be satisfied that the registrar, in his conclusions on the couple’s statements, had made a finding as to their inferred common intention at the time of purchase of the property rather than as to their understanding at the time at which the statements were made: Mortgage Corporation v Shaire [2000] 3 EGLR 131 considered. He had also erred in finding that the couple’s statements amounted to a declaration of trust; they were merely statements made for the purpose of informing H’s creditors the nature and extent of his assets.
2. In the circumstances of the instant case, it was not possible to infer that the couple had shared any common intention as to beneficial ownership at the time of the purchase of the property. The size of the parties’ respective beneficial interests therefore fell to be determined on the basis of what now appeared fair to the court, having regard to all the parties’ conduct in respect of the property, both at the time of purchase and subsequently: Oxley v Hiscock [2004] EWCA Civ 546; [2004] 3 WLR 715 applied. Although the fairness test did not render that determination a discretionary matter, different judges could reach different views as to what was fair without concluding that the first instance judge had been wrong in the sense of having made an error of law. Applying that test, the registrar had correctly found that equal shares were appropriate.
3. The authorities on beneficial shares tended to bypass a relevant question, namely whether the parties had an actual or a presumed intention to share the beneficial interest of a matrimonial home as beneficial joint tenants, rather than as tenants in common. Since beneficial joint tenants could not hold in unequal shares, the question of quantifying respective shares would arise only where the basis of co-ownership was that of tenants in common. Despite equity’s traditional dislike of joint tenancy, ownership on such a basis was not obviously either unjust or inappropriate as between a husband and wife with regard to their matrimonial home. In such cases, a too-ready assumption of a tenancy in common begged an important prior question. However, the registrar could not be criticised for failing to mention this question, since the respondent had not contended that the couple were joint tenants and the matter had been touched on only briefly in cross-examination.
Robert Hurst, the appellant’s husband, appeared on her behalf; Richard Fisher (instructed by Taylor Wessing) appeared for the respondent.
Sally Dobson, barrister
