You’ve been together years, have children together, bought a house, you’re living like man and wife – you just haven’t got round to getting married.
And, unfortunately, now you are splitting up. It’s a sad situation but at least you’re protected as a ‘common law wife’ aren’t you? No.
The trouble is, in law, there is no such thing as a ‘common law wife’. Only those who are married (or in Civil Partnerships) can rely on the laws relating to financial division of matrimonial assets.
The assumption by many unmarried couples in a long standing relationship that they have acquired rights akin to married couples is manifestly wrong.
Despite various consultations and pledges, parliament has overlooked the issue. Judges have tried their best to tackle it but they cannot make up whole new branches of the law, only tinker around the edges.
So what happens when the relationship ends?
If you are not married, are not named on the title to the former family home, and do not have dependent children at the time of separation (an entirely separate property regime under Schedule 1 to the Children Act 1989 would apply if there were children) then House of Lords (now restyled as the Supreme Court) case law has made it abundantly clear that the starting position in determining the financial interest in a property (i.e. the former family home) is to look at how the legal title to the property is held.
If the title is held jointly without any contrary indication of specific division, such as would be contained in a specially drawn up trust deed or which would be indicated on the transfer deed upon purchase, the starting position is a position of equal shares but this only the starting position.
The truth is that many couples do not openly discuss property ownership and place trust (sometimes misguided) in one another. Not doing so stores up trouble for later.
If the property is registered in the name of one party only that party is able to seek to establish that they have a beneficial interest (i.e. a financial interest in the equity in the property as opposed to the legal title) in accordance with general property law principles.
This may be done by establishing that there had been a ‘common intention’ on the part of both parties that it was intended that the equity should be held differently to the legal title, for example with both having a share. The burden of proof will be the party seeking to establish that the parties intended the beneficial interest to be held differently to the legal title. It is not an easy burden to shift.
Defining common intention
The common intention is not fixed on the acquisition of the property but will be capable of being changed throughout the course of ownership.
The common intention can be established most efficiently by showing that a written document exists such as a trust deed. A 1986 case confirms that where there has been such a deed it will be binding on the parties.
In the absence of a trust deed, the party seeking to establish a share would be entitled to seek to establish a common intention by relying on any discussions that had taken place between both parties with regard to the actual ownership of the property. Therefore the smallest details of what was said years before can play an important part.
It is quite important to point out that a common intention must be an intention of both parties. If one party is held to have intended differently, then that would not affect how the beneficial interest is held.
If there have been no written documents and no discussions, it is still open to the court to either ‘infer’ or ‘impute’ an intention. These terms are not entirely synonymous but are essentially used where the courts relying on evidence such as conduct to gauge what the parties intended.
An obvious example is where one party has undertaken such substantial works on the property that it will be obvious that there would have been a common intention between the parties, even if the same was not expressly discussed. Evidence of financing or providing labour in relation to substantial improvements to the property can be very important as with the added investment, the property can be significantly enhanced in value.
A case from a party not on the legal title based on financial contributions must establish that those contributions are referable to the property. It is gold dust for lawyers when presented with a case where the party not on the title has paid part of the purchase price or has regularly contributed to the capital repayments on a mortgage on the property, say with payments being made from a joint account as it is usually self-evident that such contributions give rise to an interest in the equity.
Direct contributions are not the only way to establish a share and it is important to note that the first question to ask must always be whether or not there was a shared intention for the party not on the title to have an interest at all. Once that is established, the court will consider the whole course of dealing between the parties to see how their shares should be allocated. This will include a review of arrangements made to meet the outgoings on the property including mortgage, council tax, utilities, repairs, insurance and other such expenses amongst other things.
It also follows that where a common intention is inferred from the conduct of the parties a court must assess what shares the beneficial interest was intended to be held in. In such situations, it will be extremely unlikely that couples would discuss their respective beneficial interests in percentage terms and the court will infer such shares from the whole course of dealing between the parties as appears fair.
The court cannot impose its own view of what is fair and override the intention of the parties as is evidenced by their conduct.
The current system can operate very unfairly to unsuspecting partners, so until it is reformed you need to be aware of your rights and ensure you are protected.
Richard Busby is a specialist divorce solicitor at London law firm Fisher Meredith LLP www.fishermeredith.co.uk