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At the end of 2020, the Court of Appeal restated in O’Neill v Holland [2020] EWCA Civ 1583 that detrimental reliance on a common intention remained a crucial element in claims to establish a share of the ownership (or beneficial interest) in property in favour of a party not named as the legal owner.
For example, it would not be enough for a claimant to simply say that the registered owner had told them the claimant shared the property with them, or part of it was theirs. The claimant would have to go on and show as a result of that statement or assurance that they acted to their detriment, for example, often by paying for the mortgage and other bills or paying for renovations to the property. We wrote about this decision at the time here.
Just over a year later and it may now be the case, according to a decision of Kerr J in Hudson v Hathway [2022] EWHC 631 (QB) that the same cannot be said for cases where the property is held in joint names and one party is seeking a larger of different share based on the common intentions of the parties.
Hudson v Hathway
Case background
In this case, the parties were cohabitees who bought a house in joint names, they later separated and Ms Hathway remained in the house with the Children, whilst Mr Hudson left, but still for a time contributed to the mortgage repayments. In 2013, the couple agreed in writing that Mr Hudson would keep his pension and other investments and Ms Hathway would have the equity and contents from the house.
In 2019, Mr Hudson issued a claim for an order for the sale of the house and half the proceeds. Ms Hathway sought an order that she should have the full amount based on a Constructive Trust which arose from the parties’ common intention, as recorded in their 2013 agreement. It was part of her case that she relied on this agreement to her detriment in numerous ways, including paying the mortgage in full from 2015 onwards and making no claims against the other assets kept by Mr Hudson as set out in the agreement.
The Judge found at first instance there was a Constructive Trust and Mr Hudson appealed.
Kerr J heard the appeal and gave judgement in which he discussed the issue. Kerr J looked closely at the key decisions of the House of Lords and Supreme Court in this area, Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2012] 1 AC 776, and noted that they did not refer to any need to prove detriment and thought it “most unlikely” and “striking” the Judges in those cases would not have mentioned it if it was a requirement.
He stated in relation to this case that:
“It is obvious that an express agreement evidences the necessary common intention. It seems otiose to superadd a detriment requirement where the common intention – and unconscionability if the agreement is broken – is already shown by the existence of the agreement; at any rate, if the agreement is more than a gratuitous promise.”
Many commentators are reporting this as a statement that detriment is no longer needed, but this should not be taken as meaning simply a common intention is enough. It remains that there needs to be something else, namely the key element of unconscionability, which it would seem often still be found by proving detrimental reliance by the claimant.
As Kerr J put it in his judgment:
“In the domestic consumer context, an express agreement as to beneficial shares, provided it is not a unilateral oral declaration of trust making the putative beneficiary a mere volunteer, can itself supply the necessary detriment or, as I prefer to put it in the light of the formulation in Jones v. Kernott at [51], satisfy the requirement of unconscionability without the need to establish separately that the beneficiary has acted in detrimental reliance on or changed her position in reliance on the promise.”
Kerr J did also discuss in passing claims for Constructive Trusts affecting property owned in and party’s sole name, rather than a joint names case such as Hudson v Hathway and accepted the evidence required may be different.
As such it seems there still seems for now to be a place for proving detriment in Constructive Trust claims and it will be interesting to see how this develops in the future and what the impact on live claims being negotiated or litigated at present will be.
How can we help
Lewis Addison is a Partner in our expert Dispute Resolution team, specialising in Will, Trust, and Probate disputes.
For more information regarding the subjects discussed in this article, please contact Lewis or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.