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News:
YOU THOUGHT YOU HAD AN INTEREST, BUT YOU DON’T
Consequent upon a number of Court of Appeal and House
of Lords decisions recently, it has become even more difficult to advise
with any degree of certainty in high value financial cases following
divorce.
Now the House of Lords had dispensed its wisdom in
the cohabitation arena and once again the law has been thrown into a
state of confusion.
In the case of Stack v Dowden an unmarried couple bought
a house in their joint names. D (the female) had paid the deposit from
her savings account and from the sale of her previous property. S (the
male) had done some alterations and improvements but could not say how
much they had affected the value of the property. The parties then got
a mortgage in their joint names. There was no clear evidence as to whether
the parties had discussed or agreed how they were to own the property.
The parties separated. S alleged that he had a joint ownership of the
property. D said that his interest in the property was limited to the
value of the contribution that he had made.
The House of Lords decided that the starting point should be that “equity
follows the law”. This means that if the property is shown as
being owned by one person and another claims to have an interest in
it, the claimant will have to demonstrate that the parties intended
their beneficial interests to be different from their legal interests.
The same principles apply to properties in joint names.
Previously it was possible to establish a claim by looking at “the
whole course of dealings between the parties”.
As a result of this case it is now likely to be more difficult (it was
not easy before!) to get a Court to move away from determining that
the interests that each party have in a property are those which are
shown on the Title Deeds. The answer to the problem is to ensure that
the parties’ financial contributions to the purchase of the property
or their actual intentions if they are not consistent with the Title
Deeds, are clearly recorded. This is something which the parties’
conveyancing Solicitor should investigate and advise upon at the time
of purchase. However, for those who have already made financial contributions
to the purchase or improvement of a property but whose name does not
appear on the Title Deeds, the road to successful recovery of that investment
is now much longer and harder. Conversely, those who hold property in
joint names but who haven’t made a full equal financial contribution,
are likely to welcome this decision.
The position set out above in relation to land should be contrasted
with other forms of jointly held property.
In Parrott v Parkin (an Admiralty case involving a
boat called “Up Yaws!”) the Court applied the principles
of “common intention to share the beneficial interest” and
“contribution of capital to the purchase price”.
August 2007
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Solicitors