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(Court of Appeal; Mummery and Sedley LJJ, Lightman J; 27 June 2007)
The unmarried couple purchased a 25% interest in a 99 year lease of a house which they lived in with their child. When the relationship irrevocably broke down the woman and the child vacated the property and the man remained in sole occupation. The woman sought a declaration that she and the man were entitled to the property as tenants in common in equal shares, an order for sale, all necessary accounts, and an order that if the man continued in occupation of the property that this should be under various conditions including that he should pay her appropriate compensation for her exclusion from the property.
The trial judge decided the case on the principles of equitable accounting only. The House of Lords in Stack v Dowden  UKHL 17 was unanimously of the view that the court's power to order payment to a co-owner of an occupation rent is no longer governed by the doctrine of equitable accounting but rather sections 12-15 of the Trusts of Land and Appointment of Trustees Act 1996 (the 1996 Act). The statutory principles must be applied and in particular the statutory innovations contained in s 15 of the 1996 Act.
The woman was entitled to credit for an occupation rent: there was no need to prove ouster from occupation as she had been constructively excluded by virtue of the breakdown of the relationship.
Determining the case with reference to the 1996 Act the court held, inter alia, that (1) the woman was entitled to setoff the credit to which she was entitled for an occupation rent against the credit to which the man was entitled for his payment of interest and rent, cancelling them in full. The fact that she had disavowed any intention to maintain a free-standing claim to the credit did not preclude her from using her entitlement to the credit as a form of set-off; and (2) the man should have the option to buy the woman's half share for the sum of 11,280 (half the value of the equity after deduction of credit to the man for one half of policy payments made).
Thorpe LJ expressed concern at public funds being expended disproportionately to the sums at issue. The case should have gone to mediation.
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