TLATA and Economic Abuse

Is economic abuse relevant when determining property ownership between former cohabitants? Whilst explicit references to economic abuse in claims under the Trusts of Land and Appointment of Trustees Act 1996 (TLATA) may be rare, a review of the case-law highlights its potential relevance. With 87% of family lawyers believing that economic abuse is not sufficiently taken into account on the breakdown of cohabiting relationships,[[1]] it is important to maximise the avenues that do exist.

Section 1(4) Domestic Abuse Act 2021 defines economic abuse as ‘any behaviour that has a substantial adverse effect on the [victim]’s ability to (a) acquire, use or maintain money or other property, or (b) obtain goods or services’. Hopefully, the forthcoming consultation on cohabitation reform will engage with the consequences of economic abuse following a cohabiting relationship. Even so, some relationships may fall outside the scope of any future legislation, for example short or childless relationships, or if the couple have exercised a right to opt out of the statutory scheme. Nor is it clear whether reform will extend to property ownership. The constructive trust regime will therefore likely remain relevant to cohabitants for some time to come.

Against this backdrop, this article explores four scenarios in which economic abuse can be relevant in a TLATA claim.

Establishing common intention in sole name cases

Where property is held in one party’s sole name, to establish a beneficial interest the other must evidence a common intention of joint ownership on which they relied to their detriment. Whilst it might initially appear hopeless to argue that such a common intention existed where the legal owner deliberately excluded the other from the title to deny them an interest, the case-law suggests otherwise.

In the seminal case of Gissing v Gissing [1970] UKHL 3 Lord Diplock held:

‘the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.’

The issue did not arise on the facts in Gissing. However, Lord Diplock’s reasoning indicates that a ‘common intention’ can be found where the legal owner did not intend to share ownership but manipulated or misled their partner into believing they did.

The situation anticipated by Lord Diplock arose in the well-known case of Eves v Eves [1975] EWCA Civ 3. Stuart Eves told Janet Eves that the property would be theirs, but that it had to be registered in his sole name as she was under 21. Janet subsequently carried out extensive renovations. In evidence, Stuart admitted that he had invented the excuse to exclude her from ownership. However, rather than adopting Lord Diplock’s test, focusing on what Janet could reasonably have understood from Stuart’s words and actions, Lord Brightman inferred a common intention from the fact of the excuse, reasoning that no excuse would have been necessary if there were no common intention of shared ownership.

Nourse LJ followed Lord Brightman’s reasoning in a similar factual scenario in Grant v Edwards [1986] EWCA Civ 4.[[2]] Sir Nicholas Browne-Wilkinson took a different approach, acknowledging that there was, in reality, no common intention of shared ownership. However, he held that because Mr Edwards led Ms Grant to believe that she would be added to the title, and because this justified her conclusion that she had a beneficial interest, Mr Edwards was precluded from arguing that she did not.[[3]] This reasoning is closer to Lord Diplock’s approach, albeit expressed differently.

Curran v Collins [2015] EWCA Civ 404 exposed the limitations of the ‘excuse’ approach adopted by Lord Brightman and Nourse LJ. The parties were not cohabiting when Ms Curran asked Mr Collins whether his new home would be in their joint names. He replied that it would not, as that would involve paying for two life insurance policies. Ms Curran argued that this excuse evidenced a common intention of co-ownership. Lewison LJ rejected the proposition that an excuse inevitably creates an inference of joint ownership. He distinguished the case on the basis that the property was not the family home and there was no positive assertion that Ms Curran would have been on the title but for cost.

It could also be distinguished on the basis that there was no abusive dynamic: the excuse was not made to induce Ms Curran to contribute to the property (and she had not done so). In Lord Diplock’s language, it was not reasonable for Ms Curran to understand that Mr Collins intended her to have an interest.

In the recent case of DDR v BDR (Financial Remedies, Beneficial Ownership and Insolvency) [2024] EWFC 278, Alexander Chandler KC, sitting as a High Court Judge, considered a scenario in which the wife had been led to believe she was a co-owner of the family home. Whilst there was no ‘excuse’, the judge drew comparisons with Eves v Eves and Grant v Edwards, noting that the husband had similarly ‘gained the wife’s confidence’ and ‘abused that trust’, so that she contributed to a property in his sole name. In other words, the case involved economic abuse.

The parties were married but the husband was bankrupt, necessitating a determination of their beneficial interests in the family home. The husband had bought the house in his sole name but 4 months later the wife became a party to the mortgage, enabling a further advance. Whilst she assumed she had become a co-owner of the property, she had not. The judge found that the husband had insisted that she sign the mortgage documents without reading them, that he had retained almost all the funds advanced, and had required her to pay more than half the mortgage payments. A common intention was inferred, with the judge holding that because the husband ‘took advantage of the Wife … equity requires the Wife’s interest to be recognised’. His approach is analogous to that of Sir Nicholas Browne-Wilkinson in Grant v Edwards. Lord Diplock’s approach of considering W’s reasonable understanding of H’s intention could also have been deployed.

These cases will, of course, offer no assistance where the abusive partner has made their intentions clear, operating through fear rather than deception. However, they may provide a route to relief where a victim-survivor has been led to believe they would have an interest in a property and has contributed to it. To bring greater clarity to the law, particularly for those unable to access legal advice, it may be helpful for such scenarios to be recognised as a distinct category of constructive trust.[[4]] This could help establish a broader understanding that although a genuine ‘common intention’ of co-ownership is unlikely in abusive relationships, equity may nonetheless intervene to prevent injustice.

Determining the extent of the parties’ shares absent an express declaration

The need to quantify the parties’ respective shares arises in two scenarios: where a party who is not a legal owner has established a beneficial interest in the property; and where a jointly owned property is held without an express declaration of trust and one party has rebutted the presumption of equal ownership by evidencing a contrary common intention.

In such cases, the primary search is for the parties’ actual shared intentions, whether expressed or inferred from their conduct.[[5]] The Supreme Court in Jones v Kernott highlighted that ‘a legitimate inference may not correspond to an individual’s subjective state of mind’, quoting Lord Diplock’s dicta in Gissing that the relevant intention is that which was reasonably understood by the other party. Thus as in the sole name cases discussed above, deliberate deceptions will not preclude a finding of a common intention.

Where it is established that the beneficial interest is shared, but it is not possible to ascertain a common intention as to the parties’ respective shares, ‘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’.[[6]] In this exercise ‘financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended [where inferring] or fair [where imputing]’.[[7]]

The relevance of domestic abuse to this process was addressed in Graham-York v York & Ors [2015] EWCA Civ 72. The parties had cohabited for 33 years. Their home had been held in Mr York’s sole name and the issue of beneficial interests arose following his death. The trial judge found that Mr York had ‘a controlling nature’ and a ‘proclivity for violence’, whilst Miss Graham-York was ‘intelligent but vulnerable, suffering symptoms of both Asperger’s syndrome and post traumatic stress disorder’, and concluded that ‘Miss Graham-York was under his control and would have done whatever he wanted her to do’.

The trial judge held that Miss Graham-York’s financial contributions in the earlier part of the relationship evidenced a common intention of joint ownership, but that there was no common intention as to shares. Finding that whilst her financial contributions ‘did not amount to much’ but that Ms Graham-York did ‘cook the family meals, and, jointly with [Mr York] looked after and brought up their daughter’, the judge concluded that ‘a fair reflection of her contributions financial and non-financial over the years would be a 25% beneficial interest in the property’.

Upholding this decision, the Court of Appeal recognised that ‘it was plainly a relationship which was abusive in every sense of that word’, but held:

‘in deciding in such a case what shares are fair, the court is not concerned with some form of redistributive justice. Thus it is irrelevant that it may be thought a “fair” outcome for a woman who has endured years of abusive conduct by her partner to be allotted a substantial interest in his property on his death. The plight of Miss Graham-York attracts sympathy, but it does not enable the court to redistribute property interests in a manner which right-minded people might think amounts to appropriate compensation. Miss Graham-York 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”. It is these last words, which I have emphasised, which supply the confines of the enquiry as to fairness.’

Ten years on, a different approach might be now be warranted. It is increasingly recognised that domestic abuse does not exist on a separate plane from the parties’ financial relationship, and that economic abuse is almost always a feature of a controlling dynamic. Abuse cannot be neatly separated from the parties’ dealings ‘in relation to the property’ and should arguably be treated as a relevant factor when assessing fairness.

Overturning an express declaration of trust on the basis of undue influence or fraudulent misrepresentation

A victim-survivor of economic abuse may succeed in setting aside an express agreement on beneficial interests if they can demonstrate that their agreement was procured through undue influence or fraudulent misrepresentation.

Considering first undue influence, the relevant legal principles are those set out in Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44. Briefly, where two people are in relationship of trust and confidence, or where one is vulnerable, and a transaction between them ‘calls for explanation’ (i.e. it cannot be reasonably accounted for based on ordinary motivations), a presumption of undue influence arises. The burden then shifts to the party seeking to rely on the transaction to prove that it was not procured through an abuse of their position, but was a free and informed exercise of the other party’s will. If they cannot do so, the transaction will be set aside.

This situation arose in the cohabitation context in Smith v Cooper & Anor [2010] EWCA Civ 722. Miss Cooper had transferred her solely owned property into the joint names of herself and her cohabitant, Mr Smith, to be held as joint tenants. There was no consideration for the transfer. Miss Cooper had not had independent legal advice, had vacillated as to whether the transaction should proceed and was suffering from depression.

The Court of Appeal agreed with the trial judge that the presumption of undue influence arose.

However, the trial judge had then wrongly asked whether Mr Smith could show that there was a reasonable explanation for the transaction. The correct question, once the presumption had arisen, was whether Mr Smith could prove that Miss Cooper entered into the transaction of her own free will, independently of the influence that he was in a position to exercise over her. Finding that there was ‘nothing in the evidence that can show that Miss Cooper was able to, or did, address these decisions free from the influence that Mr Smith was in a position to exercise over her’, the Court of Appeal set aside the transaction.

Similarly, in Pearce v Beverley [2013] EW Misc 10 (CC) the transfer of a property into joint names by an elderly and vulnerable man was set aside. The court found that the presumption of undue influence arose and could not be rebutted.

The issue of fraudulent misrepresentation arose in Razaq v Shaheen [2020] EWHC 2382 (QB). Regrettably, it was not formally pleaded, meaning Martin Spencer J could only speculate that it would probably have succeeded if had been. Miss Shaheen had agreed to purchase a right-to-buy property in joint names and equal shares with Mr Razaq, her husband under Islamic but not English law, with whom she had a child. Almost immediately after the purchase was completed Mr Razaq left the home and sought his 50% share of its value.

Miss Shaheen’s evidence, which was accepted, was that Mr Razaq had persistently pressured her to buy the property, telling her it was for their future. She explained that she had felt under pressure to agree, and when he left she felt deceived and taken advantage of. Her evidence was accepted in full. On these facts, it seems that an undue influence claim might also have succeeded.

The cases highlight the potential for redress where abuse has taken the form of assets being transferred into the abuser’s name. Razaq v Shaheen, in particular, also underscores the need for greater awareness among practitioners of the potential relevance of these equitable doctrines in cohabitation disputes, and familiarity with the requirements of the Civil Procedure Rules 1998 (SI 1998/3132) (CPR).

Overriding an express declaration of trust on the basis of a superseding common intention

It had long been accepted that a valid declaration of trust is conclusive in determining beneficial interests, save where varied by a subsequent express declaration of trust. However, in Nilsson & Anor v Cynberg [2024] EWHC 2164 (Ch) Deputy High Court Judge James Pickering KC held that an express declaration of trust can be varied by a common intention constructive trust.

In that case, the married parties had purchased a property as joint tenants. Following their separation in 2009 they orally agreed that the husband would relinquish his interest in the property, provided the wife agreed to leave it to the children on her death. The wife subsequently met all the outgoings and invested in the property, but when the husband was made bankrupt in 2018, the property remained in their joint names. The court held that the wife was the sole beneficial owner under a common intention constructive trust arising from the parties’ agreement on their separation.

The judge considered that previous authority established only that an express declaration of trust cannot be overridden by a common intention constructive trust relying on facts existing at the time of the declaration of trust, but can be overridden by a constructive trust arising from subsequent events.[[8]] As the decision was a refusal of permission to appeal following an oral hearing it could not be further appealed; nor is it binding precedent.

Nilsson v Cynberg involved an express oral agreement which both parties wanted upheld. Whether a judge would be willing to hold that an express declaration of trust can be varied by an inferred common intention, the existence of which is disputed by one of the parties, remains to be seen. Such an approach would represent a significant development in the law and could open a new avenue for victims of economic abuse where post-declaration conduct reflects a different understanding of ownership. However, given the CPR costs rules there may be few litigants willing to see how far this approach can be taken.

Conclusion

Plainly, there are many situations in which the law of constructive trusts offers no assistance to victim-survivors of economic abuse. Yet in some cases there may be options for recourse. A greater focus on the intersection of economic abuse and the relevant equitable doctrines may assist in identifying and advancing such claims and ultimately contribute to the development of the relevant principles in line with a modern understanding of domestic abuse. Constructive trusts are, after all, a child of equity, designed to achieve fairness and natural justice.

[[1]]: Report by Resolution’s Economic Abuse Working Group, October 2024, https://resolution.org.uk/campaigning-for-change/dafpr-report/. This compares to the 80% who consider it is not sufficiently taken into account in financial remedy proceedings.

[[2]]: In this case the relevant excuse was that having Mrs Grant’s name on the title may prejudice her divorce proceedings, and Mrs Grant had relied on the assurances in contributing to the mortgage repayments.

[[3]]: Sir Nicholas recognised that this was ‘closely akin’ to proprietary estoppel and he did ‘not think it matters which formula is chosen’, an approach with which Lord Walker disagreed in Stack v Dowden.

[[4]]: Again, there are obvious similarities with a proprietary estoppel claim. In DDR v BDR W put her claim on both footings, with Alexander Chandler KC preferring the constructive trust analysis due to the wider range of remedies available.

[[5]]: Stack v Dowden [2007] UKHL 17; Jones v Kernott [2011] UKSC 53.

[[6]]: Jones v Kernott.

[[7]]: Jones v Kernott.

[[8]]: The decision was comprehensively analysed by Andrew Day and Jacob Gifford Head for the FRJ, https://financialremediesjournal.com/they-think-its-all-over-it-is-not-express-declarations-subsequent-agreements-and-the-decision-in-re-cynberg/.