Upload
familyproperty
View
226
Download
0
Embed Size (px)
Citation preview
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 1/51
Changing Intentions,
Changing Law: Kernott v Jones and the Family Home
S E M I N A R
T U E S D A Y 3 1 S T J A N U AR Y 2 01 2
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 2/51
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 3/51
The Basic Position Continued
The answer to (1) must be found either by
common intention from the evidence
Note that it is not at present possible to find an
answer to (1) by imputing a common intention Having found an affirmative answer to (1), it is then
ossible to im ute a common intention about the
www.familyproperty.org.uk
size of the share by looking at the whole course of dealing
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 4/51
Definition
Per Neuberger LJ in
“An inferred intention isobjectively deduced to be thesubjective actual intention of the
Stack
actions and statements. Animputed intention is one which isattributed to the parties, eventhough no such actual intentioncan be deduced from their actions
an s a emen s, an even ougthey had no such intention ...”
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 5/51
Definition
Per Neuberger LJ in
“ ... Imputation involvesconcluding what the parties would have intended, whereas
Stack
what they did intend.”
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 6/51
The Facts of Kernott v Jones
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 7/51
The Facts of Kernott v
Jones
1985: Badger Hall
Avenue (BHA) acquired
Purchase price £30,000contributed unequally
Conveyed into jointnames with no expressdeclaration of trust
The equitable
1985presumpt on o o nt
tenancy is operating atthis point
Two joint life insurancepolicies commenced
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 8/51
Kernott v Jones timeline
1986: extension built
Financed by joint loanof £2,000
Mr Kernott did most of the work on theextension
Extension increased value of property from
1986
30,ooo to a out
£44,000
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 9/51
Kernott v JonesTimeline
1985 – 1993
4 children born
Ms Jones pays all of thehousehold outgoingsincluding the mortgagepayments out of jointresources 1985 -- 1993
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 10/51
Kernott v Jones timeline
1993: Mr Jones leaves
the property
Ms Jones concededat trial that at thispoint, there was
nothing which coulddisplace thepresumption of equitable joint
1993
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 11/51
Kernott v JonesTimeline
At an unknown date
There are no discussions between the parties about whateffect these acts may have ontheir interests
between Mr Kernottleaving BHA and himpurchasing a new property in May 1996,one of the joint life
insurance policies iscashed in and dividedequally
?1996
---
[1995]?1993
1995 for £69,995
May 1996 Mr K uses lifeinsurance money to buy new property (Stanley Road) in his sole name
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 12/51
Kernott v Jones timeline
1996 to approx 2006
Ms Jones lives with thechildren at BHA and MrKernott lives at Stanley Road
Mr Kernott makes nocontributions towardsmortgage, endowmentpolicy or maintenance
1996 2006of children
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 13/51
Kernott v JonesTimeline
Important findings of
There was a finding of fact that
Mr Kernott would not have beenable to afford the mortgage on
fact
part of the mortgage on BadgerHall Avenue [40]
KvJ is NOT an “imputed commonintention” case – the trial judgeinferred a common intention
from the evidence and thisfinding was not overturned
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 14/51
Kernott v JonesTimeline
At the outset, this was a
1995-6
ene c a o nt tenancy By the close, it was a beneficial tenancy incommon in unequalshares
The transformation hadtaken place aroundabout 1995 – 6 (orpossibly slightly earlier)
1985 – 1993 approx. :presumed common
intention joint
tenancy
2011: inferredcommon intention
tenancy in common
in unequal shares[90:10 by 2011]
In this case the partieshad had a real commonintention which wasinferred from theiractions
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 15/51
Kernott v JonesTimeline
1996
Mr Kernott’s interest isfrozen at its estimatedcash value on that date£ 0 000
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 16/51
Kernott v JonesTimeline
At the point of change
in 1996, the shares of the parties were equal
The significance of thechange of intentions
was what happenedthereafter
sshare
in1 6
ershare
in1 6
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 17/51
Kernott v JonesTimeline
The effect of the freeze
Equity 2006
of Mr Kernott’s share in1996 was that Ms Jonesmade all of the gainreflected by payment of the mortgage and of the
market rise over theensuing 10 years
Consider the effects if
Ms Jones 1996
Mr Kernott
1996
Ms Jones (since1996)
sold in 2005The Judge inferred thatthis must have beentheir intention in 1996
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 18/51
Re-Framing Kernott v Jones
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 19/51
The Stackquestionsre-framed
Of the key questions in Stack, question1 was not in dispute: both partiesagreed Mr Kernott had an interest andit was presumed by his appearance on
www.familyproperty.org.uk
t e t t e
The focus was Question 2: was hisinterest 50%, or less than that?
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 20/51
Kernott Re-framed
Ms Jones’ argument was that the
equitable presumption of jointtenancy in 1993 was not
’
positions in 2006
She had the burden of proving
that between 1996 – 2006 theparties had a common intention which displaced the previously
valid equitable presumption She was arguing that the trust
could change over time
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 21/51
Kernott v
JonesRe-framed
It had always been possible for a
trust to be varied by subsequentconduct: Neuberger LJ in Stack @138 – 147 sets out the traditional
position Subsequent discussions, statements
or actions from which a common
understanding or agreement can beinferred [138]
improvements to the property [139] (Possibly) capital repayments to the
mortgage [140]
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 22/51
The Leading Judgment in Kernott v Jones
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 23/51
Kernott
LeadingJudgment
Walker and Hale LLJ
The trial Judge concluded that Ms
Jones had discharged her burdenand was upheld by the Supreme
Ms Jones had demonstrated thatthere was evidence from which
the new common intention could be inferred
The SC went further and said that
a new common intentionrespecting the size of the sharecould also be imputed
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 24/51
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 25/51
Kernott
LeadingJudgment
Walker and Hale LLJ
Guiding principles set out at
paras 51(1) – (5) p. 18
Imputation only applies to the
the shares: 51(4)
“The whole course of dealing” is
to be given as broad a meaning asthe course relevant toascertainin actual intentions [ie
para 69 of Stack] It is not limited to financial
contributions alone
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 26/51
Kernott v Jones
Leading Judgment
We are expressly told that
principles 51(4) and 51(5) alsoapply to “sole name” cases:
It is affirmed that this is a new regime for “family home” cases
The assumptions about humanmotivations which underlie theresultin trust conce t are not
appropriate in the family homecontext: para 53
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 27/51
Kernott v Jones
Leading judgment
The leading judgment contains an
extended critique of theinadequacy of the resulting trust
the judgment quotes a definitionof them as
“a materially communalrelationship ... One in which, inpractical terms, [the parties] pool
their material resources(including money, other assets,and labour)” [21]
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 28/51
The reason people do not
formulate agreements in thissituation is precisely because they trust each other and they are not
act ng n v ua st ca y seeparas 20 – 22]
Taking an equitable account in
such circumstances is impractical In Kernott , there is “no scope” for
an e uitable account once the
interests have been defined Effort would be
“disproportionate” [50]
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 29/51
Kernott v Jones
Leading judgment
In these circumstances it is
inadequate to respond to such aperson: “Because you trusted a
will not help you”
In any event, the assumptions which underpinned the use of apurchase money resulting trust were already out of date by the
time Pettit was decided in 1970[para 24]
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 30/51
Kernott v Jones
Leading judgment
PMRT has therefore now been
displaced from its primary position in family home cases
It is almost certainly now
insufficient to advance anargument for unequal shares in a joint names case based on
unequal contributions alone The whole of the context (ie “the
whole course of dealin ”) must be
looked at How was this worked out in
Kernott ?
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 31/51
Kernott v Jones
Leading judgment
The facts up to 1996 were clear
The facts of 1995-6 justified the“logical” inference that the parties
’ would “crystallise” at that point
“It is clearly the intention which
reasonable people would havehad had they thought about it atthe time” [48]
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 32/51
Kernott v Jones
Leading judgment
Joint names
“The court will try to deduce whattheir actual intentions were at therelevant time. It cannot impose a
contrary to what the evidenceshows they actually intended. Butif it cannot deduce exactly whichshares were intended, it may haveno alternative but to ask whattheir intentions as reasonable and just people would have been hadthey thought about it at the time.
some courts may not welcome, butthe court has a duty to come to aconclusion on the dispute put before it.” [para 47]
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 33/51
Kernott v Jones
The process of finding
Step 1: Examine theevidence to see if there isan express commonintention: if not --
an answer to Question 2re. the size of theinterest Step 2: Examine the
evidence to see if you caninfer a common intention
on the basis of theevidence available; if not --
Step 3: Impute anintention using whatevidence there is and doingthe best you can within thecontext
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 34/51
Kernott v Jones
“Minority” judgments
What are we actually doing when
we impute an intention? Imputation is a process of [quasi-
] invention, inference is a process
of deduction In what way is imputation
different from simply deciding
what is a fair share? Kerr LJ thought there was no
imputation “involves the courtdeciding what is fair in light of the whole course of dealing”
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 35/51
Kernott v Jones
The question of
On whether or not there was
sufficient evidence for the trialJudge to infer an answer toQuestion 2:
inference Kerr LJ thought not [para 76] butthat imputation gave the sameresult
Wilson LJ thought there was[para 84]
inference/imputation point wasprobably in practice a distinction without a difference [para 65]
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 36/51
Changing Intentions,Changing Law
A W O R K E D E X A M P L E : S A M A N D S U S I E
www.familyproperty.org.uk
Ch i I t ti Ch i L
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 37/51
Changing Intentions, Changing Law
Sam and Susie Timeline
Property acquired inSam’s sole
name1995 – 1999
Parties pool theirresources
2010Sam seeks 100% of
sale proceeds of property
1999 – 2008Three children born
Susie looks after childrenfull-time
www.familyproperty.org.uk
1999First child born
Susie stopsearning
2008Susie extends theproperty and adds
25% to its value
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 38/51
Sam and Susie
Timeline
1995 : Property acquired
In Sam’s sole name
Equal cash contributions
Agreement to share mortgageliability
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 39/51
Sam and Susie
Timeline
1995 -- 1999
Parties pool their resources
One joint account from which all
ou go ngs nc. mor gage are pa
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 40/51
Sam and Susie
Timeline
1999: First child born
Susie gives up work to care for thechild full-time
am con nues o wor an sincome is used to pay themortgage
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 41/51
Sam and Susie
Timeline
1999 -- 2008
Two further children born: Susie works part-time from 2005
am con nues o wor an sincome is used to pay themortgage
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 42/51
Sam and Susie
Timeline
2008
Susie inherits £30,000 and paysfor an extension to the property,
Sam continues to work and hisincome is used to pay the
mortgage
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 43/51
Sam and Susie
Timeline
2010
Parties separate
Sam seeks a sale of the property
an e er o e u y or anamount equivalent to his cashcontributions inc. mortgage
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 44/51
Sam and Susie
The starting point is that Sam is
the sole beneficial owner Susie must bring evidence to
have a share
She will almost certainly be able
to do so in this context by provingher cash contribution
inferred common intention thatshe should have a share
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 45/51
Sam and Susie
We then turn to question 2
First exercise is to set up achronology or timeline
econ y, en y w c any othe Stack para 69 factors are inplay to establish the context
It may be helpful at this stage toask whether on balance the facts
“materially communal”relationship
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 46/51
Sam and Susie
Then progress through the facts
in context to establish whetherthere has been an express
Do the facts support an inferredcommon intention as to size of share?
My view is that it might bedifficult in the Susie Sam
scenario to infer a commonintention
www.familyproperty.org.uk
Thi i t i l “ t i ll
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 47/51
Sam and Susie
This is certainly a “materially communal” context
The parties did not come to any express agreement about whatha ened when Susie sto ed
paying the mortgage If the parties had kept their financial
affairs separate, eg separate bank accounts, inference is problematic
If the parties operated a joint bank account, inference is easier
parties themselves say about thearrangements: there is no hard andfast rule
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 48/51
Sam and Susie However, if the court cannot infer a common
intention, it is now free to impute one The court can now say, “This was a materially
communal relationship in which the parties didnot keep their finances separate [or, perhaps,saw their finances as a joint venture], thereforea common intention as to equal shares can beimputed”
This is particularly likely where one party hasceased to contribute due to full-time child careor, for example, illness
Note that Susie’s contribution to the extension isnot likely, in my view, to change the balance of
The more silent the parties are about theirarrangements, the more likely it is that equalshares may be pronounced in this context
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 49/51
Sam and Susie In practical terms in this case, there is
no difference between inference andimputation
e ac s n con ex or e w o e courseof dealing indicate materialcommunality or joint venture
The difference between inference andimputation may be on apparently slightevidential matters that indicate “this is what the parties must have intended”
A findin of fact b the court that theparties never gave any thought to the
size of the shares will not defeat anequal-share result
www.familyproperty.org.uk
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 50/51
Sam and Susie Possible contra-indications of
joint venture
Buying to develop as well as touse as a home, or buying to let;anything with a commercial
flavour The Stack situation, where the
distinct and there is no realnotion of “sharing”
www.familyproperty.org.uk
Changing Intentions, Changing Law
8/3/2019 Changing Intentions
http://slidepdf.com/reader/full/changing-intentions 51/51
g g , g g
A Working Method
www.familyproperty.org.uk