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Talking about gold-diggers misses the point

11th February 2016

Family partner, Judith Fitton article looks into the law behind a contentious property case in The Times, published on 11th February.

With all the huff and puff in the headlines about this story, the property law issues that led to the First-Tier Tribunal of the Land Registry turning down plumbing tycoon John Hoggins’s claim to a £650,000 house he bought for his girlfriend have been rather ignored.

Mr Hoggins paid a deposit of £100,000 on the second home in Sawbridgeworth, Hertfordshire, in 2009 and thereafter paid the mortgage. He had been with Greta Cerniauskaite for five years and registered the house in her sole name. When they split in 2013, the dispute arose as to who was the true legal and beneficial owner.

Judge Ann McAllister accepted Ms Cerniauskaite’s evidence that both parties intended the house to be hers; it was one of a series of generous gifts by Mr Hoggins, who also bought her a £160,000 Bentley car.

The bloggers of this world have expressed outrage that this “gold-digging” former girlfriend from Lithuania could be allowed to swindle this hard-working 62-year-old out of his capital.

But they miss the point in two ways.

Firstly, the house was always hers and the ownership was only disputed by Mr Hoggins after the split in 2013.

The court can only give effect to the intention of the parties. If the property is put into the sole name of one party, then this is clear evidence of how the parties intended the equity (or value in the property) to be held.

The court doesn’t have the power or discretion under the Trusts of Land Act to rewrite history and to adjust the shareholdings unless there is clear evidence that the parties intended something else or that the claimant had made a clear contribution to the purchase and had then relied to their detriment on an agreement that they would have a share in the equity.

Mr Hoggins claimed the house was really a joint purchase but as he had debts, it was “easier” to get a mortgage this way. This is a familiar scenario in Trusts of Land cases, notably in the case of Thompson v Hurst [2012] EWCA Civ 1752.

In that case the claimant was awarded a 10 per cent interest in the equity of the property, despite having made no financial contributions. But he could prove a common intention for the parties to share the equity at the time of the purchase.

Secondly, the public perception seems to be that this is a quasi-divorce case and that Ms Cerniauskaite was unjustifiably seeking a share of Mr Hoggins’ wealth. Despite several abortive attempts at reforming the law, cohabitees do not have personal claims against their former partners in this way and this is a prime example of the disparity between the position of a married spouse and an unmarried girlfriend.

From a social point of view, after a nine-year relationship during which Ms Cerniauskaite supported Mr Hoggins and “did a great deal to make his life easier” including helping to raise his children from his previous marriage, is it unreasonable to see her keep a home, even if they never decided to marry? If they were married, she could have claimed much more. The final message to take away is that gifts once made, cannot be unmade if the donor changes his mind.

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