Jones v Kernott

This appeal concerns the respective beneficial interests in a family home purchased in the joint names of cohabiting parties. The Supreme Court reaffirmed and clarified the principles in Stack v Dowden [2007] UKHL 17: the starting point in joint-names cases is that equity follows the legal title and the parties are presumed to hold as joint tenants, but that presumption can be displaced by evidence of a different common intention either at the time of purchase or formed later. If the parties' actual shared intention cannot be ascertained, the court may impute an intention and award each party the share which the court considers fair having regard to the whole course of dealing between them.

Applying those principles to the facts, the court held that the judge had been entitled to find that the parties' intentions changed after separation and to infer (or, alternatively, to impute) the proportions in which the beneficial interests should be held. The judge's division of the property (90% to Ms Jones, 10% to Mr Kernott) was restored.

This is an appeal from the Court of Appeal ([2010] EWCA Civ 578) by Mr Kernott against the trial judge's decision, later upheld in the High Court on first appeal ([2009] EWHC 1713 (Ch)), that the parties' family home (39 Badger Hall Avenue) should be held 90% to Ms Jones and 10% to Mr Kernott. The proceedings were brought by Ms Jones in the County Court under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 seeking declarations as to the parties' beneficial interests.

Facts:

• The property was bought in May 1985 in their joint names for £30,000 with an endowment mortgage; an extension was added in 1986.
• The parties lived together until October 1993, after which Ms Jones remained in the house and paid the household expenses alone for about 14½ years while Mr Kernott acquired a separate home in 1996.
• At trial the judge found that the parties' intentions had changed after separation so that Ms Jones should have the larger share; he quantified that share as 90% to 10%.

Procedural history: County Court trial (April 2008) → appeal to High Court (Deputy Judge Strauss QC) → Court of Appeal ([2010] EWCA Civ 578) which allowed Mr Kernott’s appeal and declared equal shares → Supreme Court appeal.

Issues framed:

• What is the starting legal presumption as to beneficial ownership when property is held in joint names?
• Can a presumption of joint beneficial ownership be rebutted by later conduct?
• If the parties’ shared intention as to proportions cannot be ascertained, may the court impute an intention and award shares the court considers fair?

Court’s reasoning and decision:

• The Court reaffirmed that in joint-names domestic cases the starting presumption is that equity follows the law and the proprietors are joint tenants; that presumption is not to be lightly displaced.
• That presumption may be rebutted either by a common intention at acquisition that beneficial interests differ, or by a later common intention that the shares should change. The common intention is to be deduced objectively from conduct and circumstances.
• Where the court cannot deduce the parties' actual shared intention as to proportions, it may impute an intention and determine shares on the basis of what is fair, considering the whole course of dealing between them (Chadwick LJ in Oxley v Hiscock was relied on and clarified).
• Applying the principles, the Supreme Court concluded that the trial judge was entitled to find a change of intention after separation and to infer the proportions reached; even if inference were not possible, imputing an intention to reach the same proportions was permissible. The Court restored the trial judge’s order.

The judgment also clarifies the distinction between inference and imputation of intention, accepts that in practice the distinction may often be narrow, and emphasises that each case turns on its facts.

Appeal allowed. The Supreme Court restored the trial judge’s order dividing the net proceeds of the family home roughly 90% to Ms Jones and 10% to Mr Kernott. The court held that in joint-ownership domestic cases the starting point is that equity follows the law (joint tenancy), that this presumption can be displaced by a common intention either at acquisition or later, that such intention is to be deduced objectively from the whole course of conduct, and that if actual intention cannot be ascertained the court may impute an intention and award shares it considers fair. The judge had been entitled to find that the parties’ intentions changed after separation and to quantify their shares accordingly.

County Court proceedings (trial April 2008) → appeal to the High Court (Deputy Judge Strauss QC) [2009] EWHC 1713 (Ch) → Court of Appeal allowed the appeal and held equal shares [2010] EWCA Civ 578 → allowed on appeal to the Supreme Court [2011] UKSC 53.