Lee Hudson v Jayne Hathway

A joint tenant may release an equitable interest in land to the other joint tenant. No particular form of words is required, but the release must satisfy the writing and signature requirements in Law of Property Act 1925, section 53(1). An email deliberately subscribed with the sender’s name is signed if the subscription authenticates its contents.

Where no effective written disposition exists, an express or inferred common intention to alter beneficial shares does not alone create a common intention constructive trust. The claimant must have acted to their detriment in reliance on that intention. Detriment is assessed broadly and may include giving up a claim or opportunity with a real, albeit uncertain, prospect of benefit.

Unmarried former partners owned their family home, Picnic House, in joint names without an express declaration of trust. After their separation, they agreed by email that the respondent would take the house and its proceeds, while the appellant retained his shares and pension.

The respondent later paid the mortgage and relied on the agreement when giving up perceived claims to assets held in the appellant’s sole name. HHJ Ralton held that she was entitled to the whole beneficial interest through a common intention constructive trust. On a first appeal, Kerr J upheld that result in [2022] EWHC 631 (QB), holding that detrimental reliance was unnecessary, but finding it established if required.

On the appellant’s second appeal, the court considered whether the emails were an effective written release and, alternatively, whether a post-acquisition change in beneficial shares required detrimental reliance.

1. Appeal dismissed. The respondent was permitted to advance the new point that the appellant’s emails effected a release of his beneficial interest. It was a pure issue of law, capable of resolution objectively from the emails. The appellant had adequate opportunity to respond and no relevant evidential prejudice was shown.

2. The emails of 31 July and 9 September 2013 clearly showed an immediate intention by the appellant to divest himself of his equitable interest in Picnic House. A joint tenant cannot technically assign an interest to the other joint tenant, but may release it. The emails therefore amounted to a disposition for the purposes of section 53(1)(a) and (c) of the Law of Property Act 1925.

3. The emails were writing and were signed. The appellant’s deliberate subscription of his name, including the sign-off Lee, was an objectively sufficient act of authentication. The statutory requirements did not require a wet-ink signature. The release was consequently effective and gave the respondent the whole beneficial interest.

4. Although that conclusion disposed of the appeal, the court also decided the point for which permission had been granted. In the absence of compliant signed writing, a common intention constructive trust requires detrimental reliance on the common intention, whether the intention arose on acquisition or later. Stack v Dowden and Jones v Kernott did not remove that requirement. A bare oral agreement cannot override statutory formalities.

5. The trial judge was entitled to find sufficient detrimental reliance. Detriment is not narrowly confined to financial expenditure and must be assessed in the round. The respondent gave up a known and legally recognisable, though uncertain, opportunity to claim an interest in assets held in the appellant’s sole name. That was a substantial change of position made in reliance on the parties’ agreement.

• Court of Appeal (Civil Division): The appeal was dismissed. The court upheld the respondent’s entitlement to the whole beneficial interest, principally because the emails effected an effective release under the Law of Property Act 1925.
• High Court, King’s Bench Division: Kerr J dismissed the first appeal in [2022] EWHC 631 (QB) . He held that detrimental reliance was unnecessary, but also upheld the trial judge’s finding that it was established.
• County Court: HHJ Ralton held that the respondent was entitled to the whole beneficial interest by a common intention constructive trust, having relied detrimentally on the parties’ agreement.