Leonard Kernott and Patricia Jones, the Stack v Dowden Criteria - Essay Example

Introduction The Supreme Court approved imputation of intention as a yardstick of fairness. Earlier on, the law concerning constructive trusts of family properties was controversial. The Jones v Kernott case highlighted difficulties with lawsuits over property ownership after separation. Most of the conclusions in the Jones v Kernott case relied heavily on the proceedings of Stack v Dowden case due to similarities between the two. Particularly, the Stack v Dowden case indicates that the fact that two parties contribute towards the acquisition of a particular property through unequal shares does not guarantee the presumption of joint tenancy (Davidson & Gardner 2012). The landmark ruling by Supreme Court laid down paradigms applicable to home ownership by unmarried cohabitant couples. Discussion Facts and Decisions of the Case Leonard Kernott and Patricia Jones started cohabiting in 1983 and had two children. They purchased a family home in joint names at 39 Badger Hall Avenue for ? 30,000 in 1984. The couple lived in this home for around eleven years (Pawlowski 2012). Upon separation of the two in October 1993, Kernott deserted their family home, while the claimant stayed with children in the house. Jones did not apply for Child Support Agency. Kernott quit making mortgage contribution for the property and demonstrated little commitment towards maintaining their two children. Their joint effort in selling the property for ? 70,000 in October 1995 was unsuccessful. The parties, however, cashed in on mutually owned insurance policy, of which the proceeds were shared equally. Kernott used his share to mortgage a house at 114 Stanley Road in Essex for around ? 57,000. Jones used her share to perform cosmetic surgery. Kernott invoked correspondence in order to claim his share of property at 39 Badger Hall Avenue. In 2007, Jones filed lawsuit against Kernott’s claim for joint share of the property (Mee 2012). Jones claimed that Kernott’s purchase of property at 114 Stanley Road was an indication of change in his intention for joint tenancy over the house. Ms. Jones sought quantification of their respective property interests. The claimant sought greater share of the property. The court ruling by Judge Dedman was that Jones merited 90 % of property ownership. Nicholas Strauss QC, a deputy judge of the High Court, approved the decision on appeal by the defendant (Pawlowski 2012). Further appeal by Kernott led to overturning of the Strauss’s decision on majority voting by the Court of Appeal. The decision was that the parties were entitled to equal share of property at 39 Badger Hall Avenue. This was based on finding that the intention of the parties was unchanged. Jones had filed an appeal to Supreme Court, which led to restoration of Strauss’s decision (Yip 2012; Mee 2012). The lordship of the Supreme Court gave mixed opinion as to whether property evaluations were to be approached from inference perspective or imputation of intentions of the parties. The ruling by Supreme Court Judges, Lord Walker and Lady Hale, was based on the premise that the parties had formed mutual purpose for beneficial ownership of the property. The decision was based on the premise that Kernott’s purchase of new home for himself was a demonstration of his change of plan. The logical inference was that Kernott’s lack of commitment for paying mortgage for the property at Badger Hall Avenue was manifested at his purchase of another home. Just like Jone’s would have exclusive benefit of capital gain in her home at Badger Hall Avenue, so would Kernott’s have exclusive benefit of capital gain at Stanley Road (Mee 2012). Nevertheless, Lords Kerr and Wilson felt that the parties’ intentions should be imputed to ownership of 90:10. Lord Collins stance was unclear concerning imputation and inference of intention (Yip 2012). Lord Wilson argued that it was logical inference that the parties shared intention with regard to secondary issue of quantification. Wilson preferred to approach the matter from imputation perspective. Accordingly, Lord Kerr observed that Kernott’s desertion of family home and purchase of another property lay weak basis for relevant inference. The quantification question, therefore, was approached from imputation perspective, thereby drawing similar inference as judges of lower courts. The judges felt that inference with respect to quantification calculations was impossible. Lord Walker and Lady Hale would have preferred imputation standpoint if they had felt that mutual intention with regard to shares of ownership lacked. This is because it was reasonable for the parties to have intention if they had considered doing so at that time (Mee 2012). Successive Judgments As indicated in the case’s facts, it is apparent that Mr. Kernott had completely ceased to contribute towards the running of the house that they had purchased together with Ms. Jones. Pawlowski (2012) also indicates that Mr. Kernott made very limited contributions towards their children’s support. Due to these facts, the judge concluded that the common intention of the couples had changed. The judge had to rely on the proceedings of Stack v Dowden case in holding the presumption that the joint ownership of the benefits from the property had been displaced and that there was no vivid evidence of division of shares from the property. The court had to impute or to infer an intention as far as sharing of the property was concerned, which led to a decision by the judge to entitle Mr. Kernott, 10% of the proceeds from the property. Consequently, Mr. Kernott made an appeal to the High Court in which he argued that it was wrong for the court to impute or infer a shift in common intention. He also argued that it was wrong for the judge to substitute the division he deemed fair between the two parties. However, despite his relentless efforts, the High Court judge dismissed the appeal, which compelled Mr. Kernott to seek the help of the Court of Appeal. Lady Hale and Lord Walker were the lead judges who made their judgment basing on the principles from Stack v Dowden’s case. The main principle in the Stack v Dowden case was that in instances where individuals purchased a family home enlisting their joint names, there was the presumption that those individuals intended to own that property in equity. However, the starting point of the Stack v Dowden case was different from the cases where property was bought under the name of one party (Pawlowski 2012). In the Jones v Kernott case, the presumption of joint ownership arose because the two parties purchased the indicated property under joint names, which serves to indicate that the parties had an economic and emotional commitment to possess a joint enterprise. Moreover, the presumption also came due to the difficulties of analyzing each party’s contribution towards the property over the long period of co-habitation. However, the presumptions made by the judges in this case can be rebutted by the evidence that the parties had no common intention of holding the property jointly. This is elucidated by the fact that the parties did not share most of their financial resources. In case vivid evidence is absent regarding the intention of the parties, questions may arise as to the time the court has the ability to infer the intention and when the court can impute such intentions. Regarding the Jones v Kernott case, the inferences were drawn from an objective deduction of the dealings of the parties. Moreover, there was a search, which was mainly to ascertain the actual intentions of the parties (Pawlowski 2012). Some of the principles that applied to the Jones v Kernott case were that the parties owned the property jointly as tenants in equity and law, which is the case when parties own a property jointly. Secondly, the common intention of the parties was to be deduced from the dealings and conduct between the two parties. Davidson & Gardner (2012) indicate that sometimes it is unclear as to whether the two parties had differing intentions at the start but changed it afterwards. In such a situation, the court can impute an intention in which each party is entitled to the share that the court considers fair, with regard to the property dealings between the parties. The Stack v Dowden Criteria In the Jones v Kernott case, the judges had to revisit decisions that were made in Stack v Dowden. These decisions affirmed that the genesis of disputes that concern family homes is the presumption of equality in the sharing of equity, which displaces the presumption of trust that existed in the beginning (Yip 2012). Similar to the Jones v Kernott’s case, Stack v Dowden is a case whereby the two parties lived together in a house in which there was a disparity between the financial contributions of the two partners. The judge in charge of this case instructed that the proceedings be divided in equal shares notwithstanding that Ms. Dowden had been the bigger contributor. The court of appeal allowed for the appeal from Ms. Dowden in which the judge instructed that the proceeds be divided 65% to 35% as per Ms. Dowden wishes. Moreover, the House of Lords upheld the order unanimously with Lord Neuberger upholding the order, albeit for different reasons. According to the Stack v Dowden’s case, the main feature is that incase an intention of sharing ownership has been established, the courts can adopt a flexible approach regarding the quantification of the parties’ shares. In the former ownership, the court adopts a concept of common intention, which is dependent upon the parties’ shared intentions. In the latter, the court analyses the matter with regard to the resulting trust, which depends on the presumption of the law on the intentions of the party that makes financial contributions towards the purchases (Davidson & Gardner 2012). In the Stack v Dowden’s case, Lady Hale had the leading opinion in the House of Lords in which the conclusions of her opinion were directed towards the case of a house that was transferred to the joint names of an unmarried or a married couple. In her opinion both parties bear the responsibility for the mortgage and both parties do not declare their interests on the benefits from the property. Lady Hale specified that in cases such as Stack v Dowden and Jones v Kernott, the presumption is that there is the legal estate coincides with the interests on the benefits. More specifically, conveyance to joint names indicates beneficial and joint legal tenancy in the context of a domestic consumer, unless the contrary of this is proved (Davidson & Gardner 2012). In the Stack v Dowden’s case, the fact that the particular parties contributed towards the acquisition of their home in unequal shares is not sufficient to refute the presumption of the concept of joint tenancy. Moreover, the task that involves seeking to highlight that the two parties intended to make the beneficial interests be different from legal interests was not embarked on lightly. Davidson & Gardner (2012) indicate that in family disputes, the act of couples splitting up arouses strong feelings. These feelings lead the parties to reinterpret the past in vengeful terms. Furthermore, the splitting of the couples leads to people spending more on the legal battles that the value of the proceeds from their joint property. The court had the task of ascertaining the common intentions of the parties with regard to sharing of the property. The Judges at the Court of Appeal indicated that there was a likelihood of the parties changing their common intentions. According to Pawlowski (2012), in a similar case, one party had financed an extension and made major improvements to common property. The Imputation/Inference Conceptual Issues The judges’ imputation inference is subject to backlash. According to Mee (2012), two overriding issues concerning judges’ landmark inference manifest. The argument was that Kernott had demonstrated lack of interest at that time, only to renew his interest for beneficial ownership of the property. He had neglected it by not contributing to mortgage or attempt to repair it because he was busy financing his new home. Mee (2012) observed that Kernott’s intention in this regard seem to correlate with planned usage of the land, rather than the issue of beneficial claim. The distinction between Kernott’s lack of intention to avail him for beneficial claim of the property, and intention to cede his valuable beneficial claim is clear. In fact, it was impossible to infer mutual intention if beneficial interests were to change. Equal claims upon divorce and consensus by Kernott could have made him to defer ownership interests for many years. Supreme Court’s decision based on common intention, which was quite different from lower court’s decision, illustrates the ambiguity of inference process (Mee 2012). The quantification issue, approached from imputation perspective, is questionable. The court’s presupposition that Kernott’s share crystallised in 1995 was fallacious. This is because it failed to take into account the fact that property prices shot up three times than previous, and thus, Kernott’s capital share generated 0 % percent return over the concerned period. The rulings presupposed that Kernott would have exclusive benefit of any capital gain in his new home. Likewise, Jones would have sole benefit of any capital gain in her family home. This overlooks the fact that Kernott has share of the property at Badger Hall Avenue, which contributed to the claimant’s capital gain rather to Kernott’s capital. This implied that Kernott’s mortgage is double than it would otherwise have been. The Badger Hall Avenue property was worth ? 70,000 in October 1995. The liability of the mortgage loan was ? 20,000, with the parties having ? 25,000 equity each. This implies that both Kernott and Jones had around 35 % claim on the property each, while mortgage liability comprising the rest of the portion. In addition, because Jones repaid the outstanding mortgage, it might be plausible that she would claim the entire increase in property value, which is attributable to the percentage represented by outstanding mortgage. This is in addition to 35 % increase in her equity share. If Kernott was allocated 35 % of present market value of the house, his claim would have been approximately ? 72,000, which is far much greater than ? 25,000 or 10 % allocation, which Supreme Court ruled. This is despite being less than 50 % of his claim. These calculations imply that it was unrealistic to infer common intention with respect to the first question concerning distinction between beneficial interests and legal title (Mee 2012). Davidson and Gardner (2012) observed two critical issues regarding the first question and second question of the doctrine. The first question regards whether to shift from prima facie share of the claimant depending on findings of mutual intentions that are authentic. The second question regards exact extent of any departure from Jone's prima facie on common intention findings or imputation of intention through quantification, with findings of intention being more preferable to imputation of intention. The first conceptual issue regards effectuation of authentic common intention through consensus construction. The second issue regards the plausibility of treatment of genuine intention by the law. If authentic intention is present, it must dominate over imputed intention. Another issue regards whether unequal break should dominate actual consensus for equality (Davidson & Gardner 2012). Conclusion To summarize, the decision by Supreme Court concerning the case of Jones v Kernott was indeed landmark. Patricia Jones, the claimant, sought greater ownership of the property. Leonard Kernott was the defendant who claimed joint tenancy over the disputed property at 39 Badger Hall. In the Jones v Kernott case, the judge concluded that the common intention of the two parties had changed. The judgment in this case indicates a heavy reliance on Stack v Dowden case whereby the judges hold the presumption that the joint ownership of the benefits from the common property had changed. The decisions from the Stack v Dowden were heavily relied on as they affirmed that the genesis of the disputes comes from the presumption of equal sharing of equity. The courts decision was divided over whether to employ imputation of intention or inference of intention. References Davidson, K., & Gardner, S. (2012). The Supreme Court on family homes. Law Quarterly Review , vol.128. 178-183. Mee, J. (2012). Jones v Kernott: inferring and imputing in Essex. Conveyancer and Property Lawyer , pp. 167-180. Pawlowski, M. 2012. Imputed intention and joint ownership - a return to common sense: Jones v Kernott. Conveyancer and Property Lawyer , vol.2, 149-158. Yip, M. 2012. Conveyancer and Property Lawyer. The rules applying to unmarried cohabitants' family home: Jones v Kernott , vol.2, 159-167. Read More