Court of Appeal looks beyond purely financial consideration in property dispute following relationship breakdown

The recent Court of Appeal decision in Southwell v Blackburn [2014] is a warning to home owners that the Courts will look beyond mere purely financial considerations when addressing property disputes between cohabitees on a relationship breakdown.

The case turned on a claim based on proprietary estoppel. Estoppel is a legal principle that prevents someone who has led another to believe in a particular state of affairs from unjustly going back on the words or actions which led to their belief.  Proprietary estoppel relates to an interest in property.  A claimant relying on proprietary estoppel needs to establish:-

• Assurance - The property owner induces, encourages or allows the claimant to believe they have or will have some right or benefit over the property.
   
• Detrimental reliance - The claimant relies on this belief and in doing so acts to their detriment to the knowledge of the property owner.
   
• Unconscionability - The property owner tried to take an unconscionable advantage of the claimant by denying the claimant the right or benefit that the claimant expected to have.

This case involved a couple who met in 2000. The defendant was 40, divorced with two daughters, and had limited financial resources but had secured a rented house from a housing association on which she had spent between £15,000 and £20,000 fitting out and furnishing. The appellant was 41 and unmarried. In 2002 they bought a property and moved in together. The property was purchased in the appellant's sole name with £100,000 of his money and with the benefit of a mortgage of £140,000 which was paid by him alone. The relationship began to deteriorate from about 2009 and the defendant and her daughters became homeless following the appellant allegedly changing the locks at the property when the defendant was out.

The defendant's case was that it was intended that they would purchase the house together and that she would be an equal owner, or in the alternative that she had a claim in proprietary estoppel. The appellant's case was that the property was in his sole name and that he had made no promises to the defendant about ownership.

The judge in the first instance concluded:

• It was unlikely that the appellant made any promise to the defendant that she would become an equal owner in the house with him, however the decision to purchase the house was made jointly with the intention that it would become their home where they would live together effectively as man and wife and that the appellant reassured the defendant that she would always have a secure home there.
• The appellant had made such reassuring promises as were necessary to persuade the defendant to move (and thereby give up her own independence and security).
• The defendant took a big risk moving from a secure rented house, on which she had spent a lot of money, leaving her job and moving her children.
• The appellant had led the defendant to believe that she would have the sort of security that a wife would have, in terms of accommodation at the house and income.

Although the defendant's claim for an equal share failed the judge upheld her alternative claim of proprietary estoppel. The judge awarded her £28,500 on the basis that this would put the defendant back in much the same position as she was before she gave up her own house. The appellant appealed to the Court of Appeal. The Court of Appeal dismissed the appeal agreeing with the judge's conclusions. 

This case is therefore a reminder for property owners that the concept of detriment is wide and need not consist of only expenditure of specific sums of money or quantifiable financial detriment, so long as it is something substantial. In this case moving from a secure rented house (on which the defendant had spent no small amount of money), leaving her job and moving her children were sufficient.  The Courts will clearly look at the whole picture to assess whether, and if so how, to address a claim based on a proprietary estoppel.

For further information, please contact Robert Horsey