I had not intended to write more than one of these important cases posts each week, but this one is so closely linked to the case I wrote about yesterday, Stack v Dowden, that I thought it best to write it straight away. In fact, Stack v Dowden really can’t now be considered in isolation from the case of Jones v Kernott, in which the Supreme Court clarified the principles laid down by its predecessor the House of Lords in Stack v Dowden.
Like Stack v Dowden, Jones v Kernott dealt with the issue of the division of a property jointly owned by former cohabitants. The full facts, however, were somewhat different:
The parties met in 1980.
In 1981 Ms Jones purchased a mobile home in her sole name.
In 1983 Mr Kernott moved in with her.
Their first child was born in 1984.
In May 1985 Ms Jones sold her mobile home and the property which was the subject of this case was purchased in joint names.
The purchase price was £30,000. A deposit of £6000 came from the proceeds of sale of Ms Jones’ mobile home and the balance was raised by way of a mortgage in their joint names. Whilst Mr Kernott lived in the property, the mortgage was paid equally.
Their second child was born in September 1986.
Mr Kernott moved out of the property in October 1993, after which Ms Jones remained living in the property with the children and paid all the household expenses herself. Mr Kernott made very little contribution to the support of the children.
Mr Kernott purchased a property of his own in May 1996.
In 2006 Mr Kernott initiated correspondence with a view to realising his interest in the jointly owned property.
Ms Jones then issued proceedings claiming either that she was entitled to the jointly owned property entirely or, if not, that she was entitled to a share of Mr Kernott’s property.
At the hearing of those proceedings in April 2008 Ms Jones accepted that she and Mr Kernott owned their property in equal shares at the time they separated. She also conceded that she did not have any interest in Mr Kernott’s property. However, she argued that its purchase, taken together with the events since the separation, was evidence that their intentions with regard to their shares in the jointly owned property had changed. The judge agreed and awarded 90% of the property to her.
Mr Kernott appealed unsuccessfully to the High Court and then again to the Court of Appeal. This time he was successful and the Court of Appeal declared that the parties owned the property in equal shares.
Ms Jones then appealed to the Supreme Court.
Lord Walker and Lady Hale gave the leading joint judgment of the Supreme Court. They set out the principles to be applied to a case such as this where a family home is purchased in the joint names of a cohabiting couple, with no agreement as to their respective shares:
(1) The starting point is that they each own 50 per cent.
(2) That presumption can be displaced by showing either that the parties had a different common intention at the time when they acquired the home, or that they later formed the common intention that their respective shares would change.
(3) Their common intention is to be deduced objectively from their conduct: “the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party’s words and conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party”. Examples of the sort of evidence which might be relevant to drawing such inferences are given in Stack v Dowden, as mentioned in my previous post.
(4) In those cases where it is clear either that the parties did not intend equal ownership at the outset, or that they 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, then each should be entitled to “that share which the court considers fair having regard to the whole course of dealing between them in relation to the property”.
(5) Each case will turn on its own facts. Financial contributions are relevant but there are many other factors which may enable the court to decide what shares were either intended (as in (3) above) or fair (as in (4) above).
Applying those principles to this case, Lord Walker and Lady Hale said that the parties’ intentions regarding the property did change. Mr Kernott would not have been able to purchase his new property had he still had to contribute towards the mortgage, endowment policy and other outgoings on the jointly owned property. The logical inference is that they intended that his interest in the jointly owned property should crystallise then. Just as he would have the sole benefit of any capital gain in his own home, Ms Jones would have the sole benefit of any capital gain in the jointly owned property. This was the intention that the original judge could and should have inferred from the parties’ conduct.
Lord Walker and Lady Hale then did a rough calculation of the parties’ respective shares in the property on that basis and found that the result was so close to the award of the original judge that they shouldn’t interfere with that award. Accordingly, they said, Ms Jones’ appeal should be allowed and the original order restored. Lords Collins, Kerr and Wilson agreed.
As Lord Walker and Lady Hale pointed out at the beginning of their judgment, the decision in Stack v Dowden attracted a great deal of comment from legal scholars, not all of it positive. Whilst Jones v Kernott may have clarified this difficult area of law a little, I’m not sure that all of those scholars who criticised Stack v Dowden are very much happier. What is really needed, of course, is for Parliament to bring in property rights for cohabitants. Alas, as Lord Wilson pointed out in his judgment, that is something that Parliament continues to fail to do.
Photo by Teresa via Flickr