Russell-Cooke recently acted for the successful First Respondent in an appeal to the Court of Appeal (CA). Our client, who had appeared in person in the court below, was involved in the claim as administrator of his father's estate.

Graham-York v York and Others [2015] EWCA Civ 72

Our client's father had been the sole legal owner of a property, on which he had raised a mortgage. His partner, the appellant, had had no legal interest in the property. Their relationship had been longstanding and it was conceded that she had made some limited financial contributions towards the property. Upon the death of the legal owner, the mortgage payments stopped and the second respondent mortgagee eventually issued a claim for possession, which our client did not defend. The appellant counterclaimed for a beneficial interest in the property.

The usual starting point in relation to property ownership is that the beneficial interest follows the legal interest. However, this can be varied where there is evidence to show an agreement or common intention that does not follow the legal title.  

On the basis of certain financial and non financial contributions made by the appellant, she was originally awarded a 25% interest, albeit after redemption of the mortgage.  Faber HHJ noted in her first instance judgment that she considered this a "generous estimate" of the appellant's interest.

On appeal to the CA, the appellant argued that the starting point for consideration of her beneficial interest was equality. Furthermore, she argued that her interest in the property should be realised before payment of the mortgage (the equity of exoneration argument). 

The equity of exoneration argument had not been raised at first instance, but only on appeal. Nevertheless, Tomlinson LJ addressed the issue briefly in his appeal judgment.  He highlighted that, by admitting she had no overriding interest, the appellant had conceded that she was bound by the mortgage. 

As between the appellant and her partner's estate, it was considered that she could not be exonerated from the burden of the mortgage, as she had benefitted from the proceeds of the remortgage. To rely on the equity of exoneration, the appellant would have had to prove that the mortgage proceeds only benefitted the deceased. It was said that "it was apparent ... that Miss Graham-York shared the benefit of the deceased's business ventures and it would be unconscionable that she should do so without sharing the burden of the mortgage."

In relation to the division of the property, Tomlinson LJ highlighted that this was "not a case in which natural love and affection can be said to have been at the forefront of the relationship" and that, although trial judge had concluded that the appellant and her partner had a common intention that she should share the beneficial ownership of the property, it was "not easy to reconcile the judge's findings ... with a common intention as to equality of interests". The Court of Appeal found that Faber HHJ had directed herself correctly and that her decision should not be interfered with.

Both parts of the appeal were dismissed, with costs.

Alison Regan, partner in the trust and estate disputes team, who worked on the case commented, "We are delighted to obtain this result for our client, after this long running and stressful litigation".

For more information about this matter or our trust and estate dispute work generally, visit our service pages here; or contact Alison Regan or Hannah Mantle.

To read the full judgment, click here.