HUDSON v HATHWAY

In a domestic consumer case concerning a family home bought in joint names without an express declaration of trust, a later express agreement altering the beneficial shares may itself establish the constructive trust. Separate proof that the beneficiary acted to her detriment, or irrevocably changed her legal position, is not required where the agreement is more than a unilateral gratuitous promise. The governing question is whether the evidence makes it unconscionable for the party with the legal title to resile from the agreed beneficial ownership. The court must distinguish this context from arm’s-length business arrangements, where evidence of the conduct or contribution expected in return may be required.

The parties were unmarried cohabitants who had bought their family home in joint names without a declaration of trust. After separation, they agreed by email that the appellant would retain his shares and pension and that the respondent would have the house, its contents and related assets. The appellant later claimed that the house should be sold and the proceeds divided equally.

The County Court found a clear agreement giving the respondent sole beneficial ownership and held, alternatively, that she had acted to her detriment by foregoing possible claims against the appellant’s personal assets. The appeal concerned whether separate detrimental reliance was necessary and, if so, whether the respondent had shown it.

1. Appeal dismissed. The agreement clearly evidenced a later common intention that the respondent should have 100 per cent beneficial ownership of the house, rebutting the presumption that joint legal ownership carries equal beneficial ownership.
2. In a case of this kind, where a family home is bought in joint names by cohabitees without an express declaration of beneficial interests, the principles in Jones v Kernott apply. The parties’ common intention is deduced objectively from their words and conduct. The agreement itself was sufficient evidence of the changed intention.
3. Separate proof of detrimental reliance or an irrevocable change of legal position was not required. A constructive trust could arise under section 53(2) of the Law of Property Act 1925, notwithstanding the writing requirement in section 53(1)(b), where the express agreement made it unconscionable for the legal owner to resile from it.
4. The conclusion was confined to the domestic consumer context. A unilateral oral declaration making the claimant a mere volunteer would not suffice. Contractual consideration principles were not directly applicable, although mutual promises might themselves supply any necessary change of position.
5. Alternatively, the first-instance judge was entitled to find that the respondent’s decision to forego a possible claim against the appellant’s personal assets amounted to sufficient detriment. The judge’s assessment of the quality and character of the relevant conduct was evaluative and disclosed no appealable error. The other alleged detriments were properly treated as peripheral rather than as the basis making it inequitable to resile.

The appellant’s claim for equal division of the sale proceeds therefore failed, and the respondent remained the sole equitable owner.

• High Court (Queen’s Bench Division) — The appeal from the County Court sitting at Bristol was dismissed.
• County Court sitting at Bristol — His Honour Judge Ralton dismissed the claim for equal division of the sale proceeds and declared the respondent sole equitable owner of the property.