New Supreme Court ruling plunges Family Lawyers into the unknown: Court's decision means confusion for England and Wales' 4 million cohabiting couples

• Family & Matrimonial Law

11 November 2011

A new ruling from the Supreme Court will have far reaching effects on any cohabiting couple, as lawyers try to establish how to advise clients now that it seems courts can inject fairness into property cases.

Kernott v Jones was a property dispute between former cohabitees Leonard Kernott and Patricia Jones. The couple bought a house in joint names in 1985 but split in 1993, with Ms Jones assuming sole responsibility for the mortgage and household expenses after the couple split. Unfortunately for Ms Jones, nearly 20 years later Mr Kernott decided he wanted half the value of the £245,000 property, even though he never made a mortgage payment on it post-split. 

In 2008, a county court judge sitting in Southend ruled that Ms Jones should get 90% of the value of the house and Mr Kernott 10%. That decision was upheld by the high court in London in 2009.

Mr Kernott took the case to the court of appeal, which overturned the lower courts' rulings and declared that Mr Kernott was entitled to half the value of the house because the couple owned equal shares when they separated and neither had done anything to change the situation since.

The Supreme Court has now restored the County Court judgement holding that where it is not possible by direct evidence or inference to ascertain the parties intentions the court can consider what is fair. Caroline Watson, cohabitation specialist with Russell Jones & Walker says that despite this decision the law is still unclear and unsatisfactory. She said "The Supreme Court has held that each case will turn on its own facts and with the introduction of the concept of fairness it will be very difficult to advise clients as to the likely outcome in their case."

Caroline says that this case highlights more than ever the fact that cohabiting couples should not leave the determination of their shares to chance but should instead expressly declare what their shares are. Caroline says it is not just cohabitants who should be wary. Now that bank lending is so restricted, lots of people are entering into different living arrangements, with increasingly numbers of parents, grandparents, siblings and friends teaming up to buy properties together, without thinking of the possible consequences. 

She said: “It is imperative that people put a Living Together Agreement into practice: people buying a property with their partner, those already living together and wanting to formalise their arrangements and protect their equity or those people who already own a property and whose partner is moving in. Even couples moving into rented accommodation together should consider a Living Together Agreement.”

The law in relation to cohabitation is complicated; one of the biggest myths many people believe in is that couples who live together become “common law” husband and wife, but there is no such legal status.

Said Caroline: “If you’re unmarried and haven’t made a will, your estate will pass to your closest blood relative. Unlike married couples, partners aren’t entitled to inherit from each other automatically something many couples living together either forget or more commonly aren’t aware of.”

She added: “If you want to be sure that you own the property in the shares you intended or you want to provide for each other in the event of the relationship breaking down then you need to enter into a living together agreement which should be reviewed as your circumstances change or as your relationship progresses in the same way that you should continuously review your Will.”

The flip side of this situation is the possibility that someone with whom you’ve shared a home then fallen out with might be able to get their hands on some of your equity.  “Even if your partner is not named on the legal title they may still, potentially, be able to make a claim against the equity by virtue of your cohabitation,” explained Caroline. “And even if you’re already living together an agreement can still be entered into, so there’s no excuse not to sign up.”

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