The Office for National Statistics estimated that in 2006 there were about 2.3 million cohabiting couples in England and Wales.
The Office for National Statistics estimated that in 2006 there were about 2.3 million cohabiting couples in England and Wales. The law does not specifically recognise their situation, yet the Government recently announced it would not be introducing any legislation to remedy this. Would the Supreme Court grasp the nettle offered by the case of Jones –v- Kernott to clarify the position of co-owners of property?
The story of this couple is in essence quite simple. Mr Kernott and Mrs Jones bought a property in 1985 in joint names and took out a joint mortgage. Mr Kernott moved out eight years later, at which point Mrs Jones took over the mortgage and all household expenditure. She also paid for most of the costs of raising the couple’s children. This situation continued for some fourteen and a half years until Mr Kernott went to court to secure what he saw as his share of the property.
The case proceeded through the courts, ending up eventually in the Supreme Court. There, the judges decided, on the facts, that as the couple did not intend to hold the property equally after their separation, and in the absence of any evidence of the actual ownership proportions the couple did intend, each of them should be entitled to a share which the court considered “fair”. However, the judges thought that for the court to make this decision should be a “process of last resort”. In considering the question of what is fair, the court said it will look at the whole course of dealings between the parties – their conduct, conversations and how the relationship was conducted and organised.
On this basis the Supreme Court decided that the original decision of the trial judge should stand – namely that Mrs Jones would be awarded 90% of the property and Mr Kernott, the remaining 10%. This represents a very different result from that given by the Court of Appeal, where it was concluded that a 50:50 split was appropriate. Interestingly, Mr Kernott was not demanding an equal split with Mrs Jones; instead, he thought that, based on the principle of fairness, a 25% share would have been a more appropriate allocation. Opinions will be divided here. On the one hand, he lived at the property for eight years, paid for “everything” while he was there and “completely refurbished the place”. On the other hand, Mrs Jones took over all expenses when he moved out, including those associated with the children. This is the problem with the “grey area” the courts have now created: it focuses on what are essentially subjective principles. Each relationship is different and will be considered on its own facts. But people and intentions can change over time; if the people involved do not make these clear, then it will only serve to complicate matters.
The court emphasised that having to rely on the fairness principle to resolve this type of problem should be a last resort. In Jones –v- Kernott there was no express declaration of trust between the parties which would have made the case clear cut. The absence of such evidence forced the court to try to divine the intentions of the former couple from their dealings with one another over the years. When this attempt failed, the court had to fall back on deciding on what was “fair” in the circumstances. But if you leave the matter up to the court, there is never any certainty as to the outcome (a risk in all litigious proceedings) and no guarantee of who the system would favour more.
The strong message delivered by this decision is that co-owners of property can only be certain of avoiding argument (and possibly a journey through the courts) if they document their arrangements in a legally binding manner. So people who buy property together – unless they are married to one another or are civil partners – should make their intentions crystal clear at the outset and remember to appropriately document any changes that occur in the future.
Every new property purchase is filled with hope, but it is a fact of life that sometimes the relationship between joint owners breaks down. Whatever life holds, it is always worth protecting yourself “just in case”.
For more information contact Alan Porter.