This blog post was contributed by David Thomas, Teaching Fellow for Property law.

Hudson v Hathway

When is detrimental reliance required in a common intention constructive trust? There has been some confusion in recent years. The leading cases, Stack v Dowden [2007] UKHL 17 and Jones v Kernot [2011] UKSC 53, don’t mention this requirement at all, and they make clear that the law as set out in Lloyds Bank v Rosset [1991] 1AC 107, where detriment is very clearly made a requirement, is ‘outdated’.

For this reason, the case of Hudson v Hathway [2022] EWCA Civ 1648 is very interesting and useful. Briefly, it concerns an unmarried couple whose house was in joint names. They broke up in 2009, with Jayne Hathway staying in the house with their two children. In an exchange of emails in 2013 aimed at resolving their financial situations, Lee Hudson agreed that Jayne should have the whole beneficial interest in the house in return for her dropping any other claim on family assets. Nevertheless, Lee claimed a 50% share in 2019.

The appeal was decided by concluding that the exchange of emails complied with Law of Property Act 1925 s53(1)(c), so that there was an express transfer of the beneficial interest from Lee to Jayne and no constructive trust was necessary. But although it is technically obiter, Lewison LJ considered the issue of detrimental reliance. He carefully and thoroughly reviewed the authorities and concluded that this is always required in constructive trusts, whether it is a sole name or joint names case, whether an imperfect agreement or an inferred common intention. That it was not mentioned in Stack v Dowden and Jones v Kernott was only because the detriment was obvious in those cases; it did not change the law to make it no longer required.

I find this a very satisfactory statement of principle by Lewison LJ, a very senior court of appeal judge and property lawyer, with whom the other judges agreed. Formalities are important; they are imposed by statute because of the importance and value of transactions in land, for the sake of certainty and clarity. If they have not been complied with, it is not enough that the parties intend something other than the legal position. For equity to intervene despite the lack of anything adequate in writing, by creating a trust, or for that matter an estoppel, requires in addition detrimental reliance.