How to lose 40% of your house by doing nothing

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North Devon Divorce Solicitor, Paul Jordan reviews the decision in Kernott –v- Jones and issues a warning to unmarried couples and cohabitees

Leonard Kernott’s 50% share of a property he bought with his former partner, Patricia Jones was sensationally slashed in November 2011 to just 10% by the highest court in the land, The Supreme Court. The decision has sent a tsunami through the legal world.

Some 20 years ago, Leonard and Patricia fell in love and, as couples do, bought a bungalow together, intending to grow roses round the door and spend the rest of their lives together. They took out a joint mortgage. The property deeds confirmed that they owned the house jointly. The law reports don’t reveal whether the pair were blissfully happy in the first 8 years of their new life together, but we do know that they chose not to tie the knot and in 1993 they went their separate ways, as couples sometimes do. Leonard moved out of the bungalow and Patricia stayed put. All seemed amicable enough. Patricia paid the mortgage and agreed that Leonard could cash in their joint endowment policy to help him buy a new house for himself: So far so good.

They each got on with living their separate lives, apparently without giving their jointly owned house another thought. Leonard was particularly pleased not to have to think about paying his first mortgage. Another 13 years down the line, in 2006, Leonard decided it would be nice to secure his half share in the bungalow that Patricia was still living in. By that time the property had risen in value substantially and was worth nearly £250,000. Leonard was looking forward to cashing in his nest egg, but Patricia had other ideas. She felt it was unfair that Leonard could swan back into her life demanding his half share of the property, when he had made no financial contribution towards the bungalow for 13 years and had bought another property of his own.

Leonard’s lawyers reassured him, explaining that under English law the Deeds held the answer. Those Deeds had never been changed since the couple parted. Therefore in the eyes of the law, Leonard and Patricia’s intentions when they fell in love all those years ago had not altered. Leonard was definitely entitled to his one half share of the property they said, pointing to the leather bound volumes of case law lining the bookshelves of their offices

Patricia’s solicitors however took a rather different view. The situation was manifestly unfair and the law has to move with the times. Leonard and Patricia couldn’t find a compromise and nor could their lawyers, so off they all went to Court. The Learned District Judge who first considered their case (and it should be remembered that District Judges are most learned indeed) agreed with Team Patricia that to award Leonard’s half the property would not be fair. He therefore decided that Patricia and Leonard’s intentions in relation to the Deeds had in fact altered, even though, like most people, neither of them knew one end of a Deed from the other. The District Judge thought Leonard should be happy with just 10% and that was all he was going to get. Leonard wasn’t best pleased, to say the least, and appealed. The first learned appeal Judge thought that 10% was a fair share too and upheld the decision of the learned District Judge.

By this time it’s probably fair to say that Leonard was fuming, especially as the decisions seemed to go against long established legal principles that had determined the ownership rights of unmarried couples who are often referred to as cohabitees and sometimes even as “common law wives” and “common law husbands”. So off went Team Leonard to the Court of Appeal, the second highest Court in the land and full of very distinguished and well respected Lord Justices of Appeal.

It was third time lucky for Len and his lawyers. They disagreed with the learned District Judge and the learned Appeal Judge. They said it was unfair to force an imputed intention on Leonard and Patricia as the lower courts had done. Team Leonard were delighted. Justice had at last been done.

But the saga wasn’t over. Patricia is evidently a lady who doesn’t like to give up lying down. Having managed to persuade the earlier Judges to inject some much needed fairness into the justice system the redoubtable Patricia decided to go for a final roll of the dice. So, hey ho, off to the Supreme Court did Patricia jolly well go … and guess what? She won!

Their most learned, distinguished and well-respected Lordships at The Supreme Court agreed with the very first learned District Judge and first learned Judge on Appeal, confirming that poor old Leonard should consider himself fortunate to be getting 10%. The Supreme Court decided that even though Leonard and Patricia had not specifically agreed to change the way they owned the bungalow after they split up, the Court could nevertheless impute intentions to Leonard and Patricia arising from their actions in order to achieve fairness.

So, once again, the Courts have taught us that the law is never as straightforward as we might think. English law is not preserved in aspic. It is constantly evolving and moving with the times; albeit often at a rather slower pace. The Supreme Court decided that by doing nothing for all those years (other than conveniently forgetting he had a mortgage to pay towards) Leonard should lose 40% of his house. After the final judgment Leonard apparently felt as though he had been portrayed as an “ogre”. His justification for contesting the case in the first place was that he had maintained that he had agreed with Patricia many years ago that he would get his half when she was ready. His mistake was not to go to a solicitor for legal advice and get the agreement drawn up as a written contract.

There are likely to be many cases where the original joint purchase of a property by unmarried couples, in equal shares, will still hold firm, because there has been no express variation of that agreement or circumstances which would enable a Court to impute an intention to vary the terms. However, there will be just as many cases, if not more, where couples split up and their post-separation circumstances raise questions as to whether the original terms of the joint ownership are still fair. These are the cases where there is a risk that the Court will impute to the parties an intention to vary their original agreement. “Poor Leonard”, some may say. “Good on you Patricia”, might say others. “Get advice” say the lawyers and rightly so.

If the property deeds are clear or if there is no express agreement or a change in circumstances that would justify the variation of an earlier agreement, then the joint owner is safe. Leonard thought he had nothing to worry about; indeed he probably didn’t give it another thought for the 13 years until he came calling for his long awaited share.

So, should unmarried property owners be worried? Well, if you are in a happy, committed relationship with your Leonard or Patricia then you may wish to jointly instruct your solicitor to check the position on your title Deeds to reassure yourselves that your understanding of the ownership position is what you believe it to be. If it isn’t, then the Deeds can easily be updated to reflect your true wishes. If, on the other hand, you are no longer living with your Leonard or Patricia then it is even more important that you get the Deeds checked now so you both know where you stand.

It would seem the old adage that “possession is nine tenths of the law” rings truer today than it ever did. Ignorance is bliss, but timely legal advice is priceless. Just ask Leonard.

If you have any concerns or queries about the impact of this important legal decision on your joint property ownership position or if you aren’t married and would like to know more about where you stand in the relationship with your partner then please give us a call on 01271 349956 or email [email protected]