A cohabitee property dispute, Scottish style
By:2 commentsJune 28, 2016
I have often written here and elsewhere of the need for a proper system of law in England and Wales to deal with cohabitee property disputes. Marilyn Stowe has also strongly argued in favour of such a system, including in a number of posts here, such as this one.
To briefly recap, Marilyn, I, and the many other family lawyers who seek such a system are not arguing that cohabitees should have the same rights as married couples when their relationships break down. We simply argue that cohabitees should have basic legal protection, under a system that is much clearer, simpler and certain than the present ‘system’, which is a hotchpotch of various complex statutory and case-law rules that are not designed specifically for cohabitees, and that often mean that deserving people have no rights at all. In 2007 the Law Commission recommended the introduction of a proper system of cohabitee property rights, but successive governments since then have refused to enact any such reform, despite the fact that a system has been in place in Scotland since 2006.
It was interesting, therefore, to come across a report of a case concerning the Scottish system: Melvin v Christie, decided on 14 June. The background to the case was that the parties cohabited from about 1991/2 until the 27th of November 2007. They have two children. They lived in a series of houses, the last of which was purchased in the woman’s sole name, with the assistance of a 100 per cent mortgage taken out in her name. The man, however, contributed towards the mortgage (the woman’s income was insufficient for her to be able to afford to pay it herself), and the court found that each party contributed an equal amount to their general expenditure.
After the separation the man made a claim under section 28 of the Family Law (Scotland) Act 2006, which enables the court to make an order requiring one cohabitant to pay a lump sum to the other, following the ending of the cohabitation. I want to look at the section in a little detail.
The court can make an order after having regard to two matters:
- Whether (and, if so, to what extent) the other party has derived economic advantage from contributions made by the applicant; and
- Whether (and, if so, to what extent) the applicant has suffered economic disadvantage in the interests of the other party or any relevant child.
In considering whether to make an order the court should consider the extent to which any economic advantage derived by the other party from contributions made by the applicant is offset by any economic disadvantage suffered by the other party and the extent to which any economic disadvantage suffered by the applicant is offset by any economic advantage the applicant has derived from contributions made by the other party [i.e. the courts should consider whether any losses suffered by one party are balanced by gains made].
Here, the man originally made his claim just on the basis that the woman had derived an economic advantage from contributions made by him. However, the court also treated it as a claim on the basis that he should be awarded a lump sum in recognition of economic disadvantage he suffered in the interests of the woman.
At first instance the man’s claim failed. Although the judge recognised that the woman had derived a relevant economic advantage, she declined to make any award of capital essentially because, although the man had clearly suffered economic disadvantage there was no evidence that he had intended, when making his contributions to the purchase of the house, to benefit the woman.
The man appealed. Before his appeal was heard the Supreme Court handed down its decision in the case Gow v Grant, which said that it was not necessary, for the purposes of section 28, to find that the applicant’s economic disadvantage was suffered in a manner intended to benefit the other party. When applying section 28, what mattered was what amounted to fair compensation for contributions made or economic disadvantages suffered in the interests of the relationship on a broad rather than narrow assessment [i.e. when considered in broad terms], bearing in mind that [most] parties will not have kept a running tally and that it would be disproportionate to demand that an accounting be worked out in detail [i.e. a detailed assessment].
Accordingly, the man’s appeal succeeded, and he was awarded a lump sum equivalent to one half of the equity in the house. The woman appealed against this order, and her appeal is the subject of this judgment. I do not need to go into the details, which are somewhat technical, save to say that her appeal was refused.
The Scottish system seems so simple, elegant and fair, a far cry from the mess we have to contend with south of the border. If only our government could summon the will to enact something similar here.
The full report of the judgment can be found here (for some reason it is in duplicate).
Image by Sarah Joy via Flickr under a Creative Commons licence
June 28, 2016
Categories: Cohabiting Couples