Financial provision on dissolution

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					FLJ73 p02-05 Adam    1/2/08        11:43   Page 2

                C I V I L PA R T N E R S H I P S

           Financial provision on dissolution
           With case law still awaited, Conrad Adam considers the
           financial issues when dealing with the dissolution of a civil
           partnership and the relationship with matrimonial law
                                                           his article sets out to do three        course replicate in brief the facts of

                                                    T      things. First, briefly to review
                                                           where we are now in relation to
                                                    civil partnership registrations in terms
                                                                                                   Miller v Miller [2006].
                                                                                                       Is that outcome under the CPA possi-
                                                                                                   ble or likely? If not, why not? It has been
                                                    of the numbers, and other data avail-          suggested by a number of commentators
                                                    able. Secondly, to remind practitioners        that on the breakdown and dissolution of
                                                    of the powers of the court in relation to      civil partnerships the court will be likely
                                                    financial provision on dissolution, under      to apply principles established in case law
                                                    the Civil Partnership Act 2004 (CPA),          relating to the breakdown of marriages. If
                                                    and finally to consider how the courts         civil partnerships are, in the words of
                                                    might apply those statutory powers, and        Mark Potter, to be considered as ‘parallel’
           Conrad Adam is a partner                 to what extent in doing so they may            to marriages, then this scenario must be
           at Cumberland Ellis LLP                  apply principles of case law established       possible. Would that outcome be fair? Or,
                                                    on the basis of marriage breakdown.            perhaps any less fair than some might say
                                                       But first let’s start with some recent      of Miller? If it was considered to be inap-
                                                    words from the President of the Family         propriate by the court, then fundamental
                                                    Division, Mark Potter, speaking in             questions need to be asked as to why.
                                                    Wilkinson v Kitzinger [2006]: ‘The inten-          Current legislation does not allow
                                                    tion of the government in introducing          same-sex partners to marry in England
                                                    the legislation was not to create a            and therefore the most they can do is
                                                    “second class” institution, but a parallel     register civil partnerships. If on the disso-
                                                    and equalising institution.’                   lution of those civil partnerships they are
                                                       Assuming that when it comes to              treated differently to married couples,
                                                    financial division at the dissolution of       where similar facts exist, then that would
                                                    civil partnerships, the courts agree with      clearly be discrimination. Any differences
                                                    these comments, then the following             cannot be justified merely on the grounds
                                                    scenario should be possible.                   of gender or sexual orientation.
                                                       Two men aged 41 and 36 register a
                                                    civil partnership. They have dated for         Where are we now?
                                                    four years but not lived together before       Available statistics for civil partnerships,
                                                    registration. After almost three years the     between their introduction in December
                                                    civil partnership is dissolved. Mr A is        2005 and currently, cover a nine month
                                                    wealthy – there is considerable debate as      period to the end of September 2006.
                                                    to how wealthy, but certainly well in          During that time there were in excess of
                                                    excess of £18m. Mr B is not wealthy and        15,600 civil partnerships registered in the
            ‘We are told in Wilkinson               gave up a job paying £85,000 pa when           UK. The government has hailed the legis-
            that civil partnerships                 the civil partnership was formed.              lation as a great success. The vast
            are marriages in all but                Children are not an issue. The civil part-     majority (over 14,000) took place in
            in name. However, it is                 nership is brought to an end when Mr A         England. There was a flurry of activity in
            difficult to see how                    forms a new relationship. Mr B claims          December 2005 itself, with almost 2,000
            certain case law, developed             that when forming his civil partnership        partnerships being formed. The averages
            in relation to breakdown                with Mr A he had a legitimate expecta-         then dropped, as one might expect, and
                                                    tion of an affluent lifestyle thereafter. On   on average between January and March
            of the marriage, can
                                                    dissolution of the civil partnership the       2006 some 1,600 took place each month,
            be applied.’
                                                    court awards Mr B £5m capital includ-          falling to just below 1,500 per month
                                                    ing provision for income. These of             between July and September. 25% of all

            2 Family Law Journal                                                                                                   February 2008
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                                                                                                                  CIVIL PARTNERSHIPS

         civil partnerships between December            1-4 of Schedule 5 at s72(1). Available           Support Agency would not be likely
         2005 and September 2006 took place in          orders mirror very closely those avail-          to have jurisdiction in very many
         London. Throughout the UK more civil           able under the Matrimonial Causes Act            instances.
         partnerships were registered in relation       (MCA) and include periodical payments,       •   Contributions – will the emphasis be
         to male couples than female couples, and       lump sum or sums, property adjustment            primarily on financial contributions?
         in London there were three times as            orders and pension sharing/attachment.       •   Compensation and sharing – not
         many male partnerships formed as                  Matters which the court must con-             mentioned in the Act, nor men-
         female partnerships.                           sider when making financial orders are           tioned in the MCA, but now
            Analysis in terms of age indicates that,    governed by part 5 of Schedule 5 and             developing as concepts within the
         to start with, older couples (presumably       mirror those contained in the MCA.               matrimonial arena.
         in more established relationships)                In relation to the exercise of any of     •   Pre-existing arrangements and legal
         favoured registration, but as time has         those powers against a civil partner in          agreements between the parties – the
         passed that trend has diminished.              favour of a child of the family who is           effect and weight to attach to these.
         Perhaps established partners were wait-        not that civil partner’s child, the court    •   Whether in principle it is the right
         ing for legislation to enable registration.    must have regard to:                             approach, and if so, to what extent it
         In December 2005 just 12% of all civil                                                          is possible, to effectively apply recent
         partners were aged under 35. That per-         • whether that civil partner had                 case law in the matrimonial arena to
         centage had doubled by September 2006.           assumed responsibility for the                 civil partnership issues. Will, or
         The proportion of partners aged 50 and           child’s maintenance;                           should, the court effectively treat
         over halved during that period from            • if so, the extent to which, and the            civil partnerships as if they were
         50% to just under 25%. Age distribution          basis upon which, that civil partner           marriages, or will a ‘second tier’
         among men has changed significantly.             assumed such responsibility and the            (some might say ‘second class’) level
         Between December 2005 and March 2006             length of time for which that civil            of financial provision actually follow.
         over half of men forming partnerships            partner discharged it;
         were aged 50 and over. That number had         • whether, in assuming such responsi-        Cohabitation
         reduced to one in four by September              bility, that civil partner did so          The ability to count, and effect of tagging
         2006. Age distribution among women               knowing that the child was not that        on, the period of pre-marriage cohabita-
         forming partnerships has been more               civil partner’s child;                     tion, where there has been a seamless
         consistent over time.                          • the liability of any other person to       transition, is a relatively new but now
            Reliable data in relation to numbers of       maintain the child.                        firmly embedded concept (for example,
         applications for dissolution is not cur-                                                    GW v RW [2003] and Co v Co [2004]) –
         rently available, and whilst there have            The application of the criteria in s25   perhaps offset to some extent by the
         been two widely publicised applications        MCA, as mirrored by part 5 of Schedule       length of marriage becoming seemingly
         to dissolve (that publicity being based on     5, are of course well known to us in         less important as a factor. Many civil
         being the first male couple and the first      the context of marriage breakdown.           partnerships (at least in the early days of
         female couple to apply), practitioners are     However, given that in many respects the     the CPA) will be based on relationships
         not yet dealing with many dissolutions.        arrangements and roles undertaken by         that have subsisted for a considerable
                                                        civil partners might be different from the   period of time – where couples who have
         Financial consequences                         more traditional roles often adopted in      been together for many years have in
         of dissolution                                 marriage, it is questionable whether the     effect been waiting for the possibility of
         There are no reported cases on the finan-      courts will be able to apply these provi-    being able to form a civil partnership.
         cial consequences of dissolution and few       sions and concepts in a way which is         This certainly appears to be backed up
         reported cases on the CPA so far.              uniform with recent case law develop-        by the early statistical evidence, which
         Wilkinson does not deal with financial         ments regarding financial provision on       indicates that those registering early on
         provision but does provide comment on          marriage breakdown. Areas and con-           under the new regime tended to be older
         the nature of civil partnerships, as com-      cepts which might cause a degree of          couples, presumably already in longer-
         pared to marriage, and might therefore         difficulty or departure may well relate to   term relationships.
         provide an initial focus for the courts        the following:                                  Is it likely that the court will treat pre-
         when determining financial issues on                                                        registration cohabitation as counting
         dissolution.                                   • Cohabitation – the extent to which         towards the length of the civil partner-
             Before looking at the issues that the        pre-civil partnership cohabitation         ship if there has been a seamless
         courts will need to grapple with, and            should be counted towards the              transition? It would seem inequitable
         how they may apply the statutory provi-          duration of the civil partnership,         not to do so given that this practice has
         sions, and perhaps principles of existing        given that registration has only been      developed in divorce cases. However,
         matrimonial case law, we should be               possible for the last two years.           one must question whether, in forming
         reminded briefly of the powers available       • Needs – particularly in the context        civil partnerships, many or any of those
         to the court. All references are to the CPA.     of income and the relevance and the        doing so would have appreciated that
                                                          extent of orders for maintenance,          the length of any prior cohabitation may
         Financial relief                                 especially if there are no children.       have an effect on the financial outcome
         The orders available to the court on           • Financial provision for children –         should the civil partnership be dis-
         dissolution, nullity, or on making a             these issues will largely rely on          solved, even if that dissolution occurs
         separation order are governed by parts           court determination, as the Child          relatively soon thereafter.

        February 2008                                                                                                          Family Law Journal 3
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             If case law developments in financial    US is fairly well established now, and it      contributions of a homemaker or child-
         provision on divorce are to be applied       is likely that that trend will further         rearer must be given equal weight to the
         to civil partnerships, then it seems         develop in the UK. This is reinforced by       financial contributions of the other
         inescapable that pre-registration cohab-     the recent introduction of the Equality        party (save for in the rare ‘stellar’
         itation will have to be taken into account   Act 2006 and was further strengthened          instances). This of course has added
         and thus, almost immediately, criteria       by the implementation of the Equality          much weight to the argument that in
         not explicitly set out in the legislation    Act (Sexual Orientation) Regulations           many cases equal division of assets is
         will be used by the court as one of the      2007 in April last year.                       appropriate, at least as a starting point.
         determining factors. At least with the           Where there are children it necessar-      However, with the possible removal, in
         MCA there was a considerable period of       ily follows that it is not possible for both   many cases, of the non-financial contri-
         time from the legislation being enacted      partners to be the biological parent of        butions argument, it would seem
         before which the court started to intro-     any given child, and given it is less          to be that there will be much greater
         duce and rely on factors and concepts        likely that the biological parent would        scope, not limited to just rare, ‘stellar’
         not explicitly set out to assist in deter-   be the non-resident parent (after Re G         contributions, to argue the financial
         mining outcomes.                             (Children) (Residence: Same-sex partner)       contributions point as a reason for
                                                      [2006]), the court, rather than the Child      departure from equality. Will the ‘yard-
         Needs                                        Support Agency, will primarily be              stick of equality’ be applied to cases of
         Will the court return to regarding this      involved in determining issues relating        dissolution at all? It must be remem-
         concept in a more restrictive and narrow     to the level of child maintenance.             bered that that concept is a creature of
         sense compared with how that term has            This will herald a return to the prac-     case law developed over 25 years to
         come to be interpreted in matrimonial        tice of court-based solutions on child         redress perceived prejudice based on
                                                                                                     gender roles, and of course mentioned
                                                                                                     nowhere in either the MCA or the CPA
         Is it likely to be the case that the court will be willing                                  as a starting point. Would it be appro-
         to treat pre-registration cohabitation as counting                                          priate to introduce, via the application
                                                                                                     of matrimonial case law, a concept to
         towards the length of the civil partnership if there                                        interpret the CPA (such a recent piece of
         has been a seamless transition?                                                             legislation) that has developed to inter-
                                                                                                     pret a separate piece of legislation now
                                                                                                     over 25 years old? If issues of equality
         proceedings? Might it only be in a case      maintenance, as was the case in relation       or presumptions of such as starting
         of real need or potential hardship where     to opposite-sex relationships prior to         points had been in the mind of
         the court is minded to make an order for     the introduction of the Child Support          Parliament when drafting the Act,
         periodical payments as between ex-part-      Act. This should at least allow for an         there is no valid reason for not making
         ners? It is questionable whether in the      overall consideration of financial issues      reference to this.
         majority of CPA cases traditional mar-       to be undertaken where there are chil-
         riage-type gender stereotypes will have      dren, in contrast to the current situation     Compensation and sharing
         existed, although no doubt in some this      in many divorce cases where that (often        Can we by and large forget about these
         will have been the case. Will the court      key) element is outside the jurisdiction       new concepts in relation to the dissolu-
         adjust capital or income to recognise one    of the court. Where children are not an        tion of civil partnerships? The number
         party’s greater need purely by reference     issue – assumed to be the case in the          of incidences in which the compensa-
         to inequality of income or earning           majority of same-sex relationships – the       tion argument could effectively be run
         capacity, not caused by any sacrifice or     court will be less concerned with resolv-      would appear to be fewer, relating to
         prejudice in the employment market           ing matters based on the stereotypical         the likely lesser occurrence of children
         due to actual gender, or gender role         gender role division still often associ-       cutting short a career, but arguments
         (such as occasioned by child-rearing)?       ated with marriage.                            relating to sharing may still have some
         Or will it perhaps be more likely that the                                                  weight. In particular these arguments
         award will have less to do with needs,       Contributions                                  may be relevant to longer civil partner-
         and more to do with why those needs          The non-financial contribution argu-           ships, or partnerships where there
         might exist? Will a clean break or           ment relating to homemaking will be            has been a considerable period of pre-
         deferred clean break order be made even      relevant, but (being in the main based         registration co-habitation, or a mixing
         after a long partnership, notwithstand-      on child-rearing in divorce cases) likely      of financial resources and pooling of
         ing considerable disparity of income         only in a minority of cases. This might        income in the true sense of a partner-
         and earning potential?                       suggest that contributions arguments           ship – that is, where even if the incomes
                                                      will in the main be run along a financial      and earning capacities are wildly differ-
         Children                                     basis instead.                                 ent, the parties have genuinely thrown
         The existence of children in same-sex           Because it is impossible for the non-       in their lot together.
         relationships as an issue will arise. Many   financial contribution of a homemaker              In these circumstances is the idea of
         same-sex couples actively seek to adopt      and child-rearer to be given a value in        an element of sharing of income going
         and some seek to create a family model       financial terms, this has inevitably led       forward justified? Is it somehow more
         based on the nuclear family unit.            to the widely accepted principle in            justifiable for a husband and wife on
         Adoption by homosexual couples in the        marriage cases that the non-financial          divorce than for same-sex partners,

         4 Family Law Journal                                                                                                      February 2008
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                                                                                                                    CIVIL PARTNERSHIPS

                                                          Applying matrimonial case law                 between. However, this still leaves the
          Co v Co (Ancillary relief:
                                                          White v White [2000] of course needs no       questions of sharing and to what extent
          Pre-marrital cohabitation)
                                                          introduction. The main principle, that the    that concept, developed within the matri-
          [2004] 1 FLR 1095
                                                          objective of the court is to achieve fair     monial arena and still in its infancy, will
          GW v RW (Financial provision:                   solution, heavily emphasises that there       have any weight in the context of a part-
          Departure from equality)                        can be no discrimination between hus-         nership dissolution. Where there are
          [2003] 2 FLR 108                                band and wife based on the roles that         children or where there has been some
          HvH                                             they undertake. Of course this usually        career sacrifice for any other legitimate
          [2007] EWCH 459 (Fam)                           translates, in the context of a marriage      reason by one of the partners, then the
          Lambert v Lambert                               case, to there being no distinction or dis-   principle of the disadvantaged partner
          [2002] EWCA Civ 1685                            crimination between the traditional roles     being able to share in the enhanced
          Miller v Miller and                             often adopted by husband as bread-            income of the more financially powerful
          McFarlane v McFarlane                           winner, and wife as homemaker (see            partner would seem to hold good.
          [2006] UKHL 24                                  Lambert v Lambert [2002]). However, it        However, we will need to see whether
          Re G (Children)                                 is questionable to what extent in the         these concepts – recently developed as
          (Residence: Same-sex partner)                   majority of civil partnerships such differ-   a way of stretching and expanding
          [2006] UKHL 43                                  entiation of roles will be apparent, or at    awards based on the long-standing and
                                                          least clearly apparent. If both partners      established institution of marriage (an
          White v White
                                                          are working full-time and there are no        institution almost universally heralded as
          [2000] UKHL 54
                                                          children then both are in the role of         one that is for the benefit of society
          Wilkinson v Kitzinger                           ‘breadwinning’ and probably of ‘home-         as a whole) – will be embraced in the con-
          [2006] EWHC 2022 (Fam)                          making’ as well. To what extent will the      text of the fledgling institution of civil
                                                          fact that there may be significant differ-    partnership.
         on dissolution? If in answer to these            ences in the level of that contribution
         questions we find ourselves saying that          (which by its nature can only be meas-        Conclusions
         one set of concepts holds good for mar-          ured in financial terms) be relevant? This    Before long financial cases relating to
         riage but another for civil partnerships         will be particularly significant where the    civil partnership dissolution will start to
         then we appear to commit an act of dis-          civil partnership, or the civil partnership   come before the courts. We are told in
         crimination, based solely on the sexual          combined with any period of pre-civil         Wilkinson by the President of the Family
         orientation of the individuals con-              partnership cohabitation, is shorter          Division that civil partnerships are mar-
         cerned. Perhaps this specific issue will         rather than longer. Will the presumption      riages in all but name. However, it is
         in any event become less relevant as             of equality – developed largely to combat     difficult to see how certain case law
         post-McFarlane v McFarlane [2006 ] deci-         perceived prejudice based on gender role      developed in relation to the breakdown
         sions develop to cap what might be               – be adopted by a system now dealing          of the marriage, particularly more recent
         achievable in that regard in the context         with same-gender partners? Will there be      case law, can effectively be applied to the
         of marriage (see H v H [2007]).                  as many clear-cut and distinctive bread-      dissolution of civil partnerships. Many
                                                          winning/homemaking role patterns to           high-profile matrimonial cases have con-
         Pre-existing agreements                          justify the adoption of that presumption?     formed to factual matrices based on
         It is more likely that on the dissolution of         What of Miller and McFarlane? It          established gender stereotypes not
         a civil partnership, as opposed to mar-          might be difficult to envisage a similar      always applicable to civil partnerships.
         riage, there might be a pre-existing             outcome to Miller notwithstanding sim-        There are also recent cases relating to
         agreement, for example by way of a               ilar facts – but why? To arrive at a          length of marriage and the reducing
         cohabitation agreement, or declaration of        different result one would have to            importance of that fact in relation to
         trust. To what extent will the court rely on     accept that the formation of a civil part-    financial provision on divorce, even
         those when determining financial out-            nership created a lesser expectation than     where there are no children, and we will
         come? Presumably it will be argued under         that created upon marriage. If that is        need to see whether those concepts are
         s25 of the MCA 1973 that entering into           right (and there is no obvious reason for     also wholeheartedly transposed into civil
         such agreements constitutes ‘conduct’, in        suggesting it is right) then shouldn’t        partnership dissolution cases.
         the same way that those arguments are            same-sex couples be given the opportu-            Without any apparently valid or
         used in relation to pre-nuptial agreements       nity of creating equivalent expectations      logical reason why it might be so, one
         prior to marriage. Of course there is also       by making marriage available to them?         might envisage that, where there are
         the catch-all of ‘all the circumstances of the   If, however, it is held that the expecta-     no children, the length of the partnership
         case’, which gives the court its wide dis-       tions created upon registration of a civil    will often be the primary determining
         cretion. It will be interesting to see to what   partnership are akin to those created on      feature in a way that is no longer the case
         extent the court is more minded to follow,       marriage then it seems inescapable that       in relation to marriage breakdown. If this
         or at least in some way reflect, any pre-        a Miller outcome must be possible.            is borne out then it is likely that the pro-
         registration agreements made. The fact               McFarlane was on its facts a hard case,   vision made will in those cases be less
         that they might exist more commonly in           and perhaps it is now becoming recog-         than in a marriage situation, in which
         civil partnerships, and the lack of an obvi-     nised that the category of cases where        case will the words of the President in
         ous public policy reason for not giving          there can be a ‘compensation’ adjustment      Wilkinson hold true? And if not, will the
         them effect, is likely to mean that they can     are, even in the context of marriage          debate regarding same-sex marriages be
         be relied upon more heavily.                     breakdown, relatively few and far             back on the agenda? ■

        February 2008                                                                                                            Family Law Journal 5

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