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The Implications of Jones v Kernott

The Implications of Jones v Kernott

This November saw the long awaited decision of the Supreme Court in Jones v Kernott [1], a pivotal case in the area of family law. The case dealt with the division of property following the breakdown of a cohabiting couple, where the property was in joint names but there was no express agreement as to shares.

Facts

Patricia Jones and Leonard Kernott met in 1980, and bought 39 Badger Hall Avenue for £30,000 in 1985 following the birth of their first child. The property was bought in joint names, but with no express agreement as to the shares each held. Jones had previously owned a mobile home, which she sold for £6,000, and that money was put towards the deposit for the new home. The couple also took out a joint mortgage of £24,000.

For the eight and a half years that they lived together, both Jones and Kernott contributed to the mortgage payments and other household expenses. They also  extended the property at a cost of £2,000 which increased the value, and Kernott carried out some of the manual labour involved in this.

In 1993 the couple split and they tried unsuccessfully to sell 39 Badger Hall Avenue in 1995. A joint life insurance policy was cashed in to enable Kernott to put a deposit down on his own property. He managed to afford his own property by way of ceasing any payments towards the mortgage on the joint home, and ceasing any significant payments towards the upkeep of his children. Following the split, Jones had therefore paid all mortgage installments and almost solely for the upbringing of the children.

In 2006, Kernott indicated that he wanted to claim a share in 39 Badger Hall Avenue, which was valued at £245,000 by the time of the trial. At this time, Kernott still had his own separate property which was valued at £205,000. In response to this, Jones applied to the court for a declaration that she owned the entire beneficial interest in the property.

Judgment

At first instance in the County Court, it was held that Jones was entitled to a 90 per cent share of the property. The judge used the case of Stack v Dowden [2] to support his decision, stating that the court had the power to infer a common intention in situations where the initial presumption of joint beneficial interest had been displaced and there was no further clear evidence on how to share the property. Kernott unsuccessfully appealed to the High Court and then to the Court of Appeal.

The Court of Appeal held that the 39 Badger Hall Avenue should be split equally, with 50 per cent of the value going to each couple. This judgment was met with widespread shock and seemed to be based solely on the fact that they were joint owners at the start of their dealings, despite all the changes that had occurred since.

Jones then appealed to the Supreme Court, who handed down their judgment in November and reinstated the decision of the County Court. They held that Jones was entitled to 90 per cent of the value of the property, and Kernott only 10 per cent (equalling around £20,000 – well below the £150,000 fees of both parties that he is expected to now be paying).

The Supreme Court held that if a property is in joint names, then the usual position will be that it will be split equally – unless there is evidence of contrary intentions, to which to Court will give effect. If it is not clear what the intentions of the parties were (as is often the case where couples are keen to avoid discussing such matters at the start of a relationship) then the courts will look at what is fair in the circumstances or what can be inferred from their behaviour. The courts, however, will not do this if the intentions of the parties were clearly different.

Lord Walker and Baroness Hale explained at paragraph 47 that:

In a case such as this, where the parties already share the beneficial interest, and the question is what their interests are and whether their interests have changed, the court will try to deduce what their actual intentions were at the relevant time. It cannot impose a solution upon them which is contrary to what the evidence shows that they actually intended. But if it cannot deduce exactly what shares were intended, it may have no alternative but to ask what their intentions as reasonable and just people would have been had they thought about it at the time. This is a fallback position which some courts may not welcome, but the court has a duty to come to a conclusion on the dispute put before it.

Analysis

As the courts do not have statutory regulation on how to split property where the couple are not married, this has become a contentious issue. The Court in Stack v Dowden began to make some headway but left many questions unanswered. As a result, the long awaited judgment in Jones v Kernott will have wide implications for unmarried cohabiting couples who make no arrangements for the division of a property.

The decision itself was unanimous, but the members of the court did have slightly different reasoning, with Lords Kerr and Wilson erring towards  a decision based on fairness, whereas the rest of the court justified it on the inferred intentions of the parties.

The key phrase from the case, in my opinion, comes from Lord Collins, who stated in his judgment that:

The courts are courts of law, but they are also courts of justice.

Lord Collins was making it clear that there are not always guidelines that make an outcome obvious, but that in those circumstances the fairest and most logical outcome needs to be calculated.

The essence of the judgment is that the courts are now permitted to allocate the property following the split of an unmarried couple as they deem fair, if the couples cannot decide this between themselves and had made no specific arrangements for such a situation.

Clearly in Jones v Kernott the couples had joint ownership at the very start, but their intentions were deemed to have changed over the years, as evidenced by the change in mortgage repayments and upkeep of the children, along with the cashing in of the life insurance policy. There might also be cases where the couple were never actually joint owners, and it seems a similar approach might be taken there although this needs further clarification.

The case therefore approves the previous approach of the House of Lords in Stack v Dowden  and clarifies it. That case in turn approved the judgment of Lord Justice Chadwick in the case of Oxley v Hiscock, [3] where he had stated that each party should be awarded what is fair in the circumstances, looking at the whole course of dealing in relation to the property.

Jones v Kernott seems to have recognised the reality of changing modern relationships: the fact that an everyday couple would not necessarily think to reduce an agreement to writing or to record anything, for fear of upsetting their partner, and that many people live in an idealistic world where they never think the relationship will break down in the first place.

It remains to be seen whether Parliament will follow this move and embody anything statutorily – my feeling is that it is unlikely since it tends to lean towards support of marriage over cohabitation. The case has been welcomed by practitioners though as a huge step in the right direction for cohabiting couples, and hopefully we will see it make an impact in future cases.


  • [1] [2011] UKSC 53
    [2] [2007] UKHL 17
    [3] [2004] EWCA Civ 546
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