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Agreements Between Cohabitees

A recent Court of Appeal decision illustrates just how easily an informal discussion and agreement can lead to a Constructive Trust defining rights in property.  The case of Ely v Robson [2016] upheld a declaration as to the extent of beneficial interests in property of Mr Ely and Ms Robson.

Mr Ely and Ms Robson cohabited in a property purchased solely by Mr Ely in 1987. Ms Robson made no contribution towards the purchase price.

Ms Robson purchased a property in her sole name in 1989, and Mr Ely claimed that he had contributed £16,000, which was disputed by Ms Robson.

The parties continued to live in Mr Ely’s property despite the relationship breaking down in 2005.  Ms Robson’s aunt and occasionally her mother also lived there. Mr Ely asked Ms Robson to move out, and upon her refusal, issued a claim for possession. She defended and counterclaimed that the Common Intention was to share equally in the ownership of the property and that she had always been led to believe this.

Although the matter was listed for trial, the parties met in August 2007 to try and resolve matters between them. The result of those discussions was disputed.

Mr Ely claimed agreement had been reached to compromise all claims and this was confirmed in correspondence between their respective solicitors.

Mr Ely holds the property on trust for himself for life, with the remainder 80% for his heirs and successors and 20% for Ms Robson
Ms Robson has the right to occupy the property whilst her mother and aunt were alive.
Following termination of Ms Robson’s right to occupy, Mr Ely would have the right to sell the property.
Mr Ely would relinquish any claim to any interest in Ms Robson’s property.

A letter was sent to the court and signed by both parties’ solicitors stating the parties had reached agreement and adjourning the trial to a later date. The matter was not however relisted.

After the death of the mother and aunt, Mr Ely issued an application for sale and declaratory relief. He asserted that he and Ms Robson had reached agreement in August 2007 on the terms of the solicitor’s letter. He also denied that he had ever indicated a common intention to share equally.

At first instance the Judge decided that if the correspondence from August 2007 had not been a correct reflection of the discussions between the parties, then it was inconceivable that neither Ms Robson nor her solicitors had not sought to correct this. Neither would they have signed the joint letter to the court.

The Judge found that Ms Robson had led Mr Ely to believe she was in agreement and Mr Ely relied upon that by not pursuing his claim.

Ms Robson appealed but the Court of Appeal found that the Trial Judge was correct in his findings that the parties did intend their oral agreement to be binding and that they intended it be acted upon. Mr Ely had relied upon the agreement in that he allowed Ms Robson to continue to live there until the death of her mother and aunt. Both parties had therefore acted consistently with the agreement.

This case illustrates the importance of setting out formally financial arrangements at the outset. Common intention can be found on the basis of informal discussion as well as these in this particular case, which were clearly an attempt to settle matters.

Maitland Walker would always recommend considering entering into a Cohabitation Agreement (also known as a Living Together Agreement). This can record all financial arrangements from the outset and what should happen if the couple separate. Cohabitees simply do not have the same rights and protection as married couples or civil partners.

Contact Janice Leyland for expert and practical advice on any of these issues.

janice.leyland@maitlandwalker.com

01643 707777 or 01823 745777