The case of Kernott v Jones was heard by the Court of Appeal on 3 March 2010 and Judgment has just been handed down. The decision should sound warning bells for both unmarried couples and solicitors who act for them on the purchase of property.
The facts, briefly, are that in 1985 Miss Jones and Mr Kernott purchased a property together and the purchase price was funded by a contribution of £6,000 from Miss Jones (the sale proceeds from her caravan) and the balance by means of an Endowment Mortgage. The financial arrangement between them was that Mr Kernott gave Miss Jones £100 per week and from that and her own earnings she paid for housekeeping, the mortgage, outgoings, and the insurance premium. Miss Jones was also primarily responsible for building an extension to the property which increased its value by 50% of the purchase price.
In late 1993, and after the birth of four children to the couple, they separated and Miss Jones assumed sole responsibility for the maintenance of those children and remained in the property with them.
In May 1996 Mr Kernott bought himself a property. In May 2006, more than 12 years after he had left, Mr Kernott sought payment of his half share in the property purchased jointly with Miss Jones.
It had long been thought that the Courts had power to alter the beneficial interest of parties in property where there had been greater financial contribution by one party and at the first Hearing, and subsequent Appeal, the Court determined that Miss Jones was entitled to 90% of the beneficial interest in the property.
The matter then came before the Court of Appeal who concluded that the critical question was whether it could properly infer from the parties conduct since separation a joint intention that, over time, the 50/50 split was to be varied. The Court concluded that it could not infer such an intention and that the original purchase in joint names created joint beneficial interest and that nothing which had happened over the passage of time since separation had displaced those interests, not even the fact that Mr Kernott had purchased property elsewhere and that Miss Jones had paid all outgoings on the original property.
In a salutary warning to both unmarried couples and solicitors, Lord Justice Wall stated that “it is therefore of the utmost importance, as it seems to me, that those who engage in these transactions, and those who advise them, should take the greatest care over such transactions, and must – particularly if they are unmarried or if their clients are unmarried – address their minds to the size and fate of the respective beneficial interests on acquisition, separation and thereafter”.
For further information contact Alan Porter