Kernott v Jones: a case of square pegs and round holes

Cohabitation|May 4th 2011

The case of Kernott v Jones is being hailed by some family lawyers as, potentially, the “new White”: a reference to the ground breaking case of White v White, heard by the House of Lords in 2000, which radically altered the landscape for divorce settlements.

Kernott v Jones is a cohabitants’ property dispute. In 1985 the parties purchased a property in joint names. The deposit was paid by Ms Jones, and a property extension was paid for by Mr Kernott. The couple separated in 1993. Ms Jones and the couple’s two children remained in the property, and Ms Jones assumed sole responsibility for the mortgage and household expenses. In 2006, Mr Kernott claimed his 50 per cent share in the property. The High Court awarded Ms Jones a 90 per cent share, but this decision was overturned by the Court of Appeal.

Eleven years after White v White, the appeal in Kernott v Jones was heard today by the Supreme Court. It was heard by five heavyweight judges including Baroness Hale and Sir Nicholas Wilson, in his first case as a new appointee to the Court.

The question at hand is this: to what extent (if at all) will the Supreme Court push the boundaries of joint property law ownership, where one party has contributed far more than the other?

In the earlier House of Lords case of Stack v Dowden, some boundaries were pushed, albeit intended for a limited number of cases. It is speculated that the renamed Supreme Court in Kernott v Jones could go further. The court may hold that a common intention to depart from equality could be expressed or inferred in the conduct of the parties, or even “imputed” to the parties. This approach, of “imputing” a common intention, was trenchantly rejected by the Court of Appeal in Kernott v Jones.

So it falls to the Supreme Court to decide if the High Court is correct, the Court of Appeal is correct or if they will come up with a different approach. They will consider to what extent the concept of “fairness” counts, if at all, in redistributing the parties’ equitable interests in their property.

An interesting article in Family Law Week, by Dr Robert H. George of the University of Oxford concludes:

If the evidence shows that these cohabitants’ actual intentions (whether express or, more likely, inferred) were that the property should be held in fair shares, those intentions should be given effect by the court. There is no reason in principle not to allow this approach (though it might not sit comfortably with the general aim of avoiding litigation in these cases, which may become increasingly significant as legal aid becomes scarcer). Nothing is imputed under this approach. The court’s evident desire to reach a fair outcome in disputes about former cohabitants’ property rights can be met by recognising that many cohabitants actually intended that the outcome be fair.

That is only the first part of the job, however. Assuming the Supreme Court does decide it will adjust the parties’ shares, what test does it then apply to calculate each party’s precise share?

As with Radmacher v Granatino in 2010, the long and winding judgements expected in Kernott v Jones may well occupy their Lordships and Ladyship for the next six months. Until then, family lawyers up and down the country are adopting a pragmatic approach, advising clients who are caught up in cohabitation disputes to “wait and see”.

The Supreme Court appears to be faced with a truly mind-bending job. Should property law be the subject of such microscopic analysis, essentially because no proper law exists to regulate cohabitation?

At present, unmarried couples are unable to apply to the court for regulation of their financial affairs, in stark contrast to married couples and couples who have entered into civil partnerships. However when Lord Justice Wall, the President of the Family Division, stated recently that urgent legislation is required for cohabiting couples, more than 60 per cent of The Times readers surveyed disagreed. Clearly there are deeply held objections: social, religious and moral.

Why? Overall the most powerful objection appears to be that married couples have chosen to enter into a legally binding relationship and, if such a relationship ends, legal regulation must apply too. Cohabiting couples have deliberately chosen not to follow suit. Cohabitation is on the increase while marriage is on the wane, in part because couples are considering and rejecting this formal, legal regulation of their relationships.  They are fearful of the legal consequences if the relationship falters. The argument goes that if a legally binding agreement has been rejected, why provide the protection of tailor-made cohabitation law?

I disagree with this argument because a cohabitation manifestly does produce a relationship in need of regulation. All we have at present is a hotchpotch of rigid, outmoded and outdated property law to regulate the end of a relationship that may have been every bit as financially complex as a marriage.  As Kernott v Jones goes to show, this clearly doesn’t fit the bill.

Its inadequacy is further highlighted by the fact that in the 16-44 age group in this country, cohabiting couples now account for more relationships than any other. As such children of cohabiting relationships, unlike those of divorcing couples, pass under the court radar too. Do their needs not count in the same way as for children of married couples?

What we need, irrespective of whether or not we personally approve, is comprehensive law that does fit the bill. They already have this law in Scotland.

We are playing catch-up. We clearly need new law that does not equate cohabitation with marriage, and does not reward parties with marriage settlements. Law that would compensate those such as Ms Jones, who has sustained economic imbalance as a result of cohabitation. Law as intended by the Law Commission, whose report to the Government continues to gather dust.

In the meantime, with no such end in sight, Kernott v Jones will see the most agile and brilliant legal brains in the country occupied for months, considering firstly whether a peg is round or square – and secondly deciding in which round or square hole the round or square peg should somehow be fitted.

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  1. ObiterJ says:

    I see no reason why England and Wales cannot have similar arrangements to those in Scotland under the Family Law (Scotland) Act.

    Whilst some will raise “deeply held objections: social, religious and moral”; the fact remains that when these relationships breakdown the property has to be somehow sorted out. It would be far better to have a set of relatively straightforward rules so that solicitors are able to advise their clients and avoid, as far as possible, litigation. The need for such rules becomes all the more important as legal aid dries up.

    Robert George has to be right in arguing that there is no reason in principle why the intentions of the parties cannot be determined from all the available evidence. Similar exercises are carried out by judges in many other areas of law. However, history shows that it is far better to have clear rules which will be applied in the absence of specific written agreement.

  2. Marilyn Stowe says:

    Obiter J:-
    Why aren’t you the Lord Chancellor?
    Best wishes

  3. ObiterJ says:

    Politics was never my forte !!

  4. Lukey says:

    Why not make pre-nuptial agreements compulsory in marriage and educate from childhood so that when people cohabit they know that they need the aforementioned ‘specific written agreement’.

    Simple – but of course a lot less money for lawyers 🙂

  5. JamesB says:

    I agree with Lukey on pretty much everything he says. I vote for him as leader of the Lib Dems – sorry. Forcing compromise or imposing agreements is not viable. Blimey, I could be the next Plato.

  6. Lukey says:

    “Forcing compromise or imposing agreements is not viable.”

    Even though you offer no argument for not having prenups as part of the marriage contract I think your view is a valid one, providing that you are prepared to accept that if there is no contract on financial matters then a Judge cannot come in and asset strip a man or a woman as they see fit – because that IS imposing an agreement – it is just that nobody knows what it is until a Judge tells you !

    I don’t want to be Lib Dem leader, a prerequisite for the job seems to be a natural inability to renege on promises and contracts – and no, not the next Plato – but you could be the next Lembit Opik 🙂

  7. Lukey says:

    I should have said ‘ability’ not ‘inability’ – a definite Lembit Opik’ism 🙂

  8. JamesB says:

    Didn’t realise how bad the Lib Dem analogy is when I wrote it. I agree with you on everything you see. Let’s just leave it there shall we. Regards, James.

  9. JamesB says:

    ‘Is’, or I think I should have said ‘was’.

  10. JamesB says:

    I am not sure, but I think Plato and his friend (student) Aristotle were gay anyway. Sorry if they were not.

  11. JamesB says:

    Aristotle was a student of Plato who was a student of Socrates. I think they were all day. I know a little more of them than that. Think they were the founders of modern thinking and law. Geco Roman is I think the basis of our courts and adversarial. Read it in Conn Iggulden’s books.

  12. JamesB says:

    All Gay I meant, but was common form of contraception back then I think.

  13. ObiterJ says:

    I have taken the liberty of citing this fine article here:

    Hope that is OK with you.

  14. Marilyn Stowe says:

    It most certainly is. Thank you very much indeed. Much appreciated.

  15. Jon Stow says:

    This case is of interest to me because HMRC has started to rely on Stack v Dowden to support their view that implied trusts are difficult to prove where there might be a claim under S.225 TCGA 1992 for private residence relief. Their stance is that beneficial ownership of property should follow legal ownership and that Stack v Dowden raises the hurdles for satisfying HMRC (or the Tax Tribunal and or Courts) otherwise.

    A favourable decision in Kernott v Jones would be helpful to the cause but Baroness Hale sat for Stack and may have been unwilling to go against her earlier decision and her judgement which HMRC have quoted to me.

  16. Eric Vardy says:

    I think I must be among the few opposing voices to legislative reform. The Law Commission’s proposed bill was poorly thought out and fundamentally unfit for its purpose. The state imposition of quasi-matrimonial rights on cohabitees after only 2-5 years of living together meant that parties would acquire rights in the usual time a non-long term but serious relationship runs its course – it therefore imputed, in a nanny state sought of way, an intention that few parties to a relationship have. I might have been more sympathetic if the time scale was longer, although all such time scales are arbitrary. The ‘opt-out’ provisions were effectively pointless as:
    i) they were like TR1 prior to the Land Registry getting tough on the declarations of trust being made – i.e. most people would ignore them, or even be ignorant of them. Further, as the reality of buying a home is that most people only take advice from their conveyancers and eschew going to family departments on the basis of price and the intimidating nature of considering separation the advice may not be from the best person to give it – especially in distance conveyancing.

    ii) District Judge’s could overturn the opt-out in a list of circumstances that looked suspiciously like many of the normal circumstances for relationship breakdown.

    Further, such a radical shake up of the law means at least 10 years of litigation – great for family lawyers’ bank balances, but not for litigants. I would also question if the current state of the law is actually broken. Yes, it is based on the law of property and so it privileges ‘certainty’ rather than ‘fairness’ but given the shift in Land Registry practice to requiring proper declarations in the TR1 and the fact that conveyancers have woken up to their obligations to advise cohabitants as to the consequences of relationship breakdown, it appears to me that the common law in this field is working as well as, say, matrimonial law. Hard cases such as Jones v. Kernott should not make bad laws and the Law Commission bill was just that. I would rather see more teeth for Schedule 1 of the Childrens Act (which, in its self, is finally beginning to become effective) to protect the children of cohabitant relationships than state intervention to force people who live together to be effectively married whether they want it or not.

  17. Robert Sutton says:

    I agree to an extent with Eric Vardy, at lease in relation to the property of separating couples the current TOLATA law appears to have the capacity to be fit for purpose without the need for new legislation.
    For a TOLATA claim to be successful there must have been an agreement or arrangement that the ownership of a property would (or may?) eventually change (if, only in the case of Kernott that arrangement consisted of “wait and see”) or that someone may be led to believe that ownership would eventually change.

    Simply put
    The question the court should ask itself is this
    Has someone put there TRUST in someone else in relation to ownership of land.

    Real people in the real world put their trust in there partners in relation to property, when real people are in a relationship it often seems immaterial to them whose name the property is in. their intentions in relation to property ownership can sometimes only be determined by their actions, irrespective of who paid the mortgage installments,
    There is often no link between peoples intentions and who pays the mortgage, to presume such a link makes no sense.

    The courts simply need the power to do what presumably the law was originally intended to do. To determine either, shared intentions in relation to ownership, or (as sometimes may be the case) one partner being led to believe that they would acquire an interest in the property.

    The height of the evidential hurdle needed to prove that such a arrangement exists or has existed is critical.
    If set too low there may be an exposure that false claims are upheld by courts.
    If set too high valid claims may not be successful.
    At the moment that evidential hurdle appears to be set too high to strike the correct balance, although I do agree that this evidential hurdle should not be based upon fairness, once the court has decided that the evidential hurdle has been cleared the court must surly be able to take into account all aspects of the case to determine what the fair outcome should be, that would undoubtedly mean from time to time inferring what that agreement should actually be.
    That may sometimes be a difficult a task for the courts to undertake, however the fact that a court may be given a difficult task which it may not relish is not in itself a good enough reason not to give it that task.

    Difficult though it may be for the supreme court Kernott appears to present a good opportunity to solve this problem area of the law.
    I for one hope that the supreme court grasp the nettle and not defer the issue until the next case.

  18. Lukey says:

    “Simply put
    The question the court should ask itself is this
    Has someone put there TRUST in someone else in relation to ownership of land.

    Real people in the real world put their trust in there partners in relation to property, when real people are in a relationship it often seems immaterial to them whose name the property is in. their intentions in relation to property ownership can sometimes only be determined by their actions, irrespective of who paid the mortgage installments,
    There is often no link between peoples intentions and who pays the mortgage, to presume such a link makes no sense. ”

    This wishy-washy stuff is complete nonsense, one of the reasons people cohabit so often now and marriage has become so unpopular is because the courts can use the marriage certificate to involve themselves in people’s affairs to a ridiculous extent.

    Trying to decide things based on what people’s intentions might have been instead of what is clearly on the contract is a complete joke and has no chance of success, just more mess and bitterness that we can see in the divorce courts now. At least with a marriage certificate both parties have actually signed an agreement and so the party out of pocket partly have themselves to blame for the court’s interference – but now the proposal is that people’s assets will be redistributed on the basis of no contract or agreement at all – it’s laughable.

    What the legal system should be doing is forcing the Government (and they have enough power to do it) to educate children about the law in secondary school – particularly as it applies to property and living together. This means that people will be more likely to protect themselves – but there will always be idiots who don’t, just like there will always be idiots who put their savings on the 16:30 at Ascot. Perhaps they should get their money back too as they trusted that they would win, with your logic paying out on the horse race based on who won the race makes no sense !

    None of this drive for children’s education is going to happen of course because there is no money in it for lawyers.

    With a rapidly declining marriage rate inevitably leading to a rapidly declining divorce rate there will be less messy divorces to line the pockets of lawyers. A new cash-cow is urgently required – so co-habitees it is…

  19. Tulsa Divorce Attorneys says:

    Kernott v. Jones sounds like a landmark case.

  20. Peter Ryder says:

    Marilyn, the last (and so far only) time I posted on your blog I strongly disagreed with your views on Hildebrand documents. That was only a few weeks before the Imerman Court of Appeal decision which showed that you were entirely right and I was pretty much entirely wrong. It is with some trepidation therefore that I post this comment on Kernott v Jones

    I’m not at all sure that Kernott v Jones will be a landmark case. The choice is surely only between the majority view in the Court of Appeal (that it is never permissible for the court to substitute its own view of fairness for what the parties themselves intended) and the dissenting judgement of Jacob LJ who said that there can be situations where the court has to make the decision based on fairness if that is what it thinks the parties themselves intended. If the woman’s case is accepted and the court concludes that the parties had left their respective shares ‘in the air’ pending the date when a division was to occur and at that later date they would each take that share which was fair, taking into account the events which have taken place in the meantime then, if they cannot agree what is fair the court has to do it for them. By accepting the task of deciding what is fair the court is surely only doing what the couple intended but upon the detail of which they couldn’t agree.

    Perhaps, however, the Supreme Court will use this case as it used Radmacher and change the focus of the law from a striving for evidence of common intention to the notion of fairness as decided by the court. Our experience of ancillary relief since 1970 is that the court has not been very consistent in deciding what is fair. A change from intention to fairness therefore must bring the real risk of generating more litigation as parties appeal to the sensibilities of judges rather than relying on what actual evidence of intention they can muster. Having worked through the mess we made of the new jurisdiction from 1970 onwards I know which scenario I would prefer!

    May I also comment on the discussion about the Law Commission report. I too am one of those opposed to the law being changed in the way suggested by the Commission. One factor which seems to have been lost is freedom of choice. Adults are entitled to be able to make decisions about living with someone else without the blanket interference of the law. In the field of ancillary relief the courts are increasingly willing to respect decisions made by couple as in the new approach to nuptial agreements following Radmacher so why ignore their wish not to be legally connected when they choose not to marry.

    A useful change in the law might be that of extending the civil contratc to heterosexual couples. This may help those who have a commitment to one another but who object to the religious connections of marriage or have some other kind of religious or quasi religious objection to marriage itself.

    As for the protection of the children of cohabitees, the case of DE v AB [2010] EWHC 3792 seems to show the way forward without a change in the legislative background. It is doubtful that the woman in that case would have done as well if the couple had been married.

  21. Marilyn Stowe says:

    Peter thank you very much for this. I have just returned home from the Reebok Stadium in Lancs where I’ve been chairing a family law conference, and I’m whacked! I’ve written a post about it for tomorrow, and Kernott v Jones is a case that cropped up.
    Your contribution however deserves a fully considered reply, so I will think about it over the next few days and then write it up. Please bear with me!
    Best wishes and many thanks again

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