Cohabitation: The Financial
Consequences of Relationship
Law Com No 307
• Referred by Government to the
• Consultation Paper (with Overview) May
• 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
– 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
– Family Law Act 1996, Part 4 (protection from domestic
– 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
• 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
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
– They are living as a couple in a joint
– They are neither married to each other nor
civil partners of each other
• 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
• The courts should be given a discretion
structured by principles which determine
the basis on which financial relief is to
• Claims should be brought within 2 years
of the parties’ separation, subject to a
general discretion to extend (to be
exercised in exceptional circumstances
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
• 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.
• 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
• 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.
• 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
• No reform of intestacy rules
• But consequential reforms of Inheritance
(Provision for Family and Dependants) Act
– Definition of cohabitants
– Apply separation analogy
– Power to bar future application under 1975 Act on
making order for financial relief on separation