Coventry View

A litigation lawyer's perspective

Posts Tagged ‘back to basics

What’s in a Name? – the new Cohabitation Rights Bill

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There was an article in The Times the other day (that I can’t link you with because of their paywall) that reported that 47% of a recent YouGov survey thought that unmarried couples had the same rights when they split up as married couples. Indeed 51% of the women in the survey thought this (as against only 42% of the men). And this is wrong – very wrong. Because they have hardly any rights when they split up, and those they have are difficult to enforce in an effective way.

If a married couple split up then the courts have very wide powers under the Matrimonial Causes Act 1973 to transfer assets between them, order one party to pay the other maintenance or to transfer pension entitlement, and also make orders in respect of any children. If one of them dies there are provisions to allow the survivor to claim reasonable financial provision from the estate under the Inheritance (Provision for Family and Dependents) Act 1975. Insurance policies usually allow for a surviving spouse to receive payment, and they inherit the bulk of the estate and have the right to administer the estate of their late partner under the Administration of Estates Acts, if there is no will.

Very little of this applies to an unmarried partner. The courts can declare what the parties rights in any property are, but can’t alter them. So if Lucy lives in Alex’s house, she won’t normally have any rights to a share of it, even if she has lived there for many years. Nor does she have any rights to a share of his income, or his pension, and if he dies without leaving a will in her favour his estate will go to his children, or parents or siblings and she will get nothing, unless she can persuade the court to award her maintenance under the Inheritance etc Act – which is much more limited than a widow’s rights, and depends on her proving that she was financially dependant.

It is of course a bit more complicated that this if Lucy contributed to the purchase price of the house, or was formally on the title as a joint owner, although even then things aren’t that clear, as the Supreme Court showed in the case of Jones v Kernott (see my piece on this here). She will have to struggle through the provisions of the Trusts of Land and Appointment of Trustees Act 1996 (“Tolata”) where ss 14 and 15 give the courts powers to regulate the actions of the trustees and declare the rights of the beneficiaries. But note that the power is only to declare the rights, not to alter them.

If the couple have children then there will be rights to apply for maintenance for the children, and they will inherit from their father in the normal way. And it is possible for Lucy to make an application for a capital sum under the Children Act to benefit the children, although hardly any applications are made (only 141 applications in the Central London Family Court in 2014) which must mean that it is less than overwhemingly attractive. But Lucy will still have very limited rights herself, and may end up with sordid squabbles about who bought the toaster, and if Alex did, was it bought as a gift for her, or was it intended to remain his, or was it bought for both of them? And then they go on to the fridge…

In a marriage (or indeed a Civil Partnership, whch is the same for virtually all purposes) the court can just transfer the toaster to Lucy and have done with it. Or not, if appropriate.  Actual ownership isn’t decisive.

So parties who are married have much better legal rights and much more effective ways of resolving any disputes if they need to do so. These rights are not perfect, and many husbands have argued they are biased in favour of wives and mothers, but they work in practice, and get tweaked from time to time.

Cohabitation Rights Bill

Now that more and more couples are living together without marriage all these problems become more and more important, especially as a much greater proportion of unmarried couples split up than married couples. There is a lot of pressure to give cohabitees at least some rights, if not all the rights of married couples, and Lord Marks of Henley-on-Thames introduced the CRB in the last parliament, and has now re-introduced it following the election, and it is working its way slowly through the House of Lords at present. The current version is here.

The Bill covers “cohabitants” who are living together as a couple and either

  1. have a child or
  2. have been living together for two years

and are not married to each other, but could be because they are not within the prohibited degrees of relationship (ie parent, grandparent, brother or sister, aunt or uncle, plus some complicated relationships involving children of former civil partners etc).

In such cases, if the relationship breaks down one party will be able to apply to the court for a “financial settlement order”, asking for lump sums, transfers of property, sharing of pensions and so on, very similar to the courts’ powers for a marriage. However, one important difference is that the court’s powers can only be triggered if satisfied that one party has retained a benefit, or the other party has an economic disadvantage as a result of a “qualifying contribution” made by the applicant, and that it is just and equitable to make an order, taking into account a check-list of factors. These include

  • the welfare of any children
  • income and earning abilities, and financial status of the parties
  • financial needs of the parties
  • (in some circumstances) the conduct of the parties.

A further difference is that parties will be able to sign agreements to opt-out of financial settlement orders, but only if they are both separately legally advised. Even then the court can set such an agreement aside if it considers that the agreement is “manifestly unfair” either because of the circumstances in which it was made, or any subsequent unforseen change in circumstances.

There are also provisions dealing with the deaths of the parties, rights on intestacy and other matters.

A Gold-Diggers’ Charter?

I have my doubts about how all this would work in practice, and in all fairness this is based on the first draft version of the bill, which may well be improved as it goes on. It has already provoked strong feelings on both sides. Some feel that it reflects reality in modern societies, and that it should go further in equating cohabitation and marriage. Others feel, however, that any rights are either going to be too weak to be effective, or will be exploited by members of short-term relationships, especially if they have children from earlier relationships already. “A gold-diggers’ charter” some say.

My Solution

I think they have both got the wrong end of the stick, and have a proposal which would make a real difference to cohabitation in future.

Parties intending to live together permanently should enter into a “cohabitaton agreement” which would give them significant enhanced rights. The agreement would not be compulsory but should be encouraged by say tax benefits and social pressure. After a time I would expect it to become normal and for people who did not do so to be a small minority.

The agreement could be fairly short, and merely require the parties to live together and look after each other to the exclusion of third parties. In order to make it more attractive and romantic you could include phrases about “in sickness and in health” and “to love and to cherish”.

The parties should make the agreement by saying the words out loud before some state official and in the presence of at least two independent witnesses. This way there could be no argument about whether they consented to it or not. They may give each other small gifts such as a ring. Then they would all sign a register.  Clearly this will need to be set up beforehand, and they will no doubt get their families and friends to attend. There may be some singing or at any rate music, and everybody will no doubt go off for a few drinks or even a full-scale party afterwards.

The basics would only cost a couple of hundred pounds, although if you wanted to pay more then nobody would stop you. Your parents may well chip in, and of course everybody would dress up. It may become fashionable or indeed standard for the woman to wear a fancy dress of a distinctive colour, and the man would wear a very smart suit which he may have to hire.

Afterwards the parties would have all the rights and privileges of a married couple. As indeed they would be.

You cannot be serious!

Well perhaps not. But I think a lot of people have overlooked the distinction between a marriage and the wedding. You don’t need a vast multi-thousand pound celebration to be married, but you do need to enter into some basic commitments if you are going to live together for the long term. Societies have had marriage for thousands of years and they can’t all be wrong. Perhaps the problem today is that we have the solution to the difficulties of cohabitation right in front of us and can’t see it.

But I’m a lawyer, not a politician, so all I can do is point out the facts, and leave it to others to make the changes.

Written by Coventry Man

20/07/2015 at 15:01

Day v Hosebay – The Judgment that Goes Back to Basics

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Every so often the Supreme Court shows us why it is there. This is to get the right result when the existing law – either because of sub-standard drafting of legislation, or over-enthusiastic extrapolation of a line of cases – has got us to a place that is logically impeccable, but clearly wrong when you look at it in the real world.

The House of Lords used to do this occasionally, and the CA will do so once in a while. At a lower level any litigator will know of local Circuit or District Judges who can generally be relied on to get the right answer, whether by a combination of clever interpretation of the authorities, or, if all else fails, by an imaginative interpretation of the facts, and a generous helping of judicial discretion. But the Supreme Court has the big advantage that it cannot be appealed, and the present court seems to have taken on board the idea that a judge’s duty is to do right between the parties, and has run with it.

The latest decision in the conjoined appeals of Day v Hosebay Ltd and Howard de Walden v Lexgorge Ltd [2012] UKSC 41 (10.10.12) is a good example of this. In a single judgment (always a helpful sign) the court cut away a number of CA and HL decisions that had come very logically to the wrong answer and took us back to the position we had been expecting to be in from the outset.

The technique is their normal one: go back to the original legislation, and the problem that it was intending to solve, find an ingenious way of achieving this without entirely rewriting the statute, and distinguish or over-rule any decisions that had got in the way of the result. Something you can do if you are a Supreme Court, and which the lower courts struggle with.

The Law

These two cases were about the right of tenants to enfranchise, or get the freeholds (or longer leases) of properties let to them on long leases. This had originally been introduced by the Leasehold Reform Act 1967 and applied to tenants with long leases of houses. It was extended to tenants of flats by the Leasehold Reform etc Act 1993. Both of these had various qualifications including most relevantly a residence test. The tenant had to live in the property in question as it was a way of giving tenants a right to buy their own homes.

This test was subsequently felt to be too restrictive, excluding leaseholders with second homes, or who had sub-let the property, or rented through a company, and was relaxed by the Commonhold & Leasehold Reform Act 2002 to a requirement to have held the qualifying lease for at least 2 years, and not to be holding a business lease under Part II Landlord & Tenant Act 1954, plus a few minor exceptions for resident landlords.

The basic test remained the same: the property in question had to be a “house” and this was defined in s2(1) of the 1967 Act as:

‘house’ includes any building designed or adapted for living in and reasonably so called, notwithstanding that the building is not structurally detached, or was or is not solely designed or adapted for living in, or is divided horizontally into flats or maisonettes; and-

a) where a building is divided horizontally, the flats or other units into which it is  are not separate ‘houses’, though the building as a whole may be; and

b) where the building is divided vertically the building as a whole is not a ‘house’ though any of the units into which it is divided may be.

The two tests are commonly referred to as being

  • is the building designed or adapted for living in?
  • is it a house, reasonably so called?

The important things to notice are that there is now no exclusion of companies and although a tenant can’t claim if they have a business lease they can very easily get round this by holding the business in another corporate entity and sub-letting to them. And you don’t need to occupy all of the property provided you have a lease of all of it. So if you have a house that has say been converted into a shop with flats above then, provided you have a lease of the whole, you have a good chance of getting the freehold.

Landlords and especially the large estates that hold much of central London don’t like having to give up their properties, and so if you couldn’t get the claim chucked out on the grounds that the notices were incorrect, arguing that the property wasn’t a house was really all you were left with. However, a long string of cases went very much the tenants’ way, with the courts holding that basically if the property had once been a house then it had been “designed for living in” and so provided it still looked a bit like a house, it was a house for these purposes. I won’t go through the cases here, but they include Lake v Bennett, Tandon v Spurgeons, Boss v Grosvenor and Prospect v Grosvenor.

The Facts

Hosebay itself was about 3 terraced houses in South Kensington that were divided up into single rooms and used to provide self-catering accommodation to visitors. Each room had self-catering and toilet facilities, and bedding and cleaning were provided, so it was much like a hotel without the meals. The CA had decided that the properties were clearly adapted for living in, even if they weren’t used for living in as such, and the buildings had been built as houses and still looked the same externally, so they qualified.

Lexgorge relates to an 18th century house in Marylebone now largely used as solicitors’ offices, although the upper floors were restricted by the lease to residential use. The landlords had conceded that it was designed or adapted for living in, and the CA held that the fact that the upper floors were being used as offices in breach of the lease did not mean that the property as a whole, which looked like a house, had been built as a house, and whose upper floors were substantially as constructed as a house, and which was described in the lease as ‘messuage or residential or professional premises’, could no longer reasonably be called a house. So it qualified as well.

The Decision

Lord Carnwath gave the only judgment. He went back to the beginning, looking at the origin of the legislation, and the emphasis on residence. He said that the definitions were complementary and overlapping:

The first looks to the identity or function of the building based on its physical characteristics. The second ties the definition to the primary meaning of “house” as a single residence, as opposed to say a hostel or a block of flats…Both parts need to be read in the context of a statute which is about houses as places to live in, not about houses as pieces of architecture, or features in a street scene, or names in an address book.

Well as soon as they got that far in the judgment the landlords must have known that they had won. And they had. All the authorities were distinguished or overruled and the decision was a short one based almost entirely on the current use of the premises in question:

  • In Hosebay the buildings that were being used as self-catering hotels were not “houses”, even if they were adapted for living in (and he questioned this as there is a difference between “living” and “staying” somewhere)
  • In Lexgorge a building wholly used for offices, whatever its original design or current appearance is not a “house” even if it was designed as a house, and is still described as a house for many purposes.

The Result

Back to basics. A thing is a house if it is at least primarily a building for living in as a residence. In other words, what the original draftsmen of the 1967 and 1993 acts would have expected. Landlords can give sighs of relief. Tenants have to make sure that primary use of the property is residential, and not business.

And the Supreme Court shows again that you can’t just expect it to go along the rails. As in the case of Berrisford v Mexfield last year when the SC dragged a “lease for lives” out of the back of the cupboard so as to produce the right result for a tenant who had been granted a lease without a specific term, and which the landlord was now trying to say was invalid,  they can be relied on to produce the unexpected whenever it matters. Which, in my respectful view, is the right way to do things. Long may they continue to do so.

Written by Coventry Man

11/10/2012 at 17:53