As is noted elsewhere on this website, if you are unmarried and decide to separate, you will not have the right to share your partner’s property, in the same way as you would if you had been married. Instead, each disputed asset is dealt with by applying the relevant law on trusts and property.
The primary asset in most cohabitation disputes is of course the home in which the parties lived, assuming it was owned, rather than rented.
Constructive trust
The home may be owned by just one party, or it may be owned jointly. In either case a dispute may arise as to the parties’ respective shares in the property. A frequent reason for such a dispute is that one party may claim that it was the common intention of the parties that the ownership of the property should be different from that stated on the Land Registry title deeds.
A classic example of this occurred in the 1986 case Grant v Edwards, in which the property was purchased in the man’s sole name. The judge found that the man told the woman that her name was not going onto the title because it would cause some prejudice in the divorce proceedings between the woman and her husband, which were then pending. In other words, there was a common intention that the woman had an interest in the property.
In such a ‘common intention’ case the party claiming a share of a property owned by the other party, or claiming a greater share in a jointly owned property, can argue that the property is actually held in trust, so that the true ownership differs from that stated on the deeds. This is known as a ‘constructive trust’.
But a common intention is not sufficient on its own. The party claiming a share or greater share must also act to their detriment in reliance upon the common intention, for example by contributing towards the mortgage on a property owned by the other party.
Court of Appeal case
The way that constructive trusts work was neatly demonstrated in a recent Court of Appeal case, Hudson v Hathway.
The case concerned Mr Hudson and Ms Hathway, an unmarried couple who bought a house in joint names, in 2007. In 2009 the relationship broke down, and Mr Hudson moved out of the property.
The couple subsequently discussed what should happen to the house, in an exchange of emails in 2013. In the course of that exchange, Mr Hudson made clear that he agreed to Ms Hathway having the whole property, stating that he had “no interest whatsoever” in it. The email was subscribed with his name.
It was also agreed that the house should be sold, which would thereby release Mr Hudson from the mortgage.
Following this Ms Hathway took over payment of the mortgage. Unfortunately, there was an issue with the property, which delayed its sale.
Impatient with a lack of progress on the sale, in 2019 Mr Hudson applied to the court for an order that it be sold and that the net proceeds be divided equally. Ms Hathway agreed that the house should be sold, but contended that she was entitled to the whole of the proceeds under a constructive trust, following a common intention and agreement to that effect. In reliance on that common intention she had acted to her detriment, by (amongst other things) paying the mortgage and desisting from claiming against assets in Mr Hudson’s sole name acquired during their relationship.
In the course of the proceedings the question arose as to whether a constructive trust can arise simply as a matter of common intention, without the need to show any detrimental reliance on that intention. There was also a dispute as to whether what Ms Hathway had done after the agreement amounted to ‘detriment’.
Mr Hudson claimed that detriment was required, and that Ms Hathway had not acted to her detriment. Ms Hathway claimed that detriment was not required, but that if it was, she had acted to her detriment.
The case went all the way to the Court of Appeal, which held that detriment was required, and that Ms Hathway had indeed acted to her detriment. Accordingly, she was entitled to the entire proceeds of sale.
Transfer by email
Before concluding, it should be mentioned that the Court of Appeal also made another finding: that the exchange of emails was sufficient on its own to effect the change of ownership.
The reason for this is that the emails fulfilled the legal requirements for the transfer of the property. This may be surprising, given that one of the requirements is that the transfer should be signed, and obviously an email cannot be physically signed. However, the Court of Appeal found that deliberately subscribing one’s name to an email amounts to a signature.
Accordingly, by the exchange of emails Mr Hudson had released his interest in the property to Ms Hathway, which actually made the constructive trust issue academic.
If you require any legal advice on cohabitation or trust disputes, please contact Lucy Marks at Marks Law. To speak to us today, please call 020 7123 4600 or email co*****@**********co.uk.