Cohabitation battles

The courts have been wary of allowing litigants in property disputes
to import the principles set out in Jones in respect of cohabitation but this approach is not inflexible.

The Supreme Court’s decision in Jones v Kernott received approval from many who hoped it would enable fairness and justice to be done in domestic property situations. It created a perception that the court’s discretion in property disputes had been widened by the introduction of a concept of fairness, borrowed from the family court’s approach towards financial remedies on divorce.

The justices in Jones set out a number of principles for determining beneficial interests in a situation where a property is co-owned by cohabitees without an express declaration of trust. The starting point is that when the couple are joint tenants in law the beneficial interest should be split equally, unless this assumption can be displaced. Less than two weeks later the Court of Appeal gave judgment in the case of Crossco v Jolan. Crossco sought to apply the Jones principles in a commercial property context. The judges dismissed these arguments and drew a clear distinction between a scenario involving commercial/investment property and one that involved a domestic property. “The jurisprudence in that distinctive [domestic] area is driven by policy considerations and the special facts that normally apply in the dealings between those living in an intimate relationship,” said one judge. This judgment provides a very clear warning about the risks of trying to import Jones principles into non-domestic property disputes.

Importing the Jones principles
The Court of Appeal had another opportunity to distinguish between domestic and non-domestic property scenarios in Geary v Rankine. Mrs. Geary sought to persuade the court that she had acquired a beneficial interest in a bed and breakfast property in the sole legal ownership of Mr Rankine by virtue of living with Mr Rankine, working with him in the bed and breakfast business and representations said to have been made by him. The Court of Appeal in dismissing Mrs. Geary’s claim, referred to the evidential burden on a party claiming a beneficial interest in a property solely legally owned by another. “The burden is all the more difficult to discharge where, as here, the property was bought as an investment rather than as a home,” the judge said.

The Geary case, therefore, emphasises the difficulties in trying to make Jones work outside the standard cohabiting family-home scenario. An application of the Jones principles occurred in Gallarotti v Sebastianelli involving Italian platonic friends living in London who decided to buy a property as joint owners. Though the parties had originally expected that the split would be 50/50, Mr Gallarotti signally failed to make the expected contributions to the mortgage which were mainly paid by Mr Sebastianelli which prompted the Court of Appeal to decide in these circumstances that the split of 75/25 in favour of Mr Sebastianelli properly reflected the parties’ common intention.

A hint of what the future might bring in England and Wales has also been provided by the Supreme Court in the recent Scottish case of Gow v Grant. Mrs. Gow claimed £38,000 for the difference in value of her flat between the date she sold it and moved to Mr Grant’s house (in 2003) and the date she moved out after the relationship had ended (in 2009). The court decided that this loss of equity appreciation was an economic disadvantage suffered by Mrs. Gow in the interests of Mr Grant and ordered that Mr Grant should pay this £38,000 to Mrs. Gow. In both Gow and in Jones, there was an implied acceptance by the court that it should intervene if one cohabitee would otherwise be left with a greater appreciation in property equity than the other following the end of the relationship.