England and Wales Court of Appeal (Civil Division) Decisions

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Cite as: [1970] WLR 1211, [1970] 2 All ER 760, [1970] EWCA Civ 6, [1970] 1 WLR 1211

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JISCBAILII_CASE_CONTRACT

		Neutral Citation Number: [1970] EWCA Civ 6
		Case No.:

IN THE SUPREME COURT OF JUDICATURE.
COURT OF APPEAL.

Royal Courts of Justice

27th April 1970

B e f o r e :

THE MASTER OF THE ROLLS (LORD DENNING)
LORD JUSTICE WIDGERY
LORD JUSTICE KARMINSKI

BETWEEN:
____________________

	JOHN BERTRAM MERRITT
	v.
	MILLICENT JOAN MERRITT

____________________

(Transcript of the Shorthand Notes of the Association of Official Shorthandwriters Ltd.,
Room 392, Royal Courts of Justice, and 2, New Square, Lincoln's Inn, London W.C.2.)

____________________

MR. A.A.R. THOMPSON, instructed by Messrs. Wilkinson,
Howlett & Durham, appeared for the Appellant (Defendant).
MR. M.G. JOHNSTON, instructed by Messrs. C.A. Maddin
(Surbiton), appeared for the Respondent (Plaintiff).
____________________

HTML VERSION OF JUDGMENT
____________________

THE MASTER OF THE ROLLS:

Husband and wife married as long ago as 1941. After the War in 1949 they got a building plot and built a house. It was a freehold house, No. 133, Clayton Road, Hook, Chessington. It was in the husband's name, with a considerable sum on mortgage with a Building Society. There they lived and brought up their three children, two daughters, aged now 20 and 17, and a boy now 14. The wife went out to work and contributed to the household expenses.

Early in 1966 they came to an agreement whereby the house was to be put in joint names. That was done. It reflected the legal position when a house is acquired by a husband and wife by financial contributions of each.

But, unfortunately, about that time the husband formed an attachment for another woman. He left the house and went to live with her. The wife then pressed the husband for some arrangement to be made for the future. On 25th May they talked it over in the husband's car. The husband said that he would make the wife a monthly payment of £40 and told her that out of it she would have to make the outstanding payments to the Building Society. There was only £180 outstanding. He handed over the Building Society's mortgage book to the wife. She was herself going out to work, earning net £7.10.0d. a week.

Before she left the car she insisted that he put down in writing a further agreement. It forms the subject of the present action. He wrote these words on a piece of paper:-

"In consideration of the fact that you will pay all charges in connection with the house at 133 Clayton Road, Chessington, Surrey, until such time as the mortgage repayment has been completed, when the mortgage has been completed I will agree to transfer the property into your sole ownership.

Signed, John Merritt. 25th May, 1966".

The wife took that paper away with her. She did, in fact, over the ensuing months pay off the balance of the mortgage, partly, maybe, out of the money the husband gave her, £40 a month, and partly out of her own earnings. When the mortgage had been paid off, he reduced the £40 a month down to £25 a month.

The wife asked the husband to transfer the house into her sole ownership. He refused to do so. She brought an action in the Chancery Division for a declaration that the house should belong to her and for an order that he should make the conveyance. The Judge made the order; but the husband now appeals to this Court.

The first point taken on his behalf by Mr. Thompson is that the agreement was not intended to have legal relations. It was, he says, a family arrangement such as was considered by the Court in Balfour v. Balfour, 1919, 2 King's Bench Division, page 571, and in Jones v. Padavatton, 1969, 1 Weekly Law Reports, page 328. So the wife could not sue upon it.

I do not think those cases have any application here. The parties there were living together in amity. In such cases their domestic arrangements are ordinarily not intended to create legal relations. It is altogether different when the parties are not living in amity but are separated, or about to separate. They then bargain keenly. They do not rely on honourable understandings. They want everything cut and dried. It may safely be presumed that they intend to create legal relations.

Mr. Thompson then relied on the recent case of Gould v. Gould, 1969. 3 W.L.R. 490, when the parties had separated, and the husband agreed to pay the wife £l2 a week "so long as he could manage it". The majority of the Court thought those words introduced such an element of uncertainty that the agreement was not intended to create legal relations. But for that element of uncertainty, I am sure the majority would have held the agreement to be binding. They did not differ from the general proposition which I stated that

"when husband and wife, at arms' length, decide to separate, and the husband promises to pay a sum as maintenance to the wife during the separation, the Court does, as a rule, impute to them an intention to create legal relations".

In all these cases the Court does not try to discover the intention by looking into the minds of the parties. It looks at the situation in which they were placed and asks itself: Would reasonable people regard the agreement as intended to be binding?

Mr. Thompson sought to say that this agreement was uncertain because of the arrangement for £40 a mouth maintenance. That is obviously untenable. Next he said that there was no consideration for the agreement. That point is no good. The wife paid the outstanding amount to the Building Society. That was ample consideration. It is true that the husband paid her £40 a month which she may have used to pay the Building Society. But still her act in paying was good consideration.

Mr. Thompson took a small point about rates. There was nothing in it. The rates were adjusted fairly between the parties afterwards.

Finally, Mr. Thompson said that, under Section 17 of the 1882 Act, this house would be owned by husband and wife jointly: and that, even if this house were transferred to the wife, she should hold it on trust for them both jointly. There is nothing in this point either. This paper which the husband signed dealt with the beneficial ownership of the house. It was intended to belong entirely to the wife.

I find myself in entire agreement with the judgment of Mr. Justice Stamp. This appeal should be dismissed.

LORD JUSTICE WIDGERY: I agree with my Lord's judgment, feeling, as he does, that no criticism can be levelled at the finding of the learned judge below.

When a husband and wife are living together in amity it is natural enough to presume that their discussions about money matters are not intended to create legally binding contracts. As Lord Atkin said in Balfour v. Balfour,

"The common law does not regulate the form of agreements between spouses. Their promises are rot sealed with seals and sealing wax. The consideration that really obtains for them is that natural love and affection which counts for so little in these cold courts."

But, of course, once that natural love and affection has gone, as it normally has when the marriage has broken up, there is no room at all for the application of such a presumption. Lord Justice Salmon made this clear in Jones v. Padavatton, to which reference has already been made, where he said, at page 332:

"As a rule when arrangements are made between close relations, for example between husband and wife, parent and child, or uncle and nephew in relation to an allowance, there is a presumption against an intention of creating any legal relationship. This is not a presumption of law, but of fact. It derives from experience of life and human nature which shows that in such circumstances men and women usually do not intend to create legal rights and obligations, but intend to rely solely on family ties of mutual trust and affection".

The experience of life and human nature which raises this presumption in the case of a husband and wife living together in amity does not support it when the affection which produces that relationship of confidence has gone.

I find it unnecessary to go so far as to say that there is a presumption in favour of the creation of legal relationships when the marriage is breaking up, but certainly there is no presumption against the creation of such legal relations as there is when the parties are living happily together.

I would dismiss this appeal.

LORD JUSTICE KARMINSKI: I agree, and only desire to add this. It is in my view of great importance, in considering whether or not an agreement of the kind which we have to consider here would create legal relations; to look at the surrounding facts. In the present case on 20th May 1966 the husband informed his wife that he was in love with another woman with whom he was living, and be added these words:

"When the house is paid for, I will consider signing over the other half to you."

That was followed five days later by the meeting in the motor car which resulted, after full discussion, in the signing of the agreement to which reference has already been made by my Lord. I do not propose to read it again.

In deciding therefore whether or not an agreement is intended to establish legal relations, it seems to me essential to look at the surrounding circumstances. In Balfour v. Balfour 1919, 2 King's Bench Division, page 571, the relevant facts were that the husband, who was employed in Government service in Ceylon, had to return there in 1916. The wife could not join him there at any rate for the time being because of her own ill-health and the husband agreed to pay her £30 a month for her support. At that time therefore the agreement was a perfectly friendly-one occasioned by a separation which was not, at any rate at that time, the desire of either of them.

In the present case it is manifest that the husband had left the wife by his own choice, because he preferred the company of another woman. He was therefore not only presumably committing adultery with her, but was also in desertion. The wife therefore had several grounds for which she could have commenced divorce proceedings, or taken such proceedings as she might have been advised for maintenance, either in a justices' court or in the High Court, on the ground of desertion or wilful neglect to maintain. In fact no proceedings became necessary, because the husband arranged to pay £40 a month, and undertook that when she had discharged a small amount outstanding on the mortgage, he would transfer the property to her sole ownership.

I have no doubt, therefore, that on the facts of this case Mr. Justice Stamp was perfectly correct in coming to the conclusion which he formed, and I agree that this appeal must be dismissed.

(Appeal dismissed. Costs of £50 ordered to be paid to respondent by appellant personally).