Aldridge and Brownlee Solicitiors

Joint Ownership of Property

In the case of Jones -v- Kernott, Ms Jones and Mr Kernott bought a house together in joint names in 1985. The deposit was provided by Ms Jones, but both parties contributed to the mortgage and other expenses until Mr Kernott left in 1993. From that date he paid nothing towards the mortgage and little towards the maintenance of the parties’ two children, who continued to live with Ms Jones.

The County Court judge ruled that Mr Kernott was entitled to a 10% share in the property. The judge held that, when the parties bought the property and lived in it, they intended to own it equally, but that their intentions changed soon after Mr Kernott left when they cashed in a joint insurance policy so that he could buy a new property. The judge held that his share of the joint home was fixed at that point.

The High Court upheld the decision of the County Court. In the Court of Appeal, however, the majority of the judges overturned the decision and stated that the equity in the property should be divided 50/50 in accordance with the original intentions of the parties. However the Supreme Court unanimously upheld the decision of the County Court judge in awarding Mr Kernott only 10% of the property.

The previous leading judgment in this area was Stack v Dowden. In that case, the House of Lords had said that there would be an assumption that the property should be divided according to how it was held on the legal title (often this will be in equal shares). This assumption could be displaced by proving that the parties had different intentions.

In Jones, the leading judgment gave the following principles for cases where a family home has been purchased in joint names:

1.    There is a presumption that the beneficial interests are held equally;

2.    The presumption can be displaced if the parties show that they had different intentions, either when they bought the property or later;

3.    The Court can infer what the intentions of the parties were from their conduct;

4.    If the Court decides that the parties did not intend to hold the property equally but cannot decide what they did actually intend, the court can say that the parties intended to hold the property in a way which seems to the Court to be fair;

5.    Each case will turn on its own facts.

The leading judgment agreed with the original judge’s reasoning that the parties’ intentions were originally to hold the property equally, but changed when Mr Kernott left. Two judges stated that the parties’ intentions could not be inferred from their conduct, but decided that a fair share for Mr Kernott was 10%.

Jane Edwards, Trainee Solicitor with Aldridge Brownlee LLP, commented that “People have looked to this case to provide much needed guidance on the law relating to property held by cohabiting couples. Unfortunately, the outcome of the case has meant that establishing what shares each person holds is still by no means certain.

“If taken to Court and the Court cannot decide on what the parties’ intentions were, the Court will decide on what it believes to be a “fair” outcome in the case. So, far from providing certainty, this has the potential to encourage litigation with people asking the Court to decide what constitutes a “fair” outcome.”

From the outset the joint owners themselves should establish as clearly as possible what their intentions are and set them out in a document usually known as a Declaration of Trust. It is equally important to keep this Declaration up to date to reflect the current intentions of the joint owners. This will save enormous expense, heartache and uncertainty. Good legal advice is indispensible to ensure the rights of joint owners are properly recorded and protected.

It is very important to obtain sound legal advice on rights to family property if a relationship does break down. If you require advice on arranging a suitable Declaration of Trust or property rights during or on the breakdown of a relationship or marriage, please contact Lynne Barton, Head of our Family Department, on 01202 294411 or email lynne.barton@ablaw.co.uk