Cohabitees and beneficial interests—what's a fair share? (Graham-York v York)

Cohabitees and beneficial interests—what's a fair share? (Graham-York v York)

How should the courts decide what is 'fair' when determining the extent of a former cohabitee's beneficial interests in a property? Emma Knight of 13 Old Square Chambers comments on a recent ruling by the Court of Appeal.

Original news

Graham-York v York (Personal Representative of the Estate of Norton Brian York) and another [2015] EWCA Civ 72, [2015] All ER (D) 115 (Feb)

The appellant, K, had cohabited with her partner, N, between 1976 and his death in 2009. Between 1985 and 2009 they had lived together in a property purchased by N and registered in his sole name. The Court of Appeal, Civil Division, dismissed K's appeal against a finding that she had a beneficial interest in the property limited to the extent of 25% of its value.

What's the background to this case?

K cohabited with her late partner N for 32 years preceding N's death. For 24 of those years they had lived together in a property registered in N's sole name and subject to a mortgage in favour of a building society. Following N's death, K had continued to live in the property. Mortgage arrears built up and the building society sought possession. K alleged that she had a beneficial interest in the property.

At trial, it was found that:

  • K was vulnerable—she suffered from symptoms of Asperger's syndrome and post-traumatic stress disorder and had endured years of abuse from N
  • K's financial contributions to the household, unlike N's, were limited, and
  • there was no express agreement between K and N as to any interest K had in the property

K was held to have a 25% beneficial interest in the property subject to the mortgage (ie the mortgage would be redeemed in full from the net proceeds of the sale of the property before K received 25% of the remaining balance).

What were the legal issues that the Court of Appeal had to decide in this appeal?

K appealed on the grounds that:

  • K's beneficial interest in the property was 50%
  • K's interest in the property should not be subject to the mortgage

It was the first of these grounds which occupied the majority of the Court of Appeal's judgment. The problem of having to determine cohabitants' respective beneficial interests in a family home registered in the sole name of one party is not a novel one and authoritative modern guidance as to the proper approach in cases of this sort is contained in Jones v Kernott [2011] UKSC 53, [2011] 3 FCR 495. However, in this case, the paucity of evidence meant that the respective shares of K and N had to be deduced from what 'the court considers fair having regard to the whole course of dealing between them in relation to the property' (paras [51] and [52]) and it was this evaluation of fairness that was being challenged in the context of relatively sparse findings of fact which included a finding that K had endured a long, abusive relationship.

What were the main legal arguments put forward?

In relation to the first ground, it was argued that a fair reflection of K's contributions to the property was 50% because K had contributed 'as much to the household as she reasonably could' and 'fairness was the guide to what reasonable parties must be taken to have intended'.

In relation to the second ground, K argued that her occupation of the property gave her an overriding interest. In the alternative, she relied on the equity of exoneration.

What did the Court of Appeal decide, and why?

The Court of Appeal unanimously dismissed the appeal. It was emphasised that the court's enquiry as to fairness was confined to the conduct of the parties in relation to the property. The court acknowledged that K's story attracts sympathy and that right-minded people might think that, having endured years of abusive conduct by N, a 'fair' result would be to grant K compensation in the form of a substantial interest in the property. However, it was made clear that the court 'is not concerned with some form of redistributive justice'.

The court highlighted several features of cases of this nature:

  • first, there is no presumed starting point of equality
  • second, a party's contributions do not necessarily become proportionately higher the longer the period of cohabitation, and
  • finally, an appellate court will only interfere with an assessment of fairness where a determination falls outside the scope of reasonable decision making—the decision in this case did not fall outside that scope

The second ground of appeal was dealt with shortly. K's first argument had already been conceded at trial and K's reliance upon the equity of exoneration failed as it was not supported by the necessary findings of fact.

To what extent is the judgment helpful in clarifying the law in this area? What practical lessons can those advising take away from the case?

To a certain extent this case changes nothing. The principles upon which the primary legal issue in this case fell to be determined were already well settled in a body of authoritative case law which culminated in Jones v Kernott. However, the poignant context of this case serves as a harsh reminder of the confines of the court's evaluation of 'fairness' in determining cohabitants' respective beneficial interests. As per Baroness Hale at para [61] of Stack v Dowden [2007] UKHL 17, [2007] All ER (D) 208 (Apr):

'...the search is still for the result which reflects what the parties must, in the light of their conduct, be taken to have intended...therefore, it does not enable the court to abandon that search in favour of the result which the court itself considers fair.'

The lesson to be taken from this case is that, where the evidence shows a common intention to share beneficial ownership but does not show what shares were intended such that the issue of 'fairness' arises, it is important to focus, not on what is 'fair' by reference to the whole course of conduct of the parties but, on what is 'fair' by reference to the conduct of the parties in relation to the property.

Interviewed by Nicola Laver.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

Further Reading

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Applications for the possession and sale of the family home—when can the application be made and what is the process?

Factors which can give rise to the court not making an order for possession and sale of the family home—and the test it will apply

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First published on LexisPSL Restructuring and Insolvency

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.