STACK v DOWDEN

When a long-term relationship founded upon fierce independence to the exclusion of marriage reaches breaking point, the effects of separation are altered through the sale of the family home.

Where domestic legislation lends assistance to the courts under the Married Women’s Property Act 1882 and Matrimonial Causes Act 1973, there was, at the point of this hearing, no legal framework within which the division of proprietary rights could be easily established where no declaration of trust had been officiated.

Having met as a young couple before sharing a home together, the title of the first property was held for the respondent, after a sole purchase made with a considerable cash investment and the remainder by way of mortgage.

During the next decade, the two parties created a family and began raising four children out of wedlock, while maintaining to all effects, separate financial accounts.

Through the course of their time in residence, there were a number of improvements made to the property, and while the appellant laid claim to the majority of the work, it was proven undeterminable, and thus assumed as equally contributed to. 

When the time came to sell the home, there had been a significant profit made in favour of the respondent, which was immediately reinvested in their second home; whereupon the couple entered into a joint purchase under secured borrowing for the remaining balance, before registering the new house under equal ownership.

In the absence of any declaration of trust, the couple opted to include a survivorship declaration that provided for absolute ownership under the death of either party.

During this period, the financial contributions were again favourable by some margin, to the respondent, although there was increased investment on the part of the appellant.

Less than ten years later, the couple decided to separate, and it was agreed that the appellant would leave the home and seek residence elsewhere, for the sake of the children and domestic stability.

As part of this agreement, the two parties underwent civil proceedings, where it was settled that in consideration for his leaving, the respondent would make specified monthly payments to help subsidise the appellant’s living costs under the terms of the Trusts of Land and Appointment of Trustees Act 1996, until such time as the sale of the house was complete.

It was after the failed renewal of the monthly payments, that the appellant sought claim for equal division of the sale proceeds, upon grounds that they had entered into the purchase of the second home as joint owners, and so under the principle of common intention and the legality of the conveyance, he was entitled to half the value of the sale, despite any claim to the contrary.

In the original hearing, the judge assessed the arguments through the essence of a working partnership, and chose to place greater weight upon the perceived intentions displayed when raising a family and managing their financial obligations; thereby ignoring the division of equitable wealth and awarding a fifty-fifty distribution of the sale funds to both parties.

Upon appeal, the Court took a wholly different view, and took pains to calculate the proportion of investment shown by the couple during their time in the home; ultimately arriving at a sixty-five to thirty-five percent division, along with the cessation of compensatory payments, in lieu of his premature departure and relocation of residence.

When bought before the House of Lords, the discussion revolved around the complexities of unmarried couples, and the often misleading nature of common intention when needing further detailed evidence as to the minds of those in contention.

It was also agreed that while the appellant had enjoyed the security of monthly payments, his removal from the home was agreed under the terms of the Family Law Act 1996; and so, any claim brought against his non-payment was fatal to observance of the applied statute.

With regard to the readjusted percentages, the House held that at best, the figure might be recalculated within a minor percentage; however, the strength of the respondent’s evidence as to her financial investment, remained as convincing as it was in the appeal.

And so, aside from any idea that a resulting trust could have been argued for in respect of beneficial interest, the outcome required no further interference, while

“[I]n a case of sole legal ownership the onus is on the party who wishes to show that he has any beneficial interest at all, and if so what that interest is. In a case of joint legal ownership it is on the party who wishes to show that the beneficial interests are divided other than equally.”

GISSING v GISSING

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.”