The court at first instance held that the appellant in this case, Michael Burton, held property in his sole name on trust for the respondent, Katrina Liden, in respect of the first £33,522. The appellant was granted permission to appeal on the basis that:
The couple met in Sweden where Michael Burton was working. Kristina Liden was a Swedish national. They cohabited in a rented property in Sweden for six years before he returned to the UK, and then she joined him, in 2001, to live in the appellant’s property owned in his sole name (from November 2002) as a result of a divorce settlement. Michael Burton proposed engagement to Kristina Liden in 2003 and purchased a ring. The couple never married, but cohabited for a number of years. On splitting up, an all too familiar dispute began about whether the respondent had any rights in the property based on her contributions while she lived there.
Kristina Liden’s evidence, which the judge at first instance accepted, resulted in the following primary findings of fact:
The judge at first instance held that ‘Mr Burton had induced, encouraged or allowed Ms Liden to believe she was obtaining an interest in the property, that the monthly payments were made in reliance thereon and that it would be unconscionable for Mr Burton to deny Ms Liden any interest in the property’ (para 13). It was considered that £200 of the £500 payments related directly to the property and a rolling interest of 3% was added to arrive at the figure of £33,522.
With regard to the finding of a proprietary estoppel, a key focus of the appeal related to whether assurances about the use of the monthly payments were sufficiently clear and related to some right or interest in the property. While there was consensus between the parties that the monthly payments were described as being ‘towards the house’, the disagreement centred on whether the payments were only ‘rent’. While the respondent had the foresight to type a document which the appellant signed acknowledging her payments, it is unfortunate that crucial discussions about the terms were discussed beforehand but not incorporated. Michael Burton made an oral assurance to Kristina Liden that she was not just a tenant, but then refused to sign anything more than a confirmation of her paying ‘rent'.
It was, therefore, necessary to look beyond that agreement and consider the surrounding circumstances. In so doing, the first instance judge found the requisite assurance based not on any identifiable promise, but rather a range of factors.
… the courts have to continue to bridge the gap between cohabitees and married couples regarding contributions to the shared home
The reasoning included Kristina Liden being informed that her payments were necessary for the house ‘to be retained’ for the couple, and being reassured that they would always be together (as borne out by Michael Burton’s proposal of engagement) (para 28). This put payments being made ‘towards the house’ into a particular context, which informed the understanding of the discussions around the nature of those payments (para 30). The appellant also cited in his appeal that £200 was not sufficiently substantial to constitute a detrimental reliance (para 21).
The appeal was unsuccessful on both points, with a unanimous judgment. Taking, first, the finding of an estoppel, the Court of Appeal confirmed that the conclusions of a trial judge will not be too readily disturbed.
In determining whether there was an assurance, context is ‘hugely important’, and with regard to whether an assurance is sufficiently clear, a trial judge is ‘best placed to evaluate that issue, having had the advantage of seeing and hearing the witnesses’ (para 24). As a result, an appellate court will be ‘reluctant’ to overturn those conclusions (para 25).
The £200 paid by the respondent ‘towards the house’ every month, from 2001 to 2013, did amount to a substantial sum. The court also agreed with the first instance judgment that had the respondent considered that she would not have gained an interest in the property, she would not have made these payments. The combination of reliance and determinant justified the conclusion of unconscionability.
With regard to the remedy given to effect the equity, again the fact-sensitive nature of estoppel was emphasised as meaning that a trial judge has ‘wide discretion’ to make findings based on the evidence before them and their own general knowledge (para 35). In this case, the judge had done no more than the minimum required to do justice between the parties.
Despite the encouragement of written agreements between cohabiting couples, in practice such documentation is often not possible to secure. Having to then rely on oral evidence and an assessment of the ‘credibility’ of witnesses (a major factor in Michael Burton’s evidence being rejected at first instance) is unavoidable (para 23). This makes the role of a first instance trial judge vital, and lessens the likelihood of successful appeals.
In the absence of an identifiable promise, courts will consider all of the surrounding circumstances to find an assurance. Judges then also have wide discretion in satisfying the equity. The role of the court in this process is to secure justice; however, as this case shows, the wide range of factors taken into consideration makes outcomes unpredictable. Former couples often disagree, leading to the expense of initial litigation, and even after a ruling parties may be dissatisfied by the outcome. Specifically, judicial decisions sometimes give at least the appearance of finding a clear and precise assurance where such discussions never actually occurred. Indeed, this was the main point on which Michael Burton’s appeal was based.
In the absence of legislation conferring additional rights on cohabiting couples, the courts have to continue to bridge the gap between cohabitees and married couples regarding contributions to the shared home. The existing routes for assistance are through trusts and proprietary estoppel. They rely on judges finding either a common intention or an assurance relating to the house, based on a reasonable assessment of the parties’ discussions and/or actions. The danger of this is that judges may strive too hard trying to find some agreement or reasonable expectation, which risks the exercise becoming artificial and potentially manipulative of the facts.
A statutory scheme for responding to the financial consequences of a cohabitation breakdown, such as the one proposed by the Law Commission in 2007, would mean that economic considerations between the parties could be responded to without any need to search for evidence of intentions of agreement about sharing the house itself.2 2 In an address to the House of Lords in December 2014, Baroness Butler-Sloss added her voice to that of other leading members of the judiciary, who continue to express dissatisfaction at the lack of a statutory framework for resolving financial cohabiting couples:
There are women and some men out there who are seriously disadvantaged in a financial way. We cannot brush that aside and say that it does not matter. It is actually wrong and something should be done.3
Had the couple in this case been married, the statutory framework of the factors contained in section 25(2) of the Matrimonial Causes Act 1973 would have been applied encompassing, among several other points, the needs of the parties, and their contributions, income and earning capacities. The lack of any comparative statutory framework relating to cohabiting couples, though, means that principles of land and property law must be applied to domestic situations to an extent that was never envisaged.