No Detriment? No Problem? A look into Hudson v Hathway [2022] EWCA Civ 1648

Hudson v Hathway is the most recent case in a long line of cases concerning equitable interest in property purchased by an unmarried couple in joint names, without an express declaration of trust, who later go on to separate. The case highlights and provides helpful guidance in relation to the requirement of detrimental reliance in common intention constructive trusts and the requirement for signed writing in the disposition of equitable interests in land pursuant to section 53(1)(c) of the Law of Property Act 1925.

Case Summary

The Facts-

Have you ever thought about the implications of signing off an email with your typed name? The decision in Hudson v Hathway is a clear illustration of the consequences which may arise when you add your typed name as your sign off on an email.

Mr Hudson and Ms Hathway formed a relationship in 1990 and had two children together. They did not marry. In 2007, with the aid of a mortgage, the couple bought a property, Picnic House, in joint names. They did not make a declaration of trust which confirmed how ownership was intended to be split. In 2009, the couple separated. Ms Hathway remained in the property with the children whilst Mr Hudson moved out. The mortgage continued to be paid from the joint bank account.

In 2013, by way of a series of emails, it was decided that Mr Hudson would receive sole ownership of his shares and pension and Ms Hathway would get sole equity in the property together with its contents and other savings and income. Ms Hathway ended her emails with ‘Jayne Hathway’ and Mr Hudson similarly signed with ‘Lee’ or ‘Lee Hudson’.

In 2015, Mr Hudson stopped contributing towards the mortgage and Ms Hathway subsequently took over the payments.

The Claim-

In October 2019, Mr Hudson issued a claim seeking an order for sale of Picnic House and 50% of the sale proceeds. Ms Hathway asserted that she should be solely entitled to the proceeds under a common intention constructive trust.

Progression of the Case-

At first instance, the court found in favour of Ms Hathway and determined that the emails passed between the parties demonstrated a common intention on which Ms Hathway had relied to her detriment (she had relinquished her potential claims to Mr Hudson’s shares and pension). Mr Hudson appealed the decision and stated the judge was wrong to decide sufficient detrimental reliance or change of position on Ms Hathway’s part as she had no right to his other assets as the parties were not married.

Upon appeal, and upon consideration of Stack v Dowden [2007] 2 AC 432 and Jones v Kernott [2012] 1 AC 776,  the court again found in favour of Ms Hathway and stated that where common intention is demonstrated by an express agreement in a joint names case, detrimental reliance is not necessary. However, it was agreed that at first instance, the court had been entitled to find that, on the facts, Ms Hathway had established detrimental reliance. Mr Hudson then appealed again to the Court of Appeal.

The Decision of the Court of Appeal-

Lewison LJ considered the following issues upon judgment –

1. Did the email chain which expressed the parties’ common intention comply with the requirement for signed writing in the disposition of an equitable interest in land prescribed by section 53(1)(c) Law of Property Act 1925?

Yes – It cannot be argued that the emails between the parties had been ‘signed’ and the effect of subscribing one’s name to an email amounts to a signature.

Lewison LJ stated as follows, “Given that so much correspondence takes place nowadays by email rather than by letters with ‘wet ink’ signature, it is, in my judgment, entirely appropriate that the law should recognise that technological developments have extended what an ordinary person would understand by a signature”.

2. Is detrimental reliance required to be shown by a party claiming a post-acquisition increase in their equitable share?

Yes – Lewison LJ considered this point and concluded the vast majority of authority was to the effect that detrimental reliance remains an essential ingredient for any equitable remedy.

3. And was the requirement for detrimental reliance fulfilled in this case?

Yes – It was concluded that the Court of Appeal could not interfere with the previous judgment and the evaluative findings of fact therein.

The claim was dismissed. Lewison LJ declared Ms Hathway to be the sole equitable owner. He found that Ms Hathway had acted to her detriment by foregoing a claim against Mr Hudson’s “other assets”. 

Comments-

The Court of Appeal decision can be found in full at Hudson v Hathway [2022] EWCA Civ 1648 (14 December 2022) (bailii.org)

In giving its decision, the Court of Appeal has provided a helpful guide on detrimental reliance in common intention constructive trust claims, resolving (for now) the uncertainty surrounding whether it was necessary to establish detriment. The decision also highlights that the correspondence passing between parties should not be overlooked and also provides clarification that the signing of emails with a typed name is sufficient to satisfy the statutory formality requirements of Section 53 of the Law of Property Act 1925.

Keelys LLP – Our Services

Here at Keelys we have a team of experienced solicitors who are here to help provide you with all legal advice and support in relation to common intention constructive trust claims.  In other words, we can help when the parties are not married but where there has been a split leading to problems with the joint ownership of the former family home.   Trust claims can be brought when property is the sole name of one of the parties or when it is in both names but an uneven share of the net sale proceeds is claimed.

For further information or to discuss your matter in further detail, please contact our Head of Litigation and Dispute Resolution department, Joanne Davies at jdavies@keelys.co.uk or on 01543 420059.