Author: Sarah Brown

Date: 7th June 2010

The recent Court of Appeal case of Kernott v Jones has been described as “a cautionary tale, which all unmarried couples contemplating the purchase of residential property as their home should study.”

In 1985 cohabitees Mr Kernott and Ms Jones purchased a property in joint names, with the deposit being paid for by Ms Jones and the couple sharing the mortgage payments. They separated some eight years later, and Mr Kernott moved out whilst Ms Jones remained in the house with the couple’s two children. From this point onwards Ms Jones assumed sole responsibility for the outgoings on the property, and for the maintenance of the children. Mr Kernott purchased a new property in his sole name in 1996.

In 2006 Mr Kernott sought payment for his half share. Ms Jones issued proceedings under the Trusts of Land and Appointment of Trustees Act 1996, seeking a declaration that she owned the entire beneficial interest in the property.

At trial the judge considered that whilst the parties’ original intention had been to provide a home for them as a couple, this intention had changed over the years since their separation. He assessed their beneficial shares in the property on the basis of what would be ‘fair and just.’. As Ms Jones had paid a far larger share of the mortgage, whilst Mr Kernott concentrated on his new property, it was held that the value of the property should be divided as to 90% for Ms Jones and 10% for Mr Kernott.

Mr Kernott appealed to the High Court, where the primary issue was whether or not a court was entitled to consider what is ‘fair’ when assessing beneficial ownership. The appeal was dismissed and it was found that the judge had been right to infer or impute an intention by the parties to change their beneficial interests. Where it was not clear how they had intended to alter their interests, the appropriate approach was to consider what was fair and just.

On 26th May 2010 the Court of Appeal allowed Mr Kernott’s second appeal, and ruled that the parties were each entitled to a 50% interest in the property. It is an established principle that where a property is purchased in joint names there is a presumption, in the absence of evidence to the contrary, that the owners will be beneficially entitled in equal shares. What has been made clear by this decision, is that the passage of time alone will not change this.

It was emphasised in the case that if the parties had truly intended to alter the beneficial ownership of the property after their separation, they should have taken steps to do so by way of express agreement. It is apparent that, had they done so, the court’s involvement would not have been necessitated.

In light of this, the importance of seeking advice from a solicitor as to the implications of a conveyance into joint names is evident. Clearly, advice should also be taken in the event that circumstances change. A property is often one of the most significant purchases a person will make during their lifetime, and cohabitees simply must contemplate what they would wish to happen to theirs in the unfortunate event of a separation.

This article is for general information purposes only and does not constitute legal or other professional advice. You should not act or rely upon this information.

Sarah Brown

Solicitor, Private Client Department

Tel: 01284 762331

Email: sarah.brown@ashtonkcj.co.uk