Paget v Paget: CA 1898

The plaintiff wife was ‘a lady of fortune’, with the bulk of her property settled on her for life for her separate use without power of anticipation. They ‘moved in good society and, large as their income was, they lived far beyond it.’ They were ‘recklessly extravagant’ and within five years were in desperate need of funds to meet the husband’s debts incurred in maintaining their lifestyle. In 1882 the wife applied to court for an order under the 1881 Act to enable her to mortgage her life interest to secure a loan of 23,000 pounds to be applied in meeting her husband’s debts. In her evidence in support of the application she referred to these debts as ‘our debts’ and said that she had known of the growing financial problems since 1880 at the latest. Another application was made in 1887 to enable the wife to mortgage her life interest for a further loan of 22,000 pounds, to be applied in paying further debts incurred by her husband. Once again she referred to these as ‘our debts’. The parties separated in 1893 and the wife brought an action against the husband for a declaration that he was liable to indemnify her against the two mortgages.
Held: The equity of exoneration is a principle of equity which depends on the presumed intention of the parties. If the circumstances of a particular case do not justify the inference, or indeed if the circumstances negate the inference, that it was the joint intention of the joint mortgagors that the burden of the secured indebtedness should fall primarily on the share of that of them who was the debtor, then that consequence will not follow.
‘If a married woman charges her property with money for the purpose of paying her husband’s debts and the money is so applied, she is prima facie regarded in equity, and as between herself and him, as lending him and not giving him the money raised on her property, and as entitled to have her property exonerated by him from the charge she has created. This doctrine is purely equitable, and the authorities which establish it shew that it is based on an inference to be drawn from the circumstances of each particular case; the prima facie inference being in such a case as that supposed that both parties intended that the wife’s assistance should be limited to the necessity of the case and should not go beyond such necessity.’
References: [1898] 1 Ch 470, [1895-9] All ER Rep 1150
Judges: Lindley MR, Rigby and Vaughan Williams LJJ
Statutes: Conveyancing Act 1881
Jurisdiction: England and Wales
This case is cited by:

  • Cited – Day v Shaw and Another ChD 17-Jan-2014
    Mr and Mrs Shaw had granted a second charge over their jointly-owned matrimonial home to secure the personal guarantee given by their daughter and by Mr Shaw in respect of a bank loan to a company (Avon). Their daughter and Mr Shaw were the . .
    (, [2014] EWHC 36 (Ch))
  • Cited – In Re Pittortou (a bankrupt) ChD 1985
    H and W charged the property to secure the H’s overdrawn bank account. The account was used both for his business and for payment of expenses relating to the matrimonial home. H was adjudicated bankrupt. W sought her equity to be exonerated from H’s . .
    ([1985] All ER 285)
  • Cited – Armstrong v Onyearu and Another CA 11-Apr-2017
    Exoneration of partner’s equity on insolvency
    The court considered the equity of exoneration, where property jointly owned by A and B is charged to secure the debts of B only, A is or may be entitled to a charge over B’s share of the property to the extent that B’s debts are paid out of A’s . .
    (, [2017] EWCA Civ 268, [2017] WLR(D) 271,, )
  • Discussed – Hall v Hall ChD 1911
    An equity of exoneration in favour of a wife arises ‘at the time she charges her estate’. The doctrine of exoneration is based on an inference in each case from all the facts of that particular case. Where one co-habitee joins in granting a charge . .
    ([1911] 1 Ch 487)

These lists may be incomplete.
Last Update: 27 November 2020; Ref: scu.567252