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Jones v Kernott Supreme Court Decision- 10/11/2011
Judgment was given today on the case of Jones v Kernott. The Judgment is 29 pages long. The leading Judgment is given jointly by Lord Walker and Lady Hale. Lord Collins, Lord Kerr and Lord Wilson also give their judgments. In the leading Judgment, Lords Walker and Lady Hale take the opportunity to revisit the decision of Stack v Dowden [2007] UKHL 17, and to provide clarification on that decision in particular Lady Hale's references to inferred intention and imputed intention.
Jones v Kernott involved the appeal by Ms Jones from the Court of Appeal decision of the previous year in which Lord Justice Wall had given the leading judgment. He had overturned the decisions of the lower courts and had ruled that the beneficial shares in the equity of a jointly owned property should be shared equally by Ms Jones and Mr Kernott despite the passage of time. He had seen nothing on the facts to displace the presumption of equality and could not infer from the evidence an intention of the parties to change their beneficial interests after separation. Lord Justice Jacob had given a dissenting judgment finding that the Lower Courts had not applied the wrong test.
The Supreme Court upheld Ms Jones' appeal and upheld the decision of Mr Nicholas Strauss QC and the District Judge who had ruled that there should be a 90%10% split of equity in Ms Jones' favour. Lord Walker and Lady Hale found that in this case, there was no need for the court to impute an intention to the parties as the judge had made a finding that the intentions of the parties had changed after separation. At the outset the intention of Ms Jones and Mr Kernott had been to provide a home for themselves and their family. After the house failed to sell in 1995, a new plan was formed and Mr Kernott bought his own house and Ms Jones stayed in the former family home. The judges ruled that the logical inference is that the parties intended Mr Kernott’s interest in the property to crystallise at that stage. Just as he would have the sole interest benefit of any capital gain in his property owned in his sole name thereafter, so should Ms Jones from thereon have the benefit of any capital gain in the former family home. In the Judges' view this was an intention that both could and should have been inferred from the parties' conduct.
They concluded that the principles to be applied in further cases of unmarried cohabitants who own property jointly and with a joint mortgage but no express declarations re the beneficial interest were as follows:
1.The starting point is that equity follows the law and the parties are joint tenants in law and equity.
2.That presumption can be displaced by showing that the parties had a different common intention when they acquired the home or that they later formed a common intention that their respective shares would change.
3.The common intention is to be deduced objectively by their conduct: the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words and conduct - notwithstanding that this was not necessarily a conscious formulation of intention.
4.In those cases where it is clear either (a) that the parties did not intend joint tenancy at the outset or (b) had changed their original intention but it was not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property, the answer is that each is entitled to the share which the court considers fair having regard to the whole course of dealing between them in relation to the property Thus the court can impute an intention to the parties.
The Judges went on to say that in their view the whole course of dealing should be given a broad meaning, enabling a similar range of factors to be taken into account as may be relevant to ascertaining the parties' actual intentions. Each case will turn on its own facts. Financial contributions are relevant but there may be other factors which may enable the court to decide what shares were either intended or are fair. In respect to sole name cases, the Judges concluded that if a common intention to share equity can be found, and in the absence of a common intention as to what those shares should be, then the court will have to look at the whole course of dealing to ascertain those parties' intentions. Finally the Judges made clear their dislike of resulting trusts in respect to ascertaining beneficial interests in family homes.
Despite however the unanimity of the Judges restoring the original County Court decision, there are differences in the reasoning of the judges in how they have reached their decisions and Lord Kerr sounded a note of caution for practitioners. Alerting to the differences between Lady Hale's reasoning and Lord Walkers' reasoning, he concluded that whether the court infers a decision or imputes a decision, it will not necessarily involve the same decision making process for the court and it may be that a different analysis would be required to consider the two different principles. He concluded that there may be times when it was not possible to infer intention and on those occasions the court would have to impute intention to the parties and that there should be a clear differentiation of the two principles. Lord Wilson applauded the leading judgment and remarked that it was developing the law of equity to allow the court to impute a common intention to the parties, particularly in the light of the government's failure to change the law on cohabitation.