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UK Tax - Has The Law Changed For Unmarried Couples?

Information For Cyprus Expats Who May Wish To Return To The UK

You may recall reading an article that I wrote in May last year which looked at the legal rights of unmarried couples. The article made specific reference to the case of Jones v Kernott (2010). At the time of writing we were still awaiting the decision of the Supreme Court (the most senior Court in this country) which was tipped to have a significant impact for unmarried couples. The Judges in Supreme Court have now made a decision. 

This month’s article looks at the impact of the case for unmarried couples. It also lists some of the considerations that you should bear in mind if you are thinking of living with someone or are already living with someone.

The case of Jones v Kernott

The Supreme Court, had to decide whether a man who left his partner nearly 20 years ago was entitled to half of the value of the house that they once shared that was in joint names.

The Facts

Mr Kernott and Ms Jones, who were not married bought a house together in joint names then separated in 1993 after 8 years. Mr Kernott moved out, leaving Ms Jones to pay the mortgage, maintain the property in addition to bringing up their two children. After the children had grown up some 13 years later, Mr Kernott sought to claim his half share of the property. This was on the basis that he was a joint and equal owner of the property and that at the time of separation nothing had been done to change the legal ownership which would represent anything other than a 50/50 split of the property. 

Ms Jones disputed his claim saying that he was not entitled to half a share as they had been separated for many years and that he had not contributed to the mortgage or any other house costs since leaving.

The County Court and the High Court agreed with her, awarding her a 90% share. Mr Kernott appealed to the Court of Appeal and was successful. The Court granted him an equal share. Ms. Jones appealed against this finding and the Supreme Court had to decide which decision should stand.

It restored the County Court and High Court decisions and said that Ms. Jones should receive 90% and Mr. Kernott 10%. In my opinion this was a fair result.

When reaching this decision the Court made the following important points that apply to unmarried couples:

1.  
   1. Where people purchase a family home in their joint names the presumption is that they intend to own the property jointly and therefore the split should be one of 50/50. Purchasing a property in joint names indicates an emotional and economic commitment.

1.  
   1. This presumption may be rebutted by evidence that it was not, or ceased to be, the couple’s common intention to hold the property jointly. This may be shown for example by evidence that a couple did not share their financial resources, financial contributions, the words that were spoken between them and/or their conduct in general. The Court has discretion and will make a decision that it considered is fair having regard to the dealings between couple in relation to the property.

In Jones v Kernott the greater financial contributions that Ms. Jones made following separation were very relevant. Also, at the time they separated in 1993 their actions showed an intention to move away from an equal division. There was a joint life insurance policy that was cashed in. The proceeds were paid to Mr. Kernott. This meant that he was able to buy a new home for himself. This showed that his intentions had changed i.e from that point onwards he intended that his financial affairs would be separate to those of Ms Jones. 
 

So where does this case leave the law for unmarried couples?

Whilst the case has provided some clarify for dealing with disputes where properties are held in joint names there is still a lot of uncertainty in this area of the law.

You should however bear the following in mind:

1. If you are buying a property with your partner, then you should discuss how this property will be held and how it will be divided if the relationship breaks down otherwise this could result in trouble in the future.

1. At present the best way for co-habiting couples to protect themselves from difficult disputes if they do split is to draw up a trust deed (known as a Declaration of Trust) or a cohabitation agreement spelling out the property shares that they will have when they move in together and what will happen on the breakdown of a relationship.  They should also consider amending or drawing up a Will to protect their interest in the property.

1. If you live together for perhaps six months or two years you are not automatically entitled to a share of your partner’s property on separation.

1. There is no such a thing as a “common law” husband/wife. It does not matter how long you have lived together. You do not have the same financial rights as a married couple. Often this leaves a woman who has given up work to look after children exposed to the risk of a life of financial difficulty if her partner leaves and has most of the assets in his name.
   

© Lucy Loizou -  Family Lawyer                                

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