The decision of the Supreme Court in the case of Jones v Kernott is likely to have far-reaching implications for cohabiting couples and the ownership of property.
Mr Kernott and Ms Jones bought a house in their join names in 1985. They separated in 1993 following which Ms Jones was solely responsible for meeting the mortgage repayments. In 2006 Mr Kernott sought to realise his interest in the property which he claimed was 50%. Ms Jones argued she should be the sole beneficial owner of the property.
No declaration had been made as to who owned what at the time of the purchase. The question arose as to whether the conduct of the parties in the period following their separation was sufficient to change the shares of ownership in the property.
When the matter first came to court, the judge decided that it was and awarded Ms Jones a 90% share. Mr Kernott successfully appealed the decision in 2010 when the Court of Appeal indicated that ownership was equal.
Ms Jones then appealed to the Supreme Court which has now reversed the decision of the Court of Appeal and reverted to the decision of the original judge by awarded Ms Jones a 90% beneficial interest in the property, with Mr Jones having just 10%.
The Supreme Court decision has provided us with guidance on how the courts will approach a dispute of this nature. The starting point is still to consider what the legal ownership of the is (whether in joint names or one party’s sole name). However, whilst there is a presumption that the beneficial shares of ownership should follow the legal documentation, that presumption can be rebutted by evidence that it was not, or ceased to be, the common intention of the parties to hold the property in that way.
Where there is no clear evidence of the parties’ intentions with regard to ownership, the court will seek to infer a common intention by looking at the parties’ conduct and dealings with each other. However, the court will now go even further. In cases where the court is satisfied that the parties had a different intention as to ownership than the legal documentation suggests (either at the outset or subsequently) but there is no evidence to clarify what the shares of ownership should be, the court will determine what those shares are on the basis of what is fair having regard to the whole course of dealings between the parties so far as the property is concerned.
The decision has been hailed as a return to common sense and certainly provides more flexibility when there is a disagreement between couples as to who owns what. However, given that the court will now effectively impose intentions on parties who may well not have had them, does this go too far? Certainly, whilst there is now more flexibility there is certainly increased uncertainty in such cases and it is worth bearing in mind that Ms Jones and Mr Kernott have spent 6 years fighting this case through the court. They are not wealthy individuals and the property itself was of modest value.
The case certainly highlights the need for reform of the legislation to provide us with a clear framework in which to work. Couples should also think very carefully when they purchase a property how they wish to own it and ensure that they are given appropriate advice at the time of purchase. I would also strongly recommend entering into a cohabitation agreement to define the parties’ intentions clearly and concisely. The cost of doing so is a fraction of the costs of bringing court proceedings and will also provide peace of mind.
If you would like more legal advice on cohabitation agreements contact our family law solicitor Altrincham on 0845 0738 445 or email firstname.lastname@example.org