The England and Wales Court of Appeal (EWCA) has found that a former cohabitant seeking a greater share in a home bought in joint names with no declaration of trust must change their position or show detriment.
The case involves a house bought in 2007 without a declaration of trust by Lee Hudson and Jayne Hathway. After the pair separated in 2009 Hudson moved out whilst continuing to pay most of the mortgage, whilst Hathway stayed at the home with their two children.
When the pair formally split in 2013 it was decided that Hudson Hathway would retain the equity from the house and its contents. Since then, however, Hudson requested the house be sold with him retaining an equal share of the sale. The judge quickly dismissed these claims due to Hathway owning the equity after the pair’s separation.
However, Hudson then took the matter to the England and Wales High Court (EWHC) for an appeal, claiming that his former partner had not changed her legal position following the separation. He also stated that as they were never married Hathway had no lawful rights to his other assets. He argued that as detriment is necessary to make the agreement enforceable in equity Hathway did not have a rightful claim to sole ownership of the house. Hathway disputed this as she claimed she did not have to show detriment as the house was held in joint names, which also did not have an express declaration of trust.
The EWHC judge, Kerr J, ruled that there was no need to Hathway to show detriment or change of position and ruled against Hudson, awarding Hathway the outright ownership of the house. This ruling sparked controversy with some legal experts, such as James Saunders, barrister at New Square Chambers, stating that:
“The conclusion that an express agreement to vary shareholdings (lacking statutory formalities) itself supplies the relevant unconscionability to bind is highly questionable.”
The court rejected the EWHC’s claim that detrimental reliance was no longer required, as judge Lewison LJ stated:
‘The overwhelming weight of authority both before and after Stack v Dowden and Jones v Kernott is to the contrary. Moreover, to hold that an oral agreement, disposition or declaration of trust was binding without more would directly contradict two statutory provisions. Equity cannot repeal the statute.”
In addition to this, Lewison cited the recent judgment of Briggs J in Guest v Guest (2022 UKSC 27) as he explained:
“Detriment is relevant to both the arising of the equity and to the remedy. Without reliant detriment there is simply no equity at all. This reflects the notion that it is the reliant detriment which makes it unconscionable for the promisor to go back on his promise.”
Ultimately though the EWCA upheld Kerr’s judgment as they believed that the requirement of detrimental reliance had been met. The EWCA also found that emails that were exchanged between Hathway and Hudson in 2013 confirmed Hudson’s intention to give sole ownership of the home to Hathway and complied with the necessary statutory formalities for transferring an interest in land or a declaration of trust of land. The EWCA stated:
“Hudson added his name to the bottom of the e-mails. That is an entirely conventional way to end (or ‘sign off’) an e-mail and I have no doubt that it satisfies the requirement in the authorities that it was added to authenticate the document. Adding your name at the end of an e-mail confirms that the e-mail comes from you. That seems to me enough to mean that the e-mail is signed by you for the purposes of s.53(1) LPA 1925 [the Law of Property Act 1925].”