There are 2 million cohabitating couples in England and Wales and a landmark case decided last week has changed the position for unmarried couples to such an extent that the old myth of “common law” husband and wife is fast becoming a reality.
Ice-cream Salesman, Leonard Kernott now 51 and Patricia Jones 56, bought a house in 1985 where they lived with their two children until 1993 when Mr Kernott left. Miss Jones stayed living at the Essex bungalow with the two children and became solely responsible for all the outgoings on the house and for paying the mortgage whilst Mr Kernott bought another property in his sole name using the proceeds of an insurance policy. In 2006 Mr Kernott, relying on the fact that he was a joint tenant, said he was entitled to 50%. The court of appeal agreed.
By way of background I should explain the legal position for unmarried couples with jointly owned properties. Where an unmarried couple buy a house jointly they may buy as “joint tenants” which means there has always been a strong legal presumption that they own the house in equal shares. It was previously thought that it was almost impossible to challenge this presumption. Alternatively, couples can buy as “tenants in common”. If they do they can specify the percentage of their shares. If they do not we must look at what was intended.
The difficulty sets in if, when the couple separate, they can’t agree what was intended or they did not specifically intend anything! Ms Jones argued that the common intention that they would own the house equally had changed when Mr Kernott left the family home. The case of Kernott v Jones is a prime example of this and the decision made in the Supreme Court changes what prior to this was thought to be the legal position.
The Supreme Court has now said that the presumption that a couple hold a jointly owned property equally can be displaced by evidence that their common intention has changed. If that presumption is displaced and there is no further clear evidence about the division of their shares in the property, the court can objectively deduct the couple’s common intention by looking at their relationship and conduct. Where it is clear that they changed their original intention, the court can impute an intention that each is entitled to a fair share. The outcome of each case depends on the particular facts of that case.
The Supreme Court reinstated the County Court’s decision that Mr Kernott was only entitled to a 10% share. To most people this will sound fair, but it is a marked departure from decisions made in other cases. It establishes a precedent that can be relied on in the future. Following from this case, the position of unmarried couples has moved huge steps towards that of the rights given to a married couple where contributions and fairness are some of the factors taken into consideration when dividing assets between husband and wife. We are yet to see in practice the impact of Jones and Kernott and perhaps this is the correct and long awaited approach given the increase of cohabitating couples in our society. The uncertainty has lead to one certainty: every unmarried couple who chooses to jointly purchase a property should discuss with their solicitors what their intentions are and make sure this is recorded legally. They should seriously consider entering into a declaration of trust and/or cohabitation agreement. Patricia Jones and Leonard Kernott had to have four different hearings in four different courts before their shares became clear. A legal document entered into at the start or a separation deed drawn up by solicitors when they separated could have saved them a huge financial and emotional cost. Last week my colleague, Beth Woodward posted on this website an article on what had happened to Geoff Boycott when he bought a house with his partner and ended up loosing out because he did not fully understand his legal position. See
http://www.neves-solicitors.co.uk/site/library/legalnews/geoff_boycott_in_Court.html
If you are cohabitating and would like to know where you stand legally or you would like to discuss more about a cohabitation agreement or separation agreement then please contact Pui Au Yeung via email pui.au-yeung@neves-solicitors.co.uk - (Tel: 01908 304560) or one of our other solicitors in the Family Department.
