UPDATE: Supreme Court Hands Down Judgment in Prest

Supreme Court Unanimously Decides in Wife's Favour

The Supreme Court of the United Kingdom has today delivered its decision in the case of Prest v Petrodel Ltd & Others, finding that, for the purposes of section 24(1)(a) of the Matrimonial Causes Act 1973, the husband was indeed "entitled" to various properties which are held within a corporate structure and which had formed part of the wife's award at first instance. It is a huge decision, particularly for big money divorce cases, and one which many people may be surprised at following the judgement of Lord Justice Rimer at the Court of Appeal.  The judgement and summary press release can be found here and previous discussions on this topic, including on the husbands failure to provide adequate disclosure can be found here and on Chambers Women in Law Blog here.

No doubt this is a decision which will generate a huge amount of debate and is arguably as significant a family law decision as Jones v Kernott (cohabitation) and Radmacher v Granatino (pre-nuptial agreements).

Results from last week’s poll...

A big thanks to those who voted in the first ever Emma's Family Law Blog poll!

The most popular response (50%) was from those who were 'not so recently qualified' who supported  the Supreme Court’s decision in Jones v Kernott.  This suggests that opinion within the legal profession is not necessarily divided in such a way as my initial observations suggested.  Good to debate these things!

Don’t forget to vote in this week’s poll!

I bet I can guess your age!

Just tell me what you think of the Supreme Court’s decision in Jones v Kernott, and I’ll tell you how old you are (roughly).

Answer the poll, now!

Now that the profession has had time to digest the Supreme Court’s decision in Jones v Kernott, which was handed down in November 2011, opinion appears to be divided as to whether the outcome was a step forward in the protection of cohabitees’ property rights or an unhelpful precedent that muddies the traditional property law rules.  In my experience of discussing this topic with other practitioners, those more recently qualified tend to favour the former position while the more experienced generation take the more cautious line.

In a nutshell (and it is a big case to squeeze into a small nutshell, perhaps a coconut would suffice), the couple, who were never married, bought a house in 1985 in joint names and valued at approximately £30,000 but made no express declaration of trust.  In 1993, Mr Kernott moved out and ceased all contributions to the mortgage and upkeep.  Fast-forward 14 years to 2007, and Mr Kernott wants to realise his interest in the property prompting Ms Jones to make an application under TOLATA 1996 for a declaration that she was the sole beneficial owner.  What the Supreme Court decided was that there could be an intention inferred and/or imputed from the parties’ actions that can affect the way they hold the property, even if no express intentions can be shown.  On that basis, they decided that from the time that Mr Kernott moved out the couple no longer intended to hold the property as joint 50/50 owners and awarded Mr Kernott a meagre 10% interest.

I’m simplifying things of course but there is a bigger picture I am trying to look at here.

Experience versus Youth

The younger generation appear to analyse the Jones v Kernott problem from a more idealistic view point.  They respond more to the facts of the case and in particular Ms Jones spending 14 years funding the mortgage and household and see the SC decision as a fair outcome, giving her the larger share of the jointly owned property.  Those more experienced tend to dwell more on the specific application of the law and express concern at the idea of asking the court to impute an intention that might not have been there.

Perhaps this comes from their increased familiarity in dealing with such issues or disinclination on the part of the youngsters to get beyond the basic facts and really analyse the decision (the case, and the Supreme Court decision is not easy reading).  That said, the five Supreme Court Justices who made the decision were none of them spring chickens and they unanimously decided (alright Baroness Hale differed on the reasoning) that the property was not to be treated as 50/50 in these particular circumstances.  I don’t think anyone would argue that they did not give proper consideration to the law.

Evolution of Social Ideals

Cohabitation is on the rise.  People are choosing not to marry or are marrying much later in life.  To some people cohabitation is as acceptable, if not preferable, to marriage, and they put no stock in the idea that the quality of the relationship is in any way contingent on its status.  Strengthening the rights of cohabitees might be seen as a logical step to bring the law in line with this evolution of social ideals and consequently is much more palatable to a generation that has grown up in a world where non-traditional relationships are socially acceptable.  To those more traditionally inclined the decision in Jones v Kernott could be viewed as legitimisation of the non-married couples status beyond that of simply two people who purchased a property together.  One wonders if the decision would have been any different if there had been no children involved (there were) and so the property was, to some extent, considered as a family home.

I’m not suggesting that all newly qualified family lawyers are pro-cohabitation and anti-marriage (I qualified last year and got married this year).  Nor am I suggesting that the elder generation of practitioners frown on everyone living together outside of wedlock.  I am simply commenting on a trend that has caught my attention and would like to extend the debate.

The Infinite Variations of Cohabital Bliss

The recent High Court case of Aspden v Elvy [2012] EWHC 1387 (Ch) has given some additional thought to the seminal decision of the Supreme Court in Jones v Kernott [2011] 3 WLR 1121.  Both cases dealt with cohabiting couples where a dispute as to the ownership of property has arisen.  Where Jones dealt with a property that was purchased in joint names, Aspden dealt with a property that was held in the sole name of Ms Elvy.  Despite this distinction, the judge in Aspden found that, just as in Jones, the common intention of the parties had changed since the initial transfer and made a decision that it considered to be fair taking into account the “whole course of dealings between the parties”.

The property in question was a barn that had been transferred from Mr Aspden to Ms Elvy in 2006.  Despite Mr Aspden’s evidence to the contrary, the judge held that at the time of the transfer barn vested entirely in Ms Elvy.  Over the course of the next three years, Mr Aspden lived on the property in a caravan and contributed a considerable amount of money (£65,000 to £70,000) and physical efforts (with his JCB) into helping Ms Elvy convert the barn.  His asserted that Ms Elvy understood that these contributions were made on the basis that he was gaining an interest in the property and that they would eventually live there together as a family.  Ms Elvy’s case was that there was no intention to live in the property together, that his financial contributions were gifts and his physical contributions so minimal as to be disregarded.

The judge decided that Mr Aspden had gained an interest in the barn and that this should be set at 25%.  The Barn had recently been valued at £400,000.  The judge noted that this figure was “somewhat arbitrary but it is the best I can do with the available material.”

Hard cases make bad law?  There was some suggestion that the decision in Jones did not go far enough in providing clarification on the application of the law in such a case.  There are still calls for parliament to step in and introduce legislation setting out the rights of cohabiting couples. Even if legislation is forthcoming, this will not solve all the problems that arise in cases such as Jones and Aspden.

If one is taking into account the whole course of dealings between the parties then it is difficult to see how one case might relate to another in all but the barest of facts.  The judge in Aspden starts his judgement by saying that “On any view the facts are unusual.”   He went on to consider the various facts that were in dispute between the parties with reference only to limited supporting documentary evidence dating back nearly 30 years.  It was only after he had made his findings that he could consider what a fair result was.  Where such disputes as to facts arise then additional clarification, whether through case law or legislation, will not be of much assistance until those facts have been resolved to the best of the Courts ability and will therefore not avoid a detailed analysis of the case.

We can expect to see more of such cases coming before the Courts.  Not because the law is unclear but because so many couples are cohabiting in preference to marriage.  People are free to make decisions about how they organise their lives and no doubt one couple’s idea of cohabital bliss will differ from that of their neighbours'.  Throw into the mix any number of factors, that may affect the status and value of any property, from children to income, benefits and DIY ability, and “the whole course of dealings between the parties” becomes something as unique to a relationship as fingerprints are to an individual.

The answer is not in further judicial or legislative clarification but in encouraging couples to consider their position early on in their cohabitation and again at any point when those intentions change, and to record it.  This is the best way to ensure that extensive arguments as to the parties’ intentions are avoided.  Having a serious conversation about who will own what in respect of property may not be an attractive prospect to couples contemplating moving in together.  As Ms Elvy said in her evidence “You don’t do that when you are getting on well”.  Well, the case law suggests that such conversations only get more difficult once the relationship has started to deteriorate by which time it may be too late!