O'Kelly v Davies

In a sole-name family-home dispute, the non-registered cohabitant must establish any beneficial interest by proving a common intention constructive trust. There is no presumption of joint beneficial ownership. The parties’ intention and their shares are determined objectively from their conduct and whole course of dealing. Where the intended shares cannot be inferred, the court may determine fair shares from that course of dealing. Illegality does not bar relief merely because legal title was placed in one name for an unlawful purpose. Relief remains available if the beneficial interest can be established without relying on that purpose or agreement. Whether reliance is necessary depends on the evidence and the judge’s findings.

The parties were long-term cohabitants. The appellant held the legal title to the family home in her sole name. The respondent claimed an equal beneficial interest, relying on the parties’ contributions, continued cohabitation and financial arrangements.

The first-instance judge found that the sole-name arrangements had been made partly to facilitate fraudulent benefit claims, but inferred a common intention that the respondent should have an equal beneficial interest. He made a declaration to that effect. The appeal challenged both the inference of common intention and the conclusion that public policy did not prevent the respondent enforcing his equitable interest.

1. Disposition. The appeal was dismissed. Lord Justice Pitchford gave the principal judgment, with which Lord Justice Beatson and Lady Justice Gloster agreed.
2. Beneficial ownership. In a family-home case where the property is held in one party’s sole name, the starting point is that the legal owner holds the beneficial interest. The non-registered claimant must establish a common intention constructive trust. The principles in [2011] UKSC 53 require common intention to be inferred objectively from conduct. The whole course of dealing is relevant, and fair shares may be assessed where the parties’ precise intentions cannot be ascertained. The distinction between resulting and constructive trusts does not require a different approach to the evidential assessment in this context.
3. Illegality. The principle in [1994] 1 AC 340 is that equity will not assist a claimant who must rely on an unlawful purpose. It does not, however, prevent enforcement of an equitable interest which can be established without relying on that purpose. The principle is not confined to resulting trusts. A constructive trust based on common intention may also be enforced where the relevant intention is inferred from lawful conduct and financial dealings.
4. Application. The judge was entitled to find that the parties’ relationship continued, that the respondent provided the family income and made substantial mortgage and renovation contributions, and that the later property replaced the earlier property as the family home. Those matters supported an equal beneficial interest independently of the unlawful reason for placing title in the appellant’s name. The unlawful purpose explained the transactions, but it did not create the beneficial interest.
5. Distinction. Barrett v Barrett, [2008] EWHC 1061 (Ch), was distinguishable. There, the alleged beneficial interest depended on payments which could only be explained by reliance on an express unlawful agreement. Whether illegality prevents enforcement depends on the nature of the claim, the evidence and the findings of fact.

• Court of Appeal (Civil Division): dismissed the appeal.
• Swansea Civil Justice Centre: His Honour Judge Vosper QC declared that the appellant held 74 Lon Olchfa on trust for herself and the respondent in equal shares.