Constructive trust hits the headlines

31-05-2011

The Supreme Court has overturned the Court of Appeal's decision in a landmark property equity case – adding confusion to an already grey area.

Ms Jones and Mr Kernott, as an unmarried couple, bought an Essex property in joint names in the 1980s and lived there together until 1993, at which time the relationship broke down. Mr Kernott moved out, leaving Ms Jones and their two young children to continue to live in the property.

After trying and failing to sell the house at that time, the former couple cashed in a joint insurance policy, allowing Mr Kernott to buy a new property with his share. From then he did not pay towards the outgoings or upkeep of the original house – and made “very little” contribution towards child maintenance costs.

When the dispute reached the County Court, each party stated that if they had discussed beneficial ownership at the time of the separation, they would have agreed on a 50:50 split. However, the argument revolved around how Mr Kernott's intentions changed as the couple went their separate ways. As he had not contributed to the maintenance for well over a decade, both the County and High Courts ruled that Mr Kernott no longer intended to own half of the property, granting 90% of the equity to Ms Jones.

The Court of Appeal, however, found that the separation did not indicate a changed intention, ruling that Mr Kernott was entitled to a 50% share of the property. In a final twist to the tale, the Supreme Court said that the court will in fact impute an intention if the circumstances dictate that is fair – and ruled that the original 90:10 split should stand.

The back and forth in the Jones v Kernott case only underlines the uncertainty that cohabiters face when owning property with their partner. Who gets what in the event of a breakup remains unclear, with legal disputes likely to be resolved in an ultimately discretionary way.