With the Law Commission's recommendations for cohabitation law reform eagerly awaited this summer, Julie Exton hopes a recent House of Lords decision has clarified at least one issue


Two million couples cohabit in this country. More than 1.25 million children are dependent on a co-habiting couple. The trend is likely to continue. And recent research carried out by Bristol and Cardiff universities has reinforced the popular misconception relating to 'common law spouses'. It revealed that most had not appreciated that holding property on a 'joint tenancy' meant that each would have an equal share should the relationship break down, regardless of contributions.



In Stack v Dowden [2007] UKHL 17, [2007] All ER(D) 208 (Apr), Mr Stack and Ms Dowden had lived together for more than 20 years. They had four children. Their first property was bought in Ms Dowden's sole name, but in 1993 they purchased a house in Chatsworth Road, London, this time in their joint names. At that time, the form of transfer prescribed by the Land Registry did not require, or even give an obvious opportunity to, the transferees to state their beneficial interests as well as their legal title. Mr Stack and Ms Dowden did not do so but they did, as was required, confirm that the survivor of them was able to give a valid receipt for the capital monies received on sale.



It was accepted, following Huntingford v Hobbs [1993] 1 FLR 736, that such a declaration could not be taken as an express declaration of trust. Nor could it be relied on for the purpose of drawing an inference as to the parties' intentions, unless they had understood its significance (they had not).



The major issue before the court was whether a conveyance into joint names establishes a prima facie case of joint and equal beneficial interests unless and until the contrary is shown. The majority of the Lords answered that question in the affirmative (Lord Neuberger dissented as to the reasons but not the outcome of the appeal).



The questions to be asked, said Baroness Hale giving the principal speech, were: 'Did the parties intend their beneficial interests to be different from their legal interests?' and 'if they did, in what way and to what extent?' The burden would be on the person asserting the shares should be different. She warned against lightly embarking on such a task. She made it clear that transfers into joint names using the old forms should not be vulnerable to challenge simply because the owners had contributed unequally to the purchase.



Although 'context was everything', she identified many factors other than financial contributions which might be relevant to divining the parties' true intentions. These include:

l Any advice or discussions at the time of the transfer which cast light upon their intentions then;

l The reasons why the home was acquired in their joint names;

l The reasons why (if it be the case) the survivor was authorised to give a receipt for the capital monies;

l The purpose for which the home was acquired;

l The nature of the parties' relationship;

l Whether they had children for whom they both had responsibility to provide a home;

l How the purchase was financed, initially and subsequently;

l How the parties arranged their finances, whether separately, together or a bit of both; and

l How they discharged the outgoings on the property and their other household expenses.



She was clear that cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests 'will be very unusual'. Here, where Ms Dowden had made substantially greater contributions over the years and the parties had kept their financial affairs separate (other than the joint acquisition of the house), all the judges were satisfied that Ms Dowden had made out her case for a 65% share and that this was one such exceptional case.



Neither did Mr Stack obtain any compensation for being excluded from occupation, formerly on the basis of 'equitable accounting', but now provided for under section 13 of the Trusts of Land and Appointment of Trustees Act 1996. In determining the issue of payments to him for his alternative accommodation, the criteria laid down in the Act were to be applied in preference to cases pre-dating that regime. Here, the property had been bought as a home for the parties and their children and, at the time of the first instance hearing, three of the children were still minors.



This case, of course, involved joint ownership. However, their Lordships took the opportunity to review the currently unsatisfactory state of the law and the more common situation where a property is owned in the sole name of one party. Importantly, they appear to have disapproved (or refined and, arguably, restricted) the test laid down by Lord Justice Chadwick in Oxley v Hiscock [2004] EWCA Civ 546, [2004] 3 All ER 703 that, once some beneficial interest had been established, each party would be 'entitled to that share which the court considers fair, having regard to the whole course of dealing between them in relation to the property' (my emphasis).



Baroness Hale and Lord Neuberger in particular expressed concern at the idea that fairness should be the guiding principle, preferring instead to adopt the suggestion made by the Law Commission in its earlier Sharing Homes: A Discussion Paper (2002, Law Com No278) of 'undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intended'. It may be a subtle distinction but it is an important one. It emphasises that the search is for the result which reflects what the parties must, in the light of their conduct, be taken to have intended. It does not enable the court to abandon that search in favour of the result which the court itself considers fair.



The Law Commission's final report is expected in August 2007. Unusually, it will not include a draft Bill. In the meantime, this will continue to be a troublesome and, for some family lawyers, uncomfortable area. A common mistake is to ask the court to adjust the parties' shares where, in fact, the legal and beneficial ownership is clear. The conveyancing file will invariably contain important, if not crucial, documents. Often, however, it has not been seen even after disclosure and exchange of statements has taken place. Get it as early as possible!



District Judge Julie Exton sits at Bristol County Court