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Cohabitation: The Financial Consequences of Relationship Breakdown

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Presentation on theme: "Cohabitation: The Financial Consequences of Relationship Breakdown"— Presentation transcript:

1 Cohabitation: The Financial Consequences of Relationship Breakdown
Law Com No 307 Stuart Bridge

2 Chronology Referred by Government to the Commission.
Consultation Paper (with Overview) May 2006. Report (no Bill, as none requested) published 31 July 2007.

3 Terms of reference Project to focus on financial hardship suffered by cohabitants or the children on termination of relationship by breakdown or death. To consider only opposite-sex or same-sex couples in clearly defined relationships. Particular attention to be paid to: Capital provision where dependent child/ren Capital and income provision on relationship breakdown Intestacy and family provision on death Cohabitation contracts and separation agreements between cohabitants.

4 Problems of the current law
Patchwork of statutory rights Children Act 1989, Sch 1 (capital provision for children) Child Support Acts 1991 and 1995 (income provision for children) Family Law Act 1996, Part 4 (protection from domestic violence) Family Law Act 1996, Sch 7 (transfer of certain tenancies) But no personal remedy at end of relationship (outside marriage or civil partnership). Reliance therefore placed on property rights (beneficial entitlement under the law of trusts) in the shared home. Widespread misconception as to true legal position: “the common law marriage myth”.

5 We do not recommend That there should be an “opt-in” remedial scheme available to cohabitants who register their relationship. That amending Schedule 1 to the Children Act 1989 provides an adequate response. That the divorce regime contained in the MCA should be applied to or adapted for cohabiting couples.

6 Financial relief for cohabitants
A scheme of general application whereby cohabiting couples may apply for financial relief on separation Provided they satisfy eligibility criteria But not where they have reached an opt-out agreement disapplying the scheme (in which case their own financial arrangements would apply)

7 The definition of cohabitants
Persons should be cohabitants for these purposes where They are living as a couple in a joint household They are neither married to each other nor civil partners of each other 2004: Approach by Deputy Leader of the House Phil Woolas MP. Sir Roger: Law Com not suitable body to review but could carry out project to try to devise an effective system of PLS

8 Eligibility criteria Cohabitants who are by law the parents of a child (born before, during or after cohabitation) should be eligible to apply. Other cohabitants should not be eligible unless they have lived as a couple in a joint household for a specified duration, to be set by statute within a range of 2 to 5 years.

9 The nature of the financial relief claim
The courts should be given a discretion structured by principles which determine the basis on which financial relief is to be granted. Claims should be brought within 2 years of the parties’ separation, subject to a general discretion to extend (to be exercised in exceptional circumstances only). Lord Norton (Chairman of Const. Cttee): ‘the implementation stage of legislation constitutes a parliamentary black hole. By addressing it, by moving forward in a way similar to that in respect of pre-legislative scrutiny, there is the potential to develop a new and significant role for Parliament, ensuring that it plays a role at all stages of the legislative process.” Baroness Amos: “Parliament and government have a common interest in strengthening post-legislative scrutiny. From the government’s point of view, it could help to ensure that the government’s aims are delivered in practice and that the considerable resources devoted to legislation are committed to good effect” - HL debate. Early consultation approach: Parliamentarians, Parly Counsel, Parly clerks, Govt departments, academics, other bodies such as NAO, Ombudsmen

10 The ingredients of a claim
An eligible cohabitant must prove that The respondent has a retained benefit; or The applicant has an economic disadvantage as a result of qualifying contributions the applicant has made. A qualifying contribution is any contribution arising from the relationship to the parties’ shared lives or to the welfare of their families. Not limited to financial contributions. Future contributions are included.

11 Definitions Retained benefit may take the form of capital, income or earning capacity that has been acquired, retained or enhanced. Economic disadvantage is a present or future loss, including Lost future earnings The future cost of paid child-care Diminution in savings as result of expenditure or as result of earnings lost prior to separation.

12 The operation of the scheme
The court may make an order to adjust the retained benefit (if any) by reversing it in so far as reasonable and practicable. If, after reversal of any retained benefit, the applicant would still bear an economic disadvantage, the court may make an order sharing that loss equally between the parties, in so far as reasonable and practicable. The court should be entitled to make orders similar to those available on divorce, with the exception of periodical payments orders.

13 Opt-out agreements An opt-out agreement should be enforceable in place of the scheme of financial relief Where it is in writing, is signed by the parties, and makes clear their intention to disapply the statute. The court should be entitled to set aside an opt-out agreement if its enforcement would cause manifest unfairness having regard to The circumstances at the time it was made; or Circumstances at the time the agreement comes to be enforced which were unforeseen when it was made.

14 Succession No reform of intestacy rules
But consequential reforms of Inheritance (Provision for Family and Dependants) Act 1975 Definition of cohabitants Apply separation analogy Power to bar future application under 1975 Act on making order for financial relief on separation


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