Wed, 25 Jan 2023
On 14 December 2022, the Court of Appeal handed down its decision in Hudson v Hathway [2022] EWCA Civ 1648 which provides some helpful guidance in relation to the requirement of detrimental reliance in common intention constructive trusts, the requirement for signed writing in the disposition of equitable interests in land pursuant to section 53(1)(c) of the Law of Property Act 1925 and when permission will be granted to a party to raise a point at appeal not raised below.
The Facts
Mr Hudson and Ms Hathway started their relationship in 1990. He moved into her home and became joint owner. They did not marry. In 2007, with a mortgage, they purchased Picnic House in joint names with no declaration of trusts. Initially both worked in the financial services industry, but after giving birth to their two sons Ms Hathway began working in the charity sector, at which point Mr Hudson’s earnings overtook hers.
In 2009 Mr Hudson and Ms Hathway separated.
In a series of emails in 2013, it was agreed that Mr Hudson would get sole ownership of his shares and pension and Ms Hathway would get sole equity in Picnic House, its contents and other savings/income. Ms Hathaway ended her emails “Jayne Hathway” and Mr Hudson ended his emails with “Lee” or “Lee Hudson”.
In 2015, Mr Hudson ceased to contribute to the mortgage and Ms Hathway took over payments.
The Claim
In October 2019, Mr Hudson issued a claim for an order for sale of Picnic House and equal division of the proceeds. Ms Hathway contended that she should be solely entitled to the proceeds under a common intention constructive trust.
Progress of the Claim
At first instance, HHJ Ralton found for Ms Hathway. He determined that the emails passing between the parties were evidence of a common intention on which she had relied to her detriment in that she had relinquished her potential claims to Mr Hudson’s shares and pension.
Mr Hudson appealed.
In appeal, Kerr J, again found for Ms Hathway. He stated that where common intention is demonstrated by express agreement in a joint names case, detrimental reliance is not required. In case he was wrong, Kerr J also determined that HHJ Ralton had been entitled to find that, on the facts, Ms Hathway had established detrimental reliance.
Mr Hudson appealed to the Court of Appeal.
The Decision of the Court of Appeal
Lewison LJ gave the lead judgment.
Issue 1: Did the email chain which expressed the parties’ common intention comply with the requirement for signed writing in the disposition of an equitable interest in land prescribed by section 53(1)(c) Law of Property Act 1925?
Yes.
There was no dispute that the emails were “writing” as defined by Schedule 1 to the Interpretation Act 1978.
As to whether the emails had been “signed”, there was a substantial body of authority to the effect that deliberately subscribing one’s name to an email amounts to a signature. Lewison LJ stated: “Given that so much correspondence takes place nowadays by email rather than by letters with ‘wet ink’ signature, it is, in my judgment, entirely appropriate that the law should recognise that technological developments have extended what an ordinary person would understand by a signature”.
Issue 2: The issue in relation to section 53(1)(c) and whether the email chain was sufficient to satisfy the requirement for signed writing in that section had not been raised below. The Court of Appeal had invited Ms Hathway’s legal team to amend her Respondent’s Notice to take this point.When will permission be granted to a party to raise a point at appeal not raised below?
Lewison LJ provided a review of the authorities.
There is no general rule that a case must be “exceptional” before a new point will be allowed to be taken on appeal. The decision whether it is just to permit the new point will depend upon an analysis of all the relevant factors including the nature of the proceedings in the lower court, the nature of the new point and any prejudice that would be cause to the opposing party if the new point is allowed to be taken.
Issue 3: Is detrimental reliance required to be shown by a party claiming a post-acquisition increase in their equitable share?
Yes.
Lewison J provided a review of the relevant sources and concluded that the overwhelming weight of authority was to the effect that detrimental reliance is required.
Issue 4: Was the requirement for detrimental reliance met in this case?
Yes.
Lewison LJ concluded that, absent a transcript of the original trial, the Court of Appeal could not interfere with HHJ Ralton’s evaluative findings of fact.
Lewison LJ did comment though that there is no significant difference between the detriment required in proprietary estoppel cases and in common intention constructive trust cases. A granular, point-by-point analysis of detrimental reliance was not the correct approach. Rather, one should “stand back and look at the matter in the round”.
Conclusions
In this judgment the Court of Appeal have provided a helpful “one-stop” guide to raising new points on appeal and detrimental reliance in common intention constructive trust cases. They have also provided welcome clarification that the signing of emails with a typed name is sufficient to satisfy the statutory formality requirements of section 53 of the Law of Property Act 1925.
