Oral Agreement To Share Ownership Of House Upheld

Archibald and another v Alexander [2020] EWHC 1621 (Ch)

Background

The Defendant (Patsy Alexander) purchased the legal title of a house jointly with her mother. Following her mother’s death, her siblings – John Archibald and Brenda Archibald (Claimants) – challenged the Defendant in respect of the house being owned outright by the Defendant.

Shortly before the house was purchased in 1997, the mother and her three children agreed orally at a face to face meeting that the house would be bought in the name of her and one or more of her children as joint tenants, to hold it for the mother for life and after her death for her three children equally.

The Claimants had been unavailable to participate in the formalities when the house was purchased, which resulted in the house being transferred into the name of the mother and the Defendant only.

Decision

The County Court Judge held that the Defendant as the surviving legal owner held the house on constructive Trust for herself and her siblings.

The Defendant was unhappy with this decision and appealed to the Court of Appeal.

Issues to be considered by the Court of Appeal:

1. Whether the Judge had been wrong to have found that there was a connection between the oral agreement and the failure of the Claimants to become transferees of the house when it was purchased; and
2. Whether the Judge had been wrong as a matter of law to have concluded that there was a sufficient detrimental reliance by the Claimants on the oral agreement.

Court of Appeal decision

The Court of Appeal decided that the Judge in the first instance had been right to decide that on the basis of the oral agreement it would be unconscionable to allow the Defendant to keep the property for herself.

Accordingly, the appeal was dismissed.

Comment

This case is an example of a circumstance in which equity will hold a transferee of a property to the terms upon which it was acquired by imposing a constructive Trust to that effect.

Rather interestingly, the Court of Appeal decided that cases such as this do not depend upon some form of detrimental reliance. They instead concentrate on the circumstances in which the transferee came to acquire the property in order to provide the justification for the imposition of a Trust.