Coventry View

A litigation lawyer's perspective

How do we split the house? – Jones v Kernott

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I had hoped to write a crisp and erudite piece about how the Supreme Court had finally sorted out, once and for all, the tricky problem of how you divide up the interests in a house after an unmarried couple split up. After all, there was a judgment given on 9th November –  [2011] SCUK 53 – which should have done this. The court had waited for 5 months since hearing the argument in May, and the lead judgment was given by Lord Walker and Lady Hale, who were the leading players in the last big case on the subject  – Stack v Dowden. It was all very promising. But things didn’t work out as I had expected.

The problem is a very real one, and remarkably common. I won’t go into all the details because that isn’t the point, but broadly Ms Jones and Mr Kernott bought a house in joint names. After living there for a time and improving it, they split up and Mr K moved out, and a little time later bought another house to live in himself and stopped paying the mortgage on this one. 14 years later when the house had gone up vastly in value he came back asking for his 50% share.

The county court judge gave him 10% which more or less represented the value when he left. This was upheld by the High Court, but the CA held that as he had a 50% interest to start with this is what he retained. And so to the SC.

They upheld the county court decision, which was no real surprise, and objectively seemed fair to all concerned (if you disregard the cost of getting to that point). However, the case had been eagerly awaited as a chance to give real practical guidance to unmarried couples, and their lawyers, on how these things are decided, so as to avoid having to go through the courts themselves. And this is where things broke down.

Now the big difference between being a married and an unmarried couple (or rather the one that I want to concentrate on today) is that when things break up the courts have no power to transfer assets or award maintenance etc. All they can do in most cases (child maintenance besides) is declare who owns what, and in what shares, and if that is unfair or unreasonable there is nothing much that can be done.

This is especially so in the case of a jointly owned house, bought by the couple, usually with differing shares of the deposit, and subject to a joint mortgage, which they pay off unequally in practice. It is far and away most couples’ largest asset. How should it be split? Do you look at the contributions and divide it according to the amounts paid? What about the liability for the mortgage? What if one party pays the mortgage and the other pays the utility bills? Or stops work to bring up children? Or earns a lot less than the other? What if there are improvements carried out manually by the couple? How do you deal with inflation? Does it matter if they keep separate bank accounts? What if one moves out how do you deal with the benefit that the other one receives by living there? Does it matter if one moves out under pressure from the other?  The list of questions is long and they all need answers.

Because whatever you say, the couple are not going to enter into a formal declaration of trust setting out their rights and so on. They have decided that they aren’t going to get married, they love and trust one another, and the future is rosy. Or rose-tinted.

So one day, when it has gone wrong, and one or other of them comes in to my office to ask me the awkward questions set out in that paragraph above, it would be extremely handy to be able to have a set of rules that would answer them, and then everybody could go on their way if not happily then at least much better informed.

But it was not to be. First of all there were 4 judgments, all slightly different. And then the guidance in the main judgment, from Lord Walker and Lady Hale, was less than comprehensive. And there was a lot of talk about the deep significance of the difference between “imputed” intentions and “inferred” intentions which mean little to me and will mean a lot less to my clients. It was, with respect, a seriously missed chance.

What can we salvage from the wreckage?  Well there are a set of guidelines set out in the main judgment (at para 51) which say in essence:

  • If they own the house jointly then this would normally mean equally (“as equity follows the law”).
  • But this can be displaced by showing a different intention, either at the time of purchase, or a later common intention to vary things.
  • The common intention is to be deduced from conduct (presumably in the absence of an express agreement) using the guidelines in Stack v Dowden and elsewhere.
  • If it is clear that the parties did not intend equal shares from the start, or had changed their intention, but the court can’t work out exactly what they did mean, the court can decide things on the basis of what they consider fair, “having regard to the whole course of dealing between them in relation to the property.” (Whatever that means – the court said that this had to be given a broad meaning).
  • And each case will (of course) turn on its own facts. Financial contributions are relevant but there are many other factors.

And similar considerations apply if the property is in one name only, although the first question must be whether the other party was intended to have any beneficial interest in the property at all.

But there are more questions raised than answered. If the court had said that they had a complete discretion to award such shares as they thought just then we would know where we are. But they could hardly do that in the absence of legislation. What all this means I will leave to other commentators. But it is a missed chance to clarify thing, an an area which, given the marriage statistics, can only get bigger.

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Written by Coventry Man

10/11/2011 at 18:47

Posted in Housing

Tagged with ,

One Response

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  1. […] that clear, as the Supreme Court showed in the case of Jones v Kernott (see my piece on this here). She will have to struggle through the provisions of the Trusts of Land and Appointment of […]


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