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25th June 2024

Richard Kershaw examines legal protections for unmarried couples in FT Adviser

Richard’s article was published in the FT Adviser, 24 June 2024, and can be seen here.

What legal protections do non-married couples have when a relationship breaks down?

Have you documented all the financial contributions you have made since the relationship started? Have you kept all the emails you and your partner have exchanged about your finances? Of course not.

If you are married to your partner, and your marriage breaks down, the lack of documents will not matter very much because the Matrimonial Causes Act 1973 is broadly protective of your interests and establishes a presumption that – where resources allow – your financial needs will be met.

But if you are not married to your partner, discussions, promises and half promises could be crucial evidence in determining what – if any – financial claims you have when your relationship breaks down.

The need for reform of this outpost of family law is currently being trumpeted by the Labour party. That this is a contentious area of potential reform is well known.

This article explores a less well-known feature of such cases, which is that the current (so-called) “system” of the law of cohabitation (which in reality is no system at all) facilitates economic abuse.

The divorce capital of the world

It is well known that, on divorce, a court can make substantial financial provision for the weaker party.  It is not for nothing that London is called the divorce capital of the world. The court conducts a two-fold exercise on divorce – first of all in calculating what the assets are, and then dividing them.

The court is compelled by statute (the Matrimonial Causes Act 1973) to consider the “needs” of each party and directed by case law to produce (where the money allows) an outcome that is “fair”.

In cases where the available money exceeds “needs” the matrimonial assets – broadly, those built up by the parties during their marriage – will be shared equally.

This does not mean that the process is straightforward, inexpensive or quick; but it does mean that where the resources exist, each party will emerge with a settlement that meets their needs, typically expressed in housing and income (whether from a party’s own resources or maintenance).

The Matrimonial Causes Act governs both divorce and financial division. It has been interpreted, largely consistently, by a body of case law since the seminal case of White v White in 2000.

By comparison, at the end of a cohabiting relationship, the parties have to look to an unsatisfactory amalgam of statute, precious few case authorities and the evidence of what the parties may have said to each other over many years.

In many cases even that will not help. No cohabitant will ever be able to claim maintenance for themselves, capital for themselves, or a share of their former partner’s pension, even if the entirety of the pension pot was built up during their relationship.

The following table summarises the stark contrast between married and non-married provision.

 MarriedNot married
Property rights and transfer(s) Yes. To achieve fairness, irrespective of legal and beneficial ownership or financial contributions.Depends on strict analysis of legal and beneficial ownership based on agreements and financial contributions.
Capital payments (lump sum)YesNo
Pension shareYesNo
Spousal maintenanceYesNo
Child maintenanceYesYes

Instead, a separating cohabitant has to craft a sustainable claim from some or all of the following diverse sources:

  1. Express declarations as to property ownership.
  2. In default of express property ownership, a close analysis of whether the legal title accurately reflects the ownership of the property, through an analysis of whether the parties had a common intention as to the shares in which they would own the property, and if so, what that common intention was. 
  3. Schedule 1 of the Children Act 1989, where there are children, under which capital provision can be made for the benefit of children during the minority or education, returning to the payer at the end of the relevant period.
  4. Finally – and really a last throw of the dice – whether there are available any “estoppel-based” arguments, where a promise made by one of the parties has been relied on by the other party to their detriment. 

By comparison to financial proceedings on divorce, where the evidence is largely valuation-driven and where legal costs generally come out of the family pot, litigation between former cohabitants is primarily fuelled by competing narratives and, because the litigation is governed by the civil procedure rules, the “loser” generally pays the “winner’s” costs.

In divorce litigation, penalising a party by requiring them to pay some of the other spouse’s costs from their award is rare, even where their legal arguments have not succeeded. This is, in part, because courts are mindful of a party’s irreducible needs.

It is the opposite in litigation involving former cohabitants, where the courts will not hesitate to order the loser to pay the winner’s costs, even where this means the resources available to the losing party to meet their irreducible needs are further eroded.

At the point of determining whether or not an adverse costs order should be made, the court is needs blind. This constitutes a significant risk to a litigant.

Nor can a cohabitant in Trusts of Land and Appointment of Trustees Act litigation apply for an order that the former partner pay the legal costs of the litigation, thus constituting a further disincentive to litigating.

In financial proceedings on divorce, ss 22ZA and s22ZB of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LSPO) allows a spouse to apply for an interim order that the wealthier spouse funds their legal costs.

The success of an LSPO application requires the satisfaction of certain criteria (no resources oneself, no option of commercial borrowing and an unwillingness on the part of the instructed solicitor to act without funding) all of which means that obtaining an order is not straightforward; but the court has the power to make interim orders that allow the financially weaker party to operate on the same playing field even if it is not necessarily level.

An uneven playing field

There is no equivalent order for which a cohabitant may apply. Resourceless cohabitants can easily find themselves at the mercy of the resource-rich and resourceful former partner.

It is the writer’s experience that financially savvy individuals, backed by sophisticated lawyers, are well aware of this hotch-potch of legislation, case-law and costs risk and deploy their superior knowledge of the (lack of codified) law to their significant financial advantage.

Most family lawyers will have been asked by a client how best to protect their wealth from their partner and all of them will have said, “Easy – don’t get married.” Such a decision is not problematic where both partners understand its consequences and choose to remain in the relationship.

However, in other circumstances a refusal to marry because of the financial commitments it creates could form part of a campaign of economic abuse, for example where one party did not realise the consequences of a decision not to marry when agreeing to leave their job to become the primary carer for the parties’ children, or to sell their home, move into their partner’s property and use the sale proceeds of their home to meet the family’s outgoings while the other partner saved their own income.

The lack of financial rights on separation can also be used to coerce a partner to remain in a relationship, by telling the partner she will be unable to support herself if she leaves.

A change in the law

The solution lies in education and reform of the law in this area, to introduce a coherent one-stop-shop statute that deals with the breakdown of a cohabiting relationship and the introduction of one or more prompts that compel individuals to think about their legal position.

With a marriage this is straightforward. Everyone can point to the marriage ceremony. Anyone getting married knows it is a pivotal date on which the parties’ legal status will change. There is no such date for a cohabiting couple. Perhaps there should be.

Potential pegs could be, where a child is born to the relationship, the registration of the child’s birth; alternatively, where a property is being purchased, it might be possible to add to the TR1 transfer documentation a tick box to propel the parties to take legal advice on the financial aspects of their relationship.

Even where the property is being bought in sole names, and where there is a mortgage, the non-legal owning party is required to sign a declaration of no interest for the mortgagor, so this too could be a “peg” upon which to hang a recommendation or requirement to obtain legal advice.

None of these are fail safes. But they are practical steps that can relatively easily be implemented to inform and educate and bring about a greater level of protection for the economically weaker party.

This is not to say that marriage and any ensuing divorce litigation is a panacea, without the potential for economic abuse; far from it. But the statutory protection afforded by the Matrimonial Causes Act is solid and provides a real anchor-point of certainty for spouses in abusive relationships.