Judgments - Stack (Appellant) v. Dowden (Respondent)

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    145.  I am rather more comfortable with the formulation of Gray and Gray, also quoted in paragraph 61 of Baroness Hale's opinion, that the court should "undertak[e] a survey of the whole course of dealing between the parties … taking account of all conduct which throws light on the question what shares were intended". It is perhaps inevitable that this formulation begs the difficult questions of what conduct throws light, and what light it throws, as those questions are so fact-sensitive. "Undertaking a survey of the whole course of dealings between the parties" should not, I think, at least normally, require much detailed or controversial evidence. That is not merely for reasons of practicality and certainty. As already indicated, I would expect almost all of "the whole course of dealing" to be relevant only as background: it is with actions discussions and statements which relate to the parties' agreement and understanding as to the ownership of the beneficial interest in the home with which the court should, at least normally, primarily be concerned. Otherwise, the enquiry is likely to be trespassing into what I regard as the forbidden territories of imputed intention and fairness.

    146.  In other words, where the resulting trust presumption (or indeed any other basis of apportionment) applies at the date of acquisition, I am unpersuaded that (save perhaps in a most unusual case) anything other than subsequent discussions, statements or actions, which can fairly be said to imply a positive intention to depart from that apportionment, will do to justify a change in the way in which the beneficial interest is owned. To say that factors such as a long relationship, children, a joint bank account, and sharing daily outgoings of themselves are enough, or even of potential central importance, appears to me not merely wrong in principle, but a recipe for uncertainty, subjectivity, and a long and expensive examination of facts. It could also be said to be arbitrary, as, if such factors of themselves justify a departure from the original apportionment, I find it hard to see how it could be to anything other than equality. If a departure from the original apportionment was solely based on such factors, it seems to me that the judge would almost always have to reach an "all or nothing" decision. Thus, in this case, he would have to ask whether, viewed in the round, the personal and financial characteristics of the relationship between Mr Stack and Ms Dowden, after they acquired the house, justified a change in ownership of the beneficial interest from 35-65 to 50-50, even though nothing they did or said related to the ownership of that interest (save, perhaps, the repayments of the mortgage). In my view, that involves approaching the question in the wrong way. Subject, perhaps, to exceptional cases, whose possibility it would be unrealistic not to acknowledge, an argument for an alteration in the way in which the beneficial interest is held cannot, in my opinion, succeed, unless it can be shown that there was a discussion, statement or action which, viewed in its context, namely the parties' relationship, implied an actual agreement or understanding to effect such an alteration.

    147.  Turning to the present case, I consider that there are no grounds for varying the split of the beneficial ownership, which arose in 1993 on the acquisition of the house, as a result of any events which occurred subsequently, at any rate to an extent more favourable to Mr Stack than the 35% accepted by the Court of Appeal. Subject to one exception, there was nothing said or done by the parties which could justify a change from that which arose at the date of acquisition. As to the exception, I accept that, as a result of his repaying some of the mortgage, Mr Stack has an arguable case for slightly increasing his share of the beneficial interest. However, his share cannot thereby be increased above 36%, assuming all the facts in his favour, and, in my view, his share would remain less than 35%.

    The payment issue

    148.  The parties each had the right to occupy the house and the concomitant expectation of having to share occupation. After some nine years of living together, Ms Dowden excluded Mr Stack against his wishes. On 11 April 2003, the parties agreed a time-limited order in the Family Proceedings Court, which excluded Mr Stack from the house, and required Ms Dowden to pay him (or to credit him against her share of the proceeds of sale of the house) a sum which reflected the cost of his alternative accommodation, later agreed at £900 per month. After that order expired on 10 January 2004, Mr Stack effectively accepted Ms Dowden's decision to exclude him. As a result, Ms Dowden continued in exclusive occupation (with their four children), and Mr Stack had to continue to pay for other accommodation.

    149.  At the hearing, an order for the sale of the house was sought and granted, and Mr Stack sought a further order that he be paid (or credited) in the meantime at £900 per month. The Judge made that order, after brief argument, on the sole stated ground that Ms Dowden had control over the marketing and sale of the house. The Court of Appeal thought this reason unsatisfactory, and reversed his decision, on the grounds that the house was soon to be sold, the four children were living there, and there was no basis for assessing the compensation at £900 per month.

    150.  The court's power to order payment to a beneficiary, excluded from property he would otherwise be entitled to occupy, by the beneficiary who retains occupation, is now governed by sections 12 to 15 of the Trusts of Land and Appointment of Trustees Act 1996, having been formerly equitable in origin. However, I think that it would be a rare case where the statutory principles would produce a different result from that which would have resulted from the equitable principles.

    151.  The 1996 Act appears to me to apply here in this way. The trustees, Ms Dowden and Mr Stack, agreed pursuant to section 13(1) of the 1996 Act (through the consent order of 11 April 2003 and not seeking to disturb the status quo after it expired) that Mr Stack would be excluded from the house. Accordingly, they could have agreed pursuant to section 13(3) and (6)(a) that Ms Dowden would pay "compensation" to Mr Stack for his exclusion. They initially agreed that in the order of 11 April 2003, but, once it expired, they could not agree whether to exercise that power. Accordingly, the decision whether to require compensation was a matter for the court under section 14.

    152.  In my view the proper exercise of the court's power in the present case would have been to order compensation. First, both parties had the right in principle to occupy it, Ms Dowden was living there on her own as she wanted, she had excluded Mr Stack against his will, and he was incurring the cost of alternative accommodation: accordingly, such a payment seems appropriate in the absence of any good reason to the contrary. Secondly, the parties plainly thought it was right, when agreeing the order of 11 April 2003, that, as a quid pro quo for his exclusion from the house, Mr Stack should be paid (or credited) at the rate of £900 per month. The circumstances of the parties do not appear to have changed by (or after) 10 January 2004, when they effectively accepted that Mr Stack would remain excluded from the house.

    153.  Thirdly, when exercising its power under section 14, the court is required to take into account four specific matters set out in section 15(1). In my view, those factors either favour ordering a payment in favour of Mr Stack, or they are neutral or irrelevant. Thus, paragraphs (a) and (b), the purpose for which the house was bought and the purpose for which it was held, favour the conclusion, as the house was bought as a home for Mr Stack (as well as Ms Dowden and the children), and , at any rate as far as he was concerned, that remained the position. Paragraph (c), the welfare of minors residing in the house, is neutral as there is no suggestion of prejudice to the four children whether or not he was paid. Paragraph (d), the interests of any secured creditor, is irrelevant for present purposes.

    154.  It is true Ms Dowden had to pay all the outgoings in respect of the house, but Mr Stack had to pay all the outgoings, as well as the rent, in respect of his alternative accommodation. Further, if the compensation was calculated (as it often is) on the basis of the rental value of the trust property concerned, the outgoings would be taken into account when assessing its rental value.

    155.  I accept that the Judge's reason for ordering payment was weak, no doubt at least in part because of the brevity of the argument and because he was not referred to the 1996 Act. (However, it is only fair to the Judge to say that, as the actual occupier of the house, Ms Dowden did have some control over the progress of its marketing and sale.) I also accept that the Court of Appeal was consequently entitled to reconsider the matter afresh. Nonetheless, I consider that the Court of Appeal went wrong in reversing the Judge's decision on the point. The fact that the children needed a home is not in point. First, it does not meet the main ground for making a payment order, namely Mr Stack's exclusion from the house and having to find and pay for alternative accommodation. Secondly, Mr Stack was paying towards the children's maintenance, and, through his share of the beneficial ownership of the house, helping to house them. Thirdly, there was no evidence to suggest that ordering a payment to Mr Stack would have in any way harmed the children's interests. That Ms Dowden had agreed to pay £900 per month under the order of 11 April 2003 suggests that it would not have had that effect.

    156.  The fact that the house might have been expected to be sold fairly soon after the hearing is a point which, in my view, is either irrelevant or cuts both ways. It did not alter the position: it merely rendered it more likely to come to an end sooner rather than later. Nor is it as if any wrongful act by Mr Stack caused his exclusion: it was simply due to the relationship breaking down. The fact that, after the order of 11 April 2003 expired, Mr Stack accepted his exclusion should not count against him. To hold that a reasonable acceptance of exclusion would make it more difficult to claim compensation would put a premium on unreasonableness and encourage litigation.

    157.  I also disagree with the Court of Appeal on quantum. I can see no reason to depart from the figure which the parties originally agreed, and was not challenged before the Judge, namely £900 per month. It is a figure which had a rational basis (namely the cost of Mr Stack's alternative accommodation). There is, in my view, a strong argument for saying that, on the basis of an analogy with trespass damages, that the court should be able to award compensation based either on the notional rental value of the house or the cost of the alternative accommodation.

    Conclusion

    158.  Accordingly, I agree that Mr Stack's appeal against the Court of Appeal's determination as to the extent of his ownership of the beneficial interest in Chatsworth Road should be dismissed, but I would have allowed his appeal against the Court of Appeal's refusal to order Ms Dowden to pay him £900 per month in respect of his exclusion.

 
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Prepared 25 April 2007