To “impute” or not to “impute” that is the question…

The latest judgement of the Court of Appeal (Capehorn v Harris [2015] EWCA Civ 955) relating to competing claims made by an unmarried separated couple in respect of property and business assets highlights two salient issues:

1. That the two stage process of establishing a common intention constructive trust allows the court to infer from conduct that there is an agreement for a non-legal owner to have an interest in property/business assets legally owned by the other but the court cannot impute that there is an agreement. Once an agreement is established, the court can only then impute the quantum of that interest having regard to all the circumstances.

2. That urgent reform is needed! The subtle though important difference between “infer” and “impute” was clearly enough to get poor District Judge Langley of the Central Family Court in a spin. How on earth are normal unmarried couples expected to navigate this legal minefield? The Courts of England and Wales needs to be provided with greater powers and discretion to divide the assets of unmarried couples in accordance with fairness. Until then, many will continue to embroil themselves in costly confusing and uncertain litigation, and/or walk away from relationships without their fair share.

In relation to assets acquired by unmarried co-habitees or partners, where an asset is owned in law by one person but another claims to share a beneficial interest in it a two stage analysis is called for to determine whether a common intention constructive trust arises.  First, the person claiming the beneficial interest must show that there was an agreement that he should have a beneficial interest in the property owned by his partner even if there was no agreement as to the precise extent of that interest.  Secondly, if such an agreement can be shown to have been made, then absent agreement on the extent of the interest, the court may impute an intention that the person was to have a fair beneficial share in the asset and may assess the quantum of the fair share