England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MIDDLESBROUGH COUNTY COURT
(DISTRICT JUDGE SPENCER)

		Royal Courts of Justice Strand, London, WC2A 2LL
		30th March 2012

Lord Justice Etherton:

1. This is an appeal from a decision of District Judge Spencer in the Middlesbrough County Court on 9 September 2010, by which she declared that the appellant has a 10 per cent beneficial interest in 21 Bradhope Road, Berwick Hills, Middlesbrough ("the Property"), and the respondent has a 90 per cent beneficial interest in the Property.
2. The appellant claims that the judgment of the District Judge should be set aside because she made errors of law in her approach to the quantification of the appellant's beneficial interest in the Property and, in any event, the District Judge's finding that the extent of the appellant's beneficial interest was 10 per cent was plainly wrong on the evidence. The appellant claims that he should have been acknowledged to be entitled to a 50 per cent beneficial interest. The appellant claims that the District Judge failed properly to apply the principles in Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53.

Background

3. The Property was formerly owned by a local authority. The respondent entered into occupation as a tenant of the local authority in 1983. In 1985 the appellant joined the respondent in occupying the Property. They lived there as a couple. In 2001 the respondent purchased the Property from the local authority at a discount under the right-to-buy scheme. The purchase price was £15,000. They had two children, with whom they lived in the Property as a family. Their relationship broke down in 2005, but, because he had nowhere else to go, the appellant remained in the Property until 2009.
4. In November 2009 the appellant commenced these proceedings for, among other things, a declaration that he had acquired a beneficial interest in the Property. In his Particulars of Claim he stated that the purchase of the Property was a joint venture so that the parties would have a future together and raise children.
5. The District Judge made the following findings of fact. The appellant worked in various jobs throughout his relationship with the respondent, mostly labouring. There were periods when he was out of work. The appellant contributed towards the housekeeping. When he was in work he sometimes contributed as much as £100 a week. When he was out of work he sometimes contributed less. His money went on housekeeping, keeping the children, treating the children and occasional extras.
6. The District Judge described the respondent (in [11]) as "running the home show" throughout. She had two jobs in order to pay the rent when the Property was rented and the mortgage payments after the Property was purchased. Her name alone was on the rent account and then the mortgage account, the electricity account, and the gas account. She had sole responsibility for all the outgoings from the beginning of her relationship with the appellant until its end, except for the council tax, which was put into joint names in 2003.
7. Both the appellant and the respondent wanted to purchase the Property when the opportunity arose to purchase it at a discount, so as to provide something for the children. That was their express agreed purpose. At that time the respondent had two jobs, but the appellant had been out of work and had not had a regular income for at least the previous six months. They both consulted a mortgage adviser, but, because the appellant had not been in work for a continuous period of six months, he was considered to be unsuitable for a mortgage loan. The mortgage application was, therefore, made in the respondent's sole name, and the Property was purchased in her sole name.

The District Judge's judgment

8. The District Judge referred to Oxley v Hiscock [2005] EWCA Civ 546, [2005] Fam 2011, and Stack. She said that the case was unusual, particularly in the way that the parties kept their finances entirely separate. She said (at [14]) that there was a common intention on the part of the appellant and the respondent, communicated to each other in 2001, that they would buy the Property jointly. When, however, they sat down with the mortgage adviser, they were advised that in order to get a good mortgage, or indeed possibly any mortgage, the appellant's work record would not help them and therefore the respondent alone should apply for the mortgage. That was the reason why the purchase proceeded in the name of the respondent alone. The District Judge said (at [15]) that she was satisfied, in those circumstances, that there was a common intention that the appellant was to have a beneficial share in the Property.
9. The District Judge said (at [16]), however, that "...there was no common intention about the beneficial aspect because neither of them thought about it." Neither of them thought about how the beneficial interest might fall if they broke up or if it did not go to the children.
10. In deciding what beneficial interest should be attributed to the appellant, the District Judge took her guidance from the principles in Oxley. In particular, she considered that her task was to attribute to the appellant a beneficial interest that was fair, having regard to the whole history of the parties' relationship. In reaching her conclusion that a 10 per cent beneficial interest to the appellant would be fair, the District Judge was guided by the following matters. Firstly, she found (at [18]) that "... the only person who brought any financial contribution to the table of the purchase was [the respondent]." She said that the respondent had brought the discount by virtue of her occupation and consistent payment of rent since before the appellant took up occupation at the Property. As a result of the discount the Property was purchased for £15,000, even though it was valued at £28,000. The mortgage was arranged by the respondent, who spoke to different potential lenders and worked out how much she could afford as the only reliable earner in the household. She alone paid the mortgage.
11. Secondly, the only subsequent major capital contribution throughout the rest of the time when they were both together in the Property was £8,000, which the respondent had received from an Equal Pay award, and which was largely applied in improvements to the Property. It had been applied in alterations to the kitchen, for a fire, for guttering, fascia boards, French windows, a front door and a garden wall.
12. Thirdly, so far as concerned household contributions, the District Judge described (at [21]) the appellant's contributions towards housekeeping of £100 or less per week, depending on his employment situation, as "perfectly reasonable amounts". The appellant also contributed to the council tax from 2003. The District Judge said (at [22]) that "...the reality is that the basics and the ability to keep their house and live in their house, was provided by [the respondent's] jobs and her financial discipline and order."
13. Fourthly, both the appellant and the respondent were responsible for improvements, repairs and renewals. The District Judge took into account three specific items on which the appellant relied. They were: helping a tradesman friend to divide a bedroom into two, at a time when the Property was still rented; taking the lead within the family in levelling out the garden, including the rockery area; and some painting and decorating in addition to that done by the respondent, and some which was paid for.
14. The District Judge found (at [29]) that the appellant did not really mind that his name was not on the deeds, and that, once the Property had been purchased, it was never discussed and was never seriously taken as something that would happen by the respondent.
15. The appellant made no contribution after 2005. The District Judge summarised (in [35]) a 10 per cent beneficial interest to the appellant as reflecting:

"...in fairness, the overwhelming responsibility and contribution which [the respondent] made, both in terms of being the only capital contributor, and also being the major outgoings contributor."

The Appeal

16. The grounds of appeal fall into two parts and can be simply summarised as follows. First, it is said that, if parties intend to purchase a property in joint names for their occupation as a couple, but fail to do so only as a result of "external factors", then the court should proceed on the basis of what would have occurred if the parties had succeeded in that intention. Mr William Josling QC, who appears today as counsel for the appellant, described the intervention of the mortgage adviser in this case as "a random intervening event". It is said by Mr Josling that as a matter of common sense, on the facts of this case, the court should proceed on the hypothesis that the joint intention of the parties is reflected in their intention that, subject to the advice of a mortgage adviser, they would wish to take and would have taken the purchase of the Property in joint names. If, in the present case, there had been a transfer of the Property into the joint names of the appellant and respondent, with no express declaration as to their respective beneficial interests, then, Mr Josling submits, on the basis of Stack and Jones, there would have been a presumption that they were beneficially entitled in equal shares and the burden of showing the contrary would have been on the respondent. Mr Josling submits that, in view of the District Judge's finding (in [16]) of a common intention about purchasing the property in joint names, there was plainly no contrary intention at the time of purchase. He further submits that, bearing in mind that matters continued after 2001 as they had beforehand, there is nothing to show that the parties' intention, actual, inferred or imputed, changed after the Property was purchased.
17. The second ground for the appeal is that, in any event, the District Judge's apportionment of the beneficial interest as to 90 per cent to the respondent and only 10 per cent to the appellant was plainly wrong. It was not fair, Mr Josling submits, having regard to the parties' whole course of dealing between them. The respondent may have paid a greater share of the household expenses, but the parties lived together as equals for 20 years, some 16 of them before the purchase of the Property. They raised their children together in the Property. The appellant made a perfectly reasonable contribution towards the household expenditure, with he and the respondent contributing such amounts as they were able towards the family pot.

Discussion and Conclusion

18. Mr Josling has argued the appeal valiantly, and with skill, but in my judgment it quite plainly cannot succeed.
19. The appellant's starting point is that the court should analyse the appellant's entitlement to a beneficial interest in the Property as if the transfer actually had been in the joint names of himself and the respondent. There is no doubt that, if the legal title to the Property had been transferred into their joint names, then pursuant to Stack and Jones the presumption would have been that they intended a joint tenancy both in law and equity. The presumption that they intended their equitable interest to be equal could be rebutted only by evidence of their intention, actual or inferred, objectively ascertained. If there was such evidence, but it was not possible to say what their actual intention was as to the shares in which they were to own the Property, they would each be entitled to that share which the court considered fair, having regard to the whole course of dealing in relation to the property.
20. I do not accept, however, the appellant's starting point. The transfer was not in fact into the joint names of the appellant and the respondent. There is, therefore, no scope for a legal presumption that the parties intended a joint tenancy both in law and equity. Mr Josling's argument amounts to a submission that there should be a legal presumption of joint beneficial ownership, not merely where the parties are indeed the joint legal owners, but where there is evidence that they would have liked to be joint legal owners but for one reason or another that was not practical or desirable. Neither Stack nor Jones, nor any other case, is authority for such a proposition. Indeed, the proposition is neither consistent with principle nor sound policy.
21. In any event, it is unrealistic to make the assumption that, had matters proceeded as the parties intended, inevitably they would have been joint legal owners of the property but without any express declaration as to the trusts on which they held it. If they had proceeded to take legal advice, their legal adviser would have been bound to advise them that they should make an express declaration as to the trusts on which they were to hold the Property. They would have explained to the legal adviser that their primary purpose was to ensure something for the children. If the legal adviser had explored what was to happen before their deaths while still owning the Property, for example if, as happened, the parties were to split up and end their relationship, it is quite impossible to say what the reaction of the parties would have been. It certainly cannot be assumed that they would have agreed that they were to be joint beneficial owners as well as joint legal owners, bearing in mind the facts of this particular case as found by the District Judge. Moreover, as Lewison LJ pointed out in the course of argument, the matter could only have proceeded towards a joint purchase in joint names if the appellant had been willing and able to assume a liability as a mortgagor; but he could not and he did not.
22. Accordingly, I do not accept Mr Josling's submission that it is a matter of common sense that, merely because prior to receiving the advice from the mortgage adviser the parties intended that the purchase should be in joint names, the court should proceed on the hypothetical basis that that is what took place for the purpose of analysing the appellant's equitable interest, even though the actual transfer was into the respondent's name alone. As Lewison LJ has recently emphasised in Chapman v Jaume [2012] EWCA Civ 476, both Stack and Jones make clear that, in the case of a transfer into the name of only one of the cohabiting parties, the starting point is quite different from the joint legal owner case. In the case of joint legal ownership, the property is necessarily held on trust and the only question is as to the size of the respective beneficial interests of the parties. In the case of a single legal owner, such as the present, where there is no express declaration of a trust, the claimant has first to establish some sort of implied trust, normally what is now termed a common intention constructive trust: Jones at [17] and [52]. The claimant must show that it was intended that he or she was to have a beneficial interest at all. That can only be achieved by evidence of the parties' actual intentions, express or inferred, objectively ascertained. If such evidence does show a common intention to share beneficial ownership, but does not show what shares were intended, then each of them is to have that share which the court considers fair, having regard to the whole of dealing in relation to the property: Jones at [51] and [52]).
23. In the present case, the District Judge considered (at [16]) that a common intention that the appellant was to have a beneficial interest in the Property was to be inferred from the common intention, prior to the advice of the mortgage adviser, that they would buy the Property jointly. I have some difficulty in understanding why the District Judge reached that conclusion in the light of all her other findings, including that neither the appellant nor the respondent gave any thought as to how the beneficial interest should fall if it did not go to the children. There is, however, no cross-appeal against the District Judge's finding on that aspect.
24. Having reached her conclusion that there was a common intention that the appellant should have a beneficial interest in the Property, but that there was no common intention, express or inferred, about what the respective beneficial interests of the appellant and the respondent should be, the District Judge quite correctly then embarked on the task of determining what would be fair having regard to the whole course of dealing between them in relation to the Property. She carried out that task in a careful and exemplary fashion. Mr Josling accepts that her decision on that aspect can only be overturned if she made an error of principle or was plainly wrong. It is quite impossible, in my view, to say that any such error of principle was made, or that the District Judge was plainly wrong.
25. It is worth emphasising again, as did Lord Walker and Lady Hale at paragraph [36] of Jones, that the trial judge has the onerous task of finding the primary facts and drawing the necessary inferences and conclusions, and appellate courts will be slow to overturn the trial judge's finding. That applies just as much to the trial judge's conclusions on fairness as it does to inferences of fact. Indeed, as I have said, it is accepted that the District Judge's decision on fairness cannot be successfully challenged unless an error of principle has been made or the overall decision was plainly wrong.
26. For those reasons, I would dismiss this appeal.

Lord Justice Lewison:

27. I agree with Mr Josling that if the facts had been different, the result might have been different, but they were not. This is a single name case, reinforced by the District Judge's finding in paragraph 13 of her judgment that "we have an absolute straight line of responsibility in provision by Miss Hurst from beginning to end, with a very small blip in 2001..."

The principles have been authoritatively laid down by the House of Lords in Stack v Dowden and the Supreme Court in Jones v Kernott but it is illuminating to see how those principles are applied. In Stack v Dowden at paragraph 92, Baroness Hale said this:

"This is therefore a very unusual case. There cannot be many unmarried couples who have lived together for as long as this, who have four children, and whose affairs have been kept as rigidly separate as this couple's affairs were kept. This is all strongly indicative that they did not intend their shares, even in the property which was put into both their names, to be equal, still less that they intended a beneficial joint tenancy with a right of survivorship should one of them die before it was severed."

Apart from the number of children, that paragraph could be applied to this case word for word.

28. Accordingly, even if the facts were as Mr Josling wanted them to be, I am by no means persuaded that Mr Thompson would have ended up with a 50 per cent share. However, the facts are what they are, and, for the reasons given by Etherton LJ, I too would dismiss the appeal.

Lord Justice Thorpe:

29. I also agree that this appeal should be dismissed, for the reasons given by my Lords.

Order: Appeal dismissed