We recently commented on The Common Law Myth relating to cohabitation – see (Cohabiting - The Common Law Myth) However, the Supreme Court has this week handed down judgment in the case of Kernott v Jones, which is another case arising from a family break-up, where the parents had purchased a family home together but never married.
The facts of the case are as follows: - Mr Kernott and Ms Jones began living together in 1983 and had two children.
- In 1985 they jointly bought a home together for £30,000. Ms Jones paid the £6,000 deposit, and the rest was obtained with a mortgage. It was widely accepted that Mr Kernott and Ms Jones bought the property with the intention of owning the property 50:50 legally and beneficially.
- Mr Kernott paid for an extension, which increased the value of the property by £10,000. The couple added a further £2,000 to the mortgage.
- Mr Kernott and Ms Jones split up in 1993. At that point both parties beneficially owned the property in equal shares. They also shared the proceeds of an endowment policy equally.
- Fourteen years later, Mr Kernott bought another home for himself. Ms Jones, who remained living in the original property, paid all of the outgoings on the property. She also raised the two children with very little contribution from Mr Jones.
- In 2007, Mr Kernott sought to obtain his 50 per cent share of the original property.
The case has since been through the Court system with the key question being: has Mr Kernott and Ms Jones’ respective interests in the property changed since they first acquired the property as their intentions changed. The Supreme Court ruled on Wednesday that the following principles should be followed: 1. The starting point where a family home is bought in joint names by an unmarried couple is that the parties own the property jointly in equal shares. 2. However, evidence may show that their common intention was different, either when the property was purchased or later on. For example, if the parties enter into a Declaration of Trust when they property is purchased. 3. If the situation is not clear cut then their common intention is to be objectively interpreted from the conduct and dealings between the parties. 4. Where it is clear that they had a different intention at the outset or had changed their original intention, but it is not possible to interpret an actual intention as to their respective shares, then the court is entitled to impute an intention that each is entitled to the share which the court considers fair having regard to the whole course of dealing between them in relation to the property. This may end up being an intention that neither of the parties ever actually had. 5. Each case will depend 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 or fair.
Question: What does the Supreme Court’s decision mean for all those cohabiting couples who own property together? Answer (in a nutshell): It means that upon a family break-up the answer as to property entitlement will depend on the specific detailed facts applying in each case. There will therefore remain a lack of certainty in this complex area of the law. So... 1. In buying a property together an express declaration of intention in a legally agreed document is the best way to achieve clarity. 2. If you are uncertain of your ownership status then you should seek advice and hopefully reach agreement on a current express declaration. 3. If your relationship has its difficulties then seek advice at the earliest opportunity. If you have any questions regarding the above article please contact any member of our Family Law Team.
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