Barnes v Phillips [2015] EWCA Civ 1056; [2016] HLR 24

Key point
  • The fact that one party received almost all the proceeds from a remortgage of the house supports intention that the parties intended to alter their beneficial shares under the common intention constructive trust
Facts
  • C and D were an unmarried couple who bought a house together in joint names
  • The man, D’s business ran into difficulties and the house was remortgaged, part of the proceeds was used to repay business debt and another part to repay the original mortgage
  • Initially, C and D both contributed to the mortgage repayments, but D later moved out and stopped making mortgage repayments and did not pay child support
  • The judge held that:
    1. There was an imputed intention that that C had a 75% beneficial share of the house while D had 25% as he had received around 25% of the net equity to repay his business debt
    2. A further adjustment was needed to reflect the subsequent mortgage payments and payments for the maintenance of the children
Held (Court of Appeal)
  • Appeal dismissed, the evidence supported an inference that the parties had intended to alter their respective shares in the beneficial interest
Lloyd Jones LJ
  • D had received nearly all of the proceeds of the remortgage which amounted to 25% of net equity of the house and the couple separated almost immediately thereafter
  • The judge’s conclusion as to relative shares in beneficial interest was correct, he was also correct to conclude that subsequent events required further adjustment to their shares
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