(back to preceding text)

    79.  That conclusion is open to the criticism that there was some evidence of such a contribution, albeit rather slim and unsatisfactory, and that would have been sufficient to answer the first question in Mr Stack's favour. The second question - what was the extent of that beneficial interest - would have been much harder to answer and the judge made no attempt to do so. But he would certainly have taken into account the improvements made to the property in trying to quantify the interest.

    80.  In 1993, another property, in Chatsworth Road London NW2, was bought as the family home. This time it was conveyed into the joint names of the parties, using the then current land registry form. This contained no declaration of trust, but did contain a declaration that the survivor could give a good receipt for capital moneys arising from a disposition of all or part of the property.

    81.  The price of Chatsworth Road was £190,000. £128,813 (the balance of the price after deduction of the mortgage loan plus stamp duty and legal fees) came from Ms Dowden's Halifax Building Society account. This already contained £57,179 in April 1993, to which were added the proceeds of sale of Purves Road. £65,025 was provided by a loan to both parties from Barclay's Bank, secured by a mortgage and two endowment policies, one in their joint names and the other in Ms Dowden's sole name. The mortgage interest and joint endowment policy premiums (eventually totalling £33,747) were paid by Mr Stack. As contemplated by the parties, the mortgage loan was repaid by a series of lump sum payments, beginning in 1994. It was agreed that Mr Stack contributed £27,000 and Ms Dowden £38,435 towards these capital repayments. The utilities bills were all in Ms Dowden's name although Mr Stack claimed to have paid some of these. Improvements were also made, although not on the same scale as those to Purves Road. Throughout this time, they kept separate bank accounts and made a series of separate investments and savings. Ms Dowden paid the premiums on the life policy in her name, which she has retained.

    82.  The parties separated in October 2002. Mr Stack left the property and Ms Dowden remained there with the children. There were proceedings between them in the Inner London Family Proceedings Court under Part IV of the Family Law Act 1996. On 11 April 2003, Mr Stack gave various undertakings to stay away from the property and Ms Dowden undertook to pay up to £1000 per month to reimburse him the cost of alternative accommodation. That undertaking was to continue until 10 January 2004 and was not renewed on that date. The trial judge ordered that £8,100 be paid to Mr Stack before division of the proceeds of sale of the property in respect of this period and neither party has appealed against that. The trial judge also ordered that the sum of £900 per month from 6 October 2004 be paid to Mr Stack out of the net proceeds of sale. The only reason he gave was that the sale would be in Ms Dowden's hands.

    83.  Mr Stack's claim for an order for sale and equal division of the proceeds was tried over two days in the Central London County Court. On 6 October 2004, the judge ordered that the property be sold and the net proceeds of sale divided equally between the parties, as should the proceeds of the joint endowment policy. Throughout his judgment, there are numerous references to the "partnership" between the parties. He expressed his conclusion thus:

"It seems to me, although the Defendant has been the bigger wage-earner over this very long association between the parties, they have both put their all into doing the best for themselves and their family as they could. In these circumstances after such a very long relationship a 50/50 share is . . . an appropriate division of the net proceeds of sale."

    On the other hand, he held that all their other savings and investments, including an account in Ms Dowden's name with the Chelsea Building Society (opened in 2000 with the redundancy payment she received from London Electricity before being immediately re-employed with one of its successors), represented "the ways where the parties have allowed their earnings and their savings to be separately divided", so that all should lie where they were.

    84.  Ms Dowden appealed. (Mr Stack was refused leave to cross-appeal in respect of the Chelsea Building Society account and so that issue cannot be pursued before us.) On 13 July 2005, the Court of Appeal allowed her appeal and ordered that the net proceeds of sale be divided 65% to 35% in her favour. A major issue had been the effect of the declaration as to the receipt for capital moneys in the transfer document. Following Huntingford v Hobbs [1993] 1 FLR 736, this could not be taken as an express declaration of trust. Nor could it be relied upon for the purpose of drawing an inference as to their intentions, unless the parties had understood its significance. If they had done, the inference that they intended a beneficial joint tenancy would have been "irresistible". With that I entirely agree. But in the court's view there was no evidence that they did. Without that, it was impossible to reach the conclusion that their shares should be equal. Ms Dowden was entitled to at least 65% of the proceeds of sale, and she had made it clear that she was not then seeking any greater share than that. The Court also allowed her appeal against the order that she pay Mr Stack £900 per month from 6 October 2004. Mr Stack appeals to this House and asks that we restore the orders of the trial judge.

    85.  The property was sold in November 2005, with net proceeds of £754,345. If the £8100 has to be deducted from that, the balance is £746,245. 50% amounts to £373,122.50. The extra 15% claimed by the appellant amounts to £111,936.75. This is a not inconsiderable sum, but the costs of pursuing the argument to this House will have been quite disproportionate.

    86.  The starting point is that it is for Ms Dowden to show that the common intention, when taking a conveyance of the house into their joint names or thereafter, was that they should hold the property otherwise than as beneficial joint tenants. Unfortunately, we lack precise findings on many of the factors relevant to answering that question, because the judge addressed himself to "looking at the parties' entire course of conduct together". He looked at their relationship rather than the matters which were particularly relevant to their intentions about this property. He founded his conclusion on the length and nature of their relationship, which he repeatedly referred to as a partnership, despite the fact that they had maintained separate finances throughout their time together. With the best will in the world, and acknowledging the problems of making more precise findings on many issues after this length of time, this is not an adequate answer to the question. It amounts to little more than saying that these people were in a relationship for twenty seven years and had four children together. During this time Mr Stack made unquantifiable indirect contributions to the acquisition and improvement of one house and quantifiable direct contributions to the acquisition of another. Both co-operated in looking after the home and bringing up their children.

    87.  In some, perhaps many, cases of real domestic partnership, there would be nothing to indicate that a contrary inference should be drawn. However, there are many factors to which Ms Dowden can point to indicate that these parties did have a different common intention. The first, of course, is that on any view she contributed far more to the acquisition of Chatsworth Road than did Mr Stack. There are many different ways of calculating this. The Court of Appeal rejected the judge's view that the Halifax account represented "joint savings", either at the time of the Purves Road purchase or at the time of the Chatsworth Road purchase. Hence they held that the whole of the purchase price, other than the mortgage loan, had been contributed by Ms Dowden. She had also contributed more to the capital repayment of that loan, although Mr Stack had made all the payments necessary to keep it going. It is not surprising that the Court of Appeal reached the conclusion that Ms Dowden was entitled to at least the 65% she claimed.

    88.  On the other hand, there was some evidence that Mr Stack had made payments into the Halifax account before the Purves Road purchase and that he had made payments thereafter which would have enabled Ms Dowden to save more of her income than would otherwise have been possible. This, together with his contributions towards the substantial improvements made to Purves Road, might suffice to give him some interest in the proceeds of sale, although quantifying that share would be very difficult. It might also suffice to give him some lesser interest in the accumulated Halifax account at the time when Chatsworth Road was bought. Again, quantifying that interest would be very difficult. There was certainly little if anything to support the conclusion that these were truly "joint" savings. But suppose that one apportions the Purves Road proceeds between them in shares of 2 to Ms Dowden and 1 to Mr Stack; the Halifax savings in shares of 3 to her and 1 to him; and shares the mortgage loan equally between them: this would yield total contributions to Chatsworth Road of roughly 64% to 36%. That calculation is, in my view, as generous to Mr Stack as it is possible to be.

    89.  The fact that it is possible to make two such different calculations on this sort of evidence indicates the pitfalls in an arithmetical approach to ascertaining the parties' intentions. The one thing that can clearly be said is that, when Chatsworth Road was bought, both parties knew that Ms Dowden had contributed far more to the cash paid towards it than had Mr Stack. Furthermore, although they planned that Mr Stack would pay the interest on the loan and premiums on the joint policy, they also planned to reduce the loan as quickly as they could. These are certainly factors which could, in context, support the inference of an intention to share otherwise than equally.

    90.  The context is supplied by the nature of the parties' conduct and attitudes towards their property and finances. This is not a case in which it can be said that the parties pooled their separate resources, even notionally, for the common good. The only things they ever had in their joint names were Chatsworth Road and the associated endowment policy. Everything else was kept strictly separate. Each made separate savings and investments most of which it was accepted were their own property. It might have been asked, "why then did they make an exception for Chatsworth Road?" This is the obvious question. The obvious answer, which Ms Dowden has never denied, was that this time it was indeed intended that Mr Stack should have some interest in the property. In the light of all the other evidence, it cannot be conclusive as to what that interest was.

    91.  There are other aspects to their financial relationship which tell against joint ownership. Chatsworth Road was, of course, to be a home for the parties and their four children. But they undertook separate responsibility for that part of the expenditure which each had agreed to pay. The only regular expenditure to which it is clear that Mr Stack committed himself was the interest and premiums on Chatsworth Road. All other regular commitments in both houses were undertaken by Ms Dowden. Had it been clear that he had undertaken to pay for consumables and child minding, it might have been possible to deduce some sort of commitment that each would do what they could. But Mr Stack's evidence did not even go as far as that.

    92.  This is, therefore, a very unusual case. There cannot be many unmarried couples who have lived together for as long as this, who have had four children together, 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 the right of survivorship should one of them die before it was severed). Before the Court of Appeal, Ms Dowden contended for a 65% share and in my view she has made good her case for that.

    93.  There remains the question of the payment for Mr Stack's alternative accommodation. This matter is governed by the Trusts of Land and Appointment of Trustees Act 1996. Section 12(1) gives a beneficiary who is beneficially entitled to an interest in land the right to occupy the land if the purpose of the trust is to make the land available for his occupation. Thus both these parties have a right of occupation. Section 13(1) gives the trustees the power to exclude or restrict that entitlement, but under section 13(2) this power must be exercised reasonably. The trustees also have power under section 13(3) to impose conditions upon the occupier. These include, under section 13(5), paying any outgoings or expenses in respect of the land and under section 13(6) paying compensation to a person whose right to occupy has been excluded or restricted. Under section 14(2)(a), both trustees and beneficiaries can apply to the court for an order relating to the exercise of these functions. Under section 15(1), the matters to which the court must have regard in making its order include (a) the intentions of the person or person who created the trust, (b) the purposes for which the property subject to the trust is held, (c) the welfare of any minor who occupies or might reasonably be expected to occupy the property as his home, and (d) the interests of any secured creditor of any beneficiary. Under section 15(2), in a case such as this, the court must also have regard to the circumstances and wishes of each of the beneficiaries who would otherwise be entitled to occupy the property.

    94.  These statutory powers replaced the old doctrines of equitable accounting under which a beneficiary who remained in occupation might be required to pay an occupation rent to a beneficiary who was excluded from the property. The criteria laid down in the statute should be applied, rather than in the cases decided under the old law, although the results may often be the same. In this case, the judge applied neither. The property had been bought as a home for the parties and their children. By October 2004, three of the children were still minors. Both parties had the responsibility of providing them with a home. Ms Dowden remained responsible for the upkeep and outgoings on the home until it was sold. Mr Stack had to provide himself with alternative accommodation but had nothing to pay in respect of the upkeep of the family's home until he was able to realise his share in it upon sale. While, therefore, a case could be made for compensating him for his exclusion, it has to be borne in mind that he had agreed to go in the course of proceedings under the Family Law Act 1996. The reason given by the judge took no account, as he was required to do, of the statutory criteria. The fact that the house was to be sold as soon as possible, so that Mr Stack would not be kept out his money for long, was if anything a factor telling against the exercise of this discretion. I would therefore agree with the Court of Appeal on this point.

    95.  In the result, therefore, I would dismiss this appeal. But the route by which I, and as I understand it the majority of your Lordships, have arrived at that result is different, both in principle and on the facts, from that taken by the Court of Appeal.

LORD NEUBERGER OF ABBOTSBURY

My Lords,

    96.  I have had the great benefit of reading in draft the opinions of my noble and learned friends, Lord Hope of Craighead, Lord Walker of Gestingthorpe and Baroness Hale of Richmond.

    97.  I gratefully adopt the exposition of the facts of this case in paragraphs 71 to 85 of Baroness Hale's opinion. I shall first consider the extent of Mr Stack's ownership of the beneficial interest in 114 Chatsworth Road ("the house"), and then turn to whether Ms Dowden should have been ordered to pay him in respect of his exclusion from the house.

    98.  Where freehold or leasehold property is acquired in the name of two parties, the effect of sections 1, 34, and 36 of the Law of Property Act 1925 is that they must be joint owners of the legal estate: they enjoy equal rights in respect of an undivided title, and survivorship applies. The rules relating to the ownership of the beneficial interest are much less constrained. In general, the parties are free to agree what they want (and if they are joint owners, it is open to either to sever it). If there is a valid declaration of trust, then (subject to any statutory provisions to the contrary) that determines the beneficial ownership. If not, then, in the absence of agreement, the court has to decide the issue.

    99.  In that connection, the present type of case, where the parties were an unmarried cohabiting couple, whose relationship has ended, and both of whom claim to have contributed to the acquisition or value of the property, gives rise to particular difficulties, as can be seen from the analysis in paragraphs 15 to 26 of Lord Walker's opinion. This is not surprising. The context is lucidly explained in paragraphs 41 to 52 of Baroness Hale's opinion. Different judges may have different reactions to a particular case, and to the relative importance of, and the proper inferences to be drawn from, particular facts. The task of the judge is normally made no easier by bad feeling between the parties, conflicts of fact, the need to examine finances discussions and actions, the number and incommensurability of relevant factors, and the welter of Court of Appeal authority (not all of which is consistent in approach or result).

    100.  The room for confusion is reinforced by the fact that the outcome will normally differ from that in a similar but crucially different sort of case, namely where the parties were married. The Matrimonial Causes Act 1973 gives the court wide powers to redistribute assets on divorce. Unlike the Inheritance (Provision for Family and Dependants) Act 1975, the 1973 Act does not extend to unmarried cohabitants, even where (as here) the relationship has lasted longer and produced more children than the average marriage. Accordingly, in such cases, judges have to apply the law in accordance with principles developed by the courts.

    101.  The determination of the ownership of the beneficial interest in a property held in joint names primarily engages the law of contract, land and equity. The relevant principles in those areas of law have been established and applied over hundreds of years, and have had to be applied in all sorts of circumstances. While both the nature and the characteristics of the particular relationship must be taken into account when applying the principles, the court should be very careful before altering those principles when it comes to a particular type of relationship. After all, these principles are not static and develop as the needs and values of Society change. Thus, the presumption of advancement, as between man and wife, which was so important in the 18th and 19th centuries, has now become much weakened, although not quite to the point of disappearance.

    102.  However, that does not mean that a change in the principles should be easy or frequent. A change in the law, however sensible and just it seems, always carries a real risk of new and unforeseen uncertainties and unfairnesses. That is a particular danger when the change is effected by the court rather than the legislature, as the change is influenced by, indeed normally based on, the facts of a particular case, there is little room for public consultation, and there is no input from the democratically elected legislature.

    103.  In the present type of case, while the number of unmarried cohabitants has increased very substantially over the past fifty (and even more over the past twenty) years, the change has been one of degree, and does not, in my view, justify a departure from established legal principles. I agree with Griffiths LJ (see Bernard v Josephs [1982] Ch 391 at 402) that the applicable principles are the same whether the parties are married or not, although the nature of the relationship will bear on the inferences to be drawn from their discussions and actions.

    104.  The Law Commission has considered this topic in the excellent Discussion and Consultation Papers described by Baroness Hale in paragraphs 44 to 47 of her opinion. The fact that the Law Commission has characterised the present state of the law as "unduly complex, arbitrary and uncertain", does not, in my opinion, justify our changing it. The Discussion Paper refers to the impossibility of devising a scheme "which can operate fairly and evenly across the diversity of domestic circumstances which are now to be encountered". This is a warning shot against the courts (as opposed to the legislature) refashioning the law. All the more so bearing in mind that, as Lord Walker says, the Law Commission may soon make specific proposals for change in this area.

    105.  In other words, the Law Commission's analysis may well justify the legislature changing the law in this field, but it does not support similar intervention by the courts, other than for the purpose of clarification and simplification. Similarly, the fact that the law of Scotland on this topic may differ from that of England and Wales, as explained by Lord Hope, does not justify the courts changing the law here (or indeed in Scotland), although it may well be another reason for changing and unifying the law on this topic throughout the United Kingdom

    106.  In my judgment, it is therefore inappropriate for the law when applied to cases of this sort to depart from the well-established principles laid down over the years. It also seems to me that the law of resulting and constructive trusts is flexible enough to deal with problems such as those thrown up by cases such as this, and it would be a disservice to the important causes of certainty and consistency if we were to hold otherwise. I note that the Court of Appeal's recent decisions in this case and in Oxley v Hiscock [2004] EWCA Civ 546, [2005] Fam 211 (both of which were rightly decided) produced an outcome which would be dictated by a resulting trust solution.

    107.  Accordingly, while the domestic context can give rise to very different factual considerations from the commercial context, I am unconvinced that this justifies a different approach in principle to the issue of the ownership of the beneficial interest in property held in joint names. In the absence of statutory provisions to the contrary, the same principles should apply to assess the apportionment of the beneficial interest as between legal co-owners, whether in a sexual, platonic, familial, amicable or commercial relationship. In each type of case, one is concerned with the issue of the ownership of the beneficial interest in property held in the names of two people, who have contributed to its acquisition, retention or value.

    108.  It appears to me helpful for present purposes to consider the issue in a structured way. First, to consider how the beneficial interest is owned at the date of acquisition, which involves identifying the nature and effect of the relevant features of what transpired between the parties up to, and at, the date of acquisition of the property. Then to consider the position at the date of the hearing, which involves identifying the relevant features of what subsequently transpired between the parties, and deciding whether they justify a change in the way in which the beneficial ownership is held. As already explained, I believe that the proper approach to these highly fact-sensitive enquiries should be in accordance with established legal principles and, as far as is consistent with those principles, as simple as possible.

    109.  In the absence of any relevant evidence other than the fact that the property, whether a house or a flat, acquired as a home for the legal co-owners is in joint names, the beneficial ownership will also be joint, so that it is held in equal shares. This can be said to result from the maxims that equity follows the law and equality is equity. On a less technical, and some might say more practical, approach, it can also be justified on the basis that any other solution would be arbitrary or capricious.

    Beneficial ownership on acquisition: differential contributions

    110.  Where the only additional relevant evidence to the fact that the property has been acquired in joint names is the extent of each party's contribution to the purchase price, the beneficial ownership at the time of acquisition will be held, in my view, in the same proportions as the contributions to the purchase price. That is the resulting trust solution. The only realistic alternative in such a case would be to adhere to the joint ownership solution. There is an argument to support the view that equal shares should still be the rule in cohabitation cases, on the basis that it may be what many parties may expect if they purchase a home in joint names, even with different contributions. However, I consider that the resulting trust solution is correct in such circumstances.

    111.  It is the answer which equity has always favoured (save where the presumption of advancement, not relevant in the context of cohabitants, applied) both historically and more recently. Eyre CB described it as a "general proposition supported by all the cases" in a passage in Dyer v Dyer (1788) 2 Cox Eq Cas 92, quoted with approval in Pettitt v Pettitt [1970] AC 777 at 814B-G by Lord Upjohn, whose views on this topic were in turn cited with approval by Lord Pearson in Gissing v Gissing [1971] AC 886 at 902G-H. Lord Brightman in Malayan Credit Ltd v Jack Chia-MPH Ltd [1986] 1 AC 549 at 559G-H approved the view that a joint tenancy in equity is rebutted where the legal owners "have provided the purchase money in unequal shares". Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708A said that the circumstances in which "a resulting trust arises" included:

"[W]here A … pays (wholly or in part) for the purchase of property which is vested … in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the … property is held … in shares proportionate to their contributions".