Posted by: RM | May 28, 2010

Beneficial Interests in Jointly Owned Property: Kernott v Jones (Round 3)

The Court of Appeal has delivered its eagerly awaited judgment in the case of Kernott v Jones [2010] EWCA Civ 578. I wrote about the decision of the lower courts here, having been left with a distinctly uneasy feeling about the way in which the authorities were being applied. Put simply, this case concerned the proper division of shares in a house which was jointly owned by the parties. The parties had separated some years before this case came before the court and each of the parties accepted that, at the time of their separation, they owned the property in equal shares.

The first issue which arises for determination in a case such as this is clearly articulated in Stack v Dowden [2007] UKHL 17 – where property is jointly owned at law, from which it follows that there is a presumption that the beneficial interests in that property are equal, can that presumption of equal beneficial ownership be rebutted? It is, quite logically, only necessary to address the question of the amount of the parties’ shares if this presumption is first rebutted. However, this is a high threshold to meet as was made clear in Stack – only exceptionally will it be possible to establish that the property is intended to be owned in anything but equal shares. In the present case the Court of Appeal, reversing the decision of the lower courts, concluded that there was no evidence from which it could be determined that the parties had, at some time after their separation, intended that their beneficial shares should be held other than equally. Lord Wall said this:

55. …This is not a case under the Matrimonial Causes Act 1973, and the government has not implemented the Law Commission’s proposals relating to unmarried couples. This court must resolve this appeal under the law relation to trusts as explained in Oxley v Hiscock and Stack v Dowden.

57. The critical question is whether or not I can properly infer from the parties’ conduct since separation a joint intention that, over time, the 50-50 split would be varied so that the property is currently held 90% by the respondent and 10% by the appellant…

58. …I simply cannot infer such an intention from the parties’ conduct. In my judgment, the conveyance into joint names, following Stack v Dowden created joint beneficial interests, and the parties agreed that when they separated they had equal interests. There has to be something to displace those interests, and I have come to the conclusion that the passage of time is insufficient to do so, even if, in the meantime, the appellant has acquired alternative accommodation, and the respondent has paid all the outgoings. In my judgment, the appellant has a 50% interest in the property, and both the judge and the deputy judge were wrong to conclude otherwise.

Not surprisingly the relevant authorities were examined at length. This was, it should be noted, a majority decision, Lord Justice Jacob dissenting. The judgments highlight, once again, the folly of unmarried couples purchasing property jointly and failing to contemplate the possibility of their later separation and the proper division of their property interests should such an event occur. In close personal relationships such discussions seem particularly unpalatable. However, they would probably have been more palatable than the three hearings to which Mr Kernott and Ms Jones have subjected themselves, together with all of the associated costs. From the perspective of the lawyer who has to advise parties who now find themselves in this position, it should make the likely outcome a little more predictable, thankfully…

For a more extensive discussion of this decision see Nearly Legal’s post here.


Responses

  1. Belatedly got my version up. I basically agree. I think the rejection of ‘imputed’ intention as opposed to inferred intention is significant.

  2. Have linked to yours now – thanks for the link to mine :-)

    I especially liked Rimer LJ’s reasoning that it seemed unlikely that Baroness Hale in Stack was suggesting that a court could ascribe to the parties an intention that they neither expressed nor inferentially had as that would have been inconsistent with her repeated reference to the goal being to find the parties’ intentions, which must mean their real intention (para [77]).

  3. [...] Rowena Meager also has a comment on this case. [...]

  4. [...] the first appeal (from the decision of the trial judge) here and the appeal to the Court of Appeal here. My views since those posts were written are unchanged and it will come as no surprise to learn [...]


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