A detrimental decision on ownership of the family home?

Abstract

In Hudson v Hathway [2022] EWHC 631 (QB), Kerr J potentially made it easier for a cohabiting partner to claim a share greater than 50% in a jointly owned home. He held that in ‘joint names’ cases where there is no express declaration of trust but there is (at least) an express agreement about beneficial ownership such a partner need not prove that she acted to her detriment in reliance on a common intention to alter the initial presumption of joint beneficial ownership recognised by Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53. The decision, however, will excite considerable doctrinal controversy. Mr Hudson and Ms Hathway became a couple in 1990 and went on to have two sons. They bought Picnic House in 2007, and both became registered proprietors but without an express declaration of trust. They never married, and Mr Hudson left the home in 2009 having formed a relationship with another woman. Ms Hathway and both sons remained living at Picnic House. Between 2007 and 2015, the mortgage on the property was paid from Mr Hudson and Ms Hathway’s joint account, albeit that in practice he contributed more because of a higher salary. The parties’ prospects of selling the property were severely blighted by an oil spill from a neighbouring property in 2011, whose consequences took years to resolve. Over 20 months, the parties discussed financial arrangements over email. In August 2013, Ms Hathway accepted an arrangement whereby Mr Hudson retained beneficial ownership of some shares and a pension, while she would have the equity in Picnic House, its contents, savings and income from endowments. She committed to readying the house for sale as soon as the oil spill issue was resolved. By mid 2014 Mr Hudson was becoming impatient with the lack of progress and referred to the time that had passed since the parties ‘reached a deal’. He stopped contributing to the mortgage in January 2015, and Ms Hathway assumed sole responsibility for it. It was not until October 2019 that Mr Hudson sought an order for sale of Picnic House under the Trusts of Land and Appointment of Trustees Act 1996, with equal division of the proceeds. Ms Hathway agreed to sale but argued that she was entitled to all of the sale proceeds on the basis of a common intention on which she had detrimentally relied. At first instance, Judge Ralton found a clear agreement that Ms Hathway was beneficially entitled to all of the equity in Picnic House. He analysed it in the context of a constructive trust: the possibility that an email exchange might satisfy section 53(1)(b) of the Law of Property Act 1925 and thus evidence an enforceable express trust by analogy with Neocleus v Rees [2019] EWHC 2462 (Ch) was not apparently considered. He