Stack (Appellant) v. Dowden (Respondent)
53. I say all this, partly to urge the Land Registry further to review its practice, but mainly to illuminate the factual context in which transfers such as the one with which we are concerned were executed. In what circumstances should it be expected that, independently of the information required by the Land Registry forms, joint transferees would execute a declaration of trust? Is it when they intend that the beneficial interests should be the same as the legal interests or when they intend that they should be different?
54. At first blush, the answer appears obvious. It should only be expected that joint transferees would have spelt out their beneficial interests when they intended them to be different from their legal interests. Otherwise, it should be assumed that equity follows the law and that the beneficial interests reflect the legal interests in the property. I do not think that this proposition is controversial, even in old fashioned unregistered conveyancing. It has even more force in registered conveyancing in the consumer context.
55. Of course, it is something of an over-simplification. All joint legal owners must hold the land on trust (before the Trusts of Land and Appointment of Trustees Act 1996, there was a debate about whether or not this was always a trust for sale, but that is another matter). Section 53(1)(b) of the Law of Property Act 1925 requires that a declaration of trust respecting any land or any interest therein be manifested and proved by signed writing; but section 53(2) provides that this "does not affect the creation or operation of resulting, implied or constructive trusts". The question is, therefore, what are the trusts to be deduced in the circumstances?
56. Just as the starting point where there is sole legal ownership is sole beneficial ownership, the starting point where there is joint legal ownership is joint beneficial ownership. The onus is upon the person seeking to show that the beneficial ownership is different from the legal ownership. So in sole ownership cases it is upon the non-owner to show that he has any interest at all. In joint ownership cases, it is upon the joint owner who claims to have other than a joint beneficial interest.
57. While there is no case in this House establishing this proposition in the consumer context, this is "Situation A" referred to by Lord Brightman in Malayan Credit Ltd v Jack Chia-MPH Ltd  1 AC 549, at 559:
The issue in that case was whether there were only three quite narrowly defined situations in which the contrary could be found or whether there were other circumstances which could lead to a contrary conclusion. Their Lordships first observed that it was improbable that joint tenancy in equity was intended where joint tenants in law held commercial premises for their separate business purposes. This is a reminder that the parties may not intend survivorship even if they do intend that their shares shall be equal. In many commercial contexts, and no doubt some domestic ones, it will be highly unlikely that the parties intend survivorship with its tontine "winner takes all" effect. Their Lordships went on to point out that there was no fundamental distinction between buying a lease at a premium with a token rent and taking a lease at a rack rent with no premium. In the latter case the rent is equivalent to the purchase money. This is a reminder that property is often acquired over time, so that payment of mortgage instalments is the equivalent of payment of the purchase price. Finally, their Lordships identified, at p 561, the features of the case before them which appeared to them "to point unmistakably towards a tenancy in common in equity, and furthermore towards a tenancy in common in unequal shares". Amongst these were not only that the parties had paid the refundable deposit, stamp duty, survey fees, rent and service charges in unequal shares, but also that those shares were proportionate to the actual square footage which each of them occupied.
58. The issue as it has been framed before us is whether a conveyance into joint names indicates only that each party is intended to have some beneficial interest but says nothing about the nature and extent of that beneficial interest, or whether a conveyance into joint names establishes a prime facie case of joint and equal beneficial interests until the contrary is shown. For the reasons already stated, at least in the domestic consumer context, a conveyance into joint names indicates both legal and beneficial joint tenancy, unless and until the contrary is proved.
59. The question is, how, if at all, is the contrary to be proved? Is the starting point the presumption of resulting trust, under which shares are held in proportion to the parties' financial contributions to the acquisition of the property, unless the contributor or contributors can be shown to have had a contrary intention? Or is it that the contrary can be proved by looking at all the relevant circumstances in order to discern the parties' common intention?
60. The presumption of resulting trust is not a rule of law. According to Lord Diplock in Pettitt v Pettitt  AC 777, at 823H, the equitable presumptions of intention are "no more than a consensus of judicial opinion disclosed by reported cases as to the most likely inference of fact to be drawn in the absence of any evidence to the contrary". Equity, being concerned with commercial realities, presumed against gifts and other windfalls (such as survivorship). But even equity was prepared to presume a gift where the recipient was the provider's wife or child. These days, the importance to be attached to who paid for what in a domestic context may be very different from its importance in other contexts or long ago. As K Gray and S F Gray, in Elements of Land Law, 4th edition 2005, point out at p 864, para 10.21:
There is no need for me to rehearse all the developments in the case law since Pettitt v Pettitt and Gissing v Gissing, discussed over more than 70 pages following the quoted passage, by Chadwick LJ in Oxley v Hiscock  EWCA Civ 546,  Fam 211, and most importantly by my noble and learned friend, Lord Walker of Gestingthorpe in his opinion, which make good that proposition. The law has indeed moved on in response to changing social and economic conditions. The search is to ascertain the parties' shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it.
61. Oxley v Hiscock was, of course, a different case from this. The property had been conveyed into the sole name of one of the cohabitants. The claimant had first to surmount the hurdle of showing that she had any beneficial interest at all, before showing exactly what that interest was. The first could readily be inferred from the fact that each party had made some kind of financial contribution towards the purchase. As to the second, Chadwick LJ said this, at para 69:
Oxley v Hiscock has been hailed by Gray and Gray as "an important breakthrough" (op cit, p 931, para 10.138). The passage quoted is very similar to the view of the Law Commission in Sharing Homes (2002, op cit, para 4.27) on the quantification of beneficial entitlement:
That may be the preferable way of expressing what is essentially the same thought, for two reasons. First, it emphasises that the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. Second, therefore, it does not enable the court to abandon that search in favour of the result which the court itself considers fair. For the court to impose its own view of what is fair upon the situation in which the parties find themselves would be to return to the days before Pettitt v Pettitt  AC 777 without even the fig leaf of section 17 of the 1882 Act.
62. Furthermore, although the parties' intentions may change over the course of time, producing what my noble and learned friend, Lord Hoffmann, referred to in the course of argument as an "ambulatory" constructive trust, at any one time their interests must be the same for all purposes. They cannot at one and the same time intend, for example, a joint tenancy with survivorship should one of them die while they are still together, a tenancy in common in equal shares should they separate on amicable terms after the children have grown up, and a tenancy in common in unequal shares should they separate on acrimonious terms while the children are still with them.
63. We are not in this case concerned with the first hurdle. There is undoubtedly an argument for saying, as did the Law Commission in Sharing Homes (2002, op cit, para 4.23) that the observations, which were strictly obiter dicta, of Lord Bridge of Harwich in Lloyd's Bank plc v Rosset  1 AC 107 have set that hurdle rather too high in certain respects. But that does not concern us now. It is common ground that a conveyance into joint names is sufficient, at least in the vast majority of cases, to surmount the first hurdle. The question is whether, that hurdle surmounted, the approach to quantification should be the same.
64. The majority of cases reported since Pettitt and Gissing have concerned homes conveyed into the name of one party only and it is in that context that the more flexible approach to quantification identified by Chadwick LJ in Oxley v Hiscock has emerged: see, in particular, Grant v Edwards  Ch 638, described by Chadwick LJ as "an important turning point" and referred to with "obvious approval" in Lloyds Bank plc v Rosset  1 AC 107, Stokes v Anderson  1 FLR 391, Midland Bank plc v Cooke  4 All ER 562, and Drake v Whipp  1 FLR 826.
65. Curiously, it is in the context of homes conveyed into joint names but without an express declaration of trust that the courts have sometimes reverted to the strict application of the principles of the resulting trust: see Walker v Hall  FLR 126 and two cases decided by the same court on the same day, Springette v Defoe  2 FLR 388 and Huntingford v Hobbs  1 FLR 736; but cf Crossley v Crossley  EWCA Civ 1581,  2 FLR 813. However, Chadwick LJ commented in Oxley v Hiscock  Fam 211, at 235:
In the case before us, he observed at para 24:
With these passages I entirely agree. The approach to quantification in cases where the home is conveyed into joint names should certainly be no stricter than the approach to quantification in cases where it has been conveyed into the name of one only. To the extent that Walker v Hall, Springette v Defoe and Huntingford v Hobbs hold otherwise, they should not be followed.
66. However, Chadwick LJ went on to say at para 26, that:
But the questions in a joint names case are not simply "what is the extent of the parties' beneficial interests?" but "did the parties intend their beneficial interests to be different from their legal interests?" and "if they did, in what way and to what extent?" There are differences between sole and joint names cases when trying to divine the common intentions or understanding between the parties. I know of no case in which a sole legal owner (there being no declaration of trust) has been held to hold the property on a beneficial joint tenancy. But a court may well hold that joint legal owners (there being no declaration of trust) are also beneficial joint tenants. Another difference is that it will almost always have been a conscious decision to put the house into joint names. Even if the parties have not executed the transfer, they will usually, if not invariably, have executed the contract which precedes it. Committing oneself to spend large sums of money on a place to live is not normally done by accident or without giving it a moment's thought.
67. This is not to say that the parties invariably have a full understanding of the legal effects of their choice: there is recent empirical evidence from a small scale qualitative study to confirm that they do not (see G Douglas, J Pearce and H Woodward, "Dealing with Property Issues on Cohabitation Breakdown"  Fam Law 36). But that is so whether or not there is an express declaration of trust and no-one thinks that such a declaration can be overturned, except in cases of fraud or mistake: see para 49 above. Nor do they always have a completely free choice in the matter. Mortgagees used to insist upon the home being put in the name of the person whom they assumed would be the main breadwinner. Nowadays, they tend to think that it is in their best interests that the home be jointly owned and both parties assume joint and several liability for the mortgage. (It is, of course, a matter of indifference to the mortgagees where the beneficial interests lie.) Here again, this factor does not invalidate the parties' choice if there is an express declaration of trust, nor should it automatically count against it where there is none.
68. The burden will therefore be on the person seeking to show that the parties did intend their beneficial interests to be different from their legal interests, and in what way. This is not a task to be lightly embarked upon. In family disputes, strong feelings are aroused when couples split up. These often lead the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms. They also lead people to spend far more on the legal battle than is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead to a different result unless the facts are very unusual. Nor may disputes be confined to the parties themselves. People with an interest in the deceased's estate may well wish to assert that he had a beneficial tenancy in common. It cannot be the case that all the hundreds of thousands, if not millions, of transfers into joint names using the old forms are vulnerable to challenge in the courts simply because it is likely that the owners contributed unequally to their purchase.
69. In law, "context is everything" and the domestic context is very different from the commercial world. Each case will turn on its own facts. Many more factors than financial contributions may be relevant to divining the parties' true intentions. These include: any advice or discussions at the time of the transfer which cast light upon their intentions then; the reasons why the home was acquired in their joint names; the reasons why (if it be the case) the survivor was authorised to give a receipt for the capital moneys; the purpose for which the home was acquired; the nature of the parties' relationship; whether they had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or a bit of both; how they discharged the outgoings on the property and their other household expenses. When a couple are joint owners of the home and jointly liable for the mortgage, the inferences to be drawn from who pays for what may be very different from the inferences to be drawn when only one is owner of the home. The arithmetical calculation of how much was paid by each is also likely to be less important. It will be easier to draw the inference that they intended that each should contribute as much to the household as they reasonably could and that they would share the eventual benefit or burden equally. The parties' individual characters and personalities may also be a factor in deciding where their true intentions lay. In the cohabitation context, mercenary considerations may be more to the fore than they would be in marriage, but it should not be assumed that they always take pride of place over natural love and affection. At the end of the day, having taken all this into account, cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual.
70. This is not, of course, an exhaustive list. There may also be reason to conclude that, whatever the parties' intentions at the outset, these have now changed. An example might be where one party has financed (or constructed himself) an extension or substantial improvement to the property, so that what they have now is significantly different from what they had then.
The facts of this case
71. It is difficult to give a full account of the relevant facts in this case because of the way in which the judge approached it. He directed himself by citing paragraphs 61 to 67 from Oxley v Hiscock  Fam 211, dealing with "Developments since Midland Bank plc v Cooke", but not by citing the crucial "Summary" in paragraphs 68 and 69. This means that he failed to draw a distinction between the first and second questions. He concluded his self directions thus:
72. The parties' relationship began in 1975, when Mr Stack was aged 19 and Ms Dowden was aged 17. The judge found it more likely than not that they were living together in rented accommodation since then. In fact, the evidence did no more than support a conclusion that they became an "item" then, and later spent four months in the United States together, and that Mr Stack often stayed at Ms Dowden's home. Mr Stack accepted that they did not start cohabiting permanently until 1983. Even after that, Mr Stack retained his father's address for some purposes.
73. In 1983, a house in Purves Road London NW10 was bought and conveyed into Ms Dowden's sole name. It had belonged to someone she called "Uncle Sidney" who had expressed the wish before he died that she be given the opportunity to buy it. The executors therefore offered it to her at what they considered a favourable price of £30,000. The correspondence refers at one point to seeing her and Mr Stack together. The judge commented that "this certainly suggests that there was a partnership as man and mistress between the parties at that time".
74. The price of the Purves Road property was £30,000. £22,000 was raised by way of mortgage, of course in Ms Dowden's name. This was an interest only loan backed by an endowment policy. It was common ground that Ms Dowden made all the payments due under the mortgage and that she paid "all the bills for utilities, council tax and the like". When the property was bought she was in regular employment as a trainee electrical engineer with the London Electricity Board. She has remained in employment with the Board or its successor throughout, working extremely hard and eventually rising to become the most highly qualified woman electrical engineer in the London area. In 1983, Mr Stack was "self-employed" as a builder/decorator, claiming no benefits but making no tax returns and keeping no records. Ms Dowden's evidence was that he did not want to take responsibility for the mortgage.
75. The down payment of £8000 came from a Halifax Building Society account, also in Ms Dowden's sole name. The judge, however, found that this was "joint savings" although he could not find how much Mr Stack had contributed to it. In the Court of Appeal it was said that there was "no evidence" to support this finding. In fact there was some: Mr Stack's evidence was that he had from time to time paid some of his own money into that account. This was vehemently denied by Ms Dowden. Even if the judge preferred his evidence to hers, it is something of a leap from this to characterise the account as "joint savings".
76. After the house was bought, four children were born to the parties. The first was born in 1986, and although Mr Stack was named as the father, he gave his father's address, which was the address to which most of his post and bank account statements were sent. The judge made little of this fact, but it might be thought to indicate something about the quality of the parties' relationship, at least until their first child was born. Three more children were born, in 1987, 1989 and 1991. Ms Dowden returned to work after each maternity leave and the children were looked after by nannies or child minders. Mr Stack began regular employment with Hammersmith and Fulham London Borough Council in 1987 and has remained with them ever since. Ms Dowden's earnings, however, began to outstrip his and were eventually £42,000 per annum to his £24,000.
77. A great deal of work was done on the Purves Road property, some of it redecoration and repairs, some of it alterations and improvements. There is no doubt that the parties worked on this together, although there was a dispute as to exactly how much work each did and the judge found that Mr Stack probably did "more than Ms Dowden gave him credit for" and eventually concluded that "he had been responsible for making most of these improvements". But he could not put a figure on their value to the sale price.
78. The Purves Road property was sold in May 1993 for £90,000, three times the figure for which it had been bought ten years before. After deduction of the mortgage redemption figure of £22,674, solicitor's disbursements and agent's fees, Ms Dowden received a cheque for £66,613. The judge asked himself whether, if the relationship had broken down at that point, she could have said that the Purves Road property was all hers. He concluded that she could not, given the length and nature of their relationship, given the work Mr Stack had done on the property, and "given that although their finances were kept separately there had been contributions to their living between the parties". This finding was overturned in the Court of Appeal, on the basis that the judge had not addressed the first question - whether Mr Stack had any beneficial interest at all. The only matter which could be relied upon as evidence of a common intention at the time of the purchase would be a contribution to the £8000 down payment. Because, in the Court's view, there was no evidence of such a contribution, it was wrong to treat Mr Stack as having any interest in the proceeds of sale of the Purves Road property.