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3-01-2020

Thomas v Bulathwela - A Reminder of the Differing Treatment of Domestic and Non-Domestic Property

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The High Court has considered at [2019] EWHC (Ch) 3511 the position between spouses in establishing the beneficial interest of property not being their matrimonial home and when that property is solely owned by one of them.

It is a reminder that we have two separate areas of law dealing with establishing beneficial interest. Arguably, both areas are seeking to establish the common intention of the parties but how this is achieved is done differently. Practitioners will now be very familiar with the processes as set out by Baroness Hale in Stack v Dowden as follows: 

  •      If there is a specific declaration of trust, that is binding and conclusive unless and until it is set aside;
  •      If there is no such specific declaration, the court will see if surrounding evidence leads to an implication that the parties had a common intention as to the beneficial interest;
  •      If there is no such evidence giving rise to the implication, do principles of fairness require the courts to impute such an intention.

From this Baroness Hale provided a non-exhaustive list of factors to be considered such as, whether the parties were married, if they had children or how they arranged their finances.

At the time, the decision in Stack was seen as ground breaking as it was a departure from the previous regime as set out in cases such as Pettit v Pettit and Gissing v Gissing which relied upon there being direct or indirect contributions to the purchase price to establish the beneficial share under either resulting or constructive trust principles.

This case was, therefore, one dealing with the Pettit and Gissing line of authorities rather than Stack. The party claiming a share did, therefore, have to show either that there was an intention at the time of purchase that the property was a joint asset or that, through contributions to the purchase price, a share could be established on trust principles.

The property was let to a daughter of the family who paid rent. The evidence as to contributions to the purchase price was poor and uncorroborated. On appeal, it was sought to adduce further evidence as to payments towards the mortgage. The Court exercised caution about equating mortgage payments as those for the purchase of the property as they could equally have been acquisition of the mortgage debt.

There was no evidence to satisfy the first instance court that the claimant should be entitled to a share of the property on trust principles.

The fact that the parties had executed a charge over the property to secure joint liabilities was not in itself referable to the purchase of the property and so evidence no common intention or resulting trust.

The appeal was dismissed.

The case highlights the differing approaches for non-domestic property even between spouses but also that the burden of proof to establish that interest must be satisfied with hard evidence. The court is unlikely to be willing to make assumptions about the intention of the parties merely because they are married when dealing with non-domestic property.

 

About the author:

Graham McPhie is a partner at Moon Beever LLP specialising in a wide range of litigation including commercial and insolvency litigation.

If you have any questions regarding the article or would like some advice, please contact Graham on gmcphie@moonbeever.com

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