Jones v Kernott

Unmarried couple – Constructive trust – Parties purchasing house for occupation with children – Parties conveying property into joint names without declaring beneficial interests – Parties’ relationship ending – Respondent occupying house with children – Court attributing 90% interest in property to respondent as fair and just – Whether court properly imputing beneficial ownership of property in unequal shares where no express agreement between parties – Appeal allowedThe appellant and the respondent were an unmarried couple. In 1984, they bought a property in joint names, which they occupied with their two children. The purchase was funded partly by the respondent and partly by an interest-only endowment mortgage. The parties shared household bills, including the mortgage repayments. They subsequently took out a further loan to extend the property; the extension was built and paid for mainly by the appellant.In October 1993, the parties’ relationship ended. The appellant moved out of the property, but the respondent continued to live there and paid the mortgage. She supported the children with little or no contribution from the appellant and did not apply for any child support payments. The parties cashed in a life insurance policy and divided the proceeds, partly to enable the appellant to purchase a second property in his sole name. The appellant made all mortgage payments and paid all other expenses in connection with that property.The appellant subsequently served a notice of severance in respect of the first property and the respondent made a claim under the Trusts of Land and Appointment of Trustees Act 1996 in respect of both properties. It was common ground that the parties had held the beneficial interest in the first property in equal shares until October 1993 and that the respondent had not acquired a beneficial interest in the second property. The county court held that the parties’ beneficial interests in the first property had changed when the appellant moved out, stopped contributing to the mortgage and other outgoings and purchased the second property. It held that the respondent was entitled to 90% of the value of the first property on the ground that it was fair and just, a decision that the High Court upheld: [2009] EWHC 1713 (Ch); [2010] 1 All ER 947.The appellant appealed. The question that arose was whether the court could properly infer an agreement post-separation, that the parties’ beneficial interests in the property had altered or become ambulatory, thereby enabling the court to declare that, as at the date of the hearing, the beneficial interests in the property were held other than equally.Held: (Jacob LJ dissenting) The appeal was allowed.There was nothing on the facts to displace the presumption of equality, and the appellant was entitled to a declaration that the parties held the severed joint tenancy as tenants in common in equal shares.The conveyance into joint names meant that the beneficial interests in the property were joint. The critical question was whether the court could properly infer from the parties’ conduct since separation a joint intention that, over time, the 50:50 split would be varied so that the property would be held 90% by the respondent and 10% by the appellant. On the facts, the court could not infer such an intention. The conveyance into joint names created joint beneficial interests, and the parties had agreed that, on separating’ they had equal interests. Something would have to displace those interests; the passage of time was insufficient to do so, even if the appellant had acquired alternative accommodation and the respondent had paid all the outgoings. The appellant had a 50% interest in the property, and the facts did not entitle the court to reach the same decision as was reached by the county court and the High Court: Oxley v Hiscock [2004] EWCA Civ 546; [2004] 3 WLR 715 and Stack v Dowden [2007] UKHL 17; [2007] 2 WLR 831 applied.If the parties had truly intended the appellant’s beneficial interest in the property to be reduced post-separation or that the property was to belong to the respondent when the appellant acquired his own house, they should have acted accordingly by adjusting their beneficial interests in the property. The court could not infer such an intention from their actions. There was evidence of equal interests on separation and an agreement by the appellant to defer realisation for a number of years prior to the severance of the joint tenancy, an action that crystallised the appellant’s 50% interest.Per Jacob LJ. dissenting: It was common ground that when the appellant left the home in 1993, the parties’ shared intention was one of joint beneficial interest and no different intention was to be inferred or imputed from the facts following his departure. Of particular significance was the cashing in of the insurance policy to enable the appellant to purchase a new house. Further, by making no payments towards the jointly owned house he could make relevant payments in respect of his own house. The appellant had also failed to take any steps regarding his share in the jointly owned house for 14 years. It was not impossible to conclude that those matters indicated a shared intention of the parties that the interests in the house were to vary over time. The judge, having seen and heard the parties, was in a better position to decide their intentions than was the Court of Appeal.Per curiam: The purchase of residential accommodation was the most important financial transaction that an individual would make. It was therefore of the utmost importance that purchasers and their advisers should take the greatest care when dealing with such transactions and address their respective beneficial interests on acquisition, separation and thereafter. It was impossible for a court to analyse personal transactions between cohabitants, and the costs of so doing were likely to be disproportionate in any event. Cohabiting partners had to contemplate and address the possibility that their relationship could break down. Andrew Bailey (instructed by Francis Thatcher & Co, of Leigh-on-Sea) appeared for the appellant; Richard Power (instructed by AI Sampson & Co, of Benfleet) appeared for the respondent.Eileen O’Grady, barrister01 P&L body no inbdent bold ljdagladg dagadg dagadg agd adgadg agd agd gadagd gad adg adg adgadg adg agd adgadg agd gdagad adg adg adgadg adg gadgad01 P&L body no indent bold to the first01 P&L body no indent gdaldagladg dagadg adg dga adgagd agd agd dga gadagd gad adg gad agd agdagd gad adg adg adg agdadg gda dga gad agd agdagd gad agd agd adgagd gad gad agdagdgad01 P&L author