Cohabitation

By Graeme Fraser, Associate

Family Law Department

Cumberland Ellis LLP

Myths about cohabitation(A) The “common law marriage”

By living together for two years you acquire rights in each other’s property and can make a claim on each other’s property

A common law wife can claim maintenance

The TruthCouples who live together have hardly any rights in property ownership compared with married couples

Your ex does not have to pay you any maintenance for your benefit – even if you gave up work to look after the kids or your home

Common law marriage has not existed in England and Wales since 1753

(B) If you break up, it’s less messy than divorce?

Contrast the legal options available when a relationship breaks down after living together…………………………….

Trust of Land and Appointment of Trustees Act 1996 (TOLATA)

Schedule 1 of the Children Act 1989 (Schedule 1)

Married Women’s Property Act 1882

Law Reform (Miscellaneous Provisions) Act 1970

Inheritance (Provision for Family and Dependants) Act 1975

WHAT A MESS!

With divorce

Matrimonial Causes Act 1973

The law is a mess but at least we know where to find it

(C) Unmarried fathers have no rights over their children

The Truth

There is no automatic parental responsibility if you are unmarried unless there is a post 1 December 2003 birth certificate

You can get parental responsibility by agreement or court order

(D) On death you are entitled to your partner’s property

The Truth

•If your partner did not make a Will you will not automatically inherit anything from them including the family home if it’s in their sole name or owned jointly as “tenants in common”. You may be homeless shortly after your partner’s death.

•If they have made a Will and what you inherit is worth more than £325,000 (up to year ending April 2011), you will have to pay inheritance tax.

Property division on separation

 If the property is in joint names, any express declaration of how the shares are held is binding even if things have changed since the declaration was made. Look at the purchase documentation.

If the property is not in joint names, the non-owner must prove an implied trust.

 

• Presumed where a person whose name is not registered at HM Land Registry has provided all or part of the purchase price

• Rebuttable by proof of gift or loan, or of common intention

• Amount proportionate to size of contributions

Resulting Trust

Constructive Trust

1) Evidence of common intention through agreement, or understanding or conduct, and Claimant has acted to detriment; and

2) Evidence of common intention as to nature and extent of beneficial interests having regard to whole course of dealing between Claimant and Defendant

Proprietory Estoppel

Claimant believes he or she had or was going to acquire a beneficial interest, which is

Because of a promise, indication or encouragement by the owner or someone on his or her own behalf; and

Claimant has acted to his or her detriment relying on that belief; and

Court finds it unconscionable to deny

Case Study 1 – Sole name, with no rights, indirect contributions – children grown up. Burns type case

Facts

•Isobel and James started living together in 1978 when they were both 28 years old

•In 1980, they moved to a property already owned by James before they lived together

•James paid the mortgage and household bills

•Isobel gave up work to have 2 children born in 1986 and 1988

•Isobel looks after the home and the children

•James and Isobel are now splitting up both at age 60

•James has a good salary, has built up a significant pension fund and has enjoyed substantial capital growth on the family home which is now mortgage free

Outcome

• No child support or financial provision for children as they are now grown up

• Isobel’s potential claim is for implied trust or proprietory estoppel

• No evidence of any agreement, understanding or arrangement to give rise to a constructive trust

• No evidence of promise or assurance on which to base claim for proprietory estoppel

• Same position as Burns v Burns (1984)

• Despite a cohabitation of 19 years in which “Mrs” Burns gave up work and raised the children and took care of household, she received nothing

• Isobel is likely to receive nothing

Case Study 2 – Sole name, promises and reliance/ acting to detriment

Facts

•Geraldine began living together with Harold in 2000 as “man and wife”

•In 2002, Harold bought a home in his sole name and paid all the household expenses

•In 2005, Harold told her he had made a Will in which Geraldine would have the house if anything happened to him

•In 2008, Geraldine discovered Harold was having an affair but Harold told Geraldine she had nothing to worry about, as the house and everything in it was hers

•Geraldine relied on Harold’s assertion and redecorated, improved and repaired the house using her own savings and doing some of the work herself

•Harold, now a prosperous businessman, has applied for possession of the property

•Geraldine is impoverished and in her late 50’s and believes that Harold should be held to his promises

Outcome

• Geraldine’s rights are focussed on Harold’s representations which generated her expectation of property ownership

• Harold has made a representation relating to the entirety of his property

• Geraldine has relied on the representation to her detriment through works to the house

• Harold has acted unconscionably by refusing to perfect the gift of the house to Geraldine

• Same position as Pascoe v Turner (1979)

• In view of Mr Pascoe’s ruthlessness in pursuing possession, he was compelled to transfer the property to Ms Turner

• Geraldine will get the house transferred to her

Case Study 3 – Schedule 1 involvement/ Implied trusts

Facts

•Edward and Faye have lived together since 1995•Edward, who is fabulously wealthy, bought the family home in 1996 in his sole name•At that time, Faye’s parents gave Faye a significant cash sum which Faye paid towards the deposit and legal expenses of the purchase•When Faye worked in the early days of the relationship she paid whatever she earned into the current account used to pay the mortgage and household bills•Faye has not worked since 1997•They have 2 children, the youngest of whom has just started school. Edward’s name is not on the birth certificate•Edward is worried about Faye’s plans for the children's education and religious teaching and wishes to be fully recognised as their father•Edward has issued TOLATA proceedings for the sale of the family home. •Faye wants to remain in the family home and for the children to continue their existing lifestyle 

Outcome

• Faye can claim that the contribution towards the legal expenses of the purchase creates a resulting trust in her favour but Edward may argue that the payment was a gift or loan to them both from Faye’s parents

• As there is no express declaration of trust and disputed evidence about intentions and arrangements, difficult to show common intention giving rise to constructive trust

• Faye’s payments are unlikely to create a beneficial interest in the home• Faye can seek a transfer of the home for her to live in until youngest child completes education

under Schedule 1. Then it becomes Edward’s again• Edward may apply for a Parental Responsibility Order to be recognised as having the same

rights and responsibilities of a married father. He may also seek Specific Issue Orders with regard to education and religion

• If Edward obtains an order for sale in the TOLATA proceedings, Faye can seek a lump sum under Schedule 1 for housing budget, for example, the costs of a rental or deposit (which is to be returned to Edward when the youngest child completes education, equipping costs, car replacement, school fees and legal costs

• Faye cannot claim maintenance for herself but is entitled to child maintenance through CSA/CMEC or by private agreement or private order

Case Study 4 – Joint names – presumption, re-butting 50/50

Facts

•Cliff and Donna started living together in 1980 and had 4 children together

•In 1993, they bought a home in joint names for £200,000 with a joint mortgage

•£70,000 came from the proceeds of sale of their previous home in Donna’s sole name and savings of £62,000 from an account in Donna’s sole name

•Cliff did works on their previous home and claims an equal share of the previous home and that Donna’s savings belonged jointly to him and Donna

•The 1993 transfer deed did not have an express declaration of trust

•Cliff has issued TOLATA proceedings for an equal share of the property

•Donna seeks a declaration that her share is 65% because of the deposit

Outcome 

• Starting point is that Cliff and Donna own beneficial interests equally

• Onus is on Donna to show that interests are divided otherwise than as indicated on title

• Donna needs to show why property was put into joint names, how they intended Donna’s and Cliff’s interests to be different to equal, and to what extent.

• The crucial finding is whether Donna’s savings and the proceeds of Donna’s previous home, which were reinvested in the family home are not joint monies but belong solely to Donna

• What was said about the repairs and alterations made by Cliff on their previous home? Did Cliff do much of the physical work?

• Assuming Donna succeeds, outcome similar to decision in Stack v Dowden in which Ms Dowden was awarded a 65% share in the property.

Case Study 5 – Property in sole name Implied Trusts

Facts

•Anna and Bruce began living together in 2002 in a house in Anna’s sole name purchased using money provided by Bruce

•In 2004, Anna’s house was sold and the proceeds were reinvested in a family home bought in Bruce’s sole name

•Anna and Bruce lived together in a family home for 5 years, both working and contributing to the household expenses including the mortgage, and both working on improvements to and maintenance of the property

•When the relationship broke down, the family home was sold and Anna and Bruce moved into separate homes, one purchased in Anna’s sole name and the other in Bruce’s sole name

•Anna has filed a TOLATA application for a declaration that the proceeds of sale of the family home are held in trusts in equal shares

Outcome

• Anna’s contributions towards the deposit and mortgage suggest that she is entitled to a beneficial interest proportionate to the amount she contributed through a resulting trust

• However, if there is evidence that the beneficial interests should be held differently, a constructive trust analysis is preferred so that a fair division has regard to the whole course of dealing between Anna and Bruce

• A common intention could be inferred by the fact that Anna and Bruce each made financial contributions

• Anna’s and Bruce’s respective beneficial interests could be evidenced by discussions at the time of purchase, but if there is no specific evidence, each is entitled to what the court considers fair

• Here, if the outcome is similar to the outcome in Oxley v Hiscock, Bruce would get a higher proportion if he has made “greater financial contributions” than Anna

What should you do to protect yourself and family if living together?

• If buying a new home together, think about how you want to own it• Options are:-

– Place in one person’s name– Joint tenants– Tenancy in common

• Make a Will – without one, all your property and assets automatically pass to your closes blood relations or to the Crown. Is that what you want to happen?

• If you’re an unmarried father, get Parental Responsibility by agreement or court order• Make a Living Together Agreement

What is covered by a living together agreement?

• Sets out date when cohabitation began

• Housing occupation/ ownership and future intentions

• Endowment policy profits

• Household expenses and debts

• Ownership of contents

• Cars

• Children- care arrangements, financial arrangements, parental responsibility

• Trigger events for activating the agreement:- death, marriage, end of living together, end of agreement, when one partner leaves home

• Transitional arrangements

• Renegotiations and changes

Features of proposed cohabitation reform

•Eligibility requirements – child or children, or living together for a minimum duration

•“opting out” of scheme rather than “opting in”

•Award dependent on “qualifying contributions” including “continuing economic disadvantage”

•Harder to qualify for award than on divorce

 

Will reform happen? 

•Some support among senior Conservative and Labour figures for Cohabitation reform

•Concern about cost – research on Scottish law to be published in Autumn

•Coalition Government has no immediate plans for Cohabitation law reform

•Resolution continues to campaign for Cohabitation reform as part of its family law agenda