Merritt v Merritt

COURT OF APPEAL, CIVIL DIVISION

[1970] 2 All ER 760, [1970] 1 WLR 1211, 214 EG 1355, [1970] EGD 418

HEARING-DATES: 27 APRIL 1970

27 APRIL 1970

CATCHWORDS:

Contract - Intention to create legal relations - Presumption against intention - Presumption inapplicable - Husband and wife not living in amity - Evidence disclosing intention to create legal relationship - Agreement after separation - Husband providing for wife - Wife paying off mortgage on matrimonial home - Husband to transfer home to wife after mortgage redeemed.

HEADNOTE:

The husband and wife were married in 1941 and had three children. In 1966, the husband became attached to another woman and left the matrimonial home to live with her. At that time, the matrimonial home, a freehold house, was in the joint names of the husband and wife, and was subject to an outstanding mortgage of some £ 180. The wife pressed the husband to make arrangements for the future, and on 25th May 1966, they met and talked the matter over in the husband's car.The husband said that he would pay the wife £ 40 a month out of which she must make the outstanding mortgage payments on the house and he gave her the building society mortgage book. Before leaving the car the wife insisted that the husband should put down in writing a further agreement, and on a piece of paper he wrote: 'In consideration of the fact that you will pay all charges in connection with the house... until such time as the mortgage repayment has been completed, when the mortgage has been completed I will agree to transfer the property in to your sole ownership.' The husband signed and dated that agreement, and the wife took the piece of paper away with her. In the following months she paid off the mortgage, partly out of the husband's monthly payment to her and partly out of her own earnings. When the mortgage was paid off the husband refused to transfer the house to the wife.

Held - The written agreement of 25th May 1966, was intended to create legal relations between the parties because the presumption of fact against such an intention where arrangements were made by a husband and wife living in amity did not apply to arrangements made when they were not living in amity but were separated or about to separate, when (per Lord Denning MR at p 762 a, post) it might safely be presumed that they intended to create legal relations; the surrounding circumstances in the present case showed that the parties did so intend; accordingly, the wife was entitled to sue on the agreement, and it being sufficiently certain and there being good consideration by the wife paying off the mortgage, she was entitled to a declaration that she was the sole owner of the house and to an order that the husband joing in transferring it to her (see p 761 j to p 762 a, p 762 d to g and p 763 b, d and h, post).

Balfour v Balfour [1918-19] All ER Rep 860, Jones v Padavatton [1969] 2 All ER 616, and Gould v Gould [1969] 3 All ER 728 distinguished.

NOTES:
For contracts between husband and wife, see 19 Halsbury's Laws (3rd Edn) 871, 872, para 1435, and for cases on the subject, see 27 Digest (Repl) 202, 203, 1605-1614.

CASES-REF-TO:

Balfour v Balfour [1919] 2 KB 571, [1918-19] All ER Rep 860, 88 LJKB 1054, 121 LT 346, 27 Digest (Repl) 201, 1604.
Gould v Gould [1969] 3 All ER 728, [1970] 1 QB 275, [1969] 3 WLR 490, Digest Supp.
Jones v Padavatton [1969] 2 All ER 616, [1969] 1 WLR 328, Digest Supp.

INTRODUCTION:

Appeal. This was an appeal by the husband, John Bertram Merritt, against the judgment of Stamp J, given on 14th May 1969, whereby he held that the wife, Millicent Joan Merritt, was entitled to a declaration that she was now the sole beneficial owner of the matrimonial home, a freehold property known as 133 Clayton Road, Hook, Surrey, and ordered the husband to join with the wife in transferring the property to her. Stamp J also dismissed the husband's counterclaim that the property was owned by the parties in equal shares. The facts are set out in the judgment of Lord Denning MR.

COUNSEL:

A A R Thompson for the husband. M G Johnston for the wife.

PANEL: LORD DENNING MR, WIDGERY AND KARMINSKI LJJ

JUDGMENTBY-1: LORD DENNING MR.

JUDGMENT-1:

LORD DENNING MR. The husband and the wife were married as long ago as 1941. After the war, in 1949 they got a building plot and built a house. It was a freehold house, 133 Clayton Road, Hook, Chessington. It was in the husband's name, with a considerable sum on mortgage with a building society. There they lived and brought up their three children, two daughters, now aged 20 and 17, and a boy now 14. The wife went out to work and contributed to the household expenses.

Early in 1966 they came to an agreement whereby the house was to be put in joint names. That was done. It reflected the legal position when a house is acquired by a husband and wife by financial contributions of each. But, unfortunately, about that time the housband formed an attachement for another woman. He left the house and went to live with her. The wife then pressed the husband for some arrangement to be made for the future. On 25th May, they talked it over in the husband's car. The husband said that he would make the wife a monthly payment of £ 40 and told her that out of it she would have to make the outstanding payments to the building society. There was only £ 180 outstanding. He handed over the building society's mortgage book to the wife. She was herself going out to work, earning net £ 7 10s a week. Before she left the car she insisted that he put down in writing a further agreement. It forms the subject of the present action. He wrote these words on a piece of paper:

'In consideration of the fact that you will pay all charges in connection with the house at 133, Clayton Road, Chessington, Surrey, until such time as the mortgage repayment has been completed, when the mortgage has been completed I will agree to transfer the property in to your sole ownership.

Signed. John B. Merritt 25.5.66.'
The wife took that paper away with her. She did, in fact, over the ensuing months pay off the balance of the mortgage, partly, maybe, out of the money the husband gave her, £ 40 a month, and partly out of her own earnings. When the mortgage had been paid off, he reduced the £ 40 a month to £ 25 a month.

The wife asked the husband to transfer the house into her sole ownership. He refused to do so. She brought an action in the Chancery Division for a declaration that the house should belong to her and for an order that he should make the conveyance. The judge, Stamp J, made the order; but the husband now appeals to this court.

The first point taken on his behalf by counsel for the husband was that the agreement was not intended to create legal relations. It was, he says, a family arrangement such as was considered by the court in Balfour v Balfour n1 and in Jones v Padavatton n2. So the wife could not sue on it. I do not think that those cases have any application here. The parties there were living together in amity. In such cases their domestic arrangements are ordinarily not intended to create legal relations. It is altogether different when the parties are not living in amity but are separated, or about to separate. They then bargain keenly. They do not rely on honourable understandings. They want everything cut and dried. It may safely be presumed that they intend to create legal relations.

n1 [1919] 2 KB 571, [1918-19] All ER Rep 860

n2 [1969] 2 All ER 616, [1969] 1 WLR 328

Counsel for the husband then relied on the recent case of Gould v Gould n3, when the parties had separated, and the husband agreed to pay the wife £ 12 a week 'so long as he could manage it'. The majority of the court ghought that those words introduced such an element of uncertainty that the agreement was not intended to create legal relations. But for that element of uncertainty, I am sure that the majority would have held the agreement to be binding. They did not differ from the general proposition which I stated n4:

n3 [1969] 3 All ER 728, [1970] 1 QB 275<

n4 [1969] 3 All ER at 730, [1970] 1 QB at 280

'When... husband and wife, at arm's length, decide to separate and the husband promises to pay a sum as maintenance to the wife during the separation, the court does, as a rule, impute to them an intention to create legal relations.'

In all these cases the court does not try to discover the intention by looking into the minds of the parties. I looks at the situation in which they were placed and asks itself: would reasonable people regard the agreements as intended to be binding?

Counsel for the husband sought to say that this agreement was uncertain because of the arrangement for £ 40 a month maintenance. That is obviously untenable. Next he said that there was no consideration for the agreement. That point is no good. The wife paid the outstanding amount to the building society. That was ample consideration. It is true that the husband paid her £ 40 a month which she may have used to pay the building society. But still her act in paying was good consideration.Counsel for the husband took a small point about rates. There was nothing in it. The rates were adjusted fairly between the parties afterwards. Finally, counsel for the husband said that, under s 17 of the Married Women's Property Act 1882, this house would be owned by the husband and the wife jointly; and that, even if this house were transferred to the wife, she should hold it on trust for them both jointly. There is nothing in this point either. The paper which the husband signed dealt with the beneficial ownership of the house. It was intended to belong entirely to the wife.

I find myself in entire agreement with the judgment of Stamp J.This appeal should be dismissed.

JUDGMENTBY-2: WIDGERY LJ.

JUDGMENT-2:
WIDGERY LJ. I agree with Lord Denning MR's judgment, feeling, as he does, that no criticism can be levelled at the finding of the learned judge below.

When a husband and wife are living together in amity it is natural enough to presume that their discussions about money matters are not intended to create legally binding contracts. As Atkin LJ said in Balfour v Balfour n5:

n5 [1919] 2 KB 571 at 579, [1918-19] All ER Rep 860 at 865

'The common law does not regulate the form of agreements between spouses. Their promises are not sealed with seals and sealing wax. The consideration that really obtains for them is that natural love and affection which counts for so little in these cold Courts.'
But, of couse, once that natural love and affection has gone, as it normally has when the marriage has broken up, there is no room at all for the application of such a presumption. Salmon LJ made this clear in Jones v Padavatton n6, to which reference has already been made, where he said:

n6 [1969] 2 All ER 616 at 621, [1969] 1 WLR 328 at 332

'... as a rule when arrangments are made between close relations, for example, between husband and wife, parent and child or uncle and nephew in relation to an allowance, there is a presumption against an intention of creating any legal relationship. This is not a presumption of law, but of fact. It derives from experience of life and human nature which shows that in such circumstances men and women usually do not intend to create legal rights and obligations, but intend to rely solely on family ties of mutual trust and affection.'
The experience of life and human nature which raises this presumption in the case of a husband and wife living together in amity does not support it when the affection which produces that relationship of confidence has gone.

I find it unnecessary to go so far as to say that there is a presumption in favour of the creation of legal relationships when the marriage is breaking up, but certainly there is no presumption against the creation of such legal relations as there is when the parties are living happily together.

I would dismiss this appeal.

JUDGMENTBY-3: KARMINSKI LJ.

JUDGMENT-3:
KARMINSKI LJ. I agree, and only desire to add this. It is in my view of great importance, in considering whether or not an agreement of the kind which we have to consider here would create legal relations, to look at the surrounding facts. In the present case on 20th May 1966, the husband informed the wife that he was in love with another woman with whom he was living, and he added these words: 'When the house is paid for I will consider signing over the other half to you.' That was followed five days later by the meeting in the motor car which resulted, after full discussion, in the signing of the agreement to which reference has already been made by Lord Denning MR. I do not propose to read it again.

In deciding therefore whether or not an agreement is intended to establish legal relations, it seems to me essential to look at the surrounding circumstances. In Balfour v Balfour n7 the relevant facts were that the husband, who was employed in government service in Ceylon, had to return there in 1916. The wife could not join him there at any rate for the time being because of her own ill-health and the husband agreed to pay her £ 30 a month for her support. At that time therefore the agreement was a perfectly friendly one occasioned by a separation which was not, at any rate at that time, the desire of either of them.

n7 [1919] 2 KB 571, [1918-19] All ER Rep 860

In the present case it is manifest that the husband had left the wife by his own choice, because he preferred the company of another woman. He was therefore not only presumably committing adultery with her, but was also in desertion. The wife therefore had several grounds for which she could have commenced divorce proceedings, or taken such proceedings as she might have been advised for maintenance, either in a magistrates' court or in the High Court, on the ground of desertion or wilful neglect to maintain. In fact no proceedings became necessary, because the husband arranged to pay £ 40 a month, and undertook that when she had discharged a small amount outstanding on the mortgage he would transfer the property to her sole ownership.

I have no doubt, therefore, that on the facts of this case Stamp J was perfectly correct in coming to the conclusion which he formed, and I agree that this appeal must be dismissed.

DISPOSITION:
Appeal dismissed.

SOLICITORS:
Wilkinson, Howlett & Durham (for the husband); C A Maddin & Co, Surbiton (for the wife).

Merritt v Merritt

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