Lowson v Coombes

Where property is put into another person’s name for an illegal purpose, the transferor may nevertheless establish a resulting trust if the beneficial interest can be proved without relying on the illegality. That principle applied where an unmarried couple contributed equally to property purchased in one partner’s sole name to frustrate the other partner’s spouse’s possible claim to financial relief. The purpose fell within section 37(2)(b) of the Matrimonial Causes Act 1973, but no presumption of advancement applied. Tinker v. Tinker was distinguishable, and the clean-hands reasoning in Cantor v. Cox could not survive [1994] 1 AC 340.

An unmarried couple purchased several properties during their relationship. Each property was conveyed into the woman’s sole name, although the man contributed substantially to the purchases. After their separation, he claimed a declaration that the final property was held for them in equal beneficial shares and sought an order for sale.

The trial judge found a common intention to acquire the properties in approximately equal shares, but dismissed the claim after applying Tinker v. Tinker and Cantor v. Cox. The appeal required the Court of Appeal to determine the effect of the parties’ purpose of protecting the property from a possible claim by the man’s wife, and whether the man could establish his interest through a resulting trust without relying on that purpose.

The appeal was allowed unanimously.

1. Lord Justice Nourse held that the trial judge had found the parties’ actual intention to be joint beneficial ownership in approximately equal shares. The references to the man’s honesty and the authorities had obscured, but did not replace, that factual finding.
2. The purpose of placing the properties in the woman’s sole name was illegal. Section 37(2)(b) of the Matrimonial Causes Act 1973 enabled a reviewable disposition to be set aside where made to defeat a spouse’s claim to financial relief. The statutory power could be exercised despite the passage of many years. A purpose of preventing a spouse from looking to an asset in future financial proceedings was therefore materially different from ordinary protection against creditors.
3. Applying [1994] 1 AC 340, the illegality did not prevent recovery. The parties were unmarried, so no presumption of advancement applied. The claimant could establish his title through the resulting trust arising from his contribution, without relying on the illegal purpose. Since the contributions were equal, the defendant held one half of the beneficial interest on resulting trust for the claimant.
4. Tinker v. Tinker was distinguishable. It concerned a transfer between husband and wife, a presumption of advancement, legal advice, and a legally permissible purpose of protecting property from creditors. The present parties had received no such advice, and their illegal purpose did not compel an intention to give the property beneficially to the defendant. The clean-hands basis of Cantor v. Cox could not stand with [1994] 1 AC 340, although its result might possibly have been justifiable on its own facts.
5. Lord Justice Walker added that the recognition of an equitable proprietary interest acquired under an illegal transaction was distinct from enforcing an executory illegal contract. The enforcement of a resulting trust did not depend on specific performance. The court declared the claimant’s half interest, ordered a sale, and awarded costs here and below, subject to enforcement only with leave.

• Court of Appeal (Civil Division): In [1998] EWCA Civ 1849, the appeal was allowed. A declaration was directed, a sale was ordered, and costs were awarded here and below, subject to enforcement only with leave.
• Dartford County Court: The claim was tried before His Honour Judge Russell Vick QC at Medway County Court and dismissed on 4 December 1997.