My partner and I have never been married but our house was in our joint names. When we separated, we reached an agreement that I would have more of the equity in the home than them. After our separation they have continued to contribute more towards the home, as they did during our relationship.
My partner is now seeking to go back on our deal on the grounds I have not acted to my detriment in relying on it.
This is the situation Ms Hathway found herself in. Some years after her separation from Mr Hudson, they agreed that she would keep the home in its entirety, amongst other assets, whilst in return she would not make a claim against his shares and pension (as a cohabitee, such a claim would have failed in any event).
2 years after the agreement was reached, and frustrated by delays in selling the home following an oil spill, Mr Hudson stopped contributing to the mortgage. Ms Hathway took over the payments.
6 years after the agreement, Mr Hudson claimed 50% of the equity in the home. While he accepted that the agreement had previously been reached, he argued that Ms Hathway had not acted to her detriment in reliance on it so there had been no successful variation of their equal shares.
The starting point is always that equity follows the law: if the legal title to a home is in joint names, so too will the beneficial interests. In legal terms, the registered owners hold the beneficial interest on trust for themselves, presumably equally unless unequal shares are specified in the purchase documents or a trust deed.
This starting point can be varied if one party can establish that, either when the home was purchased or subsequently, the parties shared a different common intention. In other words, the party claiming a larger share is arguing that a constructive trust is in place and they will usually also have to show that they relied on that common intention to their detriment for the claim to succeed. It is often difficult to prove a different common intention but, in Hudson v Hathway, the express agreement reached between the parties was clear evidence. So, the question was whether it was also necessary for Ms Hathway to prove she relied on the agreement to her detriment for her constructive trust claim to succeed.
Mr Justice Kerr decided that, in joint names cases where there is an express agreement regarding beneficial shares in the home (rather than simply a promise by one party of a greater share for the other), the express agreement is of itself enough to establish a constructive trust without the need for additional detrimental reliance. It was made clear that, in this case, the deal reached between the parties was so obvious that it would be grossly unfair to allow Mr Hudson to resile from it..
Ms Hathway was able to rely on the express agreement and retain all the equity in the home.
If you find yourself in a position like that of Mr Hudson or Ms Hathway, or indeed have any query regarding cohabitation, do contact our national team of specialist family lawyers.