Court decides verbal agreement between former cohabitees is binding

We often use the phrase ‘my word is my bond’, but when it comes to legal agreements many presume that if something is not set out in writing, it is unenforceable.

However, a recent Court of Appeal hearing involving a cohabiting couple shows differently.

In Ely v Robson [2016] the Court of Appeal upheld a declaration that the claimant held property where he had lived with the respondent, on ‘constructive trust’ – or common intention – for them both. The declaration was based on an oral agreement.

The couple’s relationship ceased in 2005. They continued living together until 2007, when one party decided the arrangement was no longer acceptable, and issued possession proceedings which were listed for trial in September 2007.

The two met in August 2007 to try to settle matters. The respondent has since argued that during this meeting no agreement was reached. However, the claimant said it was agreed that:

  • The claimant would hold the property on trust for himself for life, with a remainder of 80% to  his heirs and 20% to the respondent.
  • The respondent could occupy the property while either her aunt or mother were alive.
  • The claimant would have the power to sell the property following the termination of the respondent’s right to occupy it.
  • The claimant would relinquish any claims  against properties owned by the respondent.

Following unsuccessful attempts to re-list the trial to a later date, and the death of the respondent’s aunt and mother, the claimant applied for a declaration of the parties’ beneficial interests and for the property to be sold.

Judge Blair decided that the understanding reached by both parties during their informal meeting in August 2007, should stand. This decision was upheld on appeal.

Kevin Double, family expert at Palmers Solicitors, said: “The decision illustrates how easily arguments can arise where there is no written record of the parties’ intentions. The cost of putting in place a written agreement – be it a trust deed or cohabitation agreement – at the time of purchasing a property or commencing a relationship, far outweighs the costs of having to resolve such disagreements through courts at a later stage.

“A cohabitation agreement may be the last thing on your mind when you first decide to set up home with your partner, but a lot of potential heartache can be avoided by doing so.”

For more information, please contact our South Woodham Ferrers Family Law team at enquiries@palmerslaw.co.uk