Jointly-held assets: Who owns what when a relationship breaks down?Print publication
The question often arises, when a relationship breaks down: who owns what, exactly? It might be that a party whose name is not on the deeds to a property nevertheless owns a share, or that the legal ownership of jointly-owned assets does not reflect the parties’ true, or beneficial, ownership. The issue can arise not only between couples whose domestic/personal relationships have ended, but also between friends, family members, business partners and others, who have shared living or working space on all sorts of informal, quasi-legal arrangements, perhaps with a view to stepping on to the property ladder, getting a business off the ground, or otherwise making an investment.
A clash of presumptions
To answer the question, the House of Lords established in Stack v Dowden (in relation to formerly cohabiting couples) that, where there is no express declaration of trust, the starting point is that beneficial ownership follows legal ownership . The onus of proving otherwise is upon the person seeking to show that the beneficial ownership is different from the legal ownership, which can be determined by discovering the parties’ common intention.
Where, however, a party has purchased a property not as a home but with the primary purpose being investment, and another family member, friend or [ex]partner claims an interest, or a dispute arises as to the extent of any beneficial ownership, Laskar v Laskar established that a resulting trust analysis may apply instead . (That is, the beneficial ownership will equate to the parties’ contributions.)
In a case where the parties are (or were) in a personal or domestic relationship, but where the asset in question was purchased as an investment, the above presumptions would seem to clash. That was the problem addressed by the Privy Council in the Bahamas in the recent case of Marr v Collie .
Privy Council clarification
Provifing welcome clarification which, no doubt, will be applied by the courts in England and other common law jurisdictions, the Privy Council found that:
- whilst, in such cases: “[a] simplistic answer… might be that, if the property is purchased in joint names by parties in a domestic relationship the presumption of joint beneficial ownership applies but if bought in a wholly non-domestic situation it does not… [in fact] the answer is not to be provided by the triumph of one presumption over another. In this, as in so many areas of law, context counts for, if not everything, a lot” 
- the real task, therefore, is to try to discover the parties’ common intention as to the beneficial ownership by looking at their whole course of conduct in relation to the asset, and to try to give effect to that
- the legal presumptions can be a starting point, but…
- Stack v Dowden is not limited to a wholly domestic context (and it can, therefore, apply where parties in a personal relationship own a commercial/investment asset); and
- the question of intention is central.
Since the downturn in the global and national property markets of the last decade, people have increasingly purchased, shared and invested in properties in ever more wide-ranging and varying circumstances. As relationships and familial and business arrangements come to an end or change over time, it is likely that the courts will continue to encounter beneficial ownership disputes pursuant to myriad different arrangements, and so any clear case law which can assist with the timely and cost-effective resolution of disputes is to be welcomed by lenders and lawyers alike.
In terms of practical advice, this case highlights the importance of seeking specialist legal advice when purchasing property with friends or partners, whether for domestic or commercial purposes (or both); of creating a clear and accurate record of all parties’ intentions as to ownership; and of keeping that record up-to-date if and when circumstances change. Similarly, if and when any misunderstanding or dispute in relation to the exact ownership of joint assets does arise, obtaining expert legal advice at the outset can help to resolve a sensitive situation as quickly and as cost-effectively as possible.
  UKHL 17. So, for example, where there is sole legal ownership, the starting point is that there is sole beneficial ownership; and where there is joint legal ownership, the starting point is that there is joint beneficial ownership.
  EWCA Civ 347
  UKPC 17
 Ibid paras. 53 and 54