On 9 November the Supreme Court delivered its judgment in Kernott v Jones, a case concerning the property rights of cohabitants. The facts are simple and could apply to many of the estimated five million people who live together (outside of marriage or civil partnership) in this country.
The Supreme Court unanimously allowed Ms Jones’ appeal, reinstating the original judgment awarding her 90% of the beneficial interest in the property which had been registered in the parties’ joint names but in respect of which Mr Kernott had made no financial contributions for 12 years after they separated.
Lord Walker and Lady Hale, who provided the leading joint judgment, described the appeal as ‘an opportunity to provide some clarification’ in relation to Stack v Dowden . While it is clear that the justices were focused on the need for clarity in this area of the law, it is questionable whether this judgment has achieved that. This case perhaps illustrates that the only proper route to clarifying the position lies with parliament. Lord Wilson was not the only justice to rebuke parliament for its failure to confer upon the courts limited redistribution powers for cohabiting couples.
The justices agreed that where a family home is bought in joint names without any express declaration of trust there is a presumption that the beneficial interests follow the legal interests, such that the parties are entitled to equal shares. The justices were unanimous in confirming that this presumption can be rebutted by evidence of a contrary common intention, either at the time of the property’s acquisition or at a later date.
When considering whether the presumption is rebutted, the first task of the court is to ascertain the parties’ actual intentions, such intentions to be inferred objectively from their conduct. No further guidance is given as to what conduct may evidence a common intention to rebut the presumption save that the non-exclusive examples set out in Stack might be relevant.
Lord Walker, Lady Hale and Lord Collins found on the facts of this case that it was possible to infer that the parties had intended to alter their beneficial interests. Lord Kerr and Lord Wilson were not so convinced. The judgment illustrates the difficulties inherent in such a task. Inevitably, the search for cohabitants’ true intentions is likely to result in costly factual and evidential arguments in future cases.
As a consequence of this judgment, in the event that the parties never intended to own the property jointly, or intended to change their beneficial interests but it is not possible to establish their common intention as to the proportion of their shares, by direct evidence or by inference, the court may impose a ‘fair’ outcome ‘having regard to the whole course of dealings between the parties in relation to the property’.
This case raises important questions as to jurisprudence and has a potentially explosive practical impact for cohabitants. Put bluntly, can it be correct that a legal presumption can be rebutted other than by actual evidence?
While it could be argued that the decision in this case was ‘fair’, the guidance in the judgment does not really create a fair judicial process for cohabitants. It creates uncertainty and an incentive to litigate in cases where the evidence of common intention is less than robust. Once again, we are told that each case will turn on its own facts; little comfort for clients without deep pockets seeking clear advice.
It is clear from Kernott that the Supreme Court is trying to adapt to current social trends and to address a lacuna in our law. Earlier this year the government shelved the Law Commission’s proposals to give cohabitants a legal framework to deal with disputes on the breakdown of their relationship.
The justices’ frustration at the lack of statutory reform was clear. Lord Collins stated: ‘The absence of legislative intervention… made it necessary for the judiciary to respond by adapting old principles to new situations... That has not been an easy task’.
Unfortunately, that task has yet to be completed and it can only be done through the much-needed and long-overdue introduction of statutory reform.
Claire Blakemore is a partner in the family team at international law firm Withers