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Case briefing: claim to beneficial interest in a deceased’s property

27 May 2015


Graham-York v Adrian York & Ors [2015] EWCA Civ

This case neatly summarises how the courts determine claims to a beneficial interest in a deceased’s property.

 The law of cohabitee claims

The principles applied by the court in determining a beneficial interest in property were laid out in Oxley v Hiscock [2005] Fam 211, Stack v Dowden [2007] 2 A.C. 432 and finally Jones v Kernott [2011] 1 A.C. 776 and can be summarised as follows:

  • In the absence of an express declaration of trust the law presumes beneficial ownership follows the legal ownership (‘equity follows the law’). Joint legal ownership presumes joint beneficial ownership in equal shares (i.e. a beneficial joint tenancy) and sole legal ownership presumes sole beneficial ownership.
  • The parties’ presumed intentions can be varied informally by agreement or conduct, to create a ‘common intention constructive trust’ as to how they held the beneficial interests at the time they acquired the property or later. In the absence of being able to deduce actual intention the parties intentions will be inferred by looking at ‘the whole course of dealing’ in relation to the property to come up with a ‘fair’ division of the beneficial ownership.
  • In determining what shares were intended and what (in the absence of a finding as to intentions) is ‘fair’ the financial contributions of the parties will be relevant. However, other contributing factors are taken into consideration including mortgage contributions, council tax and utilities, repairs, insurance and housekeeping, and the domestic basis for the purchase and arrangements and obligations in the relationship.

Graham-York

Norton York (‘the deceased’) owned a property registered in his name with a mortgage in his favour with Leeds Building Society. Adrian York was the deceased’s son and the sole beneficiary and PR of the estate. Miss Graham-York lived in the property and was the deceased’s surviving partner.

Following the deceased’s death, and following a possession claim following judgment for £450,000 in respect of the unpaid mortgage, Miss Graham-York brought a claim against Adrian alleging a beneficial interest in the property, on the basis of a common intention constructive trust. She was awarded a 25% beneficial interest in the proceeds and possession and a sale were ordered. The proceeds were to first be utilised to discharge the mortgage debt and the balance then applied to discharge her 25% interest.

Appeal

Miss Graham-York appealed, that:

  • She was entitled to a 50% beneficial interest on the basis, in part, that the deceased had an abusive relationship with her.
  • Her interest should be paid out before the building society discharged its interest (i.e. be exonerated in equity by the deceased, applying the ‘equity of exoneration’)

Tomlinson LJ found the award of 25% appropriate. In particular, in sole ownership cases, the starting point is not equality of interests. Further, applying the factors above, the court will not seek redistributive justice in relation to the alleged abusive relationship, so as to compensate the claimant. The court is confined to awarding what is fair having regard to the parties dealings only in relation to the property.

The court dismissed the second element of the appeal. For the equity of exoneration to be established Miss Graham-York would have to show that the mortgage represented lending which was not incurred for the benefit of the joint household but solely for the benefit of the deceased, which she could not. The deceased was responsible for generating almost all of the income, and thus the assets, which the family unit enjoyed: “Miss Graham-York shared the benefit …… and it would be unconscionable that she should do so without sharing the burden of the mortgage.”

A version of this article appeared in Private Client Adviser magazine.

This article is not intended to be a full summary of the law and advice should be sought on all issues.

 

For further information regarding this issue contact Lloyd Junor at Adams & Remers.

Telephone

+44 (0)1273 403275


Telephone

+44 (0)1273 403275


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