UK: Jones v Kernott — A Case Of Clarification Or Not?

Last Updated: 18 July 2012
Article by Matthew Evans

Property ownership issues for cohabiting couples

The Supreme Court has recently handed down its much anticipated judgment in the case of Jones v Kernott [2011] UKSC 53. The case is notable because it deals with the ownership of property between non-married couples.

Jones v Kernott - the background information

The Jones v Kernott case concerned the rights of Leonard Kernott and Patricia Jones and their entitlement to a £245,000 property which they bought in Essex in 1985. Ms Jones paid £6,000 from her own funds with the remainder being funded through a mortgage.

Ms Jones paid the property outgoings including the mortgage and the bills, whilst Mr Kernott paid for some improvements to the property.

The couple split up in 1993. Mr Kernott moved out and made no further financial contributions to the property or to the family home. The couple cashed in a joint life insurance policy and divided the proceeds, which enabled Mr Kernott to purchase his own home in 1996.

In 2006, some 13 years after they had separated, Mr Kernott decided to seek repayment from Ms Jones for his share of the property. As a result, Ms Jones started legal proceedings to obtain a declaration that she owned the entire beneficial interest.

It was recognised that the couple owned the property equally at the point of their separation, but Ms Jones argued that Mr Kernott's beneficial interest had reduced due to his lack of financial contribution since moving out.

Court decisions

The County Court and High Court both agreed that Mr Kernott was entitled to just 10 per cent of the property value. This decision was based on the couple's financial arrangements during the time they were apart.

However, this was then overturned by the Court of Appeal, which ordered a 50/50 share on the basis of the original agreement.

Joint equity presumption

The Court of Appeal based their decision on the earlier case of Stack v Dowden [2007] UKHL 17. This previous case recognised that, in the absence of any evidence to the contrary, where people purchase a family home in their joint names the presumption is that they intend to own the property jointly in equity also. 

Because Ms Jones and Mr Kernott had never talked about how they held the property, or drawn up a document indicating the same, the Court of Appeal felt that the presumption that there was an equal entitlement had not been overcome. Furthermore there was no evidence to prove the parties' joint intentions had changed after their separation.

The Supreme Court ruling and the possibility of imputation

The Supreme Court judges were unanimous in allowing the appeal and restoring the order of the earlier County Court Judge.  As such, the beneficial interest was split 90/10 in favour of Ms Jones.

The judgement applied the following principles: 

(i) The starting point where a family home is bought in joint names is that the parties own the property as joint tenants in law and equity

(ii) That presumption can be displaced by evidence that their common intention was, in fact, different, either when the property was purchased or later.

(iii) Common intention is to be objectively deduced (inferred) from the conduct and dealings between the parties.

(iv) Where it is clear that they had a different intention at the outset or had changed their original intention, but it is not possible to infer an actual intention as to their respective shares, then the court is entitled to impute an intention that each is entitled to the share which the court considers fair having regard to the whole course of dealing between them in relation to the property.

(v) Each case will turn on its own facts; financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended or fair.

Supreme Court ruling implications

As such the decision in Jones v Kernott case confirms that if the courts find that the intentions of the parties have changed since they bought the property, then they can imply a further alteration to the shares that they own in the property.

Furthermore, the courts have stated that whilst their primary aim is to ascertain the actual intentions of the parties, whether expressed or inferred, if it is not possible to do so then the court "is driven to impute an intention which the parties may never have had". Therefore in cases where intention is not known the court can still make what it believes is a fair decision.

Reason behind the Supreme Court decision

In the Jones V Kernott case, there was no need for the court to impute an intention to the parties, as the trial Judge had made a finding that the intentions of the parties had changed after separation. The main factor behind this being that the property was no longer required to be the family home it was initially intended to be. In addition Mr Kernott's interest in the property ceased when he bought his own house in 1996.

What does this mean for cohabiting couples? 

Partner at Hugh James solicitors Matthew Evans commented "Marriage break-ups are covered by extensive legislation and case law and so married couples who seek advice about entitlement to property and financial matters can usually get reasonably clear advice about where they stand. The law for divorcing couples allows the court to consider all the circumstances and then do what is fair. However, the same cannot be said for cohabiting relationships."

Many commentators are calling for statutory reform in this area of law and want laws to be introduced by Parliament which govern the relationships of unmarried couples and provide them with financial remedies should the couple separate. Scotland has already introduced such laws, but until this happens in England and Wales there may well be many more cases like the Jones V Kernott.

In 1985 when Ms Jones and Mr Kernott bought their house, it was commonplace to buy a property jointly without an express declaration of trust. Nowadays, where a property is bought in joint names, joint owners are required to indicate how they wish to hold their property. Therefore disputes in respect of beneficial interests will inevitably reduce over time.

However, the situation Ms Jones and Mr Kernott faced could still be a possibility for thousands of older couples who do not benefit from the updated conveyancing practices which are now in place.

Couples should therefore not assume that the legal pieces of paper that show co-ownership of a property are the end of the story.

  • Prepare a simple declaration

In light of the Supreme Court decision, couples should probably prepare a simple declaration of trust explaining how they want to own a co-purchased property.

  • Review declaration following changes in circumstances

Should there be a change in a couple's circumstances then they should review their initial declaration. This will avoid a judge at a later stage deciding on what he/she is fair.

  • Get legal advice

Unmarried couples who buy property together should probably take legal advice before they buy a property, take legal advice if they split up, and if they do not want to end up like Ms Jones and Mr Kernott they would be wise to put their intentions in writing in a deed of trust.

Matthew Evans continued "Most people will not believe that they need to take these steps to protect themselves. Unlike wills or pre-nups there is a general lack of awareness surrounding the right of cohabitants, for example the urban myth of rights and entitlements for common law spouses is surprisingly still prevalent. Taking these simple precautions could well save thousands of pounds in legal fees and years of heartache whilst you wait for a decision."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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