Monday, November 30, 2015

Cohabitation Break Up and the Division of Property

Cohabitation law is very different from matrimonial finances. Upon divorce a husband or wife has a claim against the assets and/or income of their separating spouse and the division of the matrimonial pot is decided on the basis of what is fair taking into account the factors for consideration via statute.

With regards to cohabitation law when unmarried couples separate their assets are divided according to land law. Historically this has appeared very unfair to the weaker earning party and some people can live and share a life for many years with their partner and receive no financial settlement if they have made no financial contribution.

Where properties are held in joint names the court has been required to consider the parties intention as to division and whether that intention changed over the years. This is where matters become more complex. A starting position of 50-50 can change due to an express intention. That is the parties have written documentation confirming they wish the share to be altered or an inferred intention. It is then for the court to decide whether the parties intended to depart from equality despite there being no documentation to support this.

Each case will be decided upon its own facts.

A recent Court of Appeal case had to consider whether there was a common intention to vary the beneficial interest, whether the shares which the judge  decided - 85%/15% were wrong and whether non payment of child maintenance payments was relevant to the calculation.

On the facts of this case Mr Phillips had taken 25% of the net equity and used it for his own purposes and post separation from 2008 onwards had made no contribution towards the mortgage. The court concluded that it would only have been acceptable for him to do this if a joint intention as to a change in the beneficial share was made.

The appeal was dismissed on all 3 grounds and it was held:
I consider that, in principle, it should be open to a court to take account of financial contributions to the maintenance of children (or lack of them) as part of the financial history of the parties save in circumstances where it is clear that to do so would result in double liability. 
 — Barnes v Phillips [2015] EWCA Civ 1056, [41]    

This is more a move towards fairness which is the bedrock of judicial discretion in matrimonial finances. 

The case of Stack v Dowden gives judges a wide discretion in taking into account any factors when assessing the “whole course of dealing in relation to the property”. Child maintenance and non payment there of has now fallen within that net. 

This is a welcome move but makes it more difficult to predict the outcome of cases.

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