Cohabitees & Investment Properties – A Fresh Approach.

In the recent Privy Council case of Marr v Collie (Bahamas) [2017] UKPC 17) further clarification has been provided in relation to cases where cohabitees jointly own property which they have purchased as an investment, rather than for a domestic purpose.

Previously, where a cohabiting couple owned an investment property together, it was generally understood that the beneficial ownership of that property followed the legal ownership unless the contrary could be proven.

However, Marr v Collie emphasises that no one presumption must triumph. Rather, the court should focus on establishing what the parties’ intentions were during their course of dealing with any investment property. There needs to be a detailed examination of the parties’ intentions.  Without that, the court cannot make a proper determination of the parties’ beneficial interests in an investment property. The context in which they bought the property is key and the court should take into consideration the parties’ common intentions.

In Marr v Collie the Appellant was a Canadian citizen working in the Bahamas in the banking industry. The Respondent was a building contractor. From September 1991 until July 2008 the two men were in a personal relationship.  When their relationship broke down, they disagreed about the beneficial ownership of various investment properties.  The agreement had been that Marr would pay for the acquisition of the properties, whilst Collie, as a commercial builder, would carry out redevelopment works. The investment properties had been put into joint names without specifying the parties’ respective beneficial interests.

In giving his judgement Lord Kerr noted that the parties’ intentions may change over time.  What they may have intended at the start of their relationship/ the commencement of their investment, may have altered as time passed.  This, he held, was why “intense examination” of such intentions was warranted in this case. Accordingly the case has been remitted to the Supreme Court of the Bahamas for a rehearing.

This case re-emphasises that it is crucially important for cohabiting couples who invest in any property (whether as a domestic property for themselves or as an investment property) to seek independent legal advice and to make their intentions clear prior to making the investment.  Any lack of clarity can lead to lengthy and complex litigation if the relationship later breaks down.

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