Cohabitee Dispute - Barnes v Phillips [2015] EWCA Civ 1056

This is an interesting case for cohabitees - Barnes v Phillips [2015] EWCA Civ 1056 . This appeal judgment concerned the purchase of a property by cohabitees with no express declaration of trust (i.e. the same scenario as in Stack v Dowden and Jones v Kernott).

A cohabiting couple who bought a house as joint tenants with equal shares have ended up with one party owning 85 per cent of the equity, although no express declaration to vary beneficial ownership was ever made. The England & Wales Court of Appeal decided that unequal cash distributions made to the two parties when the property was re-mortgaged demonstrated a change to the original intention to hold equal shares.

In essence, the approach consists of 2 stages:

1) a) Was there any express agreement that the parties' intention as to the size of the shares would change? If not, b) can such an intention be inferred, having regard to the sort of evidence set out in paragraph 69 of Stack?

2) If an agreement to vary the size of the shares exists, whether express or inferred, what is the size of those shares?

Where it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property, "the answer is that each is entitled to that share which the court considers fair having regard to the whole course of dealing between them in relation to the property" (Chadwick LJ in Oxley v Hiscock).

The Court of Appeal confirmed that imputation of intention is permissible only at the stage of ascertaining the shares in which the property was held following the demonstration of an actual intention to vary shares in the property.

The judge at first instance had failed to address a "critical step" in the process. He moved straight from finding that there was no express agreement to vary the shares to finding that he could impute an intention to the parties as to the size of the shares. He did not consider whether he could infer a common intention to vary shares in the property in the circumstances of the case.

The Court of Appeal therefore found that it was open to it to consider whether a common intention to vary shares should be inferred. Importantly Lloyd Jones LJ stated:

"It is clear from the judgments of the majority in Jones v Kernott that the scope for inference in this context is very extensive indeed. (See in particular Lord Walker and Baroness Hale at [34]: 'In this area, as in many others, the scope for inference is wide.')"

Lloyd Jones LJ stated that the weight of the evidence supported an inference that the parties intended to alter their shares in the property.
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