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Changes in Cohabitation Law

29 November 2011

When any relationship breaks down the emotional fallout is obviously significant, but the practical and financial implications equally cause huge problems and unfortunately the law is just not straightforward. Up until now it is only those who are married who can really seek proper protection on a separation. Therefore if you are married even if the property is owned by one spouse the other spouse can seek an equitable distribution of that property by virtue of the fact they had married.

With more than two million people cohabiting in this country, family lawyers have been concerned for some time about protecting vulnerable clients in such situations.

Up until Tuesday 8 November 2011 if a cohabiting couple owned property then that property would be disposed of and split according to the legal right of ownership. This inevitably meant that regardless of who had put money into the property or who lived in the property if both names were on the title deeds they would each receive 50%. This also means that if a dependant cohabitee lives in property owned by the other cohabitee they have very limited rights.

It is difficult to be faced with a client who is a dependant cohabitee with children in a case where there are not significant sums of money and there is only one property and have to explain to them that their rights are very limited.

Yesterday, judgment was made available in the case of Leonard Kernott and Patricia Jones by the highest court in the land, the Supreme Court. Notwithstanding the fact that they purchased their former family home together in 1985, taking out a mortgage together and making sure that the title deeds were in joint names, the Supreme Court has decided that Mr Kernott who left nearly 20 years ago should only be entitled to 10% of the equity in the property. This is a huge development.

To show how complicated this is it needs to be understood that when the case was originally heard, in the county court, that Judge had indeed decided that Mr Kernott should receive 10%. He had challenged that decision in the Court of Appeal where it was decided that as the property was held in joint names legally, he should receive 50%. For the Supreme Court to reinstate the original Judge’s decision is a very bold move which hopefully is going to support people in similar situations to Patricia Jones in the future.

Mr Kernott obviously had been in a difficult position. He has stated that he did not force the sale when he left because his children still lived in the property and he decided not to force the issue until his youngest son was 18 years of age. His moral dilemma therefore has been entirely at conflict with his legal position.

The Supreme Court took into account the fact that Miss Jones continued to live in the property for nearly 20 years, maintained the mortgage, and therefore was it fair for Mr Kernott to receive, as he should on the face of it, 50% of the equity after such a long period of time?

We suspect there now to be a flurry of such cases, as lawyers previously felt very uncomfortable about advising clients to take matters such as this to court on the basis that it was strongly felt that the legal division for the parties, regardless of how much time had passed, would be upheld. Whether the principle in this case continues to be established is another matter.

There is considerable disquiet in family law at every level as to the vulnerability of cohabiting couples in this country. If you live just a few miles north of the border, Scottish law does provide a level of protection. In English law unless there were children it was difficult to obtain more than assets already held in the individual’s name.

The really difficult aspect of all this for Mr Kernott and Miss Jones is that they started this process to sort out entitlement in 2006 and the first Judge delivered in 2008 so the time and the effort along with the legal costs to some extent have taken the edge off Mr Kernott’s reaction, which is very measured in the circumstances.

A word of caution: each case regardless of the nature of the family relationship whether it be a marriage, civil partnership or cohabitation, will be judged on its own individual facts. In this case the Supreme Court felt that Mr Kernott’s interest in the property had “crystallised” in 1995 when the couple took the house off the market and cashed an insurance policy so he was able to buy a home of his own.

The Supreme Court has taken a bold step today, but unfortunately because of the state of our law in this country in many ways all it has done is create further uncertainty. However at least it contributes to and maintains an essential debate about what we do when couples who are not married separate.

The one thing this case does show from Mr Kernott’s perspective is that it is better to address the issues at separation and set out clearly what each party’s intention is to avoid what without doubt would have been a very difficult four years of struggle through the courts to receive some clarity.

The Law Commission Report on cohabitation has made firm recommendations to reform the law. Those recommendations are based upon two years’ research and go some considerable way to elevating the status of cohabitating couples to something more akin to a marriage or civil partnership. Unfortunately in September the government announced that it does not intend to take forward the recommendations during the current parliamentary term.

Jenny Goldstein - Head of Family Law