The notion of a “common law marriage” is simply a myth and carries no weight in law. The truth is that cohabitants have no financial claims against each other arising from the fact of their cohabitation. The law on cohabitation is messy and incoherent and the patchwork of legal remedies currently available is complex and unsatisfactory.
THE FACTS
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In 2001 there were over 2 million cohabitating couples in England and Wales
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In 2004 42% of births were outside marriage
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By 2031 it is predicted that one in four couples will be cohabiting
Time for a change
In the 21st century, more and more people are living together outside marriage and civil partnerships than ever before yet we have no coherent scheme specifically designed to provide financial relief to those cohabitants whose relationships end by separation. There exists though a remarkably high level of misconception amongst the public as to the legal status of cohabitants. Calls have long been made for the law to reflect social reality and to recognise the increasingly prevalent phenomenon of cohabitation. This has finally led to the publication in July 2007 of the Law Commission’s Report, “Cohabitation: The Financial Consequences of Relationship Breakdown”. The Report built on the Law Commission’s Consultation Paper published in May 2006, and recommends the introduction of a new scheme of financial remedies which it is believed would lead to fairer outcomes on separation for cohabitants and their families.
Who is a “cohabitant”?
The Law Commission does not propose a comprehensive definition of “cohabitant” but instead focuses on describing the type of relationship to be covered by any new scheme. It recommends that people should be viewed as cohabitants where:-
- They are living as a couple in a joint household and
- They are neither married to eachother nor civil partners
The Law Commission has decided against recommending a list of factors to help determine who are “cohabitants”, but has nonetheless outlined the “six signposts” it thinks a Court may wish to have in mind in deciding whether a relationship is that of a couple.
The six signposts:
The six signposts:
- existence of a joint household
- the stability of the relationship
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financial arrangements
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responsibility for children
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whether the parties have a sexual relationship
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public recognition of the relationship.
What does the Law Commission propose?
There are essentially 4 key features to the scheme of financial relief on separation envisaged by the Law Commission.
1. Discretion-based system: In keeping with English Family Law tendencies, the scheme would be based on judicial discretion rather than a more rigid European-style fixed rule regime.
Despite the Law Commission’s recommendation, some observers, concerned by the unpredictability of judicial discretion, believe that certainty of outcome should be the order of the day, and so advocate a fixed rule mechanism. We shall have to wait to see what reaction the Report generates on this important issue.
2. Contributions: The approach to be adopted by the Courts in determining financial relief forms a significant part of the proposals. What is crucial is that the Law Commission does not consider that the mere fact of the parties’ cohabitation should in itself justify the more economically powerful party being required to make provision for the other’s needs in the event of the breakdown of the relationship. Therefore, contrary to some reports in the press, the proposals will NOT offer cohabitants divorce-style remedies.
The Law Commission proposes instead that financial relation on separation should be determined by the economic impact of cohabitation. A cohabitant applying for relief following separation (“the Applicant”) 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.
Qualifying contributions would not be limited to financial contributions, and would also include future contributions, in particular to the care of any children.
The Court would have discretion to grant such financial relief as might be appropriate to deal with these matters, but, in doing so, would have to have regard to a number of factors, primary consideration being given to the welfare of any child of the parties.
Such recommendations are quite frankly troubling. One can only imagine the potential uncertainty that will arise as Courts and lawyers try to interpret legal concepts such as “retained benefit”, “economic disadvantage” and “qualifying contributions”. It almost doesn’t bear thinking about! Following on from years of muddle and mess, there are many who feel that any new legislation on this topic should be as clear and as precise as possible to avoid the very problems that have led to this consultation paper in the first place. Failure to seize the moment and to produce a clear and comprehensive piece of legislation will simply lead to more work for the lawyers!
3.Eligibility: The questions of how to define “cohabitants” and how to assess whether they are eligible for financial relief are problematic, yet fundamental.
The Law Commission recommends that cohabitants who are by law the parents of a child born before, during or after their cohabitation ought to be automatically eligible to apply for financial remedies in the event of a separation.
But what about couples who have not had a child together ? The Law Commission recommends that couples who do not have children or who have children who are not by law the children of that couple (for example, step-parents) should only have access to financial relief on separation if they have lived together for a minimum number of years. The Law Commission does not then go on to recommend what that “minimum duration requirement” should be although it does suggest that a period of between two and five years would be appropriate.
4. Opt-Out: In recognition of the parties’ autonomy, the Law Commission proposes that cohabitants should be free to opt out of the system and/or to enter into a Cohabitation Contract (similar to Pre-Nuptial Agreements which are increasingly being entered into by marrying couples). Whilst the right to opt out is important to preserve the parties’ freedom, there is an acknowledgment in the Report that proper safeguards must be in place to ensure that it is not abused.
Summary:
What is clear from the Report is that the Law Commission rejects any suggestion that cohabitants should have access to the same financial regime as is applicable on divorce. This can be seen in particular from the range of Orders the Commission recommends should be available to the Court. Whilst it is proposed that lump sums, property transfers, property settlements, Orders for sale and pension sharing should form part of the range of remedies, unlike on divorce, periodical payments should not generally be available to separating cohabitants. What is proposed instead is a free-standing scheme for certain cohabitants in certain circumstances.
One vitally important question, the answer to which currently cohabiting couples will no doubt be keen to find out, is whether any change in the law will operate retrospectively.
Those couples whose relationships have ended prior to any new scheme coming into force would not be affected under the current proposals. However, the Law Commission does consider that, due to the discretionary nature of the scheme proposed, it would be appropriate for financial relief to be available to those couples whose relationships began prior to the scheme coming into force, but terminated at some point thereafter, thus enabling the Court to interfere with express arrangements made prior to the implementation of any new Act. The ability to opt-out will be of significant importance to such couples.
What should you do now?
It is certainly worth couples who currently live together giving some very serious thought to their futures. Those whose relationships have already soured or are rocky should look to seek advice now about the consequences of termination before any new laws are introduced. Others would be advised to consider entering into a Cohabitation Contract. Whilst we do not yet know what weight will be given to such contracts under new legislation, comparisons can be drawn with Pre-Nuptial Agreements which, subject to certain conditions being met, are now substantially being taken into account by the Courts. Pre-Nuptial Agreements are a growing trend for marrying couples. It is likely that Cohabitation Contracts will follow suit, and indeed the Law Commission has recommended that, so long as a couple have executed a valid opt-out agreement, Cohabitation Contracts should be enforceable.
So What Happens Next ?
Nothing for the moment ! The Law Commission has not been asked to draft a Bill, and any change in the law will require legislation.
This Government has in the past made clear that it is committed to remedying the current situation. Last year, Harriet Harman, the then Minister of State, Department for Constitutional Affairs commented in the House of Commons, “There is a requirement - a public policy imperative - to tackle the problem because the current situation results in unfairness and hardship and, in particular, causes problems for young children …It is a commitment of the Government to protect children and to ensure fairness, so we shall take the matter forward.” What is inevitable is the backlash that will undoubtedly intensify from those who argue that reform will undermine the institution of marriage. Legal experts will recall that previous efforts back in the mid-1990s to introduce “no-fault” divorces were halted largely due to the protests of those morally opposed to it. Will such ethical and religious objectors succeed again?
As ever, it is a case of watching this space and awaiting developments.