The Court of Appeal has effectively given guidance on the application of Stack v. Dowden [2007] UKHL 17 where one is faced with a transfer into joint ownership and no express statements as to shares in the property in Fowler v Barron [2008] EWCA Civ 377 (23 April 2008).
At 21:
To recapitulate, the important points decided by the House for the purpose of this appeal were as follows. The legal technique that the court will use to ascertain whether both joint owners who had been co-habitees had a beneficial interest is that of the common intention constructive test, rather than that of resulting trust. This will enable the court to take a holistic view of the whole of the parties’ conduct so far as it illumines their shared intentions about the ownership of the property. The court will not impose any particular allocation of property on the parties. It is not a question of the court deciding what is fair as regards the division of ownership but of determining what the co-owners’ shared intentions were as regards beneficial ownership. This was a deliberate policy choice to make the law respond to current needs: see per Baroness Hale at [60]. Where, as here, a house is transferred into the joint names of two individuals as their home, without any declaration of trust, the transfer will indicate that the parties intended to own the house in equal shares and thus the onus will be on the one (here, Mr Barron) who asserts that property is owned by them other than in equal shares to show that they had a shared intention to own the property in some other shares. The conduct that the court will take into account will include, but is not limited to, the financial contributions that they made towards the acquisition of the property or repayment of any loan raised for such purpose. The onus will not be easy for that person to discharge.
Evidence purporting to rebut the presumption of joint beneficial ownership must be of the parties shared intentions, or of a later shared change of intention.
35. In determining whether the presumption is rebutted, the court must in particular consider whether the facts as found are inconsistent with the inference of a common intention to share the property in equal shares to an extent sufficient to discharge the civil standard of proof on the person seeking to displace the presumption arising from a transfer into joint names.
36. The emphasis is on the parties’ shared intentions. As Lord Diplock said in Gissing v Gissing [1971] AC 886 at 906B-C, “…the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.” This would be broadly consistent with the principles applicable to the interpretation of a written document, if that had set out their intention.
When assessing evidence, attention should be given to Lady Hale’s warning at para 68 of Stack:
In family disputes, strong feelings are aroused when couples split up. This often leads the parties, honestly but mistakenly, to reinterpret the past in self-exculpatory or vengeful terms. They also lead people to spend far more on the legal battle and is warranted by the sums actually at stake. A full examination of the facts is likely to involve disproportionate costs. In joint names cases it is also unlikely to lead a different result, unless the facts are very unusual.
In this case, the lower Court’s finding of no interest for Ms Fowler in the property (on the basis of contribution to purchase and mortgage as a resulting trust issue) was overturned, and a 50% interest found. In particular, shared household expenses, although none directly related to property expenses, were found sufficient to infer that it was not important to the parties who paid for what specifically or respective size of contribution. Evidence of mutual wills also played a part.
It was noted that Stack v Dowden involved a quite unusual separation of finances.
From this, it is clear that the presumption of joint beneficial interest is to be taken seriously. Rebuttal evidence will have to be pretty strong.
it was indeed noted that stck v dowden involved an unusual separation of finances. however, while it suited the court to say that and seemed to result in a just outcome, i don’t think it is actually true on the facts.
the court loooks to have placed great weight on the fact that the man could have done more (in fact the logical inference was that if he had got off his arse a bit more he might have got his 50% - can’t quite point you to this phrase in the judgement alas). i think the insistence on ‘unusual factors’ was a denningite smokescreen to try and see justice done.
can anyone point to a single aspect of the financial arrangements between the parties in stack and dowden that could reasonably be called ‘unusual’. she put in c 2/3rds of the cash and she got out about that.
The separation of the finances in Stack v Dowden was unusual for a cohabitee/joint title set up. The point is that inferring shared intentions is done from the whole course of conduct towards the property and finances. In Stack, not only the purchase price but all of the parties’ finances were clearly separate and often clearly hypothecated.
This is unusual; most often, without any particular discussion or decision, someone will pay house insurance, council tax, maybe the mortgage; someone else will buy food, the kids’ clothes, maybe some DIY costs. There is not, very often, a joint account for ‘the household’. This was not the case in Stack, see para 91.
In these situations, as the Court found in Fowler, there is no shared intention to be found that financial liability for the costs of the home be X’s responsibility (or divided in proportion a:b). So it is not sufficient evidence of shared intention of division of interest to enable a rebuttal of the presumption of equal shares to be inferred. The starting point is 50/50 on a joint title, after all.
Sticking solely with purchase contributions is to take the resulting trust approach taken by the first order judge in Fowler, which is firmly over-ruled here as in Stack.
Ah good old trusts of homes, always comes up on the trusts exam paper, and is reasonable!
Hmm not to sure about the common intention construction trust myself, Lloys Bank v Rosset, is also a bit of a bitch to understand, what with that Lord Bridge calling a constructive trust a resulting trust and then the academics argueing over whether Lord Bridge really was trying to merge proprietary estoppel and constructive trusts together. So glad I never have to study property law again!
Thought I would contribute
Is anyone out there aware of reliable research on what is or not the “usual” treatment of finances by cohabitees? How do judges or lawyers know what is usual, and why should “unusual” seperation of finances be strong evidence of the cohabitees’ intentions towards the division of ownership of house? Lord Neuberger’s speach on this issue is surely the correct analysis. The starting point in cases of differential contributions to purchase price ought to be resulting trust, and the party who wishes to show a diferent intention under constructive trust principles should shoulder the burden of proof.
Stack v Dowden is being applied to cases that in my view it has no relevance to. For example, the case of the boyfriend who moves into a house already owned by his girlfriend, but who subsequently is registered as joint legal owner. I know of one judge who almost had a fit when it was submitted in argument that the boyfriend had to prove an entitlement to a share on constructive trust principles and that the starting point was not 50:50.
David, that is a very interesting question, and I strongly suspect that the answer is that there is no such research. We are surely in the realm of commonsense and the reasonable observer. Notoriously reliable.
That said, when looking at a scale ranging from complete co-mingling of all income to completely seperate income and expenditure, I would be surprised if the result wasn’t some form of bell curve. I would expect ‘I’ll pay the rent/mortgage, you pay the bills/household costs’ to be somewhere near the peak down the right hand side slope.
My understanding was that ‘unusual separation’ of finances became ’strong’ evidence only in the absence of anything more clearly determinative of intention. If one is left with the need to infer intention, then course of conduct is what one must perforce fall back on.
I’m not surprised the judge had a fit in your anecdote. Surely where there is joint title, the starting position is 50/50, absent any other declaration. If someone seeks to establish a different share in equity, then I’d say the burden of proof has to be on them, otherwise is there any point to joint title existing at all?
And this is the situation at issue - the starting point is the presumption of 50/50 that arises from joint title. ‘Starting with resulting trust’ - as in differential contribution to purchase price, means ignoring joint title altogether, surely?
A lot more education and advice on how to hold in specified shares as tenants in common would be a good thing, granted.