Equal rights to joint home can be inferred

Midland Bank v Cooke and another; Court of Appeal (Lord Justice Stuart-Smith, Lord Justice Waite and Lord Justice Schiemann) 7 July 1995

The fact that a married couple made no agreement as to the proportions in which their home should be beneficially owned did not prevent the court, applying general equitable principles, inferring an agreement that they should own it jointly in equal shares.

The Court of Appeal unanimously allowed an appeal by the second defendant, Jane Marie Cooke, against the decision of Judge Hamilton, sitting in Hitchin County Court on 5 February 1992, and ruled that she had a beneficial half- interest in the matrimonial home, overriding that of the bank under a mortgage taken out in the name of her husband, Graham Edward Cooke.

Andrew Gore (Pictons, Bedford) for Mrs Cooke; Terence Bergin (Philip Ross & Co) for the bank.

Lord Justice Waite said that when Mr and Mrs Cooke were first married in 1971 they moved into a home which had been purchased in Mr Cooke's sole name. Of the pounds 8,500 purchase price, pounds 6,540 was provided by mortgage, pounds 1,000 was a wedding present from Mr Cooke's parents and the rest came out of Mr Cooke's own savings. Both spouses worked and although Mr Cooke paid the mortgage Mrs Cooke discharged other household outgoings from her earnings.

Soon after the decision in Williams & Glyn's Bank Ltd v Boland [1981] AC 487, at the bank's request Mrs Cooke, believing she had no option, signed a form of consent to any present or future right or interest she might have in the property being postponed to the bank's security under the mortgage.

In May 1981 Mr and Mrs Cooke together executed a second mortgage on the property to secure their liability under a joint guarantee as security for a business loan. In about 1984 Mrs Cooke brought Married Women's Property Act proceedings as a result of which the property was conveyed into both spouses' joint names as tenants in common.

In July 1987 the bank brought these proceedings against Mr and Mrs Cooke claiming payment of pounds 52,491 due under the mortgage and possession in default of payment. Mrs Cooke's defence pleaded, inter alia, that her signature on the consent form had been obtained by undue influence and that she was entitled to a beneficial half-interest in the property overriding any interests of the bank under the mortgage.

It was common ground that at the time of purchase there had been no discussion between the spouses as to the name in which the property should be held or as to how it should be beneficially owned.

The judge ruled in Mrs Cooke's favour on the issue of undue influence but concluded that Mrs Cooke was only entitled to a beneficial interest of 6.47 per cent of the property, that being the proportion borne by her half of the wedding present from Mr Cooke's parents. It was implicit in that finding that the judge did not regard any other aspect of the course of dealing between the parties as capable of having any influence at all upon the quantification of their interests.

The bank submitted that if the parties themselves testified, as they had done in this case, that they made no agreement as to the proportions of their respective beneficial interests, there was no scope for equity to infer from their conduct an imputed agreement. That was a submission which, considered in the absence of authority, his Lordship would reject instinctively.

The bank relied on Springette v Defoe [1992] 2 FLR 388 at 395. However, that case involved a middle-aged couple already established in life whose house-purchasing arrangements clearly had the same formality as a joint venture or commercial partnership. It could not have been intended to lay down a general principle that absence of express agreement precluded inference of presumed agreement.

Positive evidence that the parties never discussed nor intended any agreement as to the proportions of their beneficial interest did not preclude the court, on general equitable principles, from inferring one.

The judge erred in treating the cash contribution to the purchase price as wholly determinative of that issue. One could hardly have a clearer example of a couple who agreed to share everything equally. Given that they had chosen to introduce the additional commitment which marriage still involved, the conclusion became inescapable that their presumed intention was to share the beneficial interest in their home in equal shares.

Paul Magrath, Barrister