Mediation
Hertfordshire

This was a TOLATA dispute between a cohabiting couple. The parties negotiated to purchase a property in the spring of 2010 for £180,000 and in order to raise a mortgage required a 25% deposit of £45,000. The Claimant (C) agreed to contribute £30,000 (the entirety of her savings). The balance of £15,000 was to be raised by the Defendant (D)

£7,000 from his savings and the balance by way of a military loan called an LSAP. He actually applied for £8,500. The reason he obtained the loan as discussed between the parties was specifically because his deposit was considerably less than the C’s and because he wanted to reduce the gap between their investments, in his words to make it more ‘fair’.

His request for a loan was rejected, therefore the only option they had if they wanted to proceed with the purchase of the property was for the C to quickly apply for a loan herself and that she would be accepted because she was a first time buyer.

There were discussions between the parties, the C saying that she didn’t want to have a debt of £8,500 and pointing out that she was already contributing about £30,000 towards the deposit which she had spent approximately seven years saving up.

The D’s response was to promise the C that all she needed to do was apply for the LSAP and that he would take care of the payments and would pay her back once the military had started to take the money directly from her salary. The C was wary of doing this but felt under considerable pressure to do so because the D stressed to her that if they didn’t come up with the money quickly then there was a chance that the vendors would pull out of the deal and the house would go back onto the open market.

The D gave the C his word that applying for the LSAP would not affect her in any way as he would take care of the repayments just as if his own application hadn’t been rejected in the first place.

The C looked to her parents for assistance but they were unable to help and in the end trusting the D and believing that he would keep his word, set up the standing order to repay her as had been discussed and verbally agreed, put in the application which was granted.

The C could not remember whether it was during the second or third meeting with Mr L (an old friend of the D) who was their financial advisor, when the question of the tenancy arrangement was raised.

She understood that she had a choice of two arrangements and that included within the solicitor’s paperwork was an information sheet briefly detailing the difference between the two arrangements. She was unaware that such arrangements existed but from the information contained it made sense to her to sign as tenants in common because she was the biggest investor and wanted her investment to be protected.

However it was explained to the parties by Mr L that it wasn’t really in her interest to opt for tenants in common in equal shares because the D was due to deploy to Afghanistan in a matter of weeks. He explained that if the house was split 85/15 (to reflect the difference in deposit) as tenants in common and should the D lose his life on deployment, the life insurance would only acknowledge the D’s share of 15% thus leaving the C with the remainder of the mortgage to finance on her own, which she realised she wouldn’t be able to do.

Furthermore, he recommended that they didn’t opt for tenants in common because they would need a solicitor to draft up additional paperwork that the process would take longer and be at extra cost and not really worth it if they could compromise matters between themselves.

The D’s contribution to the pressure on the C was to specifically state that he would not sign as tenants in common because they would both be paying equally towards all the bills and it would only be fair that he was a joint owner. The C stated that she expressed concern and specifically raised the issue as to whether her deposit was safe if she signed as a joint tenant. She was assured by both the D and Mr L that there were no problems.

The D assured the C that should the relationship break down ‘which it wouldn’t, then he would do the honourable thing and they would take back what they had put in as it was only fair. Furthermore he reassured her that he was in the relationship for the long haul and that he would not “see her off”. He expressed disappointment that the C even questioned him on the subject as he thought she was implying that he was untrustworthy.

He told her specifically that the percentages/shares would not matter as dividing funds would never be an issue and this was backed up by Mr L. Additionally the D stated that they could not afford to incur any extra costs and that it was pointless to draft unnecessary paperwork which would only delay the process when there was absolutely no need as the outcome on the deposits would be the same whichever tenancy agreement was signed.

The C was therefore made to understand that the purchase could only continue as joint tenants but that her deposit would be secure. She had specifically stated to her solicitors now, that had she been given the correct advice, not being pressurised and truly understood that her initial contribution was not safe, then she would not have signed as joint tenants. The conveyancing paperwork was completed afterwards by parties at their work place and returned to the solicitors. No advice was given to the parties by the solicitor regarding a declaration of trust for the LSAP loan.

The relationship broke down due to allegations of the D having an affair. Who then reneged on their agreement. The D threatened the C with ‘a world of pain and things would go sour’ if she did not accept what he wanted. There had also been an incident between them involving violence and he specifically told the C’s father that he could get the C sacked from her job if she fought for her deposit. Furthermore, after a false allegation to the Police about drink driving, the C was woken up by the Police at 0200 hours in order to give a breath sample which was negative.

Prior to separating they decided to marry. The wedding was cancelled and all the deposits / extra expenses were lost. The C was deployed to Afghanistan in August 2011 and while she was there, there were communications between the parties and attempts to settle the differences and it was agreed that the D would remain in the house until she returned in February 2012 when they would discuss the matters.

They specifically agreed that the D would not bring any girlfriends back to the property which agreement he broke and the C then realised that his affair might be ongoing. They then had discussions regarding the disposal of the property and the C specifically raised the repayment of the monies due to her.

The D wrote her a letter listing his financial interest in the property and the personal effects which he would be removing (most of the furniture which he did) but made no mention of the LSAP loan and at this stage the C realised that she had been duped. Even so there were further attempts between the parties between March and July 2012 to save the relationship.

The D put pressure on the C that if she would agree to the sale of the house and the payment to him, there would be a possibility that they could yet be reconciled. This was a
cruel ploy and was fully recorded in e-mails.

The mediation took place in person, was incredibly difficult and emotional for the parties to say the least. Within five hours an agreement was reached.