iuc TYceiuy Law Reports, August /, iy/u
1211
1 W.L.R.
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[COURT OF APPEAL]
* MERRITT v. MERRITT
1970 April 27
Lord Denning M.R., Widgery and Karminski L.JJ.
B Contract—Formation—Intention to create legal relationship—Uncertainty—Husband and wife—Separation—Husband's agreement to transfer matrimonial home to wife's sole ownership
—Whether intention to enter into legal relations.
A husband and wife married in 1941. In 1949 they built
a house as a matrimonial home. It was in the husband's
name with a large sum on mortgage with a building society.
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In 1966 they agreed to put the house in their joint names.
Shortly afterwards the husband left the house and went to
live with another woman.
At a meeting on May 25, 1966, the husband agreed to pay
the wife £ 40 a month out of which she was to pay the £ 180
outstanding to the building society. At her insistence he
signed a document stating that in consideration of her paying
all charges in connection with the house until the mortgage
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repayments had been completed he agreed to transfer the
house into her sole ownership. The wife paid off the balance
of the mortgage and the husband then reduced the £ 40 a
month to £ 25 a month.
Stamp J. granted the wife's application for a declaration
that the house belonged to her and ordered the husband to
join in the necessary conveyance.
On the husband's appeal:—
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Held, dismissing the appeal that since the parties had
separated the agreement regarding the ownership of the
matrimonial home was one which was intended to create
legal relations and was binding upon them.
Balfour V. Balfour [1919] 2 K.B. 571, C.A.; Jones v.
Padavatton [1969] 1 W.L.R. 328; [1969] 2 All E.R. 616,
C.A. and Gould v. Gould [1970] 1 Q.B. 275; [1969] 3
W.L.R. 490; [1969] 3 All E.R. 728, C.A. distinguished.
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Per curiam. In deciding whether or not an agreement is
intended to establish legal relations the surrounding circumstances must be looked at to see whether reasonable people
would regard the agreement as intended to be binding (post,
pp. 1213D-E, H, 1214E).
Decision of Stamp J. affirmed.
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The following cases are referred to in the judgments:
Balfour v. Balfour [1919] 2 K.B. 571, C.A.
Gould v. Gould [1970] 1 Q.B. 275; [1969] 3 W.L.R. 490; [1969] 3 All
E.R. 728, C.A.
Jones v. Padavatton [1969] 1 W.L.R. 328; [1969] 2 All E.R. 616, C.A.
The following additional case was cited in argument:
Gissing v. Gissing [1969] 2 Ch. 85; [1969] 2 W.L.R. 525; [1969] 1 All
E.R. 1043, C.A.; (Note) [1969] 2 Ch. 105; [1969] 2 W.L.R. 1208, C.A.
APPEAL from Stamp J.
The defendant, John Bertram Merritt, appealed against the judgment
of Stamp J. on May 14, 1969, adjudging that the plaintiff, Millicent Joan
Merritt, was entitled to a declaration that she was the sole beneficial owner
of the freehold property known as 133 Clayton Road, Hook; Surrey and
1212
Merritt v. Merritt (C.A.)
[1970]
ordering that the defendant join with the plaintiff in transferring the A
property to the plaintiff.
The grounds of appeal were, inter alia: that the judge misdirected
himself in law in holding that the parties intended to and did enter into
legal relations; that he misdirected himself in holding that the agreement
between the parties was legally binding and enforceable, in holding that
there was valid consideration for the contract and in failing to declare
that the plaintiff held the property on trust for the plaintiff and the
defendant.
The facts are stated in the judgment of Lord Denning M.R.
Anthony Thompson for the defendant.
Michael Johnston for the plaintiff.
M.R. Husband and wife 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, no. 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, aged now 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 husband formed an attachment
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 May 25 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 into
your sole ownership.
Signed, John Merritt. May 25, 1966."
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 down 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 made the order;
but the husband now appeals to this court.
LORD DENNING
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1 W.L.R.
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Merritt v. Merritt (C.A.)
Lord Denning M.R.
The first point taken on his behalf by Mr. Thompson is that the
agreement was not intended to have legal relations. It was, he says, a
family arrangement such as was considered by the court in Balfour v.
Balfour [1919] 2 K.B. 571 and in Jones V. Padavatton [1969] 1 W.L.R.
328. So the wife could not sue upon it.
I do not think 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.
Mr. Thompson then relied on the recent case of Gould v. Gould [1970]
Q 1 Q.B. 275, 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 thought 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 the majority would have held the
agreement to be binding. They did not differ from the general proposition
which I stated at p. 280 that:
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" 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. It looks at the situation in which
they were placed and asks itself: Would reasonable people regard the
agreement as intended to be binding?
Mr. Thompson 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
F 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.
Mr. Thompson took a small point about rates. There was nothing in
it. The rates were adjusted fairly between the parties afterwards.
Finally, Mr. Thompson said that, under section 17 of the Act of 1882,
_ this house would be owned by husband and 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. This 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.
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WIDGERY L.J. I agree with Lord Denning M.R.'s judgment, feeling,
as he does, that no criticism can be levelled at the finding of the 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 Lord Atkin said in
Balfour v. Balfour [1919] 2 K.B. 571, 579:
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Lord Denning M.R.
Merritt v. Merritt (C.A.)
[1970]
." The common law does not regulate the form of agreements between A
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 course, 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 L.J. made this clear B
in Jones v. Padavatton [1969] 1 W.L.R. 328, to which reference has already
been made, where he said, at p. 332:
" As a rule when arrangements 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 presump- -,
tion 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.
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I would dismiss this appeal.
KARMINSKI L.J. 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 May 20, 1966, the
husband informed his wife that he was in love, with another woman with F
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 my. Lord. I do not propose to read it again.
In deciding therefore whether or not an agreement is intended to Q
establish legal relations, it seems to me essential to look at the surrounding
circumstances. In Balfour v. Balfour [1919] 2 K.B. 571, the relevant facts
were that the husband, who was employed in Government service in
Ceyjon, 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 H
separation which was not, at any rate at that time, the desire of either
of them.
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
ine weeiay Law Reports, August /, ISVU
1215
1 W.L.R.
Merritt v. Merritt (G.A.)
Karminski L J .
A, she might have been advised for maintenance, either in a justices' 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
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perfectly correct in coming to the conclusion which he formed, and I agree
that this appeal must be dismissed.
Appeal dismissed.
Costs of £ 50 ordered to be paid to
plaintiff by defendant personally.
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Solicitors: Wilkinson, Howlett & Durham; C. A. Maddin & Co.,
Surbiton.
A. H. B.
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[PROBATE, ETC., D I V I S I O N ]
* N U T K I N S v. NLJTKINS ( B R O W N CITED)
1970
p
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April 20, 27.
Dunn J.
Husband and Wife—Maintenance—High
Court—Judgment
summons—Service—Power
to direct substituted
service—R.S.C.,
Ord. 65, r. 4—Matrimonial Causes Rules, 1968 (S.I. 1968, No.
219 (L. 4) ), rr. 3, 87 (5).
A wife applied for leave to dispense with personal service
upon the husband of a judgment summons for arrears due
under an order made in matrimonial proceedings, notwithstanding that rule 87 (5) of the Matrimonial Causes Rules,
1968,1 required that every judgment summons " shall be
served on the debtor personally," the evidence showing that
the husband was evading personal service: —
Held, that since R.S.C., Ord. 65; r. 4, 2 empowered the
court, in the case of any document which by virtue of any
provision of the Rules of the Supreme Court was required to
be served personally, to order substituted service, and rule 3
of the Matrimonial Causes Rules, 1968, applied the Rules of
the Supreme Court, 1965, with the necessary modifications,
to the practice and procedure in matrimonial proceedings
pending in the High Court, the combined effect of these two
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Matrimonial Causes Rules, 1968, r.' 3: " Subject to the provisions of these
rules and of any enactment . . . the Rules of the Supreme Court 1965 shall apply
with the necessary modifications to the commencement of matrimonial proceedings
in, and to the practice and procedure in matrimonial proceedings pending in . . .
the High Court . . . "
R. 87: " . . . (5) Every judgment summons . . . shall be served on the debtor
personally not less that 10 clear days before the hearing and at ,the time of service
there shall be paid or tendered to the debtor a sum reasonably sufficient to cover
his 2expenses . . . "
R.S.C., Ord. 65, r. 4: " (1) If, in the case of any document which by virtue
of any provision of these rules is required to be served personally on any person,
it appears to the court that it is impracticable for any reason to serve that document
personally on that person, the court may make an order for substituted service of
that document . . . "