Introduction
The case of Jones v Kernott, adjudicated by the Supreme Court in [2012] 1 AC 776, concerns the distribution of beneficial interests in property co-owned by unmarried couples. This judgment established critical principles relating to common intention constructive trusts in the context of family homes. Central to the ruling is the concept that while legal ownership might appear straightforward, beneficial ownership, especially in non-marital relationships, requires careful consideration of the parties’ intentions and conduct. The court’s decision in Jones v Kernott highlights a departure from strict legal presumptions, emphasizing a more nuanced examination of the parties’ whole course of dealings relating to the property, and their financial and non-financial contributions.
Establishing Beneficial Interest: Joint vs Sole Ownership
The starting point in determining beneficial interest is whether the property is held in joint names or in the sole name of one party. The case law, particularly Stack v Dowden [2007] 2 AC 432 and Jones v Kernott, highlights this distinction. In joint names cases, a presumption arises that the parties hold joint beneficial interests mirroring their legal title. Conversely, a property held in a sole name is presumed to be held solely for the benefit of that legal owner. However, both these presumptions can be rebutted based on evidence of the parties’ common intentions.
The case of Jones v Kernott specifically addressed the situation where the parties had purchased the property in joint names but later separated, with one party continuing to occupy the home and solely contribute to its upkeep. The Supreme Court in Jones v Kernott emphasized that the presumption of joint beneficial ownership in joint name cases can be displaced by establishing that the parties had either an actual intention that their beneficial interest would differ, or that such an intention can be imputed. This imputation occurs when it is impossible to ascertain the actual intention, in which case, the court looks at what is fair given the whole course of dealings between the parties in relation to the property.
The Role of Common Intention
The principle of common intention is paramount in determining how beneficial interest is allocated in property disputes between cohabitants. As the court stated in Jones v Kernott, this intention can be inferred from the words and conduct of the parties. However, it is more than merely an expressed agreement; it includes actions and arrangements which indicate a shared understanding about ownership. This includes financial contributions and indirect contributions toward household expenses.
The court in Jones v Kernott also established that common intention can change over time. The court recognized that a couple’s initial intention about their property rights may not remain static, and the court should be open to the possibility that the beneficial shares may have altered, if that reflects their changed intentions, as deduced from their conduct. The Supreme Court clarified the point, that the court can infer or impute a change in common intention over time, and that this is not just limited to the initial intentions at the time of acquisition. This principle is particularly significant in cases where a couple’s financial situation or contribution patterns change.
Quantifying Beneficial Interest
Where a common intention to depart from the legal title has been established, the next task is to quantify the respective beneficial shares. If the court can identify the actual intention of the parties about the division of beneficial interest, they will give effect to that intention. However, in many cases such actual intentions may not be evident. The court in Jones v Kernott confirmed that if it is not possible to infer the actual intention of the parties with sufficient precision, then the court can impute an intention which is what is “fair” given the parties’ whole course of conduct. This is a departure from a rigid approach based solely on financial contributions, looking instead at a broader range of factors.
The whole course of conduct, as mentioned in Stack v Dowden and affirmed in Jones v Kernott, includes factors such as whether the parties had children, the nature of their relationship, how they organised their finances, and how they discharged outgoings and household expenses. The court has explicitly rejected a narrow focus on direct financial contributions to the acquisition of the property, taking a more holistic approach that acknowledges non-financial contributions. For example, contributions towards the upkeep of the home or childcare responsibilities can be material in quantifying beneficial interest.
Departure from Lloyds Bank v Rosset
The case of Lloyds Bank v Rosset [1991] 1 AC 107, previously established a very high threshold for proving a constructive trust, requiring a direct financial contribution to the purchase of the property or an express agreement to share the property. The judgements in Stack v Dowden and Jones v Kernott collectively represent a significant departure from this stricter approach. The courts now recognise a wider range of contributions, which are not limited to direct financial payments, as relevant in determining the existence and extent of beneficial interests. This reflects a move towards a more equitable approach that recognises the varied ways in which partners contribute to their relationship and shared home.
The Supreme Court in Jones v Kernott did not overrule Lloyds Bank v Rosset on a point of law, but it did significantly shift the prevailing interpretational context. Post Jones v Kernott, it became clear that contributions other than those expressly or directly towards purchase price or mortgage could be regarded as evidence towards common intention. This is particularly important for women who historically often have made more indirect or non-financial contributions in domestic settings, such as childcare and homemaking, as seen in the case of Burns v Burns [1984] Ch 317.
Imputation of Intention and Fairness
One of the more debated aspects of Jones v Kernott is the court's power to impute intention when the actual intention cannot be ascertained. This imputation differs from inferring an intention from conduct. Imputation involves attributing an intention to the parties that they may not have explicitly formed. This is based on what the court believes is fair considering the parties' entire course of dealings. The court in Jones v Kernott stated that where the court cannot identify actual intention it will decide what is fair having regard to the whole course of dealings between them in relation to the property.
This aspect has drawn both praise and some criticism. Some argue that the concept of fairness allows the courts to achieve more equitable outcomes, ensuring each party in a domestic relationship receives a just share, taking into account non-financial contributions and needs post-separation. Others express concern that the wide discretion given to judges makes the process uncertain, meaning that it becomes more difficult for individuals to predict how courts will determine the property interests. However, the decision also tries to strike a balance between fairness and certainty, by seeking to find actual intention wherever possible.
Conclusion
The case of Jones v Kernott is a landmark decision that significantly altered the approach of the English courts in determining beneficial interests in co-owned property. By moving away from the rigid approach outlined in Lloyds Bank v Rosset, the Supreme Court laid out a framework that prioritizes a holistic assessment of the parties’ intentions and conduct. The judgment allows for the possibility of changes in the intention of parties over time and the possibility of the court imputing intention when actual intention is unknown. It also recognises that contributions are not limited to direct financial payments towards the purchase price but that all factors relating to the property and the relationship can be taken into account.
Jones v Kernott built upon the principles established in Stack v Dowden, and together, these cases emphasize that equity should not rigidly adhere to legal presumptions, but instead, should seek to fairly reflect the nature of the relationship between cohabitants and their respective contributions to the shared property. Furthermore, this area of law has become the focal point of academic study, and continues to influence decisions and the academic direction of research, as evidenced in a variety of writings that analyse the effects of the Jones v Kernott judgement, such as the article by Simon Gardner, and Brian Sloan. This case continues to be highly relevant for all those dealing with property disputes in non-marital relationships.
