The case of Jones v Kernott focused on the correct approach the courts should take when calculating beneficial interests in property where the legal title to the property is held in joint names by an unmarried couple but there is no express statement of how it is to be shared.

The judge in the county court had held the common interest of the couple, who had split up 18 years previously, had changed. Relying on Stack v Dowden, he decided that Mr Kernott was entitled to only a ten per cent share in the Essex house, bought for £30,000 in 1985 but now worth £245,000, rather than the 50 per cent share he was seeking. Mr Kernott appealed to the High Court where he lost but he went on to appeal successfully in the Court of Appeal.

However, the Supreme Court allowed Ms Jones’ appeal and restored the county court order, saying it was the duty of the courts to decide what the intentions of the couple were during the course of their relationship and afterwards.

Watson, head of family law for London and Milton Keynes, says: “Historically, cases of this type have been difficult to determine. Cohabiting couples in times of relationship breakdown have been dealt with under the strict terms of property and land law rather than the more discretionary approach adopted in family cases which apply to married couples.

“In the case of Stack v Dowden, matters changed in that the courts made it clear that they could take into account ‘the whole course of conduct of the parties…to arrive at a conclusion that they indeed intended something different from what seemed clear from the conveyance into joint names.’

“However, this was limited in that the conveyance was held to indicate both a legal and beneficial joint tenancy and proving anything else was not easy. The burden was placed on the party seeking to show that the beneficial interest in the property was different from the legal interests.”

There have been a large number of cases since Stack v Dowden seeking to establish or quantify a beneficial interest in a property. But Watson says these have been dealt with in a large range of ways and the inconsistency of the judiciary has made it very hard to advise clients as to the likely outcome of any case.

The Supreme Court decision, she continues, is “highly significant” for people who bought property before the 1991 introduction of the form TR1 used to transfer title of a property. “Before then, there was no specific facility to declare your beneficial interest in a property at the time of purchase without entering into further legal documentation.

“Where that applies, people need to review their situation and consider if the way in which they hold the legal title to their property accurately reflects the beneficial interest and the way they run their financial affairs. For example, if one party has contributed significant capital to either the purchase or subsequent improvements to the property or if contributions to the outgoings have not been made equally.”

The TR1 was updated in 1998 to include a specific section for parties to declare how they wished to hold the beneficial interest, such as joint tenants or tenants in common. Watson says: “People who have purchased using a TR1 should still review the way in which they hold the beneficial interest because if a joint tenancy is not what they intended, they can vary their interests by agreement.”

Mr Kernott argued the decision was unfair to men but Watson says the decision would have applied in the same way if the positions had been reversed. “The relevant factors were the initial contribution to the purchase price made by Ms Jones and the on-going sole contributions she had made to the mortgage and outgoings on the property after separation.”

In terms of advice for clients, Watson says: “It is clear the courts have tried to inject a degree of fairness into outcomes for separating couples when the legal interest in a property does not accurately reflect their situation. Practitioners advising clients, either at the time of purchase or subsequently, should advise them to consider carefully how they wish the beneficial interest to be reflected and to record it in a specific living together agreement or declaration of trust. This will need to be regularly reviewed in the same way that a will should be reviewed, particularly when circumstances change.”

The decision comes amid calls for statutory rights for cohabitating couple after the government decided not to go ahead with Law Commission proposals. Supreme Court Justice Lord Wilson highlighted the “continued failure of Parliament to confer upon the courts limited redistributive powers in relation to the property of each party upon the breakdown of a non-marital relationship”.

Watson says: “Ideally some statutory guidance and legislation would clarify issues for cohabiting couples. The government appears reluctant to take such step. Whether this is because they do not wish to give co-habiting couples the same rights as married couples, thereby promoting marriage, or whether they feel parties should be able to regulate their own affairs in these circumstances, is unknown.

“However, without doubt, clarity in this area of law would allow parties to enter into arrangements safe in the knowledge they would be binding. Alternatively, if a set of proceedings and legislation were put in place in the same way that financial proceedings are for married couples, practitioners could advise clients as to the likely outcome of any proceedings.”