COHABITEES RIGHTS

Supreme Court verdict gives cohabitees more clarity, though urgent reform still is required

The decision in the Kernott vs Jones case gives cohabitees more rights to negotiate their share of jointly-owned property if a relationship breaks down.

Patricia Jones, 56, won an appeal at the Supreme Court against an earlier ruling that had given her partner, Leonard Kernott, 51, the right to half of the Essex bungalow they bought in 1985, despite his having left 18 years ago and not contributed to the mortgage since.

Facts

Ms Jones and Mr Kernott met in 1980. In 1981 Ms Jones bought a caravan with the help of a bank loan, and in 1984 Mr Kernott moved into the caravan with her upon the birth of their first child. In May 1985 Ms Jones sold her caravan, and the parties bought a house in Essex  for £30,000. Ms Jones contributed £6,000, and the balance was raised by an interest-only mortgage. The house was conveyed into their joint names. From this point on they shared payment of the household bills and the mortgage. In 1986 the couple's second child was born. The parties took out a loan for £2,000 for an extension which was mostly constructed by Mr Kernott.

In 1993 the couple separated, and Mr Kernott left the house. He stopped paying his share of the bills, and contributed little or nothing towards the maintenance of the children. In May 1996 the parties cashed in a life insurance policy and divided the proceeds. With his share of these Mr Kernott bought another house in Essex for £57,000.

In May 2006 Mr Kernott sought payment of his half-share of the first house. Ms Jones responded by claiming in court for a declaration that she owned the entire beneficial interest in the property. Judge Dedman, after considering previous caselaw decided that while the interests of the parties at the outset might well have been that the property should be split jointly, those intentions had altered significantly over the years. He considered that the correct test was therefore what was "fair and just" between the parties, taking into account the whole course of dealing between them. He concluded, taking into account Mr Kernott's ceasing to pay any bills, the fact that Ms Jones contributed over 80% of the equity, and the lack of assistance provided by Mr Kernott relating to the maintenance of the children, that the correct split would be 90:10 in favour of Ms Jones.

After Mr Nicholas Strauss QC in the High Court awarded Ms Jones a 90% share, The Court of Appeal held that the house was held in equal shares.

The Supreme Court, overturning the Court of Appeal, held that Mr Kernott and Ms Jones would hold the shares in the house on trust in a ratio of 10% to 90%, to reflect their contributions to the home.

Shani Carr, partner and head of Hand Morgan & Owen's Family Law Department outlined the implications of the judgment. "Today's ruling was welcomed by family law specialists, but it still requires judges to make their own interpretations, and only deals with property. The law remains in a "state of flux".  Solicitors are still not in a situation of being able to give clients concrete advice - it's still very much left up to individual judges. This causes confusion, stress, litigation and costs – and hence ultimately is damaging for families and children."

The Law Commission conducted an investigation into cohabitee property rights, culminating in a series of recommendations in 2007. However these proposals were never implemented and the U.K’s 2.2m people who currently cohabit do not enjoy the legal protections of married couples or those in civil partnerships.

This judgement 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. The verdict only goes so far in providing cohabiting couples with clarity about what will happen to shared property on a relationship breakdown.  Many cases could still end with what most people would consider an unfair outcome.

It is crucial that couples who are thinking of buying a property and living together take legal advice from a solicitor to reduce the likelihood of potential problems later. Solicitors are highly experienced in dealing with house purchases and helping people properly set up their financial arrangements. A solicitor will help to avoid unforeseen problems, about legal rights in a relationship generally, and can discuss how rights might change as a relationship develops, such as children or marriage.

14 November 2011

Disclaimer

The contents of this article are for the purposes of generally awareness only.  They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.  Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.