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Cohabiting couple dispute ownership of guesthouse in Hastings

Solicitors in London

News article published on: 20th June 2012

Geary v Rankine – Court of Appeal [2012]

Mr Rankine and Mrs Geary were in a relationship from 1990-2009. They had a child, Aran, born in 1992. In 1996 Mr Rankine purchased a guest house in his sole name to be run as a business with a manager. He used entirely his own funds to purchase the property (and no mortgage). Mr Rankine moved there in due course to run the guest house himself and Mrs Geary later joined him. Mr Rankine and Mrs Geary separated in 2009. She brought a claim against the business and the property. Mrs Geary claimed that they had been partners in the guest house business, and that she had a beneficial interest in the property as there was a common intention constructive trust based on a change in their common intention after the purchase (i.e. when they both moved to run the guest house).

As a reminder, the court in Jones v Kernott [2011] said that the Court had to search for the parties actual shared intentions. With regards to the partnership claim, the Court of Appeal accepted Mrs Geary’s argument that a family relationship was not incompatible with a business relationship and that a partnership can be based on an agreement inferred from conduct. In this case however, Mrs Geary was not a partner in the business as:

Business accounts were on a sole trader basis

  • There was no sharing of profits
  • Mrs Geary was not ‘held out’ as a partner to the outside world
  • There was no joint bank account

The Appeal Court said with regards to the actual ‘bricks and mortar’: even if there was a partnership it didn’t necessarily follow that the building was a partnership asset. The starting point was the principles in Stack v Dowden [2007] and Jones v Kernott and the legal ownership of the property (‘the title’). Mrs Geary had the burden of establishing that her and Mr Geary had a common intention to share the property, and that burden was higher when the property was an investment.

The Appeal Court found that there was no change to Mr Geary’s intention that he be sole owner, and there was no detrimental reliance on Mrs Geary’s part.

The Appeal Court said that a common intention constructive trust can be based on a change of intention, and the court is tasked to find the intention of ownership shared by both parties. There is no room for imputation in relation to evidence of actual intention, imputation is only in relation to the shares (i.e. whether they owned as 50/50, 60/40, etc).

One of the three Appeal Court Judges hearing the case, Lord Justice Levison said:

“Whether the beneficial interests are to be shared at all is still a question of a party’s actual shared intentions. An imputed intention only arises when the court is satisfied that the parties’ actual common intention, express or inferred, was that the beneficial interest would be shared, but cannot make a finding about the proportions in which they were to be shared … Mrs Geary had to establish that despite the fact that the legal title to the property remained in Mr Rankine’s sole name, he actually intended that she should have a beneficial interest in it. As I have said, that actual intention may have been expressly manifested, or may be inferred from conduct; but actual intention it remains”

Andrew Watson and Lisa Pepperfamily law solicitors in Osbornes family department are resolution accredited specialists in cohabitation matters.

You can contact Andrew or Lisa to discuss any family law issue by:

Osbornes offers expert legal services in family law, including divorce law. To speak with one of our experts, including specialist divorce lawyers in London please contact us on the number above

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