Introduction
The case of Jones v Kernott [2012] 1 AC 776, a significant judgment by the Supreme Court, concerns the determination of beneficial interests in property held by cohabiting couples. This area of law, governed by the principles of common intention constructive trusts, addresses how property rights are allocated when unmarried partners separate. The core concept revolves around whether the parties' conduct demonstrates a shared understanding that their beneficial interests differ from their legal ownership. This requires a careful examination of their interactions and contributions to the property. The starting point in cases with joint legal title is that the equitable interest also is held jointly, whereas with sole legal title, beneficial interest also rests with the legal owner. The legal principle provides that these presumptions may be rebutted by demonstrating a common intention, or a change in intention, inferred from the entire course of conduct regarding the property. If such an intention is found, the court quantifies the beneficial interest reflecting that common intention or, in its absence, what it considers fair in relation to their conduct. The principles set out in Jones v Kernott provide a framework for understanding how the courts distribute property rights fairly in the absence of formal marriage.
The Presumption of Equity Following the Law
In cases where a property is registered under joint legal ownership, a key element is the presumption that equity follows the law. This principle, established in Stack v Dowden [2007] 2 AC 432 and affirmed in Jones v Kernott, dictates that when a couple purchases a property jointly, the law assumes both to be joint beneficial owners as well. This presumption is not a rigid rule, but a starting point, which acknowledges the emotional and economic commitment inherent in joint ownership. The underlying rationale is that parties in intimate relationships, often do not account for their finances individually, and the joint purchase suggests a joint undertaking. However, this is not automatic, and can be rebutted if there is proof of a different intention between the parties. This could be an existing intention when the property was acquired, or the formation of a new intention later on. This allows the court to look beyond the legal title to assess the true ownership. In contrast, where the legal title is in one person’s sole name, the presumption is that they are the sole beneficial owner, a presumption that can also be rebutted, though the threshold of evidence is typically higher in such cases. The presumption seeks to capture the reality of property ownership, but allows for flexibility.
Rebutting the Presumption of Joint Beneficial Ownership
The presumption that equity follows the law can be displaced if one of the parties can demonstrate that there was a shared intention that their beneficial interest should be different from the legal one, or that the intention changed over time. This requires a thorough investigation of the parties' whole course of conduct relating to the property. Relevant factors include any discussions or advice at the time of purchase, the reasons why the property was acquired jointly, the purpose of acquisition, the nature of their relationship, and whether they had children they were responsible for. Financial arrangements are also key, such as how the purchase was financed and how they handled household expenses. It should be noted that financial contributions are not the only aspect considered; non-financial contributions, such as homemaking or childcare, also form part of the assessment. The courts seek to understand the true intentions of the parties, by looking at the realities of their circumstances and behaviours. This contrasts with the previous approach established in Lloyds Bank v Rosset, which narrowly focused on direct financial contributions. The focus in Jones v Kernott and Stack v Dowden has shifted to a more holistic approach that considers the entirety of the relationship.
Inferring and Imputing Common Intention
The court determines the common intention of the parties through an objective assessment of their actions and statements. This process involves either inferring or, under specific circumstances, imputing an intention. Inferring an intention involves deducing it from the evidence presented, while imputing an intention occurs when no actual intention can be directly or indirectly derived from the parties' conduct. Lord Walker and Baroness Hale in Jones v Kernott noted that if it proves impossible to discern the actual intention of the parties regarding the quantification of their shares, the court will then determine what is fair given their course of dealings in relation to the property. In cases where the presumption of joint beneficial ownership has been rebutted, and a different intention as to the division of shares can be inferred, this forms the basis of determining the actual beneficial interest of each party. If, however, the evidence fails to establish an actual or inferred intention, the court moves to impute an intention based on fairness, taking into account all relevant circumstances. This approach acknowledges that parties may not always form explicit intentions about their property rights, and aims to achieve an equitable result. This departure from a strict adherence to financial contributions promotes flexibility and fairness.
The Facts and Outcome of Jones v Kernott
The specific facts of Jones v Kernott involved a cohabiting couple who purchased a property in joint names. Initially, they shared expenses, but after Mr. Kernott moved out, Ms. Jones remained in the property with their children and shouldered all subsequent expenses. The court accepted that they had an initial shared intention at the time of purchase to own the property jointly and equally, as there was a presumption that the equity followed the law. However, the Supreme Court found that their common intention had changed over time, due to the fact that Mr Kernott had not contributed for a long period of time, whilst Ms Jones had shouldered the expenses of the house. Consequently, the trial judge established that the parties now held unequal shares in the beneficial ownership of the property, with Ms. Jones holding a 90% share and Mr. Kernott holding a 10% share. The Supreme Court upheld this decision, highlighting how the parties’ conduct following their separation demonstrated a change in their intentions regarding their respective shares. Jones v Kernott therefore presents an illustration of how the courts may move to impute a fair solution in line with the course of conduct of the parties when an actual intention cannot be determined. The case further solidifies the position that beneficial interests can change over time, even in situations where the legal ownership is static.
Implications and Impact on Subsequent Case Law
The judgment in Jones v Kernott has had a profound impact on subsequent case law concerning beneficial interests. It clarified the principles set out in Stack v Dowden and reinforced the idea that the courts will assess the whole course of conduct when determining beneficial interests. This has led to a shift away from a strict focus on financial contributions to a more holistic assessment. Cases such as Geary v Rankine [2012] 2 FLR 1409, however, illustrate that the threshold to rebut the presumption of sole beneficial ownership remains high, especially where the property was bought as an investment. Similarly, Aspden v Elvy [2012] EWHC 1387 demonstrated how the courts may take a more holistic approach, moving away from the restricted Rosset criteria, even in sole name cases. The case of Curran v Collins [2015] EWCA Civ 404, however, reinforces that the mere presence of a ‘specious excuse’ to not register a partner’s name will not usually lead to the inference that the person to whom the excuse was given has a beneficial interest. Jones v Kernott and its subsequent interpretations have promoted greater equity in the law while introducing a degree of uncertainty. Although this does create a degree of unpredictability, it is reflective of the complexities of relationships, and seeks to provide an equitable solution.
Conclusion
Jones v Kernott represents a key development in the law regarding the distribution of property rights between unmarried couples. The judgment confirmed the rebuttable nature of the presumption that equity follows the law in cases of joint legal ownership, highlighting that the court will examine the entirety of the parties’ conduct when quantifying beneficial interest. The distinction between inferring and imputing intention allows for a more flexible approach, while still ensuring that the allocation of property reflects what is fair. The influence of Jones v Kernott can be seen in subsequent case law, and has shaped the framework in which courts evaluate disputes concerning beneficial interests. The judgment does not automatically lead to a splitting of assets, it examines the specific circumstances of the parties and applies the law accordingly. The principles set out in Jones v Kernott build on the framework established in Stack v Dowden, which is to allow for an assessment of the actual conduct of the parties, and to consider it over a longer period of time, rather than confining the court to the time of purchase alone. The principles outlined in these cases continue to be influential in determining equitable solutions for unmarried cohabitants.
