Abbott v Abbott
| Jurisdiction | UK Non-devolved |
| Judge | Baroness Hale of Richmond |
| Judgment Date | 26 July 2007 |
| Neutral Citation | [2007] UKPC 53 |
| Court | Privy Council |
| Docket Number | Appeal No 142 of 2005 |
| Date | 26 July 2007 |
[2007] UKPC 53
Present at the hearing:-
Lord Bingham of Cornhill
Lord Walker of Gestingthorpe
Baroness Hale of Richmond
Lord Carswell
Lord Neuberger of Abbotsbury
Privy Council
[Delivered by Baroness Hale of Richmond]
These are proceedings between a divorced husband and wife about the beneficial ownership of their former matrimonial home, its furniture and some shares (an earlier dispute about a bank account has now been resolved). In the High Court, Mitchell J declared that both the house and the shares were beneficially owned by the parties in equal shares. He ordered that the house be sold and the proceeds divided equally, with an adjustment to reflect the wife's joint ownership of the furniture. The Eastern Caribbean Court of Appeal allowed the husband's appeal. The wife now appeals to the Board.
The matrimonial home: the law
Unlike some other Caribbean countries, Antigua and Barbuda have no equivalent of the wide powers of property adjustment enjoyed by divorce courts in the United Kingdom. Property disputes have therefore to be resolved according to the ordinary law. Nevertheless, the inferences to be drawn from the conduct of husband and wife may be different from those to be drawn from the conduct of parties to more commercial transactions. The modern law has been developed in four decisions of the House of Lords, Pettitt v Pettitt [1970] AC 777, Gissing v Gissing [1971] AC 886, Lloyd's Bank plc v Rosset [1991] 1 AC 107, and most recently Stack v Dowden [2007] UKHL 17, [2007] 2 WLR 831, largely approving an important decision of the Court of Appeal in Oxley v Hiscock [2005] Fam 211.
Not surprisingly, both courts in this case based their reasoning on a famous passage from the speech of Lord Bridge of Harwich in Rosset's case [1991] 1 AC 107, at 132-3:
"The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially….
In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a constructive trust. In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do."
Gordon JA in the Court of Appeal emphasised the last sentence. But in this respect the law has undoubtedly moved on, as we shall see.
There are, of course, two separate questions: first, was it intended that the parties should share the beneficial interest in a property conveyed to one of them only; and second, if it was so intended, in what proportions was it intended that they share the beneficial interest? There are two separate concepts which may help in answering those questions, explained by Peter Gibson LJ in Drake v Whipp [1996] 1 FLR 826, 827:
"A potent source of confusion, to my mind, has been suggestions that it matters not whether the terminology used is that of the constructive trust, to which the intention, actual or imputed, of the parties is crucial, or that of the resulting trust which operates as a presumed intention of the contributing party in the absence of rebutting evidence of actual intention."
It is now clear that the constructive trust is generally the more appropriate tool of analysis in most matrimonial cases. As Lord Walker of Gestingthorpe explained in Stack v Dowden [2007] UKHL 17, at para 31:
"In a case about beneficial ownership of a matrimonial or quasi-matrimonial home (whether registered in the name of one or two legal owners) the resulting trust should not in my opinion operate as a legal presumption, although it may (in an updated form which takes account of all significant contributions, direct or indirect, in cash or in kind) happen to be reflected in the parties' common intention."
Lord Walker also commented upon the passages from the speech of Lord Bridge of Harwich in Lloyd's Bank plc v Rosset [1991] 1 AC 107 quoted in para 3 above. Lord Walker pointed out, at para 25, that although Lord Bridge had drawn a sharp contrast between cases in which there had been some prior agreement to share and those where there had not, he and all the other members of the House were "unanimously, if unostentatiously, agreeing that a 'common intention' trust could be inferred even when there was no evidence of an actual agreement". Lord Walker went on to comment, in para 26:
"Lord Bridge's extreme doubt 'whether anything less will do' was certainly consistent with many first-instance and Court of Appeal decisions, but I respectfully doubt whether it took full account of the views (conflicting though they were) expressed in Gissing v Gissing (see especially Lord Reid [1971] AC 886 at pp 896G-897B and Lord Diplock at p 909D-H). It has attracted some trenchant criticism from scholars as potentially productive of injustice (see Gray & Gray, Elements of Land Law, 4 th ed [(2005)], paras 10.132 to 10.137, the last paragraph being headed 'A More Optimistic Future'). Whether or not Lord Bridge's observation was justified in 1990, in my opinion the law has moved on, and your Lordships should move it a little more in the same direction …"
Lord Walker, Lord Hoffmann and Lord Hope of Craighead all agreed with my own opinion, in which I summed the matter up thus at para 60:
"The law has indeed moved on in response to changing social and economic conditions. The search is to ascertain the parties' shared intentions, actual, inferred or imputed, with respect to the property in the light of their whole course of conduct in relation to it."
The House also approved a passage from the Law Commission's discussion paper on Sharing Homes (2002, Law Com No 278, para 4.27):
"If the question really is one of the parties' 'common intention', we believe that there is much to be said for adopting what has been called a 'holistic approach' to quantification, undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intended."
The matrimonial home: the facts
The wife is Canadian and the husband Antiguan. They were married on 21 May 1983 in Nova Scotia while the husband was studying medicine there. In June 1984, the husband's mother transferred a plot of land at Paradise View in Antigua into the husband's name. On the wife's case this was so that they could in due course build their matrimonial home there. Husband and wife returned to Antigua in July 1984 and the husband set up in medical practice. The wife worked in the surgery for him for a while and also worked in a travel agency. In March 1986, their first child, Danielle, was born and the wife did not work outside the home again until 1995. In June 1986, the couple returned to Canada for the husband to pursue post graduate studies. Their second child, Shannon, was born in December 1987. The family returned to Antigua in July 1990.
During 1990 and 1991 their matrimonial home was built on the land which had been given by the husband's mother in 1984. The construction was financed partly by a bridging loan, which was later replaced by a mortgage, and partly by gifts from the husband's mother. The mother contributed cash totalling some EC$400,000 but it is unclear how this was paid. The wife's case was that some was paid into the couple's joint bank account and some was paid direct to the tradesmen. The bridging loan of EC$250,000 was made by the Bank of Nova Scotia in November 1990. This too was paid into their joint account. In August 1991, it was replaced by a loan of the same amount, secured by a mortgage, from the Barbados Mutual Life Assurance Society. The husband, as legal owner, executed the charge over the property. But the wife also made herself jointly and severally liable for the repayment of the principal and interest on the loan. The loan was also secured by insurance policies on each of their lives, for EC$150,000 on the husband's life and for EC$100,000 on the wife's. The husband also took out a mortgage protection policy. The husband first stated in evidence that "apart from the insurance I do not recall the claimant being involved in the loan in any other way" but had then to accept that "she is a party to the charge. I do not know why". He later claimed that "today is the first that I heard that she was asking for...
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