Where unmarried couples purchase a property and the relationship flourishes, then issues as to who owns the property are unlikely to arise. However, where the relationship breaks down and one party leaves the property, then, unless couples address the issues of ownership at that time, significant problems can arise which may then result in lengthy litigation. An example, and cautionary tale, of one such situation, is detailed in the recent Court of Appeal decision in Kernott v Jones.
Patricia Jones and Leonard Kernott bought a property in 1985 with the aid of a deposit provided by Miss Jones and a mortgage. The monthly mortgage repayments were shared between Mr Kernott and Miss Jones and the property was held in joint names.
By 1993 the relationship had broken down and Mr Kernott moved out of the property. Miss Jones remained in the house with their two children and she continued to service the mortgage.
Approximately 12 years after their separation Mr Kernott determined the legal joint tenancy and sought payment from Miss Jones for the value of his half share of the property. Miss Jones denied his right to a half share and issued proceedings for a declaration that she owned the entire beneficial interest.
Both the County Court and the High Court decided that the property was owned 90/10% in favour of Miss Jones. Their decision was based upon the premise that beneficial ownership could be “ambulatory” (a concept derived from the case of Stack v Dowdon). Therefore, as Miss Jones had paid the mortgage and looked after the children since the separation, the court imputed that the parties intended to alter the beneficial ownership in such a manner, notwithstanding the fact that there was no evidence detailing that this was their actual intention. Mr Kernott appealed.
The Court of Appeal disagreed with the decision of the High Court and reversed its decision.
The Court of Appeal stated that the starting position in disputes of this type is that there is a strong presumption that the property is jointly owned unless there is an express declaration of trust to the contrary. There was no such declaration and no evidence to support an intention to vary the beneficial ownership in the property. The Appeal Court said that if Mr Kernott and Miss Jones had truly intended that his beneficial interest should reduce post separation they should and would have acted accordingly and detailed such an agreement or intention.
Whilst questions of equitable accounting were not before the Court of Appeal, parties in Miss Jones’ situation may be able to recover some or all of the monies paid out for matters such as the mortgage and other outgoings (Mr Kernott would have a cross claim for occupational rent) on a sale of the property.
For further information please contact:
Rachael Oakes (nee Smethurst), head of the family team, on 01865 781000