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O’Kelly v Davies (2014) EVCA Civ 1606
This case concerned a property in Sketty Swansea owned in the sole name of Ms O’Kelly. Her former partner, Mr Davies, applied to the court for a declaration that he had an equal share in the property. He did not ask for the sale of the property because it was his daughter’s home. At trial in 2013 the judge, following the guidance in the Supreme Court case of Jones v Kernott (2011) UKSC 53, decided that the property was owed legally and beneficially by both Ms O’Kelly and Mr Davies in equal shares. Ms O’Kelly disagreed and appealed. Her appeal was heard in December 2014 and published at the end of March 2015. Her appeal failed.
The trial Court found that this was a long relationship, beginning in either 1984/85 and definitely ending in late 2011 when Ms O’Kelly discovered that Mr Davies was having an affair with a woman in Saudi Arabia. So this was a relationship of about 27 years. They had one daughter, Evangeline, who was born in October 1996. Mr Davies worked in construction, mostly abroad, and Ms O’Kelly hadn’t worked since the early 1990’s. During the course of the trial it emerged that she was claiming benefits as a single mother. The judge found that the couple had colluded in hiding their relationship to facilitate benefit fraud.
Initially they lived in rented accommodation but in December 1987 they jointly purchased a property in William Street, Swansea with the aid of a mortgage. In 1991 that property was transferred from their joint names to the sole name of Ms O’Kelly. They continued to live together and Mr Davies continued to pay the mortgage. In about 1997 there was an anonymous complaint to the DSS that Ms O’Kelly was falsely claiming benefits. The couple told the DSS that they were living separately but they had had been a brief reconciliation, which led to Evangeline’s birth. They successfully hoodwinked the DSS. Mr Davies was not named as Evangeline’s father on her birth certificate although he told the DSS that he suspected that she was his child.
In October 2006, Mr Davies purchased the William Street property from Ms O’Kelly for £155,000, with the purchase money coming from a mortgage and a personal loan. Simultaneously, with the William Street money, Ms O’Kelly purchased the property in Sketty for £130,000 with a small mortgage of £13,000. She banked £20,000. She wanted to move to the catchment area for Evangeline’s preferred secondary school. The couple continued to live together and Mr Davies carried out renovations to their Sketty home. The William Street property was rented out but repossessed in about 2008. It was about this time that Mr Davies started working in Saudi Arabia. He added Ms O’Kelly to his bank account and, by 2011, she had withdrawn almost £54,000. The mortgage was reduced to £6,000 partly by DSS mortgage payments of £3,000 and from monies drawn from the joint account.
The judge did not accept Ms O’Kelly’s case that she and Mr Davies had separated in 1991. On appeal she argued that the couple had treated their properties separately from October 2006 but the Court of Appeal did not agree. There was no express written or oral agreement between the couple and so the Court had to consider the application of trust law to the case. The Court upheld the trial judge’s decision that objectively they had a common intention that they would own the Sketty property jointly even if Ms O’Kelly had the secret intention to deny Mr Davies any interest should he claim it. The Court had to find a fair outcome looking at the whole course of dealings between the couple.
Ms O’Kelly had a second argument on appeal. She said that Mr Davies had to rely on their unlawful agreement, the deception of the DSS, in order to claim part of the Sketty property. If she succeeded in this argument Mr Davies would be prevented from realising his interest because the law of equity will not allow a claimant to enforce an illegal agreement. The Court of Appeal had to consider whether Mr Davies could prove the trust without relying on the unlawful agreement.
The Court found that Mr Davies had no need to rely on the deception of the DSS to claim part of the property. The unlawful aim of defrauding the DSS explained the couples conduct but it was their common intention that gave rise to the constructive trust and their joint beneficial ownership of the Sketty property. The House of Lords had made the same finding in the case of Tinsley v Milligan (1994) 1 AC 340, where a property was bought in the sole name of one partner with the purpose of fraudulently claiming of DSS benefits. In that case the claimant had contributed to the purchase price and so there was a trust and she did not need to rely on the illegal agreement.
This case illustrates how the Court will examine disputes about property by unmarried couples. Even if the property is owned in the sole name of one party the Court will look for express agreement and, if there is no agreement, consider if there is any intention to share ownership. The court will look at both words and conduct. If there is no evidence of any discussions the intention of the couple will be inferred from conduct alone.
The couple both had their own lawyers at trial but Mr Davies represented himself at the appeal. Ms O’Kelly lost but, as her former partner was unrepresented, she was saved having to pay his lawyers cost. Interestingly, a search on the internet indicates that the Sketty property is probably worth no more now than it was when purchased.
This article is for information purposes only and is not legal advice. It should not be acted or relied upon and legal advice should be sought before applying any of the information in this article to any facts or circumstances.