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HUDSON V HATHWAY

General principle:


The traditional position is that a claimant must demonstrate that they acted to their detriment in reliance on an informal agreement.


In O’Neill v Holland the Court of Appeal emphasised the importance (established in Lloyds Bank v Rosset) detrimental reliance plays in establishing a common intention constructive trust where the claim rests upon an express but informal agreement between the parties.


Name:


Hudson v Hathway [2022] EWHC 631


Facts:


This case involved a dispute over the equitable ownership of "Picnic House" property. Legal and beneficial ownership of the property was shared by Jayne Hathway and Lee Hudson, who had been in a relationship since 1990 and had purchased Picnic House in 2007.


In 2009, the relationship ended and Lee moved out. At that time, the mortgage, which had been in joint names, was converted to an interest-only mortgage, paid for by Lee, whose earnings at that time were substantially greater than Jane's. Several e-mail exchanges occurred between November 2011 and September 2013 in the aftermath of the relationship's dissolution. Each party possessed a variety of assets, which they looked to divide. This included Picnic House, which Jayne consented to acquire. Jayne and Lee signed each of these e-mails by inputting their names at the bottom.


However, there were problems with an insurance claim on the property, and Lee ceased paying the mortgage in 2015 out of frustration over the lack of progress. He ultimately filed a claim requesting a sale order and fifty percent of the sale proceeds.


At first instance, the trial judge determined that there was an agreement that Jayne would own the entirety of Picnic House's equitable title. In order for the court to uphold the agreement, Jayne was required to demonstrate detrimental reliance (which, based on the facts, the judge determined she had). In light of the judgements in both Stack and Jones, the judge ruled that Jayne was not required to demonstrate detrimental reliance in her first appeal. Even if he was incorrect about that, he believed the trial judge was permitted to have reached the conclusion he did regarding detrimental reliance.


Ratio:


In spite of the fact that harmful reliance was not explicitly addressed in either Stack or Jones, which, of course, has been the topic of considerable debate in the legal community, Lewison LJ's answer was surprisingly straightforward. When he was first dealing with Stack, he made the observation that Lord Walker and Lady Hale did not confirm that detrimental reliance was needed; nevertheless, they did follow the principles outlined in Oxley and Grant, and they did not indicate that detrimental reliance was not essential. Stack was the subject of his early dealings. In a similar vein, he pointed out that when Lord Walker and Lady Hale were delivering the lead judgement in the case of Jones, they once again alluded to Grant, Oxley, and Stack, but they did not mention the fact that the necessity for harmful dependence had been abrogated. In addition to this, he pointed out that the negative dependency was so clear that it had not been a topic that was taken into consideration.


As a result, he came to the conclusion that the House of Lords or the Supreme Court did not plan to revoke the necessity for harmful reliance. He made the observation that if this was intended, it had gone utterly unreported by the legal community. As a result, his conclusion was that the House of Lords or the Supreme Court had no intention of repealing the requirement.


Application:


More recently, O’Neill’s insistence on detriment was initially put in question by Kerr J’s first-instance ruling in Hudson v Hathway [2022] EWHC 631. However, the Court of Appeal in Hudson reiterated (obiter) the traditional stance that a claimant must show they have acted to their detriment in reliance on the informal agreement.



HUDSON V HATHWAY

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