8 December 2011 by

The Rights of Unmarried Couples, a cautionary tale: Part 2

Those of you that read my blog of 20 May 2011 will no doubt have been waiting with bated breath for the decision of the Supreme Court in the case of Jones –v- Kernott. This was the cautionary tale of a couple that had been separated for more than 12 years when Mr Kernott sought a half share in their former home despite having made no contribution towards the mortgage or other household costs since separation.

Initially the County Court found that Mr Kernott should only be entitled to a 10% interest on the basis that this was fair and reasonable. The decision was appealed, but the High Court upheld the decision. A further appeal was made to the Court of Appeal and Mr Kernott was awarded a 50% interest in the property.

More than 4 years after Mr Kernott initially began the proceedings, the highest Court in the land has now ordered that he is only entitled to a 10% interest in the property.

The reasoning behind the Court of Appeal decision was that as the property was initially purchased in joint names and they had subsequently agreed to sell the property and share the sale proceeds equally this showed their intention that the property was to be held jointly in equal shares.

The Supreme Court, however, found that the parties’ intentions had changed after the separation. Although the property was placed on the market it failed to sell. It was at that time that a ‘new plan’ was formed. A life insurance policy was encashed and Mr Kernott used the proceeds to purchase a new property for himself, which is something he simply would not have been able to do had he been required to continue contributing towards the mortgage, endowment policy and other outgoings relating to the property. The court, therefore, found that the ‘logical inference’ is that it was the parties’ intention that their interests in the property should crystallise at that point.

The property was worth approximately £60,000 when the parties separated, but had increased in value to £245,000 in 2008 when the County Court had found that Mr Kernott should only by entitled to a 10% interest. The Court found that when the parties separated Mr Kernott’s 50% interest would have equated to £30,000, which is roughly 10% of the value in 2008.

In summary, the Court set down the following principles that will be applicable to cases where a property has been purchased in joint names by an unmarried couple with no express declaration of their beneficial interests:

  1. The starting point will always be that the property is owned in equal shares.
  2. This presumption can be challenged if it can be shown that the parties’ intentions were different at the time the property was purchased or at a later date.
  3. The common intention will be objectively deduced from the conduct and dealings between the parties.
  4. Where it is not clear what the parties’ intentions were at the time the property was purchased or at a later date, the court can impute an intention that is considered fair having regard to the whole course of dealing between them.
  5. Each case will turn on its own facts.

The costs of this litigation will no doubt have exceeded Mr Kernott’s 10% interest in the property, so the moral of the story for all unmarried couples that purchase a property together is to ensure your intentions are clear. If they are unclear the Court will seek to ascertain the parties’ actual intentions, whether expressed or inferred, but if this is not possible the Court will impute an intention that is considered fair having regard to the whole course of dealing between the parties.

Of course, this saga could have all been very easily avoided had the parties clearly documented their intentions by executing a declaration of trust or entering into a cohabitation agreement when the property was initially purchased or they started living together.

If you have any questions, please call or email Darrell on 020 7288 4795,

4 November 2011 by

Changes to the Construction Act

Part II of the Housing Grants, Construction and Regeneration Act 1996 (‘the 1996 Act’) has been a key piece of legislation affecting the construction industry in England, Wales and Scotland since it came into force on 1 May 1998. It applies to any agreement that is a construction contract as defined in sections 104 – 107 of the 1996 Act.

6 December 2011 by

Probate

If there’s one thing lawyers are criticised for more than any other, it’s not being easy to understand – and jargon is the reason why. It’s probably a fair criticism. The law, like any other specialist area of human endeavour, has developed almost a language of its own over the 1,000 or so years it has evolved in this country, and if you don’t know the terminology, legalese can be difficult to understand.

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