Wilcox v Tait

Where co-owners hold land under an express declaration of trust, the declaration determines their beneficial shares. Equitable accounting is a separate, fact-sensitive exercise. It arises only after the shares have been established and should generally be undertaken when the property has been sold and a fund is available for distribution.

In an ordinary cohabitation case, the court may infer from cohabitation that neither party is to account for expenditure incurred for their joint benefit while the relationship continues. That is an evidential inference, not an absolute rule. The relevant question is the parties’ intention as to how expenditure was to be borne.

Miss Wilcox and Mr Tait became joint registered proprietors under a 1994 Transfer which declared that they held the property as beneficial joint tenants. After their relationship ended, Miss Wilcox sought under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 a declaration of equal beneficial ownership, an order for sale, division of the proceeds and an account of rental income.

The county court declared that the parties had equal beneficial shares but ordered equitable accounting from the purchase of the property in 1990. It ordered Miss Wilcox to account for mortgage payments, repairs and improvements, treated her beneficial interest as extinguished, transferred the property to Mr Tait and dismissed her application for sale. The appeal concerned the timing and scope of equitable accounting, mortgage and endowment-policy payments, and accounting for the period before separation.

Appeal allowed. The Court of Appeal set aside the county court’s order. Lord Justice Jonathan Parker gave the judgment, with which Lord Justice Auld agreed.

1. The parties’ equal beneficial interests were properly reflected by the express declaration in the 1994 Transfer. The court should therefore declare equal shares and order a sale. The conclusion was consistent with Goodman v Gallant [1986] 1 FLR 513 and Lord Upjohn’s dictum in Pettit and Pettit [1970] AC 777.
2. Equitable accounting is distinct from determining beneficial ownership. It is a reflection of, and derives from, the parties’ beneficial interests. It can arise only after those interests have been established. The exercise is fact-sensitive, and no general rule fixes its commencement or determines automatically which payments must be credited.
3. In a cohabitation case, the relevant issue is the parties’ intention or common understanding as to how expenditure was to be borne. In the ordinary case, the court may infer from continued cohabitation that expenditure incurred for their joint benefit during that period was not intended to give rise to later accounting. That inference is not absolute. A departure from the parties’ arrangement may justify accounting before separation. Clarke v Harlowe was correctly understood in that qualified sense and was approved.
4. The judge had not heard evidence about the parties’ intentions. It was therefore premature to make a final accounting order which extinguished Miss Wilcox’s beneficial interest. The net proceeds should ordinarily be divided only after the property has been sold and a fund is available. Authorities concerning post-separation payments or different factual settings did not establish a contrary general rule, including Marsh v von Sternberg [1986] 1 FLR 526 and Re Pavlou [1993] 1 WLR 1046.
5. Miss Chadwick’s acceptance that Mr Tait had applied £4,000 to the mortgage was not an admission that Miss Wilcox was accountable for that sum. Nor did agreement on figures in a draft order amount to consent to liability. The delay argument, based on Coley v Coley [1975] Fam Law 195, failed because there was no equivalent evidence that Mr Tait had been led to assume that no claim would be made.
6. The court declared that the parties were beneficially entitled in equal shares and ordered sale by public auction, with conduct of the sale given to Miss Wilcox’s solicitors and liberty for Mr Tait to bid. After sale, the matter was remitted to a district judge to determine distribution of the net proceeds if agreement could not be reached.

• Court of Appeal (Civil Division): On 13 December 2006, the appeal was allowed and the county court’s order was set aside. Equal beneficial shares were declared, a sale was ordered and the accounting issue was remitted for determination after sale: [2006] EWCA Civ 1867.
• Kidderminster County Court: HHJ Geddes, on 20 March 2006, declared equal beneficial shares but ordered accounting from 1990, transferred the property to Mr Tait and dismissed the application under section 14 of the Trusts of Land and Appointment of Trustees Act 1996.