Peter Jolley discusses the case of Hudson v Hathway [2022] EWCA Civ 1648

The Court of Appeal has left it beyond any doubt that ‘detrimental reliance’ is an important requirement for establishing a common intention trust in property disputes between former cohabitees.

The parties were former cohabitees who purchased a family home together without making an express declaration of trust. Where the legal title to the property is held in joint names, without an explicit declaration, it is presumed that beneficial ownership is held jointly in equal shares, unless the contrary is proved. The parties’ shared intentions then fall to be considered, whether expressed or inferred from their conduct.

In this case, the parties had separated and later exchanged a series of emails in which it was agreed that Mr Hudson should have sole ownership of his shares and pension and Ms Hathway should have sole equity in the family home. Mr Hudson ceased to contribute to the mortgage and six years later issued a claim for an order for sale and equal division of the sale proceeds.

On a first appeal, Kerr J decided that the parties had made a “deal [which] was sufficient to establish the common intention and the common intention was sufficient to establish the constructive trust.” Detrimental reliance did not need to be shown where the common intention was demonstrated by the parties’ express agreement.

On this second appeal, the Court of Appeal held that in the context of a constructive trust, a party claiming an increase in their equitable share due to a changed common intention must show detrimental reliance on the changed intention. This will confirm the position generally understood by practitioners in this field.

Of note, Lewison LJ deemed the claim to the shares and pension was sufficient detriment – in other words, Ms Hathway had a constructive claim over what were deemed joint assets accrued in circumstances where Ms Hathway had taken time from her career to raise the parties’ children.

As well as dealing with detrimental reliance, the judgment also deals with two other areas of law: making a new point on appeal and the formalities required for dispositions of equitable interests in land.

In relation to the first of these, an appellate court should not generally permit a new point on appeal if it would necessitate new evidence or, had it been run below, it would have resulted in the trial being conducted differently with regards to the evidence. Lewison LJ outlined the relevant factors to consider and invited Ms Hathway to amend her Respondent’s Notice to argue that the emails from Mr Hudson, which expressed the parties’ common intention, complied with the statutory formalities in s.53(1)(c) of the Law of Property Act 1925.

In relation to this second issue, it was held that Mr Hudson had formally signed away his interest in the property in writing, in compliance with the statute. While it is well established that an email satisfies the written requirement, the authorities cited on signing off an email with your name amounting to a signature are cases dealing with this issue in a commercial context. This decision confirms those principles are also applicable in a domestic context.

The full decision is available on Bailii here

11th Jan 2023

Peter Jolley

Call 2014