Lee Hudson v Jayne Hathway

JurisdictionEngland & Wales
JudgeMr Justice Kerr
Judgment Date21 March 2022
Neutral Citation[2022] EWHC 631 (QB)
Docket NumberClaim No: F01BS770
CourtQueen's Bench Division
Lee Hudson
Appellant (Claimant)
Jayne Hathway
Respondent (Defendant)

[2022] EWHC 631 (QB)


Mr Justice Kerr

Claim No: F01BS770

Appeal No: 11BS018C





Ms Zoë Saunders (instructed by Veale Wasbrough Vizards) for the Appellant

Mr Michael Horton QC and Mr Guy Holland (instructed by Ashtons Legal) for the Respondent

Hearing date: 10 February 2022

Approved Judgment

I direct that no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Kerr Mr Justice Kerr

Introduction and Summary


This is an appeal in a case about equitable ownership of a family home purchased in joint names, initially with equal ownership rights, where the unmarried parties later separate. Must a party claiming a subsequent increase in her equitable share necessarily have acted to her detriment? Or does a common intention alone suffice to alter the beneficial shares? And if the former, was the judge right to decide that the requirement of detriment was met?


Ms Hathway submits that detriment is not required in a joint names family home case with no express declaration of trusts. If it were, the House of Lords in Stack v. Dowden [2007] 2 AC 432 and the Supreme Court in Jones v. Kernott [2012] 1 AC 776 would have said so. The judge should not have held that detriment was required. Or, she says, if the judge was right, the requirement was met and, indeed, he should have found further detrimental conduct by her.


Mr Hudson asserts, to the contrary, that detrimental conduct was required to alter the beneficial shares; if it were not, the House of Lords and Supreme Court would have made that clear but they did not. The judge was right so to decide. However, Mr Hudson submits, the judge was wrong to find that Ms Hathway acted to her detriment; she did not, objectively, alter her legal position irrevocably, so as to make it worse than it would otherwise have been.

Outline Facts


Ms Hathway and Mr Hudson started a relationship in 1990. He moved into her home and became joint owner. They did not marry. They had two sons. They sold the home and bought another, in joint names. Then in 2007, with a mortgage, they bought Picnic House, again in joint names, with no declaration of trusts. Both worked. His earnings soon overtook hers; she left the financial services industry to work in the charity sector; he remained in financial services.


In 2009, Mr Hudson left Ms Hathway for another woman, moved in with her and later married her. They are now estranged. Ms Hathway stayed at Picnic House with the two sons. The mortgage was converted to an interest only basis. It was paid, as before, from the joint bank account into which both their salaries were paid. Over the years, Mr Hudson substantially paid the mortgage; the amount he contributed far exceeded Ms Hathway's contributions.


Then in 2011, the house was blighted by an oil spill, making it very difficult to sell. An environmental disaster was how the judge described it. Oil leaked into the house from a neighbouring tank and under the ground beneath the house. An environmental clean up was required. A complicated insurance claim dragged on for years. Over the following 20 months or so, the parties had sporadic email discussions about financial arrangements.


In July and August 2013, Mr Hudson and Ms Hathway agreed terms set out in emails. He had shares of unknown value and a pension. These he would keep: she would have no claim over them. In an email of 31 July he insisted that they should be “ring fenced … what I get from my years of personal graft …”. She would have the “liquid cash … [s]avings in the bank, other plans … [p]hysical property, the contents of the house … [and] the house”. He described it as “a bad asset which is preventing all of us [from] .. moving on with our lives”.


Ms Hathway's response in an email of 12 August 2013 was to accept “[s]o that we can move forward and get to a point of completely severing our financial connections”. She confirmed: “you get sole ownership of your shares and pension, I get the equity from the house, the house contents, savings and income from endowments …”. She would “do everything I can to get the house ready for sale as soon as the situation with the oil spill is resolved”.


Time passed and Mr Hudson became impatient with a lack of progress in resolving the oil spill clean up, the insurance claim and the sale of Picnic House. In May and July 2014 he referred in emails to how much time had passed “since we came to a deal”. In January 2015, he ceased contributing to the mortgage. Ms Hathway took over the payments. It was cheaper than renting. The two sons, now young adults, remained at Picnic House with her.


The judge found that the parties had clearly reached a deal. The parties did not disagree; but the deal did not satisfy the formalities for transferring legal title or a declaration of trusts ( Law of Property Act 1925 ( the 1925 Act), section 53(1); Law of Property (Miscellaneous Provisions) Act 1989 ( the 1989 Act), section 2(1)-(3)). A change of beneficial ownership could, though, arise by a constructive trust (section 53(2) of the 1925 Act; section 2(5)(c) of the 1989 Act) or by a proprietary estoppel.


In October 2019, Mr Hudson issued his claim under CPR Part 8 and the Trusts of Land and Appointment of Trustees Act 1996. He sought an order for the sale of Picnic House, with equal division of the proceeds. Ms Hathway agreed that the house should be sold but contended that she was entitled to the whole of the proceeds under a constructive trust following a common intention and agreement, in reliance on which she had acted to her detriment.


The detrimental conduct relied on was: paying all interest payments on the joint mortgage from January 2015; desisting from claiming against assets in Mr Hudson's sole name acquired during their relationship; not claiming financial support for the benefit of the children under the Children Act 1989; accepting sole responsibility for the oil spill and insurance claim; at her own expense, maintaining and redecorating the property from January 2015; relying from 2014 on the understanding that she was sole beneficial owner, in conducting her finances and lifestyle; and living frugally to afford the upkeep and mortgage.

The Judge's Decision


The judge gave an extempore judgment on 29 January 2021, at the end of a three day trial at which both parties (and Mr Hudson's estranged wife) gave written and oral evidence. The judge noted that there was a proprietary estoppel claim before the court, which I mention because in this appeal the parties agreed that I do not need to consider it. A buyer had been found and a sale of Picnic House was proceeding towards exchange of contracts at the time of the trial.


The judge stated the facts, in greater detail than my summary above. He found that there was a clear agreement, on the terms set out in the emails quoted above. There was a clear common intention that Ms Hathway would have the entire equity in the property. There was a joint expectation that she would sell the property, but the agreement did not include any time limit for a sale, which was frustrated by the continuing consequences of the oil spill. He rejected Mr Hudson's suggestion that Ms Hathway was prevaricating about selling.


Before considering the submission of law, also made to me, that Ms Hathway did not have to show that she acted to her detriment, the judge considered whether she did in fact do so. He rejected all the suggested detriments apart from one: desisting from making claims against assets in the sole name of Mr Hudson.


The judge noted that matrimonial remedies involving transfer of assets between spouses were not available here and that Ms Hathway would have no claim against Mr Hudson's shares or pension. However, he observed, the parties were together for some 20 years and until July 2013 “both believed in the concept that wealth generated whilst the family was together would be shared between them when they separated”.


There could be “some sort of civil claim … like this one in the form of constructive trust or equity which could have been mounted … perhaps against the shares. It may have been a weak claim but I cannot be convinced that it is a non-claim”. Ms Hathway had given up all such claims and Mr Hudson “preserved what he wanted to preserve”. Until his email of 31 July 2013 he:

“was not saying no to such claims in principle but was entertaining the concept of unwinding their financial affairs. That, it seems to me, was a significant change in position. It cannot be said that Mr Hudson would have refused making some payment to Ms Hathway even if the court might have decided that no payment should be made.”


He then turned to the law, observing that no authority cited was on all fours with the facts before him. He mentioned three cases, though many more were cited to him: Lloyds Bank plc v. Rosset [1991] 1 AC 107 (the celebrated passage in Lord Bridge's speech at 132E–133B); Jones v. Kernott [2012] 1 AC 776, SC; and O'Neill v. Holland [2020] EWCA Civ 1583, [2021] 2 FLR 1016 (per Henderson LJ at [62]).


He rejected the submission of Mr Guy Holland that no detrimental reliance at all need be shown. The cases featured “activity resulting in a change of position”, generally relied on “to support the making of a common intention of beneficial shares or varied beneficial shares”. He agreed with Ms Zoë Saunders' submission that “there must be a change of position or detrimental reliance in a joint name case where A contends that a variation has been promised by B in A's favour”. Otherwise, equity would be aiding a “pure...

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