Family Law | Jones v Kernott
Updated: Aug 7
THE DECISION IN JONES V KERNOTT  3 WLR 1121 HAS BROUGHT MUCH NEEDED CLARITY TO THE LAW REGARDING TRUSTS OF THE FAMILY HOME
The trusts of the family home have always been a controversial legal issue. This is because most of the time, the parties are not married couples or in a civil partnership. As such, the statutory protection under the Matrimonial Causes Act and the Civil Partnership Act respectively does not apply to assist the parties when there is a breakdown in such a relationship. Further, most of the time, the parties often fail to specify their respective shares in the property. Consequently, besides needing to establish whether or not the other party has a beneficial interest in a property when that property is in the sole name of the other party, disputes also arise in relation to the quantification of the parties’ respective beneficial interests in the property.
This essay argues that although the Supreme Court decision in Jones v Kernott did not add any new principles into the existing legal framework on quantification of beneficial interests pursuant to a common intention constructive trust, it has helped to clarify the concepts and affirmed the test set out by Baroness Hale in Stack v Dowden. In this regard, this has brought more clarity to the law regarding trusts of a family home.
As the current legal framework stands, parties can establish a beneficial interest in the property by express trust, the common intention constructive trust or the resulting trust.
In express trust cases, the name of the parties is registered on the title of the property and quantification will be based on what the parties have clearly expressed in the conveyance, that is, the legal documents that already exist.
Under a resulting trust, beneficial interest will arise only if there is a contribution to the purchase price of the property and quantification of the respective beneficial interest is based entirely on the amount of contribution towards the purchase price of the property.
In relation to a common intention constructive trust, both the establishment of the beneficial interest and quantification thereof is based instead on the common intention of the parties.
In Stack v Dowden, Baroness Hale explained that if a person’s name is not registered on the title of the property, then in equity, it is presumed that the person has no beneficial interest. Similarly, if the person’s name is registered on the title to the property, then the person is presumed to have a beneficial interest. This is due to the application of the presumption that ‘equity follows the law’.
However, even in joint name situations, the parties often fail to specify the precise quantification of their shares. In Goodman v Gallant, the court explained that if the parties had set out their respective equitable shares, this would be given consideration.
In the absence of an express statement to this effect, the onus falls on the court to determine the quantification of the parties’ respective beneficial interest. In order to determine quantification under a constructive trust, the court has to determine the common intention of the parties when the property was purchased.
In Oxley v Hiscock, which concerns a sole name case where the property was only registered in the name of one of the cohabitees, Chadwick LJ explained that to determine common intention, the court will adopt a broad-brush approach by considering the ‘whole course of dealing between the parties’ including the surrounding circumstances relating to the purchase of the property.
However, much uncertainty was caused in the law for two principle reasons: Firstly, the lack of clear guidelines meant that the courts had a huge amount of discretion in quantifying the beneficial interest. Secondly, the test expounded by Chadwick LJ was too general and broad which resulting in an inherent lack of legal principle and the corollary to that was that if judges are to quantify the beneficial interest based on the ‘whole course of dealing between the parties’, the exercise would be too fact-sensitive and may encourage excessive courtroom litigation to occur. Therefore, a more precise legal test is required with clear factors being set out to support its application in practice.
In this regard, the subsequent Supreme Court decision in Stack v Dowden clarified the issue that superseded the broad-brush approach adopted by Chadwick LJ. In this case, involving two cohabitees, the facts were exceptional. Although the house was registered in joint names, the woman paid an overwhelming 65% of the purchase price, whilst her male cohabitee only contributed the remaining 35%. Therefore, when the relationship broke down, the male cohabitee sought to share equally in the equity of the house, which was opposed by his female cohabitee.
The Supreme Court held that as a matter of principle, in joint name situations, there is a presumption of equal sharing in the absence of clearly expressed intentions by the parties to the contrary. The party who seeks to oppose the presumption bears a heavy burden to rebut the presumption.
However, on the facts, Baroness Hale felt able to hold that the presumption of equal sharing was rebutted because of the unique factual circumstances present in the case. For example, the parties strictly organised their finances separately and there was little demonstration of a mutual intention to share in the property equally other than the fact of their cohabitation. Hence, the judge explained that although the financial contribution is not the determinative factor in the quantification of a beneficial interest in a common intention constructive trust, it still plays a pivotal role and where all factors are being equal, it will be exhaustive such as on the present facts.
In reviewing the authorities on quantification, Baroness Hale commented on the approach taken by Chadwick LJ in Oxley and reminded us that the test was predicated on common intention and not fairness. Her Ladyship then held that although the parties’ conduct should be considered, there are several non-exhaustive factors that the court shall have particular regard to. These factors apply in the domestic context as opposed to the commercial context.
Therefore, other than financial contributions, the judge was also prepared to consider any advice or discussions received by the parties at the time of the transfer that may indicate their true intentions. They are:
Secondly, the reasons as to why the property was registered in the joint names of the parties.
Thirdly, the purpose for which the property was purchased.
Fourthly, the nature of the parties’ relationship.
Fifth, whether there were any children living in the property for whom the parties collectively had the responsibility to provide a home.
Sixth, the financing arrangements of the parties in purchasing the property.
Seventh, the manner in which the parties have organised their finances.
Finally, the manner in which the parties pay their outgoings on the property and other household expenses.
In the social context of cohabitation, the judge also indicated that the respective personalities of the parties are crucial in determining their true intentions. Furthermore, the judge reminded that in a social context of cohabitation, a relationship of love and affection is bound to exist and must be given priority when assessing the true intentions of the parties. Where the parties are jointly liable for the mortgage payments, the amount that each contributed is less likely to be determinative other than the fact that both parties intend to contribute as much as possible to the household. As such, they would share the eventual benefit or burden equally. Baroness Hale also explained that the common intention of the parties is not static and can change over a course of time. Her Ladyship cited the example where one of the parties has financed the construction of an extension to the property that has improved the value of the property. In this situation, what the parties originally intended had changed.
Notwithstanding the breakthrough that Stack achieved in this landmark ruling which represented a victory of sort for cohabitees in the social context, there continued to exist uncertainty in case law; the issue whether common intention could be imputed as well as inferred.
At the Court of Appeal stage, Neuberger LJ explained that inferred intention was based on an objective deduction from the facts. Thus, inferring involves a consideration of what the parties did intend based on their actions and words. The imputed intention is one that is inferred to the parties although no such intention can be deduced from their statements and conduct. Imputing intention involves a hypothetical exercise that requires asking what the party would have intended. Neuberger LJ warned that intention should not be imputed because this would be pre-empting and second-guessing the parties’ true intentions. Hence, the exercise would be subjective and too uncertain to produce justice on the facts.
In the aftermath of Stack, the court clearly rejects the test of fairness proposed in Oxley and favour a test that is based on common intention. However, besides the factors that inform the parties’ actions and conduct, the issue as to whether intention can be imputed was not addressed. Therefore, in Jones v Kernott, the Supreme Court took the opportunity to clarify the existing legal principles set out in Stack. There were two cohabitees who were jointly registered on the title. Whilst Miss Jones wholly paid the purchase price, the household expenses were shared between the parties. However, when Mr Kernott moved out, Miss Jones assumed full financial responsibility for the expenses for fourteen years. Mr Jones now claims that he is to share equally in the beneficial interest of the property. Crucially, when the parties were separating, an endowment policy was given to Mr Kernott to purchase his own home. In reinstating the order of the High Court that awarded a 90% share to Mrs Jones and 10% share to Mr Kernott, the Supreme Court found this factor determinative as it indicated that the parties’ intentions had changed, and this indicated Mr Kernott’s severance from the property.
The Supreme Court also set out working principles that constitute the legal framework in determining quantification of the beneficial interest in under the common intention constructive trust in property disputes. Firstly, when the property is jointly registered under the name of the parties, there is a presumption that they own the property as joint tenants, both at law and in equity. This results in the presumption of equal sharing. Secondly, this presumption can be rebutted by evidence that their common intention was different, either when the property was purchased or later. The burden is on the party seeking to depart from this to prove that the parties do not intend to share equally. Thirdly, the common intention in question is to be objectively inferred from the conduct and dealings between the parties. Fourthly, by a majority, the Supreme Court held that in principle, the intention could be imputed when it is no longer possible to infer an actual intention and it is clear that the parties had a different intention at the outset or had changed their original intention. The court will impute an intention that each party is entitled to the share which the court considers fair having regard to the whole course of dealing between the parties vis-à-vis the property. In doing so, the Supreme Court justified that the law also imputes intention in resulting trust cases:
“Whenever a judge concludes that an individual “intended, or must be taken to have intended,” or “knew, or must be taken to have known,” there is an elision between what the judge can find as a fact (usually by inference) on consideration of the admissible evidence, and what the law may supply (to fill the evidential gap) by way of a presumption. The presumption of a resulting trust is a clear example of a rule by which the law does impute an intention, the rule being based on a very broad generalisation about human motivation”
However, imputation of common intention is only limited to the quantification of shares. Citing Nicolas Piska’s arguments, Lord Walker and Baroness Hale commented that imputing and inferring intention is a distinction without any real difference because most of the time, sparse evidence would mean that it would be difficult to ascertain the subjective intentions of the parties. Quoting the statement made by the trial judge, their Lordships held that it would not be wrong in principle to impute intention since ‘this is what the courts are here for’. Therefore, in light of this decision, one can conclude that the legal test to determine the quantification of the parties’ respective beneficial interests when the parties are silent is that of common intention. However, this intention can be inferred objectively from the facts as indicated by the parties’ actions and words. The court may impute intention based on what the parties would have intended when evidence is limited, although there is an absence of clear actions and words by the parties on the facts. Fifthly, the court endorsed the general statement of the principle set out by Baroness Hale in Stack to the effect that in domestic relationships, financial contributions are relevant but not conclusive in enabling the court to determine what shares were either intended or fair. Each case will turn on its own facts.
In light of the twin decisions delivered by the Supreme Court, the Court has clarified that the test to determine both the establishment of beneficial interest and the subsequent quantification thereof is one of common intention. Furthermore, in relation to the latter, common intention can be inferred or imputed based on the amount of evidence of the parties’ actions and words on a given set of facts. One should also note that the law is flexibly interpreted as the legal tests are set in the social context of trust for a family home. Therefore, the robust conditions that govern a more formal commercial setting do not apply. Notwithstanding the fact that much needed clarity has been introduced by the Supreme Court’s decision in Jones v Kernott in relation to the quantification of the parties’ respective beneficial interest, the Court still failed to resolve the uncertainty regarding the establishment of beneficial interest. This is wholly attributed to the lack of appeal cases concerning the point as both Stack and Jones concern quantification of beneficial interests.
The decision in Jones is significant as it demonstrated the inherent uncertainty in the test that originated from one of the most authoritative case law that has ever emerged in this area of law in Stack. The Supreme Court’s approach in Jones also demonstrates the extent and willingness of the court to achieve social justice on the facts by imputing a new common intention based on the overall assessment of the parties’ social and economic circumstances. The legal framework that the Supreme Court sets out in Jones has also refined the principles originally expounded in Stack. This serves to be the authoritative legal test employed to determine quantification of the parties’ beneficial interest under a common intention constructive trust, as much-needed legislative reforms in this area does not seem forthcoming in the near future.
However, on a jurisprudential basis, one can observe the difficulties with imputing intention and the judges does not seem to have addressed the need and justification of doing so adequately. At the very least, the reasoning is less than convincing. The comments made by Lord Wilson characterises the problems when his Lordship explained that imputation of knowledge is justified as a measure of last resort because it is done on the basis of what is ‘fair’. However, this is hardly consistent with Baroness Hale’s disapproval of Chadwick LJ’s judgment in Oxley when it was stated that the real measure to quantify must necessarily be that of the parties’ common intention, that is either expressed or one that can be implied from the conduct of the parties. In addition, the introduction of a test predicated on ‘fairness’ is dangerous because it fairness is a vague and subjective concept that seems to incorporate what a judge thinks rather than what the parties intend in the first place. From this perspective, this makes imputing wrong in principle. In this respect, Lord Neuberger’s concerns in Stack are justified.
Having said that, one can applaud the willingness of the judges to tread a doctrinal path that focuses on the realities of social justice and practical fairness. In this regard, one can note the resounding comments of Baroness Hale in Stack that pointed out that where the parties are in a domestic relationship, financial contributions should not be the sole consideration and common intention must be found through a holistic appraisal of the various factors that are present in the relationship vis-à-vis the family home. Therefore, if one considers social justice and fairness to be the objectives that the quantification process should strive to achieve, then imputation of intention as a measure of last resort is justified. At least, it is not routinely employed by the courts where there is clear evidence indicating the parties’ likely intentions when sharing the property. In a vast majority of cases, it is likely that such evidence would be present. In addition, as the courts indicated in Jones, where there is a lack of clear evidence to indicate intention, the court is forced to impute because a decision simply has to be made and quantification must occur to give justice to the parties. Therefore, when one considers this reality, imputation is not a doctrinal luxury but rather a matter of procedural necessity.
From a more practical perspective, the judgment in Jones also encourages the parties to specify their intentions as to quantification of their beneficial interest in the property to avoid any future disputes and judicial quantification, that may prove to be artificial. This is primarily due to the nature of the quantification methodology or legal test employed by the courts. If the courts are to consider the entire course of dealing between the parties, to a large extent, this amounts to a subjective exercise undertaken by judges. Although in Stack, the court sets out several factors and indicated the difference between imputation and implication of intention, there are no conclusive guidelines to determine the precise intention of the parties. Post-Jones, there are only working guidelines that are indicative of what the parties’ intentions may be on a given set of facts.
Further, there is no hierarchy of factors that the courts are to consider. Hence, if on a given set of facts, there are several factors that favour a party and some other factors that favour the opposing party, the judges would be forced to make a value judgment of sort in a subjective manner. Hence, if one views the quantification of shares under a common intention constructive trust in this regard, the decision in Jones did nothing to clarify this shortcoming nor provide any clear guidelines as to which factors to be given due consideration or wright over the other. Everything seems to depend on the facts and circumstances. Even the facts of both Stack and Jones are exceptional. In Stack, the parties organised their finances in such a strict and separate manner whilst in Jones, the male cohabitee had already begun to make investments in purchasing an alternative property which allows the courts to conclude that his intention to share the property had changed from what both parties had periodically contemplated in the first place when they bought the property.
In conclusion, the doctrine of common intention constructive trust is a useful tool for cohabitees outside a marriage relationship and civil union to establish a beneficial interest in a property. However, post-Stack, there has been residual uncertainty surrounding the issues of quantification of the beneficial interest especially the methodology of imputing intention where the parties have not expressly stated their intentions as such. In this respect, the decision of the Supreme Court in Jones is to be applauded because it helps to restore certainty in the law and clarify the issues relating imputation of intention whereby the conduct of the parties have been silent and does not indicate any such intention of sharing.
Nevertheless, the decision does not set out any new principles and the exceptional facts of the case suggest that in the vast majority of cases involving constructive trust, it would be rare for the courts to quantify a share for the parties without considering the extent of financial contribution to the property in question.
Therefore, as one can observe, as the law currently stands, the quantification of beneficial interests under the doctrine of common intention constructive trust remains a balancing exercise of factors to be undertaken by the courts on a factual basis. The courts will have to focus on all the factors in the course of dealing between the parties to ascertain the common intention.
Exceptionally, where no such evidence of common intention can be found, the Supreme Court affirmed that intention can be imputed. As such, although the decision in Jones has brought much needed clarity to the law regarding trusts of the family home, there remains an inherent uncertainty in the law regarding quantification necessarily due to the discretionary methodology employed by the courts. In this respect, it is hoped that Parliament will no longer shirk its responsibility to clarify the law and accept the Law Commission’s proposal in reforming the law by statutory codification.
The information provided in this article is not intended to constitute legal advice and you should take full and comprehensive legal advice on your individual circumstances by a fully qualified Solicitor before you embark on any course of action.
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Table of Cases
Aspen v Elvy  EWHC 1387 (Ch)
Crossco 4 Unlimited v Jolan Piccadilly Ltd  EWCA Civ 1619
Drake v Whipp  1 FLR 826
Dyer v Dyer  2 Cox Eq Cas 92
Gissing v Gissing  AC 886
Goodman v Gallant  2 WLR 236
Jones v Kernott  UKSC 53
Lloyds Bank v Rossett  AC 107
Malayan Credit Ltd v Jack Chia-MPH Ltd  AC 549
Midland Bank Plc v Cooke  4 All ER 562
Oxley v Hiscock  EWCA Civ 546
Springette v Defoe  2 FLR 388
Stack v Dowden  UKHL 17,  EWCA Civ 857
Stokes v Anderson  1 FLR 391
White v White  1 AC 596
Law Commission Reports
Law Commission, Cohabitation: The Financial Consequences of Relationship Breakdown (Law Com No 307, 2007)
Burn E and Cartwright J, ‘Maudsley & Burn's Land Law Cases and Materials’ (9th edn., Oxford University Press 2009)
Clarke A and Kohler P, ‘Property Law: Commentary and Materials (Law in Context)’ (Cambridge University Press 2005)
Dixon M, ‘Modern land law’ (8th edn., Routledge-Cavendish 2012)
Gray K, ‘Elements of land law’ (5th edn., Oxford University Press 2008)
MacKenzie J and Philips M, ‘Textbook on Land Law’ (14th edn., Oxford University Press 2012)
McFarlane B, Hopkins N and Nield S, ‘Land Law: Text, Cases, and Materials’ (2nd edn., Oxford University Press 2012)
Bridge S, ‘Jones v Kernott: fairness in the shared home - the forbidden territory or the promised land?’ (2010) 4 Conveyancer 324
Cloherty A and Fox D, ‘Proving a trust of a shared home’ (2007) 66 Cambridge Law Journal 517
Dixon M, ‘The never-ending story –co-ownership after Stack v Dowden’ (2007) Conveyancer 456
Douglas G, Pearce J and Woodyard H, ‘Cohabitants, property and the law: a study of injustice’ (2009) 72 Modern Law Review 24
Gardner S and Davidson K, ‘The Supreme Court on family homes’ (2012) Law Quarterly Review 179
Greer S and Pawlowski M, ‘Constructive trusts and the homemaker’ (2010) Denning Law Journal 35
Hopkins N, ‘Regulating trusts of the home: private law and social policy’ (2009) 125 Law Quarterly Review 310
Lee J, ‘"And the waters began to subside": imputing intention under Jones v Kernott’ (2012) Conveyancer 421
Panesar S and Gompertz K, ‘Jones v Kernott: non-marital contribution – joint ownership – constructive truss and beneficial interests’ (2011) Coventry Law Journal 49
Piska N, ‘Intention, fairness and presumption of resulting trust after Stack v Dowden’ (2008) 71 Modern Law Review 120 at 128
Bailey-Harris R and Wilson J, ‘Jones v Kernott – Another helping of the witches' brew?’, available online at <http://www.familylawweek.co.uk/site.aspx?i=ed89478> accessed on 12 August 2014
Barnes L, ‘Stack v Dowden: The principles in practice’, available online at <http://www.familylawweek.co.uk/site.aspx?i=ed642> accessed 12 August 2014
Saunders Z, ‘Jones v Kernott –into forbidden territory without a fig leaf?, available online at <http://www.stjohnschambers.co.uk/wp-content/uploads/2011/11/Jones-v-Kernott.pdf> accessed on 12 August 2014
West L, ‘Cohabitants and constructive trusts after Jones v Kernott’, available online at <http://www.charlesrussell.co.uk/UserFiles/file/pdf/Private%20Client/PCYB2013_Cohabitants_constructive_trusts_Feb_2013.pdf> accessed on 12 August 2014
 see Law Com No. 307, Cohabitation: the Financial Consequences of Relationship Breakdown (2007).  see K. Gray, ‘Elements of land law’ (5th edn., Oxford University Press 2008)  see L. Barnes, ‘Stack v Dowden: The principles in practice’, available online at <http://www.familylawweek.co.uk/site.aspx?i=ed642>  see Lloyds Bank v Rosset  AC 107, per Lord Bridge  see Dyer v Dyer  2 Cox Eq Cas 92; Springette v Defoe  EWCA Civ 546  see Gissing v Gissing  AC 886   UKHL 17  Ibid., at para    2 WLR 236  Disputes about the parties' respective beneficial interests in joint name situations will inevitably become less common over time, because of the operation of Form TR1 from 1st April 1998 which mandates the parties to specify the quantum as to how they wish to share in the property.   EWCA Civ 546  Oxley v Hiscock  EWCA Civ 546, para   see Stokes v Anderson  1 FLR 391; Midland Bank Plc v Cooke  4 All ER 562; Drake v Whipp  1 FLR 826  see A. Cloherty and D. Fox, ‘Proving a trust of a shared home’ (2007) 66 Cambridge Law Journal 517; M. Dixon, ‘The never-ending story - co-ownership after Stack v Dowden’ (2007) Conveyancer 456  see B. McFarlane, N. Hopkins and S. Nield, ‘Land Law: Text, Cases, and Materials’ (2nd edn., Oxford University Press 2012); J. MacKenzie and M. Philips, ‘Textbook on Land Law’ (14th edn., Oxford University Press 2012)  Ibid., at para   see White v White  1 AC 596  Ibid., at para   Stack v Dowden  EWCA Civ 857  see N. Piska, ‘Intention, fairness and presumption of resulting trust after Stack v Dowden’ (2008) 71 Modern Law Review 120 at 128   UKSC 53  see E. Burn and J. Cartwright, ‘Maudsley & Burn's Land Law Cases and Materials’ (9th edn., Oxford University Press 2009)  Ibid., at para   see the recent decision in Aspden v Elvy  EWHC 1387 (Ch); see also J. Lee, ‘"And the waters began to subside": imputing intention under Jones v Kernott’ (2012) Conveyancer 421  see S. Panesar and K. Gompertz, ‘Jones v Kernott: non-marital contribution – joint ownership – constructive truss and beneficial interests’ (2011) Coventry Law Journal 49  see Malayan Credit Ltd v Jack Chia-MPH Ltd.  1 AC 549.  see S. Gardner and K. Davidson, ‘The Supreme Court on family homes’ (2012) Law Quarterly Review 179  see N. Hopkins, ‘Regulating trusts of the home: private law and social policy’ (2009) 125 Law Quarterly Review 310; G. Douglas, J. Pearce and H. Woodyard, ‘Cohabitants, property and the law: a study of injustice’ (2009) 72 Modern Law Review 24  see L. West, ‘Cohabitants and constructive trusts after Jones v Kernott’, available online at < http://www.charlesrussell.co.uk/UserFiles/file/pdf/Private%20Client/PCYB2013_Cohabitants_constructive_trusts_Feb_2013.pdf>  see Z. Saunders, ‘Jones v Kernott –into forbidden territory without a fig leaf?, available online at < http://www.stjohnschambers.co.uk/wp-content/uploads/2011/11/Jones-v-Kernott.pdf>; S. Bridge, ‘Jones v Kernott: fairness in the shared home - the forbidden territory or the promised land?’ (2010) 4 Conveyancer 324  see Crossco 4 Unlimited v Jolan Piccadilly Ltd.  EWCA Civ 1619  see R. Bailey-Harris and J. Wilson, ‘Jones v Kernott – Another helping of the witches' brew?’, available online at <http://www.familylawweek.co.uk/site.aspx?i=ed89478>  see the arguments in S. Greer and M. Pawlowski, ‘Constructive trusts and the homemaker’ (2010) Denning Law Journal 35