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Kernott v Jones and the principled approach to Constructive Trusts

In anticipation of the Supreme Court’s judgment in Kernott v Jones, Peter Ryder, solicitor considers the principles that the court should apply in deciding property disputes in cohabitation disputes.

















Peter Ryder, solicitor, has over 25 years experience in family law work.  He works as a family law locum and has assisted over thirty different firms in England and Wales.  He also lectures on family law and cohabitation matters.

Some commentators have expressed the hope that in Kernott v Jones 1 the Supreme Court will move the law of constructive trusts away from the search for common intention, substituting the ability to decide cases on the basis of fairness.  In this article I argue that to do so would not only be bad in itself, it would also be unprincipled and thus beyond the powers of the Supreme Court.

The decision of the Supreme Court should be useful in clarifying the issue of whether it is permissible in some circumstances for the court's idea of fairness to form part of its decision but it should remain impermissible for the court to substitute its own idea of fairness for what it finds was the common intention of the parties. 

In the case itself the parties separated with Ms Jones and their child being left in their jointly owned home which they both accepted was, at that time, owned by them in equal shares.  Mr Kernott needed to buy himself a new house and, according to her case, Ms Jones, knowing that Mr Kernott was financially stretched, did not press him for either child support or for help with the cost of the mortgage or upkeep of the house.  Many years later Mr Kernott sought his half share.  In response Ms Jones argued that they had an understanding that, because she was 'letting him off' his responsibilities, his share would be reduced over time, thus compensating her for what Mr Kernott had not earlier provided.  By not seeking financial help from him Ms Jones had acted to her detriment and so a constructive trust was triggered.  Her case emphasised her continuing contribution to the house and seemed, it is submitted, to underplay the lack of child support.

The trial judge accepted Ms Jones's argument and assessed the man's share at 10%.  The judge hearing the first appeal accepted the findings of the trial judge and dismissed the appeal.  Unfortunately, there was, up to this point, it is submitted, a degree of error in principle in that it was suggested that where the court could not identify the common intention of the parties it was permissible for it to decide the case on the basis of what it thought was fair.

In the Court of Appeal the majority found that there had not been enough evidence for the judge to identify a common intention that was different from the legal position of equal shares and that the judge had then made the error of deciding the issue on the basis of  his own idea of fairness rather than the common intention of the parties.  In his dissenting judgment Jacob LJ  said that there can be situations where the judicial notion of fairness has a role to play and that this was one such situation.  He disagreed with the majority view that the trial judge did not have enough evidence to make the finding that there was a common intention that the share of the man would be reduced over time to something which represented a fair share when set against his failure over the intervening period to contribute to the cost of keeping and maintaining the house (or the children).  He went on to say that it was in the absence of subsequent agreement about that reduction in Mr Kernott's share that the court could decide what that share should be, using the principles of fairness.  If it was their common intention that the share should be reduced to what is fair then the court, as a last resort, could and should identify the fair result.  This did not substitute fairness for common intention.  It merely accepted that fairness was an element of that common intention.  If the Supreme Court limit themselves to that issue then the case will merely clarify the law. 

On a practical note, if the Supreme Court go further and open the Pandora's Box of a new law of constructive trusts based not on the need to identify common intention but on the notion of judicial fairness it will, it is submitted, create more problems than it solves.  Seeking to achieve a 'fair' result may, at first blush, seem like the more modern and reasoned way forward.  This is particularly true for family lawyers who are steeped in the discretionary jurisdiction of the court in financial relief, but it is precisely our experience of judicial fairness in that jurisdiction that should warn us against a change of this kind.  The 30 years prior to White v White 2 showed just how unpredictable a wide judicial discretion can be.  Even now there remain substantial differences between the results which can be anticipated from different individual judges and/or different court centres.  Some solicitors engage in forum shopping for that reason alone.  This is not good for litigants and it is not good for the reputation of the law.  Although the abandonment of common intention may mean that lawyers will have less trouble understanding the law, it is likely that there would be more inconsistency in the results and greater difficulty in advising clients on likely outcomes.

It is to be hoped, however that the Supreme Court will follow established principles and stick with the law as it is.  In a society governed by the rule of law, interference by the courts in the lives and rights, particularly the property rights, of the individual must be principled, not arbitrary.  Except as permitted by statute or rules dealing with issues such as undue influence the court does not generally involve itself in otherwise lawful arrangements between individuals of full capacity merely because, for example, a contract seems to be unfair. 
 
The law is nothing if it does not follow its own rules.  The central rule enshrined in the law of constructive trusts is that which requires the court to identify the intentions of the parties at the relevant time or times in the transaction and/or their relationship.  That this can be a difficult exercise is not in doubt, nor can it be argued that some of the concepts have not been troubling for even the best legal minds.  Thus the idea  gained ground in the High Court and the Court of Appeal in the 1950s and 1960s (with no little help from Lord Denning) that the court could substitute its own idea of fairness for what it found to be the intention of the parties.  This notion was struck down in the House of Lords in the Pettitt and Gissing 3 cases.  When that idea surfaced again in the Court of Appeal, in Oxley v Hiscock 4 the House of Lords took the first opportunity available to it, in Stack v Dowden 5, to correct the view expressed in the Court of Appeal and remind us all that discovering common intention remains the objective.  Baroness Hale in Stack v. Dowden at para. 61 said "...the search is still for the result which the parties must, in the light of their conduct, be taken to have intended".  That is not legal pedantry, but rather a  recognition of the need to find a principled reason for judicial interference.  Can there be a principled reason for such interference under the guise of a law a constructive trust based merely upon some notion of what the court thinks is fair?  It is surely the subjective unfairness which arises from the failure of one party to follow his conscience and implement a common intention upon which the other party has relied which gives the court jurisdiction.

It may well be that the current law needs some attention to improve it, or perhaps it merely needs to be better understood by practitioners and many of the judiciary.  One must remember that until recent times this branch of the law was the preserve of a specialist bar and a specialist judiciary.  Now many non-specialists run constructive trust cases and they are tried (probably more often than not) by non-specialist judges some of whom may not be very familiar with the law of trusts..  A careful reading of the modern authorities leads to the conclusion that much of the confusion in the law has been contributed to by the decisions of lawyers who may have been operating in a technical area of practice of which they had relatively little experience.  Once the confused decisions are stripped out the law is not very confusing at all.  To replace it with the superficially simple but innately uncertain concept of 'fairness' would create more problems, including the very real risk in these times of the litigant in person that far more cohabitants will litigate in the hope of persuading a judge that the result engendered by the application of strict law is "unfair."

In any event the Supreme Court could only move us from common intention to fairness if it was willing to abandon the line of authorities which underpin the constructive trust itself.  It is those cases which make judicial interference principled.  It is to be hoped that it remains so.


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1 [2010] EWCA Civ 578
2 2001 1 AC 596
3 Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing. [1971] AC 886
4 [2004] EWCA Civ 546
5 [2007] UKHL 17 [2007] 2 A.C. 432