Midland Bank Plc v Cooke

English Property Law

Midland Bank Plc v Cooke
Image: ‘Pillars of Deceit’ by Michael Lang

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When two first-time homebuyers rely upon a financial donation from family members, the equality of shared ownership can become displaced, despite individual perceptions of common intention and the partnership of marriage.

When two young newlyweds entered into a mortgage of their family home, it was not without a significant cash contribution from the groom’s parents. This gift was bestowed upon the couple after the bride’s parents had covered the costs of the wedding, and therefore implied equal investment into their committed relationship. At the time of conveyance, the deeds fell under sole title in favour of the groom, and no assumptions were otherwise made than it was their home, and that both parties were joint occupants and thus entitled to equal benefits.

A few years after the purchase, the nature of the mortgage altered, and was now liable under the terms of an acquiring bank, at which point the wife was asked to sign away any beneficial interest she held in favour of the new mortgagee. Her agreement to this request was given (albeit under visible duress) so that the husband could continue to run his business, while the family (now with three children) could remain in secure occupation.

After re-mortgaging the property a number of years later, the wife took the opportunity to have her name included within the title, and thus became a legal tenant-in-common. When the business began to fail and the mortgage fell into unrecoverable default, the bank sought to repossess, at which point the wife challenged the order on grounds that any relinquishing of interest had not been of her volition, rather that her now estranged husband’s undue influence led her to act against her will and under marital obligation.

In the first hearing, the judge found in favour of the wife on the grounds described, before going further to explain that while her collective time and monies invested into the home during the course of their marriage could not translate into an equal half-share of the property, it did result in a six percent stake hold, arising from her half-share entitlement of the cash gifted by the groom’s parents at the point of purchase; and therefore under those circumstances, any repossession order could not stand.

When challenged by the bank and the wife in the Court of Appeal, the principle of shared equity was given greater consideration, along with the equitable maxim ‘equality is equity‘, which on this occasion was not relied upon. Instead, it was agreed that the wife’s actions first dismissed as non-contributory,  were embraced as wholly acceptable, despite no verbal agreements between the couple as to whether or not the home was equally divisible to begin with.

Key Citations

“[I]t would not only be sensible to draw the inference that the bridegroom’s parents intended to make a present to them both of the money’s which were to be applied in the purchase, but highly artificial to draw any other inference.”

“[T]he court in the exercise of its equitable jurisdiction would not permit the husband in whom the legal estate was vested and who had accepted the benefit of the contributions to take the whole beneficial interest merely because at the time the wife made her contributions there had been no express agreement as to how her share in it was to be quantified.”

“[I]t would be anomalous, against that background, to create a range of homebuyers who were beyond the pail of equity’s assistance in formulating a fair presumed basis for the sharing of beneficial title, simply because they had been honest enough to admit that they never gave ownership a thought or reached any agreement about it.”

“[T]he positive evidence that the parties neither discussed nor intended any agreement as to the proportions of their beneficial interest does not preclude the court, on general equitable principles, from inferring one.”

“[T]hat this was a couple that had chosen to introduce into their relationship the additional commitment which marriage involves, the conclusion becomes inescapable that their presumed intention was to share the beneficial interest in the property in equal shares.”

Author: Neil Egan-Ronayne

Author, publisher and foodie...

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