Upload
persephone-west
View
222
Download
1
Embed Size (px)
Citation preview
Case No: B2/2004/2208
Neutral Citation Number: [2005] EWCA Civ 857
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CENTRAL LONDON CIVIL JUSTICE CENTRE
His Honour Judge Levy QC
CHY04209
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday, 13 July 2005
Before :
LORD JUSTICE CHADWICK
LORD JUSTICE CARNWATH
and
LADY JUSTICE SMITH
- - - - - - - - - - - - - - - - - - - - -
Between :
BARRY ALAN STACK Claimant/
Respondent
- and -
DEHRA ANNE DOWDEN Defendant/
Appellant
- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
Mr Alan Barton (instructed by Walter Jennings & Son, 259/263 Kentish Town Road, London
NW5 2JT) for the Appellant
Mr Francis Wilkinson (instructed by Attiyah Lone of 106-107 King Street, Hammersmith,
London W6 0QP) for the Respondent
- - - - - - - - - - - - - - - - - - - - -
Judgment
Lord Justice Chadwick :
1. This is an appeal from an order made on 6 October 2004 by His Honour Judge
Levy QC sitting at the Central London County Court in proceedings brought
under section 14 of the Trusts of Land and Appointment of Trustees Act 1996.
The property to which the proceedings relate is a dwelling house known as 114
Chatsworth Road, Willesden Green, London N2. The property is registered at Her
Majesty’s Land Registry in the joint names of the parties to the proceedings, Miss
Dehra Anne Dowden and Mr Barry Alan Stack. The appeal provides an
opportunity to review the principles by which the respective beneficial interests of
unmarried co-habitees in property registered in their joint names are to be
determined in the light of the recent decision of this Court in Oxley v Hiscock
[2004] EWCA Civ 546, [2005] Fam 211.
2. The proceedings were commenced by Mr Stack in or about September 2003. His
claim was for a declaration that the property was held by the parties upon trust for
themselves as tenants in common in equal shares; and for an order for sale. The
judge made an order in those terms. He directed payment out of the proceeds of
sale, in advance of division into equal shares, of sums intended to recompense Mr
Stack for his cost of renting alternative accommodation since October 2002.
The claimant’s primary submission – express trust
3. The property was transferred to Miss Dowden and Mr Stack, as purchasers, by a
transfer dated 27 August 1993. The transfer contains no words of trust. But it does
contain a declaration by the purchasers that the survivor of them is entitled to give
a valid receipt for capital money. Paragraph 2 is in these terms:
“The Purchasers declare that the survivor of them is
entitled to give a valid receipt for capital money arising
from a disposition of all or part of the property.”
4. It was Mr Stack’s primary submission at the trial that the property had been
transferred to the parties subject to the express trust that they held the beneficial
interest as joint tenants in equity. In November 2002 Miss Dowden served notice
of severance. It is common ground that, if there were a joint tenancy in equity, it
was then severed and the parties held the property thereafter as beneficial tenants
in common in equal shares.
5. A declaration in the form of that in paragraph 2 of the transfer deed in this case is
consistent with the right of survivorship, inherent in a joint tenancy, extending to
the beneficial interests in the proceeds of sale – section 36(2) of the Law of
Property Act 1925. It is not apt in a case where there is a beneficial tenancy in
common – section 27(2) of that Act. The appropriate (and usual) declaration in a
case where the parties intend from the outset that their beneficial interests shall be
as tenants in common in equity – whether in equal or unequal shares – is that a
valid receipt for capital monies cannot be obtained from the survivor alone. A
declaration in that form will lead to a restriction on the register to that effect under
section 58(3) of the Land Registration Act 1925.
6. The judge did not accept that the declaration contained in paragraph 2 of the
transfer deed was sufficient, of itself, to lead to the conclusion that the property
had been transferred subject to an express trust for the parties as beneficial joint
tenants in equity. He addressed the point, shortly, in the opening sentence of
paragraph 19 of his judgment:
“The second paragraph of that transfer certainly
suggests that there was to be a joint tenancy of the
Property, but it is not sufficient by itself for there to be
an express declaration of trust, as was found in one of
the cases to which [counsel] had referred me.”
The case which the judge had in mind as authority for that proposition was, I
think, Huntingford v Hobbs [1993] 1 FLR 736.
7. The submission advanced on behalf of Mr Stack in the court below - but rejected
by the judge - is pursued in this Court by a respondent’s notice. Mr Stack invites
this Court to uphold the judge’s order directing payment out of the proceeds of
sale to the parties in equal shares on the grounds that this is a case in which the
property was transferred subject to an express trust declared in the transfer deed,
that the beneficial interests of the parties under that express trust were as joint
tenants and that the beneficial joint tenancy under that express trust has been
converted into a beneficial tenancy in common in equal shares by severance.
8. It is, I think, common ground – and, if it is not common ground, it is not open to
serious dispute – that, if there were an express trust from the outset, there would
be no need to consider, as the judge did, what interests might have arisen (in the
absence of an express trust) under resulting or constructive trusts. The express
trust would be determinative of the present interests. It is appropriate, therefore,
to address that issue first.
9. That can be done shortly. Huntingford v Hobbs (supra) was a decision of this
Court. The facts in that case (so far as material in the present context) are
indistinguishable from those in this case. The property had been transferred into
the joint names of the parties by a transfer which contained no declaration of trust
in express terms, but which did include a declaration as to the power of the
survivor to give a receipt for capital money arising on a disposition of the land.
The primary submission advanced on the appeal was that a transfer in that form
was to be construed as a declaration by the parties that they held the property for
themselves as joint tenants (ibid 740E). As Sir Christopher Slade observed (ibid
740 F-G), if that submission were correct, it would follow from the decision in
Goodman v Gallant [1986] Fam 106 that, in the absence of any claim for
rectification or rescission, the declaration of trust in the transfer conclusively
defined the parties beneficial interests, and the effect of the notice of severance
(which had been served in that case, as in this) would be to leave the two parties
entitled to the proceeds of sale in equal shares.
10. The Court was divided on the point. Sir Christopher Slade, following the earlier
decision of this Court in Harwood v Harwood [1991] 2 FLR 274, held that – on a
fair reading of the words of the declaration as to the power of the survivor to give
a valid receipt – they did not constitute a declaration of trust. Lord Justice Dillon
took the opposite view. He distinguished Harwood and indicated that he would
have preferred to adopt the approach in Re Gorman [1990] 2 FLR 284; a decision
of the Divisional Court in Bankruptcy which had, itself, been distinguished in
Harwood. The third member of the Court, Lord Justice Steyn, held that this Court
was bound by the reasoning in Harwood; but that, in any event, he found the
reasoning in Harwood “wholly persuasive”. He said that he would follow it even
if precedent did not compel that course.
11. Whatever view I might have taken of the effect of a receipt clause in the form of
that contained in the transfer deed in the present case if I had been required to
consider the matter without the benefit of authority, I have no doubt that it is not
open to this Court to depart from the position established by its earlier decisions in
Harwood v Harwood and Huntingford v Hobbs. This must be seen as a case in
which the transfer of the property into the joint names of the parties contained no
declaration of the trusts upon which they were to hold the proceeds of sale.
Implied, resulting or constructive trust
12. There is, of course, no doubt that the parties do hold the property, 114 Chatsworth
Road, as trustees – sections 34 and 36 of the Law of Property Act 1925. Nor is
there any suggestion, in this case, that there is any person other than the parties
who is beneficially interested under the trusts upon which the property is held.
The question is as to the extent of the respective beneficial interests of the parties
under those trusts.
13. In addressing that question it is necessary to have in mind that section 53(1)(b) of
the Law of Property Act 1925 requires that a declaration of trust respecting any
land must be in writing. In the absence of a declaration of trust which meets that
requirement, the answer must be found in the principles of law relating to
resulting, implied or constructive trusts. The requirement as to writing does not
affect the creation of resulting, implied or constructive trusts – section 53(2) of
that Act. The position was explained by Lord Justice Slade (giving the judgment
of the Court) in Goodman v Gallant [1986] Fam 106, 110F-H:
“In a case where the legal estate in property is conveyed
to two or more persons as joint tenants, but neither the
conveyance nor any other written document contains
any express declaration of trust concerning the
beneficial interests in the property (as would be required
for an express declaration of this nature by virtue of s
53(1)(b) of the Law of Property Act 1925), the way is
open for persons claiming a beneficial interest in it or its
proceeds of sale to rely on the doctrine of ‘resulting,
implied or constructive trusts’ (see s 53(2) of the Law of
Property Act 1925). In particular, in a case such as that,
a person who claims to have contributed to the purchase
price of the property which stands in the name of
himself and another can rely on the well-known
presumption of equity that a person who has contributed
a share of the purchase price of property is entitled to a
corresponding proportionate beneficial interest in the
property by way of implied or resulting trust (see, for
example, Pettitt v Pettitt [1970] AC 777 at 813-814, per
Lord Upjohn). . . .”
14. Goodman v Gallant was not, itself, a case in which a claim based on resulting,
implied or constructive trusts could be advanced. The reason appears in the next
sentence of the passage which I have just set out (ibid, 110H-111A):
“. . . If, however, the relevant conveyance contains an
express declaration of trust which comprehensively
declares the beneficial interests in the property or its
proceeds of sale [as was the position in that case], there
is no room for the application of the doctrine of
resulting, implied or constructive trusts unless or until
the conveyance is set aside or rectified; until that event
the declaration contained in the document speaks for
itself.”
But it is pertinent to note, first, that the Court accepted, in that case, that a
conveyance into joint names which contains no declaration of the beneficial
interests does not lead necessarily to the conclusion that the parties were entitled
beneficially in equal shares – (ibid, 118D) - and, further, that, although this Court
referred in Goodman v Gallant to “the well-known presumption of equity that a
person who has contributed a share of the purchase price of property [which
stands in the name of himself and another] is entitled to a corresponding
proportionate beneficial interest in the property by way of implied or resulting
trust”, the Court did not suggest that that was the only basis upon which a person
could establish a beneficial interest. It was open to a person claiming a share in the
property to rely upon a constructive trust arising out of the common intention of
the parties as to what their respective shares should be.
15. The proposition that a person claiming a share in the property could rely upon a
trust arising out of the common intention of the parties – that is to say, the
common intention of the claimant and the other person (or persons) in whom the
legal estate is vested – had not been in doubt since the observations of Lord
Diplock in Gissing v Gissing [1971] AC 886, 905C-D, 907B-D, 907E-G, 908D-
909C. The basis upon which the trust arises – or is imposed – is that the claimant
has acted in reliance on that common intention in circumstances in which it would
be inequitable to allow the other party or parties to refuse to give it effect. The
point was put by Lord Diplock in Gissing (ibid, 905C-D) in these terms:
“A resulting implied or constructive trust – and it is
unnecessary for present purposes to distinguish between
these three classes of trust – is created by a transaction
between the trustee and the cestui que trust in
connection with the acquisition by the trustee of a legal
estate in land, whenever the trustee has so conducted
himself that it would be inequitable to allow him to
deny to the cestui que trust a beneficial interest in the
land acquired. And he will be held to have so conducted
himself if by his words or conduct he has induced the
cestui que trust to act to his own detriment in the
reasonable belief that by so acting he was acquiring a
beneficial interest in the land.”
Those observations were made in the context of a dispute between husband and
wife in proceedings which predated the Matrimonial Property and Proceedings
Act 1970. But they are of general import; and, in particular, they remain
applicable to cases where the parties have not been married.
16. Gissing was a case in which the property had been conveyed into the sole name of
one of the parties to a marriage. There were, therefore, two distinct questions to be
addressed: (i) whether the party in whom the legal title was vested (in that case,
the husband) held the property upon a trust to give effect to the beneficial interest
of the other party (the wife) and, if so, (ii) to what shares in the property were the
parties respectively entitled beneficially. It was in relation to that latter question
that Lord Diplock explained (ibid, 908D-909C):
“In such a case [where the court is satisfied that it was
the common intention of both spouses that the
contributing wife should have a share in the beneficial
interest and that her contributions were made upon this
understanding] the court must first do its best to
discover from the conduct of the spouses whether any
inference can reasonably be drawn as to the probable
common understanding about the amount of the share of
the contributing spouse upon which each must have
acted in doing what each did, even though that
understanding was never expressly stated by one spouse
to the other or even consciously formulated in words by
either of them independently. It is only if no such
inference can be drawn that the court is driven to apply
as a rule of law, and not as an inference of fact, the
maxim ‘equality is equity’, and to hold that the
beneficial interest belongs to the spouses in equal
shares.
The same result however may often be reached as an
inference of fact. The instalments of a mortgage to a
building society are generally repayable over a period of
many years. During that period, as both must be aware,
the ability of each spouse to contribute to the
instalments out of their separate earnings is likely to
alter, particularly in the case of the wife if any children
are born of the marriage. If the contribution of the wife
in an early part of the period of repayment is substantial
but is not an identifiable and uniform proportion of each
instalment, because her contributions are indirect or, if
direct, are made irregularly, it may well be a reasonable
inference that their common intention at the time of the
acquisition of the matrimonial home was that the
beneficial interest should be held by them in equal
shares and that each should contribute to the cost of its
acquisition whatever amounts each could afford in the
varying exigencies of family life to be expected during
the period of repayment. In the social conditions of
today this would be a natural enough common intention
of a young couple who were both earning when the
house was acquired but who contemplated having
children whose birth and rearing in their infancy would
necessarily affect the future earning capacity of the
wife.”
17. In a case where the property has been transferred into joint names, it can usually
be taken for granted that each was intended to have some beneficial interest in the
property. In such a case, the focus is on the second of the two questions which
Lord Diplock identified in Gissing. But the principle remains the same. The court
must do its best to discover from the conduct of the parties whether any inference
can reasonably be drawn as to the probable common understanding about the
amount of their respective shares upon which each must have acted in doing what
each did.
18. Huntingford v Hobbs (supra) was a case in which the property had been conveyed
into joint names. As I have already explained, it was held (by the majority in this
Court) that the conveyance contained no express declaration of trust. It was held,
also, that it was not open to the claimant to advance a case (on appeal) that the
receipt clause in the transfer (if not sufficient to constitute an express declaration
of trust) could, nevertheless, be relied upon as compelling evidence of a common
intention that he should take an interest as joint tenant in equity (ibid, 744A-C).
Nor could other evidence as to common intention could be relied upon; that had
not been an issue at trial (ibid, 749G, 753A).
19. It was on the basis that there was no (or no admissible) evidence of common
intention before this Court in Huntingford v Hobbs that Sir Christopher Slade said
this (ibid, 744C-G):
“There is no dispute that when the property was placed
in joint names, the two parties intended that that they
should each have a beneficial interest in it. The
difficulty lies in establishing the extent of those
beneficial interests in the absence of any declaration of
trust.
In the absence of any declaration of trust, the parties
respective beneficial interests in the property fall to be
determined not by reference to any broad concepts of
justice, but by reference to the principles governing the
creation or operation of resulting, implied or
constructive trusts which by s 53(2) of the Law of
Property Act 1925 are exempted from the general
requirements of writing imposed by s 53(1).
In Walker v Hall [1984] FLR 126 at p 133, Dillon LJ
made the following statement of a well known general
principle:
‘. . . the law of trusts has concentrated on how the
purchase money has been provided and it has
consistently been held that where the purchase money
for the property acquired by two or more persons in their
joint names has been provided by those persons in
unequal amounts, they will be beneficially entitled as
between themselves in the proportions in which they
provided the purchase money. This is the basic doctrine
of the resulting trust and it is conveniently and cogently
expounded by Lord Upjohn in Pettitt v Petitt [1970] AC
777 at p 814’
The application of this principle ordinarily gives rise to no
difficulty where the whole of the initial purchase price has been
contributed by the two or more interested parties in the form of
cash derived out of their respective resources without the
benefit of a loan.”
He then went on to address the more usual case where the parties do not (together)
contribute the whole of the initial purchase price out of their own resources. The
property is purchased with the benefit of a loan . He said this (ibid, 744G-745D):
“Greater problems arise in cases such as the present, where part
of the money required has been borrowed on mortgage. On the
particular facts of some such cases the court, for the purpose of
ascertaining the parties’ proportionate interests in the property,
has thought it right to attribute to them the intention that their
contributions to the purchase should be ascertained as at the
date when the property eventually came to be sold.”
He referred to the observation of Lord Diplock in Gissing ([1971] AC 886, 909D-
E) that:
“. . . there is nothing inherently improbable in their
acting on the understanding that the wife should be
entitled to a share which was not to be quantified
immediately upon the acquisition of the home but
should be left to be determined when the mortgage was
repaid or the property disposed of, on the basis of what
would be fair having regard to the total contributions,
direct or indirect, which each spouse had made by that
date. Where this was the most likely inference from
their conduct it would be for the court to give effect to
that common intention of the parties by determining
what in all the circumstances was a fair share.”
And he pointed out that inferences of that nature as to the common intentions of the
parties were drawn by this Court on the particular facts of Young v Young [1984] FLR
375 and in Passee v Passee [1988] 1 FLR 263. But he went on to say this:
“However, in a case where a purchase in the joint names of
two parties has been financed partly in the form of cash
provided by one or both of them, and partly by way of a
loan on mortgage, another approach open to the court is to
assess the parties’ contributions to the purchase, and thus
their proportionate interests in the property, by reference to
the time of the initial purchase, having regard to what sums
each of them actually paid and what obligations each of
them actually assumed in relation to the mortgage. This, for
example, was the approach adopted by this court in Crisp v
Mullings [1976] 239 EG 119 and by Bush J in Marsh v von
Sternberg [1986] 1 FLR 526.”
20. In Huntingford v Hobbs the purchase price had been provided, in part, from the
proceeds of sale of Mrs Hobbs’ former home and in part with the aid of a building
society advance. Mr Huntingford had made no cash contribution of his own; but
the court treated him as if he had provided the whole of the building society
advance. The reason was explained by Sir Christopher Slade (ibid, 745E-746B):
“As appears from the passage from Lord Diplock’s
speech in Gissing v Gissing quoted above, the task of
the court in cases such as this is to draw the most likely
inference as to the common intention of the parties at
the date of the purchase from their conduct. This must
depend on the facts of the particular case. On the
particular facts in Young v Young and Passee v Passee,
the evidence disclosed no clear arrangement or
understanding between the parties, as at the date of the
purchase, in regard to the manner in which the mortgage
payments were to be provided for. In the present case,
in contrast, while both parties as joint proprietors had to
join in the mortgage and assume joint and several
liability to the mortgagee building society, there was a
clear agreement or understanding that, as between the
two of them, Mr Huntingford would pay all the interest
due under the mortgage and all the endowment policy
premiums which would in due course, if the policy were
duly kept up, discharge the capital debt owed to the
lender. As at the date of the purchase, while Mrs Hobbs
no less than Mr Huntingford was assuming a liability to
the lender, it was not contemplated that, as between the
two of them, she would have to pay anything towards
the discharge of this liability.
‘It is of course always possible to look at the
subsequent conduct of the parties to see if it shows
any light on what they originally agreed, but in the
absence of a new or varied agreement, subsequent
conduct cannot affect what was originally agreed.’
Marsh v von Sternberg (above) at p 533 per Bush J.)
Drawing the most likely inference from the conduct of
the parties in the present case, in my judgment the
proper common intention to impute to them is a
common intention as at the date of purchase that Mrs
Hobbs should be treated as having contributed her cash
contribution, Mr Huntingford should be treated as
having contributed the whole of the sum borrowed on
mortgage, and that the property should be owned by the
two of them in shares proportionate to such
contributions.”
On the basis that Mrs Hobbs had contributed £38,860 out of the proceeds of sale
of her former home and that Mr Huntingford was to be treated as having
contributed the whole of the mortgage advance of £25,000, the property was held
in the proportions 61% and 39%.
21. The judgments of this Court in Huntingford v Hobbs were handed down on 10
March 1992. On the same day the same Court (Lord Justice Dillon, Lord Justice
Steyn and Sir Christopher Slade) handed down their judgments in Springette v
Defoe [1992] 2 FLR 388. The latter case has been relied upon, in later cases, as
authority for the proposition that, if there had been no discussion between the
parties as to the extent of their respective beneficial interests at the time of the
purchase, then it must follow that the presumption of resulting trust was not
displaced and the property was held for the parties in beneficial shares
proportionate to their contributions. There are passages in Springette v Defoe
which might be thought to support that view. Lord Justice Dillon explained the
principle upon which he reached his decision in that case in these words (ibid,
392E-F):
“In Walker v Hall I expressed the view at p 134C that it
was not open to this court, in the absence of specific
evidence of the parties’ intentions, to hold that the
property there in question belonged beneficially to the
parties in equal shares, notwithstanding their unequal
contributions to the purchase price, simply because it
was bought to be their family home and they intended –
or possibly one should say ‘hoped’ – that their
relationship should last for life. The effect is that, in the
absence of an express declaration of the beneficial
interests, the court will hold that the joint purchasers
hold the property on a resulting trust for themselves in
the proportions in which they contributed directly or
indirectly to the purchase price, unless there is sufficient
specific evidence of their common intention that they
should be entitled in other proportions – eg in equal
shares notwithstanding unequal contributions – to rebut
the presumption of resulting trust.”
There is, if I may say so, nothing controversial in that statement of principle. Nor
in his subsequent observation (ibid 393D) that:
“The common intention must be founded on evidence
such as would support a finding that there is an implied
or constructive trust for the parties in proportions to the
purchase price. The court does not as yet sit, as under a
palm tree, to exercise a general discretion to do what the
man in the street, on a general overview of the case,
might regard as fair.”
But Lord Justice Dillon went on to say this (ibid, 393E):
“But the common intention of the parties must, in my
judgment, mean a shared intention communicated
between them. It cannot mean an intention which each
happened to have in his or her own mind but had never
communicated to the other.”
And, (ibid, 393G):
“Since, therefore, it is clear in the present case that there
never was any discussion between the parties about
what their respective beneficial interests were to be,
they cannot, in my judgment, have had in any relevant
sense any common intention as to the beneficial
ownership of the property. . . . The presumption of
resulting trust is not displaced.”
Both Lord Justice Steyn (ibid, 395G) and Sir Christopher Slade (ibid, 396F)
agreed with that approach. As Lord Justice Steyn put it:
“Given that no actual common intention to share the
property in equal beneficial shares was established, one
is driven back to the equitable principle that the shares
are to be presumed to be in proportion to the
contributions.”
22. In the recent decision in Oxley v Hiscock [2005] Fam 211 this Court reviewed
the law in relation to the beneficial interests of co-habitees. It did so in the
context of property which had been transferred into the sole name of one of
them, but in circumstances in which there was evidence from which to infer a
common intention, communicated by each to the other, that each should have
some beneficial share. The amount of the respective shares had not been
discussed between them. In the course of that review the decision in Springette
v Defoe (supra) was considered at some length – see paragraphs 45 to 49 of my
judgment, with which the other members of the Court (Lord Justice Mance and
Lord Justice Scott Baker) agreed.
23. The issue in Oxley was whether, absent discussion between the parties as to the
extent of their respective beneficial interests at the time of the purchase, it must
follow that the presumption of resulting trust was not displaced and the property
was necessarily held in beneficial shares proportionate to the respective
contributions to the purchase price. After referring to the passages from the
judgments of Lord Justice Dillon and Lord Justice Steyn which I have already set
out in this judgment – which, as I observed, provided (at first sight, at least)
support for the defendant’s contention that that issue should be answered in his
favour – I said this at paragraph 49 (ibid, 740D):
“But, for the reasons which I have sought to explain, it
is (at the least) open to serious doubt whether those
passages did reflect the state of the law as it had
developed in this area by the time that Springette v
Defoe [1992] 2 FLR 388 was decided in March 1992.”
24. It is unnecessary to rehearse, in this judgment, the reasons which led me to that
conclusion. They are set out at length in my judgment in Oxley. It is sufficient to
refer to the observation of Lord Diplock in Gissing (ibid, 908F-G) which I have
already set out:
“. . . the court must first do its best to discover from the
conduct of the spouses whether any inference can
reasonably be drawn as to the probable common
understanding about the amount of the share of the
contributing spouse upon which each must have acted in
doing what each did, even though that understanding
was never expressly stated by one spouse to the other or
even consciously formulated in words by either of them
independently.” [emphasis added]
and to say that I have not altered my view that, properly understood, the
authorities before (and after) Springette v Defoe do not support the proposition
that, absent discussion between the parties as to the extent of their respective
beneficial interests at the time of the purchase, it must follow that the presumption
of resulting trust is not displaced and the property is necessarily held in beneficial
shares proportionate to the respective contributions to the purchase price. That is
not to say, of course, that there will not be cases where the correct conclusion is
that the parties’ beneficial interests are proportionate to their respective
contributions. Cases turn on their own facts.
25. In Oxley v Hiscock I referred (ibid, 246B-H, paragraphs [68] and [69]) to the two
distinct questions which arise in cases where property had been purchased in the
sole name of one of two cohabitees. The first question is 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. As I have said, in a
case (as the present) where the property has been transferred into the joint names
of co-habitees, the answer to that question is unlikely to present any difficulty. It
can usually be taken for granted that each was intended to have some beneficial
interest in the property. Why else was the property transferred into their joint
names? But an affirmative answer to the first question leads to the second
question: “what is the extent of the parties’ respective beneficial interests in the
property?”. It was in relation to that question that I said this (ibid, 246F-H,
paragraph [69]):
“Again, in many such cases, the answer will be
provided by evidence of what they said and did at the
time of the acquisition. But, in a case where there is no
evidence of any discussion between them as to the
amount of the share which each was to have – and even
in a case where the evidence is that there was no
discussion on that point – the question still requires an
answer. It must now be accepted that (at least in this
Court and below) the answer is that each is entitled to
that share which the court considers fair having regard
to the whole course of dealing between them in relation
to the property. And, in that context, ‘the whole course
of dealing between them in relation to the property’
includes the arrangements which they make from time
to time in order to meet the outgoings (mortgage
contributions, council tax and utilities, repairs,
insurance and housekeeping) which have to be met if
they are to live in the property as their home.”
26. I remain of that view. Further, as it seems to me, there is no reason in principle
why the approach to the second question – “what is the extent of the parties’
respective beneficial interests in the property?” – should be different, in a case
where the property is registered in the joint names of cohabitees, from what it
would be if the property were registered in the sole name of one of them; although
the fact that it has been registered in joint names is, plainly, to be taken into
account when having regard “to the whole course of dealing between them in
relation to the property”.
The course of dealing between the parties in relation to 114 Chatsworth Road
27. As I have said, the property was purchased in August 1993. The purchase price
was £190,000. Of that sum £19,000 had been paid, by way of deposit, from an
account (No 4257552) in the name of Miss Dowden with the Halifax Building
Society. The balance on completion was funded, in part, by an advance of £65,025
from Barclays Bank plc, secured by a mortgage executed by both Miss Dowden
and Mr Stack. The judge held, at paragraph 19 of his judgment, that “other than
the mortgage monies which were provided to the parties jointly, all the monies for
the purchase appear to have been provided by [Miss Dowden].”
28. The judge’s observation that the purchase monies, other than the mortgage
advance, “appear to have been provided by Miss Dowden” reflects the fact that
the completion monies (other than the advance) were transferred to the solicitors
acting in the purchase by cheques delivered by Miss Dowden. Although it was not
wholly clear from the evidence, it seems likely that at least £105,000 of those
completion monies came from the Halifax account to which I have just referred.
As at 6 April 1993 the balance on the Halifax account had stood at £57,179. The
proceeds of sale of an earlier property, 160 Purves Road, London NW10, (in the
sum of £66,663.13) had been sent to her on 18 May 1993. For the purposes of this
appeal the purchase of 114 Chatsworth Road (£190,000) may be treated as funded
from three sources (i) the mortgage advance (say, £65,000), (ii) the proceeds of
sale of 160 Purves Road (say, £67,000) and (iii) building society savings
(£58,000).
29. There is no doubt that, vis à vis the Bank, the parties were jointly and severally
liable to repay the mortgage advance. The advance was, in fact, repaid by lump
sum payments over the period 1993 to 2002. The judge found (at paragraph 38 of
his judgment) that the redemption monies had been provided as to £27,000 by Mr
Stack and as to £38,435 by Miss Dowden. That finding is a little more generous to
Miss Dowden than her own pleaded case, which had put her contribution towards
the redemption monies at £35,169.19 (or “at least £35,000”); but nothing turns on
that. It is clear that each party made a substantial contribution to the repayment of
the mortgage advance.
30. Mr Stack made the monthly interest payments due under the mortgage – in
amounts which reduced as the capital monies were paid off. He put the aggregate
of those interest payments at £17,988.30. The judge made no finding; but I do not
understand that sum to be in dispute.
31. Repayment of the mortgage advance had been secured by a collateral endowment
policy (Barclays Endowment Insurance Policy No 08/10799842/030021), written
to mature at the end of 15 years. The monthly premiums in respect of that policy
(£153.63) were paid by Mr Stack. He continued to make those premium payments
after the mortgage advance had been redeemed; thereby keeping the policy alive.
His claims in the proceedings included a claim that the endowment policy be
surrendered and its proceeds divided equally between the parties. The order of 6
October 2004 required the surrender of the policy, for payment of £3,639 to Mr
Slack out of the proceeds, and for the division of the balance (after that payment)
between the parties equally. The payment of £3,639 in advance of division
represented the aggregate of the premiums paid by Mr Stack after the date in
October 2002 on which the mortgage advance was finally redeemed. There is no
appeal or cross-appeal from that part of the judge’s order.
32. At the time of the purchase of 114 Chatsworth Road Mr Stack and Miss Dowden
were, respectively, aged 38 years and 35 years. They had been going out together
since 1975 or thereabouts; had been living together as man and wife since 1983;
and were parents to four children, then aged between 7 and 2 years. Miss Dowden,
who was a qualified electrical engineer, was in full time employment with the
London Electricity Board. Mr Stack was employed by the Hammersmith and
Fulham London Borough Council, earning (as the judge found) between £20,000
and £24,000 per annum. It was common ground that Miss Dowden’s earnings
were greater than his. The judge found that, during the period when they were
both living at 114 Chatsworth Road, each made contributions to the joint living
expenses. He said this (in answer to question 14 under paragraph 39 of his
judgment):
“Although the parties kept separate bank accounts and
they had different savings accounts, I accept the
evidence of [Mr Stack] that effectively they managed
their affairs together”
And, at paragraph 40 of his judgment:
“It seems to me, although [Miss Dowden] has been the
bigger wage-earner over this very long association
between the parties, they have both put their all into
doing the best for themselves and their family as they
could.”
33. Mr Stack’s primary case, on the pleadings – as I have said – was that the transfer
deed by which 114 Chatsworth Road was transferred “contained a declaration that
the parties were the joint beneficial owners”. In the alternative it was pleaded (at
paragraph 9 of the particulars of claim) that:
“The Transfer deed indicated the parties’ intention to be
the joint beneficial owners of the property at 114
Chatsworth Road, and the parties can therefore be
treated as the beneficial tenants in common in equal
shares without further analysis.”
The judge did not address the contention that (absent an express declaration of
trust) sufficient evidence of the parties’ intention to be joint beneficial owners of
the property could, nevertheless, be found in paragraph 2 of the transfer deed.
Although Mr Stack had said, at paragraph 5 of his witness statement dated 4
September 2003, that “We purchased the property at Chatsworth Road put in our
joint names (sic) to ensure that if one of us died, the property would pass to the
other under the rule of survivorship”, the judge made no finding to the effect that
the significance of the declaration was brought to the attention of either party. He
would, I think, have been entitled to be sceptical of Mr Stack’s assertion that,
absent an explanation from the solicitor acting in the purchase, he was aware of
“the rule of survivorship”. There was no evidence of a solicitor’s letter –
comparable to that set out in the judgment of the Court in Harwood v Harwood
(ibid,279E-F) – which explained why it was thought appropriate to include
paragraph 2 in the transfer deed. There was nothing (other than the declaration and
Mr Stack’s witness statement) to suggest that the principle that a joint tenant takes
the whole property by survivorship was ever in the minds of the parties. Miss
Dowden’s pleaded case, which she supported in evidence, was that the purchase
proceeded in joint names without discussion. As she put it, at paragraph 16 of the
witness statement which she made on 23 January 2004:
“I don’t think we ever talked about who should be the
legal owner of Chatsworth. It just happened that both
our names were put forward to the agents as purchasers
and the purchase went through in joint names. To the
best of my recollection there was never any discussion
between myself and Barry about ownership of the house
at Chatsworth.”
34. Mr Stack pleaded, in the further alternative (at paragraph 10 of the particulars)
that:
“In the premises there is to be inferred a common
intention that the Claimant and the Defendant hold the
property at 114 Chatsworth Road . . . legally for
themselves as beneficial owners in equal shares . . .”
The judge did not think it necessary to resolve the question whether the parties
had discussed the beneficial ownership of 114 Chatsworth Road at the time of the
purchase. At paragraph 20 of his judgment he said this:
“The Claimant said there was conversation about joint
ownership at that time; the Defendant said otherwise.
Assuming against the Claimant, there was no such
conversation, it seems to me, having regard to the good
relationship that the parties had up to then enjoyed, both
before and after the purchase, it is likely that there was
some understanding between them. As was said in one
of the cases cited to me, it takes little to assume that
there was such common intention.”
In those circumstances, as it seems to me, this Court has to approach this appeal
on the basis that there was no discussion, at the time of the purchase of 114
Chatsworth Road, as to the respective shares of the parties in that property. Mr
Stack did not assert in his pleadings that there was; Miss Dowden said in her
evidence that there was not; and the judge made no finding.
35. If, on a true analysis, the whole of the purchase price for 114 Chatsworth Road
other than the mortgage advance was provided by Miss Dowden from her own
funds, then - subject to the question whether (as pleaded in paragraph 9 of the
particulars of claim) an inference as to intention should be drawn from the
declaration in paragraph 2 of the transfer deed (to which I shall need to return) – it
is impossible, as it seems to me, to reach the conclusion that it is fair, having
regard to the whole course of dealing between the parties in relation to that
property, that their beneficial shares should be equal. If the whole of the purchase
price for 114 Chatsworth Road other than the mortgage advance was provided by
Miss Dowden from her own funds, that conclusion would fail to give proper
weight to her financial contribution to the acquisition of the property.
36. The judge did not reach his conclusion on the basis that the whole of the purchase
price for 114 Chatsworth Road other than the mortgage advance was provided by
Miss Dowden from her own funds. He treated Mr Stack as having some beneficial
interest in the proceeds of sale of 160 Purves Road (paragraph 17 and the answer
to question 12 in paragraph 39 of his judgment); and he treated the savings in the
Halifax account as joint savings, at least in part (as appears from the answer to
question 13 in paragraph 39 of his judgment). But he does not seem to have
thought it necessary to quantify the share in the Purves Road property to which (as
he found) Mr Stack was entitled; nor did he quantify the extent that Mr Stack was
entitled to the savings in the Halifax account. It is to those matters that I now turn.
The Purves Road property
37. The property at 160 Purves Road was purchased in 1983 from the executors of a
friend known to Miss Dowden as “Uncle Sidney”. The purchase price was
£30,000 and the property was transferred into the sole name of Miss Dowden.
There was some suggestion that the purchase was at less than market price
because the executors were anxious to give effect to the deceased’s wish that Miss
Dowden should have the opportunity to acquire the property; but the judge made
no finding and nothing, I think, turns on that point. The purchase price was
provided (i) as to £22,000 by an advance from the Halifax Building Society (in
respect of which Miss Dowden was the sole borrower) and (ii) as to the balance
(£8,000) from monies drawn from an account in her name.
38. In relation to the Purves Road property, therefore, it was necessary for the judge to
address the first of the two questions identified in paragraph [68] of my judgment
in Oxley v Hiscock ([2005] Fam 211, 246C): “whether there was evidence from
which to infer a common intention, communicated by each to the other, that each
shall have a beneficial share in the property”. And, in addressing that question, he
needed to have in mind the two categories of case identified by Lord Bridge of
Harwich in Lloyds Bank plc v Rosset [1991] 1 AC 107, 132E-133B. As I sought
to explain in Oxley, cases within the first category are those in which there has
been some discussion between the parties at the time of the acquisition from
which it can be seen or inferred that each intended that the party who is not the
legal owner should have some beneficial interest. Cases within the second
category are those in which there is no evidence of any such discussion; but where
the common intention can be inferred from their conduct at the time of the
acquisition. And, in cases which fall within that second category, as Lord Bridge
observed in Rosset (ibid, 133A-B):
“. . . direct contributions to the purchase price by the
partner who is not the legal owner, whether initially or
by payment of mortgage instalments, will readily justify
the inference necessary to the creation of a constructive
trust. But, as I read the authorities, it is at least
extremely doubtful whether anything less will do.”
What will not do in that context, as Lord Bridge made clear (ibid, 131D-G) is
work done in and about the property (including decoration and renovation) after
the property has been acquired.
39. Mr Stack did not allege, in his pleadings or in his witness statement, that there had
been any discussion as to beneficial ownership of 160 Purves Road at the time of
the purchase in 1983. The judge made no finding to that effect. This, therefore, is
a case in which a finding that there was a common intention, at the time of the
purchase, that each party should have some beneficial interest must be based on an
inference from conduct at the time of the purchase. If such a finding is to be made,
the case must be brought within Lord Bridge’s second category in Rosset.
40. Mr Stack’s pleaded case was that 160 Purves Road was purchased in the sole
name of Miss Dowden “as at that time she could more readily obtain a mortgage
loan as she was employed while [he] was self-employed”. The property was
bought for £30,000, of which £22,000 was borrowed from the Halifax Building
Society “and the parties from their joint savings contributed the remaining
£8.000”. At paragraph 6 of his witness statement he referred to “a down payment
of £8,000 funded from our joint savings”. He said that: “I made regular
contributions to the household expenditure, which freed [Miss Dowden’s] salary
to pay the mortgage”.
41. Miss Dowden’s case was that the £8,000 was provided by funds saved by her in
her Halifax savings account and that she paid all the mortgage instalments. It can
be seen from the completion statement on the sale of the Purves Road property in
1993 that the redemption figure in respect of the Halifax mortgage was in excess
of £22,000. It is clear that the “mortgage instalments” to which she referred are
payments of interest. In her witness statement dated 23 January 2004 (at
paragraphs 7 and 8) she said this:
“The money to purchase Purves Road was raised by
myself. I was working at the time and [Mr Stack] was
not officially working. He did a little unofficial painting
and decorating. I had some savings which we used as a
deposit and the rest of the money was raised on
mortgage. The deposit monies did not come from a joint
savings account as [Mr Stack] alleges in paragraph 6 of
his statement because we have never had a joint
account. It was my money and it came out of my
account. The mortgage was in my name as I was the
only one working. I paid the mortgage payments and the
household bills, although [Mr Stack] may have
occasionally contributed to some household expenses.
The bills were all in my name and I always paid them.
[Mr Stack] did not want to be on the deeds as he did not
want the responsibility of the mortgage or household
debts and running costs. . . . [He] did not want to
commit to me or seemingly the children. ”
In support of that last sentence she drew attention to the fact that, when the birth
of their first child was registered (on joint information), Mr Stack gave his address
as 76 Taplow, Adelaide Road, NW3 - although he was, in fact living at 160
Purves Road at the time – and the child was registered with her surname rather
than his.
42. The judge accepted that the £8,000 paid on the purchase of 160 Purves Road came
from an account in the sole name of Miss Dowden (paragraph 9 of his judgment).
But he thought it likely that “there was some sort of contribution – it is not
possible to quantify the sum – from [Mr Stack]”. In answer to question 1 in
paragraph 39 of his judgment “Was the £8,009 invested in the purchase of the
Purves Road Property joint or sole savings?” the judge held “In my judgment,
they should be considered as joint savings”. In the circumstances that, as the judge
found, at paragraph 9 of his judgment, Mr Stack “had no records whatsoever of
his income at that time” and had made no tax returns it is not clear how the judge
was able to find that money in Miss Dowden’s account was, in part, his money.
The only explanation which the judge gave was that they had been living together
for some time before 1983.
43. The judge asked himself the question, at paragraph 16 of his judgment, whether, if
the relationship between Mr Stack and Miss Dowden had broken down in 1993 (at
the time of the sale of 160 Purves Road), Miss Dowden would have been able to
say that the whole of the proceeds of sale belonged to her alone. He answered that
question at paragraph 17:
“Given the fact that by that time [1993] there had been a
relationship stretching from 1975 or so, certainly from a
little later as man and wife, and given the work that [Mr
Stack] had done on the Purves Road Property, and given
that although their finances were kept separately there
had been contributions to their living between the
parties, I should have been surprised if [Mr Stack]
would not have been found to have certainly some
entitlement to a part of the proceeds of sale.”
The judge’s approach, in that paragraph, fails to address the first of the two
questions identified in paragraph [68] of my judgment in Oxley v Hiscock ([2005]
Fam 211, 246C): “whether there was evidence from which to infer a common
intention, communicated by each to the other, that each shall have a beneficial
share in the property”. It gives no weight to Lord Bridge’s observation, in Lloyds
Bank Plc v Rosset [1991] 1 AC 107, 133A-B, that in cases where there has been
no discussion between the parties at the time of the purchase – that is to say, cases
within his second category – it is extremely doubtful whether anything less than a
direct contribution to the purchase price by a person who does not become the
legal owner will justify an inference that it is the common intention that he or she
is to have a beneficial interest. In my view the reasoning in paragraph 17 of the
judge’s provides no basis for a conclusion that Mr Stack would have been entitled,
in 1993, to any share in the proceeds of sale of 160 Purves Road.
44. The judge returned to that issue in answer to question 12 in paragraph 39 of his
judgment – “At the moment that the Purves Road Property was sold, did [Mr
Stack] have any beneficial interests (sic)?”. He said that he had already answered
that question affirmatively. That, as it seems to me adds nothing to the answer
which he had given at paragraph 17 of his judgment.
45. It is important to keep in mind (i) that the Halifax mortgage by which the purchase
of 160 Purves Road was funded (as to £22,000) required no periodic repayments
of capital, and (ii) there was no evidence that, at the time of the purchase, it had
been the common intention of the parties that Mr Stack would contribute to
interest payments. There was no evidence to contradict Miss Dowden’s statement
that the mortgage was taken in her name because Mr Stack wanted no
responsibility in relation to the mortgage debt. In those circumstances his
subsequent contributions to household expenses cannot be relied upon as evidence
that, at the time of the purchase, there was a common intention that he should
have a beneficial interest in that property.
46. The only matter that could have been relied upon as evidence of such common
intention, at the time of the purchase, would be a contribution by Mr Stack to the
£8,000 deposit. But that money came from Miss Dowden’s savings account; there
was no evidence to support a finding that the monies in that account represented
joint savings; the judge provided no satisfactory explanation for his conclusion
that “there was some sort of contribution – it is not possible to quantify the sum”
from Mr Stack into that account; and the judge did not, himself, rely on any
contribution by Mr Stack to the £8,000 deposit in his reasoning in paragraph 17 of
his judgment.
47. In my view the judge was wrong to treat Mr Stack as having any beneficial
interest in the proceeds of sale of the Purves Road property; and so wrong to treat
the application of those proceeds towards the purchase of 114 Chatsworth Road as
representing a contribution by Mr Stack to that purchase.
The savings in the Halifax account
48. I turn now to the monies standing to the credit of Miss Dowden’s Halifax account
in 1993, immediately before the sale of the Purves Road property. As I have said,
£58,000 or thereabouts was provided from that source towards the purchase price
of 114 Chatsworth Road. The judge treated the savings in the Halifax account (in
1993) as joint savings, at least in part, as appears from the answer which he gave
to question 13 in paragraph 39 of his judgment:
“Was the £30,000 invested in 114 Chatsworth Road
joint savings, or not? I cannot say that the whole of the
£30,000 was joint savings, but certainly by that time,
taking account of the way in which [Mr Stack] and
[Miss Dowden] conducted themselves, there was, as
[Mr Stack] said in his evidence, really a partnership
between them in the way they lived.”
Confidence in the judge’s conclusion is not enhanced by his apparent failure to
appreciate that the amount found from Miss Dowden’s Halifax account was
£58,000 rather than £30,000; although his mistake may have come from paragraph
8 of Mr Stack’s witness statement (where he refers to £30,000 of the purchase
price of 114 Chatsworth Road coming “from our joint savings”). And, if the judge
could not say that “the whole of the £30,000 was joint savings” he may, perhaps
be taken to have thought that less than one half of the £58,000 was joint savings.
49. Mr Stack’s pleaded case was that the £58,000 was “a contribution from the joint
savings of the parties”. That is elaborated, shortly, in paragraph 6 of his witness
statement: “The relatively small mortgage that we obtained [to fund the purchase
of 160 Purves Road] enabled us to pool surplus monies left over after payment of
monthly bills into a Halifax savings account”. Miss Dowden took issue with that.
At paragraph 14 of her witness statement she said:
“When we purchased Chatsworth Road in August 1993
I contributed £125,020 to the purchase price of
£190,000. This was my own money. It comprised
£66,663.13 from the proceeds of sale of Purves Road
and the balance came from my own savings. [Mr Stack]
says at paragraph 8 of his statement that £30,000 came
from our joint savings. This is not true. We did not have
a joint bank account. All the money was mine. I earned
it from working hard at my job.”
50. There was no evidence that the parties had ever agreed that the Halifax account
was to be treated as a joint account. The issue for the judge was from what source
or sources had that account been funded. He accepted (at paragraph 35 of his
judgment) that throughout the relationship Miss Dowden had greater earnings than
Mr Stack. There was no reason to disbelieve her when she said that the savings
came from her earnings; and no evidence on which the judge could find (and he
did not find, in terms) that Mr Stack had made any payments into the Halifax
savings account. The only basis for his conclusion that Mr Stack had any interest
in the savings account seems to have been that “there was really a partnership
between them in the way they lived”. But a finding of a joint property interest
requires more than that. As Lord Bridge put it in Rosset (ibid, 127H-128A):
“Spouses living in amity will not normally think it
necessary to formulate or define their respective
interests in property in any precise way. The
expectations of parties to every happy marriage is that
they will share the practical benefits of occupying the
matrimonial home whoever owns it. But this is
something quite different from sharing the beneficial
interest in the property asset which the matrimonial
home represents.”
Although those observations were made in the context of a marriage and in
relation to the interests of the parties to that marriage in the matrimonial home,
they apply with at least equal force to property owned by unmarried cohabitees.
No doubt both Mr Stack and Miss Dowden would readily accept that, in the loose
sense in which the word is now used in this context, they were “partners”. But that
has nothing to do with partnership in the strict (or Partnership Act) sense of that
word; and to describe them as “partners” in that loose sense says nothing about
their respective property interests.
51. In my view the judge was wrong to hold that Mr Stack had any interest in the
monies standing to the credit of Miss Dowden’s Halifax savings account
immediately before the sale of the Purves Road property; and so wrong to treat the
application of those monies towards the purchase of 114 Chatsworth Road as
representing a contribution by Mr Stack to that purchase.
The respective shares of the parties in 114 Chatsworth Road
52. As I have said, if, on a true analysis, the whole of the purchase price for 114
Chatsworth Road other than the mortgage advance was provided by Miss Dowden
from her own funds, then - subject to the question whether an inference as to
intention should be drawn from the declaration in paragraph 2 of the transfer deed
– it is impossible to reach the conclusion that it is fair, having regard to the whole
course of dealing between the parties in relation to that property, that their
beneficial shares should be equal. That conclusion fails to give proper weight to
Miss Dowden’s financial contribution to the acquisition of the property.
53. I return, therefore, to the question whether an inference as to the parties’ common
intention should be drawn from the declaration in paragraph 2 of the transfer deed.
The point is not pursued in the respondent’s notice, which invites the Court to
uphold the judge’s order by finding an express trust – a finding which, as I have
said, is not open to this Court in the light of its earlier decisions in Harwood v
Harwood [1991] 1 FLR 274 and Huntingford v Hobbs [1993] 1 FLR 736. The
point is not pursued (as an alternative to express trust) in the respondent’s skeleton
argument; and it was not pursued in oral argument. Nevertheless, the point was
pleaded in paragraph 9 of the particulars of claim; it is some importance; and I
think it right to address it.
54. A declaration that the survivor should be entitled to give a good receipt for capital
money is consistent with a beneficial joint tenancy and (prima facie, at least)
inconsistent with a beneficial tenancy in common (whether in equal or unequal
shares). Should that lead the court to conclude that the inclusion of such a
declaration in the transfer of property to persons as joint tenants in law is
indicative of the parties’ common intention that they should hold the property
transferred as joint tenants in equity? Sir Christopher Slade addressed the point
directly in Huntingford v Hobbs [ 1993] 1 FLR 736, 744A-B:
“[Counsel] submitted that, even if the declaration at the
end of the transfer did not constitute an actual
declaration of trust, nevertheless, having regard in
particular to the form of the transfer and the statements
in Mrs Hobbs’ first affidavit, there was compelling
evidence that the parties intended that Mr Huntingford
should take an interest as beneficial joint tenant in the
property or its proceeds of sale. I do not, for my part,
accept that there was any such compelling evidence.
However, this point as to the parties’ intentions was not
taken in the court below. If it had been, its validity
could have been, and no doubt would have been, tested
by cross-examination of Mr Huntingford [by] Mrs
Hobbs’ counsel. As the case was argued at the trial, she
had no occasion to put questions to him on this point, or
to call evidence on it. In the circumstances, I do not
think it right to allow this point to be taken and I put it
on one side.”
Lord Justice Dillon did not treat the point as distinct from the submission that (as
a matter of construction) the transfer contained an express trust ( a point on which
he was in the minority). Lord Justice Steyn did not address the point in express
terms; but, had he thought it a good point, the decision in Huntingford v Hobbs
would have gone the other way.
55. For my part, I have little doubt that if it had been established in evidence that the
parties understood the significance of the declaration in paragraph 2 of the transfer
deed – and, in particular, understood that (in the circumstances of this case, where
there was no other person who could have a claim to a beneficial interest) a
paragraph in those terms was consistent only with an intention that the whole
property should pass to the survivor on the death of the first of them to die – the
inference that they intended a beneficial joint tenancy would have been
irresistible. But what if, as in the present case, there is no finding of fact (and no
independent evidence) that both parties did understand the significance of the
declaration?
56. I accept, of course, that – as Lord Justice Dillon observed in Huntingford v Hobbs
(ibid, 754G-H) – “. . . a party who signs a document is bound by the terms of that
document even if he or she did not trouble to read it”. But the question – in the
present context - is not whether Miss Dowden is bound by the declaration. Plainly,
she is – at least vis à vis a purchaser. The question is whether the court should
draw an inference in respect of her intention as to beneficial ownership – a matter
in relation to which the declaration in paragraph 2 of the transfer deed cannot, of
itself, be determinative. In that context the declaration points in one direction
rather than another if, but only if, the parties understand its significance. If they do
not understand why the declaration is in the transfer deed, it seems to me
impossible to rely upon it for the purpose of drawing an inference as their
intentions; other than as indicative of a common intention that they should be
bound by it in respect of the matter (the power of a survivor to give a receipt for
capital monies) for which it actually provides.
57. It follows that I would allow the appeal from the judge’s conclusion that the
parties were entitled beneficially to equal shares in 114 Chatsworth Road. By her
appellant’s notice Miss Dowden sought a declaration that the respective beneficial
interests of the parties in that property were 65/35 in her favour “or such other
shares as the Court of Appeal finds just and fair according to the evidence”. But it
is clear from her skeleton argument – and was confirmed in oral argument – that
she was not seeking a greater share than 65%. We did not hear argument on the
question whether – adopting the approach indicated in Oxley v Hiscock [2005]
Fam 211 – she would have been entitled to a share greater than 65%. For my part,
I have no doubt that she is entitled to at least 65% of the proceeds of sale of 114
Chatsworth Road. It is unnecessary – and, in the absence of argument, would be
inappropriate – to decide whether a claim for a greater share (and, if so, in what
amount) would have succeeded.
Compensation in respect of Mr Stack’s exclusion from 114 Chatsworth Road.
58. The parties lived together at 114 Chatsworth Road as a family with their four
children from September 1993 until October 2002. By that date the relationship
had broken down. Mr Stack moved out of the former home. Miss Dowden
commenced proceedings in the Inner London and City Family Proceedings Court,
seeking an order to restrain Mr Stack from molesting her or the children. On 11
April 2003 the parties gave mutual undertakings in those proceedings. Mr Stack
undertook to leave 114 Chatsworth Road by 25 April 2003 and not to return (save
for specified periods which, during the school holidays, were limited to one in
each week with not less than 2 days notice through solicitors). He undertook, also,
not to use or threaten violence against Miss Dowden or the children. Miss
Dowden undertook that, subject to documentary proof being provided, Mr Stack
should be reimbursed the cost of renting alternative accommodation (to be capped
at £1,000 per month) until the sale of 114 Chatsworth Road, such reimbursement
to be paid from the proceeds of sale of that property before division. Those
undertakings were given over until 10 January 2004. Fresh undertakings were
given on that day; but (of importance in the present context) Miss Dowden’s
undertaking to reimburse to Mr Stack the cost of renting alternative
accommodation was not renewed. He, however, gave an undertaking not to return
to 114 Chatsworth Road save for a period of 2 hours on the first Sunday of each
month.
59. Paragraph 1(c) of the order of 6 October 2004 provides for payment to Mr Stack
out of the proceeds of sale of 114 Chatsworth Road before division between the
parties of (iii) the sum of £8,100 and (iv) a sum equal to £900 per month from that
date until completion of the sale of the property. The basis upon which the judge
made that order appears from paragraph 42 of his judgment:
“One further issue arises for decision. . . . [A]fter the
parties split [Mr Stack] moved out of the house and
there was an undertaking given to the Magistrates’
Court that . . . an allowance of [£900] should be made to
him from the net proceeds of sale before division. In
January of this year . . . [Mr Stack’s] undertaking for
that allowance to continue (sic) was refused. There was
an application to this Court when an order might have
been made where the undertaking was continued. That
undertaking was not signed by [Miss Dowden]. It is not
clear to me that there was any consideration by the
Court of the decision by the Magistrates’ Court, so in
those circumstances there should, in my judgment, be
no deduction for the period from the time of the
Magistrates’ Court order to now from the sum to be
mutually shared. It seems to me, though, that as the sale
is very much, I suspect, going to be in [Miss Dowden’s]
hands, it would be fair to both parties if there should be
such an allowance from the month of October until
there is a sale of the Property.”
60. It is, I think, reasonably clear that the sum of £8,100 which the judge allowed to
Mr Stack out of the proceeds of sale before division represents the amount due (at
the rate of £900 per month) in respect of the nine months (April 2003 to January
2004) during which the undertaking given by Miss Dowden to the Inner London
and City Family Proceedings Court was in place. Miss Dowden does not appeal
from that part of the judge’s order. But she does appeal from the order that Mr
Stack be allowed a sum equal to £900 per month from 6 October 2004 until
completion of the sale of the property.
61. In my view she is entitled to succeed on that point. The only reason which the
judge gave for the order which he made was that “the sale is very much, I suspect,
going to be in [Miss Dowden’s] hands”. But that, as it seems to me, was to
overlook the fact that he had ordered a sale of 114 Chatsworth Road on the open
market for the best price reasonably obtainable; that there was nothing in the order
which had the effect of postponing that sale; and that his order named the agents
who were to have conduct of the sale and provided that the solicitors to act in the
sale were not to be the solicitors for either party. It is impossible to say that Miss
Dowden has control of the timing of the sale; and it was no part of Mr Stack’s
case before this Court that she had been the cause of any (or any unreasonable)
delay. It seemed to be common ground that neither party was anxious to press for
a sale at a time (October 2004 to April 2005) when the market was perceived to be
slack.
62. The judge seems to have overlooked, also, that (until sale) a home must be
provided for the four children of the couple; and that (in the order of 6 October
2004 itself) Mr Stack continued his undertaking not to intimidate, harass or pester
the children. It is clear, therefore, that the order was made on the basis that the
children would continue to live at 114 Chatsworth Road with their mother until
that property was sold. Absent any allegation that she was delaying a sale, there
was no basis upon which to make an order that she should pay an occupation rent
for 114 Chatsworth Road; no basis upon which that rent could be assessed at £900
per month or any other figure; and no basis upon which to order that she should
pay Mr Stack’s accommodation costs (whatever they might be).
63. The jurisdiction to make an order that a beneficiary under a trust of land who is in
occupation of that land make payments to a beneficiary whose own entitlement to
occupy the land has been excluded or restricted is not in doubt – section 13(3) and
(5) and section 14(2)(a) of the Trusts of Land and Appointment of Trustees Act
1996. But that power must be exercised with regard to the intentions of the
persons who created the trust, the purposes for which the land is held and the
circumstances of each of the beneficiaries – section 13(4) and (8). It is not at all
clear that, in making the order that he did, the judge was purporting to exercise a
power under the 1996 Act. But, if he were, he was required to take account of the
obligations of both parents towards their children; and, in particular, the need for
the children to remain in their home, under the care of their mother, until the
house was sold. He failed to give any consideration to those matters.
The application for permission to cross-appeal
64. In his particulars of claim Mr Stack had sought an order that cash held as at 1
October 2002 in a Chelsea Building Society savings account in the name of Miss
Dowden be divided equally between the parties. It was said, at paragraph 7 of the
particulars, that Mr Stack had contributed to the household expenditure while at
114 Chatsworth Road and “the excess of the parties’ income over expenditure was
used to build up a savings account which contained £60,000 at the time of the
separation of the parties in October 2002”.
65. The judge rejected that claim. At paragraph 41 of his judgment, he said this:
“As to the Chelsea Building Society account in [Miss
Dowden’s] name, which did contain, I think, £60,000,
which is now reduced to £18,000, this seems to me to
be one of the ways where the parties have allowed their
earnings and their savings to be separately divided. It
has been accepted that most of their shares, et cetera,
and PEPs, et cetera, should lie where they are without
any judgment from the Court. I do not see any reason to
take a different decision so far as the Chelsea Building
Society account is concerned.”
66. By a respondent’s notice filed on 9 March 2005 Mr Stack seeks to challenge the
judge’s decision to make no order in respect of the Chelsea account. He seeks an
order that £30,000 (being one half of the monies standing to the credit of that
account in October 2002) be paid to him out of the proceeds of sale of 114
Chatsworth Road before division. A challenge to the judge’s decision on that
point could only be made by way of cross-appeal; for which Mr Stack requires
permission.
67. I would refuse permission to cross-appeal on that point. There is, at first sight,
some force in the contention, advanced on behalf of Mr Stack in his counsel’s
skeleton argument, that the judge’s treatment of the monies in the Halifax account
(both in 1983 and in 1993) as joint savings – notwithstanding that the account was
in Miss Dowden’s sole name – is inconsistent with his refusal to treat the monies
in the Chelsea account (in 2002) also as joint savings. But the force that that point
might otherwise have had is lost if (as I have held) the judge were wrong to treat
the monies in the Halifax account as joint savings. The correct view, as it seems to
me, is that monies in savings accounts held by Miss Dowden in her own name
were her monies; and that that was the position in respect to the monies in the
Chelsea account as it was in respect to the monies in the Halifax account.
Conclusion
68. I would allow the appeal. I would set aside sub-paragraphs (iv) and (v) in
paragraph 1 of the judge’s order of 6 October 2004. In the place of those sub-
paragraphs I would direct that, after payment of the sums mentioned at sub-
paragraphs (i) to (iii) of paragraph 1 the net proceeds of sale of 114 Chatsworth
Road be divided in the ratio 65% to Miss Dowden and 35% to Mr Slack. And I
would set aside paragraph 6 of that order and invite submissions as to what
provision should be made for the costs of this unfortunate litigation.
Lord Justice Carnwath :
69. I agree. I add a few comments, with particular reference to the work of the Law
Commission in this field, in which I took a small part during my period as Chairman.
70. In its Discussion Paper, “Sharing Homes” (2002), the Law Commission summarised the
conclusions of its study of the law relating to “the property rights of those who share
homes”. We emphasised the broad range of circumstances covered by the study including
-
“… not only couples, married or unmarried, but also
friends, relatives and others who may be living together
for reasons of companionship or care and support”.
The paper summarised the development of the law in this country, and in other parts of
the Commonwealth (notably Australia, New Zealand and Canada), and considered
alternative approaches to future legislation, including “property-based” and
“relationship-based” approaches. The paper made no formal proposals, principally
because, as we said –
“… it is quite simply not possible to devise a statutory
scheme for the ascertainment and quantification of
beneficiary interest in the shared home which can
operate fairly and evenly across the diversity of
domestic circumstances which are now to be
encountered” (para 3.1).
71. More recently the Commission has been invited by the Lord Chancellor to undertake a
more limited project on “Cohabitation”. According to the most recent annual report (Law
Com 294), the project –
“… will focus on the financial hardship suffered by
cohabitants or their children on the termination of their
relationship by separation or death. It will restrict its
review to opposite or same sex couples in clearly
defined relationships. While there need not necessarily
be a sexual element to the relationship, at the very least
the relationship should involve cohabitation and bear
the hallmarks of intimacy and exclusivity, giving rise to
mutual trust and confidence between partners”.
It is to be hoped that this project - which, as the annual report makes clear, will address
the viability of a “relationship-based” approach in clearly defined circumstances - will
in due course enable a line to be drawn, in those cases, under the unfortunate history of
the attempts of the courts to grapple with these issues over more than 35 years. But it
will leave cases which fall outside those defined relationships to be dealt with on the
traditional “property-based” approach
72. That history dates back at least to the House of Lords’ judgments in Pettitt v Pettitt
[1970] AC 777, which laid the foundation for the modern development of the law.
However, even by then, as Lord Reid noted (p792D), the law had been in an
unsatisfactory state for the previous 20 years, and there had been an acute difference of
opinion in the Court of Appeal.
73. At that time, the focus of attention was on the treatment of what some called “family
assets”, held between husband and wife. That was before the Matrimonial Property and
Proceedings Act 1970, which established the modern statutory basis for dealing with
assets on the breakdown of marriage, and gave the court wide discretionary powers to
make orders for financial provision and property adjustment. For that reason the
subsequent development of common law principles has been principally in relation to
couples living together outside marriage. That issue has of course become increasingly
pressing in recent years, as more couples choose to live together and bring up families
outside marriage, without necessarily understanding the inadequacies of the law to adjust
property interests when such a relationship breaks down.
74. Unfortunately the speeches in Pettitt v Pettitt did not speak with one voice, and it is
difficult to extract even a single majority view. The problems are compounded by the
fact that in the following case, Gissing v Gissing [1971] AC 886, the House itself found
some difficulty in agreeing on what had been decided by Pettitt v Pettitt, and the speeches
give further twists to the arguments. This was bad start. For developments since then I am
content to adopt the Law Commission’s discussion of the law as it stood in 2002, taken
with the comprehensive and authoritative review by Chadwick LJ in Oxley v Hiscock
[2004] 3WLR 715. An illuminating discussion of the various concepts from an academic
point of view is to be found in Professor Gray’s Elements of Land Law, Chapter 10.
75. To the detached observer, the result may seem like a witch’s brew, into which various
esoteric ingredients have been stirred over the years, and in which different ideas
bubble to the surface at different times. They include implied trust, constructive trust,
resulting trust, presumption of advancement, proprietary estoppel, unjust enrichment,
and so on. These ideas are likely to mean nothing to laymen, and often little more to the
lawyers who use them.
76. Underlying this apparent confusion, is a range of conflicting policy factors which can
be validly used to support different ideas. For example, the following ideas can all
found in the cases, and all can be supported by respectable arguments:-
(i) The interests should be solely as defined by the transfer deed, or by any
written agreement of the parties;
(ii) The interests as defined by (i) may be modified to give effect to
differences in the financial contributions made by one or other of the
parties at the time of the acquisition.
(iii) They may be modified (further or in the alternative) to take account of
any agreement or understanding reached at that time between the parties
(whether or not in writing);
(iv) They may be modified to take account of the dealings between the parties
during the course of their relationship, so far as casting light on their
presumed intentions in relation to their shares in the property.
(v) The division should not depend on past agreements or understanding, but
should be determined by reference (partly or wholly) to the future needs
and expectations of the parties.
77. These ideas are not comprehensive or mutually exclusive. They represent a spectrum.
Policy justifications at one end can be found in principles of legal certainty (supported in
respect of land by the policy implicit in section 53 of the Law of Property Act 1925). At
the other end, the ideas arguably offer a fairer approach to what are in effect “family
assets”, corresponding to the policy approach imposed by Parliament in respect of
marriages. Professor Gray shows how the courts in other Commonwealth Countries have
felt able to take a more adventurous approach than the English courts (para 10.152 FF).
He also suggests some “possible directions for English Law” (para 10.161 FF).
78. Returning to the present case, I have no doubt that, pending the Law Commission’s
further work, we should stick closely to the principles enunciated by Chadwick LJ in
Oxley v Hiscock. If we had been starting afresh, I could see attractions in the argument
for distinguishing that case, on the grounds that in the present case the parties had
specifically agreed that the legal interest should be held as joint tenants. It is arguable
that the presumption should be that beneficial interests should follow the legal interests in
the absence of clear evidence of a contrary intention. In the present case the power of the
survivor to give a receipt for capital monies points to the absence of any contrary
intention. However, I agree with Chadwick LJ that, having regard to the way the law has
developed, that would not be a defensible distinction.
79. Accordingly, I gratefully adopt the whole of the reasoning of Chadwick LJ, and agree
with the order he proposes.
Lady Justice Smith:
80. I also agree with Chadwick LJ.