Jones v Kernott [2012] 1 AC 776

Key point

  • Under a common intention constructive trust, if it is impossible to infer any actual intention as to the parties’ respective shares, their intention will be imputed by fairness according to their course of conduct

Facts

  • C and D were an unmarried couple cohabiting a property they bought in their joint names
  • They later separated with the woman (C) remaining in the house with the children
  • They agreed to cash in the life insurance policy they both contributed to and share the proceeds, with the man (D) using his proceeds to put down the deposit for to purchase a home for himself
  • C commenced action for declaration that she owned the entire beneficial interest in the property, while D sought to sever the joint tenancy
  • It was accepted by the parties that at the time of separation that they held the property in equal shares

Held (Supreme Court)

  • The parties owned the property in unequal shares, with the woman (C) holding 90% and the man holding 10%
  • Their intentions had changed since they separated

Lord Walker and Baroness Hale

Presumption of joint tenancy in law and equity: [51]

  • Where a couple buys a place for cohabitation in joint names without an express declaration of their beneficial interests, the presumption is that equity follows the law and they are joint tenants in law and equity
  • The presumption could be displaced by showing
    • (a) that the parties had a different common intention at the time when they had acquired the home OR
    • (b) that they had later formed a common intention that their respective shares would change
  • Common intention is to be deduced objectively from words and conduct, examples of relevant evidence is given in Stack v Dowden at [69]

Rationale for the presumption

  • The presumption of a beneficial joint tenancy is not based on a mantra as to “equity following the law”: [19]
  • Rather there are two reasons
    • If a couple in an intimate relationship purchase a house together, almost always with the help of a mortgage for which they are jointly and severally liable, that is on the face of things a strong indication of emotional and economic commitment to a joint enterprise: [19]
    • In a trusting personal relationship the parties do not hold each other to account financially (Gardner describes this as “materially communal relationships” where parties pool their resources): [22]

Imputed intention (on the quantification of shares): [51]

  • Where the presumption is displaced, but it is not possible to ascertain by direct evidence or by inference what their actual intention was as to the shares in which they would own the property, the court will decide what is fair having regard to the whole course of dealings between them in relation to the property
  • The whole course of dealings include a similar range of factors to be taken into account as may be relevant to ascertaining the parties’ actual intentions, financial contribution being only one of them

Single owner cases: [52]

  • When the family home is in the name of one party only, there is no presumption of joint beneficial interest
  • 2 questions arise: 1. Whether the other party has beneficial interest at all? 2. What is his interest?
  • Both are to be answered based on the parties’ common intention deduced from conduct
  • If common intention to the share of interest is missing, the court will determine what is fair according to their course of conduct

Current case: [48]

  • There is no need to impute an intention on the parties as the trial judge found that their intentions had changed since they purchased the property
  • It was intended that D’s interest in the property had crystallised when they separated, in return D could have his new home bought from his share of the life insurance proceeds
  • Just as C had the sole benefit of any capital increase of the property, C had the sole benefit of any capital increase from his own home

Comment on the presumed resulting trust: [24] – [25]

  • In the context of a family home, presumption of resulting was tempered by the presumption of advancement
  • The presumption of advancement is unrealistic in the modern world and discriminatory between sexes and married and unmarried couples
  • Abandoning the presumption of advancement while retaining the presumed resulting trust would place an even greater emphasis upon who paid for what, an emphasis that is too narrow
  • The time has come to make it clear that presumed resulting trust does not arise when a couple makes an unequal contribution to the purchase in joint names of a family home
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