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The problem is common enough: a property is bought as a home for an unmarried couple who intend to live as man and wife; both make financial contributions to the property, although it is bought in one partner’s sole name and there is no express declaration of trust. How are the proceeds of sale to be divided?
In theory, the answer lies in s14 Trusts of Land and Appointment of Trustees Act 1996, which allows the court to make a declaration as to the extent of each person’s interest. Moreover, s15 sets out guidance as to the matters that are to be taken into account (eg the intentions; the purpose for which the property is held; the welfare of a minor who might be in occupation; the interests of any secured creditor). However, in practice the courts adopt a much vaguer approach. This is well illustrated by a recent CA decision which looked at over 20 earlier cases, but yet made no mention of s15! The reality seems to be, therefore, that the courts hide behind a discussion of constructive and resulting trusts, as well as proprietary estoppel, but they mingle them with concepts of ‘fairness’. Thus, the starting point is to look for a common intention that each side should have a beneficial share, but even if there was no express agreement, it ‘will readily be inferred from the fact that each made a financial contribution’. That, then, simply leads one on to the basic question of assessing the parties’ respective beneficial interests and that is where we really revert to concepts of ‘fairness’, with the courts saying that ‘each is entitled to that share which the court considers fair, having regard to the whole course of dealing between them… including the arrangements which they make from time to time in order to meet the outgoings’.
Although the CA decision was meant to be a helpful review of the authorities, in practice it does little to assist. The most important piece of advice for property lawyers is to make sure that unmarried couples address these questions (and then supply answers) when they first buy the property. So, if you are acting on a purchase for an unmarried couple then do raise the issue and try to get something on file. As a starting point, there is a helpful questionnaire that can be adapted for use in [2004] SJ 807. For a commentary on Oxley v Hiscock [2004] EWCA Civ 546 see [2004] LSG 24 June 28; [2004] NLJ 952.
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