Supreme Court upholds county ruling in cohabitation case

The Supreme Court has today restored a county court judgment that supports a court’s right to decide the ’fairest’ way of dividing property when cohabiting couples split up.

Handing down their decision in Jones v Kernott, the five sitting Supreme Court Justices said that in cases where a cohabiting couple fails to make a decision over the division of property when they separate, it falls to judges to impute their intention and decide what is fair.

The case hinged on the ownership of a house bought by a Ms Jones and a Mr Kernott in 1985. Jones and Kernott had two children together before Kernott moved out of the property in 1993. While cohabiting the couple had shared household expenses, including a mortgage, but Kernott made no further contribution once he had moved out.

In 1996, after the couple had agreed to cash in a joint life insurance policy, Kernott bought his own house.

The proceedings began in 2006, when Kernott sought to claim his interest in the joint property at 39 Badger Hall Avenue in the Essex town of Thundersley. In response, Jones began county court proceedings seeking to claim that she owned the entire beneficial interest in the house. If she and Kernott were joint owners, she said, she should also be registered as a joint proprietor in Kernott’s house.

The county court judge said previous judgments on this issue, including the 2007 House of Lords decision in Stack v Dowden, meant that in the absence of a clear indication of the couple’s intention he had to consider “what is fair and just between the parties”. He decided that Jones owned 90 per cent of the Badger Hall property and Kernott 10 per cent.

In the High Court deputy judge Nicholas Strauss QC dismissed Kernott’s appeal. However, the Court of Appeal upheld the appeal, ruling by a majority that Jones and Kernott owned the property jointly.

The Supreme Court, however, found that the county court judge had applied the correct reasoning. Although there were some differences in the unanimous decisions of the Supreme Court justices, they agreed on key points. Supreme Court Justices Lady Hale and Lords Walker, Collins, Kerr and Wilson sat on the case.

Kerr SCJ said: “Where the intention as to the division of the property cannot be inferred, each is entitled to that share which the court considers fair. In considering the question of what is fair the court should have regard to the whole course of dealing between the parties.”

Initial reaction from lawyers suggested the decision is likely to make the question of dividing property between unmarried couples more difficult in cases where intention has not been clearly declared.

Jones was represented by sole practitioner Ivan Sampson of A I Sampson & Co, instructing Lamb Chambers’ Richard Power. Kernott was represented by Chris Pinnion of Francis Thatcher & Co, who instructed Andrew Bailey of Chelmsford set Trinity Chambers.

Sampson said his client was “delighted” with the decision.

Lawyers’ reaction:

Law Society president John Wotton:  
“This judgment moves the law forward because it allows courts to reach a view about what the parties intended, and what a fair outcome should look like. However, the meaning of ‘fairness’ in cohabitation law is not the same as fairness in marriage. Many cases could still end with what most people would consider an unfair outcome. The confused state of the law continues to cause stress, litigation and costs – and hence ultimately is damaging for families and children.”

Jane Craig, head of family law, Manches:
“The judgment achieves what most people would think is a fair outcome and is very welcome. Nonetheless, this decision does not detract from the need for the government to implement the Law Commission recommendations on cohabitation because this whole area of the law is a mess and desperately needs reform.”

Alison Hawes, partner, Irwin Mitchell:
“The bottom line is that couples should not assume that the legal pieces of paper that show co-ownership of a property are the end of the story. If one of them goes on to make a different arrangement, for example moving out or not paying the mortgage then the court can and will adjust the original shares. Some commentators will say that the court is being paternalistic – that if a couple want a court to intervene and do what is ‘fair’ then they can get married because the divorce courts have a wide discretion. Others will say that couples who live together need the protection of the court where there is no clear legal agreement, to help reach ‘fair’ decisions.”

Joanna Grandfield, barrister, Mills & Reeve:
“The Supreme Court’s decision approves the increasing tendency of the courts to avoid the harsh results of a strict interpretation of property law through the use of ‘inferred intentions’ as a means of getting round legally correct, but morally unfair results. The price of this approach is that cases will continue to come before the court requiring an extensive examination of the history of a relationship including detailed evidence from the parties as to who said and did what when in order to determine what was (or should have been) agreed as to property ownership as a result. That has a high cost, both emotional and financial, for all concerned.”

Matthew Humphries, senior associate, Stewarts Law:
“I think it’s shifting the law towards the kind of test that you have when spouses get divorced. What’s really interesting about it is the way the Supreme Court has decided to develop the law when Parliament has specifically decided not to do so.”