Evidence of the intentions of cohabitants
Family analysis: Graeme Fraser, partner at Hunters Solicitors, explains how the decision in Ely v Robson shows that, in the absence of family law based cohabitation statutory remedies, the court will continue to scrutinise the available evidence to demonstrate the parties’ intentions when it comes to agreements between cohabitants.
Ely v Robson  EWCA Civ 774,  All ER (D) 140 (Jul)
The Court of Appeal, Civil Division, dismissed an appeal against a declaration made in the county court regarding the parties’ interests in a property legally owned by the respondent. The judge had been entitled to reject the appellant’s evidence, and to accept that of the respondent, before finding that the parties had entered into an oral agreement agreeing their respective interests in the property. That agreement was binding upon the parties, and the respondent had relied on the agreement to his detriment by not pursuing his earlier claim for possession of the property.
What issues did this case raise?
This case involved a dispute regarding Mr Ely’s and Ms Robson’s respective beneficial interests in a property, 6 Torbay Road. Mr Ely had purchased that property in his sole name, with no contribution from Ms Robson to the purchase price. Up until their estrangement, they lived at that property, which also provided accommodation for their children, Ms Robson’s aunt, and her elderly mother, for about 18 years. After the relationship broke down, Ms Robson refused to move out of the property. Mr Ely’s evidence was that:
- during a meeting with no solicitors present, the parties agreed a compromise of their claims
- that agreement was subsequently confirmed by a letter from Mr Ely’s solicitor’s letter confirming that the property would be held on trust for Mr Ely for life, with an 80:20 split of the beneficial interest in his favour, and
- Ms Robson would have the right to occupy the property for as long as her aunt and elderly mother were alive
Ms Robson, however, subsequently disputed this on the basis that she had an equal share in the property. A joint letter was purportedly sent to the court shortly after Mr Ely’s solicitor’s letter to vacate a hearing as the parties were close to reaching a settlement. On appeal, Ms Robson argued that:
- the agreement was uncertain and incomplete
- further terms relating to their interests had yet to be agreed
- the whole agreement had to be committed to writing and the necessary formalities complied with, and
- the parties did not expect the agreement to be immediately binding
Why is it significant?
Kitchen LJ (providing the leading judgment in the Court of Appeal) found that from the time of their meeting with no solicitors present that Ms Robson and Mr Ely had a common understanding as to the extent of their respective interests in the property, and thereafter Mr Ely acted to his detriment in reliance upon that understanding. He was satisfied that thereafter Mr Ely held the property on constructive trust for them both and that Ms Robson’s interest was limited to the interest defined in the declaration that the trial judge (Judge Blair QC) made in the same terms as the solicitor’s letter. There had been no further or other common understanding concerning their respective interests. Both parties continued to act consistently with the terms of the agreement they had reached on at the meeting without solicitors until Ms Robson had challenged Mr Ely’s claim and reasserted her original claim for an equal share in the property.
How helpful is this judgment in clarifying the law in this area?
Although the settlement agreement lacked the necessary formalities, it nevertheless took effect by way of constructive trust or gave rise to a proprietary estoppel which meant that it would be unconscionable for Ms Robson to resile from her representations and she was estopped from doing so. Equity came to Mr Ely’s aid as he had acted to his detriment by not previously pursuing his claim for a declaration that Ms Robson had no interest in the home prior to the meeting with Ms Robson without solicitors. In line with other cases, the decision was largely fact-specific. For example, the Court of Appeal rejected Ms Robson’s contention that Mr Ely’s solicitor’s letter did not have an input from her as it was not accepted that the meeting without solicitors took place after the date of the solicitor’s letter.
Are there any remaining grey areas?
Kitchen LJ observed that this was an unusual case in that Mr Ely, who was seeking the declaration of trust, was already the legal owner of 6 Torbay Road. It was not easy to see how the judge thought the case was one of proprietary estoppel since the term describes the equitable jurisdiction by which a court may interfere in cases where the assertion of a legal right would be unconscionable.
What does this mean for lawyers and their clients?
The Court of Appeal has provided guidance that in a domestic property dispute, the terms of a solicitor’s letter can be sufficiently clear to be capable of forming the basis of a binding agreement. Furthermore, a judge is also entitled to find that:
- the parties intended their oral agreement to be binding
- they both understood and intended that it should be acted upon, and
- all that remained to be done was to put in place the mechanics necessary to achieve their stated objectives
What should they do next?
If clients hold a meeting without solicitors, then they should be careful to ensure that they each obtain legal advice before committing to an agreement. This judgment means that lawyers should be particularly careful when recording agreements reached between clients. If settlement terms have not been concluded, then the party who disagrees must be clear as to the matters in dispute.
How does this fit in with other developments in this area?
The decision is indicative of the court’s willingness to make findings in domestic and familial circumstances about holding the parties to their intentions in keeping with the equitable remedies of constructive trust and proprietary estoppel. Unfortunately, disputes are likely to remain uncertain and costly when they are so heavily dependent on findings of facts, often in the absence of contemporaneous documents, which are unlikely in reality to be kept when a dispute surfaces many years later. For example, in this case, although the court’s computerised log indicated that it had received a letter from or on behalf of Ms Robson indicating that the case had settled, Ms Robson’s solicitors had no record of any such letter and Ms Robson maintained that she did not send one either.
Do you have any predictions for future developments?
In the prolonged absence of family law based cohabitation statutory remedies, we can expect the courts to continue to make similar findings in these types of cases. In keeping with the lower courts, the High Court is keen to pay respect to the personal autonomy of couples who attempt to reach agreement without lawyers, so long as they have sufficient knowledge of what the agreement means. This means that it is preferable for unmarried couples to enter into written declarations of trust, cohabitation and separation agreements. In reality, however, such agreements are seldom made in situations where one will have more to lose and the other will have more to win. The underlying concern remains that in situations where one of the parties is more financially vulnerable than the other, the absence of safety net legislation means that such disputes are likely to continue for the foreseeable future, with considerable costs being expended on such litigation, because of a continued lack of certainty as to outcome.
This article was originally published in LexisNexis Family Law and can be found here.
Hunters incorporating May, May & Merrimans