Posted by The Family Law Company on 8th January 2015

This is a comment we hear frequently from unmarried clients asking whether they are entitled to claim an interest in the home they shared with their former partner, but which was owned in the sole name of the partner.

The chances are the former partner took advice early in the relationship. The standard advice given in these circumstances is not to permit your (non-owning) partner to make any direct financial contribution to the purchase of your property. The term ‘direct’ refers to payments towards the mortgage, deposit or the cost of improving or renovating the property. This advice has been offered by solicitors to their clients repeatedly over the last 23 years.

The reasons are to be found in the comments of Lord Bridge in the landmark 1991 case of Lloyds bank v Rosset. The relevant passage reads;

“… direct contributions to the purchase price by the partner who is not the legal owner … will readily justify the inference necessary to the creation of a constructive trust [i.e. giving the non-owner an interest in the home]. But as I read the authorities, it is at least extremely doubtful whether anything less will do.”

It follows that if the legal owner insists on making all the mortgage payments and paying for improvements, leaving their partner to pay for or contribute to everything else, they (the legal owner) will keep the property free from any claims by their partner, even in the event of separation after a long relationship. And so it has proven to be, time after time in the intervening years.

But is that all about to change? We now have a situation where after two decades, there are many unmarried relationships founded on this mantra, often with the non-owning partner blissfully unaware of the significance of the arrangements. When one considers whether it is right that the legal owner might not be able to afford to pay for and improve the home without the contribution of the other partner to all the other outgoings, this rather arbitrary distinction appears very unfair indeed to the committed non-owner who has dutifully paid the domestic bills for many years without realising the reason why their partner has insisted on things being done in this way.

The first signs of discontent with this state of affairs came as long ago as 2001 in the case of Le Foe v Le Foe, when a junior Deputy Judge commented that indirect contributions;

“… should suffice to enable the necessary inference [for the non-owner to acquire an interest] to be drawn. Otherwise these cases would be decided by reference to mere accidents of fortune, being the arbitrary allocation of financial responsibility as between the parties.”

The judge concerned, Sir Nicholas Mostyn QC is now a leading light in family law cases both as High Court Judge and (until recently) advocate whose utterances are greatly respected and frequently reported. Sir Nicholas is now one of the ‘movers and shakers’ in the family courts.

More recently, other senior judges have suggested in other judgements that the law has ‘moved on’ since the Rosset case although to date, the courts have resisted the urge to intervene, hoping no doubt that the government will legislate to address this difficult issue. A hope which has to date, proven to be in vain.

But how much longer can this state of affairs persist in a society where more people now live together in unmarried relationships, a good proportion of them affected by precisely these issues. In Scotland, the law has already moved on.

A former cohabitee living in Scotland who has benefitted from ‘economic advantage’ due to the contribution of their former partner may be ordered to make financial provision for the partner on separation. This simple formula prevents one partner from dividing up financial responsibilities in such a way as to leave them with the full benefit of the property on separation and their former partner with nothing. If they have derived ‘economic benefit’ a claim arises regardless of whether that benefit consists of payments directly towards the home or indirectly towards the domestic bills.

Our prediction is that the courts will soon take the opportunity to address this issue in case law, thereby encouraging the government to introduce long overdue legislation in similar fashion to the successful Scottish model.

 

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