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

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Between :

BARRY ALAN STACK Claimant/

Respondent

- and -

DEHRA ANNE DOWDEN Defendant/

Appellant

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(Transcript of the Handed Down Judgment of

Smith Bernal Wordwave Limited, 190 Fleet Street

London EC4A 2AG

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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

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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.