Constructive trusts. A topic to make law students shudder but newsworthy today because the Supreme Court released its decision on Jones v Kernott where our senior judges grapple with constructive trusts.
This is the second visit in four years to the Supreme Court by an ordinary unmarried couple with an ordinary asset in dispute – this time a £245,000 home in Essex. Mrs Jones had been granted 90% of the equity by the county court and High Court. The Court of Appeal disagreed granting equal shares, but found the decision “difficult”.
The facts started typically enough. The couple bought a house in the mid 1980s in joint names. As was common practice then, there was no written or other indication as to beneficial ownership. The couple split in 1993, with Mrs Jones remaining in the house with the two young children of the relationship. Proceedings to work out shares were not brought until 2007. In the interim, Mr Kernott paid nothing for the children, and nothing towards the property outgoings or its improvement. He bought another property using a joint insurance policy that the parties cashed in and divided equally. In summary, their lives diverged completely, save for the one joint property.
In the County Court, both parties agreed that had the beneficial interests been quantified at the date of separation in 1993 it would have been 50:50 – in accordance with joint legal ownership. The interesting point, for decision by the court, is what happened to their intentions after that, as their lives diverged? The lower courts said that, looking at the whole course of conduct of the parties, their intentions must have changed such that Mr Kernott no longer intended to own half the property.
The Court of Appeal, by a majority, thought the divergence of their lives (including a lack of responsibility towards children) did not indicate a changed intention. It would not attribute a changed intention to the parties. As so often, the parties themselves had not discussed the issue. The Supreme Court has today said unanimously that that does not matter. The court will impute, i.e. attribute, an intention if the circumstances dictate that is fair. The law is therefore now not only unclear, but highly discretionary.
Jones v Kernott involved an ordinary couple with ordinary assets, only £90,000 apart, who were forced to fight through four levels of court at considerable expense. It is a shame that the greyness of the law is foisted upon such couples. Although conveyancing practice is slightly better now about beneficial ownership upon purchase, thousands of older couples don’t benefit from that. Also people typically fail to set out how they own property with a simple declaration of trust, particularly later on when circumstances change. Unlike wills or pre-nups, there is a lack of awareness on this.
What we need is an overarching law of financial claims for unmarried couples. Some say that’s not necessary because they choose not to marry. But the Scots have introduced such a law recently. It offers financial remedies, albeit lesser than those available to married couples. If the distinction from marriage is marked in that way, if it protects children and those who believe in the myth of common law marriage, and if it avoids ordinary cases going on an expensive journey to the Supreme Court, then why not here too? The Coalition Government should dust down The Law Commission’s proposal to introduce important and overdue law reform in this area that could affect up to 4million cohabiting couples in this country.
William Healing, family law partner, Kingsley Napley