The decline in marriage or a desire by parties not to be married has resulted in several couples deciding to co-habit and jointly own the property where they live.
The courts have on several occasions been faced with adjudicating upon disputes concerning the division of property as between cohabiting parties when sadly their relationship breaks down. However, what happens if one party to the relationship decides to leave and have nothing further to do with the relationship or the property in question?
The case law in respect of this type of issue is now to a large degree settled by the cases of Stack v Dowden and Kernett v Jones. However, the way in which the courts interpret the decisions can make the ultimate outcome difficult to predict. It requires considerable experience to analyse the facts and to determine with accuracy the likely outcome.
Kernett v Jones states that where property is jointly owned and has always been jointly owned, the presumption that the property is owned on a 50:50 basis both legally and beneficially is a very strong one. A party seeking to argue that this ‘common intention’ as to ownership has altered, will have to provide ‘compelling evidence’.
However, a court can infer a change in this common intention by having regard to ‘words and/or conduct’. Most of the time a court will be unable to rely on “words” because either there is no written document or there is a conflict of evidence as between the parties as to ‘who said what and when’. Importantly, conduct can be a relevant factor which will then enable the court to infer that it has resulted in the ‘crystallisation’ of one party’s interest at a particular point in time.
Thus, by way of example, if one party to the relationship decides to vacate the property and has nothing whatsoever to do with it for several years, say in excess of 10 years, the court can infer that because of that conduct, there has been a change in the parties’ common intention regarding ownership of it.
If the court concludes that a particular party’s interest “crystallised” (a crystallisation case) then the court will value that interest as at the date of crystallisation.
What does this mean in practice? If a party who is in a relationship leaves the property and makes no financial contribution to it for several years, a court can infer that the individual’s interest crystallised at the point of vacating it. The individual’s interest is the value of that interest as at the date of leaving but valued at today’s date. In such cases there will be no need to account to the remaining partner for payments made for the upkeep of the property, but if the money cannot be raised by way of re-mortgage or loan then the property will have to be sold.
Conduct therefore is an important factor to take into consideration when advising unmarried clients in a dispute concerning ownership of a jointly owned property.