The Analysis of the Property Law on Land - Essay Example

Property Law on Land By + Property Law on Land Case The case under study is Kernott v Jones that was before the English court in 2011. The case pitted Mr. Kernott and Ms. Jones, who met in 19801. Having lived together for five years, the parties purchased a house in Thundersley, Essex in 1985 and cited ownership in the names of both parties. The house in question was located on 39 Badger Hall. The cost of the new house was £30000. Ms. Jones raised £6000 towards the purchase of the house. A mortgage plan based on interest only raised the remaining amount. Both parties shared the cost of paying back the mortgage and the household bills. The next year, Mr. Kernott and Ms. Jones acquired a loan to extend their house, with Mr. Kernott undertaking most of the construction work. The couple separated in 1993 and Mr. Kernott left their home in Badger Hall Avenue. Mr. Kernott stopped contributing to the household bills and the mortgage. Further, he made little contribution towards maintaining the two children that the couple had. Three years later, Mr. Kernott and Ms. Jones decided to redeem their life insurance policy, dividing the proceeds between themselves. Mr. Kernott bought a house on 114 Stanley Road in Essex with his share of the proceeds. However, in 2006, he sought payment for the value of his share of the house on Badger Hall Avenue. Ms. Jones declined, requesting that the Appointment of Trustees and Trusts of Land Act 1996 grant her total ownership of the property2. Mr. Kernott filed his case in October 2007 in the court in Southend County. He claimed that the court makes a declaration under the Appointment of Trustees and Trusts of Land Act 1996 that: i. Ms. Jones owned complete beneficial interest in the property, or ii. The court determines both their interests in the property since if Ms. Jones possessed a beneficial interest in the property, Mr. Kernott also had such interests, or iii. The court declares Ms. Jones the sole proprietor of the property, or that the court declares registration for both parties as joint proprietors3. The decision by the court The court decided, after considering precedence in the cases of Dowden v Stack and Hiscock v Oxley that both parties share the total value of the property in different proportions, awarding 10% of the property to Mr. Kernott and 90% awarded to Ms. Jones. According to this judgment, Mr. Kernott would recieive £24355 and Ms. Jones would receive £219,190 in the event that they sold the property then Mr. Kernott appealed this decision at the High Court4. The appeal Mr. Kernott argued at the High Court that the judge wrongly imputed or inferred an intention that after the separation of the couple, both parties’ beneficial interests were supposed to change. Further, he claimed that the court was unfair in its quantification of the beneficial interests owned by both parties. By a simple majority, Mr. Kernott’s appeal went through. The court declared that both parties were joint owners of the property, and were tenants with equal shares5. Judges Wall P., Rimer L.J. and Jacob L.J. presided over the appeal6. Wall and Rimer argued that there was no way to indicate a change in the intentions of both parties regarding the property after the separation. The Supreme Court in England decided to restore the judge’s order. This court posited that in the event that it is impossible to ascertain a common intention concerning the method of division of interests in property, the court should employ discretionary jurisdiction to impute a considerably fair intention. The court imputes intention after an analysis of the dealings between the parties in the dispute7. Discussion The decision made in this case has cleared up the uncertainties in law with regard to family home trusts. The matter in question was share quantification in a property jointly purchased and registered in the names of a couple that lived together without expressly declaring the beneficial interests due to both8. The argument fronted is that the quantification of shares as an issue comes second to the creation or existence of a trust9. Property law is not easy to operate. The ruling in this case brought a clear distinction between the terms ‘imputation’ and ‘inference’. The understanding of these two terms had been an issue in similar cases. In fact, these two terms were partly the cause of the division in the House of Lords in Dowden v Stack. The courts implied in their ruling that the property’s sole owner does not necessarily have sole beneficial interest. This, however, is subject to a determination of a common intention by the court. The ruling in this case brought about much needed clarity in property law in the United Kingdom. By upholding the decision of the County Court, the Supreme Court set precedence by positing that despite financial contributions made by both parties being a relevant point for consideration, the court has to look into other factors that may help the court in deciding what shares of the estate were either fair or intended. The implication of this ruling is that the courts may imply an alteration to the property shares in the event that the court, after confirmation of a change in the intention since the purchase of the property by both parties. In instances where the courts cannot confirm the intention, the court has to make a decision that it believes is fair10. What this ruling means for couples that jointly own property is that in the event that they are not married, at the end of their relationship there is no certainty about the portion that each party gets. On paper, Mr. Kernott and Ms. Jones owned the property 50:50. The Supreme Court, however, altered this ratio. The Supreme Court, in Kernott v Jones, clarified some important aspects as seen in Dowden v Stack. The case focused on what ‘common intention’ means. In Dowden v Stack, ‘common intention’ formed the criteria for the determination of share quantification for both parties11. This was the secondary question in the case. ‘Common intention’ also formed the foundation of a claim by either party to the creation or existence of a trust, which was the primary question. The Supreme Court also made a clarification as to the scope of Dowden v Stack by defining in clearer terms the kind of home that may attract the application of the decision. The Supreme Court advocated for the removal of the use of the supposition of resulting trust by making it clear that the resulting trusts doctrine could not apply in domestic cases. This means in the scope of Dowden v Stack, other homes such as houses bought by siblings, friends, parents and children (homes purchased by parties whose relationship does not qualify as intimate) are not recognized12. Going by the maxim ‘equity comes after the law’, in a situation of sole ownership, the initial determination is that the sole legal proprietor also qualifies as the sole beneficial proprietor. To claim beneficial entitlement, a claimant may adopt constructive or resulting trusts13. In the event that the claimant is successful in establishing trust, the court has to quantify the beneficial share owned by the claimant. Therefore, in cases of sole legal ownership, the courts can use the trust to determine whether there is any beneficial interest owed to the claimant and, where it is determined that there is, to calculate the extent to which the claimant owns shares in a property14. The court can still use the same maxim in determining a dispute about joint legal ownership. The starting point in such a case is the determination of equal and joint beneficial ownership. In such a case, only the issue of the parties’ share quantification concerns application of trust15. A court decides to convey the title of ownership into joint names of both parties after examining the presence of a trust. A party may claim constructive or resulting trust to indicate that the parties hold beneficial interests in a property in unequal shares, with one or more party holding more shares than the other does16. The decision made by the Supreme Court judges in Kernott v Jones forms the basis upon which the first presumption on the application of trust, and whether share quantification is through a constructive or resulting trust. Sole legal ownership As indicated above, the claimant may adopt the use of constructive or resulting trust with the aim of establishing that she or he owns a beneficial interest in a property under dispute where the case is about sole legal ownership17. The court has a responsibility to order the quantification of the beneficial interest owned by a claimant in the event that the claimant is successful in claiming trust18. Resulting trust and constructive trust The court can impose a buying money resulting trust in a case where a claimant contributed to procuring a property registered in the sole name of another person through directly funding the purchase19. The rationale that a court uses in awarding the trust is assuming that the intention of the claimant was to invest as opposed to making a gift. The court reflects this rationale when dividing the beneficial interest based on contributions made by both parties in the purchase of the property in dispute20. The majority of judges sitting at the Supreme Court in Kernott v Jones doubted the practicability of resulting trust while determining a case of property rights regarding the context of the home21. The use of the resulting trust in cases concerning sole legal tenure of homes is potent. This is because the resulting trust serves to allocate to the beneficiary their due share in the contribution for the purchase of a home22. The resulting trust, in this case, will serve to rebut a presumption initially held on sole legal ownership. However, in the event that the claimant seeks a disproportionate share, the law allows him or her to front their financial input as evidence. Using financial input as evidence will help the claimant to prove that he or she has a common intention with the aim of claiming a constructive trust23. With the imposition of a resulting trust, there are chances that two issues may come up. The first issue is the scope of contributions directly made, which form the basis of the trust. The question in this matter is whether the trust considers the contributions that both parties make to a mortgage or whether it is only restricted to the cash input towards purchasing a property. The second issue is the method used to quantify the beneficial share owned by the claimant in a scenario where there is difficulty in determining the accurate amount of money contributed by each party24. Kernott v Jones brings more certainty to the fact that a direct financial input is enough evidence of an assumed common intention by both parties to own jointly a beneficial ownership, solely with the aim of claiming a constructive trust25. Due to that, there is an overlap between the presumed agreement constructive trust and the resulting trust. This overlap exists because both resulting and constructive trusts may arise in the event that there was direct monetary input towards the purchase of a home26. It is imperative to note that resulting trust and constructive trust are mutually exclusive. These two trusts are mutually exclusive since the basis of quantifying the beneficial interest owned by the claimant in resulting trust is different from the basis used for constructive trust27. The claimant is due for interest in reflection to whatever amount that they put into the purchase of property in a case of resulting trust. In a case of constructive trust, the interest owned by the claimant is determined through referring to the intention that both parties held prior to and during the transaction28. A conceptual difference comes out clearly in the analysis of the contribution made by the claimant. The different methods used in the quantification of the share owned by the claimant reflect this conceptual difference29. A court imposes a constructive trust on the basis that the contribution made by the claimant shows an agreement by both parties to own beneficial interest jointly30. This agreement is positive. The trust comes to existence because the decision by the legal owner not to give the claimant a portion of the shares despite the claimant having contributed to the investment would be unconscionable31. A court imposes a resulting trust after determining, either on its own or after guidance by counsel, that there was no intention by the claimant to offer his contribution as a gift to the registered owner32. The Kernott v Jones case made a considerable contribution to developments in UK law on property ownership. Since the judges made a decision on the case, there have been a number of decisions made by the Court of Appeal constituted in a similar fashion. One such case is Rankine v Geary [2012] EWCA The case Kernott v Jones highlighted the fact that a common intention by both parties to co-own beneficial ownership in other ways other than proportions in relation to direct financial input apply in cases involving home ownership33. Arguably, such an intention is more likely to occur in instances where the parties have an intimate relationship34. Most co-owned homes where the parties are not intimately involved have a common intention to co-own beneficial ownership based on the percentage contributed by each party35. However, this ruling did was not conclusive enough, since there were questions that were not answered, exposing the matter to litigation. One such question is whether in a case of sole ownership a party can infer common intention such that the parties can share the beneficial interest from their direct contributions36. If that is the case, then it means that indirect contributions are not considered. This is arguable in a court. If that is not the case, then the court ought to have clarified the meaning of indirect contributions. The second unaddressed matter is whether a party can ascribe a common intention saying that the parties will unequally share the interests in the case of a joint ownership. Further, the court would have addressed the matter of Mr. Kernott’s effective severance. By the court determining whether Mr. Kernott’s effective severance was an earlier one based on conduct or whether it was his express one, the court would have found more facts to decide in this case. This point is relevant since Ms. Jones had earlier conceded that their cohabitation began with a joint beneficial tenancy. With these questions and new developments in land law, such as people declaring their interest (as per the TR1 wordings), it may become a major issue once more if similar cases come before the court in future. The Supreme Court judges went ahead and imputed an intention to Mr. Kernott and Ms. Jones. It is imperative to note that the trial judge, who had determined that there was a difference in the intentions of both parties after separation, had done this37. The main issue to point out was that the house was not required to serve the purpose it was initially intended to, and that is to be a home to the family. Further, a widely held position is that whatever interest claimed by Mr. Kernott ceased when he decided to buy his own house38. Nevertheless, following the case of Kernott v Jones, courts have explored a wider scope while trying to ascertain a change in the common intention of the parties to a property dispute. The arrangements made by couples have evolved, with more opting to execute a Declaration of Trust and reviewing it at any point, as they feel necessary. Bibliography Constructive trusts and co-ownership | Lexology, n.d., Constructive trusts and co-ownership. Retrieved August 18, 2014, from http://www.lexology.com/library/detail.aspx?g=2efa451c-d94a-48ce-a18b-b702b6438b6a Dixon, M., & Dixon, M., 2012, Modern land law 8th ed., Abingdon, Oxon [England: Routledge. Hudson, A., 2008, Understanding equity & trusts 3rd ed., London: Routledge-Cavendish. MacKenzie, J., & Phillips, M., 2006, Textbook on land law 11th ed., Oxford: Oxford University Press. McDonald, I., & Street, A., 2009, Equity & trusts. Oxford: Oxford University Press. McFarlane, B., & Hopkins, N. S., 2009, Land law: text, cases, and materials. Oxford [UK: Oxford University Press. Sexton, R., & Bogusz, B., 2009, Land law: text, cases, and materials. Oxford: Oxford University Press. Steele, J., 2010, Tort law: text, cases, and materials 2nd ed, Oxford: Oxford University Press, USA. Strong, S., & Williams, L., 2008, Tort law: text, cases, and materials. Oxford: Oxford University Press. Strong, S., & Williams, L., 2011, Complete tort law: text, cases, and materials 2nd ed., Oxford: Oxford University Press. Thompson, M. P., 2012, Modern Land Law 5th ed., Oxford: OUP Oxford. United Kingdom Supreme Court, n.d., Jones v Kernott [2011] UKSC 53 (9 November 2011). 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