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PROPERTY: Stack v Dowden [2005] EWCA Civ 857

Date:11 AUG 2005

(Court of Appeal; Chadwick, Carnwath and Smith LJJ; 13 July 2005) [2006] 1 FLR 254

The parties cohabited from 1975 to 2002 and had four children. They purchased a house in 1993, which was registered in joint names. The purchase price was funded by a mortgage for which the parties were jointly and severally liable, proceeds of sale of their previous home and savings from an account registered in the woman's sole name. The woman had funded the purchase of the previous home and it had been registered in her sole name. The man had made some contributions to household expenses and done some work on the previous home. The 1993 transfer deed contained no words of trust but did contain a declaration by the purchasers that the survivor was entitled to give a valid receipt for capital. The woman served a notice of severance in 2002. The man brought proceedings under the Trusts of Land and Appointment of Trustees Act 1996, s 14, seeking a declaration that the property was held by the parties as tenants in common in equal shares. The judge held that the parties held the house as tenants in common in equal shares, ordered sale and directed that the man should receive recompense for his cost of renting alternative accommodation since the parties' separated. The Court of Appeal allowing the wife's appeal held on the authorities of Harwood v Harwood [1991] 2 FLR 274 and Huntingford v Hobbs [1993] 1 FLR 736, the declaration in the transfer deed as to the survivor's entitlement to give a valid receipt for capital did not constitute an express trust of the beneficial interests. Where property has been transferred into joint names it can usually be taken for granted that each was intended to have some beneficial interest and the focus will be on the question of their respective shares. From the parties conduct the court has to see whether any inference could reasonably be drawn as to the probable common understanding about the amount of their respective shares upon which each must have acted in doing what they did. Where there was no evidence of any discussion between them as to the amount of the share which each was to have, and even where the evidence was that there was no discussion, each was entitled to the share considered fair having regard to the whole course of dealing between them in relation to the property, Oxley v Hiscock [2004] 2 FLR 669. The judge had been wrong to hold that the man had had a beneficial interest in the proceeds of sale of the previous home and therefore had been wrong to treat those proceeds as representing a contribution by him to the house purchased in 1993. The judge had failed to address the question whether there was evidence from which to infer a common intention, communicated by each party to the other, that each should have a beneficial interest in the earlier home. Since the man had not alleged that there had been any express discussion as to beneficial ownership, a finding that there had been a common intention as to shared beneficial ownership could only be based on the second branch of Lord Bridge's test in Lloyds Bank plc v Rosset [1991] AC 107, at 132, namely an understanding as to beneficial ownership inferred from conduct, it being extremely doubtful in that context whether anything less than a direct contribution to the purchase price would suffice. The judge had not been entitled to conclude on the facts that the man had a beneficial interest in the proceeds of sale of the former home. The judge had been wrong to treat the application of the savings as a contribution by the man to the purchase of the house. There was no evidence that the parties had agreed to treat the account as a joint one and no evidence the man had paid money into the account. The fact that they were partners in the family sense said nothing about their respective property interests. As the whole of the purchase price of the house other than the mortgage advance had been provided by the woman from her own funds, then, subject to the question whether an inference asto intention should be drawn from the declaration in the transfer deed, it was impossible to reach the conclusion that it was fair, having regard to the whole course of dealings between the parties in relation to the house, that their beneficial interests should be equal. Had it been established on the evidence that the parties understood the significance of the declaration, the inference that they intended a beneficial joint tenancy would have been irresistible. Where the evidence was that the parties did not understand why the declaration was in the transfer deed it was impossible to rely upon it for the purpose of drawing an inference as to their intentions, other than as indicative of an intention that they should be bound by it in respect of the matter for which it provided, namely the power of a survivor to give a receipt for capital monies. The woman by her appellant's notice had sought a declaration that the respective beneficial interests of the parties in the house were 65%/35% in her favour, or such other shares as the court were to find just and fair. However, in argument it was clear that she did not seek a share greater than 65% and there was no argument presented on whether, adopting the approach in Oxley v Hiscock, she would have been entitled to more. It was inappropriate in the absence of such argument for the court to decide whether a claim for a greater share would have succeeded. The court would make a declaration in the terms sought. There was jurisdiction under the 1996 Act to make an order that a beneficiary under a trust of land who was in occupation should make payments to another beneficiary who had been excluded from occupation. However, s 13(4) and (7) required that such power be exercised with regard to the intentions of those who created the trust, the purposes for which the land was held and the circumstances of the beneficiaries. The judge had been required to take account of the obligations of both parents towards their children, and in particular, the need for the children to remain in their home. He had failed to give any consideration to those matters and the order should be discharged.