Detrimental reliance and the family home: orthodoxy restored?

Abstract

In Hudson v Hathway [2022] EWHC 631 (QB) (noted Sloan 2022), Kerr J excited much controversy by suggesting that detrimental reliance may not need to be shown by a joint legal owner seeking to establish an increased share of the family home under a common intention constructive trust. In a swiftly following judgment ([2022] EWCA Civ 1648), however, the Court of Appeal reaffirmed the requirement of detrimental reliance in both ‘sole’ and ‘joint names’ cases, albeit also concluding that the case did not turn on the point after all. Lee Hudson and Jayne Hathway, a separating unmarried couple, agreed in a lengthy email correspondence that Mr Hudson would retain full ownership of some shares and a pension, while Ms Hathway would have the equity in Picnic House, their former joint home, its contents, savings and income from endowments. The house was in joint names, without an express declaration of trust. 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 (see Sloan 2022 for more detail). At first instance, Judge Ralton found a clear agreement, forming the basis of a constructive trust, that Ms Hathway was beneficially entitled to all of the equity in Picnic House. He accepted that she had detrimentally relied on the agreement by giving up her claims to assets in Mr Hudson’s sole name. Mr Hudson appealed on the basis that the judge was wrong to find detrimental reliance. Ms Hathway countered that it was unnecessary to find such reliance in a joint names case, and that in any event the judge was correct to find detrimental reliance. Kerr J seemingly agreed with Ms Hudson that proof of detriment was not required in ‘joint names’ cases, but found it established on the facts. Mr Hudson appealed again. Originally, the submissions related to detrimental reliance. But at the Court of Appeal’s prompting, and with its permission, Ms Hathway’s counsel successfully advanced the new, alternative, argument that two of Mr Hudson’s emails complied with the statutory formalities for the disposition of an interest in land, so that the detrimental reliance issue did not arise. As Lewison LJ (giving the lead judgment with which Andrews and Nugee LJJ agreed) recognised, the question of whether the emails complied with statutory formalities was