Kernott &
Jones – A Cautionary Tale
The
story of Kernott and Jones is one that should be heard by all cohabiting
couples, but sadly it is not a great love story, but rather a salutary tale.
"This
is a cautionary tale, which all unmarried couples who are contemplating the
purchase of residential property as their home, and all solicitors who advise
them, should study." So said Lord Justice Wall, introducing his
judgment in Kernott v Jones [2010] EWCA Civ 578.
The case involved
Mr Kernott and Ms Jones, who entered into a relationship in 1980 and began
cohabitating in 1983. They bought a home together jointly in 1985. They separated
in October 1993 and Mr Kernott moved out of the family home. Ms Jones remained
there with their children.
There was some discussion
between the two of them in October 1995, when Mr Kernott wished to realise his
share in the property, and it was placed on the market for sale. However, as
there was no interest in it, Mr Kernott and Ms Jones agreed to cash in a joint
life insurance policy so that Mr Kernott could use his half of the proceeds to
purchase an alternative home.
The question which
came before the Courts some 15 years later, was whether Mr Kernott could still
rightly demand a 50% share of the jointly owned home, despite not having contributed
to it for 15 years.
You may be
surprised to learn that when a property is purchased together, if there is an
express declaration (a note on the legal paperwork that states whether you own the
property as joint tenants or tenants in common) then the legal starting point
is that you are bound by this declaration, regardless of how many years have
passed.
In the case of
Kernott & Jones, there was no express declaration and therefore the
question before the Court was, “In the absence of an express declaration, can
the parties move away from the presumption that the property was held equally?”
Ms Jones was
arguing that she should receive a larger share, as she had been solely
responsible for the mortgage and maintenance of the property for 15 years.
The Supreme
Court has now confirmed that while there is a presumption that a property
should be held equally if it is in joint ownership, this can be overturned if
evidence can be provided to show that this was not what the parties intended.
To show this,
you need to prove that there has been a change of agreement between the parties
as to the interests each of them have in the property, either by express
agreement (both of you agreed verbally or in writing) or by proving that you
can infer such a change by looking at how you both acted.
In the case of
Kernott & Jones, cashing the life insurance policy to enable an alternative
home to be purchased and Mr Kernott no longer financially contributing to the
property provided the evidence required for the court to infer a change to the
original agreement.
If it can be
shown that the intention has changed, then there may be scope to move away from
a 50:50 division. In this case, Ms Jones was awarded a 90% interest in the
property.
This case
highlights the importance of agreeing with your partner how a property is to be
dealt with, both at the outset when you buy it, and later following a
separation. It would be unwise to assume that you will be entitled to a larger
share just because you have made a greater contribution to the mortgage and the
upkeep of the home. The onus will be on you to supply evidence to prove
this.
If you are contemplating
separation, discuss the terms with your partner at the earliest opportunity. A Separation
Agreement can be drawn up to record the terms agreed, providing certainty and
protection for both parties.
If you are
contemplating setting up home with your partner, make sure you discuss what should
happen if you separate. Cohabitation Agreements (also known as Living Together
Agreements) can be drawn up to record responsibilities during the relationship,
and determine what will happen with the family home, finances, furniture and
any other assets, should the relationship break down. Family Law Consultancy
can provide advice and assistance on these matters.
