Supreme Court develops law on joint ownership

November 14, 2011

This week the Supreme Court of England and Wales handed down a judgment in a case concerning joint owners of property, which served to clarify the court’s approach to the division of equity in cases where property is owned jointly.

Where a couple own a property jointly and they have not indicated the proportions of the shares in which it is to be held, then the law will presume that it is held in equal shares. But in some circumstances that presumption can be rebutted if there is evidence that they had a different intention. This is fine if that intention was obvious and explicit, but what about cases where the intention is unclear and disputed? The court set out this approach:-

  1. The court must first attempt to infer an intention from the parties’ conduct, and make findings of fact where necessary. Conduct is not restricted to financial contribution. 
  2. If a common intention cannot be inferred, then the Supreme Court decided that the judge should examine what is fair, having taken all the circumstances, such as contributions to the mortgage, into account. In other words, the court will look at the whole course of dealing between the parties and effectively impose or attribute an intention on them.

 

It is likely that in practice, as three of the judges indicated, the outcome in either scenario is unlikely to be very different. This is however, definitely a new approach. It appears that the courts can now decide what division of equity is “fair”, in addition to just inferring that the parties actually did intend something other than equal shares. The presumption that a couple who jointly own a property hold it in equal shares can therefore be replaced by the court’s idea of what is fair, and it is the view of some commentators that it is unfortunate that the certainty of the principle of equal joint ownership should be undermined. It remains to be seen how tightly the courts will hold to the presumption and what practical effect the decision will have. It seems clear however, that at the very least, the uncertainty will create more cases.