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What is a fair share?
The task of analysing the final chapter of this, Jones v Kernott, the most recent of a series of controversial cohabitant cases, in 1,100 words is not easy. This is particularly so where, despite the unanimity of outcome, there is far from unanimity in reasoning. With Hale and Walker on the one side, and Kerr and Wilson on the other, Lord Collins seeked to minimise the differences between them.
Ms Jones and Mr Kernott had two children, and in 1985 purchased a house in joint names for £30,000 with a £6,000 deposit paid from the proceeds of the sale of Ms Jones’ former home. There was no declaration as to how the beneficial interest should be held. They shared household expenses, and in 1986 took out a joint loan to build an extension. In 1993, Mr Kernott moved out and thereafter made no further contribution in respect of the property and little to the maintenance and support of their two children. Then, in 1996, a joint life insurance policy was cashed in and the proceeds divided between them, so Mr Kernott could put down a deposit on a home of his own.
Some 14 years later, he claimed a 50% beneficial interest in the joint property. Ms Jones asserted that she owned the entire beneficial interest, alternatively, that she had a beneficial interest in Mr Kernott’s property. All five Supreme Court justices, for different reasons, restored the decision of the first-instance judge, namely that Mr Kernott was only entitled to a 10% share.
(i) In joint names cases, the starting point is that equity follows the law. One begins the search for the proper allocation of shares in the property, with the presumption that the parties are joint tenants and are thus entitled to equal shares;
(ii) 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;
(iii) The common intention, if it can be inferred, is to be deduced objectively from the parties’ conduct; and
(iv) Where the intention as to the division of the property cannot be inferred, each is entitled to that share which the court considers fair, having regard to the whole course of dealings between the parties.
Lord Kerr identified the areas of disagreement as these: (a) is there sufficient evidence from which the parties’ intentions can be inferred? (b) is the difference between inferring and imputing an intention likely to be great as a matter of general practice?
But first Baroness Hale and Lord Walker, in a joint judgment, took the opportunity to clarify the House of Lords decision in Stack v Dowden  UKHL 17. In particular, they acknowledged the difficulties of interpretation (identified by Lord Wilson at paragraphs 85-87) of what Hale said at paragraph 61 of Stack.
In referring to the Law Commission’s 2002 paper, Sharing Homes, she emphasised that the search is for the result which the parties must, in the light of their conduct, be taken to have intended. ‘Taken to have intended’ must mean, according to Wilson in Jones, the power to resort to imputation. Yet, Hale in Stack had gone on to say that it does not enable the court to abandon that search in favour of the result which the court itself considers fair.
The position, apparently now clarified, is that the search is primarily to ascertain the parties’ shared intentions, whether expressed or to be inferred from their conduct. There are two exceptions. The first is where the classic resulting trust presumption applies - rare in a domestic context. The second is where, although it is clear that the beneficial interests are to be shared, it is impossible to divine a common intention as to the proportions. In those two situations, the court is driven to impute an intention the parties may never have had. In the present case, they agreed with the trial judge’s finding that the parties’ intentions had changed, and that Mr Kernott’s interest in the property had crystallised when the life policy was cashed. They allowed Ms Jones’ appeal on that basis.
As far as the imputation/inference debate was concerned, Hale and Walker thought this may well be a distinction without a difference with regard to the process of determining parties’ intentions. Kerr disagreed. He considered the process by which one would arrive at (sometimes) the same result would be different, requiring, as it would, a markedly and obviously different mode of analysis. Imputing an intention involves the court in deciding what is fair in the light of the whole course of dealings with the property and that has nothing to do with what the parties intended, or what might be supposed to have been their intention had they addressed that question.
He preferred that there be a well-marked dividing line between the two. As soon as it is clear that inferring an intention is not possible, the focus of the court’s intention should be squarely on what is fair, an obviously different examination than is involved in deciding what the parties actually intended. He considered that the bare facts of Mr Kernott’s departure from the family home and the acquisition of another property were a slender foundation on which to conclude that he had entirely abandoned whatever stake he had in the previously shared property. Both he and Wilson considered it eminently fair, however, to award a 10% share on the basis of imputation.
I think (and hope) the position can be summarised like this. The starting point is to try and work out what the parties can be inferred, from their conduct, as having intended. If that can be done, the court cannot impose its own view, however unfair it feels the outcome to be. But the court must not strain to infer something that it is really impossible to do. In such cases, there should be no hesitation about imputing an intention which delivers a fair outcome, having regard to the whole course of dealings between the parties. The same principles will also apply to single name cases once the non-owner establishes some beneficial interest by way of an express or implied common intention trust.
District Judge Julie Exton sits at Bristol Civil Justice Centre