Barnes v Phillips

For a jointly owned home, a departure from equal beneficial ownership requires an actual common intention to alter the parties’ interests. That intention may be express or inferred from their conduct, but it cannot be imputed. Once an actual change is established, and the intended proportions cannot be ascertained, the court may impute fair shares from the whole course of dealing relating to the property.

That broad assessment may include mortgage payments, repairs and financial provision for children, provided that this does not create double liability. Fresh evidence on appeal will be refused where it could have been produced at trial with reasonable diligence, is unlikely materially to affect the result, or lacks probative value.

The parties had lived together and bought their family home in joint names. Following their separation, the respondent brought proceedings under section 14 of the Trusts of Land and Appointment of Trustees Act 1996.

His Honour Judge Madge held that the parties had initially owned the beneficial interest equally. He declared that, after a remortgage principally benefiting the appellant and subsequent dealings with the property, the respondent held an 85% share and the appellant a 15% share.

The appellant challenged the judge’s use of imputed intention, the quantification of the shares, and the relevance of child maintenance. He also sought to introduce further evidence concerning the remortgage. The central issue was whether an actual common intention to alter the beneficial interests could properly be inferred before the shares were imputed.

Appeal dismissed. Lloyd Jones LJ, with whom Longmore LJ and Hayden J agreed, upheld the declaration that the respondent held 85% and the appellant 15% of the beneficial interest.

1. The court reaffirmed the sequential approach in Jones v Kernott [2011] UKSC 53. In a joint-names case, the court must first ascertain an actual common intention to displace equality. That intention may be express or inferred from conduct, but cannot be imputed. Only after such a change has been established may the court impute the parties’ intended proportions where these cannot be directly ascertained or inferred.

2. The county court judgment did not expressly address the critical first stage. The Court of Appeal could nevertheless draw the necessary inference. The appellant had received virtually all of the remortgage proceeds, amounting to about one quarter of the available equity, for his own purposes shortly before the relationship ended. His later cessation of mortgage contributions also supported an inference that the parties intended their beneficial interests to change.

3. The judge was entitled to impute a 75:25 division at the time of the remortgage and separation, and then to adjust it to 85:15. The whole course of dealing was broad enough to include the parties’ mortgage payments, repairs and financial responsibility for their children. Financial contributions to child maintenance, or their absence, could be considered unless this would produce double liability. On the facts, any liability to the Child Support Agency was of limited significance and created no material risk of double counting.

4. Permission to adduce further evidence and to appeal on the additional ground was refused. The material failed the criteria in Ladd v Marshall [1954] 1 WLR 1489: it could have been produced at trial with reasonable diligence, was unlikely materially to affect the result, and lacked probative value.

• Court of Appeal (Civil Division) — dismissed the appellant’s appeal and upheld the 85:15 declaration: [2015] EWCA Civ 1056.
• Central London County Court — His Honour Judge Madge declared that the parties held the beneficial interest as tenants in common, 85% for the respondent and 15% for the appellant.