Yesterday, The Supreme Court unanimously allowed Mrs Jones appeal in the case of Jones v Kernott [2011]. The case concerns the correct approach the court should adopt calculating unmarried couples interests in property, where the legal title to the property is held in their joint names and the couple do not have an express statement of how it is to be shared (known as a "declaration of trust"). In legal terms, the case concerns the correct approach in calculating couples beneficial interests in jointly held properties (that is the share in the equity in the property).
Background
Ms Jones and Mr Kernott met in 1981. They had two children together. In 1985 they purchased a house in Essex in their joint names. The original purchase price was £30,000, of which £6,000 was paid by Ms Jones towards the deposit. The £6,000 was raised by her from the proceeds of sale of her previous home. Ms Jones and Mr Kernott did not sign any statement as to how their beneficial interest in the property was to be held. They shared the cost of the mortgage and upkeep on the house. In 1986, they jointly took out a loan of £2,000 to build an extension. Mr Kernott did some of the work to the extension himself.
Their relationship broke down and in 1993 Mr Kernott moved out. From that point onwards, Ms Jones lived in the property with both children. In 1996 Mr Kernott bought his own house. Over the years, the value of the jointly owned property increased and in 2006 Mr Kernott indicated that he wished to claim a beneficial interest. In response, Ms Jones applied to the County Court for a declaration under Section 14 of the Trust of Land and Appointment of Trustees Act 1996 that she owned the entire beneficial interest in the property. The property at this time had risen in value to £245,000.
Count Court Judgement
The matter was initially dealt with by a County Court Judge. He noted that the property was first purchased to set up a family home. It was bought in joint names and, therefore, a presumption arose that Ms Jones and Mr Kernott intended to jointly share the beneficial ownership of the property. Up until 1993 there was no evidence to rebut that presumption. Ms Jones argued however that during the fourteen and a half years following the breakdown in the relationship, there was evidence that their common intention had changed. She argued that Mr Kernott had ceased to make contributions towards the running of the property and had made only very limited contributions towards the support of their children. She further argued that it was during this period that the value of the property increased.
The County Court Judge accepted Ms Jones's argument and held that the common intention between her and Mr Kernott had indeed changed upon separation. The County Court Judge relied upon the decision of the House of Lords in the case of Stack v Dowden [2007]. He held that once the initial presumption of joint beneficial ownership is rebutted and there is no further clear evidence as to the division of shares in the property, it falls upon the Court to infer or impute an intention to the parties as to the division of the property. On this basis, the County Court Judge decided that Mr Kernott was entitled to only a 10% share in the beneficial interest in the property.
Mr Kernott initially appealed the decision of the County Court Judge, arguing that it was wrong for the County Court Judge to infer or impute a change of common intention and wrong for the County Court Judge to substitute a division that he considered to be fair as between the parties. His appeal was dismissed. Mr Kernott then appealed to the Court of Appeal. The Court of Appeal by a majority allowed his appeal. Ms Jones, thereafter, appealed to the Supreme Court, the highest Court in England and Wales.
Judgment of the Supreme Court
Sitting at the Supreme Court, Lord Walker and Lady Hale said that the principle recognised in the case of Stack v Dowden is that where people purchase a family home in their joint names, the presumption is that they intend to own the property jointly and beneficially also. The starting point is different in cases where the property is brought in the name of one person only.
They went on to say, that the presumption of joint beneficial ownership arises because:-
(i) Purchasing property in joint names indicates an "emotional and economic commitment to a joint enterprise"; and
(ii) The practical difficulty of analysing respective contributions to the property over long periods of cohabitation.
They said that the presumption can be rebutted by evidence that it was not, or ceased to be, the common intention of the parties to hold the property jointly. This may more readily be shown where the parties did not share their financial resources. In the absence of clear evidence of intention, a question arises as to when the Court can infer such intention and when the Court can, impute or infer an intention. The Court had to primarily ascertain the parties' actual intentions, expressed or inferred, but if it was still unclear as to how the beneficial interest were to be shared because it was impossible to infer a common intention, the Court would have to impute an intention to the couple, which they may never have had.
The Supreme Court introduced the following principles:-
(i) The starting point where a family home is bought in joint names is that they own the property as joint tenants in law and beneficially;
(ii) That presumption can be rebutted by evidence that their common intention was, in fact, different, even 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 dealings between them in relation to the property; and
(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.
On the facts of this case, and adopting the above principles, The Supreme Court upheld the original decision of the County Court Judge that Ms Jones and Mr Kernott's intentions as regards to the property had changed after their separation. As such, Mr Kernott was only entitled to a 10% of the value of the property, as originally ordered by the County Court Judge.
This Judgment is of significant importance to co-habiting couples (including same sex couples). It is believed that there are more than 2million co-habiting couples in England and Wales.
The solicitors in the Family Law Department at Rollingsons Solicitors Limited are specialists in advising co-habiting couples of their joint property rights upon a breakdown of their relationship. They are also specialists in preparing the necessary documentation at the time the co-habiting couples purchase property in joint names, to protect their beneficial interest on a future breakdown in their relationship.
If you wish to consider if the Supreme Court Judgment in Jones v Kernott affects your own unique situation, then please call our Family Law Department on 0800 011 6432 or email law@rollingsons.co.uk The Family Law Department can assist individuals in resolving such matters without the need of issuing Court proceedings. They can also discuss protective mechanisms co-habiting couples can take to protect their beneficial interests.
