EWHC 698 (Ch)
This case is an abomination, and illustrates yet again that depriving people of legal aid does the development of the common law a great disservice. Snowden J, who is a clever chap, should have known better. The contest is between an estranged wife and her husband’s trustee in bankruptcy.
Before I narrate this sorry tale, let me ask you a question.
Biffy buys a bicycle. She says that if Wills pays half, then, even though the bicycle lives in Biffy’s garage, the bicycle is “as much his as hers”. The offer isn’t time limited.
Wills doesn’t pay half. What interest does he have in Biffy’s bicycle?
I know what you are going to say. It’s “diddly squat”, isn’t it?
Or is it? If you yourself have a bicycle, can anyone come along and claim halfsies, if they give you half the purchase price? No, clearly not. Biffy has parted with something. I’d say this “something” was a contingent interest in 50% of the bicycle.
Anyway, back to the case. Mrs Jackson (“Mum”) – let’s pretend we’re touchy feely family bods here – is married to Mr Jackson (“Dad”). They have been “estranged” since 2001. However, they are still married. Mum has four children, but it’s not clear that they are Dad’s too, or some other dad. Anyway, Mum brings one of the kids to court to help her. She’s called “Monique”. Snowden J says nice things about Monique:
“But I must also pay particular tribute to Ms. Lewis, who does not have any legal training, but who assisted and represented her mother in difficult circumstances with remarkable ability, poise and confidence, both in written submissions and by way of oral submissions at the hearings before me.”
Sir Richard also says nice things about the Trustee’s counsel too – Ms Daisy Brown (“Daisy”) of Guildhall Chambers:
Ms. Brown, counsel for the Trustee and faced with a litigant in person, conducted the case in an exemplary manner, which reflects the stance taken by the Trustee and his solicitors.
Not that exemplary, Daisy! You could have done your job and reminded the court of some elementary principles of property.
But that’s enough ad hominem (feminam) abuse from me. Back to the narrative.
Mum buys Blackacre (194 Harrington Road, Beckenham) with some of her own money from a property she previously owned, and a mortgage. (Dad knows all about mortgages, having run a one-man band mortgage broking firm. Subsequently he was struck off by the FCA.) Dad never, ever, lives there. He occasionally telephones the kids.
Then Mum does a very silly thing. She goes to Dad’s solicitors and executes a Deed of Trust. The Deed says that she holds Blackacre in equal shares for Dad and herself. Why? In evidence, she said she was told by the lawyers that this was to protect the kids if she should shuffle off the mortal. Yeah right.
The Trust Deed does contain a magic clause. I say “magic” because even though they read it, indeed the learned judge quotes it, the words are hidden by the cloak of not-knowingness. It states – and think back to the bicycle that started this story – that Dad’s getting fifty percent of Blackacre is in consideration of him paying half of the mortgage payments and outgoings.
Are we agreed here? In the real world, Dad has a contingent interest, which becomes actual, if and only if, he coughs up the wonga. In Snowden-world, though, the grand wizard pulls out magic pixie dust from his robes, sprinkles it on Dad’s contingent interest, and like some New Testament miracle, the halt can walk and the blind can see, and Dad has got his share upgraded.
Mum then gets into trouble with her mortgage payments. The extent of Dad’s help is to get her a new, shiny mortgage. A condition of the mortgage is that the legal title is transferred into both their names. So Dad has finally given some consideration – the value of his joint covenant.
Imagine that this is pre 1998, what do we have? Again, in the real world, we have joint legal tenants, with Dad having a contingent interest thingy in the equitable title.
However, this all happened in 2007. What’s changed? That little box-ette on the TR1, which joint legal tenants tick to record the beneficial interest. Unhelpfully, Mum and Dad’s solicitors tick that little box on the TR1 saying that they held Blackacre on trust for themselves as joint tenants.
And off Snowden goes on his Stack v Dowden frolic. His subversion of the case is breath taking. Have you read Stack v Dowden recently? It’s about cohabitants. Ms Dowden, was you might remember, TfL’s most senior engineer. She had lived with Mr Stack for thirty odd years and also had four kids by him. Stack v Dowden is a Baroness Hale special. As a matter of policy, it is beyond criticism. As a matter of law – and I say this as a Baroness Hale groupie – it is a bit pragmatic. Far be it from me to ally myself with pillars of the establishment, but I’m rather with Lord Neuberger in this judgment.
Stack is therefore instantly distinguishable. It is about cohabitants and a family home. It is not about a home purchased by an estranged wife with her own money, and with the mortgage liability solely discharged by her, to provide a home for herself and her children.
But let’s put Stack aside, and let’s put Mum’s mere equity for undue influence/mistake aside (as the learned judge did) and think about what interest Dad has after Mum ticked the fatal TR1 box. Two possibilities, I suggest.
Firstly that Mum ended the trust that the trust deed had created and resettled Blackacre so that she gratuitously conferred a beneficial interest on her estranged husband.
Secondly, Mum ticked the box because as far as she was concerned she already held Blackacre not absolutely, but contingently for her husband, and for herself. As Baroness Hale says in Stack, the starting point is the TR1, and you need proof of the parties’ intentions to go beyond that. I’d say a trust deed was pretty good proof.
Much later, Dad went pop. His trustee in bankruptcy went after half of Blackacre. I don’t doubt that Snowden J thought he was doing the right thing by using equitable accounting to reflect Mum’s contributions, and get her a bigger share. However his starting point is fundamentally misconceived.
This is a very unfortunate case. I was reminded of Lord Denning’s words in another lamentable case about errant equitable interests: Re Vandervell (no 2).
[Counsel] realised that the claim….had no merit whatsoever. He started off by reminding us that “hard cases make bad law”. He repeated it time after time. He treated it as if it was an ultimate truth. But it is a maxim which is quite misleading. It should be deleted from our vocabulary. It comes to this: “Unjust decisions make good law”: whereas they do nothing of the kind. Every unjust decision is a reproach to the law or to the Judge who administers it.