Unmarried buyers beware

Despite contributing nothing since leaving over 12 years earlier an appellant still retained his equal share in the home maintained by his former unmarried partner

 

Kernott v Jones [2010] EWCA Civ 578 has been described by Sir Nicholas Wall, one of the appeal judges hearing it and now President of the Family Division, as “a cautionary tale, which all unmarried couples who are contemplating the purchase of residential property as their home, and all solicitors who advise them, should study.”

The case raised a “difficult issue” which the judge formulated in this way.  Where :
(1) an unmarried couple has acquired residential accommodation in joint names, which by common agreement was held by them beneficially in equal shares as at the date of their separation, and
(2) one party (here the respondent) thereafter
    (a) continues to live in the property; and
    (b) assumes sole responsibility for its continuing acquisition and maintenance - i.e. not only supports herself and the parties' children but pays the mortgage and all the outgoings (including repairs and improvements),
can the court properly infer an agreement post separation that the parties' beneficial interests in the property alter or (to use the phrase coined by Lord Hoffman in argument in Stack v Dowden  [2007] UKHL 17; [2007] 2 AC 432) become "ambulatory", thereby enabling the court - as here – to declare that, as at the date of the hearing before the court, the beneficial interests in the property are held other than equally?

By a majority (Wall & Rimer LJJ; Jacob LJ dissenting) the Court of Appeal held, following Stack v Dowden, that the conveyance into joint names created joint beneficial interests and the parties agreed that when they separated they had equal interests There had to be something to displace those interests and the passage of time was insufficient to do so, even though the outgoing partner had acquired alternative accommodation and the party remaining had paid all the outgoings since he had left.  The appellant outgoing partner was entitled to a 50 per cent interest in the property and the decision that the interest was split 90 per cent to 10 per cent in favour of the respondent who had remained in occupation was wrong.  There was no tension between Stack v Dowden and Oxley v Hiscock [2004] EWCA Civ 546; [2005] Fam 211 when applied to the facts of the case.

Sir Nicholas concluded, at para [61], by saying :
“I described this case as a cautionary tale. So, in my judgment, it is. The purchase of residential accommodation is perhaps the single most important financial transaction which any individual transacts in a lifetime. It is therefore of the utmost importance, as it seems to me, that those who engage in these transactions, and those who advise them, should take the greatest care over such transactions, and must – particularly if they are unmarried or if their clients are unmarried – address their minds to the size and fate of the respective beneficial interests on acquisition, separation and thereafter. It is simply impossible for a court to analyse personal transactions over years between cohabitants, and the costs of so doing are likely to be disproportionate in any event. Cohabiting partners must, it seems to me, contemplate and address the unthinkable, namely that their relationship will break down and that they will fall out over what they do and do not own.”

Date Added: 1st June 2010