The Supreme Court last week allowed the appeal in Jones and Kernott which dealt with the correct approach to calculating the beneficial interests held in a property by cohabitants where the legal title to the property is held in joint names that there is no express statement dealing with how the property is to be shared.

Facts

Ms. Jones and Mr Kernott met in 1981.  They had two children during their relationship.  They bought a house together in 1985 in joint names.  The property was purchased for £30,000.00 with a £6,000.00 deposit paid for by Ms Jones.  No provision was made to determine exactly what shares each party was to own in respect of the property.  They both shared the mortgage and other costs of the house.  In 1986 they took out a joint loan for £2,000.00 to build an extension.  Mr Kernott also carried out some of this work himself.

In 1993 Mr Kernott left their house.  Ms. Jones remained in the property with the two children.

In 2007 Ms. Jones applied to the Court for a Declaration (under section 14 of the Trusts of Land & Appointment of Trustees Act 1996) that she owned 100% share (of the beneficial interest) in the property.

The County Court Judge noted the house was initially purchased as a family home.  It was bought in joint names and the presumption arose that they intended to jointly share the beneficial ownership.  Until 1993 there was no evidence to rebut that presumption, Ms. Jones claimed in the 14½ years after that there was evidence that their common intention had changed.  Mr Kernott had stopped paying money towards the mortgage or other outgoings and it was during this latter period that the most significant increase in the value of the property took place.

The Judge held that their common intention had in fact changed and that once the initial presumption of joint beneficial ownership was rebutted where there was no further clear evidence of the division of shares in the property (in this case being no express declaration of trust either in the form TR1 or other written document).  It was up to the Court to infer or impute an intention to the parties as to how the property should be divided.

Mr Kernott appealed to the High Court unsuccessfully and then the Court of Appeal which allowed his appeal.

Reasons for judgement in the Supreme Court

The principles recognised in Stack and Dowden were reiterated, namely that where a couple purchase a family home in their joint names, the presumption is that they intend to own the property equally.  The starting point is different in cases where the property is bought in the name of one party alone.

The presumption of equal shares may be rebutted by evidence that it was not the common intention of the parties to hold the property jointly or that that common intention changed later on.  The presumption is more easily rebutted where the parties did not share their financial resources.

An inference is drawn where the actual intention is objectively arrived at from looking at the dealings of the parties; an imputation is one attributed to the parties by the Court.  Where it is impossible to infer a common intention as to what shares the parties hold, the Court will have to impute an intention to them which they may never have had.

The Court will consider the following principles:

1. The starting point where a family home is bought in joint names is that they own the property as joint tenants in law and equity.

2. That presumption can be rebutted by evidence that their common intention was different when the property was purchased or later on.

3. Common intention can be drawn from the conduct and dealings between the parties.

4. Where it is clear that they had a different intention at the outset or their intention changed later on but it is not possible to infer an actual intention as to their shares then the Court can impute an intention that each is entitled to the share which the Court considers is fair having regard to the whole course of dealings between them in relation to the property.

5. Financial contributions are relevant but there are a number of other factors which may assist the Court in deciding what shares were intended or is fair in the particular circumstances.

In the case of Jones and Kernott the County Court judge held the parties intentions as regard to their jointly held property changed after their separation.

In this case the County Court judgement was upheld, namely that Mr Kernott was only entitled to a 10% share.  The Court found that the parties’ intentions had changed after their separation in 1995 when Mr Kernott purchased a house in his sole name.

By Melanie Townsend

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