This blog post will discuss the recent decision held by the Court of Appeal in Hudson v Hathway and its implications.
To better understand the implications of the decision made in Hudson v Hathway, we must understand the concept of Co-ownership. Co-ownership occurs when a property is owned by more than one person. The legal estate will always appear as Joint Tenants but depending on the equitable title, the interest in the property can be held as joint tenants or as tenants in common. A joint tenancy in equity means that the property is being held in undivided shares, so if one of the joint tenants dies, the right of survivorship applies to the remaining tenant, making him or her the sole proprietor of the property, whereas a tenant in common will pass the interest in accordance to their will or intestacy rules and can be held in equal or unequal shares. The process by which a joint tenancy can be converted into a tenancy in common is known as severance which separates the joint tenancy into shares.
It is clear that for severance to take place, it can be affected unilaterally by written notice by one of the parties. In practice, it is presumed that when severance takes effect, the parties become entitled to an equal split of the property.
The facts of the case:
Mr Hudson and Ms Hathway were an unmarried couple who had bought a property jointly as joint tenants. When the relationship ended, Mr Hudson made an order for the property to be sold and the sale proceeds to be shared equally. Ms Hathway argued that she had relied on an agreement that had been discussed by email between herself and Mr Hudson whereby he disposed of his beneficial interest and she would therefore be entitled to the whole of the sale proceeds. The court considered whether there needed to be detrimental reliance by one of the parties to create a common intention constructive trust. The court confirmed that detrimental reliance had to have taken place for a common intention constructive trust to be created. After their separation, Ms Hathway did not make a claim against any of the assets and had been paying all interest payments on their joint mortgage which proved that she had relied on the agreement to her detriment
The decision: Section 53 of the Law of Property Act 1925 states that in order to release a disposition it has to have been done in writing and signed. The Court of Appeal had to consider whether signing off the email with his name constituted a signature. There was no question Mr Hudson had made the disposition in writing. The question was whether the email signature could be considered a valid signature for the purpose of disposing of your equitable interest in a property. The Court of Appeal confirmed in Hudson v Hathway that ending an email with your name is considered a signature.
This meant that Mrs Hathway was the sole beneficial owner of the property and was therefore entitled to 100% of the sale proceeds.