David Wedgwood, Partner

Earlier this year, Lord Hope, in a landmark case setting out the basis on which shares in properties are to be determined, stated that the issue of calculating the shares of co-owned property “has become an increasing pressing social problem, as house prices rise and more people are living together without getting married or entering into a civil partnership”.

The House of Lords confirmed that non-married partners are in a very different situation from those seeking to redistribute assets on divorce. Perhaps surprisingly, the Law Lords agreed that the appropriate criterion was not fairness, but the parties’ intentions.

The Law Lords confirmed that the starting point for entitlement as to the proceeds of the property in joint names remains equal shares. Whilst it is a difficult process to overcome the assumption of equal shares in many circumstances, such as where there has been uneven contribution into the property, that can be done.

However, the Law Lords agreed that, even in cases of a property in a sole name, the contribution into the property was not the overriding issue. Baroness Hale emphasised that the Court should look primarily at the parties’ shared intentions, whether actual, inferred or implied. Whilst financial contributions would be relevant to ascertaining the parties’ true intentions, they were only one factor. Of course, a written document agreed by all parties at the outset is most helpful to the Court in determining intentions. However, that often is not available and then the Court will look at other matters including; any advice or discussions on buying the property, the reasons why the property was acquired, the reasons why a survivor was authorised to be able to sell the property alone (if it be the case), the nature of the parties’ relationship and how they arranged their finances and how expenses were paid.

The courts accepted that difficulties arise where the intentions as to the ownership of the property change. However, the House of Lords felt strongly that there would need to be compelling evidence that all the parties had intended the same change in their share in the property, before the courts should move away from the original intentions.

Conclusion

Whilst it may seem strange that the highest court in the land has decided that courts should not try and be fair when dealing with co-owned property, perhaps the Law Lords’ decision can better be seen as their directing the courts not to interfere with non-married people’s intentions as to ownership of shares of property. The difficulty is often in proving those intentions years later.