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Jones -v- Kernott – Further uncertainty for unmarried couples who separate

The long awaited decision of the Supreme Court in Jones v Kernott [2011] UKSC 53 has finally been released today. This case illustrates the continuing uncertainly that continues to surround cases involving unmarried couples who separate.

If a married couple split up and they own a property jointly or in one party’s sole name the Court has a wide ranging discretion to determine what a fair outcome should be. In doing so they can take into account factors such as the welfare of any children, the contributions each party has made to the marriage, the income and outgoings of the parties and so on. However it is very different for parties who are not married as they then have to rely upon property and trust law principles where the Court does not have the same discretion. Factors which would be highly relevant if the parties were married simply carry no weight.

With unmarried couples when they buy a house the most important aspect of the case has always been to see how the parties purchased the property. If one party is putting in more money than the other and they don’t want to own the house equally then they really need to have a Declaration of Trust drawn up to safeguard their position. In the absence of that the inference is that parties intended equal ownership and that remains the same even if one party had contributed more money or they split up.

If an unmarried couple separate with one of them staying in the house and making all mortgage payments then they can be given credit in any later division of the property by such amount as they have reduced the mortgage balance by. The same principle applies to post-separation home improvements, such as building an extension or new conservatory. This is what is commonly known as “equitable accounting.”

What the Court has decided in Kernott –v- Jones goes beyond “equitable accounting.”  In this case the parties separated in 1993 when Mr Kernott moved out and effectively stopped contributing towards the property. The Court inferred that although the property was initially purchased in equal shares, in the subsequent 14 years that followed separation the parties’ common intention had changed from equal ownership. The Court decided that Mr Kernott was then only entitled to 10%.

The implications of this decision are likely to lead to more cases in which an argument will be run that the intention of the parties may well have been 50/50 at the time of purchase but for some reason the intention changed at a later date with the court being asked to infer that as they did in this case. We think that this will, however, always been difficult to prove and this is why we would always recommend that if there is any intention to own a property in unequal shares the parties should take specialist legal advice and have a Declaration of Trust drawn up clearly showing the proportions in which they intend to own the property.

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Paul Lancaster

Partner
Family Law
PLancaster@LawBlacks.com
0113 227 9285
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Paul Lancaster Blacks Solicitors LLP