In Stack v Dowden,  UKHL 17, handed down on Wednesday, 25 April, the House of Lords dismissed Mr Stack's appeal from the Court of Appeal decision at  1 FLR 254 concerning a property which the parties had held as joint tenants for over 25 years. The issue before the House was the effect of a conveyance into the joint names of a cohabiting couple but without an explicit declaration of their respective beneficial interests in a dwelling house which was to become their home. The judge at first instance decided that there had been a common intention of the parties to share the beneficial ownership of the property in equal shares. He based this finding, at least in part, on the general notion of a partnership between them. The Court of Appeal allowed Miss Dowden's appeal from that decision on the following grounds.
- The valid receipt clause in the transfer was not an express agreement that the parties beneficial shares in the property would be equal.
- The clause did not demonstrate a common intention that the shares were equal, unless it could be shown that both parties were aware of its full meaning at the time of the purchase. This was not the case.
- It was clear that both parties intended to have an interest in the property, but there was no evidence of any agreement or discussion between them as to the quantum of those shares.
- The court therefore sought to infer a common intention from the parties' relevant conduct. In this particular case, the fact that Miss Dowden had contributed a much larger part of the purchase price was highly significant.
The Court of Appeal awarded Miss Dowden 65% of the proceeds of sale and Mr Stack was awarded 35%. Mr Stack appealed to the House of Lords which agreed with the Court of Appeal that the parties' beneficial shares in the property should approximately reflect their financial contributions towards it.
- The valid receipt clause was neither an express agreement that the beneficial shares would be equal, nor was it evidence of a common intention to that effect - there was no evidence that the parties had understood what it meant.
- In the absence of any express agreement, the courts must search for evidence of a common intention between the parties as to how the property would be owned. This may hinge on conversations that took place at the time of acquisition.
- In a case such as this, where the legal title to the property was made in joint names but no evidence exists as to the actual intentions of the parties concerning the sharing of the beneficial interest, the starting point (said the majority) is that equity follows law. Therefore it is presumed that the beneficial shares are also jointly held and are consequently equal.
- This is a firm presumption and rebutting it is no small task. In rare circumstances, however, a survey of the parties' conduct may throw light on the question of what shares were intended and reveal an inferred common intention that those shares should be unequal. Such conduct need not be limited to direct financial contributions to the property.
The House of Lords inferred a common intention that the beneficial shares were unequal. This was based, not solely, on the much higher financial contribution made by Miss Dowden, as this would probably not have been determinative in isolation; it was further supported by the unusual degree of separation between the parties' financial arrangements. For a full summary of the Law Lords' speeches see June  Fam Law. The judgment is published on http://www.publications.parliament.uk/pa/ld200607/ldjudgmt/jd070425/stack-1.htm. The Law Commission's final report and proposals on Cohabitation: the Financial Consequences of Relationship Breakdown is due to be published in August this year.
With thanks to James Freeman, Speechly Bircham LLP.