The area of law governing the rights of unmarried couples in property disputes has been in confusion for many years. Successive governments have shown a total lack of political will to legislate in this area, despite the Law Commission having made recommendations for significant reform.
Cohabitees – which today comprise a significant and increasing proportion of couples – have had to rely upon a wholly inadequate and confusing body of case law which has developed over many years and which adopts complex principles of trust and equity. Practitioners and specialists have long called for legislative reform. In February 2011, President of the Family Division, Sir Nicholas Wall said that he was "...in favour of cohabitees having rights because of the injustice of the present situation." He went on to praise marriage for the stability it offered for bringing up children but said that " women cohabitees in particular are severely disadvantaged by being unable to claim maintenance and having their property rights determined by the conventional laws of trust." In the case in point (Jones v Kernott) Lord Wilson commented in his judgment that the decision was welcome "in the light of the continued failure of Parliament to confer upon the courts limited redistributive powers in relation to the property of each party upon the breakdown of a non-marital relationship."
The Supreme Court decision in Jones v Kernott, handed down on 9 November 2011, does appear to have brought with it some clarity of approach to these cases, albeit within the boundaries of what the Judges could achieve in the absence of legislative reform. It also has the benefit of allowing Judges to import the new principle of 'fairness' into these cases so that, where courts had previously been confined to make their decisions purely based upon what they consider the parties' common intention to be as to the beneficial ownership, if that is not possible to determine, the court can now impute an intention to the parties to achieve a result that the court considers to be fair.
So where does that leave separating cohabitants in practice? As mentioned above, the case law is complex and detailed; a summary is not easy to achieve. However, below is a flowchart which attempts to reflect the detailed body of case law (culminating in the decision in Jones v Kernott) as simply as possible. Anyone other than academics and practitioners is, after all, probably most interested in how to apply the law in practice.
What will become readily apparent from the text here, the flowchart below and the briefest look at the law in this area is that clarity and certainty of approach are conspicuously absent. For anybody proposing to cohabit or purchase a house together, it is of paramount importance to clearly define the intended shares of ownership from the start and to keep this under review as circumstances may change and develop. This can be done simply within the transfer form itself upon conveyance or by separate declaration of trust. For separating cohabitees, there is no substitute for early legal advice; whilst Jones v Kernott may have added clarity of approach, the application of its principles of inference, imputation and fairness may in fact make cases harder to decide and predict in practice than they have been to date.
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