01 June 2006

Family news - summer: Cohabitation - the need for reform


Michael Gouriet
Partner | UK

The Law in England relating to cohabiting couples is in urgent need of reform.  Whilst there are inevitably continuing concerns about imposing marriage-like norms and expectations upon people who have chosen a different way of life, there is an increasing need to protect vulnerable parties following relationship breakdowns.

The myth of the ‘common law marriage' remains widespread in England.  Indeed a survey in 2004 showed that 57% of people who live together believe they have similar financial rights to those of married couples if they break up.  That is not the case. 

Cohabitation is recognised in some English statutes (for example, compensation on death) but, unlike married couples and registered civil partners, those in unmarried couples have no financial claims against each other when their relationships break down, except in respect of their children. 

The only potential claim a cohabitant might be able to make is to claim an interest in a specific asset (for example, the property in which the couple lived).  Where there is a dispute as to the ownership of property, the English Court has the power to declare how the property is held.  This declaratory law is governed by complicated equitable doctrines (resulting trusts, constructive trusts and proprietary estoppel) which enable a person who is not the legal owner to establish an interest in a property.  The outcome often depends on the evidence that each party gives at court and this can result in expensive litigation.

Resulting trusts

A resulting trust arises where one party has contributed all or part of the purchase money for a property which is then put into the name of another with the common intention that the other should hold the contributor's share in trust in an amount proportionate to that which he/she contributed.      

Constructive trusts

A constructive trust arises where there is no written agreement as to how the property is held but it can be established that there was a common intention, by reference either to express discussions or to financial contribution to the acquisition (but the payment of household bills will not suffice), that the claimant has a beneficial interest in the property and that he/she has acted to his/her detriment in reliance upon that common intention. 

Quantification of the interest (i.e. whether it should be a 50% interest or some other proportion) is then determined by reference either to an express agreement, if there is one, or to what the Court considers fair, having regard to the whole course of dealing (including domestic contributions) between the parties regarding the property.

Estoppel

In order to establish an estoppel, there is no need to provide evidence of any agreement or common intention – it is instead dependent upon the conduct of the parties.  Under this doctrine, the Court's remedies are more flexible.  In addition to being able to declare ownership rights in a property, the Court can grant a right to occupy and/or grant compensation to the Claimant. 

Unmarried parents

Where an unmarried couple have a child, the parent with whom the child lives after the separation (the ‘carer') may make financial claims against the other parent but only for the benefit of the child.

Income

The Child Support Agency (CSA) generally has jurisdiction over the level of maintenance payable, which is calculated with reference to a percentage of the other parent's (usually the father's) net annual income (subject to a cap on that net income of £104,000).  The applicable percentage payable depends upon the number of children (15% for one, 20% for two and 25% for three or more) but the figures can be varied in certain circumstances, for example, by reduction for the time spent with the non-resident parent.

Where one parent lives outside the UK, the Court (rather than the CSA) has jurisdiction over maintenance and, whilst the Court may refer to the CSA guidelines, it is not bound by them.  All circumstances will be taken into account, including the parents' respective resources and needs, the children's needs and lifestyle.

In those cases where the CSA has jurisdiction, and the father's net annual income exceeds £104,000, the carer may apply to the Court for a top-up over and above the CSA award.  This can lead to a tension between the fact that the carer has no personal entitlement and the fact that she may be entitled to an allowance as the child's carer.  The highest court award to date has been £70,000 per annum, which included an unspecified amount for the mother as carer of the child (Re: P (Child: Financial Provision) [2003] 2 FLR 865).

In all cases, the Court retains the power to order the payment of school fees separately from maintenance. 

Capital

Recent case law has confirmed that, where the father can provide housing for the carer and the child, the property provided should be held in trust for the mother and child to live in rent-free until the child has finished his/her education, at which point, it should revert to the father.  The mother is then left to fend for herself (often at a time when her advancing age is likely to constrain her ability to obtain remunerative employment). 

The highest court award to date for housing has been £1million (Re: P (Child: Financial Provision) [2003] 2 FLR 865). 

Where the father's capital resources are insufficient to provide housing for the mother and child, he can only be required to provide additional maintenance to service a mortgage or meet rental payments if his net annual income exceeds the CSA threshold of £104,000 (referred to above).

Reform

Many practitioners believe the current law is unfair and out of step with society as it leaves vast numbers of people in vulnerable positions when their relationships break down.  Interested professional bodies, such as The Law Society and Resolution (the association representing family lawyers in England) have put forward proposals for reform which would enable cohabitants to make claims for financial provision.  The Law Commission is expected to make recommendations for change in a consultation paper later this year.

Michael Gouriet Partner | London

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