The recent Court of Appeal decision in Hudson v Hathway  EWCA Civ 1648 is a reminder of how the law adapts to changes in technology. It is also a reminder of how apparently informal communication by email can have profound implications.
Background to the case
The case involved separating co-habitants: Mr Hudson and Ms Hathway. They were joint-owners of a property. There was little doubt, and no legal debate, that at the point of purchase of the property they were joint tenants both at law and equity.
In 2009 Mr Hudson left Ms Hathway to live with another woman. Ms Hathway remained in the property with the parties’ 2 children.
Some time later, in 2013, there were discussions about how their assets would be divided: both the property and various other assets in the individual names of the parties.
At the time, the property was somewhat blighted by an oil spill and Ms Hathway was handling a protracted insurance claim. In a series of emails Mr Hudson basically said Ms Hathway could have his interest in the property (and various other joint capital) but she could have no claim on any of his other assets. He wanted nothing more to do with it and all its problems. Ms Hathway essentially accepted the deal also by email. Both parties signed off their emails with their names.
The plan was that the property would then be sold. This did not happen immediately and as a result, by 2015, Mr Hudson stopped making contributions to the mortgage and any other outgoings – all such being taken on by Ms Hathway.
In 2019 Mr Hudson issued a claim seeking the sale of the property and a 50% interest for himself. Ms Hathway agreed the sale, but asserted that she was now the 100% beneficial owner by reason of the parties’ agreement in 2013. She asserted this agreement gave rise to a common intention constructive trust which she had relied upon to her detriment.
Various elements of detriment were advanced: minor works to the house; meeting all the mortgage payments and other outgoings, dealing with the insurance claim; living frugally to meet the house overheads and not pursuing any other claims against Mr Hudson including claims for child maintenance.
Judgment at first instance
At first instance the judge found there had been a clear agreement in 2013 that Mr Hudson would give his interest to Ms Hathway. It was conceded in argument this agreement did not comply with the Law of Property (Miscellaneous Provisions) Act 1989 so as to be an enforceable contract for transfer.
The judge however found that the agreement was enforceable as a common intention constructive trust. He did so on the basis that it was necessary for Ms Hathway to show detriment and that, whilst most of the things she asserted were insufficient to amount to such detriment, her failure to pursue other legal claims was sufficient detriment to establish her claim.
Refusal of Mr Hudson’s first appeal
Mr Hudson appealed. Kerr J refused the appeal. He upheld the judge’s factual findings re detriment but disagreed such was strictly necessary.
His view was that in cases such as this, where there was a variation of shared interests post separation, that a finding of detrimental reliance was not required and that agreement alone would suffice.
He based this on his analysis of cases such as Jones v Kernott  1 AC 776 and Barnes v Phillips  EWCA Civ 1056, where there had been findings of agreements to vary, and, according to Kerr J, there had been no requirement for detrimental reliance.
Mr Hudson’s second appeal on the ‘detrimental reliance’ point
Mr Hudson got permission for a second appeal on the detrimental reliance point and the matter came before the Court of Appeal. The lead judgment was given by Lewison LJ. Perhaps unsurprisingly, he rejected the heresy that detrimental reliance was not necessary to found a claim for a common intention constructive trust – whether on a post-separation variation or otherwise.
This was entirely in keeping with Lewison LJ’s previous decision in Curran v Collins  1 FLR 505 and that of the Court of Appeal more recently in O’Neil v Holland  EWCA Civ 1853 that emphasised the requirement for detrimental reliance in respect of a common intention trust claim.
Lewison LJ felt Kerr J had misinterpreted cases such as Barnes v Phillips and that detriment had always been implicit in these cases, even if not specifically argued. He felt there was nothing in the authorities that began to suggest that this essential element was not required in a subsequent variation case.
However, he upheld the first instance finding that sufficient detriment existed re Ms Hathway’s abandonment of other claims – even if, on their merits, the other claims Ms Hathway might have against Mr Hudson might not be particularly strong. In any event such finding by the first instance judge was “evaluative” and thus the sort of thing an appellate court would not interfere with.
The new point about express disposition
Most significantly, however, Lewison LJ raised a new point not taken below: that the email exchange itself in 2013 was sufficient to amount to an express disposition of Mr Hudson’s beneficial interest compliant with s.53(1)(a) and (c) of the Law of Property Act 1925.
The effect of such disposition would be the equivalent of an express declaration of trust that from thenceforth Ms Hathway was the sole beneficial owner – though the point was not formally argued as an express declaration of trust pursuant to s.53(1)(b). As this was a point of pure law, in Lewison LJ’s view, he permitted the point to be argued for the first time in the Court of Appeal.
This was a different point to the Law of Property (Miscellaneous Provisions) Act 1989 argument conceded below and, in any event, the parties were not bound by concessions on points of pure law.
The requirements of s.53(1) are that there must be signed writing to create or dispose of an interest in land or to declare a trust therein. Lewison LJ was quite satisfied, as had been the judge at first instance, that the email exchange evinced a clear intention by Mr Hudson to dispose of his beneficial interest immediately.
- The email exchange was in writing.
- The more interesting and, at least in this area, novel point was whether the writing included the necessary signature.
What constitutes a ‘signature’ for the purpose of s53(1) of the Law of Property Act 1925?
Lewison LJ applied a constructive interpretation to the concept of signature. He reviewed various authorities concerning signatures in other areas of law in the context of emails: these generally treated the addition of a person’s name at the end of an email, usually (but not exclusively) after words such as “best wishes”, “your sincerely”, “regards” etc, as being a signature.
Further, these authorities generally concluded that it matters not whether such name is added manually or as a result of an auto-footer added to all sent emails – for the decision to have an auto-footer is itself a conscious act. The mere sending of an email, however, without the addition of a name in some form in the body of the email would not suffice.
Relying on this body of authority Lewison LJ found that the addition of Mr Hudson’s name at the conclusion of the emails in 2013 complied with the requirement for a signature in s.53(1)(a) and (c).
Mr Hudson had thus legally disposed of his beneficial interest to Ms Hathway by these emails and the finding of a common intention constructive trust was thus not strictly necessary (though as discussed above he went on to find such constructive trust would nonetheless have been made out).
Impact of the decision concerning express declarations of trust
This is an interesting development given the significant modern use of electronic communications. It clearly has implications beyond the confines of a disposition pursuant to s53(1)(c) for the requirements for signed writing are identical in respect of an express declaration of trust pursuant to s53(1)(b). It thus provides another area where parties and their advisers may look for an express declaration of trust – beyond the standard examination of the TR1 and search for any freestanding deed of trust.
This has implications beyond apparent compromises or variations. It may well be that in email exchanges, at or about the time of purchase, express declarations of trust can be found.
Of course in a joint names case both parties would have to “sign” – though, relying on the authorities in other areas considered by Lewison LJ, an email trail where both parties acknowledged the agreement and signed their own emails would likely suffice.
However, the greatest significance may be in single name cases where the person not named on the title may otherwise have difficulty showing sufficient, or any, detriment.
For detriment is not required in respect of an express declaration of trust.
An email from the named buyer to a non-financially contributing co-habitant, that they were to have say a 50% interest in a property, with a name added at the bottom would thus be potentially an express declaration of trust. It would avoid the need for the co-habitant to show some further act by way of detriment. The same may also apply to text messages or WhatsApp messages - though the necessary inclusion of a name by way of signature may be less likely.
Of course, the devil will always be in the detail and the precise wording of the email or message will be significant as to whether the requirements are made out: not merely in respect of signature but also in respect of certainty in what is being recorded. But this case illustrates, as in so many other areas of law, that with the advance of technology the law does not stand still. Neither can the practitioner advising on these cases.