Hudson v Hathway [2022] EWCA Civ 164814 December 2022

Published: 04/01/2023 09:00

Lewison, Andrews and Nugee LJJ. Second appeal on whether detriment remained a requirement of a constructive trust, given not mentioned in either Stack or Kernott.

Unmarried couple, house in joint names. On separation, parties agreed that Ms Hathaway would retain the house for herself and their children. Some years later, Mr Hudson sought sale and equal division. Ms Hathaway argued that she was entitled to the whole of the proceeds, a constructive trust arising from the parties’ common intention that the house be hers, coupled with detriment. HHJ Ralton rejected most of her pleaded detriment (payment of mortgage interest, decorating, frugality) but accepted as detriment her desisting from bringing Sch 1 claim and giving up ‘some sort of civil claim’ over Mr Hudson’s pension and shares in exchange for the house – controversial as the parties were unmarried and their belief that they had mutual divorce style claims was mistaken. At first appeal – summary here – Kerr J held that detriment was not a requirement if common intention and unconscionability were present, but did not disturb finding that detriment was satisfied on the facts. Mr Hudson appealed.

Held, dismissing appeal:

  1. Section 53 Law of Property Act 1925 provides that an interest in land can be created or disposed of by a signed document. Mr Hudson had emailed Ms Hathaway expressly giving her the house. Section 36(2) provides that a joint tenant can release his interest to the other joint tenant and no particular form of words is required. Mr Hudson had written on separation that he would have no interest in the house. He typed his name at the end of the emails. There was ‘a substantial body of authority to the effect that deliberately subscribing one's name to an email amounts to a signature’. Accordingly, s 53 was satisfied. This was sufficient to dispose of the appeal.
  2. Detriment was an essential requirement of a constructive trust. HL had not intended in Stack or Kernott to ‘abrogate the long-standing principle that what makes an unenforceable agreement or promise enforceable in equity is detrimental reliance. The principle of detrimental reliance was not challenged in either case, and that it why it was unnecessary for the court to deal with it’. Indeed, the HL had in both cases cited Grant v Edwards, a case that referred to a requirement of detriment, with approval.
  3. While the agreement in the present case satisfied s 53, if it had not been satisfied (if the agreement had been verbal, for example), then detrimental reliance would have been necessary. Otherwise, the Lords ‘would have needed to explain how a mere oral agreement (without more) overcame the statutory formalities laid down by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and section 53(1) of the Law of Property Act 1925’. Guest v Guest had more recently affirmed ‘the critical importance of detrimental reliance to the intervention of equity’.
  4. Ms Hathaway’s argument amounted to an assertion that a constructive trust had arisen in relation to the parties’ other assets based on a common intention of shared ownership and detriment. It was this claim, known to the law, that she had given up. It was not necessary to know whether the claim would have succeeded. ‘Whether detrimental reliance to that extent in the context of an express agreement is sufficiently substantial is … an evaluative decision for the trial judge.’
  5. A claim to a beneficial interest is a chose in action and not an equitable interest caught by s 53. Accordingly, any cause of action Ms Hathaway had in respect of Mr Hudson’s shares could be assigned by her and no particular form was required to do so. Her own email to him accepting his retention of the shares was sufficient.
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