The imputation of beneficial rights to property based upon the conduct of the contending parties, has been a delicate issue for the courts for many years.
On this occasion, the lines of demarcation were drawn by the House of Lords, in order to prevent further abuses of equity and its associated maxims.
After marrying at a young age in 1935, the respondent in this appeal joined her husband in the purchase of their first home in 1951 for a sum of £2,695. The mortgage was held in sole title by her appellant husband, who contributed £500 by way of a loan, and £45 from his own savings; while the respondent paid £220 for a new lawn, household appliances and furniture.
During the time of their marriage, the mortgage was paid by the appellant, who also provided the respondent with regular weekly payments for housekeeping costs, while repaying the loan furnished him by his employer.
Prior to the purchase, the appellant had served time in the military, and after finding himself discharged following the war, the respondent secured him a position with a printing firm that she herself worked at.
While the respondent’s earnings remained at a stable £500 p.a, the appellant was successful in his endeavours, and soon established himself as director of the firm, with earnings of around £3,000 p.a.
After twenty-five years of marriage and the raising of their son, the appellant committed adultery with a younger woman, before leaving the home and beginning a life with her.
This led to their divorce; during which, the appellant continued to pay the mortgage, loan and outgoings on their marital home, until the loss of his job and subsequent financial troubles.
Around this time, the respondent issued a summons declaring absolute ownership of the home, based upon the oral promise by the appellant that she could keep the house.
Under section 53(1) of the Law of Property Act 1925, any declaration of trust with regard to beneficial interest in property must be written; however, the courts can find the existence of such an agreement by equitable principles of resulting, implied and constructive trusts where sufficient evidence allows.
In order to establish this, the court would seek to infer through the conduct of the parties, reasonable proof that when engaging in the purchase of the home there had either been agreement as to how to apportionment of interest was to be divided, or the financial contributions made by each party for the duration of the marriage or occupancy.
In the first hearing, the court awarded that the appellant was, by extension of his financial payments and obvious legal title, the sole owner of the property, and allowed for repossession under law.
In the Court of Appeal, the decision was reversed by a majority, who held that the respondent was entitled to a fifty percent share of the home, while presented to the House of Lords, the recent outcome of Pettitt v Pettitt was taken under consideration, along with the principles of cestuis que trusts.
In Pettitt, the former wife pursued proprietary interest of the sole legal title held by her ex-husband under section 17 of the Married Woman’s Property Act 1882, on a home still subject to an outstanding mortgage.
Her contention was that having occupied the home for ten years, she was entitled to a beneficial interest due to her substantial contributions to both the deposit and subsequent repayments during the time of their marriage; whereupon the husband countered that his individual improvements to the house afforded him an equal share of the property.
While on that occasion the judgment fell in favour of the wife, there was little with which to compare it to this case; and so, the equitable nature of trusts were explored through the conduct of the respondent.
Here it was held by majority, that while an oral declaration by the appellant suggested otherwise, there was absolutely no evidence that the respondent did, at any time, intend to contribute to the purchase of the home, or the upkeep of mortgage repayments, even when the appellant had suffered financial setbacks.
And so it was for those reasons, that suggestions of trusts of any kind were simply obiter dictum, and that for the purposes of natural justice, the appeal was upheld with costs, while the House reminded the parties that:
“Any claim to a beneficial interest in land by a person, whether spouse or stranger, in whom the legal estate in the land is not vested must be based upon the proposition that the person in whom the legal estate is vested holds it as trustee upon trust to give effect to the beneficial interest of the claimant as cestui que trust.”