PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.
A London couple who ran a guest house together have had the ownership of their assets decided after an acrimonious court case.
They had been together since the early 1990s and had a son. In 1996, the male partner bought a seaside guest house in his own name and ran it himself, employing a manager, while he continued to live in London.
He later took over the running of the guest house full time, moving into the property. The female partner later moved into the property to help him run the business, receiving no wages for so doing.
When the couple split up, she argued that she had an interest in the property for two reasons. Firstly, she claimed that the business was a partnership. Secondly, she claimed that a ‘constructive trust’ had been created, giving her a right to a share in the property.
The question of whether or not there was a partnership was relatively straightforward. The County Court concluded that there was not and, even if there had been, there was no necessity for the property to be a partnership asset.
The question as to whether or not the man’s conduct had created a constructive trust in favour of his then partner was more difficult. It turned on whether there had or had not been a ‘common intention’ that the woman would have a beneficial interest in the property. The Court ruled that there was not and the case ended up in the Court of Appeal, which concluded that there was insufficient evidence that this was the case, either at the beginning of their relationship or at any point thereafter. The appeal was therefore rejected.
Failing to make clear one’s intentions as to property ownership can have serious consequences. Having the appropriate documentation in place at the beginning so that the arrangements are in no doubt is the safest option and can avoid argument and unnecessary court appearances later on.