THE EFFECT OF STACK V DOWDEN [2007] UKHL 17 ON

THE LAW OF TRUST AND CO-OWNERSHIP

Introduction to Co-ownership

The law in relation to co-ownership in the United Kingdom brings great effect and

may greatly impact the lives of most people residing in the United Kingdom,

mainly England and Wales. To be concise, the law of co-ownership will come into

effect should two or more individuals enjoy rights of ownership of a particular land

simultaneously regardless of whether it is a freehold or leasehold land.

The Law of Property Act 1925 and the Trusts of Land and Appointment of

Trustees Act 1996 are the relevant statutes that have enabled the law of co-

ownership to come to life. Notwithstanding that the law of co-ownership is indeed

a creation of both common law and statute of Parliament.

Prior to 1st January 2016, concurrent ownership of property may take place

in various forms, however, post 1st January 2016 co-ownership may take place in two

ways. They are joint tenancy and tenancy in common.

* Undergraduate, UK Degree Transfer Programme (Law), HELP University

Under joint tenancy, there are no distinct shares. In simple terms, what this means

is that should a land is owned by two people (or more) on the idea of joint tenancy,

each of the two (or more) co-owners are to be treated as to have entity to the whole

of the land. Therefore, when a piece of land or property is subject to joint tenancy,

there would only be one formal title and the said one formal title would be jointly

owned by all of the joint tenants.

Joint tenancy can be said to be the true meaning of co-ownership as ‘there

are no shares, no partition of the land, but a right of ownership of the whole of the

land enjoyed concurrently with all the other owners.’1

Before a joint tenancy can come into existence, the ‘four unities’ must be

present.2 Only through the presence or possibly the absence of the ‘four unities’ can

a joint tenancy be distinguished from a tenancy in common. These unities are

‘unity in possession’, ‘unity of interest’, ‘unity of title’ and ‘unity of time’.3

Unity in possession means each joint tenant would be entitled to physically

occupy the whole of the land and none can exclude the others from any part of it.

There is to be no physical division of the land, and shall have no restrictions

imposed on any of the joint tenants in respect of the usage of the land. However,

Sections 12 and 13 of Trusts of Land and Appointment of Trustees Act 1996 have

1 th
Martin Dixon, Modern Land Law, (8 edn, Routledge-Cavendish 2012) 132
2
AG Securities v Vaughan [1988] UKHL 8
3 th
Martin Dixon, Modern Land Law, (8 edn, Routledge-Cavendish 2012) 133
modified the practical effect of this unity to enable one joint tenant to be excluded

from the land subjected to terms and conditions. This can be seen in the case of

Chan Pui Chun v Leung Kam Ho & Anor.4

Unity of interest would mean that each joint tenant must hold the same

interest in the property. The joint tenant’s interest must be of same extent, nature

and duration.

The unity of title would purport that joint tenants are required to have

acquired their interest through the same transaction. This would mean that joint

tenants must obtain their title from the same set of conveyancing papers.

Nevertheless, in certain circumstance, as a form of formality, estate owners may be

deemed to be joint tenants despite signing different documents. This was

illustrated in the case of Antoniades v Villiers.5

The unity of time means that the interest must have been acquired at the

same time.

A great benefit of joint tenancy is that should one joint tenant were to

demise in the existence of a joint tenancy, the demise’s interest in the joint tenancy

would accrue automatically to the other joint tenants. No formal conveyance or

document would be required to reflect the new situation.6

4
[2002] EWCA Civ 1075
5
[1988] 3 WLR 139
6 th
Martin Dixon, Modern Land Law, (8 edn, Routledge-Cavendish 2012) 133
Tenancy in Common

A tenancy in common is a type of shared ownership of property. This is where each

owner owns a part or a share of the property. In contrast to a joint tenancy, these

shares can be of unequal size, and may easily and without inhibition, be transferred

to other owners both during life and via a will.

A tenant may specifically point out a precise share of ownership of the land

such as one-half, one-sixth and one-quarter. However, this does not mean that a

tenant may physically delineate a portion of the land or property to claim it as his

own.

In summary, under tenancy in common:

• There would be no division of shares in the land;

• There is a unity of possession;

• No other unity need to be present, although others may be;

• There would be no right of survivorship.

The Equitable Interest

In each circumstance there is a co-ownership of a land or a property, the legal title

of the land would be held by the joint tenant trustees on trust of the land, as per

Sections 4 and 5 of the Trusts of Land and Appointment of Trustees Act. They

are to hold on to this land acting as trustees on the statutorily imposed trust of land
for the ‘real’ owners. Here, the ‘real owners’ are simply known as the equitable

owners.

Express and Implied Creation of Co-ownership

Any piece of land or property can be deliberately passed on to two or more

individuals. In the absence of any statement to the contrary, these legal owners will

also be taken to be the equitable owners holding the property on trust for them as

either joint tenants or tenants in common. It is likely that for a conveyance of land

expressly to declare who are the equitable owners, and also the nature of their

ownership as established in Goodman v Gallant.7 In such cases, the trust of land

and the equitable ownership is ‘expressly declared’. Two points are of importance

here:

i.) In order for a trust of land to be valid, it must satisfy Section 53(1) of the

Law of Property Act 1925. This means that an express declaration of the

beneficial interests is created and is proven by writing. However, there is

one vital exception to the requirement of writing, which is through

proving a resulting or a constructive trust as per Section 53(2) of the Law

of Property Act 1925.

ii.) Individuals who are parties to the said writing that establishes the trust

cannot, thereafter, plead a resulting or constructive trust to establish

different interests. The only exception to this is if the express declaration

has been procured by fraud or some other vitiating factor such as undue

7
[1986] Fam 106
 influence.

The Express Trust

It is viable for the legal owner to willfully and expressly declare through writing, as

per Section 53(1) of the Law of Property Act 1925, that he is holding the land on

trust for the claimant, normally in co-ownership with himself as well. As an express

trust, the equitable co-ownership thereby is conclusive according to its terms.

The Resulting Trust

A second method by which a person may claim an equitable interest is by

contributing to the purchase price of a property, despite the fact that his name is

not on the legal title. This is the resulting trust.

In such cases, legal ownership is in one person and equitable ownership is

shared among the contributors, usually on the basis of a tenancy in common in

proportion to the contribution provided. However, the contribution is to be made

for the acquisition of the property, and not merely to its repair as decided in the

case of Bank of India v Mody.8 It would seem that an interest would not arise

should there be evidence to prove that no common intention as to joint ownership

in ever existed as established in the case of First National Bank Plc v Ashok

Krishna Wadhwani and Maya Wadhwani.9 Post acquisition mortgage payments

8
[1998] 95(12) LSG 29
9
[1998] EWCA Civ 682
appear to fall outside resulting trusts as decided in Curley v Parkes.10 However in

the case of Laskar v Laskar,11 it was held that such payment would suffice.

The Constructive Trust

Another method of establishing an interest is through the constructive trust. For a

constructive trust to arise, there has to be a shared common intention between the

parties and on that intention, the claimant relied to his detriment.

The case of Lloyd Bank plc v Rosset12 provides for the early guidance on common

intention:

• Prior to acquisition or a date after the acquisition has taken place, there

should be agreement or understanding between the parties about sharing

the property beneficially. This understanding is based on evidence of

express discussion as decided in Eves v Eves.13

• The way of direct payments towards the purchase money of property like

lump sum or mortgage payments;

• This 3rd route was provided for by the case of Stack v Dowden14 and the

relationship between the parties and their entire course of dealing should

also be taken into account. This is not restricted to promises or payments.

10
[2004] EWCA Civ 1515
11
[2008] EWCA Civ 347
12
[1990] UKHL 14
13
[1975] 1 WLR 1338
14
[2007] UKHL 17
 Besides common intention, there should also be detrimental reliance. The

claimant must show that they relied to their detriment on the existence of common

intention. Lord Denning in Greasley v Cooke,15 said that if there is evidence of

detriment there should be presumption of reliance. Detriment could be doing extra

ordinary work for the house (Eves v Eves).16 It could be financial as well as other

kinds of detriments such as foregoing a job opportunity.

If a resulting trust is established, then the interest in quantified through the

percentage of their contribution to the purchase money. In constructive trust the

quantification will be based on the parties’ common intention or compensation of

the value of detriment suffered. In express trust the parties should expressly

declare their share and is conclusive. As per Oxley v Hiscock17 and Stack v

Dowden18 it is now said that courts have to decide what is fair in the circumstances

to quantify the equitable interest and this can apply in any scenario not necessarily

lovers.

If there is explicit agreement about the size of the share the courts hold that to

be conclusive because of the intention of the parties about their equitable shares as

decided in Crossley v Crossley.19

Where there are two legal owners they might have equal shares on the basis of

Equity follows Law however the approach of the courts have changed in

15
[1980] 3 All ER 710
16
[1975] 1 WLR 1338
17
[2004] EWCA 546
18
[2007] UKHL 17
19
[2007] EWCA Civ 1491
21st century cases and this can be challenged as in Stack v Dowden20 and Fowler v

Burron.21 Both of these cases showed that there is no need for equity to follow law

because of the imposition of constructive trust but Segal v Pasram22 followed the

maxim. Now the law as summarized in Jones v Kernott23 is.

In summary, therefore, the following are the principles applicable in a case

such as this, where a family home is bought in the joint names of a cohabiting

couple who are both responsible for any mortgage, but without any express

declaration of their beneficial interests.

The Case of Stack v Dowden [2007] UKHL 17 and Its Effect to the Law of Trust &

Co-ownership In England & Wales

Facts and decision of Stack v Dowden:24

Ms. Dowden and Mr. Stack were co-habitees. They bought a house in their

joint names but had made no declaration as to the entitlement of the beneficial

interest in the property. The purchase price of £190,000 came from £129,000 of Ms.

Dowden’s savings and sale of her previous property. The remainder sum came

from an interest only mortgage and two separate endowment policies. Mr. Stack

paid the mortgage installments totaling £27,000 while Ms. Dowden paid £38,000. It

is said that Ms. Dowden was the one who paid majority of the utility bills. They had

separate bank accounts and made separate investments. The couple then separated

20
[2007] UKHL 17
21
[2008] EWCA Civ 377
22
[2008] 1 FLR 271
23
[2011] UKSC 53
24
[2007] UKHL 17
and Mr. Stack brought an action for sale of the property and distribution of the

proceeds in equal shares.

The Court held that although the determining beneficial interest where the

legal title was held jointly is followed by the beneficial interest through the

presumption of ‘equity follows the law’. However, this presumption was not seem

to be applicable as there was evidence to show that this was not Ms. Dowden and

Mr. Stack’s intention.

As per Baroness Hale:

In the cohabitation context, mercenary considerations may be more to the fore than

they would be in marriage, but it should not be assumed that they always take

pride of place over natural love and affection. At the end of the day, having taken

all this into account, cases in which the joint legal owners are to be taken to have

intended that their beneficial interests should be different from their legal interests

will be very unusual.

This is, therefore, a very unusual case. There cannot be many unmarried couples

who have lived together for as long as this, who have had four children together,

and whose affairs have been kept as rigidly separate as this couple's affairs were

kept. This is all strongly indicative that they did not intend their shares, even in the

property which was put into both their names, to be equal (still less that they

intended a beneficial joint tenancy with the right of survivorship should one of

them die before it was severed.) Before the Court of Appeal, Ms. Dowden contended

for a 65% share and in my view she has made good her case for that.25

25
[2007] UKHL 17, [2007] 2 All ER 929 [953] (Hale LJ)
 The case of Stack v Dowden26 has indeed brought upon several changes

and has affected the law in relation to trust and co-ownership in England and

Wales. In relation to case laws, Stack v Dowden27 has been applied numerous times

and has brought further development.

In Holman v Howes28 was one of the earliest applications of Stack v

Dowden29 by the Court of Appeal. Citing the speech of Baroness Hale, Lord Justice

Lloyd stated that the Court's inquiry should be directed to what was intended

between the parties or, if that cannot be identified directly, what they must be

taken from their conduct to have intended. "It is not for that which the court

considers fair."30

Stack v Dowden31 has not only developed the laws in relation to a similar

situation as to the fact of its case but has extended beyond to deal with situations of

imputation or inference, investment properties, proprietary estoppel, equitable

accounting, creditors & family home and undue influence.

26
[2007] UKHL 17
27
ibid
28
[2007] EWCA Civ 877
29
[2007] UKHL 17
30
[2007] EWCA Civ 877 [30] (Lloyd LJ)
31
ibid
Conclusion

In summary, the law on trust and co-ownership started out way back as a result of

the Law of Property Act 1925 and Trusts of Land and Appointment of Trustees

Act 1996. As discussed, these statutes along with common law has resulted in a

gradual development on this area of law and the leading case of Stack v Dowden

has brought upon great developments as it has been applied in many

circumstances and this shows that the English Courts are indeed adapting to the

current trend of family home arrangements in England and Wales. There may be

improvements but this is indeed moving at a great pace.