Marr -v- Collie (Bahamas)


Reference:
[2017] UKPC 17

Date:
6th June 2017

Court:
Privy Council

Facts:

The Privy Council in Marr v Collie (Bahamas) [2017] UKPC 17  (Click Here)  has settled the debate as to the proper approach to establishing the beneficial ownership of a jointly-held asset, even one acquired as an investment, rather than as a home for the legal co-owners, preferring the Stack v Dowden approach to the initial presumption of resulting trust.

 

Mr Marr, a banker, and Mr Collie, a building contractor, began a personal relationship in 1991.  Over the course of their relationship they acquired several investment properties, which were conveyed into their joint names with no express declaration of trust.  In addition, they also purchased a Ford ‘Sport Trac’ vehicle and a motor boat, registered or licensed in their joint names.  In all cases, the cash element of the purchase price (and most, if not all, mortgage payments relating to the investment properties) was found to have been paid by Mr Marr.   Mr Collie claimed that it was intended that he would renovate the properties they purchased or that he would build on the plots of land acquired and that in any case all of these assets were intended to be equally owned from the first.  Unfortunately the relationship broke down in 2008 and Mr Marr later issued proceedings in the Bahamas for declarations that he held the entire beneficial ownership of, among other things, the investment properties, the truck and the boat.

 

The legal dispute centred over whether the correct approach was that set out by Lady Hale in Stack v Dowden [2007] 2 AC 432, that a conveyance into joint names creates a presumption of equal beneficial ownership, or whether, as held by Lord Neuberger in Laskar v Laskar [2008] EWCA Civ 347 (and following his dissenting judgment in Stack), that principle was restricted to the domestic context, in a narrow sense, and so where a property was purchased as an investment, the traditional presumption that property is held on resulting trust for the parties according to their contributions to the purchase price applied, in the absence of evidence to the contrary.

 

In Marr v Collie it was held at first instance that Stack v Dowden did not apply where the primary purpose of the purchase was investment.  It was held that Mr Collie had failed to rebut the presumption of a resulting trust and that therefore the properties and other assets were held entirely for Mr Marr.

 

The Bahamian Court of Appeal reversed that decision in respect of the investment properties, the truck and the boat, finding evidence of an intention that they should be held in different shares to the parties’ contributions to purchase price, while holding that the resulting trust presumption would have applied in the absence of such evidence.  

 

Giving the opinion of the Board, a panel which included both Lady Hale and Lord Neuberger, Lord Kerr began by considering the decisions in Stack v Dowden, Laskar v Laskar and Jones v Kernott [2011] UKSC 53. He concluded that the approach in Stack was not confined to the purely domestic setting:

 

Of course, when the conveyance occurs in circumstances where the parties are involved only in a personal relationship, the fact that they have elected to have the property in their joint names may make it easier to infer an intention that they should share the beneficial ownership. But that does not mean that where there is a commercial dimension to the acquisition of the property, the decision to have the legal ownership declared to be jointly shared is bereft of significance. The intention of the parties will still be a crucial factor.

 

The Board advised that the correct approach to cases in which jointly-owned property (meaning any asset and not only land) is acquired by individuals in a personal relationship and not subject to any express declaration of trust is as follows:

 

1. The first task is to establish the “context” of the acquisition and to establish whether it can be considered to be a purely commercial transaction, i.e. where the parties were concerned only for their own individual rather than mutual benefit.  Purely commercial transactions would continue to fall outside Stack’s scope.

 

2. In other cases the starting point, as in Stack, is that joint legal ownership should be taken to signify equal beneficial ownership; the parties are to be presumed to have intended to hold equal shares in the property (or their act in acquiring property jointly should be treated as sufficient evidence of this intention), unless evidence to the contrary or of some other positive intention can be found.

 

3. That intention is not fixed at the date of purchase, but may change and should be determined by evidence from the whole course of dealings between the parties,  i.e. by considering the same factors applicable in the case of a couple’s home given at paragraph 69 of Lady Hale’s judgment in Stack.

 

4. Only where it appears from the evidence that the parties did not acquire property in joint names to give effect to an intention to share co-owned property equally, and no other intention as to sharing can be established by the evidence (including by inference or imputation, see Jones v Kernott) would the resulting trust presumption come into play.

 

The Board determined that the Bahamian courts had proceeded on an incorrect legal basis and had not sufficiently applied themselves to the question of intention.  It also considered that the decision of the Court of Appeal had suffered from procedural flaws.  It therefore advised that the case should be remitted to the court at first instance, so that the evidence bearing on the question of intention could be reviewed afresh and from the correct legal starting point.

 

Although this appeal was heard under Bahamian law, England and Wales would apply the same law to these issues.  Accordingly, the Board’s decision will be regarded as directly applicable domestically, even if not strictly binding as a matter of precedent.


Comment:

The Privy Council has opted to apply a multi-factorial, ‘all of the circumstances’ approach to a much wider range of jointly-owned assets, rather than one which may give certainty to the parties, based on their respective financial contributions.  

 

In some cases, and indeed in Marr v Collie, intention will be determined on the basis of positive evidence, so that the starting point will not be likely to  affect the end result. The adoption of the Stack approach may mean that where that evidence is absent, the fact of joint legal ownership will lead to a radically different conclusion than would be reached by an application of the presumption of resulting trust.

 

This decision also greatly expands the scope of the evidence that may be regarded as relevant to the issue of intention, where the subject matter is not the family home.   As a result, disputes between co-owners will be likely to become a contested narrative of the parties’ relationship, with significance claimed for every payment, improvement, comment or change of circumstances over many years.  

 

The exact limits of the newly extended scope of Stack v Dowden are likely to be the new legal battleground in subsequent cases.

 

As Lord Neuberger prepares to retire, it appears his earlier efforts to champion certainty and predictability in property transactions at the expense of “justice” in the particular case have been successfully tempered, at least in a broadly domestic context, by the family judges on the Supreme Court bench.

 

Mark Hubbard appeared in the Privy Council for Mr Collie.

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