Cowcher v Cowcher (1972) 1 WLR 425 (constructive trusts)
The case of Cowcher v Cowcher is one on constructive trusts.
The parties were married in 1953. In 1963 a house was bought in the name of the husband as the matrimonial home. The purchase price was £12,000. The husband paid a cash deposit of £1,000 and the balance of £3,000 was raised through a loan upon overdraft from the husband’s bankers. An additional £8,000 loan from an insurance company was secured upon a mortgage of the home and a 25-year endowment policy on the life of the husband for the same sum with profits.
The policy was written under the Married Women’s Property Act 1882 for the benefit of the wife.
At the time of the purchase of the house the wife paid £3,063 to the husband’s business and £1,306 to the husband.
In 1966 and 1968 the wife paid some mortgage interest and premiums on the policy.
In May 1971 each party was granted a decree nisi of divorce on the grounds of adultery and the marriage was dissolved by decree absolute in August 1971.
That the property is held on trust for sale and the net proceeds of sale are held on trust for the wife and the husband as tenants in common as to one-third thereof for the wife and two-thirds thereof for the husband.
The wife’s beneficial interest in the house arose under a resulting trust from the actual provision of the purchase price unless a contrary consensus as to the proportions in which the parties were to be taken as having provided the purchase moneys could be inferred from the facts.
The settlement of the policy on trust for the wife and the contemplation of the parties that in future the husband alone was to be the source of the family income were conclusive against such inference. The beneficial interest of the parties could not be altered by the mere payment by one beneficial owner of a mortgage instalment properly payable by the other and accordingly, that as the actual source of the purchase money was one-third as to the wife and two-thirds as to the husband, the net proceeds of sale of the house were held on trust for the parties as tenants in common in those proportions subject to an equitable accounting.
In summary, Cowcher v Cowcher is about:
- The parties included a husband and a wife whom jointly contributed to the purchase of a fee simple title to a family home.
- Was there any basis for altering the co-ownership shares? The shares that each spouse would normally receive based upon proportions each contributed to its purchase? The court held that there was not.
- reasons for rejecting the argument that equity is synonymous with “fairness”:
- Bagnall J quotes that justice must be determined according to law which can be attained by applying rules and principles acquired over time, not on the basis of general considerations of fairness (particularly in respect of property rights)- otherwise no lawyer could safely advise their client.
- It might be unfair for Mrs Cowcher to receive a smaller share of the title than her husband considering everything she did for him, but there was no basis in the law of trusts to grant her a larger share for that reason alone.
In obiter, Bagnall J added a note on intention of beneficial ownership:
“I am constrained to add one further observation. The purchase of a matrimonial home cannot be accomplished without professional advice and assistance. In dealing with the purchase solicitors make many common form inquiries dealing with such matters as planning, registration of charges and so forth. Though it is not for me to dictate such matters, I think that it would be desireable, also as a matter of common form, that they should make specific inquiries of the spouses of their intentions as to beneficial ownership.
The resolution of future disputes would be facilitated; the additional costs would be insignificant; and I cannot think that connubial harmony would be unduly jeopardised.”