Oral Agreement Upheld To Share House Ownership
The England and Wales High Court has upheld an oral agreement between siblings John and Brenda Archibald and Patsy Alexander to share a house despite alleged lack of detriment (Archibald v Alexander, 2020 EWHC 1621 Ch).
In 1997, the family home was purchased by the three siblings mother, however Patsy Alexander’s name was also added to the legal documents as a joint tenant.
Upon the death of their mother, Patsy claimed sole beneficial ownership of the property by succession. However, her brother and sister fought this claim.
According to John and Brenda, shortly before the purchase of the home in 1996, the siblings and their mother held a face-to-face meeting where verbal agreements were made regarding the ownership of the property.
It was alleged, that the agreement was on the basis of the sibling’s mother buying the property in her name and one or more of the children would be names as joint tenants. The home would be lived in by their mother until her death, where it was then divided equally between the three children.
This reasoning behind this agreement was to prevent the children having to pay inheritance tax as well as protecting the asset against their mother’s new partner, if she was ever to re-marry.
John and Brenda claimed that Patsy held the property’s title on trust for herself and themselves, as beneficial tenants-in-common in equal shares. Patsy had only been named as the only legal co-owner because they had been unavailable to participate in the purchase formalities due to other commitments, they said, believing their legal participation was unnecessary because of the oral promises that had been made.
Patsy refuted this and claims the meeting never took place.
The Central London County Court judge rejected Patsy’s account, saying her case was “manufactured and her evidence was unstrustworthy”. This caused the judge to rule that the property was to be shared equally between the three siblings.
Patsy appealed this ruling and took her case the the England and Wales High Court. She claimed that any oral agreement that might have been made had not caused John and Brenda to decide not to become transferees in the 1997 purchase. She also argued that, as a matter of law, the county court judge was wrong to conclude that such an oral agreement could create an equity in John and Brenda’s favour under a constructive trust, because they had not relied on it to their detriment; and that a common intention constructive trust required detrimental reliance as a condition.
This appeal was also dismissed.
The judge of the second hearing, Fancourt J said:
“It was self evident, that if an express agreement is made in such terms in a loving family context, the non-transferees will rely on that by not otherwise protecting their position.”
“The constructive trust in such circumstances depends on the agreed basis on which the transferee of property received it and on the fact that it would be unconscionable for them to treat the property as their own.
“The principle applies exactly to the facts of the instant case, as found by the [county court judge].”