Author: Anna Wakeling
Cohabiting couples were the fastest growing family type between 1996 – 2016 in the UK, more than doubling in numbers from 1.5 million families to 3.3 million families. This trend shows little sign of abating. Yet contrary to popular belief, there is no such thing as a “common law marriage”. Despite more and more people choosing to cohabit, the law affords far fewer rights and protection to cohabitees on separation and death, than to married couples or civil partners. Matters can become even more complicated when the cohabitees are not only in a personal, but also a business relationship.
The recent Privy Council decision in Marr v Collie  UKPC 17 has helped clarify the debate surrounding the beneficial ownership of property held jointly by an unmarried couple, particularly where such property has been purchased as an investment.
The dispute in Marr concerned the personal relationship between Mr Marr and Mr Collie and their ownership of a series of jointly owned investment properties (as well as a home, pieces of art, a boat and a truck) in the Bahamas which they had purchased for their joint benefit during their 16 year relationship. The properties were predominantly funded by Mr Marr. No declaration existed specifying the parties’ respective beneficial interests in the properties. The case addressed the beneficial ownership of these properties following the end of the parties’ relationship.
The case centred on the approach to be adopted when determining beneficial ownership pitting the views of leading judges against the other. Was it that set out by Lady Hale in the leading House of Lords decision in Stack v Dowden  2 AC 432 that the starting point is that a conveyance in joint names indicates legal and beneficial joint ownership unless the contrary is proven? Or, should it be limited to the purely domestic setting as espoused by Lord Neuberger in Laskar v Laskar  EWCA Civ 347 (and promoted in his dissenting judgment in Stack), so that property purchased solely for investment purposes should instead be held in accordance with the traditional presumption of a resulting trust whereby joint owners of property hold it on trust according to their contributions to the purchase price?
It was held at first instance that Stack did not apply to investment properties even if applied to cohabiting couples, and that the burden was on Mr Collie to rebut the presumption of a resulting trust in favour of Mr Marr, which he had failed to do.
The decision was reversed by the Bahamian Court of Appeal, which found that there was sufficient evidence to find a common intention of the parties to share the beneficial interest, while holding that the resulting trust presumption would have applied in the absence of such evidence.
Mr Marr appealed. The Privy Council disagreed with the approach of the Bahamian Court of Appeal calling it “unsustainable”. The Board identified a “clash of presumptions” and found that there was no “triumph of one presumption over another” in determining whether the investment properties were held on a resulting trust or on the basis that joint legal ownership signifies joint beneficial ownership. Instead, the Board concluded that context is key and is set by the parties’ common intention. What matters is the parties’ intentions, or lack of, at the time of purchase and, if applicable, whether those intentions changed over time.
The Privy Council allowed Mr Marr’s appeal, accepting his evidence that he had not intended to bestow an equal beneficial interest in the investment properties on Mr Collie. Rather the properties had been put into joint names on the understanding that Mr Collie would make an equal contribution to their development, which he had subsequently failed to do. The Privy Council also concluded that the approach in Stack was not limited to the “purely domestic setting” and that it also applied to investment assets. It therefore remitted the case to the Supreme Court in the Bahamas for determination of the appropriate beneficial ownership of the investment properties.
As demonstrated by the Privy Council’s decision, intention as to ownership, or lack of it, is key when an asset is purchased jointly by a cohabiting couple. Whilst putting a property in joint names may, on the face of it, seem like clear evidence of intention to jointly share the beneficial interest, it would be unwise to rely on this as irrefutable evidence of this intention. The case thus underlines the importance for those who invest in property as co-owners, be it purely a home or investment property, to properly consider and take independent legal advice at the time of purchase on their intentions as to how the property will be held and how such ownership should be documented.
To prevent these disputes arising it is open to the parties to enter into an express agreement governing co-ownership or a cohabitation agreement or a declaration of a trust. Clearly documenting ownership of joint property in this manner should limit the scope for dispute as to the extent of their respective interests in any joint property. Obviously these agreements should be kept under review and updated if any changes arise.
 Families and households in the UK: 2016, published by the Office for National Statistics (4 November 2016).
Anna Wakeling, Associate, Fladgate LLP (firstname.lastname@example.org)