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Judgments Stack
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Stack
(Appellant) v. Dowden (Respondent) Barry Alan Stack v Dehra Anne Dowden IN THE SUPREME COURT OF JUDICATURE
LORD JUSTICE CHADWICK Between: ____________________ (Transcript of the Handed Down Judgment of ____________________ Mr Alan Barton (instructed by Walter Jennings & Son,
259/263 Kentish Town Road, London NW5 2JT) for the Appellant HTML VERSION OF JUDGMENT Crown Copyright © Lord Justice Chadwick :
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 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." 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. 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." 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. 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. 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. 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 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. 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). . . ." ". . . 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." "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."
"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. 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). 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. "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." "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. "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." 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. 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." ". . . 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] "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." The course of dealing between the parties in relation to 114 Chatsworth Road 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]." 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). 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. 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. 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. 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" "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." "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 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 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. 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." 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". 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. 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." 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. 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. 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 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." "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." "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." The respective shares of the parties in 114 Chatsworth Road 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. 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. 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." 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. 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. 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. 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." 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. 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). 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 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". 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." 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 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 : 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. 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". "… 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". 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. 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. 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. 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; 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. Accordingly, I gratefully adopt the whole of the reasoning of Chadwick LJ, and agree with the order he proposes. Lady Justice Smith: I also agree with Chadwick LJ. |
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Related Pages Stack
v Dowden Oxley v Hiscock Court of Appeal May 2004
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