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Legal Treatment of the Family Home

Info: 2475 words (10 pages) Law Essay
Published: 17th Jul 2019

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Jurisdiction(s): UK Law

Traditionally, the legal treatment of the family home in property disputes has been problematic, despite the English courts developing different methods of using equitable devices to establish beneficial interests.

While recent approaches by the judiciary appear to have widened the scope of relevant factors beyond the traditional emphasis on financial contributions, it will be put that, in practice, the law has not progressed significantly beyond where it was in the 1970’s. Consequently, the law remains focused on monetary inputs, unsettled, and in dire need of reform.

This discourse will be prefaced by looking at the social and legal context of disputes over property rights in the family home. Subsequently, a discussion of the case law development will highlight pivotal trends to illustrate the difficulties faced by the judiciary. Finally, a discussion of some possible alternatives for reforming the law will follow.

Disputes over rights in the family home, is an emotionally charged subject that has a far reaching impact on people’s lives. These battles played out in the courts, where property and family law intersect, reflect a mixed bag of social and economic issues entangled with legal principles. Accordingly, the law has struggled with imposing commercial approaches to this domestic context.

When intimate relationships breakdown and disputes arise, the legal treatment of the home depends on the circumstances of the relationship between the parties. For marriages and civil partnerships, the law has a wide discretion to allocate property rights based on statutory guidelines and what the courts decide as a fair outcome based on the facts of each case. By contrast, when cohabiting couples separate these disputes tend to be problematic, and the courts have strained to apply the rigid principles of property and trust laws. Since the courts do not have the same discretion as with marital relationships, they have grappled with a patchwork quilt of doctrines and statutory rules to determine the property rights of the respective parties.

There are two forms of property ownership under English law. The legal owner is the registered owner declared on the conveyance, and the beneficial owner has the right to live in and use the property, as well as the right to share in the proceeds of the sale. In many cases, the legal and beneficial owners will be the same, as with married couples. Where they are different, this gives rise to a trust.

Under express co-ownership, where the parties hold the property under the declaration of an express trust, the terms of that trust shall determine the division of the equitable interests in the property. This declaration must be evidenced in writing and signed by the legal owners.

Under implied co-ownership, in the absence of an express declaration, the beneficial interests are determined according to implied trusts, which arise on the basis of strict principles of law and acts retrospectively imposing institutional trusts. Under the application of these trusts, agreements do not have to be in writing, and this exception provides the means for settling disputes as to how the home should be shared.

A few prevalent underlying themes are worth considering before discussing trends in the case law.

At this point is worth recognising that English law has struggled with its own traditions, whereby wives did not have property rights independent of their husband’s rights. In Gissing v Gissing, Lord Diplock took a radical view by recognizing other forms of common intentions between couples. Furthermore, the Law of Property Act 1925 is considered outmoded, as it was not designed to contemplate problems arising from co-ownership or quasi-marital relationships. Traditionally, this has favored the economically dominant partner, emphasizing financial contributions over all else. This failure to recognize the value of other types of contributions, sacrifices or investments in relationships leaves the law vulnerable to injustice.

When property disputes arise, two distinct legal steps must be taken. First the beneficial interest must be established, secondly, the respective shares must be quantified. Establishing the beneficial interest has focused on finding the common intentions of the parties since the House of Lords decision in Lloyds Bank v Rosset. This involves finding common intention through evidence of an express agreement between the parties, or direct contributions to the purchase price if no such agreement is found, whereby equity follows the law. Later cases departed from the restrictive two-limbed test laid down in Rosset towards more flexible approaches to finding common intention.

Quantification of the beneficial interests has lacked clarity since the 1970’s, when the twin cases of Pettitt v Pettitt and Gissing v Gissing reached the House of Lords. These significant decisions, where both claimants were unsuccessful, enabled the courts to move beyond the restrictive resulting trust doctrine which based the acquisition of rights solely on direct financial contributions to the purchase price, or “the solid tug of money” as Woodhouse J once put it.

However, along with more discretion and flexibility came uncertainty, a theme which continues to plague the courts even today.

But it is evident that many couples don’t make formal agreements when they buy a property.

Therefore, any subsequent search for evidence of common intention could be fictional. The alternative approach taken in Midland Bank v Cooke, is that beneficial interests should be distributed according to what the court considers fair taking into account all the circumstances, not restricted to direct financial contributions. This approach was at odds with the House of Lords in the trilogy of Pettitt, Gissing, and Rosset. Consequently, along with the exercise of this wide discretion came arguments from critics that the law was becoming too subjective.

In more recent cases, the courts have preferred the unconscionability approach, based on the claimant being denied a beneficial interest, and allocating equitable interests without the need to establish common intention. Opposing orthodox approaches, this doctrine considers what the court considers fair in the circumstances. This was employed in the sole legal owner case Oxley v Hiscock, whereby Chadwick LJ rejected the orthodox by arriving at a decision based on fairness, looking at the whole course of dealing between the parties, not on the fiction of common intention. In his attempt to conflate two different doctrines, Chadwick LJ stated “it may be more satisfactory to accept that there is no difference in cases of this nature between constructive trust and proprietary estoppel.”

Criticisms of this case have been leveled on a number of issues, including the effort to conduct a survey the entire case law in this area, seeking to reconcile the irreconcilable authorities.

Also, since the apportionment of shares seems closely tied to the financial contributions of each party, it is arguable that employing an updated version of the resulting trust approach would have rendered the same outcome. This case serves as a reminder that the judiciary are still searching for definitive explanation of the principles established in Pettitt and Gissing.

An alternative way to establish a claim, in contrast to implied trusts, is to base it on promissory estoppels. This is a remedial doctrine capable of providing a wide range of prospective remedies which do not impose institutional trusts. Once it is established that a person has been induced to suffer a detriment in reliance on a representation as to property rights, the court can award a wide range of remedies based on fairness.

After Oxley, the trend of diluting the precision from Rosset continued, with courts exercising discretion in finding agreements without identifying the actual understanding between the parties.

The next approach to develop emerged from the first case involving cohabiting legal co-owners to reach the House of Lords, Stack v Dowden, which provided an opportunity to bring some clarity to the grey areas that existed. The majority decision was based on the common intention constructive trust, whereby, the legal title being held jointly gave rise to the presumption that the parties intended the beneficial interest to be the same as the legal interest. Looking at the whole course of conduct in relation to the property, that presumption was rebutted by evidence of their common intentions. This gave rise to a common intention constructive trust where the beneficial interest in the property was held in unequal shares. The House of Lords unanimously dismissed the appeal, and subsequently formulated three core principles, signifying an important new development for the law in this area.

However, while this case was anticipated as the high-water mark for dealing with property rights in the family home, the overall outcome was somewhat disappointing for a number of reasons. Despite the impression of forging a new approach, this case seems to perpetuate the haunting influence of financial contributions as weighing heavily on all the members of the House. Since none of the previous case law was overruled and no new test was created, all the contradictory trends from the past three decades remain effective and unresolved.

While Stack took a broad view of financial contributions departing from the restrictive approach of Rosset, non-financial contributions were not accorded the same significance. Seemingly, this preserves the traditional focus on monetary inputs that runs like a thread throughout the gamut of the case law. Overall, the decision lacks clarity and represents a missed opportunity to bring certainty to the law.

Cases after Stack have applied the presumptions to measure when and how a case may be considered unusual enough to justify a rebuttal, focusing on the express or inferred intentions of the parties. Despite all of the incongruous swaying between doctrines, the emphasis continues to be on financial contributions.

The fall-out from this lineage of cases seems to illustrate how the courts have taken a number of different routes only to repeatedly arrive at the same conclusions. The result is multiple doctrines which seemingly shift between being conflated, contradictory, and distinct. This rendered vagarious decisions, many of which are irreconcilable and conflicting. For instance, it remains difficult to reconcile Lord Bridge’s constructive trust with Lord Browne-Wilkinson’s approach to resulting trusts.

This leaves the law in an unsettled state, crying out for reform, with solutions seemingly vague.

Further judicial consideration could provide the necessary answers, with another Rosset-type single owner case reaching the House of Lords. In light of the results of recent cases, such as Oxley and Stack, many would argue that reform is still desirable as a matter of social policy.

Alternatively, development of a new doctrine which is more adaptive to different circumstances, such as the ambulatory constructive trust proposed by Lord Hoffmann in Stack, may be helpful.

The Law Commission has been contemplating this area of law since 1995, and may still play a significant role in resolving these issues. In Stack, the majority seem to be waiting for the Law Commission to make proposals to Parliament, even though the Law Commission has not produced anything so far, nor are they planning to draft anything in upcoming publications. In July 2007, they published their recommendations to introduce a new scheme of financial remedies for cohabitants. But the Government did not accept their proposals, preferring to wait for the results of changes to Scottish Law, a move which has been criticized since Scottish law does not recognize equity.

Henceforth, we come back full circle with the ball batted back to Parliament yet again, with no satisfactory results thus far.

With the statutory rules regulating co-ownership outdated and no longer relevant and failing to reflect the needs of modern society, the words of Lord Reid in Pettitt still ring true: “the whole question can only be resolved by Parliament and in my opinion there is urgent need for comprehensive legislation”. But that was forty years ago, and next to nothing has happened yet. Meanwhile, Lord Lester’s Cohabitation Bill remains stalled in Parliament faced with mounting criticism and a lack of critical support.

So far, Parliament has taken a ‘hands off’ approach to property rights of cohabitants, though other forms of legislation have recognized cohabitants under the law. Many find it hard to fathom that Parliament has been willing to legislate for same-sex couples, but not for cohabiting women. As a growing policy concern, with family diversity entering the culture of legal regulation, the law needs to properly recognize the prevalence of quasi-marital relationships and the decline of marriage in order to keep pace with society. It follows that, with more people choosing alternatives to marriage, there is an increasing need for protection under the law.

Taking all of this into account, the following conclusions can be drawn.

The lineage of cases in this area illustrates that the law remains riddled with difficulties.

Property law has witnessed the role of equity expand and contract, sometimes rigid and sometimes yielding. Trends reveal the battle of opposing forces, whereby increased discretion has given the courts more flexibility in decision making versus the uncertainty that has resulted from outcomes that are often inconsistent, and sometimes conflicting.

Despite strident efforts by the courts over the last forty years, to develop doctrines that take account of a broader spectrum of factors, the imbalanced prevalence of monetary inputs remains influential. There is a lingering need for further development in the law amidst the changing landscape of English society, and social policy dictates that this extends beyond the scope of the judiciary.

By implication, it is imperative that Parliament step in and formulate a cogent set of principles with sufficient detail to cover all the different situations in which implied trusts operate. Only then will some clarity be brought to the muddied waters that have existed in this area of law for far too long. Until legislative intervention responds to these cries for help, inquiries involving beneficial interests will continue to torment the judiciary.

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