The recent case of Graham-York v Leeds Building Society (2015) EWCA Civ 72 (“Graham York”) involved a claim by Miss Graham-York against the estate of her deceased partner and the mortgagee. It is therefore a misconception to presuppose that disputes involving co-ownership are purely restricted to the confines of separation between cohabitants and are the domain of family lawyers.
Where a property is purchased in the joint names of two individuals who then utilize it as their home, there is a strong presumption that it is to be held in equal beneficial shares (Stack v Dowden (2007) 2 AC 432 and Kernott v Jones (2012) 1 AC 776) although, the courts have at times shown ambivalence towards such a presumption.
Notwithstanding such ambivalence, practitioners have developed a fairly sound comprehension of the position which the courts are likely to adopt in cases involving two registered cohabitees.
An inherent difficulty lies with cases involving one registered cohabitee. Consequently, if some form of agreement to share the beneficial interest has been either established or inferred, the perennial problem faced by legal advisors and indeed by the courts involves the arduous task of quantifying the size of a cohabitee’s shares in a property when purchased in the sole name of one of the cohabitant’s (“C1”) and where the other (“C2”) claims a beneficial interest.
In the case of Graham-York, Miss Graham-York (“C2”) claimed a beneficial interest in the property which was purchased subject to a mortgage in 1982, and which was held in her deceased partners sole name (“C1”) having lived together since 1975 with two children, who were adults at the time when proceedings were instituted.
C2 continued to reside in the property following the death of C1 but failed to pay the mortgage and arrears then accrued which led to possession proceedings being instituted by the lender against C1’s estate, whose sole personal representative comprised C1’s son from a previous relationship. C2 joined the proceedings in her own right claiming a 50% beneficial interest in the property and claiming that her interest ranked ahead of that of the lender. An order for possession was made but the actual possession date was to be fixed after the trial of C2’s claim that she had a beneficial interest in the property.
The trial judge at first instance noted that C2 was working at the time at which the property was purchased and from this it was inferred that C2 had contributed in some way to the purchase price and following on from this, the judge inferred an agreement to share the beneficial interest in the property between C1 and C2.
The difficulty for the trial judge was then to determine the actual beneficial entitlement of C2 and in the absence of sufficient evidence as to the actual extent of the respective shareholdings between C1 and C2 , applied the test devised in the judgment of Chadwick LJ in Oxley v Hiscock (2005) Fam 211 which, allows the court to determine the respective shares which it considers fair considering the dealings between the parties relating to the property. It was held that C2’s contribution was insignificant when compared to C1’s but due consideration was given to C2 having made non-financial considerations to the household generally including cooking meals and raising their daughter jointly with C1 and so found that she was entitled to a 25% beneficial share in the property.
C2 appealed to the Court of Appeal seeking equal shares which, was rejected by the Appellant Court stating that where a property is held in a cohabitee’s sole name and there is no evidence of a common intention with the other cohabitant relating to the proportions in which the beneficial interest is held, there is no presumed starting point of equal interests and so the court should have regard to the whole course of dealings between the parties relating to the property and consider both C2’s financial and non-financial contributions however, Tomlinson LJ made it clear that the court was not prepared to interfere with the first instance finding.
What was particularly interesting was that he had acknowledged that had the first instance judge found a larger share of say of 33%, the judge would not have been wrong. In his view, it would encourage appeals in this particular category of case if the appeal court was to increase the percentage and this would lead to calls of ‘tinkering’.
This case illustrates the conceptual difficulty faced by many practitioners when advising their clients of the actual extent of a cohabitee’s beneficial interest and also, it is worth noting that wholesale reliance on the principles emanating from this case cannot be taken for granted.