Midland Bank Plc v Cooke (1995)

English Property Law

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

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.

Gillett v Holt (2000)

English Property Law

Gillett v Holt
Image: ‘Folk Art Farm’ by Tony Grote

The notorious ambiguity of estoppel is explored here through the unexpected end of a lifelong working relationship built upon trust, duty and a faith of spirit, and as is so often found in matters such as these, a man’s word is not always his bond.

After investing the best part of forty years into a farming alliance that created an almost familial structure, the arrival of a divisive party witnessed the destructive end of a mutually prosperous and seemingly concrete friendship. When a younger man forged a meaningful relationship with an older farmer, the two men became almost father and son, with the former relying upon, and often following the wisdom of the latter, in accordance with domestic arrangements, career aspirations and even parenting decisions; all while sustaining and enriching the estate’s financial footing through the course of his duties.

This interdependence became the foundation of a commercial enterprise that by definition became more complex, and so required increased investment from both the employer’s paid advisers and the younger man’s wife as a co-contributor. During the many years spent together, there had been a significant number of verbal declarations as to the intentions of the elder man when it came time to choose a successor to his sprawling estates, and it was these quasi-promises, along with multiple wills, that coloured the appellant’s choice-making and calculated reluctance to set aside the type of financial provisions one might ordinarily expect.

The mechanics of the business and associated friendship continued to flourish, until the arrival of a trained solicitor, who for one reason of another, began making spurious claims that the appellant and his wife were defrauding the business, and that legal intervention was ultimately necessary. This course of action and influential advice also led to the couple’s removal from the existing will, whereupon sole beneficial rights instead passed to the now co-defendant.

After an exhaustive cross-examination in the original hearing, the deciding judge awarded against the appellant, despite his claim of proprietary estoppel following the removal of his presence in the will, and inherent reliance upon the goodwill of the defendant during the passage of time.

At appeal, the fluid and therefore often misinterpreted principle of estoppel, was held to close scrutiny, along with the previous findings of the judge; whereupon it became clear that while a degree of effort had been put into the relevance of estoppel, the obvious right to claim had been lost to principles attributable to succession law. Through the delicate use of equity, the Court then agreed that (i) there was ample evidence to show a detriment under continued reliance, and (ii) that in order for a clean break to exist, there needed to be a reversal of fortune on the part of the co-defendant, and a ‘coming good’ on the word of the older man.