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

         Stuart Bridge
             Chronology
• Referred by Government to the
  Commission.

• Consultation Paper (with Overview) May
  2006.

• Report (no Bill, as none requested)
  published 31 July 2007.
         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.
   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”.
   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.
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)
   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
            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.
 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).
    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.
                 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.
         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.
           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.
                 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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