High Court

The appeal from the decision of Judge Dedman in the Southend on Sea County Court on 21 April 2008 was heard on 12 May 2009, judgment handed down on 10 July 2009, by Mr Nicholas Strauss QC in the High Court of Justice, Chancery Division who dismissed the appeal, as before awarding beneficiary shares in the Badger Hall Avenue house to Jones and Kernott in the ratio of 90:10.^[1]

Court of Appeal

On 26 May 2010, Her Majesty's Court of Appeal in England upheld the appeal, finding that the house was held in shares of 50/50.^[2] Rimer LJ gave the judgment.

Supreme Court

On 9 November 2011, the Supreme Court of the United Kingdom, overturning the Court of Appeal, held that Mr Kernott and Ms Jones would hold the shares in the house on trust in a ratio of 10% to 90%, to reflect their contributions to the home. Although the Supreme Court unanimously reached the decision, their Lordships concurred on different grounds. Lord Walker, Lady Hale and Lord Collins concluded that there are situations where it would be permissible to impute common intention, while Lord Kerr and Lord Wilson preferred to base their opinions on the fact that the court had the discretion to acknowledge constructive trust in such a manner because it was fair.

Lord Kerr said the following.

76. Lord Walker and Lady Hale have concluded that the failure of the parties to sell their home in Badger Hall Avenue in late 1995, leading as it did to the cashing in of the life insurance policy, meant that Mr Kernott intended that his interest in the Badger Hall Avenue property should crystallise then. That may indeed have been his intention but, for my part, I would find it difficult to infer that it actually was what he then intended. As the deputy High Court judge, Nicholas Strauss QC put it in para 48 of his judgment, the bare facts of his departure from the family home and acquisition of another property are a slender foundation on which to conclude that he had entirely abandoned whatever stake he had in the previously shared property. 77. On the other hand, I would have no difficulty in concluding, as did Mr Strauss and as would Lord Wilson, that it was eminently fair that the property should be divided between the parties in the shares decreed by Judge Dedman. Like Lord Wilson, therefore, I would prefer to allow this appeal on the basis that it is impossible to infer that the parties intended that their shares in the property be apportioned as the judge considered they should be but that such an intention should be imputed to them.

Lord Wilson said the following.

87. The problem has lain in Lady Hale's third sentence. Where equity is driven to impute the common intention, how can it do so other than by search for the result which the court itself considers fair? The sentence was not obiter dictum so rightly, under our system, judges below the level of this court have been unable to ignore it. Even in these proceedings judges in the courts below have wrestled with it. Mr Strauss observed, at para 31, that it was difficult to see how – at that final stage of the inquiry – the process could work without the court's supply of what it considered to be fair. In his judgment on the second appeal Lord Justice Rimer went so far as to suggest, at para 77, that Lady Hale's third sentence must have meant that, contrary to appearances, she had not intended to recognise a power to impute a common intention at all.

88. I respectfully disagree with Lady Hale's third sentence.

89. Lord Walker and Lady Hale observe, at para 34 above, that in practice the difference between inferring and imputing a common intention to the parties may not be great. I consider that, as a generalisation, their observation goes too far – at least if the court is to take (as in my view it should) an ordinarily rigorous approach to the task of inference. Indeed in the present case they conclude, at paras 48 and 49, that, in relation to Chadwick LJ's second question the proper inference from the evidence, which, if he did not draw, the trial judge should have drawn, was that the parties came to intend that the proportions of the beneficial interests in the home should be held on a basis which in effect equates to 90% to Ms Jones and to 10% to Mr Kernott (being the proportions in favour of which the judge ruled). As it happens, reflective perhaps of the more rigorous approach to the task of inference which I prefer, I regard it, as did Mr Strauss at [48] and [49] of his judgment, as more realistic, in the light of the evidence before the judge, to conclude that inference is impossible but to proceed to impute to the parties the intention that it should be held on a basis which equates to those proportions. At all events I readily concur in the result which Lord Walker and Lady Hale propose.