Posted by: RM | November 9, 2011

Jones -v- Kernott (Round 4)

It would have been impossible to have allowed today to pass without a short post about the Supreme Court’s judgment in Jones -v- Kernott [2011] UKSC 53 (it is quite possible that I will come back later with a more detailed post once I have had the opportunity to digest the whole decision more comprehensively!). I have previously written about 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 that I read the Supreme Court’s judgment with a sense of disappointment. The facts (shamelessly and idly copied and pasted from my original post) are, briefly, as follows:

Ms Jones and Mr Kernott bought a property, 39 Badger Hall Avenue, in 1985 and the property was conveyed into their joint names. The purchase price was £30,000 of which £6,000 was contributed by Ms Jones. The remainder was financed by an interest only mortgage, supported by an endowment policy. The mortgage and endowment policy payments were shared between the couple. The following year a further loan of £2,000 was taken out against the property for the purpose of building an extension and this was built and paid for largely by Mr Kernott. This is estimated to have enhanced the value of the property by almost 50%, from £30,000 to £44,000. Ms Jones and Mr Kernott shared the household expenditure (including bills and mortgage repayments) until the couple split up and Mr Kernott moved out of the property in 1993 (some 8 years later). Thereafter, Ms Jones made all of the interest only mortgage payments together with the payments against the endowment policy and met all expenditure in relation to the upkeep of the property. There were two children of the relationship who remained with Ms Jones. Mr Kernott made little or no contribution to their maintenance and none had been sought by Ms Jones.

Some time after the relationship had ended a life insurance policy was cashed and the proceeds split between the parties. In part this was to enable Mr Kernott to purchase a property for himself which he did in 1996, acquiring 114 Stanley Road, which he then financed alone. It is undisputed that Ms Jones never acquired any interest in the Stanley Road property. It is also undisputed that until the couple split up and Mr Kernott moved out of the property in 1993, the beneficial shares in the property were owned equally. The question for the court was whether, following the couple’s separation in 1993, the beneficial shares in the property were altered. At first instance the judge held that they had altered and concluded that Ms Jones was entitled to a 90% beneficial interest in the property on the basis that it was “fair and just”.

The leading judgment in the Supreme Court was, unusually, a joint judgment by Lord Walker and Lady Hale. Inevitably there was much reference to the applicability of the principles set out in Stack -v- Dowden [2007] UKHL 17. The crucial question at the heart of this particular case was whether, following Mr Kernott’s departure from 39 Badger Hall Avenue, an intention between the parties could be found which would rebut the presumption of joint beneficial ownership (which presumption generally arises where there is joint legal ownership and no express declaration of trust that the co-owners should own in anything other than equal shares). Reversing the decision of the Court of Appeal and restoring the determination of the trial judge (upheld in the High Court on appeal) the Supreme Court concluded that the facts in the present case did give rise to an inference that the intentions of the parties (to own the property in equal beneficial shares, consistent with their legal ownership) did change when Mr Kernott acquired his own property independently of Ms Jones. That finding, said Lord Walker and Lady Hale, was a finding made by the trial judge and there was, therefore, no need to impute any intention. This seems to me to fail to recognise that there was no evidence of such an intention referred to by the trial judge in his judgment (as was, in my view, implicitly recognised in Lord Walker and Baroness Hale’s judgment where, at para [48], it is said that “[the parties] intentions did change significantly. [The judge] did not go into detail”) and that this was the intention which he imputed to the parties. At para [47] it is explicitly recognised that the court cannot impose on the parties a solution which is contrary to the evidence of what the parties actually intended.

However, where the court cannot deduce from the evidence what the intentions of the parties were as to shares it was said that the court would have to ask what the parties intentions would have been as reasonable and just people had they thought about it at the time. At para [48] the abortive attempts to sell the jointly owned property, the cashing of the life insurance policy to, amongst other things, help fund Mr Kernott’s acquisition of a new property in his own name and the fact that he would not have been able to afford to do this had he still had to contribute to the property at 39 Badger Hall Avenue all gave rise to the “logical inference” that Mr Kernott and Ms Jones intended Mr Kernott’s interest in the Badger Hall Avenue property to crystallise then. Still looks like “imputed” intention to me, whatever the label given to the exercise…

Postscript: Inevitably, there has been a significant level of interest in this decision and there are lots of other interesting posts (adopting various views) which can be viewed at the following links (my apologies if I have left any out – if you would like links to your posts included please contact me):

http://www.marilynstowe.co.uk/2011/11/10/kernott-v-jones-on-bbc-breakfast/

http://nearlylegal.co.uk/blog/2011/11/jones-v-kernott-ending-the-big-debate/

http://obiterj.blogspot.com/2011/11/cohabitation-what-about-house-part-2.html

http://www.familylaw.co.uk/articles/HayleyTrim10112011-632

http://www.familylore.co.uk/

http://hklandlaw.wordpress.com/2011/11/11/jones-v-kernott-in-the-supreme-court/

For what it’s worth, I agree with those who denounce the lack of enthusiasm for introducing legislation to deal with the distribution / allocation / re-allocation of property rights upon the breakdown of relationships between co-habiting (non-married) couples – my objection is concerned with the use of property law principles for dealing with the same which, in my view, distorts and makes inappropriate use of well established principles (even if the outcome reached might, on the face of it, seem “fair”).


Responses

  1. Lord Walker and Lady Hale at paragraph 48 say: “Insofar as the judge did not in so many words infer that this was their intention, it is clearly the intention which reasonable people would have had had they thought about it at the time. But in our view it is an intention which he both could and should have inferred from their conduct.”

    Also at paragraph 47: “But if it cannot deduce exactly what shares were intended, it may have no alternative but to ask what their intentions as reasonable and just people would have been had they thought about it at the time. This is a fallback position which some courts may not welcome, but the court has a duty to come to a conclusion on the dispute put before it.”

    Although “imputing” is not considered the best solution my understanding from reading the judgement, only a brief reading, was that imputing is a solution that should be used if the court is unable to deduce or infer what the actual intentions were.

    In paragraph 36 Lord Walker and lady Hale say that “…there will continue to be many difficult cases in which the court has to reach a conclusion on sparse and conflicting evidence. It is the court’s duty to reach a decision on even the most difficult case. As the deputy judge (Mr Nicholas Strauss QC) said in his admirable judgment [2009] EWHC 1713 (Ch), [2010] 1 WLR 2401, para 33 (in the context of a discussion of fairness) “that is what courts are for.”

    I think that there is a place for imputing intention on parties where the evidence is “sparse and conflicting”.

    I am pleased, even though my pleasure or displeasure is irrelevant, with this decision as I had a hard time accepting the Court of Appeal decision.

  2. […] Co-operative [2011] UKSC 52. As decisions go it was perhaps not quite as “exciting” as Kernott -v- Jones but, nevertheless, the fact that a judicial committee of seven was convened to hear the case should […]

  3. […] Rowena Meager’s Property Law Blog | Jones v Kernott (Round 4) – “I read the Supreme Court’s judgment with a sense of disappointment.” […]

  4. […] Rowena Meager’s Property Law Blog | Jones v Kernott (Round 4) – “I read the Supreme Court’s judgment with a sense of disappointment.” […]

  5. […] Rowena Meager’s Property Law Blog | Jones v Kernott (Round 4) – “I read the Supreme Court’s judgment with a sense of disappointment.” Posted by Marilyn Stowe on 10 November 2011 Categories: Cohabiting Couples Tags: BBC Breakfast, cohabitation, cohabiting couples, Kernott v Jones, Marilyn Stowe, Stowe Family Law, Supreme Court […]


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