#1781 - Family Property - Family Law

Family Property

The Ownership of Family Property

• Aims of the law

  • Law in this area needs to pursue three aims:

    • 1. The law should produce as high a degree of certainty as possible

    • 2. The law should reflect the wishes and expectations of most couples

    • 3. It should be practical and easy to apply

How does the law actually work? – Personal Property

• General Principles

  • Income belongs to the person who earned it

  • Personal property is presumed to belong to the person whose money was used to buy it, though this presumption is rebuttable

  • Ownership of property can be transferred from one person to another if there is an effective delivery of the property with evidence it is intended as a gift

  • The act of marriage, engagement or cohabitation itself does not change the ownership of property

• Jointly used bank accounts

  • Normally, a pooling of assets will indicate joint ownership. The key question is: “what is the purpose for which the fund is held?”

    • Jones v Maynard [1956]:

  • So the focus is on the intentions of the party to the fund

  • Any property bought from it is jointly owned if the property was purchased for the parties’ joint use

    • But if it was bought for one of the parties it seems likely that it will be regarded as belonging to that party

    • Re Bishop [1965]:

• Housekeeping and maintenance allowance

  • S.1 Married Woman’s Property Act 1964:

    • If any question arises as to the right of the husband or wife to money derived from any allowance made by the husband for the expenses of the matrimonial home

      • The money or property shall, in the absence of any agreement between them to the contrary,

        • Be treated as belonging to the husband and wife in equal shares.

  • Herring: Doesn’t apply the other way, but the courts would probably work it on the basis of the parties’ intentions.

• Gifts from one person to the other

  • Any gift from one to the other where gift clearly intended will lead to ownership by the receiver

    • However, if no evidence

      • Gift from H to W will be treated as gift under presumption of advancement

      • Gift from W to H will be treated as H holding property on trust for W

• Gifts to partners from third parties

  • Ownership depends on the donor’s intentions

    • Midland Bank v Cooke [1995]: A gift was given by W’s parents to the couple on their wedding day for them to buy a house together.

      • Waite LJ:

        • Intention of donor third party can be inferred from the circumstances

        • Here, gift to both because given so could buy house together.

          • Therefore, in equal shares.

• Express declarations of trust

  • Rowe v Prance: M bought a boat and wrote to his lover, W, detailing the various things he wished to do to her “on our boat”.

    • Held

      • This was a declaration of trust on the part of M of the boat

        • To be held in equal shares for both M and W.

        • W was therefore entitled to a half-share.

• Problems

  • Herring: The Law Commission has characterised the existing rules as arbitrary, uncertain and unfair

    • There is too much emphasis on who purchased a particular piece of property, which may be a matter of chance.

    • And there is uncertainty over when an express trust will be found – possibly attached to comments like “our boat”

    • By contrast, there may be couples whose general lifestyle demonstrates that they wish to share everything

      • But if there are not statements to this effect

        • Then they may find themselves in difficulty in proving co-ownership.

How does the law work? – Ownership of the Family Home

• Legal Ownership

  • This is a particularly heated areas, as homes have great monetary and emotional significance

    • And where the couple are not married, the courts have no powers to transfer assets from one party to another

    • Therefore, since it can only declare who actually owns the house, this will be highly important should the couple separate.

  • If land is registered, the legal owner can be determined by finding out who is registered as the owner of land

  • If the land is not registered, the person listed in the conveyance per s.52(1) LPA 1925 is the legal owner, as no land can otherwise be transferred legally.

• Equitable ownership

  • Express trusts

    • S.53(1)(b) LPA 1925 states that a declaration of trust in respect of land must be manifested and proved in writing signed by the settlor.

      • This means that an oral statement from the owner that they wish to hold the land on trust for someone else would not be sufficient for an express trust of land.

    • Per Goodman v Gallant, unless there is fraud or mistake, if the conveyance sets out the equitable shares there should be

      • Then the court will not need to consider the question further.

      • A conveyance into joint names with nothing further leads to a rebuttable presumption of equal shares per Stack v Dowden

  • Implied trusts

    • Most couples won’t think about the nature of the conveyance – especially if one party moves into another’s already owned house

      • Therefore, s.53(2) is crucial – saying s.53(1) does not affect constructive and resulting trusts.

    • Resulting trusts

      • Pettit v Pettit

        • Where A and B both contribute to the purchase price of a house, but it is put in B’s name only

          • the presumption is that they intend to hold it on trust for one another in proportion to their contributions.

      • This does not apply if there is a close relationship between A and B

        • Then, in the absence of any other evidence (Gissing), it will be found that A intends to give a gift to B.

    • Common intent constructive trusts

      • Lloyds Bank v Rosset

        • Lord Bridge: These can be found from

          • Any agreement, arrangement or understanding reached between the parties that the property is to be shared beneficially

          • A common intent can be inferred from a direct contribution to the purchase price or mortgage instalment.

      • Stack v Dowden [2007] is a slight departure from Rosset in that there is less of an emphasis of direct financial contributions

        • And that the whole course of conduct could be examined to find the parties’ intentions

        • And the calculation of what each party is entitled to under a constructive trust is not based on fairness

          • But is based on examining their whole course of conduct – such as the reasons for the house, the nature of the parties’ relationship

          • And this is also a separate issue to whether there is an interest at all –

            • the smallest of contributions does not mean that is the extent of that party’s share.

    • Proprietary estoppel

      • For A to establish PE over B’s property, needs to show:

        • A believes she has or is going to be given an interest over B’s property

        • A must act to her detriment in reliance on this belief

        • B must be aware of his own interests in the property

        • B must have known and encouraged/acquiesced to this belief

      • However, per Gillet v Holt, concionability and fairness may be a factor in each case.

        • Indeed, if there is great detriment, the courts may allow a very vague statement to be relied upon.

Improvements to the Home

• Married couples

  • S.37 Matrimonial Proceedings and Property Act 1970

    • If a spouse, civil partner of fiancé(e) [but not an unmarried cohabitant] makes a substantial contribution to the improvement of the property

      • In which the other spouse, civil partner of fiancé(e) has an interest

        • The improvement will create an interest in the property

  • This is however subject to any agreement that the parties reach

    • The improvement must be of monetary value – s.37 applies whether the contribution is in real money of money’s worth

      • And counts even if the person employed someone to do it for them.

    • The contribution must also be identifiable with the improvement in question

      • – so a wife who pays all the household expenses to enable the husband to pay for the improvements of a piece of property

        • Means that W can rely upon s.37

    • The contribution must be of a substantial nature

      • Re Nicholson (Deceased): Installing central heating worth 189 in a house worth 6000 is substantial

        • Spending 23 on a gas fire is not.

    • The contribution must involve an improvement of property, not merely maintenance of it

  • The share the successful party receives will be based on any agreement between the parties

    • Or failing that what the court considers just – normally a share which reflects the increase in value caused by the improvement.

Criticisms of the present law

• Can lead to great injuries to unmarried co-habitants

  • T v S(Financial Provisions for Children) [1994:

    • Johnson J:

      • The sadness here is that after a long and seemingly happy relationship

        • A mother of five kids, having never been married to their father

          • Has no rights against him of her own

      • She has no right to supported by him in the short, still less the long term; no right in herself to even have a roof over her head

• The laws are complicated and unclear

  • Many things unclear

    • Do we need a direct financial contribution?

    • Do the extent of the parties shares change from those at acquisition over time, or stay the same?

    • Is there need for detrimental reliance where there has been an express agreement? What about where there is no express agreement?

  • The unpredictability discourages negotiation and settlements.

• Inflexibility of Rosset

  • The requirement for an oral agreement between the parties is unrealistic, as not all couples will go into detail about the legal ownership of their property

    • The cases go to great lengths to pick up on casual comments

    • And the parties’ recollections of their “tenderest exchanges” are unlikely to be consistent when they’ve gone through a break-up.

  • Similarly, the need for some kind of spoken promise on both constructive and...