Hudson v Hathaway

The Court of Appeal dismissed the appellant’s challenge. The court held that (i) an e-mail exchange in July–September 2013 amounted to a signed written release/disposition of the appellant’s equitable interest in the family home and therefore satisfied the statutory formalities in section 53(1) of the Law of Property Act 1925, and (ii) in any event a common-intention constructive trust requires proof of detrimental reliance or a change of position to render it unconscionable for the legal owner to resile. The trial judge’s finding that the respondent had acted to her detriment (in particular by giving up perceived claims to the appellant’s assets) was open to him and was upheld.

This was an appeal from the High Court (Kerr J) concerning beneficial ownership of a family home, Picnic House, purchased in joint names by an unmarried couple who later separated. The claimant in the High Court (the respondent in this appeal) contended that the parties had agreed post-acquisition that she should have the whole beneficial interest, and in reliance on that common intention she acted to her detriment. The appellant sought an order for sale and equal division.

Procedural history: trial before HHJ Ralton; first appeal to Kerr J ([2022] EWHC 631 (QB)); second appeal to the Court of Appeal ([2022] EWCA Civ 1648).

Nature of relief sought: an order for sale of Picnic House with equal division of proceeds (appellant); respondent claimed the whole beneficial interest under a constructive trust arising from a common intention and detrimental reliance.

Issues considered:

• Whether the July–September 2013 e-mails complied with the statutory formalities of s.53(1) Law of Property Act 1925 (writing and signature) so as to effect an immediate disposition or release of the appellant’s equitable interest.
• Whether, as a matter of principle, a change in common intention post-acquisition can alter beneficial shares without proof of detrimental reliance.
• On the facts, whether the respondent had acted to her detriment in reliance on any changed common intention.

Court’s reasoning: The court first held that the July and September 2013 e-mails were writings and were signed for the purposes of s.53(1) LPA 1925 because the sender’s deliberate subscription of his name to an e-mail can constitute a signature which authenticates the document. On that basis the e-mails amounted to a release/disposition of the equitable interest and satisfied the statutory formalities. Separately, the court examined the substantive equitable principle and held that longstanding authority requires detrimental reliance (or an equivalent change of position) to crystallise a common-intention constructive trust; Stack v Dowden and Jones v Kernott did not remove that requirement. The trial judge’s evaluative finding that the respondent had relied to her detriment (notably by abandoning perceived claims to the appellant’s personal assets and by taking on the mortgage and upkeep) was open to him and was not vitiated by error. The appeal was therefore dismissed.

Appeal dismissed. The Court held that the July–September 2013 e-mails amounted to a signed written disposition/release of the appellant’s equitable interest in the house satisfying section 53(1) of the Law of Property Act 1925; and, as a matter of principle, a common-intention constructive trust requires proof of detrimental reliance or change of position, which the trial judge was entitled to find on the facts.

Appeal to the Court of Appeal from the High Court, King’s Bench Division (first appeal to Kerr J [2022] EWHC 631 (QB) following trial before HHJ Ralton); present judgment [2022] EWCA Civ 1648 dismisses the appellant’s second appeal and upholds the High Court’s substantive outcome.