If you are an unmarried couple buying a property together don't assume that you will automatically be entitled to receive half of the share of the property if you part.
The case of Jones (Appellant) v Kernott (Respondent) [2011] UKSC 53, (decision 9th November 2011) concerns the correct approach in calculating beneficial interests in property where the legal title to the property is held in joint names by an unmarried couple but there is no express statement of how it is to be shared.
The facts
The parties met in 1980. Ms Jones bought a mobile home in her sole name in 1981. Mr Kernott moved in with her in 1983 and their first child was born in June 1984. The mobile home was sold in 1985 and the property (the subject of these proceedings) 39 Badger Hall Avenue, was bought in the parties joint names.
The purchase price of the property was £30,000 and the deposit of £6,000 was paid from the proceeds of sale of the mobile home. The balance was met by an endowment mortgage in joint names. In March 1986 the parties jointly took out a loan for £2,000 to build an extension. Some of the labouring was carried out by Mr Kernott and for the rest he paid family and friends. This enhanced the value of the property from £30,000 to £44,000. A second child was subsequently born to the parties in September 1986. In October 1993 the relationship broke down and Mr Kernott moved out of the property. The parties had lived at 39 Badger Hall for 8 years 5 months and had jointly shared the mortgage and household expenses. From that point forward Mrs Jones lived at the property with the children and paid all the household expenditure herself.
The parties cashed in a life insurance policy in 1995, dividing the proceeds equally allowing, Mr Kernott to buy his own house in May 1996 in Essex. As time passed the value of both properties increased and in 2006 Mr Kernott indicated that he wished to claim a beneficial share in 39 Badger Hall. As a result, in October 2007 Ms Jones applied for a declaration that she owned the entire beneficial interest in the property. By 2008 when the case initially went to court the house was valued at £245,000.
The decision of the County Court
It was recognised by the County Court Judge that Mr Kernott was able to afford his own home as he was not making any contributions towards the former family home and paid little by way of maintenance towards his children. Despite the fact that the unmarried parties' initial intentions were to provide themselves with a home as a couple and for their children it was held that the parties' intentions with respect to their beneficial interests had changed significantly over time. The fact that Mr Kernott was attempting to assert his beneficial interest 14 ½ years after having previously ignored it completely by investing in his own property gave more credibility that the parties intentions had changed. The Judge held that once the presumption of joint beneficial ownership is displaced and there is no clear evidence as to the division of shares it becomes the Court’s duty to infer or impute an intention to the unmarried parties as to the division of the property. It was held that Ms Jones was entitled to a 90% share and Mr Kernott a 10% share.
Mr Kernott appealed to The Court of Appeal who allowed his appeal. Ms Jones as a result appealed to the Supreme Court who unanimously allowed her appeal and restored the County Court’s decision.
The reasoning behind the decision
Where an unmarried couple purchase a family home in their joint names the presumption is that they intend to own the property jointly in equity also.
The Presumption may be rebutted by evidence that it was not, or ceased to be, the common intention of the unmarried couple to hold the property jointly. This can more readily be shown where the parties did not share their financial resources. The Court should then try to ascertain the parties actual intentions from their dealings.
Accordingly the Supreme Court was happy with the way the County Court Judge had gone through the above facts and deduced that the parties’ common intentions had changed in 1995 where Mr Kernott’s interest in Badger Hall had crystallised.
The decision of the Supreme Court and the applicable principles
1) Where a property is bought in joint names they own the property as joint tenants in law and in equity.
2) That presumption can be displaced by showing (a) that the parties had a different common intention at the time when they acquired the home, or (b) that they later formed the common intention that their respective shares would change.
3) Common intention is to be objectively deduced (inferred) from the conduct and dealings between the parties.
4) Where it was clear that either the parties did not intend a joint tenancy from the outset or their original intention had changed, but it was not possible to infer an actual intention as to their respective shares then the court will be entitled to impute an intention after having regard to the parties’ whole course of dealing in relation to the property.
5) Case will be decided on their own facts. Although financial contributions were relevant there were many factors which would enable the court to decide what shares were intended or fair.
If you would like to receive advice either before you move in with your partner or if you have decided to part and own property together, please call our expert Family Law solicitors on 0208 464 4242 or email familylaw@wellerslawgroup.com
