Author: Helena Luckhurst
This article is taken from Helena Luckhurst’s blog The Wealth Lawyer UK
The thorny issue of a couple’s beneficial interests in a jointly owned property following relationship breakdown has once again been examined by the court, this time relating to a Privy Council decision on appeal from the Bahamian Court of Appeal. The case concerned the relationship between Mr Marr and Mr Collie, who together had jointly purchased several properties over the years in the Bahamas during their 17 year relationship.
The last major decision on this point came out of the 2007 English case of Stack v Dowden. It confirmed the principle that, in domestic situations, ‘the starting point where there is joint legal ownership is joint beneficial ownership…unless and until the contrary is proved’. To reach a different outcome, there needed to be evidence that the parties shared a common intention that the beneficial ownership should be held unequally. The intention need not be expressly stated by either of the parties – inferences from conduct and conversations throughout the relationship would be relevant. This mode of analysis was to be preferred to the legal principle of a presumption of a resulting trust, where joint owners of property hold the entire beneficial interest on trust for whichever of them pays the purchase price, if only one of them had paid for it.
Stack concerned the beneficial ownership of a home. However, in the Marr case, the relationship was both personal and commercial. Mr Marr had funded the purchase of a home for him and Mr Collie but there were other residential properties, purchased as investments. Although the facts were disputed between the parties, Mr Marr, a banker, used his own funds to pay the deposit and serviced any debt associated with their purchase, while Mr Collie provided his building skills. No declaration of trust existed setting out how the equity was owned by the two parties. Did the reasoning in Stack apply only to ‘the purely domestic setting’? The court in Marr said no.
The Marr case is authority for extending the Stack approach to jointly acquired investment property, where there is an element of commercial endeavour as well as a personal relationship. The intention of the parties is still critical where a property is bought in the joint names of a cohabiting couple, even if the purchase is for pure investment. Putting a property into joint names is evidence of intention but not conclusive evidence. Purely commercial transactions, where there is no intention to derive any mutual benefit, continue to fall outside the Stack common intention analysis. The case also extends the Stack analysis to a wide range of jointly owned assets, in this case including a car, boat and artwork.
Helena Luckhurst, Partner, Fladgate LLP (email@example.com)