What the Kernott v Jones judgment means for cohabiting couples

I wrote about the possible outcome of the Kernott v Jones case yesterday after reading the Court of Appeal judgment in the case, and noting Lord Justice Jacob’s dissenting judgment. I couldn’t see any reason to fault his argument, which made a lot of sense – despite the conservative, orthodox approach of Sir Nicholas Wall and Lord Justice Rimer,  both of whom ruled against Ms Jones.

Although Lord Justice Jacob’s take on the case was pitted against that of two very high-powered figures, I hoped that my support for his admirably straightforward and sensible judgment would prove well-founded. And so it has been. Today the Supreme Court upheld the appeal by Ms Jones, ruling that Mr Kernott is entitled to just 10 per cent of the former couple’s jointly owned property. (This earlier post provides a more detailed background to the case.)

So what does the Supreme Court’s decision mean for all those cohabiting couples who own property together? Put simply, if they are not married and their relationship later breaks down, it means a loss of certainty about who gets what. In Kernott v Jones, the property was owned 50:50 on paper, but the Supreme Court altered that ratio because “the presumption may be rebutted by evidence that it was not, or ceased to be, the common intention of the parties to hold the property jointly”.

I suspect that purist lawyers, accustomed to applying straightforward law, will abhor this loss of certainty. But one party’s loss is another party’s gain. The judgment also promises more just outcomes for parties who have relatively few legal rights because they are unmarried, who instead remain trapped in a hotchpotch of outdated and outmoded law in 21st century society.

My views on the legal remedies currently available to cohabiting couples are well-known to regular readers. In a post about the recent Family Justice Review, I commented that I didn’t wish to be seen as standing on a soap box. That remains my position, but from a personal perspective, I believe that the Supreme Court’s decision is a triumph for family lawyers who have long cast about in vain for ways to bring about more equitable outcomes for their clients.

Now if the Government would only get its act together and take the relevant law reform in hand, outcomes for clients would become fairer still. People like Ms Jones and Mr Kernott – who, let’s remember, were two ordinary people fighting over a relatively modest bungalow – would not have to spend time and money jumping through the hoops of the Chancery courts in an attempt to obtain a fair outcome.

The Supreme Court press summary accompanying the judgment is set out in full below. The full judgment can be found here.

PRESS SUMMARY

Jones (Appellant) v Kernott (Respondent) [2011] UKSC 53

On appeal from the Court of Appeal [2010] EWCA Civ 578

JUSTICES: Lord Walker, Lady Hale, Lord Collins, Lord Kerr, Lord Wilson

BACKGROUND TO THE APPEALS
This case concerns the correct approach to calculating beneficial interests in property where the legal title to the property is held in joint names by an unmarried couple but there is no express statement of how it is to be shared.

Ms Jones and Mr Kernott met in 1981. They had two children together. In 1985 they purchased a house in Thundersley, Essex in their joint names. The price paid was £30,000 with a £6,000 deposit paid exclusively by the proceeds of sale from Ms Jones’s previous home. No declaration was made as to how the beneficial interest in the property was to be held. The mortgage and upkeep on the house was shared between them. In 1986 they jointly took out a loan of £2000 to build an extension. Mr Kernott did some of the work himself.

The relationship deteriorated and in 1993 Mr Kernott moved out. From that point onwards Ms Jones lived in the Thundersley property with both children. In 1996 Mr Kernott bought his own house in Benfleet, Essex. Over the years, the value of the Thundersley property increased and in 2006 Mr Kernott indicated that he wished to claim a beneficial share in it. In response, Ms Jones, in 2007, applied to the county court for a declaration under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 that she owned the entire beneficial interest in the property. By 2008 the property was valued at £245,000.

The county court judge noted that the house was first purchased to set up a family home. It was bought in joint names and a presumption arose that they intended to jointly share the beneficial ownership of it as well. Up until 1993 there was no evidence to rebut that presumption. Ms Jones claimed however that in the 14 and a half years following there was evidence that their common intention had changed. Mr Kernott had ceased to make contributions towards the running of the house and had made only very limited contributions towards the support of their children. Furthermore it was mostly during that latter period that the value of the property had increased.

The judge held that their common intention had indeed changed. In reliance upon the decision of the House of Lords in Stack v Dowden [2007] UKHL 17, [2007] 2 AC 432, he held that once the initial presumption of joint beneficial ownership is displaced 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 that they, as reasonable and fair people, would have intended. He decided that Mr Kernott was entitled to only a 10% share.

Mr Kernott appealed to the High Court arguing that it was wrong for the court to infer or impute a change of common intention and further wrong for the judge, in effect, to substitute a division that he considered to be fair as between the parties. Mr Nicholas Straus, QC sitting as a High Court judge dismissed his appeal. Mr Kernott appealed to the Court of Appeal which, by a majority (Jacob, LJ dissenting), allowed his appeal.

JUDGMENT
The Supreme Court unanimously allows the appeal and restores the order of the county court. Lord Walker and Lady Hale give the lead judgment. Lord Collins agrees with Lord Walker and Lady Hale and adds some reflections of his own. Lord Kerr and Lord Wilson agree in the result but reach it by a different route.

REASONS FOR THE JUDGMENT
References in square brackets are to paragraphs in the judgment

Lord Walker and Lady Hale: The principle recognised in 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 in equity also [15]. The starting point is different in cases where the property is bought in the name of one party only. 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 [19-22].

The presumption may 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 [25]. 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, instead, impute an intention. An inference is drawn where an actual intention is objectively deduced from the dealings of the parties; an imputation is one attributed to the parties by the court [26-27]. The search is primarily to ascertain the parties’ actual intentions, expressed or inferred but if it is clear that the beneficial interests are shared but impossible to infer a common intention as to the proportions in which they are shared, the court will have to impute an intention to them which they may never have had [31].

The following principles apply: (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 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; 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 [51].

On the facts of this case the county court judge held that the parties’ intentions as regards the Thundersley property had changed after their separation. It was a “…logical inference that they intended [Mr Kernott's] interest in Badger Hall Avenue should crystallise” in 1995, when they took the house off the market, cashed in an insurance policy, so that Mr Kernott was able to buy a house in his own name [48]. The calculation of their shares on this basis produced a result so close to that produced by the judge that it would be wrong for an appellate court to interfere.

Lord Collins agrees with Lord Walker and Lady Hale, holding that the differences in reasoning set out below are “largely terminological and conceptual and are likely to make no difference in practice.” [58].

Lord Kerr holds that the divergence in reasoning might, in practice, make a difference [67]. The question concerns how far the court should go in seeking to infer intention and when it is justified in imputing it. It is preferable to give effect to the parties’ intentions where possible but the courts should not be reluctant to recognise when it is not and to impute an intention accordingly. In agreement with Lord Wilson it is not possible to infer the intention in this case but the division that the judge made is a fair one as between the parties and should stand.

Lord Wilson considers that on the facts of this case, it is impossible to infer the intentions of the parties and the court can only impute to the parties an intention that the house be held in fair proportions along the lines of those set out by the county court judge [89].

Marilyn Stowe

The senior partner at Stowe Family Law, Marilyn Stowe is one of Britain’s best known divorce lawyers with clients throughout the country, in Europe, the Far East and the USA.

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23 comments

Anon - November 10, 2011 at 11:53am

I don’t think that one party taking 90% can be considered fair. But I do agree that this will have far reaching implications. I think that now, as well as not getting married to stop lawyers interfering in their relationships, couples now must also not have property in joint names.

For me this is exactly my case, I have my house and my girlfriend has her house, well, she lives with her parents actually, but we are hoping to get her on the property ladder next year; but now I certainly won’t be sharing a mortgage or having the property in joint names with her.

I find all this relationship taxation all a bit sad really and undermining of relationships. I mean, people like poor Leonard Kernott, how can he ever trust another woman again on the deeds to his house, I doubt he could.

ObiterJ - November 10, 2011 at 7:30pm

It is a shame that we cannot draft the legislation and present it to Parliament !! This is, yet another, example of an area of law where practitioners require straightforward guidance so as to be able to advise their clients. It would, I feel sure, save a great deal of very costly litigation. I have cross referenced your post here along with some others:

http://obiterj.blogspot.com/2011/11/cohabitation-what-about-house-part-2.html

Lukey - November 10, 2011 at 11:10pm

I think the law as it stands worked fine, this was an unusual case, Mr Kernott had left the property for good 14 and a half years previously and had not contributed one red cent to the mortgage in all that time – effectively by leaving and contributing nothing he had defaulted. Whether he should have got nothing or 10% or 25 % as he wished (even he didn’t think he should get 50%) is a judgement call that had to be made but clearly he had to get a minority share because he left the property and didn’t attend to the upkeep or payments for such an extremely long time.

An exceptional case should not be used as a way for the legal system to start routinely interfering further in cohabitants lives and arrangements and charging them huge fees for doing so.

Marilyn Stowe - November 11, 2011 at 8:40am

Hi Lukey
I don’t think it will. This case was dealt with under the Trusts of Land and Appointment of Trustees Act 1996. There is nothing touchy feely about it. The parties intentions were able to change because they had not made an express declaration as to ownership of their beneficial interests:- the ‘Supremes’ do make that point at the outset.
More couples routinely do make a declaration of 50/50 beneficial ownership in their conveyance but most don’t understand there are effectively two types of ownership, legal and beneficial.
As this is Chancery law, trust and property law, I would be interested to know, how if at all, the law in this case can effectively displace a stated declaration of joint beneficial ownership at the outset and whether in those types of cases, parties intentions can thereafter be perceived to have changed, inferred or imputed.
If it can then it is very significant indeed. If it can’t then although the case has undoubtedly driven the law forward to assist people like Tricia Jones, where there was no express declaration it won’t apply to most.
I’m waiting for more to emerge from lawyers that do routinely practice in this area. The distinction seems to have been omitted from the various commentaries I’ve read but as the judgement is only two days old it’s not surprising.
If you’d like any clarification of the above just let me know and as soon as I get more, I will post it.
Best wishes
Marilyn

ObiterJ - November 11, 2011 at 12:07pm

If I understand your response to Lukey correctly, you have touched on a worrying point which I have also been wondering about. Let us suppose that the initial conveyance to X and Y is crystal clear in that it transfers Blackacre to X and Y as joint tenants in law and equity. Can a subsequent course of conduct – (perhaps over many years) – displace the terms of that conveyance? Traditionally, the answer would have been a very clear NO. But now ….?

Marilyn Stowe - November 11, 2011 at 12:09pm

Exactly.
I have a call in to Chancery Counsel and as soon as I have spoken to her I will post the response.

roger windsor - November 11, 2011 at 3:16pm

hi , the law surely is an ass in this area ! a friend was made homeless, when a woman, his partner of 9 years locked him out; her home,he moved in, idea to move and have 50 ;50 share of new home, didnt move;he spends 30k on her place, all on trust, as well as 50% of ogs on house account,and then 100%for 1 yr when she loses job, 40k out of pocket, as well as spending big xxxxs on meals , hols, her kids,v. generous guy.she had met new guy,(all over in a flash) he was sunk, started proceedings , ran up against tlata claim issues, ie kernott v jones, ran out of money, recession ! 3 years on, desperate for his money back now,all done on trust, nice guy too trusting. met the hard nosed proverbial ………..!!! female .Makes me spit, hes living with friends ….farce. UNFAIR !!!!law an ass.

roger windsor - November 11, 2011 at 3:29pm

A ps to my earlier note !…………….i know also its too often one persons word against anothers,and in these types of situations too easy for one person to lie about facts especially when not huge equity,and when no desire to alter comfort zone.

Thats what happened here,and what the court would have to address but too often never gets there because of the costs,,,,,,,,,,,,,,,,,, surely wrong !

ObiterJ - November 11, 2011 at 5:33pm

Here is a further excellent article which touches on the very point we raised above:

http://www.familylawweek.co.uk/site.aspx?i=ed89478

Marilyn Stowe - November 11, 2011 at 6:43pm

Obiter J
Thanks very much the article is very interesting particularly the last paragraph of the part they are discussing jointly owned property where there is an express declaration of trust.
You will see they say it will have to await further litigation. Section 53 Law of Property Act 1925 states that an express declaration of trust can only be varied if in writing, but of course, certain types of trust are exempt, resulting constructive and implied etc. So does Kernott v Jones assist?
I didn’t know the answer to what is a very complicated question out
of my own field. I had read the section 53 easy answer on one property blog, the author suggesting that if a variation was not in writing that was the end of the story, but I suspected, trusts being
trusts (!) that it was too easy.
And so it seems. It appears the authors of the article you refer to namely John Wilson QC and Prof Rebecca Bailey Harris are reserving their position too. They are the two you may recall, who originally posed the question ‘Is Kernott v Jones the new White v White of the cohabitation world?’
I respect and like them both very much indeed, in fact both of them are visitors to SFL. So in default of an easy answer, we will have to wait and see in future litigation. Although if parties don’t have access to public funding, how many may litigate to this extent again? And should they have to do so?
As another (family law) barrister said to me today, he reckons the ‘Supremes’ have made the law so difficult that they are trying to force the Government to take action and Amen to that.
Have a very good weekend
Marilyn

ObiterJ - November 12, 2011 at 11:14am

… and a very good weekend to you also. IF the “Supremes” have taken that strategy, it is a high risk strategy.

The point may get litigated eventually but it may be many years. One possibility is it arises as a sidewind of one of those mega-divorce cases which arise from time-to-time?

I netirely agree about legal aid – the situation there is already deplorable for many and, once LASPO is law, it will be dire for almost everyone. The crazy thing is that they wanted to save £350m from a £2bn budget – a cut of 17.5%. I am quite sure that a better way could have been found to distribute the £1.65 bn which remains. Herein lies the iniquity of LASPO which hammers the most vulnerable.

Sarah - November 12, 2011 at 3:52pm

I am so pleased with this verdict…
I paid well over 90% of the mortgage on a house which I foolishly put into joint names with my unreliable and volatile ex partner.. who then failed to ever contribute fully – I supported him for much of the relationship.
If he does take me to court I am hoping this will put me in a stronger position than previously…
I have also looked into severing the joint tenancy, as if I walked under a bus I understand the house would be his. However, I am concerned that doing this appears to put the ownership into 50/50 shares… and as such would be to my detriment – but it seems Kernott did exactly this some years ago – and it doesn’t seem to have helped him claim 50% – why is this?

Marilyn Stowe - November 12, 2011 at 7:20pm

Owning property as tenants in common means that each party owns a distinct share of a property in either equal or unequal shares. Their interest does not automatically pass to the other owner as it would if they owned as joint tenants of the whole property, instead it passes as they leave it by will.
In Kernott v Jones the court appears to have held at paras 48 and 49 that the parties did own the property equally both beneficially and legally, until their intentions jointly changed when they agreed to surrender the endowment policy equally between them and he bought a new home which he couldn’t afford to do unless he stopped contributing to their property. As a result the equal beneficial ownership changed. The calculation of how it changed worked out on the facts at 90/10.
Of course you should take your own legal advice as to whether you should sever the joint tenancy and I would suggest you also make a will at the same time.
Marilyn

Sarah - November 13, 2011 at 2:35am

thankyou Marilyn!
Apart from severing the joint tenancy, is there any other way of stopping my ex from automatically inheriting my share of the house should I die?

Marilyn Stowe - November 13, 2011 at 9:41am

I think you do need to sever the joint tenancy to ensure your share does not automatically pass to your former partner. There are ways of contesting your estate post your death, including your share of the house, but they are complicated and expensive.
There was a case in the High Court recently about Geoffrey Boycott and a property he had owned jointly with a former partner. She later severed the joint tenancy and left her half share by will. He claimed that there was an agreement he would receive her half share but as a result of the severance he could not.
Have you been advised by Chancery lawyers how severance will affect you in relation to your case? I think it is well worth obtaining that advice as I think you will be ok:- but this blog is intended for general advice only and I can’t advise you specifically as I don’t have all the facts and you aren’t my client!

Sarah - November 13, 2011 at 9:11pm

thanks Marilyn – I will speak to my lawyer again re this issue. I would like to thank you for your informative and insightful articles re the Kernott v Jones case – they have been most valuable.

jayne doe - January 18, 2012 at 2:10pm

I have a similar case to the kurnot v jones ongoing in the courts but have come to a brick wall, the property was signed over to me by my former comonlaw husband, it is his ex wife who is now claiming it after their 2nd divorce, i stand to loose half of the house to her, she has never paid anything towards it and has still been able to go to court for force of sale, my children face the prospect of loosing their home to the ex wife of a man they hardly remember as he hasnt been in their lives for many many years ? any advice or help is greatly needed, i am crushed emotionally,physically,mentally and financialy……………………… jayne doe

kaygo - March 25, 2012 at 1:35pm

the recent decision in this case, it is obvious it has nt completely remidied the matter of chabitation. what reform would you sguggest marilyn as you are a expert in this area what would you prefer working with cases or legislation? and aslo is there a legislation which works with cohabibation as in a framework to use from.

Marilyn Stowe - March 25, 2012 at 6:39pm

Hi Kaygo
Thank you for your comment. I think we desperately need specific cohabitation legislation similar to what exists and appears to work well in Scotland. The law would provide remedies based on economic loss as a result of cohabitation but would not be the same as a divorce settlement because marriage is different, as couples take on legal obligations.
Best wishes
Marilyn.

Rhys - May 6, 2012 at 6:51pm

Could anybody answer my question please,i am also in the same boat,know where near the amount that Kernott v joneses case.I put down a deposit of around £32000,on a house,the ex at the time wanted her name on the house,as we were supposed to get married & she would be receiving an inheritance of around £55000,we were not married,two years down the line,we have gone our separate ways,now she wants half of the house! we have two children,i have always paid for the boys,she never put or bought any money into the house,im am taking legal advise,any comments? please Rhys.

Andrew Preece - January 29, 2013 at 9:50pm

I noticed that the majority of people who agreed with the outcome in the Jernot-Jones case were women. Wake up, here’s the truth of the matter.
20 years ago(1993), My then partner and I bought a house in joint names with a joint mortgage. After her failed attempt to kick me out to bring in her new boyfriend, she left the house but the rest of her family did her work, and after 6 months I ran away and asked her permision to rent it out. She refused, the house stayed empty for 2 years before I put someone in in order to meet the mortgage and arrears. For 20 years , she contributed nothing. As in the above case, she cashed in the endowment and insurance , seized and sold our car and stole £3,200 from our bank account. I have just come from Cardiff Court with an order that I must now sell the house , give her half , and pay ALL The costs.
Rhys, the best advice I can give you is unlawful !

erkan özdemir - November 27, 2013 at 2:13pm

Kernott was not decided by reference to property law at all, it was an exercise of redistribution of assets on the basis of fairness and an invented or disguised judicial discretion structured like the divorce jurisdiction.

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