Laskar v Laskar

The presumption that joint legal owners hold equal beneficial shares does not ordinarily govern property acquired primarily as a commercial investment, even where the owners are family members. In the absence of an agreement about beneficial ownership, their shares may be determined by their respective contributions under a resulting trust analysis.

A right-to-buy discount is attributable to the secure tenant whose occupation generated it. Joint mortgage liability may count as an equal contribution where the parties made no different arrangement and intended rental income to service the debt. An account of rental income remains discretionary and may be refused where its cost and complexity would be disproportionate.

A mother and her adult daughter jointly purchased a council property under the right-to-buy scheme. The purchase was funded by a statutory discount attributable to the mother's secure tenancy, cash contributions from both parties and a joint mortgage. The property was acquired primarily as an investment and was let to tenants.

HHJ Dennis Levy QC declared that the daughter held a 4.28% beneficial interest, based only on her cash contribution, and refused an account of rental income. Permission to challenge the primary factual findings was refused, but permission was granted to appeal the conclusion about beneficial ownership.

The issues were whether equal beneficial ownership should be presumed, how the right-to-buy discount and joint mortgage should be attributed, and whether an account should be ordered.

Appeal allowed. Lord Justice Neuberger delivered the judgment, with which Lord Justice Rimer and Lord Justice Tuckey agreed.

1. The approach to joint ownership in Stack v Dowden [2007] UKHL 17 was directed principally to property bought as a home in the domestic consumer context. It was inappropriate to apply that approach to a property bought primarily for rental income and capital appreciation, even though the purchasers were mother and daughter.

2. Even if a presumption of equal beneficial ownership applied, it was rebutted. The parties kept their finances separate, did not acquire the property as a shared home and made significantly different contributions. The daughter was introduced principally because the mother could not finance the purchase alone. In the absence of any agreement about beneficial ownership, the resulting trust analysis required their shares to reflect their contributions to the purchase price, subject to any later variation.

3. The right-to-buy discount was attributable entirely to the mother. Her secure tenancy and period of occupation made both the purchase and the discount possible. A nomination under section 123 of the Housing Act 1985 shared the statutory right to buy against the council, but did not determine the purchasers' equitable rights between themselves. Section 123(3) concerned joint ownership of the legal estate and went no further in relation to beneficial ownership.

4. The joint mortgage was attributable equally to the parties. They had no agreement that either would bear the repayments, and they intended the mortgage to be serviced from the property's rental income. Each therefore contributed half of the mortgage advance. Combining the mother's discount, half of the mortgage and cash contribution with the daughter's half of the mortgage and cash contribution produced beneficial shares of approximately two-thirds and one-third respectively.

5. An account of historic rental income was refused as a matter of discretion. Most rent had serviced the mortgage and property expenses, while the mother had managed the lettings, repairs and outgoings. An account would have generated disproportionate expense and disputes over allowances. The daughter's knowledge and earlier acceptance of the arrangements also weighed against relief. Her declared 33% interest nevertheless entitled her to seek an account of future income and outgoings.

The order below was varied by substituting a 33% beneficial interest for the daughter's 4.28% interest. The refusal of an account was upheld.

1. Court of Appeal (Civil Division): The appeal was allowed. The appellant's beneficial interest was increased from 4.28% to 33%, while the refusal of an account was upheld.
2. Central London County Court: HHJ Dennis Levy QC declared that the appellant held a 4.28% beneficial interest and refused an account of rental income.
3. Permission to appeal: Chadwick LJ refused permission to challenge the judge's primary factual findings but permitted an appeal against the conclusion concerning beneficial ownership.