Analysis
88 Leyland Road, London (property) was purchased by the parties in January 1996 for approximately £135,000 using approximately £25,000 from their savings for the deposit and taking out a joint repayment mortgage for the balance with HSBC. It was registered in their names as joint tenants. Both contributed to the cost of installing double glazing, resurfacing the driveway and landscaping the garden. The appellant, who had acquired other buy-to-let properties in his sole name, told the respondent in early 2005 that he wanted to remortgage the property because of debt problems. The property was valued at £350,000 when it was remortgaged on 4 May 2005. The loan was for £145,000 of which a sum of £78,930.62 was used to redeem the mortgage with HSBC and the larger part of the balance was intended to pay off debts totaling £64,811. In the event, the appellant did not pay two of those debts. The relationship between the parties broke down around June 2005 and the appellant moved into one of his other properties. Thereafter the appellant continued to contribute to the mortgage repayments and make payments for the maintenance of their children until approximately January 2008, when the respondent assumed sole responsibility for them. Following an application for declaration under s14 of the Trusts of Land and Appointment of Trustees Act 1996 it was held in the Central London County Court on 13 February 2014 that the parties held the property as tenants in common in shares of 85% for the respondent and 15% for the appellant. The appellant appealed.
Held (dismissing the appeal)
There was no express agreement between the parties as to a variation of their beneficial interests in the property and the judge, who had quoted extensively from Jones v Kernott [2012]WTLR 125, omitted a critical step in the reasoning process when he moved directly from considering whether there was any common intention between them to considering the size of the parties’ shares. It was in this context that the judge imputed their intention by considering what was fair, having regard to the whole course of dealing between them. While ‘inferring’ and ‘imputing’ intention can often be confused, it was unlikely that the judge had erred; his use of the word ‘impute’ was both intentional and appropriate given that he was addressing the second stage of the analysis, namely to determine the shares in which the parties were entitled to the property following a change in the basis on which their beneficial interests were held. In those circumstances, where a critical step in the reasoning process had been omitted during the first stage of the analysis, it was open to a court exercising appellate jurisdiction to consider whether a common intention between the parties to vary their shares should be inferred. The weight of the evidence supported an inference that the parties intended to alter their shares in the property and, in circumstances where nearly 25% of the equity had been paid to the appellant (ie £66,000 out of £275,000), there was to be inferred a common intention to vary the parties’ interests at the point when their relationship ended. The judge’s conclusion as to the intention to be imputed to the size of their shares was entirely appropriate and, moreover, he was correct to conclude that subsequent events required a further adjustment in the intention to be imputed to the parties. The appellant had failed to contribute anything towards the mortgage repayments for a period of six years up to the trial and, in these circumstances, a further adjustment of 10% in the respondent’s favour was entirely justified. In principle, it should be open to a court to take account of financial contributions to the maintenance of children as part of the financial history of the parties, save in circumstances where this would result in a double liability. The appellant’s application to appeal on the procedural ground that the respondent had been allowed to change her pleaded case at a late stage in the proceedings and for permission to adduce further evidence was refused.
JUDGMENT Lloyd Jones LJ: [1] This is an appeal by Mr Kenneth Michael Barnes against the order of HHJ Madge made in the Central London County Court on 13 February 2014 whereby he held and declared that the parties held the beneficial shares in their jointly owned property at 88, Leyland Road, London, SE12 8DW …Continue reading "Barnes v Phillips [2015] EWCA Civ 1056"