Last month, the High Court handed down judgment in the case of Oberman v Collins. This was a dispute between a former unmarried couple concerning an £8 million property portfolio.
During the 20 year cohabiting relationship, 41 properties were bought in the sole and joint names of the parties, and in the name of their company, Bluegen. Both Ms Oberman and Mr Collins were directors and shareholders of Bluegen.
Ms Oberman sought a declaration from the court that she had a 50% beneficial interest in all of the properties in the portfolio, including the properties purchased in Mr Collins’ sole name. Ms Oberman claimed that she had an interest in the properties under a ‘common intention constructive trust’ – in other words, that she and Mr Collins had both intended for all of the properties to be shared between them as part of their property business.
In evidence, Ms Oberman stated that it was understood and expressly agreed between the parties that the entire portfolio was for their joint and equal benefit, regardless of the legal ownership of each property, which was fluid and depended on the manner in which they thought it would be most straightforward to obtain a mortgage.
In support of her case, Ms Oberman relied on a number of letters which Mr Collins had written to her from prison (he served a prison sentence of three months in 1997, during the course of the relationship, after being convicted of false accounting). The letters mapped out plans for their future together and outlined the property business they would build.
When the couple, who never married, separated many years later in 2015, they agreed to share the 28 properties in both of their names, but could not agree on the 12 properties purchased in Mr Collins’ sole name.
The court held that there was a single portfolio in common ownership, irrespective of whether the properties were registered in the name of Bluegen, the sole name of Mr Collins or Ms Oberman or in their joint names, and that the parties had equal shares in the portfolio.
Mr Collins was also ordered to pay Ms Oberman 50% of the rent and profits received / the proceeds of sale of the portfolio.
The case confirms that the court will look to the intentions of the parties when deciding who is entitled to share in property, even where the properties consist of a fluctuating portfolio of properties purchased for investment purposes, and are never lived in by the parties as their home. In other words, the court’s ability to declare a ‘common intention constructive trust’ is not limited to purely domestic situations and can apply in a commercial or quasi commercial context.
It should also be noted that, had the parties documented their intended shares in the properties at the time of buying them (in an express declaration of trust), this litigation might have been avoided.
The content of this article is for general information only. If you require any further information in relation to property disputes of this nature, please contact Laura Tanguay.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at February 2021.