The Court of Appeal has upheld the award of a significantly higher share in equity to one of a former cohabiting couple.
Barnes v Phillips concerned a couple who had lived together since 1989. They bought a property with a mortgage and held it as ‘tenants in common’ – a form of ownership similar to a joint tenancy but with one difference: one tenant cannot inherit the other half of the property from the second tenant if the latter dies.
The man paid the mortgage and and split the other household bills with his partner, who worked only part time after the birth of their children. The couple had various improvements to their home undertaken and the man also invested in two flats before running into financial difficulties. He remortgaged the couple’s home to clear his debts.
The couple separated and the man moved into one of this other properties. Within a year the man had ceased making mortgage payments, leaving the woman with sole responsibility for these as well as primary financial responsibility for the couple’s two children.
She launched legal proceedings, seeking to establish the nature and extent of her interest in the former couple’s home. A Judge declared that the man had not been frank when giving evidence and said he preferred the evidence given by his former partner. He concluded that despite the lack of a clear statement of intent when the house was first purchased, the former couple had been full joint tenants as far as the law was concerned, with an equal share in the property. They had made equal contributions to a “marriage without a wedding ceremony”.
As there was no evidence to suggest their intentions regarding ownership had ever changed, the court was entitled to reach a conclusion on the basis of what was fair in the circumstances the Judge explained.
He concluded that the woman was entitled a 85 per cent share in the property, because her former partner had released substantial equity for his sole benefit during the remortgage. In addition, she had been the sole mortgage payer since their separation.
The man appealed unsuccessfully. At the Court of Appeal, Lord Justice Lloyd Jones said the first judge had made a clear distinction between inferring intention and ‘imputing’ (attributing) attention in ownership of the property.
His Lordship concluded:
“For reasons set out above, I consider that the judge did not infer that the parties had formed a common intention to hold the property in shares of 85% to the respondent and 15% to the appellant. On the contrary, having inferred a common intention to vary their interests in the property he imputed an intention to them as to their respective shares.”
In a summary of the case, barrister Elizabeth Darlington of Zenith Chambers in Leeds notes that the decision represents a shift away from previous precedent which believed that common intention regarding property ownership could only rarely be established.
In addition, she noted:
“The Court of Appeal, although stating that it was not permissible to impute an intention to the parties at the first stage of deciding whether to depart from a 50/50 division, took a purposive approach [focused on a particular purpose] when inferring from the parties’ conduct that they must have intended to alter the size of their beneficial interests [at the time of the remortgage]. The distinction between imputation and inference is, in practice, increasingly one without a difference.”
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