Entitled to 50% or Kernott entitled to 50%

5th April 2018 Commercial

The world and society we live in is changing in so many ways and marriage seems to be further down the agenda than ever before for many couples. It is now very common for partners to live together for extended periods of time before getting married, if they get married at all. According to the Office for National Statistics, in 2017 cohabiting couples were the fastest growing family type. This however is leaving many people open to disputes in relation to property ownership if the cohabiting couple decide to go their separate ways. This can be made even more difficult if there is no written agreement specifying each party's share of the property.

This area of the law is governed by the Trusts of Land and Appointment of Trustee Act 1996 ('TOLATA') which in turn means that any dispute or claim for an interest in a property should be brought within the civil court and not the family court.

In the case of Jones v Kernott [2011] UKSC 53 the Supreme Court stated that where a couple purchase a home in joint names then the presumption is that they intend to own the property jointly both in law and in equity. However, that presumption can be rebutted if there is evidence that the intentions of the parties changed.

If there is little or no evidence to show that the parties' intentions have changed then the case of Jones v Kernott allows a Court to make a decision as to what it thinks the parties intentions are. By way of example if an unmarried couple purchased a property 50/50 but after several years one party moves out and the other party remains in the property paying all the bills, upkeep of the property etc. then legally the parties still own the property 50/50. However, the Court can make a decision that the person who has remained in the property paying all the bills etc. should actually own more of the property than the party who moved out.

This is exactly what happened in the case of Ms Jones and Mr Kernott. The parties purchased a property jointly in 1985. Both parties contributed to the property throughout the cohabitation however, the couple did not marry and they separated in 1993. Mr Kernott moved out of the family home and stopped making contributions towards the running of the house. Ms Jones remained in the property for the next 14 years with their two children.

In 2006, Mr Kernott indicated that he wished to claim a beneficial share in the property however, Ms Jones applied to the Court under Section 14 of TOLATA that she owned the entire beneficial interest in the property.

The matter went all the way to the Supreme Court who upheld the original decision of the County Court Judge. The County Court Judge had decided that the original common intention of the parties had changed, but there was no evidence as to what percentage share of the property each party now owned. The Judge therefore had to decide upon the intentions of the parties as to the division of the property based on what he thought to be fair and reasonable. On that basis the Judge held that the beneficial interest in the property was held 90/10 in Ms Jones' favour.

So what does this actually mean?

When matters like this go to Court, the starting point is that the couple will own the property jointly both in law and equity. However, this presumption of joint ownership can be overturned if a party can provide evidence that the common intentions of the parties differed from 50/50, whether that be at the time the property was purchased, or at a later date.

The Supreme Court went further than this in Jones v Kernott. The Court said that if it is clear that the parties had a different intention at the outset, or their original intentions had changed but the evidence is not clear on what their intentions actually were, then the Court can make its own decision as to what it thinks the intentions were. When the Court makes this decision it will make it based on what it considers to be fair having regard to all the dealings between the parties in relation to the property. This is given a very broad meaning and will include things like; how the purchase was financed; why the home was acquired in joint names; advice or discussions at the time of the purchase or subsequent discussions; nature of the parties' relations; how the parties arranged their finances etc.

Each case will undoubtedly turn on its own facts but the Court in Jones v Kernott indicated that although financial contributions are relevant, there are many other factors which may enable the Court to decide what shares were intended or are fair.

The important matters which arise out of this case is that the Court can, and should infer an intention of the parties where it is not possible to determine a common intention from the evidence even if this is an intention that the parties never actually had. This can be an intention which alters the original intentions of the parties based on a change in circumstances.

Should you be facing any of the issues above then please contact Louise Wakely or Hayley Evans of our Commercial Litigation department who will be able to assist using the form to the right.

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Hayley Evans is an Associate Solicitor located in Manchesterin our Commercial Litigation department

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