Gavin Henshaw is the Head of the Family Department at Curzon Green Solicitors. In this article he explores the Supreme Court decision which was handed down in the case of Jones v Kernott in November 2011 and the impact this will have on cohabiting couples.

On 9 November 2011, the Judgment of the Supreme Court was handed down in the case of Jones v Kernott. It had been hoped by many that the Judgment would clarify the law relating to ownership disputes between cohabiting couples. The history of this case is as follows:

• Mr Kernott and Ms Jones met in 1981 and had two children. In 1985 they purchased a house in Thundersley, Essex (“the Property”) in their joints names. The purchase price of the Property was £30,000 and the initial deposit of £6,000 was raised through the sale of Ms Jones’ previous property.
• The Property was held in the parties joint names as Joint Tenants.
• In 1986, the parties took out a loan of £2,000 to extend the Property.
• In 1993, the parties relationship ended and Mr Kernott moved out of the Property. Thereafter, Ms Jones lived with the children in the Property and paid all of the outgoings without any assistance from Mr Kernott.
• The parties attempted to sell the Property in 1995 but it did not sell. Instead, the parties agreed to cash in a joint policy and split the proceeds. This money allowed Mr Kernott to purchase his own property.
• The value of the Property increased over time and in 2006, Mr Kernott confirmed he wanted to claim a half interest in the Property. In response, Ms Jones applied to the County Court in 2007 for a Declaration that she was entitled to all of the beneficial interest in the Property. When the matter was heard by the County Court, the Property was valued at £245,000.
• The County Court decided that it was clear from the conduct of the parties since 1995 that the initial intention of the parties that the Property was to be a family home and owned equally had changed. The District Judge stated it was therefore necessary for the Court to try and infer or impute the altered intention of the parties.
• The District Judge decided that because Ms Jones had been financially maintaining the Property since 1995, it was equitable to award her with 90% with the remaining 10% to Mr Jones.
• Mr Kernott sought to appeal this decision to the High Court and argued that the District Judge was wrong to infer or impute an intention where there had been no express agreement.
• The High Court considered the matter further and rejected Mr Kernott’s appeal. This resulted in him appealing to the Court of Appeal.
• By majority, the Judges of the Court of Appeal allowed Mr Kernott’s appeal and stated that, in the absence of an express agreement of the parties, it was not the place of the Court to infer or impute a change as to the parties beneficial interest in the Property. The reasoning given was that, had it been the intention of the parties to change their beneficial interest in the Property, they would have done so expressly.
• The Court of Appeal overturned the decision of the County and High Court and declared that the parties owned the Property in equal shares.
• Ms Jones appealed to the Supreme Court and argued that this decision was wrong. The Supreme Court rejected the decision of the Court of Appeal and restored the decision of the County Court.

In the Judgment all 5 Supreme Court justices, for different reasons, agreed that where a home is purchased in joint names then, in the absence of any agreement to the contrary, the Courts will adopt the following approach: -

1. The starting point will be that it will be presumed that the property is owned equally by both parties.
2. This presumption will be displaced if it is clear that the parties had a different common intention at the time when they purchased the property, or that they later formed a common intention that their respective shares would change.
3. The common intention of the parties will be gleaned by the Courts from their historic conduct.
4. Where it is clear that the parties decided that they did not own the property jointly but it is not possible for the Court to glean from their historic conduct what shares they agreed to hold the property in then the Courts will award each party the sum which it considers is fair based on the history of the case.
5. Each case will be decided on its own facts. Financial contributions from either party will be relevant but there will be a number of other factors that the Court may consider when deciding the parties’ respective interest in the property.

Therefore, for individuals who find themselves in a similar situation to Ms Jones, the recent Judgment is clearly reassuring as the law will not simply award their ex-partner with half of a property that they did not actively contribute to. It cannot be said though that the Judgment has cleared up this area of law. The guidance given by the justices that "each case will turn on its own facts" provides little comfort for clients without deep pockets seeking clear advice. It is clear that a search for cohabitants' true intentions will often result in costly factual and evidential arguments within Court proceedings.

To be fair to the justices they were in a difficult position caused by the long-standing failure of the government to pass legislation to deal with issue. One of the justices, Lord Wilson, was critical of this failure within his Judgment.  The fact that it took 4 different hearings in 4 different places to determine the outcome of this case shows that the law on this issue is in a mess and in need of long-overdue statutory reform.

There are currently an estimated 5 million people who live together (outside of marriage or civil partnership) in this country. This case does highlight a real need for the general public to take more care when owning a property with someone else. It also provides an important reminder to cohabiting couples that the law does not treat them in the same way as married couples - this point should be particularly salient to couples with dependent children.

The case also hopefully highlights the need for cohabiting couples to carefully document their intentions when they own property together. When purchasing a property, everyone has, and should take up, the option of defining their respective shares by way of a Deed of Trust or entering into a Cohabitation Agreement with the other owner of the property. It is possible to update these documents if there is a change in circumstances. It is obvious that there is a much stronger likelihood of reaching a sensible agreement at the beginning of a relationship rather than at the end.

For further information about Cohabitation Agreements, click here and for Cohabitation Disputes, click here.