Kernott v Jones – A case of clarification or not?
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.
Kernott v Jones - 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?