Cohabitation ruling prompts calls for legal reform
The UK's highest court ruled on whether an ice-cream salesman who left his partner nearly 20 years ago is still entitled to half of the value of the house they had bought together and shared for eight years.
Overruling a Court of Appeal judgment that Leonard Kernott was entitled to half the value of the house, the Supreme Court decided that he was only entitled to 10% of the £245,000 Essex property. It reinstated an original order from a county court in 2008.
Lawyers said the judgment brought greater clarity to unmarried couples who share property and assets, but said urgent reform was still needed.
Alison Hawes, partner and specialist in family law at Irwin Mitchell, said the ruling did away with the age old myth that cohabiting couples have the same rights as those who have tied the knot.
She added: "The bottom line is that couples should not assume that the legal pieces of paper that show co-ownership of a property are the end of the story. If one of them goes on to make a different arrangement, for example moving out or not paying the mortgage then the court can and will adjust the original shares.
"Some commentators will say that the court is being paternalistic – that if a couple want a court to intervene and do what is 'fair' then they can get married because the divorce courts have a wide discretion. Others will say that couples who live together need the protection of the court where there is no clear legal agreement, to help reach 'fair' decisions."
Some 2.2 million people in the UK now cohabit, according to research firm One Plus One, and nearly half of births were to unmarried couples in 2008, compared with just 8% in 1971.
Kernott and Patricia Jones, a hairdresser, had bought a house in Thundersley, Essex in 1985 for £30,000 with a mortgage in joint names, with a deposit paid for by Jones from the proceeds of selling her mobile home. They had two children before splitting up in 1993, and from then on Jones alone paid the mortgage and brought up the children. Kernott bought another home after the couple cashed in a life insurance policy.
The Supreme Court judges said his departure, failure to pay the mortgage and subsequent purchase of another home showed that the couple's "common intention" to set up and maintain a family home had changed.
Law Society president John Wotton said: "This judgement moves the law forward because it allows courts to reach a view about what the parties intended, and what a fair outcome should look like. However, the meaning of 'fairness' in cohabitation law is not the same as fairness in marriage.
"Today's verdict only goes so far in providing cohabiting couples with clarity about what will happen to shared property on a relationship breakdown. The fact is that successive governments have failed to legislate on the rights of unmarried couples living together, despite the Law Commission's proposals for reform, which we have supported.
"Many cases could still end with what most people would consider an unfair outcome. The confused state of the law continues to cause stress, litigation and costs – and hence ultimately is damaging for families and children.
Wotton added that it was crucial for couples who are thinking of buying a property and living together to take legal advice from a solicitor to reduce the risk of problems later. "A solicitor will help to avoid unforeseen problems, about legal rights in a relationship generally, and can discuss how rights might change as a relationship develops, such as children or marriage."
Hawes said it might be necessary to revisit the arrangements later: "If they break up or there is a change in circumstance – one of them perhaps is made redundant and does not pay the mortgage – then if they want certainty it would be sensible to go back to their living together agreement or declaration of trust and make sure that it says what they want it to.
"Taking these simple precautions, a bit like making a will, is going to save thousands of pounds in legal fees, and uncertainty whilst lawyers and judges look at diaries, receipts, and the history of the couple's relationship and financial transactions over periods of months or years."