We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
In November 2011, the Supreme Court delivered its judgment in
Jones v Kernott [2011] UKSC 53. The case could be relevant
to many of the estimated five million people who live together
(outside of marriage or civil partnership) in England and
Wales.
The couple met in 1980. A few years later and having had their
first child, they purchased a home together which was registered in
their joint names. When they separated in 1993, their financial and
practical contributions to the family and the home were broadly
equal and there was nothing to suggest that there should be any
change to their equal shares in the property.
After the separation, Ms Jones and the couple's two children
remained living in the home and Ms Jones took over the financial
responsibilities for the house and family. Mr Kernott made no
practical or financial contributions to the household during the 12
years that followed.
In 1996, Ms Jones agreed to the surrender of a joint endowment
policy to enable Mr Kernott to pay the deposit on the acquisition
of his own home. The Judge observed that he was able to afford his
own home as he was not making any contributions towards the former
family home and the support of his children.
In 2006, Mr Kernott sought an encashment and return of his 50%
interest in the property. Ms Jones argued that their interests had
changed over time. The Judge accepted that contention and, applying
the earlier House of Lords decision in Stack v Dowden
[2007] UKHL 17, divided the proceeds 90:10 in Ms Jones' favour,
having considered what was fair and just between the parties,
taking into account the course of dealing between them.
Mr Kernott appealed to the High Court and then to the Court of
Appeal. The Court of Appeal declared that the parties owned the
property in equal shares, awarding Mr Kernott a 50% interest in the
house. However, in this latest judgment, the Supreme Court has
unanimously allowed Ms Jones' appeal, reinstating the original
judgment awarding her 90%.
Lord Walker and Lady Hale, who provided the leading joint
judgment, described the appeal as 'an opportunity to provide
some clarification', but it is questionable whether this
judgment has achieved that.
The Guidelines – Clarified
Where a property is purchased in joint names and with a joint
mortgage, the presumption will be that the couple owns the asset in
equal shares. This presumption can be displaced where there is
evidence that the couple's intention was, in fact, different,
either when the property was purchased or, as in this case, at a
later time. The couple's intention will be evidenced in
documents or inferred from their conduct and dealings. In a
situation where the conduct of the parties suggests that their
interests in the property have altered but without specifying the
new proportion of shares, the Court has power to 'impute'
to the parties (i.e. attribute to them an agreement that does not
exist). In doing so it must consider the whole course of dealing
between them in order to achieve an outcome that is
'fair'.
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'.
Different rules will apply when a property is purchased in the
sole name of one party. Here the starting point will be whether it
was intended that the other party should have any beneficial
interest in the property at all.
The parties' common intention has once again to be deduced
objectively from the parties' conduct. If such intention to
share the property can be ascertained but the interests are
unclear, then again, the court can 'impute' its own
solution in accordance with what it considers fair, having regard
to the whole course of dealing between them. Again, each case turns
on its own facts.
The judgment was initially hailed as introducing the concept of
fairness to property disputes arising between cohabiting couples.
However, this is a gloss.
One major problem is that the judgment gives little guidance for
practitioners as to what conduct would amount to evidence of an
intention to displace the presumption that a property in joint
names is held 50/50. As a result, there are likely to be more
contested disputes arising from uncertainty and an incentive to
litigate where the evidence to displace the legal presumption of
joint ownership may be less than robust.
What is clear is that the case demonstrates the need for clients
to receive advice to ensure that, at the outset of any cohabitation
arrangement, intentions are made known and expressly recorded and
then updated properly as the situation develops, so as to avoid
costly protracted litigation arguing about changing intentions and
what constitutes a 'fair' division in each set of
circumstances.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
A legal services order may be worded so as to provide that it will be for a specified period of time or for the purposes of a specified part of the proceedings.
The case of Hawes v Burgess and another [2013] EWCA Civ 74 is recent Court of Appeal decision reminding Probate practitioners of what steps must be taken to ensure that Wills they draft are upheld.
A well-meaning friend, relative or even a carer of a deceased person may take what they believe are helpful steps to tidy up a deceased’s affairs in the days following their death to pave the way for those who will carry out the administration of the estate.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
