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Constructive trusts and email

In the recent case of Hudson v Hathaway [2022] EWCA Civ 1648, the Court of Appeal has re-iterated one long-standing point and also confirmed that email correspondence can amount to a disposal of an interest in property. 

When a joint ownership relationship breaks down, there can be arguments relating to the co-habitees’ equitable shares (ie the entitlement to the sale proceeds rather than just the paper ownership) in real property. 

One way to establish the extent of a co-habitee’s interest in jointly owned property following relationship difficulties is to establish that they have a beneficial interest in the property under a constructive trust.  Often (but by no means always) this will be recorded in a formal deed, but even where there is documentary evidence of shares co-habitees are able to claim an increase in the size of their equitable share if they can show that there was a common intention between the owners to increase the share, and that the co-habitee relied on that intention to their detriment. 

In this case, two co-habitees, A and B, jointly owned a property in equal shares and ran into relationship difficulties.  They agreed that A would keep various shares and pension rights, with B keeping the equity and contents in the property plus some savings.  Once some property damage was sorted out, the property would be sold and the proceeds would belong to B. A paid the mortgage for a while, then B took the payments over.  After 4 years, A demanded that the property be sold and the proceeds split equally.  B’s counter argument that she was entitled to 100% of the proceeds was upheld by the Court of Appeal, partly as B was able to demonstrate that she had relied to her detriment on the initial agreement by giving up rights in A’s shares and pension, and taking on the mortgage when A stopped paying it.

Property law has various formalities for disposing of interests in land, and equitable interests are no exception.  To dispose of an equitable interest requires the disposal to be in writing and signed and it was held in this case that A had successfully signed away his equitable rights in the property by email.  His name at the end of the email was deemed sufficient signature for these purposes.

 

Posted on 01/12/2023 by Ortolan

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