Legal Recognition of Unmarried Couples
It is clear that unmarried couples do not enjoy the same statutory recognition as their married counterparts.[1] This is most conspicuous on the breakdown of a relationship,[2] which in the latter case will allow for discretionary relief. On the other hand, the position of unmarried cohabitants is still decided under the ‘ordinary law’ of property, which continually leads to ‘unfairness between the parties’.[3] This ‘unfairness’ involves the requirement, in cases where there is no express declaration of trust and that only proof of financial contribution or detrimental reliance[4] will permit the acquisition of a beneficial interest in the home. However, a number of new appellate decisions appear to mirror a more ‘family-centric’ approach to this issue by highlighting the context of the claim as worthy of special consideration, which is sometimes defined as the ‘familiarisation’ of property law, i.e. ‘the process by which both judges and the legislature have modified general principles of land law or trusts to accommodate the specific needs of family members’.[5] Stack v Dowden[6] and Jones v Kernott[7] represent the continuance, if not the culmination, of this trend.
In Stack v Dowden, itconcerned a conveyance into joint names but the financial contributions to the property were unequal and, except from repayments of the mortgage, the parties kept their finances mostly separate. The claimant, Ms Dowden, had made the greater contribution and argued that a common intention to share unequally could be inferred. This seemed to be the only fair outcome as it is not expected that couples would decide upon shares of the property whilst co-habiting. Cohabitees will usually be under the impression of always staying together. However, Lady Hale took the opportunity to emphasise that the law had ‘moved on’[8] since Lloyd’s Bank v Rossett[9]‘in response to changing social and economic conditions’[10] and that in the joint enterprise context ‘many more factors than financial contributions’ could be taken into account when determining the parties’ intentions. However, contra Chadwick LJ in Oxley v Hiscock[11] Lady Hale stressed that she was not open to the court ‘to impose its own view of what is fair’ but to determine ‘the shared intention of the parties, actual, inferred or imputed‘[12]. In the context of joint names cases Lady Hale set out a list of criteria relevant to determining the parties’ common intentions, including the reason for the purchase being made in joint names, the ‘purpose for which the home was acquired’ and the parties’ ‘individual characters and personalities’. But, Stack left two questions open: firstly, when could a court ‘impute’ a common intention? And, secondly, was the holistic process of inference or imputation restricted to the ‘joint enterprise’ scenario?
The facts of Jones v Kernott are similar to that of Stack v Jones, and the Supreme Court were unanimous in finding a common intention to depart from the joint names presumption of equal shares. The Court were similarly unanimous as to quantification,[13] although the difference in approach was notable.[14]Â The findings in Stack that intention could be ‘imputed’, Lady Hale and Lord Walker found that whilst the conceptual difference between inference and imputation was clear, ‘the difference in practice may not be so great’[15] as ‘the scope for inference is wide.’[16] Lord Wilson elaborated, effectively conflating the two concepts by suggesting that the process of inference could include ‘fairness’ in the Oxley sense[17]. The minority, as in Stack, were more cautious, finding an appreciable difference in practice if an ‘ordinarily rigorous approach’[18] to inference were taken. Lord Kerr thought the language of imputation clouded the issue, preferring a clearer approach between the inquiry into intention and the imposition of a fair outcome, which was specifically distinct[19].
In the outcome one is no closer to an answer; the majority avoided the issue by claiming to infer a common agreement, accepting the decision of the trial judge, whereas the minority arrived at the same outcome by imputing the requisite intention, yet it gave no indication as to what the process involved. Therefore, what does appear to be clear is that imputation is only available at the quantification stage, and only then when the inquiry into actual intentions has failed.[20]
A separate question is whether this wide approach to inference or imputation is available to claimants seeking to obtain an interest in sole name cases. This has been assumed by some commentators, such as Gardner[21] and Dixon[22], although the cases commonly cited in support are explicable on other grounds. For example, in Laskar v Laskar[23] a resulting trusts-type analysis was preferred, whereas in Holman v Howes[24] it was not argued that the claimant had a beneficial interest in the property.
The better view is that the holistic approach to inference and imputation is restricted to cases analogous to Stack and Jones; homes purchased in joint names with joint liability for any mortgage. The notion of ‘joint enterprise’ was heavily emphasised in both cases and it appears to be the sole foundation upon which the holistic approach can be built. In sole name cases, by contrast, ‘the starting point is different’, which may exclude the same inferences being drawn. Given these apparent limitations on the scope of Stack and Jones, it would be unrealistic to assume the principles they represent will apply outside of the ‘joint enterprise’ context.
Cohabitees in Scotland have equal rights as married couples do, so why is this not applied in England. Co- habitation has become much more common thus, eliminating any negative aspects the law attaches to it would relieve cohabitee’s ambiguity in instance of separation. Gender gaps plays a key role, men on average earn more than their counterparts, they would thus be able to contribute more financially. Women would always be found lacking as they would be the ones who would be looking after the home. Home improvements adds value to the property,[25] despite the law stating that it does take this into account; The outcome is Stack does not fully mirror this conclusion. The court only seems to look at financial contribution more, physical contribution onto the property should not be overlooked. The law creates gender inequality as it seems that the only way the court could offer a fair and just outcome in cases is to infer what the couples would have wanted. In most cases this is looking at who contributed more financially.
In conclusion, whilst it is now clear that the law has ‘moved beyond’ the orthodoxy of focusing on financial contributions, this appears to apply only to those cases coming within the Stack v Dowden or Jones v Kernott definition of ‘joint enterprise’. The position in sole name cases, on the other hand, remains unaltered, suggesting that a dual regime has now emerged. The holistic approach is fully in evidence in cases of ‘joint enterprise’, at both the qualification and quantification stages, but in a sole name case the de facto resulting trust analysis still applies. If both stages truly are governed by the parties’ common intentions then the evidentiary processes should be the same, yet this is evidently not so. Although we await an appropriate case to test the limits of the holistic process of inference or imputation, it would appear that, in the absence of an express declaration, the prioritisation of financial contribution will continue to prejudice financially weaker claimants.
Question 3
The first issue is whether Showstopper Bank (SB) the mortgagee,will have a right to possess Mary’s property,the mortgagor.
A mortgage is a charge by deed by way of legal mortgage.[26] It is a contract between the mortgagee and mortgagor and once the mortgagor repays the loan, the contract is terminated.
The mortgagee is entitled to rights and remedies in the event that a mortgagor fails to fulfill the repayment schedules.[27] Remedies include the sale and the appointment of a receiver;[28] taking possession and foreclosure, which will rarely be encountered in practice.[29]
Where a legal mortgage has been created,whether by demise or by legal charge
[30] and no provision is made for the retention of possession by the mortgagor,[31] the mortgagee is entitled to immediate possession.[32] The mortgagee will be able to recover the full sums due by the mortgagor through sale of the property,and by suing on the covenant to pay the full sums due.[33] Moreover,a mortgagor does not need to default on the payments,the mortgagee has the power to take the property”before the ink becomes dry”, [34] according to s.95(4).[35] Clarke LJ in Ropaigealach states “banks could take possession the next day”.[36] Although this power has restrictions; as a default is needed,the mortgagee must act fairly towards borrower.[37] A mortgagor can only seek possession to secure the debt owed and no other collateral intentions.[38]
Therefore,SB will have a right to take possession of the property at any time,regardless of a defaulted on her payment.Although it does not mention whether Mary has signed a mortgage contract,one can assume that she has for practicality reasons.The mortgage contract that Mary has signed, the “ink became dry”[39] thus,this gives an immediate right to possession.This is regarded as SB bank enforcing its security for the money that they have lent to Mary.However,the fact that Mary has defaulted on her payments,gives the bank a greater right of seeking possession as SB is securing the debt owed.
Furthermore,a mortgagee can only seek vacant possession of the property by seeking a court order.If a mortgagee is found to use violence to gain possession of an occupied premises without court order,it can be found as a criminal offence under s.6 of the Criminal Law Act.[40] The banks need to possess the land before selling it.Mortgagors are also protected under the Eviction Act 1977 [41] as a mortgagee cannot harass an occupier in order to gain possession.
Accordingly,SB should apply for a court order in order to seek possession of the property.SB must not attempt to enter the property and take possession as Mary is still living in the property.In Ropaigealach,[42]occupiers were not living in the property hence,possession of the property was allowed without a court order.If SB attempted to enter,they could be found liable for a criminal offence.
On the other hand,the mortgagor is also entitled to rights and remedies.
The AJA 1970,[43] s36 provides that where the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage the court may:
- adjourn the proceedings [44]
- stay or suspend execution of the judgment or order,[45] or
- postpone the date for delivery of possession,for a period the Court thinks reasonable [46]
In consequence,the court would apply s36 [47] as it is likely that Mary would be able to find another job and make the payments again provided that Mary is able to provide evidence of actively trying to find a job.In Caunt,[48] Lord Justice Russell states that possession proceedings can be adjourned for a ‘short time’.[49] This gives the ‘mortgagor a limited opportunity to pay off the mortgage’.[50] It appears that Mary would be able to pay back “any sums due under the mortgage” within a reasonable period as she is actively looking for a new job.The reasonable time period, as stated in Cheltenham [51],is considered to be the remainder of Mary’s mortgage.Once,Mary finds another job,it is very likely that her financial circumstances will improve thus,SB would not need to seek possession of the property.
As a note,it is unlikely that SB would be able to take possession of the house abruptly.SB has to follow the procedures in the MCOB.[52] It clearly states that eviction would be the last resort and that mortgagees should seek another alternative other than taking possession.It is unlikely SB would be able to take possession at an early stage.Moreover, the pre-action protocol for possession should also be consulted,this would enable SB and Mary to make contact and come to a wise decision before the court proceedings.
To conclude,it appears SB would not be able to exercise possession as it is likely that Mary would be able to find a job which would enable her to pay any sums due.However,if Mary is not able to provide evidence of being able to pay off the mortgage,SB could take possession and proceed to sale.
The second issue is whether SB would be able to apply for the proceeds of the sale of the property.
Most mortgage agreements contain a provision that gives the mortgagee power of sale.[53] As soon as the legal date of redemption has passed the power of sale arises.[54] The mortgagee’s power of sale arises under LPA,[55] s 101[56] and is regulated by LPA 1925,[57] s 103.[58] This allows a mortgagee to instigate possession proceedings once one of the conditions are met:[59]
- Two monthly instalments have not been paid OR;[60]
- A notice requiring payment of the mortgage money has been made and the payment has not been made three months after service. [61] OR
- There has been a breach of some provision in the mortgage deed
The notice must be made in writing to the mortgagor.It must be noted that if the mortgagor sells the property before the power of sale becomes exercisable,the mortgagor can sue the mortgagee under s 104 (2) (d).[62]
Consequently, Mary has defaulted on her payments; although it does not state how long, it can be assumed that it has been more than three months as SB wants to take possession. SB power of sale becomes exercisable under s 103 [63] as Mary’s legal date of redemption has passed hence, SB is able to sell the property to acquire the money back. If Mary had not satisfied one of the requirements mentioned above, SB would not have been able to exercise their power and SB can be sued by Mary under LPA 4 (d).[64] It must be noted that once SB sells the property,Mary’s equity of redemption is destroyed.[65]
In exercising its power of sale, the mortgagee has the following duties to the mortgagor:
- Mortgagee is under an equitable duty to act in good faith but it does not have a fiduciary duty to the mortgagor.[66]
- Mortgagee must take reasonable care to obtain a proper price.[67]
- Mortgagee is not bound to postpone the sale in the hope of obtaining a better price.[68]
Accordingly,SB must only sell the property for the purposes of regaining its security back and not simply waiting for a better offer from another buyer.
Once the sale has taken place,the mortgagee becomes a trustee of the proceeds of sale for the mortgagor.[69]The mortgagee must apply the following funds after the mortgage has been paid:
1. Costs in selling the property [70]
2. Any money due under the property [71]
3. Any subsequent mortgages [72]
Consequently, SB will have to pay any charges and costs occurred in selling Mary’s property. It does not appear that Mary has any other mortgage;thus SB will not have to use the money to pay any subsequent mortgage.Furthermore, any remaining money after the proceeds of the sale will be paid back to Mary after the outstanding debt has been paid.[73]
Overall, SB will be granted the right to exercise the power of sale.
Bibliography
Books
Ben McFarlane et al, Land Law: Text, Cases and Materials 2nd ed (OUP, 2012)
Chen-Wishart, M. (2008), Contract Law, 2nd Edition, Oxford: University Press
Dixon, M. (2009), Modern Property Law, 6th Edition, Routledge-Cavendish
Furmston, M. (2007), Law of Contracts, 15th Edition, Oxford: University Press
Kevin Gray and Susan Francis Gray, Elements of Land Law 4th ed, (OUP, 2009)
Thompson, M.P. (2003), Modern Land Law, 2nd Edition, Oxford: University Press
Articles
Bridge, ‘Cohabitation: Why Legislative Reform is Necessary’ [2007] Fam Law 911
Dixon, ‘Editor’s Notebook: The Still Not Ended, Never-Ending Story’ [2012] Conveyancer and Property Lawyer 83
Gardner, ‘The Future of Stack v Dowden’ (2011) 127 LQR 13
Hayward, ‘Family property’ and the process of ‘familialisation’ of property law’ Child and Family Law Quarterly 24(3): 284-303
Lawson, ‘The Things We Do For Love: Detrimental Reliance in the Family Home’ (1996) Legal Studies 218
Mee, ‘Jones v Kernott: Inferring and Imputing in Essex’ (2012) Conv 167
Pawlowski, ‘Imputed intention and joint ownership – a return to common sense: Jones v Kernott‘ (2012) Conv 149
Reports
Law Com. No. 274, Eighth Programme of Law Reform (London: Stationary Office, 2001)
Law Com. No. 278, Sharing Homes: A Discussion Paper (London: Stationary Office, 2002);
Law Com. No.307, Cohabitation: The Financial Consequence of Relationship Breakdown (London: Stationary Office, 2007)
Cases
Burns v Burns [1984] Ch 317
Birmingham Citizens Permanent Building Society v Caunt [1962] 1 Ch 883
Cheltenham and Gloucester Building Society v Norgan [1996] 1 WLR 343
Cooke v Head [1972] 1 WLR 518
Downsview Nominees v First City Corporation [1992] UKPC 34
Eves v Eves [1975] 1 W.L.R. 1338
Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317
Holman v Howes [2007] EWCA Civ 877
Jones v Kernott [2011] UKSC 53
Laskar v Laskar [2008] EWCA Civ 347
Lloyd’s Bank v Rossett [1991] 1 A.C. 107
Medforth v Blake [2000] Ch 86
Morris v Morris [2008] EWCA Civ 257
National and Provincial bank v Ahmed [1995] CA
National Westminster Bank plc v Skelton[1993] 1 All ER 242, [1993]
Oxley v Hiscock [2004] EWCA Civ 546
Pulk v Mortgaging services [1993] 2 All ER 481
Quennel v Maltby [1979] 1 All ER 568
Ropaigealach v Barclays Bank plc [2000] QB 263
Stack v Dowden [2007] UKHL 17
Tse Kwang Lam v Wong Chit Sen [1983] 3 All ER 54
Online Journals
The Law Society Gazette, Mortgage proceeds of sale <https://www.lawgazette.co.uk/news/mortgage-proceeds-of-sale/34657.fullarticle >accessed 10th January 2017
The Law Society Gazette, Mortgage sale by mortgagee
<https://www.lawgazette.co.uk/news/mortgage-sale-by-mortgagee/32616.article >accessed 11 January 2017
[1] Matrimonial Causes Act 1973, ss.21 – 25; Civil Partnership Act 2004, Sch 5. See Bridge, ‘Cohabitation: Why Legislative Reform is Necessary’ [2007] Fam Law 911.
[2] See Law Commission Report No 278, Sharing Homes: A Discussion Paper (London: Stationary Office, 2002); Law Com. No.307, Cohabitation: The Financial Consequence of Relationship Breakdown (London: Stationary Office, 2007)
[3] Law Com. No. 274, Eighth Programme of Law Reform (2001) at 7
[4] Eves v Eves [1975] 1 W.L.R. 1338; Cooke v Head [1972] 1 WLR 518; Lawson, ‘The Things We Do For Love: Detrimental Reliance in the Family Home’ (1996) Legal Studies 218
[5] Hayward, ‘Family property’ and the process of ‘familialisation’ of property law’ Child and Family Law Quarterly 24(3): 284-303
[6] Stack v Dowden [2007] UKHL 17
[7] Jones v Kernott [2011] UKSC 53
[8] Stack at [60] per Lady Hale
[9] Lloyd’s Bank v Rossett [1991] 1 A.C. 107
[10] Ibid.
[11] Oxley v Hiscock [2004] EWCA Civ 546
[12] Ibid.
[13] All of the five member panel arrived at a 90:10 split in favour of Ms Jones.
[14] On this point see Mee, ‘Jones v Kernott: Inferring and Imputing in Essex’ (2012) Conv 167
[15] Jones v Kernott [2011] UKSC 53 at [34].
[16] Ibid.
[17] See Pawlowski, ‘Imputed intention and joint ownership – a return to common sense: Jones v Kernott‘ (2012) Conv 149
[18] Jones v Kernott [2011] UKSC 53 [89]
[19] Jones v Kernott [2011] UKSC 53 [73-74] per Lord Kerr
[20] Mee, ‘Jones v Kernott: Inferring and Imputing in Essex’ (2012) Conv 167at 174
[21] Gardner, ‘The Future of Stack v Dowden’ (2011) 127 LQR 13
[22] Dixon, ‘Editor’s Notebook: The Still Not Ended, Never-Ending Story’ [2012] Conveyancer and Property Lawyer 83
[23] Laskar v Laskar [2008] EWCA Civ 347
[24] Holman v Howes [2007] EWCA Civ 877
[25] See, e.g., Lord Hope (para. 12); Lord Walker (para. 36); Baroness Hale (para. 70).
[26] Law Property Act 1925 s 85 & s 87
[27] Halsbury’s Laws ( 2016 5th edn ) vol 77 Para 404
[28] Ibid
[29] Ibid
[30] Law of Property Act 1925 s 87 (1)
[31] National Westminster Bank plc v Skelton[1993] 1 All ER 242, [1993]
[32] Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317,
[33] Halsbury’s Law ( n 27)
[34] Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317
[35] Law Property Act 1925 s.95(4)
[36]Ropaigealach v Barclays Bank plc [2000] QB 263
[37] Pulk v Mortgaging services [1993] 2 All ER 481
[38] Quennel v Maltby [1979] 1 All ER 568
[39]Â Ropaigealach(n 36)
[40] Criminal Law Act 1977 s 6
[41] Administration of Justice Act 1970 s 36
[42] Ropaigealach (n 36)
[43] Administration of Justice Act 1970 s 36
[44] Ibid
[45] Ibid
[46] Administration (n 41)
[47] Ibid
[48] Birmingham Citizens Permanent Building Society v Caunt [1962] 1 Ch 883
[49] Ibid
[50] Ibid
[51] Cheltenham and Gloucester Building Society v Norgan [1996] 1 WLR 343
[52] The Mortgage and Home finance conduct of Business Handbook
[53] S Clarke and S Clegg, Land law (4th edn, OUP oxford 2014) 55
[54] Ibid
[55] Law Property Act 1925 s 101
[56] Ibid
[57] Halsbury’s Laws (n 27)
[58] Law Property Act 1925 s 103
[59] Halsbury Laws (n 27)
[60] Ibid
[61] Ibid
[62] Law Property Act 1925 s 104 (2) (d)
[63] Law Property Act 1925 s 103
[64] Law Property Act 1925 s 4(d)
[65] National and Provincial bank v Ahmed [1995] CA
[66] Medforth v Blake [2000] Ch 86
[67]Downsview Nominees v First City Corporation [1992] UKPC 34
[68] Tse Kwang Lam v Wong Chit Sen [1983] 3 All ER 54
[69] Law Property Act 1925 s 105
[70] Ibid
[71] Ibid
[72] Ibid
[73] Law Property Act 1925 s 105