Wright v Johnson

In disputes over beneficial ownership of a home acquired by unmarried co-owners, the parties’ common intention remains paramount. A court should not treat equitable accounting as an automatic consequence of separation, one party’s payment of mortgage instalments, or one party’s non-occupation. Whether an account is required depends on the intention inferred from all the circumstances. The same approach applies to claims for occupation rent. A claim may be barred where the claimant accepted that the property would remain occupied rent-free. However, rent actually received by one co-owner must be accounted for according to the parties’ beneficial shares.

The parties were former unmarried co-owners of a registered freehold house acquired jointly in 1976. The transfer was unavailable, and the register contained no express declaration of trust, although it included a restriction associated with a tenancy in common.

The Edmonton County Court ordered sale and divided the net proceeds equally, subject to an adjustment in favour of Mr Wright for mortgage payments. Miss Johnson appealed. Mr Wright cross-appealed, seeking sole entitlement or further adjustments for mortgage payments and occupation rent. The central issues were the parties’ beneficial interests and whether equitable accounting was required before distributing the sale proceeds.

1. Appeal and cross-appeal. Miss Johnson’s appeal was allowed to the limited extent that the adjustment in Mr Wright’s favour for mortgage instalments was deleted. The net proceeds were to be divided equally, subject to an inquiry and account for any rent received by Miss Johnson. Mr Wright’s cross-appeal was dismissed.

2. Beneficial ownership. The court accepted that, when the property was acquired, the parties intended to hold it as tenants in common in equal shares. That conclusion made it unnecessary to resolve disputes about the purchase price or the parties’ initial contributions. The court also rejected the estoppel and waiver grounds, and held that the trial judge’s relevant factual findings were open to him.

3. Equitable accounting. The observations in Bernard v Josephs [1982] Ch 391 did not establish a rule requiring an account in every case after co-owners separated. The parties’ intention remained decisive. On the facts, the separation had no real significance in relation to the children, and Mr Wright’s mortgage payments were intended to benefit them rather than create a credit against Miss Johnson. No adjustment for those payments was therefore justified.

4. Occupation rent. Mr Wright was not entitled to charge occupation rent. He had not sought possession against the children and grandchildren occupying the property, nor demanded rent from them, and was therefore taken to have accepted their rent-free occupation until sale. That barred relief against Miss Johnson.

5. Rent received. If Miss Johnson had received rent from any occupant after 1 July 1995, she was required to account for one half of it in the distribution of the proceeds.

• Court of Appeal (Civil Division): The court allowed Miss Johnson’s appeal to the extent stated, dismissed Mr Wright’s cross-appeal, ordered an inquiry and account for rent received, and varied the county court order.
• Edmonton County Court: His Honour Judge Tibber ordered sale of the property and equal division of the proceeds, subject to an adjustment in favour of Mr Wright for mortgage instalments.