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Graeme Fraser examines the beneficial ownership of properties in unmarried couple disputes in Family Law

  • June 02, 2017
  • By Hunters Law

Context counts for a lot – determining the beneficial ownership of properties in unmarried couple disputes

Each party was relying on common intention but they could not agree on what it was. Mr Marr had purchased various properties over a 10-year period, making all the financial contributions, but at the same time placing them in joint names with Mr Collie.

Isaacs J, the trial judge, decided that the burden was on Mr Collie to rebut the presumption of a resulting trust in favour of Mr Marr but Mr Collie had failed to discharge it. But in the same judgment, he decided the result would be the same even if the common intention constructive trust analysis applied in Stack v Dowden were applied.

The Court of Appeal, however, focused on the intention of Mr Marr, and in particular an email that Allen P stated that to Marr a joint purchase meant a 50% interest held by each party. The Privy Council, however, considered that the trial judge had not examined the reasons why Mr Marr agreed to convey properties into his and Mr Collie’s joint names, when anticipated financial contributions from Mr Collie did not materialise.

It was also unsustainable for the Court of Appeal to permit a conclusion that the common intention of the parties that the beneficial interest should be shared because the trial judge had presumed without any proper examination of the actual intentions of the parties that Mr Marr did not intend to confer an equal beneficial interest in the investment properties on Mr Collie and that the decision to place the properties in joint names was on the basis that Mr Collie would make an equal contribution to their development.

The Board of the Privy Council highlighted that in determining the division of the beneficial interest when the parties are unmarried, save perhaps where there is no evidence from which intentions can be identified, the answer is not to be provided by the triumph of one presumption over another. Context counts for, if not everything, a lot. Context here is set by the parties’ common intention – or by the lack of it. If it is the unambiguous mutual wish of the parties, contributing in unequal shares to the purchase of property, that the joint beneficial ownership should reflect their joint legal ownership, then effect should be given to that wish. If, on the other hand, that is not their wish, or if they have not formed any intention as to beneficial ownership, but had accepted advice that the property be acquired in joint names, without considering or being aware of the possible consequences of that, the resulting trust solution may provide the answer.

The presumption that a conveyance into joint names indicates both legal and beneficial joint tenancy unless and until the contrary is proved (per Lade Hale in Stack) should not be confined exclusively to a domestic setting, although if the conveyance occurs where the parties are only involved in a personal relationship, that makes it easier to infer the intention. The intention of the parties will still be a crucial factor where there is a commercial dimension to the acquisition of the property. Where additional evidence is available in the form of testimony from the parties themselves as to their intentions when the property was acquired, this can rebut the presumption of resulting trust.

This direct focus on the intentions of the parties could only be avoided if applied to purely domestic arrangements. Laskar is not authority for the proposition that the principle in Stack applies only in the domestic consumer context. Where a property is bought in the joint names of a cohabiting couple, even if that is as an investment, it does not follow inexorably that the resulting trust solution must provide the inevitable answer as to how its beneficial ownership is to be determined.

This case emphasises the importance of extracting a clear account of the contributions made by the parties when properties are purchased. It should now occur to practitioners that it is just as important to ascertain the intentions of partners in a relationship when a family home is purchased or when an investment property is acquired, regardless of the circumstances. Mr Marr could undoubtedly have avoided an intense examination of why the properties were acquired by entering into an express declaration of trust for each property specifying the contributions he expected Mr Collie to make. Additionally, the initial intention or lack of it at the time of purchase may change.

A clearly drafted cohabitation agreement, which includes the flexibility of a review clause, that avoids ambiguity and the parties can understand, with the benefit of independent legal advice is extremely helpful in enabling an unmarried couple to consider and agree how they would wish their finances and property to be dealt with when that relationship ends, taking into account their respective contributions.

Graeme Fraser

Partner

This article was originally published in Family Law and can be accessed here

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