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Property case law update: June 2010

Constructive Trusts
Unmarried Couple – Presumption if Jointly Owned

Stack v Dowden / Oxley v Hiscock explained
Kernott v Jones [2010] EWCA Civ 578

K and J bought the Property in joint names. They separated but agreed the Property was held by them beneficially in equal shares as at the date of their separation. J remained in the Property, assuming sole responsibility for mortgage payments and all other outgoings. K later served a notice to sever the joint tenancy and sought payment of his half share.

HELD: Where there is joint legal ownership there is presumed to be joint beneficial ownership and the onus is on the party seeking to show why this should be departed from. The passage of time, even of a period of twelve years, is insufficient to displace the presumption. This is a difficult test to satisfy and there is unlikely to be a divergence between the equitable and legal ownership save in an unusual case.

In assessing the extent of the parties’ beneficial interests the court should look to the conduct of the parties to see if there was any express intention to vary them or if such an intention can be inferred. The court should not impute such an intention if it cannot be inferred.

Landlord & Tenant
Commercial Lease – Break Clause – Valid Service of Notice to Terminate

Hotgroup Plc v RBS Plc (as Trustee of Schroder Exempt Property Unit Trust) [2010] EWHC 1241 (Ch)

R demised commercial premises to H for ten years. The lease contained a break clause allowing H to terminate it after five years by serving a notice within a specified period on both R and a property management company, X. H served notice on R within the relevant period but failed to serve X. H sought a declaration that the break notice was effective on the basis that (i) the lease should be construed contra proferentum, (ii) the relevant clause was concerned only with deemed and not actual service on R, and (iii) no time provision was specified for service on X and time was not stated to be of the essence.
HELD: Although the clause had to be interpreted contra proferentum, its meaning was clear. On the wording of this clause, there was no distinction between deemed and actual service. Further, the commercial purpose of the clause required that time be of the essence as regards service on X as well as R. Accordingly, the break clause had not been properly exercised.
Case Summaries by Andy Creer, Laura Tweedy and Philip Fellows.