"Compare and contrast the manner in which equitable principles have been used as a means of resolving property disputes between co-habitees in this jurisdiction and in England. Identify what you perceive to be the strengths and the weaknesses of these different approaches and briefly suggest any improvements which might be taken on board by the Irish courts in resolving disputes of this nature. "
It is first important to note at the onset that in the context of property disputes between spouses, the property rights are subject to the courts wide discretionary powers pursuant to the judicial Separation Reform Act 1989, which allows the courts to make property adjustment orders subject to specific factors which the court must have regard to in resolving a dispute. Also of relevance is the Matrimonial Home Bill, 1993, which was referred to the Supreme Court by former president Mary Robinson, on the grounds that matrimonial property would be automatically held jointly by the spouses was unconstitutional.
Therefore it would appear that the principles in case law are relevant today in circumstances where matrimonial property issues between spouses are not governed by legislation, and also to property disputes between co-habitees and third parties. The difficulties which arise in relation to deciding in what circumstances a beneficial interest may arise have largely centred on assessing the worth or suitability of the various types of contributions.
In the following assignment I am going to look at how the courts have dealt with these situations as they have arisen. It is also important to look at how the English courts have approached it in there jurisdiction, and to compare and contrast these two approaches, in order to analyse there strengths and weaknesses and hopefully to make some suggestions as to improve the system in use. I am first going to examine how the Irish judiciary has approached this topic. Ireland, Direct contributions.
In Ireland It has been clearly established by the courts that if property has been purchased in the sole name of a spouse, the other party will have a resulting trust if they have made direct contributions to either the original purchase price, which is somewhat uncommon as property is now usually purchased with a mortgage, but the courts have taken this in to account and allow a direct contribution made to the mortgage payments to result in a trust, proportionate to the amount of money paid.
The first case that used these principles was in the case of Heavey v. Heavey1. The facts of the case concerned a couple that purchased a house in the name of the husband. The wife made direct contributions to the purchase price of the house and also made subsequent repayments to the mortgage. The marriage broke down and the wife made an application pursuant to section 12 of the Married Women's Status Act 1957, claiming half the beneficial interest in the house.
Kenny J directed the claimant the correct approach in this circumstance was to apply the concept of a trust to the legal relationship which arises when a wife makes payments towards the purchase of the house, or the repayment of mortgage instalments, he went on to explain that her share in the trust held by the husband would be proportionate to the size of the contributions made by her. Kenny J then went on to grant her one half of the beneficial interest of the property. This approach was again reiterated in the subsequent case of C v. C2 and again in the case of W v. W3 where Finlay P set out a number of general principles.
"Where a wife contributes by money to the purchase of property by her husband in his sole name in the absence of evidence of some inconsistent agreement or arrangement the court will decide that the wife is entitled to an equitable interest in that property proportionate to the extent of her contributions as against the total value of the property at the time the contribution is made4. " This position in Ireland now seems to be undisputable in this area and has been accepted by the supreme court in the case of McC v. McC5, this has provided a degree of consistency in the area but although it is perhaps at the expence of flexibility.
England, Direct contributions. The courts in England have taken a slightly different approach, which has lead to some uncertainty in the courts. This uncertainty surrounds whether a direct contribution will give rise to a resulting or a constructive trust based on the parties common intentions. This was discussed by Lord Bridge where he stated: "Direct contributions to the purchase price by a partner who is not the legal owner… will readily justify the inference necessary to the creation of the constructive trust. However, contributions of a direct nature should under traditional principles give rise to a resulting trust"
This meant that in some circumstances the share in the trust might be greater than the contribution made depending on the common intentions of the parties. This rational can be seen recently in the case of Midland Bank plc. v. Cooke6 hear the court of appeal accepted this approach and stated that in order to establish a beneficial interest in the first place you must take in to account a number of factors including the undertaking of a survey which looks at the whole course of dealing between the parties relevant to their ownership and occupation of the property, and are not just limited to the simple act of the contribution made.
In this case although the wife's initial direct contribution was only 6. 4% of the value of the property, the court took in to account he entire course of dealings between the couple and held that the plaintiff was entitled to one half of the share of the house. These two approaches both have there advantages and disadvantages, although the English approach has the flexibility, the law is uncertain in this area, and can lead to confusion. The Irish approach is a lot clearer but this can lead to inflexibility and as a result unfair decisions by the courts.
There is definitely space for improvement in both approaches, and I believe maybe a compromise somewhere in between these to approaches would lead to a clearer and more flexible approach by the courts. Ireland, Indirect contributions. Indirect contributions are contributions made to the household which do not include the purchase price of the property or repayments of the mortgage. The law in this area has been unsettled for some time bur now appears to be well established and clear. During the 1970's and 80's there was an influx of case relating two this and from this two distinct approaches have appeared.
The first approach was illustrated by Keane J7 where he established that there must be evidence of a common intention that indirect contributions will give the contributor a share in the beneficial interest in the property before the court would make such an order. The next approach can be found in the judgement of Finlay P in W. v. W8. The facts of the case were that the wife claimed indirect contribution on the grounds that there a home which was a working farm, was maintained and improvements made by her, this was rejected by the courts, she also claimed that her contribution on the farm allowed for payments on the mortgage to be made.
The courts view fallows. "Here a wife contributes… to a general family fund thus releasing her husband from an obligation which he otherwise would have permitted him to repay mortgage instalments, she will in the absence of proof of an inconsistent agreement of arrangement be entitled to an equitable share in the property which had been mortgaged and in respect of which the mortgage was redeemed approximately proportionate to her contribution to the mortgage repayment, to the value of the mortgage thus redeemed and to the total value of the property at the relevant time. " This approach was adopted in the Supreme Court in the case of McC v.McC9 .
The wife in this case had contributed to the cost of there first home and when they sold the house the money was used to by furniture fore the new home. The wife claimed that this was an indirect contribution. The court agreed and granted her one third of the furniture and fittings of the new house. Henchy J. commented on this approach. "When the wife's contribution has been indirect the court will in the absence of any express or implied agreement to the contrary, infer a trust in favour of the wife, on the grounds that she has to that extent relieved the husband of the financial burden he incurred in purchasing the house. "