To Rely Or Not To Rely On A Common-intention Constructive Trust: An Instance Of The Application Of S. 53(1)(c) Of The Law Of Property Act 1925

• Published date: 31 January 2023
• Subject Matter: Finance and Banking, Real Estate and Construction, Charges, Mortgages, Indemnities, Financial Services, Real Estate
• Law Firm: Gatehouse Chambers
• Author: Mr John Clargo

On 14 December 2022, the Court of Appeal overturned March's High Court decision that detrimental reliance is not a necessary element of a claim based on the doctrine of common-intention constructive trust (while also showing that there was no need to rely on the doctrine in the first place).

Hudson v. Hathaway [2022] EWCA Civ 1648, [2022] EWHC 631 (QB)

THE FACTUAL BACKGROUND

In 1990 Mr Hudson and Ms Hathaway started a relationship. He moved into her house and it was put into joint names. They had 2 sons. They moved to another house, again in joint names. In 2007 they moved to a third house, Picnic House, which was purchased with the assistance of a mortgage, and again placed into joint names. Ms Hathaway had given up working while caring for their children but had subsequently gone back to work in the charity sector. Mr Hudson had continued to work lucratively in the insurance industry. His contributions to the mortgage significantly outstripped hers over time.

In 2009 Mr Hudson left. The mortgage was converted into an interest-only mortgage and continued to be serviced out of a joint account into which both salaries were paid. In 2011 Picnic House suffered a significant oil-spill from neighbouring land which led to a protracted insurance claim and difficulties in selling it.

Mr Hudson and Ms Hathaway corresponded by email about tidying up their financial affairs in the aftermath of their relationship. At the end of 2011 she emailed him to say that, in her view, certain shares owned by him, which he had asserted to be worthless, formed (like his pension fund) part of their "collective assets" in that their relationship together had allowed his personal career to advance. Mr Hudson replied to the effect that things which had accrued during their relationship was something that they should reach an agreement on.

In mid-2013 Mr Hudson asserted that he should retain what had accrued from his "personal graft" but that Ms Hathaway could have "the liquid cash ...savings in the bank ... physical property, the contents of the house". He went on to say "Which leaves the house, a bad asset which is preventing all of us [from] ... moving on with our lives .... You know what, I want none of the proceeds of that either. Take it. Buy yourself somewhere you can afford to live.... What I want is an end to it. So have everything that's available now and when the house is sold."

She asked him to confirm that he meant that he should get "sole ownership of your shares and...