Sharing Homes and the Property Rights of Cohabitants COHABITEES AND REAL PROPERTY A GUIDE THROUGH THE JUNGLE Copyright Jane Drew October 2003-All rights reserved. No part of this document may be copied or used without the written permission of the author.

• It is often difficult to define the way through a tangle of cases concerning the beneficial rights in property of unmarried couples.
  
  

• Law not discretion is important and the law of trusts or the concept of estoppel applies rather than what is fair and just.

1. IS THE PROPERTY IN JOINT NAMES?
2. IS THERE ANYTHING IN WRITING?

• The first question to consider is was there an express agreement?
  
  

• Is it recorded on the face of the land Registry transfer?
  The standard forms of transfers give 3 boxes to tick, depending on whether the property was to be held as joint tenants, tenants in common in equal shares or otherwise as specified by the joint proprietors.
  It is the writer's view that once the box is ticked an express trust of land is created which will comprehensively declare the beneficial interests in the property and its proceeds of sale unless and until it is varied by those who are competent to vary it or it is rectified or set aside on the grounds of fraud or mistake.
  
  

• If there is an agreement reached between the parties and effectively recorded in writing (as by a declaration of trust contained in the conveyance or in a separate document) that will prevail until is varied.
  

• In unregistered conveyancing the declaration of beneficial interests on the face of the conveyance is incapable of variation in the absence of fraud or mistake:
  see Goodman v Gallant [1986] 1FLR 513.
  

• Look very carefully at any documentary evidence such as the conveyancing file or any contemporaneous notes, letters or court papers, e.g. Children Act 1989 statements.
  

IF THE PROPERTY IS IN ONE NAME ONLY OR IF THERE IS NO EXPRESS DECLARATION OF TRUST
IF THERE IS NOTHING IN WRITING DID THE CLAIMANT MAKE A CONTRIBUTION?

(a) Resulting Trust

• Where a property is purchased in one name alone with contribution to the purchase price from both or more than one party, a resulting trust will be presumed to effect the inferred common intention that the parties should share in the equity of the property in accordance with their contribution: see Pettit v Pettit [1970] Appeal Cases 777 and Gissing v Gissing [1970] 3 WLR 355.
  
  

• Where therefore property is acquired with contributions from other parties than the legal owner this is always the first possibility where there is no written declaration. See Lowson v Coombes [1999] 1 FLR 799.
  A decision to register the property in the name of the cohabitant to avoid a claim by a wife (which was never made) did not deprive a husband from a declaration that he was the beneficial owner of the property occupied by the cohabitant.
  
  

• This Court of Appeal case approved and followed the case of Tinsley v Milligan [1993] 2 FLR 963 and distinguished the case from Tinker v Tinker [1970] 2 WLR 331.
  
  

• See Carlton v Goodman [2002] 2FLR 259.
  G and C acquired the property in joint names. No discussion or agreement between them about beneficial interest. Apart from joining in the mortgage application and signing contract, C took no part in conveyancing and did not pay anything towards property at the time or the mortgage until G died. HELD C held on trust for G's estate subject to equitable accounting for payments made after G's death.
  
  

• A resulting trust can however be displaced by:
  (a) a constructive trust relying on the common intentions of the parties (i.e. an actual constructive trust) or
  (b) an inferred intention of the parties - an inferred constructive trust.
  
  

• See Drake v Whipp [1996]1 FLR 826.

(b) Actual Constructive Trust

• The difference between the actual constructive trust and the inferred constructive trust comes from Lloyds Bank v Rossett [1990] 2 FLR 155.
  
  

• Under the first category, the actual constructive trust, the question to ask is was there any express agreement.
  
  

• See Rowe v Prance [1999] 2 FLR 787
  
  

• Was the co-habitee promised that the property would be theirs if some obligations were discharged by them - e.g. paying for the food and furnishings or contributing to the mortgage - and did the co-habitee actually put the intention into practice.
  
  

• By The Law of Property Act 1925 any enforceable declaration of trust must be in writing and the Courts will only enforce an unwritten intention to create beneficial interest if there is some act by the party receiving the interest alleged to be relying on the trust and to the detriment of that party.
  
  

• In other words, is there a common agreement or arrangement or understanding to share between the parties - perhaps informal and often imperfectly recalled - that the property was to be shared beneficially - see Lloyds Bank v Rossett. The Court must look carefully for any act done by the claiming party to their detriment such as paying any accounts or paying for food etc.
  
  

• Notice the similarity between the actual constructive trust and proprietary estoppel when the issue of detriment is considered - see Lloyds Bank v Rossett [1991] AC 107 per Bridge LJ "Once a finding to this effect is made (i.e. of an arrangement or agreement to share) it will only be necessary for the partner asserting a claim to a beneficial interest against the partner entitled to the legal estate to show that he or she has acted to his or her detriment or significantly altered his or her position in reliance on the agreement in order to give rise to a constructive trust or a proprietary estoppel". See also Jennings v Rice [2002] EWCA 22 February 2002.
  
  

• The act or acts done do not have to be referable to the property itself but do have to be done in reliance upon the understanding or agreement and it does involve the expenditure of money.
  
  

• The common intention or understanding must be communicated between the co-habitees or parties. If there is no such communication between the parties then there can be no common intention: see Springette v Defoe [1992] 2 FLR 388. Even though the parties had both independently thought they would share the property equally they had never discussed or communicated their intention to each other and the property was therefore held on the basis of resulting trust. See also Savill v Goodall [1993] 1 FLR 755. Claimant moved in with secure tenant, the Defendant, and seven years later together signed secure tenants notice claiming to exercise right to buy the house, purchased house for £20,445 with a discount of 42%, purchase funded by a 100% mortgage. No expressed declaration as to the respective beneficial interest. Parties contributed roughly equally to domestic outgoings during the period of cohabitation. HELD: Parties had acquired the property with the intention that it should be held on trust for themselves in equal shares.
  
  No express declaration of trust "if an ordinary sensible couple without more declare an intention to own their home jointly they can only be taken to intend that they shall own it equally."
  
  

• See also McHardy & Sons (a firm) v Warren and another [1994] 2 FLR 338 where the payment of a deposit as a wedding present to the couple was held to indicate an intention that the parties should share the property equally and was therefore a direct contribution to the purchase price by the wife
  
  

• See also Halifax Building Society v Brown, RZ Hemsley Ltd v Brown and another [1996] 1 FLR 103.
  
  

• It is often very difficult to ascertain whether there was such an understanding or agreement sufficient to create this sort of trust. Ask to see the conveyancing file of the solicitors who acted on the property purchase. Take careful instructions from one's client as to the terms of the agreement or discussions which took place prior to the purchase. Any third party information such as from relatives or friends with whom the house purchase was discussed in the presence of the other co-habitee and any written information, whether letters or other form of evidence might help to establish such an agreement. See also Stokes v Anderson [1991] 1 FLR 391.
  

(c) Inferred Constructive Trust

• This is the second type of constructive trust referred to by Lord Bridge in Lloyds Bank v Rossett. If there is no such express agreement or understanding a trust can only exist where the Court could infer from the conduct of the parties that they jointly intended they should both have a beneficial interest in the property.
  
  

• Under Lloyds Bank v Rossett a common intention can only be inferred from direct contributions to the initial purchase price or indirect financial contribution or the payment of mortgage instalments referable to the acquisition of the home.
  
  

• I.e. the Court examines the conduct of the parties to see whether on the established facts it can assume or infer a common intention to share ownership of the property and if satisfied that it can then the Court can conclude that there was indeed a trust giving one or other an interest which without the application of the trust he or she would not have received.
  
  

• See also Le Foe v Le Foe and Woolwich plc [2001] 2 FLR 970 where it was held that indirect contributions to the mortgage by the wife created sufficient inference from which the judge found that the parties intended that the wife should have a beneficial interest in the former matrimonial home.
  
  

• See under this category of case Cooke v Head and Eves v Eves.
  "The sledgehammer-wielding mistress cases."
  In these particular cases the work of the mistresses in demolishing buildings, wielding sledge-hammers, wheeling barrows of rubble and hard-core about and cement mixing imputed a joint intention to acquire a home for themselves: i.e. because she did those works there must have been an intention to own the property jointly. In this particular case - i.e. the inferred or constructive trust - the work done or the conduct of the parties must be referable to the subject property.
  
  

• Where the Court infers a constructive trust arising in the purchase of the home, especially when the woman contributes to the mortgage, the resultant trust looks very like a resulting trust, particularly where the Court calculates the interest by reference to the arithmetic of her contribution but a constructive trust infers common intentions of the parties even after the acquisition whereas a resulting trust presumes an intention in the mind of the donor only so the question to be asked is:
  
  

• Did she do something relating to the property which would make someone say there must have been a common intention between them, otherwise she would not have done that.
  
  

• See Stokes v Anderson [1991] 1 FLR 391. Female co-habitee made payment of £5,000 and £7,000 to male co-habitee who was legal owner. Parties had made plain orally their common intention that female co-habitee should have a beneficial interest in the property. Payment made by female co-habitee constituted conduct amounting to and acting on the common intention by her. Requirements for acquisition of beneficial interests satisfied: i.e. although no express agreement the common intention was to be inferred from conduct, i.e. direct financial contributions of £5,000 and £7,000.
  
  

• If in fact a beneficial interest is established, quantifying the interest of the party who does not own the legal estate depends on the common intention of the parties. That common intention is not necessarily ascertained at the time that the interest was acquired but is seen in the light of all payments made and all acts done by the Claimant so as to arrive at the determination of a fair share. When considering the beneficial ownership of a house in which an unmarried couple formerly lived together all payments made and acts done by one party were to be treated as illuminating the common intention as to the extent of that party's beneficial interest.
  

• Once the common communicated intention or understanding is established or where a common intention is inferred the Court must then find how the parties intended the shares in the property to be divided. The Court looks to the value of the contributions if this is possible but this may not be easy and in any event the contribution may not be helpful since it is the bargain that is important not the adequacy of the consideration.
  
  

• The matters that the Court can take into account as illuminating the common intention as to the extent of the party's beneficial interest have been discussed in Midland Bank v Cooke [1995] 2 FLR 915. Couple married 1971. Husband purchased property for £8,500 - £6,450 by way of a mortgage, £1,000 of his own savings and £1,000 in the form of a wedding gift from his parents. Wife did not make any direct contribution to the purchase herself but made substantial financial contribution to the upkeep of the property and household. In 1978 mortgage replaced with bank loan to secure a business guarantee. In 1981 a second charge was executed to secure a further business loan, this time in joint names. In 1984 wife commenced proceedings under Section 17 MWPA 1882. Consent order in 1985 transferred the property into joint names. Default on repayments in 1987 and bank sought possession. Husband and wife separated, wife and children remaining in the property. County Court Judge found wife's interest amounted to 6.47% of the value of the property, that being her half share of the wedding gift advanced by her in-laws. Wife appealed: -
  
  Held
  
  Holding the wife had a half-beneficial interest
  1. Wedding gift was gift equally to both spouses: accordingly wife had beneficial interest by way of a resulting trust in the property.
  2. When the Court is to determine in the absence of express evidence as to what proportions the couple intend to hold the property in which they both have a beneficial interest the Judge's duty is to survey the whole course of dealing between the parties relevant to their ownership and occupation of the home. That scrutiny is not limited to direct contributions to purchase price and the Court is not bound to deal with the matter on a strict basis of the trust resulting from cash contribution. It is free to attribute an intention to share the beneficial interest.
  3. Positive evidence that the parties neither discussed nor intended any agreement as to the proportion of beneficial interest does not preclude the Court on general equitable principles from inferring such an agreement.
  
  

• Thus, wider contribution in terms of home making and child rearing may be taken into account in quantifying the beneficial interest. See Waite LJ in Midland Bank v Cooke
  
  "The duty of the Judge is to undertake a survey of the whole course of dealings between the parties relevant to their ownership and occupation of the property and their sharing of its burden and advantages. That scrutiny will not confine itself to the limited range of acts of direct contribution of the sort that are needed to found a beneficial interest in the first place. It will take into consideration all conduct which throws light on the question of what shares were intended."
  
  

• It would therefore appear that once the party seeking an interest has passed through the gate of common intention or inferred common intention then the wider contributions can be taken into account in assessing the share that the party has in the property. Cases relating to married couples are the same as cases relating to unmarried couples although there may be some differences as to the inferences to be drawn from their actions. See also Grant v Edwards [1987] 1 FLR 87. See also Walker v Hall [1984] 1 FLR 126 - woman's share in property assessed in exact proportion to the amount of her financial contribution to the acquisition of the property, i.e. contribution made by the parties to the acquisition are examined to establish the party's intention.
  
  

• See also Gordon v Deuce [1983] 1 WLR 563 - interest in property acquired on basis that financial contribution to household expenses allowed the man to pay the mortgage so contribution indirectly helped to purchase the property but intention as to beneficial ownership at the time the house is bought is crucial.
  
  

• See Lloyds Bank v Rossett but conduct which will not give rise to such an inference may still constitute sufficient detriment to make an express intention into an enforceable trust:
  
  

• so if co-habitee alters position in reliance on an agreement this could give rise to an enforceable interest in her favour by way of constructive trust or proprietary estoppel.
  See Cooke v Head and Eves v Eves.
  

• Direct and actual physical labour on the property such as the demolition and removal of building rubble help create a constructive trust to confer an interest. If the party is led to believe that the property would belong to them jointly there was an understanding or common intention that the Claimant was to have some sort of proprietary interest in the house.
  
  

• But the fact that property has been shared or that one party has spent money on it does not of itself suffice to expect beneficial entitlement: see Thomas v Faulkner-Brown [1988] FLR.
  
  

• Under English Law the fact that A spends money on B's property does not of itself entitle A to an interest in the property.
  
  

• There must be a common intention established before the spending of the money will create any interest in the property.
  N.B. Where conduct alone is relied upon in the absence of an express representation by the other partner that she or he is to have an interest - see Windeler v Whitehall [1990] 2 FLR.
  
  Co-habitee's claim to shares in her partner's home and business. Had not worked. Had received money from the Defendant and had made no financial contribution to the purchase. No equitable interest established. No direct evidence to show an intention that she should have an interest in the property. Nor was there conduct from which an intention could be held. Nothing substantially referable to the acquisition of property. Nothing done to relieve him of significant expenditure.
  
  

• Distinction between the effect of evidence on the one hand which was capable of establishing an express agreement or express representation a party was to have an interest and evidence on the other hand of conduct alone as a basis for an inference of the necessary common intention.
  
  

• There may be exceptional cases where parties agree to alter their beneficial interest after the house was bought. See Sekhon v Alissa [1989] 2 FLR 94.

NO COMMON INTENTION AT ALL BUT WAS THERE AN ESTOPPEL?
ESTABLISHING A RIGHT TO REMAIN (AND POSSIBLY AN INTEREST)

Proprietary Estoppel Requirements

• See Matharu v Matharu [1994] 2 FLR 597. In order to raise a proprietary estoppel the Defendant claiming the equity needed to show:
  
  

• that he or she had made a mistake as to her legal rights;
  
  

• that she had expended money or done some act on the basis of that mistaken belief;
  
  

• that the possessor of the legal right knew of the existence of his legal right which was inconsistent with the equity;
  
  

• that the possessor of the legal right knew of the mistaken belief of the person now claiming the equity;
  
  

• that the possessor of the legal right encouraged the expenditure by the person now claiming the equity, either directly or by abstaining from asserting his legal right.
  
  

• See Gillett v Holt and Another [2000] 2 FLR 266.
  
  

• The doctrine of proprietary estoppel must reflect the fundamental principle that equity was concerned to prevent unconscionable conduct.
  
  

• The court must look at the matter in the round. When ascertaining whether promises and assurances repeated over a period of many years as to future rights over property were sufficient to found a successful claim for equitable relief founded upon a proprietary estoppel, it was not necessary that the promise made was irrevocable.
  
  

• It was the other party's detrimental reliance on the promise that made it irrevocable.
  
  

• Detriment was required but it was not a narrow or technical concept. The requirement must be approached as part of a broad enquiry as to whether repudiation of an assurance was or was not unconscionable in all the circumstances.
  
  

• There must be sufficient causal link between the assurance and the detriment asserted.
  
  

• The issue of detriment must be judged at the moment when the person who had given the assurance sought to go back on it.
  
  

• The detriment must be pleaded and proved. In the case G and his wife had devoted the best years of their lives to working for H.
  
  

• See also Chan Pui Chun v Leung Kam Ho [2003] 1 FLR 23. Man promised woman he would divorce his wife marry her and give her a house. Man sent to prison for fraud. Woman kept the business going on the promise of marriage and a share in the business projects. On release, couple came to UK and bought a property which was held by an off shore company, the shares in which were held 49% to the man and 51% to the woman. Property could not not be sold without the consent of both parties. Relationship broke down and woman brought trust action for declaration as to her beneficial interest in the property.
  
  HELD
  
  

• The judge was entitled to find on the evidence before him that the man had promised that the woman should have a share in the proceeds of the business projects, that the woman had acted to her detriment in reliance on that promise and that in all the circumstances her beneficial share should be quantified as one half.
  
  

• The existence of a degree of uncertainty as to whether the man's promise extended to other projects did not lead to the conclusion that the promise relating to the two specific projects should be treated as so uncertain as to preclude the court from granting equitable relief in respect of it.
  
  

• There was no ground on which the court could interfere with the judge's evaluation that the woman had altered her position to her detriment in reliance on the man's promise and, as no specific share had been mentioned, the judge had been entitled to determine the extent of the woman's beneficial share in the two projects in question.
  
  

• The result would have been the same in this case whether the claim had been framed in terms of proprietary estoppel or of constructive trust.
  
  

• These cases of proprietary estoppel are usually cases where a dishonest or deliberate misleading of the other party is involved. In other words one party intends all along to keep the legal estate to himself and to have the whole beneficial interest and exclude the other party. Here the question is an assurance given albeit dishonestly that if the co-habitee did this the other co-habitee (the legal owner) would do that? Did the misled co-habitee do it? See Coombes v Smith [1987] 1 FLR 352.
  
  

• Encouragement engendered by the legal owner that some right had been granted in or over the property.
  
  

• The person in whom the encouragement has been engendered must act to his or her detrimental reliance. See also Grant v Edwards [1986] 2 ALL ER 426. He expressly and forcefully declared that their house would have been vested in joint names but for the fact that her name on the title would ruin her chances in her ancillary relief claim against her husband. "Once it has been shown that there was a common intention that the Claimant should have an interest in the house any act done by her to her detriment relating to the joint lives of the parties in is my judgment sufficient detriment to qualify. The acts do not have to be inherently referable to the house". See also Pascoe v Turner [1979] 1 WLR 431. Mr Pascoe left Mrs Turner and on departure said "the house is yours and everything in it". Assuming it was, Mrs Turner spent capital on repairing and improving it. P's action for possession failed - estopped from breaking his promise to transfer the house to her absolutely.
  

• Greasley v Cooke [1980] 1 WLR 1306 - Woman contributed to looking after household because of promise that she could live in the house rent-free for life. Allowed to do so. Non-financial contribution cannot confer a proprietary interest but may constitute detriment for the purposes of estoppel.
  
  

• See also Wayling v Jones [1995] 2 FLR 1029. The Claimant and Deceased live together in the Deceased's house from 1971 to 1975 and then separated for one year. In 1976 the Deceased bought a café with a flat above. The Claimant at his request returned and helped him to run the café. The Deceased made a will leaving the Claimant the flat, the café and the freehold of his house. Thereafter, changed both residence and business several times, Claimant continuing as Deceased's companion and running the business. The Deceased repeatedly promised to leave the Claimant his business and told him that he would update his Will but never did so.
  
  Held
  
  Where a person acted to his detriment in reliance on a promise made by another, the principle of proprietary estoppel applied provided there was a sufficient link between the promises relied upon and the conduct constituting the detriment. The promises relied upon did not have to be the sole inducement for the conduct. Once it had been established that promises had been made and there had been conduct by the Claimant of such a nature that inducement might be inferred then the Burden of Proof shifted to the Defendant to establish that the Claimant had not relied on the promises. On the facts, it was clear that promises had been made. The Claimant's conduct was such that inducement might be inferred and since the Claimant had stated in examination in chief that he would have left the Deceased if the promises had been withdrawn the Defendants had not discharged the burden of establishing that the Claimant had not relied upon the promises.
  
  

• See also re Basham (deceased) [1986] 1 WLR 1498
  
  

• Burrows & Burrows v Sharp [1991] Family Law 67. Informal agreement in relation to the ownership of a family home. The appellant purchased a council house where she lived at a discount. The mortgage payments had been made by the appellant's grand-daughter and her husband on the understanding that they would live in the home with the appellant and receive it when she died. A trust deed was drawn up but it did not accurately reflect the agreement. When the parties fell out the Respondents sought an order vesting the house in them in accordance with the trust deed and in response the appellant sought to evict them. The Respondents' argument that she was estopped from so doing was accepted by the Judge. Estoppel gave rise to an equity which the Court should perfect in the most appropriate way. The Appellant was ordered to pay the Respondents the money which they expended plus interest for the Respondents to vacate the premises.
  
  

• See also Baker v Baker and another [1993] 2 FLR 247. The Claimant, a secure tenant of a council house made an arrangement with his son and daughter-in-law that he would provide money towards the purchase of a house for them to live in and he would live there rent-free for the rest of his life. Disagreement and the Claimant left. In reliance on equitable estoppel had established a right to release inequity for the loss of his expectation that during his lifetime he would be able to enjoy without payment the use of a room of his own and share the amenities of living in a house.
  
  Deprived of right to occupy his own room, satisfaction of that equity should be the value of that right. See also Matharu v Amaru [1990] 2 FLR 597. In 1968 the Claimant bought the property which became the matrimonial home of the Defendant and the Claimant's son after their marriage in 1971. The Defendant's husband made extensive improvements to the property at his own expense. In 1988 the marriage broke down and in 1990 the Defendant obtained an order excluding the husband from the house. The husband died in 1991. The Claimant emigrated to Canada but returned the following year. The Claimant demanded that the Defendant vacate the property. His application for possession order was dismissed at first instance on the ground of proprietary estoppel. Also held that the Defendant enjoyed an unquantifiable beneficial interest in the property which was declared to be held on trust for sale. Claimant appealed.
  
  Held
  
  Proprietary estoppel was established on the facts of the case and the Judge had correctly decided that the Defendant's equity defeated the Claimant's claim for possession.
  
  The Defendant did not however acquire a beneficial interest in the property on the basis of the estoppel. What was created was a licence for the Defendant to remain in the property for life or such shorter period as she might decide.
  
  

• See also Lissimore v Downing [2003] 2 FLR 308
  Miss L lived with Mr. D a founder member of a well known rock band who owned a substantial country estate. When relationship broke down she claimed a beneficial interest in the estate.
  
  The basic rule under the doctrine of proprietary estoppel is that the representation made by the owner must relate to some specific property or to some part of the property that is objectively ascertainable.
  
  The alleged unspecific representations could not found a proprietary estoppel. They did not on their face relate to any specific property and were not expressed in terms that enabled an objective assessment of what was being promised. In the latter respect they contrasted with statements made to unpaid or underpaid business workers or business partners for whom commensurate reward could be objectively ascertained.
  
  None of the conduct relied upon by Miss Lissimore was induced by any assurance made by Mr. Downing.

IF ALL ELSE FAILS IS THERE A RIGHT TO OCCUPY?

• A contractual licence can arise if there is evidence of an agreement or intention to create a legally binding interest and contribution or other consideration to support a promise.
  
  

• Intention to create legal relations may be difficult to establish unless the relationship has effectively broken down and both parties wish to agree future arrangements. See Tanner v Tanner [1975] 3 ALL ER 776.
  
  

• Consideration may be established by relinquishing previous accommodation or agreeing not to apply for child maintenance: but see Horrocks v Forray [1976] 1 ALL ER 737 and Layton v Martin [1986] 2 FLR 22.
  
  

• Compare these cases with Ungarian v Lesnott [1990] FLR - implied trust based on the inferred intention of the parties, which gave the Defendant a right to stay in the house in which they were co-habiting for the rest of her life thus creating a settlement within the meaning of The Settled Land Act. Defendant was "tenant for life" and was therefore entitled to call upon the Claimant to execute a vesting deed in her favour and subsequently sell the property and re-invest the proceeds.
  
  

• There have been a number of cases involving the purchase of property by a relation where The Settled Land Act was mentioned: see Costello v Costello [1996] 1 FLR 805. Defendant and husband bought the property they had occupied for many years under the right to buy legislation. Purchase price provided by their son, the Claimant. A trust deed was executed by the parents and their son whereby the parents held the property in trust for their son absolutely subject to their right to live there rent free for life. After the father's death the Claimant sought to have the property transferred into his sole name and to that end asserted that the trust conferred on the Defendant a mere licence to occupy the property for the rest of her life. The Defendant claimed the effect of giving her a right to occupy the property for life was to make her the tenant for life under The Settled Land Act with a consequence that she was entitled to sell the property and require the trustees to apply the proceeds in buying a different property in which she would have a life right of occupation. The Defendant appealed against the judgement in favour of the Claimant.
  
  Held
  
  On true construction of the trust deed the Defendant was accorded a life interest in the property. Accordingly, the property was limited in trust to persons by way of succession and subject to the settlement, under which the Defendant was tenant for life for the purposes of The Settled Land Act 1925 with power of sale conferred by the Act.
  

QUANTIFICATION AND VALUATION OF THE BENEFICIAL INTEREST

• Quantification of any party's share in the property depends on the terms of the trust and the valuation of that interest can only be made at the point when the trust is to be determined and beneficial interests are to be converted into a form in which they can be distributed.
  

How did the parties intend that the property should be shared

• See Brown v Matthews [1990] 2 WLR 879. It would be possible with the permission of the Divorce Court for a statement to a welfare officer that the house was bought as a gift to the mother and grandmother of the child to be used in a property dispute as evidence of a common intention to share beneficial ownership. Court of Appeal discharged the injunction restraining use of this information.
  
  

• Quantification is a question of intention. Valuation of the beneficial interest is determined at the date of the sale or order.
  
  

• See Turton v Turton [198] 3 WLR 622. (Since that is when the statutory trust for sale terminates and the beneficial interests are realised on sale.)
  
  

• Thus the purpose of the trust may cease on separation but the trust itself will continue until the sale brings it to an end. "A property interest cannot be brought to an end by an event unrelated to the property itself, for example, by separation of the co-habitees": see Walker v Hall [1984] FLR 126.
  
  

• Importance of not confusing the quantification of shares and their valuation - the quantity of the person's share remains the same throughout - i.e. how the parties intended the property to be shared - but its value may vary according to the value of the property. "Valuing a property interest at a particular time does not turn it into money although it may be a preliminary to doing so".
  
  

• Where the intention of the parties is that the property should be shared according to their contributions to the purchase it was the mortgage liability of the applicant and not the value of the payments he actually made: see Marsh v Von Sternberg [1986] 1 FLR 536.
  
  

• The issue being one of quantification, the value of contributions was relevant only so far as it evidenced the intention of the parties as to what share the applicant should have. The value of a share bears no direct relationship to the value of contribution but it is related to it via its proportion to the value of the whole. The value of this proprietary interest can never be fixed while the trust exists.

VALUATION

• Contributions made by a remaining partner, e.g. mortgage payments. Usually credit is given for capital payments whereas interest is usually associated with value of sole occupation.
  
  

• Uncertainty of occupational rent where one co-owner has ousted the other: see Jones v Jones [1984] 3 WLR 862 and Dennis v McDonald [1982] 2 WLR 275.
  
  

• It has been said in re Pavlou that the presentation of a petition for divorce by the party remaining in occupation of the matrimonial home should normally be taken to signify a refusal to take the other party back and a willingness to pay an occupation rent thereafter.
  
  

• Mortgage payments treated as money had and received by the trust and not as the acquisition of a property right - otherwise intention would be that the trust terms were altered every time a payment was made.
  
  

• Outlay for renovation or redecoration which results "in a much better sale price" (see Griffiths LJ in Bernard v Josephs [1982] 2 WLR 1052) should have credit by repayment of the whole or part of money spent.
  
  

• Equitable accounting necessary after proceeds of sale realised but before money is distributed.
  
  

• For the purposes of equitable accounting there was no distinction to be made between a beneficial tenancy in common and a beneficial joint tenancy. The guiding principle was that "on a partition suit or order for sale the point of time at which severance occurred if there was a joint tenancy and the proportions in which the entirety should be divided between the former co-owners must have regard to any increase in its value which had been brought about by expenditure by one of them."
  
  

• Credit should be given for one half of the actual expenditure on any increase in the value realised thereby (whichever was the less) and one half of the increase in the value of the equity of redemption resulting from the capital element of the mortgage since the date of the co-owner's departure.

A CAUTIONARY TALE: SEVER OR BE SUED

• Early consideration should be given to severing the equity to protect co-habitees particularly at risk: e.g. seriously ill or elderly co-habitees.
  

• See Hunter v Babbage [1994] 2 FLR 806. Husband and wife held matrimonial home as beneficial joint tenants and lived there until separation in 1984. In course of divorce proceedings wife applied for ancillary relief. Agreement reached December 1989 and consent order drawn up to the effect that property was to be sold forthwith and proceeds of sale divided in an agreed proportion. The husband died before the agreement was finalised. The Claimants as executors of the Deceased applied to the Court to determine whether the beneficial joint tenancy in equity of the property had been severed by the service of the documents relating to the draft consent order so that a half share in the equity belonged to the Deceased's estate or whether the wife was entitled to the whole beneficial interest by survivorship.
  
  Held
  
  Correct inference from the Affidavit evidence and the letters between the party's solicitors was that there was an agreement for severance in 1989. That had the effect of severing the joint tenancy irrespective of whether the agreement between the tenants was expressively to sever or was to deal with the property in a manner involving severance. Notwithstanding the fact that the order was not necessarily specifically enforceable. Property held by wife for herself and the beneficiaries in equal shares.
  
  

• A notice under Section 36 of the Law of Property Act 1925 was effective even though the giver destroyed it after delivery to the correct address but before the joint tenant saw it: Kinch v Bullard [1999] 1 WLR 423.
  
  

• A joint tenancy can be severed by the tenant wishing to effect severance serving a Notice of Severance on the other joint tenant under Section 36(2) of the Law of Property Act 1925 and thereafter registering the severance at HM Land Registry.
  
  

• Severance can be effected in other ways. It may be sufficient for there to be a common intention or agreement between joint tenants that the tenancy should be severed even though there is nothing in writing: see Burgess v Rawnsley [1975] Ch 429.
  
  

• The effect of one joint tenant making an application for an order for sale or becoming bankrupt can be to sever the joint tenancy as can one joint tenant dealing with his interest as if it were held as a tenant in common, such as selling it or charging it: see Ahmed v Kendrick [1988] 2 FLR 22 and Re Drapers Conveyance [1969] 1 Ch 486.
  

IF IN DOUBT SEVER!!!

• See also Grindal v Hooper (Times Law Reports 8.1.2000). Where there was an express declaration of trust as to the beneficial ownership there was no room for any implied or resulting trust.
  
  

• Risk of claims for negligence if equity not severed and one or other co-habitees dies.