Advise Shaun, Paula, and Shaun’s parents, on their respective rights to the two properties.

Description

Problem Question:

Shaun Williams is the owner of a cottage on the outskirts of Lincoln. He is also the sole director/shareholder in a company called SW Success Ltd, that is the owner of storefront in central Lincoln. The details of the two properties are as follows:

1. Cottage and surrounding land, freehold title registered with the Land Registry in the name of Shaun Williams as entry LN225678, at 15 Cherry Drive, High Market, Lincoln LN14 3TZ.

2. City-centre storefront, leasehold title registered with the Land Registry in the name of SW Success Ltd as entry LN985321, at 42 Lindonium Drive, Lincoln, LN2 9XA.

The cottage is subject to a mortgage, which is registered with Lincolnshire Building Society. The repayment is £700 per month and will be repaid in full in July 2037. Shaun bought the cottage in 2012 for the price of £220,000. The deposit of £25,000 was provided by Shaun’s parents. Shaun always assumed it was a gift to him. His mother did say, “I hope you pay us back one day”, but Shaun took it to be a joke, and nothing more was said on the matter.

Shaun established SW Success Ltd in 2016. It has been a successful business, generating a turnover of around £60,000 per year. In 2017, the company bought the lease (for 50 years) to 42 Lindonium Drive for £150,000. The company paid £30,000 and took a mortgage with Lincolnshire Building Society for the balance, paying £420 per month. Shaun pays himself dividends of around £10,000 per year.

In 2015, Shaun began a romantic relationship with Paula Fitzpatrick. She is a physiotherapist, who earns around £27,500 per year. For the first year, she still rented a flat near the hospital, but in 2016, around the time Shaun set up his business, she moved in with him to the cottage.

Paula helped out a lot in setting up the business and, in 2019, even reduced her working hours at the hospital to 80% in order to spend more time working in the shop. Shaun was very grateful for her work and gave her around £300 per month as a thank you gift. In 2019, Shaun spent the dividend he had paid himself on an extravagant trip with his friends. Paula was upset about this, as a lot of the company’s success was down to her work. In response, Shaun did say it was “our” business, that it wouldn’t work without her, and did give her an extra £2,000.

Back in 2016, shortly after Paula moved in, Shaun asked if she could help with some household finances. In the past four years combined, Paula has contributed around £2,000 on new kitchen appliances, a new boiler, and new furniture for the living room. She has also paid £125 per month to help with council tax and utilities. She offered to help with the mortgage but Shaun said he had it under control.

In 2017, they did quite extensive works on the garden. Paula spent £1000 on a gazebo and put in countless hours of work doing up the garden. The garden is now far more practical and picturesque.

In 2019, after the row about Shaun’s holiday, Paula also asked to be put on the legal title to the cottage. Shaun said he would look into it but was evasive when Paula brought it up later on, asking her not to worry about such things. To family and friends, Shaun has referred to the house as “ours”.

In the spring of 2020, Paula and Shaun broke up, and Paula left and moved back in with her parents. Shaun’s relationship with his parents has also deteriorated and his parents are now insisting on getting their £25,000 back.

Advise Shaun, Paula, and Shaun’s parents, on their respective rights to the two properties.

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