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Practitioners welcome Jones v Kernott judgment

Complexity of the law underlines the need for cohabitants to record their changing intentions

Practitioners have welcomed the Supreme Court's clarification in Jones v Kernott [2011] UKSC 53 of the House of Lords' decision in Stack v Dowden. However, in the absence of reform of the law affecting cohabitants' property rights, it is all the more important that couples record their intentions formally and review those arrangements in the light of subsequent changes in their circumstances.  

The case concerned the rights of Leonard Kernott and Patricia Jones and their entitlement to a £245,000 Essex house they bought for £30,000 in 1985. Since the pair separated in 1993, Ms Jones has lived with their two children at the property and paid the mortgage independently. 

The county court and High Court have both previously agreed that Mr Kernott was entitled to just 10 per cent of value of the property on the basis of the couple's financial arrangements during the time they were apart. However, the ruling was then overturned by the Court of Appeal, which ordered a 50/50 share on the basis of the original agreement. 

Today, around 18 years after they split and following months of deliberation on the issue, judges at the Supreme Court have ruled that 10 per cent is a fair share for Mr Kernott.

Steve Kirwan, chair of Resolution's Cohabitation Committee, said that the decision of the Supreme Court in the case was to be welcomed, not only because of the outcome for Ms Jones – one which most would regard as being a "fair" outcome for her – but also because it enabled the court to provide further clarification of the rather confusing guidance in the earlier decision of Stack v Dowden.

Mr Kirwan said that, although the decision was a unanimous one, the reasons adopted for reaching it were not, which itself underlines the complexity of the law in this difficult area, with two of the judges taking the opportunity to criticise Parliament for a continued failure to reform the law affecting couples that live together.

Alison Hawes, a partner and family law specialist at Irwin Mitchell, said:

"The bottom line is that couples should not assume that the legal pieces of paper that show co-ownership of a property are the end of the story.  

"The careful analysis of the couple's relationship and dealings means that the court has taken the view it is fair to adjust the 50/50 shares from when the property was first bought many years ago, so that the man has only 10 per cent because of what has happened in the intervening years. 

"The judgment makes it even more important that couples who live together have a clear simple declaration of trust explaining how they want to own the property; and a living together agreement that shows what their intentions are.  

"If they break up or there is a change in circumstance – one of them perhaps is made redundant and does not pay the mortgage – then if they want certainty it would be sensible to go back to their living together agreement or declaration of trust and make sure that it says what they want it to.  

"Taking these simple precautions, a bit like making a will, is going to save thousands of pounds in legal fees, and uncertainty whilst lawyers and judges look at diaries, receipts, and the history of the couple's relationship and financial transactions over periods of months or years. 

"Some commentators will say that the court is being paternalistic – that if a couple want a court to intervene and do what is 'fair' then they can get married because the divorce courts have a wide discretion.  Others will say that couples who live together need the protection of the court where there is no clear legal agreement, to help reach 'fair' decisions."