Cohabitation and Property Rights

Kernott and Jones

On the 9th November 2011 the Supreme Court delivered its judgement in the much awaited case of Kernott and Jones.  This concerned the property rights of cohabitees.  The judgement overturned the ruling of the Court of Appeal and unilaterally reinstated the original judgement.

In this case Ms Kernott and Mr Jones met in 1981 and had two children.  They purchased a property in joint names in 1985.  The price paid was £30,000 with a £6,000 deposit paid by Ms Kernott. The mortgage and upkeep of the property was shared.  They jointly took out a loan in 1986 to build an extension.  Mr Kernott did some of the work himself.   There was no declaration as to how they intended to hold the property.

In 1993 Mr Jones left the property. In 1996 the parties cashed in joint policies and Mr Jones used his share to buy another property in his sole name.  The value of the joint property increased over the years and in 2006 Mr Jones indicated that he wished to claim his beneficial interest and Ms Kernot applied to the court asserting that she owned the entire beneficial interest.  By 2008 the property was valued at £245,000.

After he vacated the property, Mr Jones did not contribute towards the upkeep of the property and contributed little for the children.

When a property is held as joint tenants there is a presumption of equality, however this can be rebutted by showing that this was not what the parties intended. The judge at the County Court found that that the parties common intentions had changed and that the court could infer or impute an intention that is considered fair.

The High Court upheld the judgement but this was overturned in the Court of Appeal.

Ms Kernott appealed to the Supreme Court who held:-

• In the majority of cases, the starting point where a property is owned as joint tenants will be an equal division of the net proceeds of sale. 
• This presumption can then be displaced by showing that the parties had a different common intention at the time they acquired the home or that they later formed the common intention that their respective shares would change.
• When looking at the parties' common intentions, the Court can deduce this by looking objectively at the parties' conduct and what was reasonably understood by the parties themselves. 
• In cases where the parties did not intend joint tenancy at the outset, or had changed their original intention, but it is not possible to ascertain by direct evidence or by inference what their actual intention was, as to the shares in which they would own the property, the Court is entitled to consider what they think is fair, having regard to the whole course of the dealings.

Therefore in certain cases the court itself can decide from all the evidence, what the parties' intention was and what they consider to be fair.  The courts have never gone this far before and most people deem this to be a fair result.  Each case will turn on its own facts and this decision is unlikely to affect the majority of the cases where there is a clear common intention.

This may be a reaction by the Lords to the frustration they feel at the lack of legislative intervention in cohabitation cases.  Earlier this year the government shelved the Law Commission's proposals to give cohabitees a legal framework to deal with disputes on the breakdown of their relationship.

The law therefore remains grey and unclear.

For further information, please contact our Family Law Team.

 

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