Jones v Kernott

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Wall,Lord Justice Rimer,Lord Justice Jacob
Judgment Date26 May 2010
Neutral Citation[2010] EWCA Civ 578
Docket NumberCase No: A3/2009/1771
Date26 May 2010

[2010] EWCA Civ 578

IN THE HIGH COURT OF JUSTICE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM Southend County Court

Nicholas Strauss QC

Before: Lord Justice Wall

Lord Justice Jacob

and

Lord Justice Rimer

Case No: A3/2009/1771

CC/2008/PTA/0637

Between
Leonard Kernott
Appellant
and
Patricia Jones
Respondent

Andrew Bailey (instructed by Francis Thatcher & Co) for the Appellant

Richard Power (instructed by A J Sampson & Co) for the Respondent

Hearing dates: 3 March 2010

Approved Judgment

Lord Justice Wall
1

I have had the advantage of reading in draft the judgments of Jacob and Rimer LJJ. I find myself in agreement with the latter and in respectful disagreement with the former. This judgment explains why, in my judgment, this appeal has to be allowed.

Introduction: the appeal

2

This is 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 facts are not in dispute and are unusual only in the sense that a great deal of time has elapsed since the parties separated.

3

We heard short but skilful argument from both sides on 3 March 2010, on an appeal from a decision of Mr. Nicholas Strauss QC sitting as a deputy judge of the High Court. His decision [2008] EWHC 1714 (Ch) is reported at [2009] 1 All ER 947. The deputy judge had dismissed an appeal by the appellant, Leonard Trevor Kernott, against a decision of His Honour Judge Peter Dedman (the judge) sitting in the Southend County Court on 21 April 2008. The judge had decided that the value of a property at 39, Badger Hall Avenue, Thundersley in Essex (the property) should be divided as to 90% for Patricia Ann Jones (the claimant in the proceeding before the judge and the respondent to this appeal) and 10% for the appellant, who had been the defendant in the proceedings before the judge. The judge also dismissed the respondent's claim in relation to a property owned and occupied by the appellant at 114, Stanley Road, Benfleet in Essex (114. Stanley Road). The judge refused permission to appeal and ordered the appellant to pay the respondent's costs.

4

The respondent abandoned her claim to an interest in 114, Stanley Road at the hearing before the judge, and has not sought to revive it.

5

This is, of course, a second appeal. However, permission to appeal to this court from the decision of the deputy Judge was given on paper by Lloyd LJ on 2 October 2009.

6

The case raises a short but, in my judgment, difficult issue, which can, I think, be formulated in the following 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?

7

A subsidiary issue arises if the question posed in the previous paragraph is answered in the affirmative, namely whether the split 90% to 10% is correct on the facts. This is not an issue which I propose to address. If what the judge and the deputy judge did on the primary issue was permissible, and provided that there was an arguable basis for the 90%-10% split then the actual split is an exercise of judicial discretion with which the court should not interfere:—see G v G [1984] 1 WLR 645. In this judgment, therefore, I propose to concentrate on the issue which I have posed in paragraph 6 above, a point aptly summarised, in my judgment, by Lloyd LJ when giving permission to appeal: —

The application of the principles as regards jointly owned property enunciated in Stack v Dowden in a case in which it is said that the parties’ intentions have changed since the acquisition of the relevant property … is problematical …

The facts

8

The respondent was born on 26 November 1954. In 1980, when she was 26, she met the appellant, whose age we do not know. In the Spring of 1981, the respondent purchased a caravan for about £3,750, a purchase which she funded by means of a loan of £3,750 from her bank. Some time in 1983 or 1984, the appellant moved in to live with her in the caravan and their first, child, a daughter, was born on 8 June 1984.

9

In May 1985, the respondent sold the caravan for £8,000, and she and the appellant bought the property for £30,000. The appellant's case is that the property was in poor condition (it is common ground that its price was depressed because it had belonged for many years to the elderly mother of one of the respondent's clients) and he says he was willing to undertake work of repair and improvement. In one of his statements, the appellant sets out the work he did.

10

The respondent contributed £6,000 from the sale of the caravan, and the balance of the purchase price of the property was raised by means of an endowment mortgage. The conveyance was taken in joint names, but there is no evidence that either party either sought or was given advice about the implications of the conveyance into joint names, or what should happen to their respective beneficial interests in the event of a separation. This is a point to which I will return at the end of this judgment.

11

We do not have any of the relevant documents, but as was commonplace at the time, it appears that the mortgage payments were of interest only (with the result that the amount outstanding remains unchanged) and that the loan was secured by a charge of the property and also by a charge of the endowment insurance policy which, if both parties survived the end of the mortgage term, would be sufficient to repay the loan. I infer, conversely, that if either party died during the mortgage term, the insurance company would have discharged the mortgage.

12

The appellant and the respondent had a second child, this time a son, in 1986, but did not marry. The appellant was employed in the summer months as an ice cream salesman, and in the winter either claimed benefit or undertook work as a builder. The respondent was a peripatetic hairdresser. The financial arrangement between them was that the appellant gave the respondent £100 per week and from that and from her own earnings she paid for housekeeping, mortgage, outgoings and the premia on the insurance policy. The appellant was also primarily responsible for building an extension to the property, which increased its value, as the respondent accepted, by 50% of the purchase price.

13

The appellant and the respondent separated in the latter part of 1993. Thereafter, the respondent assumed sole responsibility for the outgoings on the property, and she also assumed sole responsibility for the maintenance of the children. She made no application to the Child Support Agency, and the appellant made no offer of maintenance for the children. He says that he had contact with the children and from time to time and purchased items for them. She says that she has redecorated the property throughout several times, and has had to replace the flat roof on the extension which the appellant had constructed. She has installed new gates and replaced the fencing and radiators.

14

In May 1996, the appellant bought himself 114 Stanley Road for £57,000. He raised the deposit – with the respondent's agreement—by means of cashing in a separate life insurance policy which they both owned and the proceeds of which they divided equally. The respondent used her share for her own purposes. Quite what this policy was, and how the premia on it had been funded, does not emerge from the evidence.

15

In October 1995 the property was put on the market for £69,995 but not sold. In May 2006, more than 12 years after their separation, the appellant sought the payment of his half share, and on 19 March 2008 he purported to sever the joint tenancy.

16

On 26 October 2007, the respondent commenced proceedings in the Southend County Court under the Trusts of Land and Appointment of Trustees Act 1996 (the 1996 Act) claiming declarations (1) that she owned the entire beneficial interest in the property; and (2) in the alternative, if the appellant retained an interest in the property that she had an interest in 114 Stanley Road. As I have already indicated; the alternative application (2) was abandoned at the hearing before the judge.

17

It was common ground between the parties at the hearing before the judge that, had the appellant sought a joint or equal beneficial interest in the property immediately following the parties’ separation in 1993, he would have been entitled to it. Whether or not he would have achieved a sale of the property is another matter, and not one which we are called upon to determine. Indeed, quite how the appellant is to be paid whatever share he is ultimately found to have in the property is not a matter which we are asked to determine.

The hearings in the courts below

18

The respondent's application came before His Honour Judge Peter Dedman on 21 April 2008. By that stage, of course, the appellant had served notice on the respondent severing the joint tenancy, and the value of the property was agreed at £245,000, The mortgage outstanding was £26,664 and the equity was taken as being £218,300. 114, Stanley Road...

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