Jones v Kernott [2011] UKSC 53 is a leading decision of the United Kingdom Supreme Court on the beneficial ownership of a jointly owned family home. The case concerns how the courts determine the respective beneficial interests of unmarried cohabiting partners where the legal title is held in joint names but the parties’ conduct changes over time.
In Jones v Kernott, the Supreme Court ultimately held that the property should be divided in a 90:10 ratio in favour of Ms Jones. The decision in Jones v Kernott clarified the approach to constructive trusts in domestic property disputes.
Facts of Jones v Kernott Case
Ms Jones and Mr Kernott met in 1980. In 1981, Ms Jones purchased a caravan with the assistance of a bank loan. In 1984, Mr Kernott moved into the caravan following the birth of their first child.
In May 1985, Ms Jones sold the caravan and the parties purchased a property at 39 Badger Hall Avenue, Thundersley, Essex, for £30,000. Ms Jones contributed £6,000 towards the purchase price, and the remainder was financed by an interest-only mortgage. The property was conveyed into their joint names.
From that point, the parties shared payment of the mortgage and household bills. In 1986, their second child was born. The couple also took out a £2,000 loan to fund an extension to the property, which was mostly constructed by Mr Kernott.
In 1993, the relationship ended and Mr Kernott left the family home. After leaving, he stopped paying his share of the household bills and contributed little or nothing towards the maintenance of the children. Ms Jones remained in the property with the children and continued to pay the mortgage and other expenses.
In May 1996, the parties cashed in a life insurance policy and divided the proceeds equally. Mr Kernott used his share to purchase another property at 114 Stanley Road, Benfleet, Essex, for £57,000.
In May 2006, Mr Kernott sought payment of what he claimed to be his half-share in the Badger Hall Avenue property. Ms Jones responded by making a claim under the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA), seeking a declaration that she owned the entire beneficial interest.
Legal Issue
The central question in Jones v Kernott was how the beneficial interests in a jointly owned property should be determined where the parties had separated and their financial contributions had significantly diverged.
Although the property had been purchased in joint names, the court had to decide whether that meant the beneficial ownership was equally shared, or whether the parties’ subsequent conduct had altered their respective shares.
Decision at First Instance
The case was first heard by Judge Dedman in the Southend-on-Sea County Court. In reaching his decision, he considered Oxley v Hiscock [2005] Fam 211 and Stack v Dowden [2007] 2 AC 432.
Judge Dedman accepted that at the outset the parties’ intentions may have been that the property would be jointly owned. However, he found that their intentions had changed significantly over time. He considered that the correct approach was to determine what was “fair and just” between the parties, having regard to the whole course of dealing.
In particular, he noted:
- Mr Kernott had ceased paying bills after separation.
- Ms Jones had contributed more than 80% of the equity in the property.
- Mr Kernott had provided little or no financial assistance towards the maintenance of the children.
Taking these factors into account, he concluded that the appropriate division was 90% to Ms Jones and 10% to Mr Kernott.
High Court
Mr Kernott appealed. The appeal was heard by Nicholas Strauss QC in the High Court, Chancery Division. The High Court dismissed the appeal and upheld the 90:10 division of beneficial interests.
Court of Appeal
The matter was then considered by the Court of Appeal. On 26 May 2010, the Court of Appeal upheld the appeal and concluded that the property was held in equal shares of 50:50. Rimer LJ gave the judgement.
This meant that the Court of Appeal restored the position that the beneficial ownership reflected the legal title.
Supreme Court Decision: Jones v Kernott Judgement
The case ultimately reached the Supreme Court of the United Kingdom. On 9 November 2011, the Supreme Court overturned the decision of the Court of Appeal. The Supreme Court held that the beneficial interests in the property were held in a ratio of 90% to Ms Jones and 10% to Mr Kernott.
Although the Justices were unanimous in the result, they differed in their reasoning.
Lord Walker, Lady Hale and Lord Collins concluded that there are circumstances in which it is permissible for the court to impute a common intention to the parties in relation to beneficial ownership.
Lord Kerr and Lord Wilson preferred to base their reasoning on fairness and the court’s ability to acknowledge a constructive trust in a way that reflects what is just in the circumstances.
Reasoning of the Supreme Court in Jones v Kernott
The Supreme Court considered whether it was possible to infer from the parties’ conduct that they had intended their beneficial shares to change over time. The majority accepted that the court may, in appropriate circumstances, impute a common intention.
Lord Kerr observed that while it may have been Mr Kernott’s intention that his interest crystallised when the life insurance policy was cashed in, it was difficult to infer that he had entirely abandoned his stake in the property merely because he left the home and purchased another property.
However, Lord Kerr considered it “eminently fair” that the property should be divided in the proportions determined by Judge Dedman. He preferred to allow the appeal on the basis that, although it was impossible to infer the necessary intention, such an intention should be imputed.
Lord Wilson addressed the distinction between inferring and imputing a common intention. He disagreed with Lady Hale’s earlier formulation suggesting that the court might not have intended to recognise a power to impute intention.
He considered that, on a rigorous approach to inference, it was unrealistic to infer that the parties intended a 90:10 split. Instead, he considered it appropriate to impute such an intention in order to achieve a fair result. He concurred in the final outcome.
The Supreme Court therefore restored the 90:10 division originally determined by Judge Dedman.
Conclusion
Jones v Kernott stands as an important Supreme Court authority on constructive trusts and beneficial ownership in domestic property disputes. The case establishes that joint legal ownership does not automatically mean equal beneficial ownership where the parties’ conduct over time indicates otherwise.
By restoring the 90:10 division in favour of Ms Jones, the Supreme Court in Jones v Kernott confirmed that the court may recognise or impute a change in intention where fairness and the whole course of dealing justify it.