Cohabitation: The Financial Consequences of Relationship Breakdown [2006] EWLC 179(6) (04 May 2006)

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You are here: BAILII >> Databases >> The Law Commission >> Cohabitation: The Financial Consequences of Relationship Breakdown [2006] EWLC 179(6) (04 May 2006)
URL: http://www.bailii.org/ew/other/EWLC/2006/179(6).html
Cite as: [2006] EWLC 179(6)

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PART 6

FINANCIAL RELIEF ON SEPARATION: A NEW SCHEME

INTRODUCTION

Reform for cohabitants with children

6.1

We have provisionally proposed in Part 5 that new statutory remedies should be introduced on separation providing financial relief between cohabitants with children. Such couples should be automatically eligible to apply for relief. 6.2

We have to define "cohabitants with children" for these purposes. In so far as this is an issue relating to eligibility to apply for relief, we deal with it in Part 9. However, the operation of the substantive principles justifying the grant of relief to an eligible applicant might themselves depend on the presence of children. We therefore need to consider which children should be relevant for this purpose. In many cases, where the parties are the joint legal parents of dependent children, this will be entirely straightforward. We shall use that case as a basis for our discussion of the principles which should underpin any new remedies. Later in this Part, we shall consider whether the principles should apply to other situations, including families whose children are no longer dependent, cohabiting step-families and families where the cohabitants are caring for children of whom neither is a parent.

Cohabitants without children

6.3

We have also examined the case for extending any reform to couples without children. Consultees may take the view that they ought not to be covered by any new scheme. Alternatively, consultees may take the view that such couples should be included but only if their relationship has lasted for a prescribed minimum duration.

6.4

We shall be addressing the issue of eligibility in detail in Part 9. We defer it to that relatively late stage in the paper not because we consider it to be unimportant: it is clearly a crucial aspect of the scheme and to an extent inseparable from the material to be discussed in this Part. Consultees' views about the acceptability of the scheme proposed in this Part may largely depend on which cohabitants would be eligible to apply under it. However, it is difficult to settle finally on detailed eligibility requirements unless it is known what it is that "eligible cohabitants" would actually be eligible to apply for. The basis on which financial relief, if any, would be provided to those who are eligible may therefore affect consultees' views about appropriate eligibility criteria.

6.5

The basic principles on which we think financial relief under a new scheme should be based are the same, whether between cohabitants with children or cohabitants without children. This Part discusses those principles accordingly. That it does so should not be taken to imply a judgement by us that all or any cohabitants without children should necessarily be included in any new scheme. That is a matter for consultation. Moreover, it is likely that, in practice, the principles that we have in mind would more often be satisfied in cases involving cohabitants with children than those without.

The structure of this Part

6.6

The beginning of this Part deals with some important preliminary issues. We identify what we regard as key objectives which any reform should seek to attain. We consider in broad terms whether any new scheme should operate on the basis of fixed rules for division of assets or by way of a judicial discretion, structured by statutory principles.

6.7

We then turn to what is perhaps the most theoretically complex aspect of this consultation: the specific principles on which any financial relief between eligible cohabitants should be based. We set out why we have provisionally rejected certain principles (based on need, concepts of "partnership" or equal sharing, and what might be called "global accounting" for all of the parties' contributions). We then examine our provisional proposals, which adopt principles based on economic advantage and economic disadvantage. We also consider the proper treatment of the costs of child-care.

6.8

We consider the range of orders which we think should be available to the courts and related issues about the use of particular types of order, in particular periodical payments and the relevance of the clean break principle.

6.9

We consider how any new scheme would interact with existing parts of the law, including claims under the law of trusts and estoppel, Schedule 1 to the Children Act and ancillary relief on divorce.

6.10

Our principal concern in this Part is to consider the basis on which remedies could be provided between the former cohabitants themselves. But we shall inevitably have to touch on the existing remedies for the parties' children, particularly in relation to the interaction of Schedule 1 to the Children Act 1989 with any new scheme operating between the adults. We also consider the range of people against whom an order under that legislation can be made, and ask whether it should be extended to include cohabitants one or both of whom are not parents of the child in question.

6.11

We end with a discussion of issues relating to those difficult cases where assets are extremely limited, or are exceeded by the parties' debts.

The rest of the paper

6.12

This Part of the paper seeks to explain the basis on which we consider financial relief ought to be granted by the courts. Part 7 examines how we think those principles could work, and some of the difficult questions that they raise, in the context of some hypothetical cases. This Part and Part 7 are therefore closely related. At various stages in this Part, we shall cross-refer readers to examples in Part 7 which illustrate the point being discussed. The examples in Part 7 will provide consultees with a further opportunity to consider eligibility before our detailed discussion of that in Part 9.

6.13

We go on to consider in Part 8 the possible implications of a new scheme of financial relief on separation for remedies on death, before turning in Part 9 to eligibility to apply for remedies on both separation and death.

6.14

We have already provisionally proposed that any new scheme should apply by default to those couples whose relationship satisfies statutory eligibility requirements unless they have, by agreement, opted out of the scheme. We discuss that issue in Part 10.

NOT EXTENDING MATRIMONIAL LAW TO COHABITANTS

6.15

Before we turn to the features of any new scheme, we must address the question of whether reform could in fact best be effected simply by extending existing matrimonial law to cohabitants.

6.16

Some jurisdictions

^[1]

Some commentators have argued that the most appropriate reform in this jurisdiction would be to extend Part II of the Matrimonial Causes Act 1973 (which applies to divorcing spouses

^[2]

^[3]

Such a proposal would be appealing to some and wholly objectionable to others. It raises two distinct issues:

(1) whether it is proper to apply the same regime of financial relief on separation to both spouses and cohabitants, whatever that law might be; and

(2) whether the law currently applying to spouses and civil partners is suitable for cohabitants.

6.19

Some take the view that, as a matter of principle, the remedies available between spouses and civil partners should be different from those (if any) applying between cohabitants, in order to preserve the legally distinctive nature of marriage and civil partnership. From a different perspective, others argue that continued difference is needed in order to protect and respect the diversity of cohabitation and the choice to cohabit instead of marry.

^[4]

By contrast, others argue that since the law's purpose in this context is essentially remedial, the same law for financial provision on relationship breakdown should apply to spouses and cohabitants, as the form of the relationship makes no difference to the sorts of problems arising on relationship breakdown.

^[5]

This dispute turns on the answers to a variety of difficult questions: what we think the function of the law in these cases should be: whether it does or should extend beyond a purely remedial function, in particular to a concern for supporting marriage or rewarding a particular type or level of commitment; whether our view about the nature of the remedy required, and what "fairness" requires, might be affected by whether or not the parties' relationship has been formalised in marriage or civil partnership; and whether the institution of marriage can meaningfully be supported, either practically or ideologically, by making different provision for financial relief on separation for spouses and cohabitants.

6.22

To the extent that some of these questions require a political or social judgement, they are not ones to which we can give a final answer. We can only make relatively technical proposals on how to implement what we believe, at this stage, is likely to be the consensus.

^[6]

We address that question in the course of examining the principles which might underlie a scheme for cohabitants, and conclude that in several respects the Matrimonial Causes Act 1973 regime is not appropriate for cohabitants.

^[7]

^[8]

KEY OBJECTIVES FOR REFORM: FAIRNESS AND CERTAINTY

We consider that the following key objectives should be pursued in devising any new scheme of financial relief for cohabitants on separation. In order to deal adequately with criticisms of the current law, any new scheme should aim to:

(1) produce fair, principled outcomes;

(2) be sufficiently flexible to relate readily to the various circumstances of those to whom it would apply;

(3) provide an acceptable degree of certainty of outcome and consistency of results;

(4) be clear and readily comprehensible; and

(5) be practical in its application.

6.25

Most people would agree that the division of property between cohabitants when they separate should be "fair". As we have seen, one of the principal criticisms of the current law is its unfairness. But reaching a consensus on what fairness comprises may be elusive. We must also acknowledge that, in view of the huge variety of cohabiting relationships, it is no easy task to provide a fair resolution in all cases and in relation to all of the numerous problems that cohabitants face on separation. Moreover, as we noted in Part 5, the selection of appropriate eligibility criteria is as pertinent to the issue of fairness as the substantive principles on which relief would be granted to eligible applicants.

6.26

We believe that we must adopt an approach which is principled. Any reform must be coherent, both in terms of its underlying rationale and in terms of the particular basis on which remedies are to be granted. It must be clear about what it is seeking to achieve.

6.27

It is also important, particularly in view of the deficiencies of the current law in this regard, that we provide a scheme which combines fairness with as much clarity and certainty of outcome as is possible in all the circumstances. This is important not only for those who litigate their disputes, but also for the far larger numbers of couples who are likely to settle their cases privately.

^[9]

^[10]

Moreover, the more robust party might be encouraged by unclear law to "have a go", even if their claim seemed to lack merit. Where there is an imbalance of power in the relationship, or one party is risk averse, the weaker or more cautious individual faced by unclear law might prefer, as an applicant, to settle for considerably less than what a court might have ordered, or, as a respondent, to settle a speculative claim from the other party, rather than risk court proceedings.

6.29

We consider that the selection of appropriate principles should be guided by available research evidence about the wide range of cohabiting relationships in England and Wales,

^[11]

^[12]

If the objectives outlined in paragraph 6.24 were attained, a new scheme would facilitate the settlement of disputes, and avoid undue forensic complexity. In turn, the process would be accessible to those acting without legal advice or representation. A new scheme would be quicker and cheaper to operate, and more easily comprehensible than the complex set of legal proceedings and principles which cohabitants currently have to negotiate on separation.

6.31

We must, however, acknowledge that any reform of this difficult subject must have its limitations. We cannot hope to provide a system that churns out intellectually coherent, substantively fair outcomes by the simple turn of a handle. Any new law, like the present law, will inevitably involve some complexities that are beyond the reach of most non-lawyers. Moreover, given the diversity of cohabiting relationships and the need to cater appropriately for a variety of situations, a simple scheme may not be the most suitable one. Our challenge is to find a satisfactory compromise between the goals of fairness, flexibility, certainty, clarity and practicality.

FIXED RULES OR PRINCIPLED DISCRETION?

6.32

The attempt to balance fairness with certainty raises questions about the basic mechanisms whereby financial relief should be granted. It is necessary to steer a careful course between the "Scylla of unfettered discretion and the Charybdis of rigid formula".

^[13]

^[14]

Should the courts' jurisdiction be based essentially on fixed rules, to which limited exceptions might be made? Or should the court instead exercise a discretion structured by express statutory principles, the application of which in an individual case might require the court to make an evaluation of the parties' particular circumstances? This may seem a rather abstract question to be posing. But we think it is helpful at the outset of devising a new scheme to consider the choice between systems based on fixed rules and those based on a set of principles that would guide judicial discretion and those resolving their disputes privately.

Fixed rules

6.34

The choice between fixed rules and principled discretion is perhaps an easy one to make from an English family law perspective. We are used to discretion in our family law, certainly in relation to court-based remedies. Notably, our system of financial relief on divorce is based on a statutory discretion.

^[15]

Many jurisdictions do have rule-based systems for family property generally, cohabitants included.

A system under which each party has a clear, rule-based entitlement over a given pool of assets has many obvious attractions.

^[20]

^[21]

Moreover, rule-based systems always have the potential for dispute at the margins. In relationship property schemes of the sort described above, the definition of what assets falls within the property pool and is therefore subject to the rule must be comprehensive. Identification of the relationship property may be complex, lead to argument between the parties and, like any rule, generate arbitrary results.

^[22]

^[23]

These problems call into question the suitability of any rule-based scheme which would apply by default to eligible cohabitants in England and Wales. A rule-based system is unlikely to have the flexibility necessary to respond to the diversity of cohabiting relationships. There is huge variety amongst cohabiting relationships, particularly in terms of the nature and level of commitment and the financial interdependence between the parties. Even if access to a rule-based scheme were strictly limited by stringent eligibility criteria, it is doubtful whether it could safely be assumed that the chosen rule was appropriate for the chosen class, whatever it was.

6.39

This is particularly important in view of the fact that we are proposing an opt-out regime, which would apply automatically to all relationships satisfying the eligibility criteria. There is only so much that can be done by eligibility criteria to isolate only (and identify all of) those cases for which the chosen rule might be appropriate. Some deserving cases might end up being excluded, and some apparently undeserving ones included. This is the inevitable result of eligibility criteria. However, unless complex or modified by discretion, the rules themselves would not be able to operate as a further filter for ensuring fair results in the cases that did fall within the scheme. Nor do we consider it would be appropriate to rely on the opt-out facility as a mechanism for removing from the ambit of the scheme those parties for whom the rule would patently not be appropriate.

6.40

We consider that the essential balance between fairness and certainty required in an area of law dealing with the diversity of intimate relationships is not readily achievable by a rule-based system. It may only be possible to achieve a better balance by injecting a large measure of judicial discretion into the operation of any exceptions. But then much of the certainty apparently offered by the rules might be lost. We therefore take the view that fixed rules for the resolution of financial and property disputes when cohabitants separate are unlikely to offer the right model for reform.

Preference for discretion structured by principles

6.41

We consider that it would be preferable to promote a more flexible approach, enabling the courts to respond more closely to the circumstances of individual relationships and provide a fair outcome for both parties. Such an approach, necessarily based on the exercise of judicial discretion, would fit better with our existing family law. Discretion has a greater capacity than rules to accommodate the facts of individual cases and takes some pressure off the eligibility criteria. However, excessive reliance on discretion may be open to criticism on the grounds that it inevitably entails a loss of certainty.

6.42

We consider that the uncertainty inherent in discretion can to some extent be limited by underpinning the exercise of the judges' discretion with a firm foundation of principles, expressly stated on the face of the legislation. These principles should indicate clearly what it is that the courts are being expected to achieve by the exercise of their discretion in each case. The principles should provide (i) a justification for the grant of some relief in the individual case (in addition to the applicant's having satisfied the eligibility criteria), and (ii) a guide to the quantification and nature of that relief.

^[24]

Unlike fixed rules, which must be applied mechanically to relevant facts, principles would operate more flexibly in pursuit of a fair outcome. The principles would indicate to the court what fairness is understood to entail for this purpose. While carrying substantial weight in shaping the nature of the inquiry required to devise a fair outcome, they would leave room for the solution to be responsive to individual features of the case.

6.44

However, while leaving some room for flexibility, the governing principles should be transparent and readily comprehensible in order to promote greater certainty of outcome. This is necessary if the law is to enable parties to reach their own agreements regarding the division of property on separation without the need for litigation or legal advice, and without the risk-averse being driven to accept unfairly low settlements or to accede to unmeritorious claims.

6.45

We provisionally reject the view that any new scheme should take effect by reference to fixed rules for property division. Instead, we provisionally propose that the courts should exercise a discretion structured by principles which determine the basis on which relief, if any, is to be granted on separation. Do consultees agree?

PRINCIPLES UNDERPINNING FINANCIAL RELIEF ON SEPARATION: AN OVERVIEW

6.46

As we have already discussed, we consider that a discretionary regime, structured by express principles justifying the grant of relief and offering a guide to the valuation and nature of any relief ordered, is more likely than a rule-based system to provide a suitable scheme for cohabitants.

6.47

We now turn to the most difficult issue: the specific principles which should structure the exercise of the discretion under a new scheme. We explore a range of principles that could be used in a new scheme for financial relief on the separation of eligible cohabitants. It may assist if we summarise at the outset the principles which appear to us to offer the most suitable basis for financial relief.

6.48

There are several approaches that we provisionally reject:

(1) we do not consider that remedies should be available on the basis of need alone;^[25]

(2) we consider that a "partnership" principle which treated the parties' contributions to the relationship as prima facie justifying an equal division of all or part of their assets would not suit the variety of cohabiting relationships, however tightly the eligibility criteria were drawn;^[26] and

(3) we reject an approach that would seek to evaluate the relative economic value of all of the contributions (of whatever sort) and economic sacrifices made by the parties over the course of their relationship and share the property between them accordingly: "global accounting".^[27]

In light of the first two conclusions, in particular, we provisionally reject the suggestion that the Matrimonial Causes Act 1973 regime should be applied to cohabitants. In so far as that scheme involves the possibility of broad needs-based liability and the equal division of assets on a partnership basis, it would not be appropriate for cohabitants. It would therefore seem preferable to devise a specific scheme which expressly articulates those principles which we do consider appropriate for cohabitants.

6.50

We provisionally propose that claims for cohabitants should be restricted to circumstances where the applicant can establish that the economic effects of the relationship, positive and negative, are not fairly shared between the parties on separation. Specifically, such a claim would involve examination of:

(1) any economic advantage retained by the respondent on separation (whether of capital, income or earning capacity) which arose from the applicant's contributions during the relationship;^[28] and/or

(2) any economic disadvantage (in terms of capital, income or earning capacity) sustained by the applicant on or after separation as a result of contributions made during the relationship, or to be sustained as a result of continuing child-care responsibilities following separation.^[29]

We also explore the issue of whether the courts should have a specific power to make awards in relation to the costs of child-care, to the extent that they are not covered by relevant tax credit entitlements.

^[30]

Some key terms used

Need – a principle whereby remedies would be aimed simply at maintaining an applicant who was not self-sufficient following separation.
Contributions – domestic, financial or other contributions to relationship and the welfare of the parties and their children, and any associated economic sacrifices made as a result.
Partnership – an approach under which the parties' relationship is viewed as having entailed a "partnership" to which each made distinctive, but equally valuable, contributions, potentially justifying an equal share of all or some of a particular property pool.
Global accounting – an approach that would seek to evaluate the relative economic value of all of the contributions (of whatever sort) made by the parties over the course of their relationship and share the property between them accordingly.
Economic advantage – a principle rewarding contributions made by the applicant which have resulted in the respondent retaining some economic benefit (in terms of capital, income or earning capacity) to the exclusion of the applicant at the point of separation. We use the expression retained benefit accordingly.
Economic disadvantage – a principle addressing the economic sacrifices (in terms of capital, income or earning capacity) incurred by the applicant as a result of his or her contributions, for example the impairment of earning capacity as a result of child-care responsibilities.
Clean break – a principle requiring the court to consider whether it would be appropriate to make orders which involve terminating the financial obligations between the parties as soon after separation as is just and reasonable.

A claim for financial relief under the two core principles would proceed as follows:

(1) A claim could only be made at all where an eligible applicant were able to prove that relevant economic advantage or disadvantage had arisen. If that were not proved, no relief could be granted.

(2) Assuming that the existence of such economic advantage or disadvantage had been proved, it would then be necessary in broad terms to quantify the scale of the relevant advantage or disadvantage.

(3) Finally, in light of the economic advantage or disadvantage, the court would then decide what financial relief, if any, ought to be granted. The court would, at this stage, take account of a number of other factors, including the clean break principle and the needs of the parties and any relevant children, in deciding how the applicant's claim should be met in practical terms.^[31]

It might be desirable to add a further threshold for successful claims, which would require the applicant to show that substantial or (more strongly) manifest unfairness would arise if no relief were granted.

^[32]

Although we do not consider that the fact that the applicant has future needs itself provides a justification for financial relief between cohabitants, the principles that we are provisionally proposing would address the applicant's needs to the extent that they reflected an economic disadvantage sustained or a failure to provide reparation in respect of a retained benefit.

6.55

The ideas of benefits retained and sacrifices incurred, which the principles of economic advantage and economic disadvantage would be designed to remedy, have resonances with the general law. The law of trusts rewards certain types of contributions according to their positive value.

^[33]

The principles we are provisionally proposing are similar to those recently enacted for claims between cohabitants, but not yet tested in litigation,

^[34]

^[35]

It is essential to appreciate that, although the claim under our proposed scheme would be based on finding relevant economic advantage or disadvantage, the courts ought not to be required to quantify awards by applying strict compensatory principles. The claim being made by the applicant would not be in tort, contract, or even restitution. It would be a family law claim to the exercise of judicial discretion in order to obtain redress for any significant economic impact of the relationship and its termination.

6.58

The purpose of the principles would be to restrict the scope of possible claims and structure the judicial discretion, to make clear to the court what the applicant would have to prove (and what sorts of evidence might be relevant) in order to establish a claim on separation. The court would be expected to identify any relevant economic advantage or disadvantage arising from the relationship, and to take account of those factors in considering what financial relief, if any, might be fair.

6.59

In many cases, it would not be possible (or practical) to calculate the precise value of the economic advantage conferred or, in particular, the economic disadvantage sustained as a result of the relationship, and it might be disproportionate, in terms of costs, to attempt to do so. The principles would therefore indicate the ingredients of a broadly fair outcome on separation, not supply a mathematical formula which would dictate the order to be made. Moreover, we shall see that there are various practical limiting factors (at the third stage identified above at paragraph 6.52) which would necessarily constrain what the court would be able to do, not least the extent of the available assets and the financial needs and responsibilities of the respondent.

6.60

Later in this Part, we shall discuss the types of orders which we think should be available to the courts exercising a principled discretion under a new scheme to grant what we shall refer to in general terms as "financial relief".

^[36]

One final note of introduction. In this and subsequent Parts, we refer to "applicants" and "respondents". If the case is litigated, whichever party brings the case to court would be formally designated as the applicant. Although many cases, we hope, would not come to court at all, the language of applicant and respondent remains useful. The decision about what financial relief to grant would turn on an evaluation of each party's contributions. It is likely that in many cases each party would put forward arguments to the effect that they had conferred some economic advantage on the other, or sustained some disadvantage. We therefore use the word "applicant" to refer to the party making a particular claim in relation to his or her own contributions, and "respondent" to refer to the party against whom that argument is being made. Which party was ultimately required to make a transfer of assets to the other would depend on the balance of fairness emerging from an assessment of the relevant claims. So the "applicant" for the purposes of a particular argument might end up being the one who had to transfer property to the other party. In some cases, action might be required of both parties, if resources belonging to each of them were necessarily affected by the settlement reached or order made.

^[37]

ALLEVIATING FINANCIAL HARDSHIP AND RELIEVING NEED

The fact of "hardship" or "need" as a basis for relief?^[38]

We have described this project as one which aims to deal with the financial hardship that may be sustained at the end of a cohabiting relationship.

^[39]

The same could be said of relieving need. The concept of need is in some ways more subtle than hardship. Like hardship, it can be measured objectively, but it can also be understood in relative terms, by reference to the particular standard of living to which the applicant has become accustomed, particularly over the course of a long relationship.

^[40]

Careful justification is needed to require one adult to meet the needs of another (in either sense) or to relieve the hardship experienced by another. Some commentators have questioned whether need ought to be used as a basis for remedies on divorce,

^[41]

^[42]

Need (in both senses) is a theme familiar to ancillary relief on divorce. Where the parties have married, the fact of their formal legal commitment may be taken as good evidence that the parties have assumed a responsibility to support each other, certainly during the relationship, when the law imposes an obligation of mutual support.

But, whatever the position applying between spouses, we think it would be inappropriate for remedies between cohabitants on separation to be available simply on the basis that the applicant was "in need" or experiencing hardship.

^[47]

^[48]

^[49]

Locating the underlying cause of hardship or need: parties' contributions

In view of the fact that many of the cohabitants who would benefit from reform currently experience hardship at the end of their relationships, the rejection of hardship and need as bases for relief might appear misguided and harsh. We must therefore make a careful and important qualification.

6.68

It is appropriate to distinguish between two categories of hardship or need, according to their cause:

(1) need unrelated to the relationship, for example, caused by illness, disability or unemployment; and

(2) need deriving from the parties' contributions to the relationship, for example, arising from one party's having given up paid employment in order to care for the parties' children.

6.69

In most divorce cases (that is, where the available assets do not exceed the parties' needs, and particularly where the parties have children) the court's decision will be driven pragmatically by the aim, so far as possible, to meet the present and future needs of both parties and their children, at least in so far as they fall in the second category.

^[50]

^[51]

We consider that it is difficult to justify making a former cohabitant responsible for meeting the first category of needs, for the reasons suggested by the American Law Institute. By contrast, on the face of it, there is a case for at least some cohabitants to be required to meet needs falling within the second category.

6.71

However, the justification for a remedy in the second situation identified in paragraph 6.68 is not simply that the applicant is experiencing hardship or has needs. The reason why, in these circumstances, the respondent should have to provide relief is that the applicant's needs have arisen in consequence of the contributions made by the applicant to the relationship. Viewed in this light, the applicant's needs are no more than a symptom, in many but not all cases, of a rather different sort of claim: one based on the contributions made by the applicant to the relationship, and associated sacrifices, and the continuing economic impact of those contributions and sacrifices on each party at the point of separation.

6.72

A claim for financial relief formulated in those sorts of terms would be more satisfactory than one based on need. It would depend for its force not on the basis that the applicant was dependent or that the respondent had made a long-term commitment to the applicant, but that the applicant was entitled to some degree of financial relief in recognition of the contributions he or she made to the relationship.

^[52]

The implications of basing financial relief on parties' contributions

It is proper to acknowledge that a principle based on the parties' contributions could, in theory, result in the making of awards which would go beyond simply alleviating financial hardship or relieving need, strictly construed. Unless a principle is framed expressly and exclusively in terms of hardship or need, it will always have the potential to provide wider remedies to those in need, and to justify the grant of financial relief to applicants who were self-sufficient and not experiencing hardship on separation. Principles based on parties' contributions inevitably rest on a broader concept of economic justice between couples at the end of their relationships.

6.74

However, many of those to whom any new law would apply may be in financially insecure positions on separation and so would gain essential, basic protection as a result of such relief being available. Moreover, since the available assets would be limited in most cases, rarely exceeding the parties' respective needs, the courts would in practice be unable to do more than simply alleviate hardship, whatever the theoretical basis of the applicable principles might be. It will never be possible to eliminate financial hardship on relationship breakdown, certainly not via private law alone: the division of the resources that had supported one household between two will often leave both parties short. A degree of financial hardship may therefore continue to be experienced by both.

^[53]

But the key point for present purposes is that while the effect of the remedies may be to relieve need, need itself would not provide a satisfactory basis for the award of the remedy. That justification should lie, in our view, in the parties' contributions and associated sacrifices.

6.76

We consider that the mere fact that one party has financial or other material needs should not in itself justify the grant of financial relief from the other party on separation. Do consultees agree?

6.77

We consider that the court's decision whether to grant financial relief and, if so, of what value, should be based on principles that focus on:

(1) the contributions which have been made by each party to the parties' joint household and to the welfare of the other party and other members of their family, in particular their children; and

(2) the contributions which each shall make to the welfare of their children following their separation.

Do consultees agree?

CONTRIBUTIONS AND ASSOCIATED SACRIFICES

Introductory observations

6.78

If a new scheme for cohabitants is to offer any improvement on the current law applying to them on separation, it is important that all types of contributions, financial and non-financial, direct and indirect, to the economic and other welfare of the couple and their family, and the associated economic sacrifices made, should be capable of giving rise to a claim. This is not to say, however, that all eligible applicants would or should necessarily succeed in obtaining relief, simply by virtue of having made contributions. As we shall see, there are various ways in which the relevant principles could operate to minimise the circumstances in which claims could be made, without unfairly denying claims to those who should be able to obtain relief on separation.

6.79

During many relationships, both partners will make a range of financial and non-financial contributions to their life together. Cases in which the parties' roles are neatly divided into homemaker and breadwinner are less common than they were. Increasing numbers of women are working part-time or full-time, even after becoming mothers. The law needs to be able to respond to these mixed contributions.

6.80

It may also be desirable to grant relief without requiring proof that the applicant's contributions have facilitated the acquisition of specific (or any) property, in particular where we are considering the economic sacrifices associated with non-financial contributions. Detaching contributions from the acquisition of property (whether generally or in relation to specific assets) means that new issues of principle, and related practical problems of proof and quantification, arise. How should we value contributions for the purpose of quantifying awards? One of the key challenges is dealing with different types of contributions which appear to be incommensurable. How should or could the law compare and weigh financial and non-financial contributions for the purpose of calculating a monetary award?

6.81

Whatever principle underpins the quantification of parties' contributions, it should be clear. All of the Australian states now have statutory remedies for separating cohabitants and all states, to a greater or lesser extent, base their property adjustment remedies on the parties' "contributions". However, the Australian courts have encountered considerable difficulty in clarifying how parties' contributions are to be taken into account and rewarded, and it can be hard to discern the basis for awards made.

In light of this experience, we think it would be necessary for any new scheme to provide clear guidance about the way in which parties' contributions should be relevant to the grant of financial relief.

Attaching positive value to contributions

6.83

We think that part of any scheme should involve attaching positive value to at least some of the parties' contributions, and distributing the parties' property in accordance with a valuation of those contributions. There are various ways in which such a scheme could operate. We shall distinguish chiefly between three approaches:

(1) equal sharing or partnership;

(2) global accounting; and

(3) economic advantage.

6.84

The competing approaches each have different merits and demerits. Those that might appear easier to apply could generate unsuitable results in many cases. Those that seem more likely to generate suitable results, tailored to the specific circumstances of each case, may for that reason sometimes cause practical difficulties, for example, regarding proof that particular contributions have caused relevant economic effects. All raise difficult theoretical questions and we are keen to receive consultees' views on these. The aim is, as ever, to find a satisfactory compromise between the objectives for reform set out at paragraph 6.24.

Recognising economic sacrifices incurred through contributions

6.85

One of the principal criticisms of schemes based exclusively on a positive valuation of the parties' contributions is that they fail adequately to address the economic sacrifices incurred in making certain types of contributions. The chief example of this is the potential impairment of earning and pension-saving capacity and the ability to undertake paid employment at all consequent upon undertaking child-care responsibilities. Those sacrifices may be more extensive than the positive value of those contributions, however the latter are measured. To disregard those sacrifices and to concentrate only on the positive value of certain contributions in awarding financial relief would perpetuate a significant aspect of the current law's perceived unfairness.

6.86

Where the assets available for division are quite limited, sharing existing capital assets even equally might leave some applicants facing greater financial hardship than the respondent on separation, in particular as a result of the impact of child-care responsibilities during the relationship on their earning capacity. This dissatisfaction with the operation of equal sharing rules and partnership principles prompted calls for reform in New Zealand and New South Wales.

^[58]

This is where a principle based on "economic disadvantage" would have a role to play. This would focus on the economic sacrifices entailed in the parties' contributions, both during the relationship and, where child-care obligations continue on separation, following it. Indeed, as we shall see, the economic disadvantage incurred as a result of making various "domestic" contributions might be thought to provide a somewhat stronger justification for an award than an attempted assessment of their positive value. We discuss the operation of such a principle from paragraph 6.150 below.

A combined scheme

6.88

We envisage a scheme based on two principles, one addressing the positive value of the parties' contributions, the other examining the economic sacrifices incurred in consequence of them. Under our preferred principles (economic advantage and economic disadvantage), not all contributions and sacrifices would count, but only those which caused one party to retain a benefit or to suffer continuing economic disadvantage (for example, in terms of earning capacity) at the point of separation.

6.89

Since both parties might have made relevant contributions, determining whether any financial relief should be granted, and to whom, would depend on weighing both parties' claims, and identifying the net imbalance between them at the point of separation. We discuss this aspect of the exercise from paragraph 6.216.

ATTACHING POSITIVE VALUE TO PARTIES' CONTRIBUTIONS

6.90

A scheme based positively on contributions must address four basic issues:

(1) To what must contributions be made in order to count:

(a) the acquisition or retention of capital assets or other economic resources (such as earning capacity); or

(b) family life more generally?

(2) What sorts of contributions count:

(a) financial contributions only;

(b) non-financial (but still economically or otherwise valuable) as well as financial contributions; and

(c) if the contribution must be associated with the acquisition of specific resources (under 1a, above), must that contribution be direct or indirect?

(3) How should the value of contributions be translated into monetary terms, or percentage shares, for the purposes of quantifying an award:

(a) by reference to some measure of their economic value; or

(b) on some basis which seeks to acknowledge the non-economic value of contributions, for example, by viewing the parties' relationship as a partnership to which each makes distinctive but equally valuable contributions?

(4) From what resources should those contributions be rewarded on separation:

(a) all resources available to each of the parties; or

(b) only from a specified "pool" of property?

Alternative approaches to the positive valuation of parties' contributions

6.91

There are several ways in which parties' various contributions could translate into awards for financial relief. We consider below and provisionally reject approaches involving equal sharing/partnership and global accounting, before outlining our currently preferred approach: a principle of economic advantage focusing on retained benefits.

^[59]

Equal sharing and "partnership" regimes

There is considerable merit in a scheme which quantifies awards of financial relief by dividing the parties' assets, or a portion of them (such as assets acquired during the course of the relationship), either equally or in other proportions, perhaps depending on the length of the relationship. This sort of approach avoids the need inherent in some other schemes to seek to place a specific value on the parties' various contributions to their relationship, and sharing the property accordingly. However, this approach is not without its problems, and its suitability for cohabitants is questionable.

6.93

As we noted earlier, some jurisdictions have adopted rule-based schemes under which cohabitants' contributions are recognised by an equal sharing of property acquired during the relationship.

^[60]

^[61]

We have already expressed the view that a rule-based scheme might not be appropriate in the English context. We do not operate a system of deferred community of property for spouses, and it would seem inappropriate to introduce such a scheme for cohabitants, where the flexibility of a discretionary regime would seem to be particularly valuable. However, it is worthwhile addressing a discretionary version of an equal sharing rule, what we shall refer to as the partnership approach. This approach is evident in the way that some Australian courts have developed their wide discretion to provide contributions-based remedies between cohabitants, and is also reflected in some decisions on ancillary relief in Australia and in England and Wales on divorce.

^[62]

On a partnership approach, cohabitants' contributions, whether non-financial or financial, could be viewed as deserving financial recognition on separation not because of any intrinsic economic worth, but because they were made pursuant to a "partnership" between the parties that is now being dissolved. On this approach, each party's contributions, whether in running the home or funding it, might be regarded as deserving of equal recognition by a broad division of assets on separation, without reference to the actual economic value (if any) of the contributions made.

^[63]

^[64]

The extent to which each party made financial contributions to the household over the course of a relationship may vary, particularly when one or other of them was out of paid employment owing to child-care responsibilities. The key factor underpinning this approach would be that the parties are equal partners, embarked on a joint venture in life, so that the precise economic value of the contributions each made, and the nature of those contributions, should not determine the nature and extent of any financial relief granted in the event of separation.

^[65]

If there were to be such a scheme, there would be a strong case, particularly perhaps in relation to cohabitants, for it to apply only to property acquired during the parties' relationship: the fruits of the partnership, including business assets of either party. Equal sharing could therefore exclude property acquired by either party before or after their relationship. It might also be proper to exclude gifts or inheritances acquired by one party during the relationship.

^[66]

EVALUATION OF THE PARTNERSHIP APPROACH FOR COHABITANTS

It seems clear from attempts to base financial relief parties' contributions in the English and Australian divorce context that partnership approaches may tend towards equal sharing of at least a particular pool of the parties' assets.

^[67]

^[68]

Particularly if a partnership approach were likely to entail equal sharing, we need to consider carefully whether that outcome and the premise on which it is based would be appropriate for cohabitants. In our view, clear justification is needed for any private family law scheme which would give parties' contributions a value greater than their actual financial worth. In the absence of any express agreement between the parties, that justification, if it exists, is to be found in the nature of the parties' relationship.

^[69]

At this point, the inseparability of the substantive principles justifying relief and the question of who ought to be eligible to apply for that relief becomes apparent.

6.101

Current English law has no presumption in favour of equal sharing between spouses on divorce.

^[70]

^[71]

^[72]

Cases in which partnership may not be appropriate

In Parts 2 and 5, we noted the variety of cohabiting relationships, in particular in terms of the nature and level of commitment shared by the parties which might be considered relevant to determining whether and for whom a "partnership" approach would be suitable. Evidence about the way that cohabitants manage their money and property during their relationships may offer further guidance. Research examining the money management practices of opposite-sex cohabitants in this jurisdiction

^[73]

^[74]

^[75]

If many couples do not pool their resources, it may be fair to suppose that they do not view their relationships in terms of equal financial partnership while they are on-going. If so, it would seem inappropriate to apply a partnership approach as the default position in the event of their separation.

^[76]

Nor is it clear that length of relationship alone necessarily affects money management practices. In the absence of a significant event, such as starting a family or taking on a mortgage, couples may continue long-term with a system adopted at the outset of their relationship.

^[77]

The partnership approach could also produce undesirable results. For example, applicants in high value cases might be thought to obtain an unjustified windfall, in so far as the award far exceeded the true economic impact (positive and negative) of the relationship on them. Attempts to modify the outcome in such cases would inevitably involve departing from the partnership approach by attaching some significance to the actual economic value of each party's contribution, which would in fact bring us closer to our provisionally preferred "economic advantage" approach.

Cases in which partnership might be more desirable

6.106

An argument can be made for distinguishing cases where the parties have children (whether or not those children are still dependent) from those who do not. Cohabitants with children behave more like spouses (with or without children) in their money management and so are more likely to operate a joint pool system.

^[78]

^[79]

This view seems to resonate with public opinions about possible reform in this area. One large-scale study found considerable support for dividing the value of the family home at least equally (in favour of the primary carer, who - the question supposed - had made no financial contribution to the purchase of the property) on the separation of cohabiting parents.

^[80]

^[81]

This distinction between cases where there are children and those where there are not is reflected in the views of respondents in a recent qualitative study.

^[82]

^[83]

^[84]

Partnership for cohabiting parents, specifically, may therefore be an attractive option. The birth of a child may not always indicate that the parties view their relationship thereafter as an equal partnership. Pregnancy may precipitate cohabitation or be unplanned, rather than being the deliberate decision of an established, fully committed cohabiting couple who wish to take their relationship forward into joint parenthood.

^[85]

However, in cases where the existing capital assets were limited, equal sharing of those assets might not always provide an adequate remedy for a party whose earnings and earning capacity had been impaired as a result of child-care responsibilities. Even if sale of the home were deferred until the children had attained independence and the capital shared at that point, many primary carers might still experience financial hardship owing to impaired earning capacity which was not adequately compensated by the share of capital enjoyed under a partnership principle.

^[86]

^[87]

CONCLUSIONS

Although on the face of it a partnership approach might appear clear and relatively easy to apply,

^[88]

^[89]

Parties could, of course, opt out of such a scheme if they did not wish to be subject to it. But it would seem preferable for the default position to be one which is likely to be suitable for the majority of cases to which it would apply in order to minimise the burden of opting out. Moreover, if in seeking to exclude the undeserving, a minimum duration requirement were set too high, cases in which a remedy were thought to be merited, albeit not one based on partnership, might be excluded.

6.113

Some cohabitants do make a clear commitment to an equal life partnership, as may be inferred from complete pooling of resources or specialisation of roles (for example, one partner goes out to work while the other raises their children). A new scheme could be devised in such a way that, even if it were not adopted as a presumption, the court could be free to adopt a partnership approach where the parties had in fact arranged their finances on that basis. However, it might be undesirable for the decision about the applicable approach to depend upon the court's determination of whether the relationship in question had the necessary hallmarks of "partnership" making such an approach appropriate. The nature of such an inquiry, where the parties are in dispute on this very point, might be time-consuming and costly, and its outcome uncertain and unpredictable.

^[90]

It seems preferable to adopt a single principle that would be suitable for the full range of cases falling within the scheme, so that it would be immediately clear in each case what the basis for relief, if any, would be.

Focusing on economic value: global accounting

6.115

If we are not to adopt a partnership principle, or if alternative principles are required for those cases in which partnership would not be an appropriate way of valuing the parties' contributions to the relationship, we need to examine approaches based on the actual economic value of the parties' contributions. This is less straightforward than might at first sight appear, particularly in relation to non-financial contributions.

6.116

One approach would be global accounting: identifying and valuing all contributions made by each party over the course of the relationship, and deciding whether the parties' various property holdings, income and so on at the point of separation fairly reflected the balance of those contributions, or whether some transfer in favour of one party was necessary. Associated sacrifices (lost earnings, earning capacity, and so on) would also be brought into account, so that the grant of relief, if any, would depend upon the overall balance of positive contributions and sacrifices made by each party. For example, past loss of earnings incurred by an applicant who had undertaken child-care responsibilities would be counterbalanced to some extent by the financial support provided by the other party during the relationship.

FINANCIAL CONTRIBUTIONS

6.117

In some cases, where the parties had principally made financial contributions, this might work relatively straightforwardly. The actual value of the financial contributions made by each party to their mutual welfare (for example, mortgage payments or rent, utility and grocery bills, purchase of household goods; capital investments in each other's businesses and property) would be identified and their property distributed on separation accordingly. Assessment of the parties' contributions up to the point of separation would proceed simply by reference to the financial value of the contributions each had in fact made, so there would be no "subsidy" or windfall for the party who happened to contribute less (or retain fewer personal savings) owing to lower earning capacity.

6.118

However, even in relation to financial contributions, difficult questions would arise. For example, while contributions relating to the basic outgoings on the parties' shared home might be straightforward enough to deal with, more difficult questions would arise regarding other "lifestyle" expenditure. It would seem inappropriate for gifts made by one party to the other to be brought into account.

^[91]

To give such contributions no weight at all as part of the global account might seem unfair to the party who had made them. However, it would also seem unfair to require the respondent to account for the benefit obtained from this sort of expenditure, certainly in so far as the applicant's lifestyle would inevitably be shared by the respondent for the duration of their relationship.

^[92]

^[93]

^[94]

NON-FINANCIAL CONTRIBUTIONS

Substantial difficulties would also arise in valuing many non-financial contributions, for the purpose of comparison with financial contributions.

6.121

The intrinsic economic value of non-financial contributions is evident from the fact that equivalent services may be purchased commercially: had the parties not performed the domestic activities of child-rearing, housekeeping, gardening, DIY, it might have been necessary to engage professional child-carers, cleaners and so on.

^[95]

^[96]

Some early cases in New South Wales took this approach to non-financial contributions,

^[97]

^[98]

No doubt a homemaker will invariably perform some, at least, of the tasks of a domestic servant but her contribution to the family unit will usually be infinitely greater than that. In many cases, she will be the uniting force and will provide the support, love and affection so necessary to maintain a happy family unit. Although it is impossible to generalise [,] the contribution of a homemaker and parent will usually extend to the performance of a myriad of tasks beyond the range of activities performed by a domestic servant.^[99]

While a commercial measure may be less inappropriate in this sense where the applicant has worked without remuneration in the other party's business, reducing contributions within the home to commercial rates seems demeaning of those who fulfil these valuable roles and so is not an attractive option. It could generate protracted and unproductive argument about the quality of services supplied by the applicant and whether the full commercial rate was warranted.

^[100]

The commercial value approach also makes assumptions about what is the appropriate comparator by which the economic benefit provided should be measured. Ought the benefit to be measured by reference to what the position would have been had the respondent not had a partner to perform these tasks and so had to employ help or do the work him or herself? Or by reference to the position as it would have been (provided the evidence supports the hypothesis) if the homemaker had instead been engaging in full-time paid employment outside the home, thus providing the household with greater income with which to hire domestic help and possibly leaving a surplus for other expenditure?

^[101]

In light of this, while it is important not to overlook the reality that these contributions are economically valuable, it is doubtful whether performance of domestic tasks, without more, can satisfactorily be brought within a scheme based on some measure of their positive value.

^[102]

^[103]

CONCLUSIONS

We do not favour a global accounting approach. Even if conducted in broad-brush manner, it seems unattractive. We have already highlighted some particular difficulties that would be encountered in valuing non-financial contributions and handling certain sorts of financial contributions. Moreover, it seems to us that this approach would tend to encourage "competition" between the parties. Each would have a clear incentive to try to obtain a larger share of the assets than the other by seeking to demonstrate (in exhaustive, itemised detail) that they had, on balance, over the course of what might have been a long relationship, made more (or more valuable) "contributions" or greater sacrifices

^[104]

^[105]

While it might be applauded for seeking to provide a perfectly calibrated justice,

^[106]

Our preferred approach: the economic advantage principle

We consider that it would be preferable for contributions to trigger a claim for financial relief based on their positive value only where the applicant could prove that they had given rise to an identifiable economic advantage (whether in the form of capital, income or earning capacity) retained by the respondent at the point of separation. This principle would operate in tandem with the economic disadvantage principle, similarly focused on the position on and following separation, which we explore below.

6.129

It is proper to acknowledge at the outset of this discussion that while we consider that this principle is in essence the right one for cohabitants, it raises various practical and theoretical questions (not all of which may be identified below), and the answers to which are not obvious. We welcome consultees' views.

NO FULL RETROSPECTIVE INQUIRY ^[107]

The principal advantage of this approach to the valuation of parties' contributions (and associated sacrifices) is that it would focus on the position at separation. There would be no need to identify and ascribe positive value to each and every contribution made by the parties during the relationship and bring them all into account. It would be necessary only to consider whether the respondent had retained some relevant economic benefit at the end of the relationship which he or she had been enabled to acquire in part as a result of contributions made by the applicant. That would inevitably entail some degree of retrospectivity, as it would be necessary to identify those contributions which had given rise to the retained benefit. But the scope of the inquiry would be considerably more limited than it would be under a "global accounting" approach.

6.131

It seems to us sensible to take the view that where the parties' contributions do not have economic consequences that survive the relationship, they should be written-off.

^[108]

(1) housekeeping money provided and spent during the relationship; or

(2) rent-free accommodation provided during the relationship.

Nor, as we shall explore below from paragraph 6.161, should claims of economic disadvantage be permitted in relation to:

(3) past earnings lost as a result of caring for children or working unpaid in the home during the relationship.

In examples (1) and (2), a claim should only be possible if the other party has retained some financial benefit following the parties' separation as a result of those contributions. In example (3), a claim should only be made if the applicant experienced economic disadvantage on separation, for example because he or she now finds it hard to get paid employment as a result of having worked unpaid in the home or because of looking after children during or following the relationship.

6.133

The focus would therefore be on the "pluses" and "minuses" held by each party at the point of separation, compared with where they were at the start of the relationship. To some extent, this would necessarily involve looking backwards, to see how those gains and losses arose, and to some extent would entail a degree of hypothetical inquiry about what would otherwise have been. But it would avoid a protracted accounting for the entire relationship.

CONTRIBUTING TO A RETAINED BENEFIT

The basic parameters of the claim

6.134

In the absence of an express agreement to share ownership, the current law only clearly rewards those who make a direct financial contribution towards the acquisition of property. In our view, this is too narrow an approach. We consider that it should be possible for eligible cohabitants to make a claim based on the principle of economic advantage wherever it can be shown that:

(1) the respondent had been enabled to retain some economic benefit (in terms of a gain in capital, income, or earning capacity) at the point of separation, and

(2) that gain had been caused at least in part by contributions made by the applicant.

6.135

In many cases, this would involve direct or indirect financial contributions of to the acquisition of property.

^[109]

^[110]

^[111]

The principle could be extended beyond this core example in two ways.

6.137

First, financial contributions might assist not in the acquisition of a capital asset, but instead in the acquisition of an earning capacity and income; for example, the applicant might have paid the respondent's fees for some professional training which enabled the respondent to acquire remunerative employment.

6.138

Secondly, it might sometimes be possible to demonstrate that non-financial contributions had enabled the respondent to acquire property or some other economic benefit. A clear example of this would involve an applicant who had worked without pay in the respondent's business, or who had made improvements to the respondent's property.

^[112]

Valuing the claim

In all of these situations it might be considered unfair for the respondent to retain on separation the entire benefit acquired to the total exclusion of the applicant. Some reparation may be appropriate. But careful consideration needs to be given to how the value of the applicant's claim should be determined.

6.140

One approach would be simply to recoup the applicant's expenditure or (where the contribution had been non-financial) pay the cost of the applicant's services (effectively a claim for the commercial value of the services provided), leaving the respondent to enjoy any increase in the value of the asset. Alternatively, relief could be calculated by reference to some defined share in the value of the benefit retained.

^[113]

Which approach is preferred might depend upon the nature of the benefit in the respondent's hands. Where the retained benefit were property that had increased in value over the course of the relationship as a result of market forces, it might be argued that the first approach would be unfair. If the applicant were simply provided with the cash value of his or her contribution, the respondent would be left with what is essentially a windfall. The law of resulting trusts precludes this, ensuring that those who make relevant contributions to the acquisition of property share equally in the increases (and decreases) in the value of that asset. It might be objected that to give the applicant anything other than compensation for the value of the contribution would be to enter into "partnership" territory, an approach that we have provisionally rejected. However, the case for partnership in this context is arguably rather different, and narrower. Here, we are talking about a benefit which has been acquired, and retained, in part as a result of contributions made by the applicant, and so without which the respondent would not have been able to retain the asset at all. No such causal link would be required for general sharing of assets under the partnership approach. So to that extent, the applicant's contribution in this context might be regarded as sufficiently closely connected with the retained benefit in the respondent's hands that sharing, rather than mere reimbursement, is fair. It would still be necessary to determine the basis on which the parties' shares should be calculated. But at least where the applicant's contribution (whether direct or indirect) had been financial, that would not be difficult.

6.142

Different considerations might apply where the retained benefit was in the form of income or earning capacity, since those can only come into existence or be fully realised as a result of active endeavour by the respondent. In these cases, simple reimbursement might be more appropriate.

The requirement of causation and potential difficulties of proof

6.143

Whatever the range of contributions that could give rise to an economic advantage claim, we do consider that any claim would have to involve proof that the applicant had contributed, directly or indirectly, to the respondent's retained benefit. A family court could be expected to approach this issue with a suitably broad brush, and would not apply itself with the rigour characteristic of a chancery court hearing a claim which relies on the tracing process. But this principle rests on the premise that it would be inappropriate to provide awards for the value of contributions regardless of whether they resulted in the retention of some discernible benefit in the hands of the respondent. So, for example, although they may have saved the respondent expenditure on hiring domestic assistance (or saved the respondent from having to do the housework and so on personally), domestic contributions that did not enable the respondent to generate any additional wealth would not give rise to any claim under this principle. In our view, the better way of dealing with that sort of non-financial contribution would be, where applicable, through the economic disadvantage principle.

6.144

This approach to economic advantage would leave applicants vulnerable to the possibility that respondents would not retain any benefit at the end of the relationship in respect of which a claim could be made. This might be the result of misfortune or a preference to expend money freed up by the applicant's contributions on ephemeral items rather than capital assets.

^[114]

The insistence on proof that the applicant's contribution had been a cause of the respondent's retained benefit and the identification of that benefit would therefore inevitably limit the potential for these claims to succeed. Moreover, particularly in relation to non-financial contributions, proof that the applicant's activities had contributed in any significant way to the respondent's economic advantage might be difficult.

6.146

In many cases, the causal link would be easy to prove, as for example where the applicant has done substantial building work on the respondent's property. Those contributions, while non-financial, have a very obvious, tangible impact on the value of the assets held by the respondent on separation. Rather harder are cases where the nature of the applicant's claimed contribution were more intangible: for example, domestic support provided by the applicant which is said to have enabled the respondent to progress further in his or her career than would otherwise have been possible, alongside raising a family.

^[115]

One response to this difficulty would be to confine economic advantage claims to cases based on financial contributions, leaving non-financial contributions to the economic disadvantage principle discussed below. However, such a restriction seems unacceptably arbitrary. The possibility of such claims based on non-financial contributions ought not to be ruled out, however difficult they may be to establish in practice in some cases. As we have seen, in situations involving unpaid work in the respondent's business or improvement to property, the economic advantage would be easy to prove, and the applicant may have sustained no economic disadvantage; having worked throughout the relationship, the applicant is likely to have skills and experience which would enable him or her to obtain new employment elsewhere. To deny that party any claim for financial relief might seem unfair in all the circumstances where it can be proved that the respondent has benefited substantially from the applicant's free services.

^[116]

It might be argued in response to this that, though not paying him or her, the respondent has been supporting the applicant during the relationship. But we consider that that is too narrow a view of the situation. While that support would have gone some way to compensate for the lack of income in terms of subsistence, the applicant would not for that reason retain a benefit at the end of the relationship equivalent to that retained by the respondent. To leave the respondent with all of the assets at the end of the relationship may therefore be unfair.

^[117]

THE ASSETS FROM WHICH RELIEF WOULD BE GRANTED

The economic advantage principle would identify specific resources in the hands of the respondent to which the applicant had contributed and which would limit the value of the award. But it seems to us that there is no reason why any financial relief granted should derive from that resource. It should be open to the court and respondent to use any available resource to meet any order made.

ECONOMIC DISADVANTAGE^[118]

Introductory observations

As we saw in Part 4, it is the current law's failure to respond adequately to the sacrifices made, in particular, by those who undertake primary child-care responsibilities which makes the outcomes between separating cohabitants with children so arguably unfair. It is therefore essential that the economic sacrifices arising from such contributions should be covered by any new scheme.

Basic questions for an economic disadvantage scheme

6.151

The following issues arise in relation to a scheme based on economic disadvantage:

(1) what should count as economic disadvantage for these purposes?

(2) should the award relate to disadvantage sustained in the past, to be sustained in the future as a result of past events, or both? Should continuing child-care responsibilities following separation and further economic sacrifices arising from them be brought into account?

(3) how should the extent of any economic disadvantage be quantified?

(4) what other factors might limit the extent to which that disadvantage can or ought to be reflected in any relief that is granted?

6.152

We address each of these in the following sections, focusing principally on loss of earnings and loss of earning capacity arising as a result of the applicant discharging child-care and other caring responsibilities in the home. As with positive evaluations of the parties' contributions, perhaps the more difficult questions concern quantification of the sacrifices made and their translation into an order. However, before we address those questions, it will be helpful to make some observations about the character of these claims, as we envisage them.

The character of the claim and its implications for relief granted

6.153

However quantifiable the economic disadvantage sustained by the applicant may be, it would not be appropriate as a matter of principle (in any cases) or realistic in practice (in most cases) to expect the respondent to incur responsibility for the full amount. Before we look more closely at issues of proof and quantification, it is important that the character of the claim be properly understood in order to identify the nature of the court's task and the framework within which these claims would be assessed.

SHARED RESPONSIBILITY

6.154

A claim based on economic disadvantage in the form of lost earning capacity and so on may appear to have parallels with actions in tort. However, we consider that the nature of a claim based on economic disadvantage in family law should be understood differently from claims for compensation made in the civil courts. The applicant with an economic disadvantage claim would not be the unwitting, or unwilling, victim typical of the civil law. The economic disadvantage sustained by the applicant is the product of the parties' life together, arising from decisions and choices which they jointly made, and for which the parties ought ordinarily to share responsibility.

^[119]

Applicants ought to be required to take what steps they reasonably could to minimise the extent of the disadvantage sustained on separation by seeking to maximise whatever earning capacity they had at that point, in so far as that were reasonable and consistent with continuing caring responsibilities.

AIMING FOR FAIR APPORTIONMENT, NOT SUBSTANTIVE ECONOMIC EQUALITY

6.156

The objective of the claim would be limited to addressing disadvantages arising from the impact of the relationship on the applicant, and to which the applicant was exposed at the point of separation.

6.157

Even after a claim was met, the applicant's economic position might still be inferior to that of the respondent, in consequence of differences in the parties' respective qualifications, skills and earning capacity on entering into the relationship.

^[120]

^[121]

The claim would not, therefore, be designed to achieve full substantive economic equality between the parties. Instead, it would simply aim to ensure fair apportionment of any economic sacrifices made as a result of their relationship at the point of separation.

CLAIM LIMITED AT THE POINT OF ECONOMIC EQUALITY

6.159

In some cases, parties might have conducted themselves in what appears to be an economically irrational way, for example, where the party with the greater earning power gave up paid work in order to care for the children. The economic disadvantage sustained by such an applicant might be so great that meeting it in full - or even in half, in recognition of the parties' shared responsibility for the decision to leave paid employment - would allow the applicant to overtake the respondent (in terms of standard of living) on separation.

6.160

In our view, that would be inappropriate.

^[122]

FOCUS ON ECONOMIC DISADVANTAGE AT THE POINT OF SEPARATION

We also consider it appropriate to confine claims to economic disadvantage felt on and following separation, excluding claims in relation to those earnings lost during the period of the relationship itself. Just as the economic advantage principle would exclude consideration of past contributions which had generated no retained benefit on separation, so economic sacrifices which did not leave the applicant in a disadvantaged position on separation ought also to be written off.

^[123]

While the relationship is continuing, the applicant's "disadvantage" might be regarded as being, at best, latent. He or she has given up work, but has done so in reliance on the support provided by the other party and the relationship. Moreover, the fact that the applicant had not been in paid employment might have been felt by all members of the household, as the level of income available to the household would be consequently reduced, and so to that extent the disadvantage would be shared during the relationship.

^[124]

It is not until the relationship ends that the effects of the sacrifices made by the applicant clearly become confined to that individual. Our focus therefore is on the economic disadvantage the applicant will experience in the future as a result of sacrifices made during the relationship and, where continuing childcare responsibilities prevent the applicant from returning to full-time paid work, following it. Unless some adjustment is made between the parties at that point, the applicant may be left unfairly bearing the future burden of those sacrifices.

A FRAMEWORK FOR GIVING A "FAIR ACCOUNT" TO ECONOMIC DISADVANTAGE

6.164

All this implies that applicants should have to show that, following separation,

^[125]

(1) as a result of the breakdown of the relationship is lower than it was during the relationship;

(2) is lower than that of the respondent on separation, and

(3) is lower than that which the applicant would have enjoyed, had it not been for economic sacrifices made as a result of contributions made by the applicant to the parties' relationship and, in appropriate cases, following separation as a result of continuing child-care responsibilities.

The court's award would, therefore, be directed to bringing the parties' economic positions on separation closer, to the extent that the disparity between them was attributable to the impact of their contributions to the relationship. The applicant could, at best, expect to be brought to the same level as the respondent (if the extent of the economic disadvantage - and any relief granted on the basis of an economic advantage claim - justified it), but not to overtake the respondent.

6.166

We believe that in the general run of cases it should be possible to implement a scheme based on economic disadvantage in a way that ensures a proportionate approach to the exercise of proving and quantifying claims, given the scale of the resources available for division between the parties. Critical factors in achieving this would be robust judicial case-management and careful structuring of the decision-making framework by the governing legislation.

6.167

Given the character of the claim as we envisage it, the quantum of the economic disadvantage would not translate directly into an award of financial relief. While the broad scale of the disadvantage would remain significant to the court's decision about the quantum of any relief, the character of the claim would reduce the need to calculate the extent of the disadvantage with complete precision.

^[126]

We now turn to the particular elements of the claim, as identified in the four questions set out in paragraph 6.151.

Causes and timing of economic disadvantage

What should not be the subject of an economic disadvantage claim?

6.169

It is important to identify clearly what we think should not be capable of being framed in terms of an economic disadvantage claim. Any claim between cohabitants should only relate to the contributions that they had made to their relationship. Many individuals might suffer economic disadvantage when their relationship ends in the sense that they then lose the financial support that their partner had been providing, and so are exposed to the economic effect of, for example, being unemployed. However, we do not consider that need or hardship alone justifies a remedy. It would therefore be necessary to demonstrate that the economic disadvantage suffered on separation was the result of relevant contributions made during, and, in the case of childcare, after the parties' relationship.

6.170

Nor do we think that it should be open to an applicant to argue that as a result of deploying existing resources in a certain way, other, potentially more profitable opportunities were foregone. Imagine the applicant who has paid household bills, or provided rent-free accommodation to the other party. Suppose that none of these had given rise to a retained benefit in the hands of the respondent, so no economic advantage claim could be made. Each of those applicants might alternatively try to put their claim in terms of economic disadvantage:

(1) by paying the bills, I was unable to make contributions to my personal pension; or

(2) by giving the respondent house-room for free, I was unable to take in a paying lodger.

6.171

In our view, each of these claims is so wholly hypothetical that it would be unacceptable to give them any weight. Of course, it is proper to acknowledge that the sort of economic disadvantage claim which we do wish to accommodate also entail an inherent element of hypothesis, at least in its quantification. While it may be perfectly clear that some sacrifice has been made as a result of reducing or ceasing paid employment, measuring the scale of that loss would necessarily require some suppositions about what would otherwise have happened to the applicant. However, we consider that there is a significant distinction between (i) sacrificing future earnings and earning capacity for the benefit of the relationship as a result of non-financial contributions; and (ii) choosing to deploy existing financial resources in one way rather than another.

^[127]

Nor, as we have already explained, do we think it should be possible to make claims in respect of past losses of earnings covering the period of the relationship.

What could be the subject of an economic disadvantage claim?

6.173

The most important type of claim that should be possible would relate to the economic disadvantage sustained by a partner who reduces paid employment in order to undertake child-care, care for another dependent family member or other domestic tasks. Where the children are still dependent on separation, it would be necessary also to consider the ongoing disadvantage likely to be experienced as a result of continuing child-care responsibilities.

6.174

Relevant sacrifices for these purposes include personal losses sustained by the applicant on separation in consequence of child-care provided during and following the relationship, such as:

(1) loss of income;

(2) loss of earning capacity; and

(3) loss of opportunity to accumulate personal savings (including, in particular, pension savings).

6.175

We consider separately below the costs of any professional child-care necessary to enable the applicant to work following separation where the children are still dependent, at paragraph 6.195.

Proof and quantification of economic disadvantage

6.176

Proving and quantifying economic disadvantage, particularly that relating to the applicant's lost earnings and earning capacity, raises difficult questions.

6.177

There may be considerable scope for factual dispute, with consequent forensic costs, regarding issues such as:

(1) whether the applicant had any earning capacity to begin with and, if so, what;

(2) whether the applicant unilaterally chose not to take advantage of an opportunity to take up or continue paid employment against the wishes of the respondent, or whether the parties had agreed that the applicant should remain at home for the sake of the children (whether as a matter of mutual choice or necessity);

(3) how to take account of the uncertainty of employment prospects in the current labour market, where the "job for life" is considerably less common than it was; and

(4) how to disentangle the effects of the relationship from other factors affecting – or which might in future affect – the applicant's position, such as a depressed labour market or chronic illness.

6.178

As we have explained above, the claim is based on the notion that the parties should take joint responsibilities for decisions that they have made which resulted in the applicant making economic sacrifices. We would not think it appropriate for an applicant to impose the consequences of an imprudent, unilateral decision to give up work on the respondent. But we would not wish to encourage regular factual dispute about whether these decisions were indeed mutual.

^[128]

Any economic disadvantage claim of this sort inevitably entails a degree of hypothetical inquiry about what the applicant's earning capacity would otherwise have been, particularly where there are few careers in which age and experience alone necessarily lead to promotion.

^[129]

There are various ways in which an economic disadvantage claim could be proved and quantified, based to a greater or lesser extent on the specific circumstances of the applicant.

Formulaic approaches

6.181

Some proposals for reform adopt a formula-based approach in order to try to avoid the forensic problems presented by attempts precisely to quantify the extent of economic disadvantage actually incurred by individual applicants. They forgo any attempt to calculate the applicant's actual earning capacity loss in favour of using substitute proxy measures.

6.182

American proposals base claims on the earning capacity of applicants' former partners. Use of such a proxy might be justified if individuals generally found partners with similar educational levels and occupations to their own; if that were so, then the position of the respondent would provide a good rough estimate of what the position of the applicant would have been had it not been for the impact of the relationship, child-care in particular, on his or her position.

^[130]

^[131]

^[132]

Australian proposals adopt a general proxy based (for the vast majority of female applicants) on national averages for women's earnings, scaled according to level of educational attainment.

^[133]

Whilst they might bring advantages of certainty, these approaches may fail to capture the individual features of particular cases, leaving individual applicants under- or over-compensated. Even assuming that suitable proxy evidence were available, it would be necessary to retain some judicial discretion to make adjustments where the evidence in the individual case demanded it. For example, where supervening disability had deprived the applicant of the relevant earning capacity, no remedy or a more limited remedy might be appropriate.

^[134]

Individualised approaches

Given the problems with using formulae, and despite the inherently hypothetical nature of the exercise, it might be preferable to attempt to identify the economic disadvantage sustained by the applicant on a more individualised basis. This task can be performed with varying degrees of forensic rigour and method, ranging from a technical, forensic approach and precise method of calculation akin to that familiar to tort law to a more broad-brush evaluation of the applicant's position and the quantum of the sacrifice.

In many of the reported New Zealand cases, claims have failed owing to insufficient proof of causation. But where the quantification issue has arisen, the New Zealand experience suggests that courts may receive actuarial and other expert evidence in order to substantiate claims of economic disadvantage.

^[138]

^[139]

It has been said of Scottish law that "claims under [the economic advantage/disadvantage] principle are particularly difficult to quantify".

^[140]

^[141]

Scottish courts hearing economic disadvantage claims in divorce litigation have allowed various methods of proof, including expert evidence

The leading Scottish case on quantification under the economic disadvantage principle on divorce expressly rejected an attempt to apply the Ogden tables (used in personal injury cases to calculate future earnings losses) as a basis for quantifying economic disadvantage in family law. Lady Smith said:

^[146]

I do not accept that it is appropriate to approach the application of the economic disadvantage principle … as though an award were being made in a personal injuries case. The inappropriateness of doing so is highlighted by the fact that, in applying the statutory provisions, the question arises as to whether any economic disadvantage suffered by the pursuer has been balanced by economic disadvantage suffered by the defender … . Moreover, the court is directed to take "fair account" which clearly involves an exercise of discretion.^[147] These requirements underline that … an overall view of the fairness and reasonableness of the outcome must be looked at.

These provisions do not, in my opinion, require that a step by step calculation of sums due under each principle be carried out, which was the approach of the pursuer's counsel, as though a compensatory award was being calculated. … Clearly, the approach required may have to be a subtle one, depending on the circumstances of the case.

Conclusion on quantification

The question of quantification is undeniably difficult and the experience of those jurisdictions that operate a compensatory principle of this sort has not been entirely satisfactory. We welcome consultees' views on the feasibility of the various options available. We have already explained how we would characterise these claims as a fair apportionment between the parties of economic disadvantage arising on separation: from paragraph 6.153 above. The approach of Lady Smith in Coyle is compatible with that approach: a family law remedy should be an exercise in fair accounting, not a strict mathematical calculation of compensation for loss, and the proof and quantification of such claims should be approached accordingly. We would expect the mechanism of proof adopted to be proportionate to the value of the claim and the assets available.

6.192

We accept the force of criticisms that reform based on economic disadvantage presupposes a "middle class paradigm": the professional woman who forgoes a career in order to have children. In many cases it may be clear that some disadvantage has been incurred even if it is not susceptible of precise measurement. The middle class case may be rather different from that of the school-leaver with minimal qualifications and experience, who makes no particular career sacrifice when parenthood begins.

^[148]

^[149]

Moreover, as we have already indicated at paragraph 6.52, the value of the economic disadvantage would not translate directly into an award. In deciding what financial relief to grant, the court would have a number of other factors to bring into account, as we discuss below. Ultimately, the best that an economic disadvantage principle could do would be to seek to achieve an equitable distribution of net economic disadvantage between the parties, given a balancing of each party's claims and, crucially, the available assets.

The assets from which relief would be granted

6.194

Just as in cases of economic advantage, we do not consider that relief for economic disadvantage should have to derive from a particular pool of property. Limiting the claim in that way would render the applicant's success entirely dependent upon the nature and classification of the parties' assets.

^[150]

^[151]

Child-care costs

There is one issue related to the economic disadvantage sustained on separation which should be considered separately: the costs of child-care. The applicant might only be able to work following separation (now without the support of the relationship) with the assistance of professional child-care.

6.196

The new Scottish legislation for financial relief between cohabitants on separation includes a claim in respect of the "economic burden of caring, after the end of the cohabitation, for a child of whom the cohabitants are the parents".

^[152]

^[153]

In many cases, as in Scotland, the child-care element of working tax credit will go some way to assist with the costs of child-care in these cases. But since the tax credit does not cover the full cost of the care required, there will always be a surplus to be paid privately.

^[154]

The Child Support Act 1991 and the operation of the Child Support Agency, also both applicable in Scotland, do not fall within the scope of this project. This paper assumes the existence of an administrative child support scheme, assessing maintenance payable by non-resident parents on the basis currently applying to cases arising since March 2003, the "new" formula.

^[155]

^[156]

Child support is designed to contribute towards the maintenance of the child during minority. The liability can only be discharged by the making of regular payments.

Since child support does not and is not intended to share the wider economic impact of parenthood between the adult parties, there is clearly a distinct role to be played by remedies between the former cohabitants based on an economic disadvantage principle dealing with loss of earning capacity, and so on. The issue of how the costs of child-care should be dealt with, given the existing remedies available for the benefit of the child, is less straightforward.

6.201

The courts have powers under Schedule 1 to the Children Act 1989 to make periodical payments to cover what may broadly be described as school fees, in all types of case.

^[162]

^[163]

In point of fact the nursery fees and the child minder's charges are sought in order to enable the mother to go out to her own job. It is in essence a periodical maintenance charge which may be said to apply indirectly to the child but more directly to the mother.^[164]

Since the parents had not been married, there was no basis on which the mother could make a claim for financial relief against the father in her own right. So in view of the Court's conclusion that it had no power to make the relevant order under Schedule 1, no order could be made.

However, where they have jurisdiction to make additional periodical payments for the benefit of the child under Schedule 1 to the Children Act 1989 (in "big money" cases which exceed the jurisdictional limit of the Child Support Agency), the courts have made awards envisaging that such payments might be used to pay for professional child-care.

^[165]

There might be a case for ensuring that the courts have jurisdiction in relation to the costs of child-care, whether those costs be regarded as being for the benefit of the child or for the benefit of the parent. Without that assistance, the parent's ability to realise whatever earning capacity he or she has might in some cases be impeded.

6.204

In many cases, however, tax credits will be available to cover much of the costs, and the practical utility of any claim between the former cohabitants would inevitably be limited by respondents' ability to pay, particularly having regard to the fact that they will already be paying child support. It might ordinarily be appropriate to view the respondent's child support payments as providing his or her contribution to child-care costs not met by tax credits. But that might be thought to overlook the importance of meeting such costs in order to enable the primary carer to work. Viewed in that light, such payments may be key to reducing that party's economic disadvantage. We are keen to receive consultees' views on whether (given these factors and existing powers of the courts under Schedule 1 to the Children Act 1989 in high value cases) it would be useful in practice, and appropriate as a matter of principle, that a new scheme for financial relief between cohabitants on separation should include the possibility of orders to help meet the costs of child-care.

Cohabitants "with children": which children?^[166]

In considering cases between cohabitants with children, we have assumed thus far a straightforward case involving joint parents of dependent children. We now need to consider whether the same principles should apply to other cases where there are children living in the cohabitants' household. In particular, in making a claim for economic disadvantage, ought it to matter whether the children cared for by the applicant were children of both parties, or of the respondent only, the applicant only, or neither of them? We shall refer to all of these as "children of the family". Similar issues might arise regarding the relationships of the parties to another family member for whom care had been provided.

6.206

The key questions relating to remedies between the adults are whether claims relating to economic disadvantage arising from child-care provided by the applicant should be available in relation to any child of the family, whether that care were provided (1) during the relationship, or (2) following separation. It is also necessary to ask whether any distinction ought to be drawn between cases where:

(1) the child is the child of both parties;

(2) the child is not the child of both parties, but of the respondent (in the event that the non-parent applicant was the primary carer during the relationship and/or following separation);

(3) the child in question is that of the applicant, but not of the respondent; and

(4) the child is the child of neither party.

Joint legal parents^[167]

Clearly, where the parties are as a matter of law the parents of children whom they have raised together, financial relief should be available to the party who has undertaken more of the child-care and whose economic position will in consequence be more disadvantaged following the parties' separation. Any child of both parties born following separation for whom the applicant will be caring should also be relevant for these purposes. Although such an applicant, like any other, would be expected to take whatever steps were reasonably available to maximise their earnings and earning capacity following separation, that applicant may face substantial economic disadvantage in the future as a result of caring for the child following separation.

6.208

Where the parties had adopted a family lifestyle in which one of them was a full-time (or part-time) stay-at-home parent throughout the children's upbringing, even where the children are no longer dependent on separation, one party may experience economic disadvantage (in terms of impaired earning capacity and so on) long into the future. In our view, the case for financial relief between the adults to reflect the consequences of that care is as strong here as it is in the case where the children are still at home.

^[168]

Cases where the parties are not joint legal parents

Potentially more complex are cases where the parties are not both the legal parents of all or some of the children who lived with them during their relationship. These cases may be further complicated by the fact that some of these children will spend time in, or may also be members of, another household with their (other) legal parent. The cohabitants' household may or may not have been the children's principal residence during the parties' relationship. But the amount of time spent by the children in each household may vary considerably, from more or less equal time, to a situation where stays in the other parent's household are relatively short

^[169]

THE RESPONDENT'S CHILD

Where the applicant has taken on child-care responsibilities for the child of both of them or for the respondent's child, it is self-evidently fair that the respondent should be required to provide financial relief in relation to any economic disadvantage sustained by the applicant as a result. New Scottish legislation limits claims relating to care provided following separation to children of whom both parties are the parents.

^[170]

THE APPLICANT'S CHILD

More difficult issues arise where the child is from the applicant's earlier relationship. In this case, the proper view might be that any financial relief relating to the applicant's care for that child should be (or have been) made by the other parent, not the current respondent, certainly to the extent that the disadvantage arose from care provided prior to the relationship now under consideration. But there might sometimes be grounds for saying that the first remedy was limited in contemplation of the second relationship or that the second partner, particularly perhaps over a long relationship, had accepted some level of responsibility for the applicant, together with his or her continuing child-care responsibilities.

THE CHILD OF NEITHER PARTY

6.212

Potentially even more varied are cases where the child is, as a matter of law, the child of neither cohabitant. However, wherever such a child had been treated by both parties as a child of their family, such responsibility arguably ought to be shared. For the duration of the relationship, and possibly thereafter, they may be regarded as having implicitly agreed to share the economic consequences of raising that child together.

Conclusions

6.213

Since the circumstances of these cases are so varied, we consider that it would be preferable not to curtail the court's powers by a rule that excluded the possibility of certain claims being made in any particular category of case. In many cases, families will be composed of children from past relationships and the current relationship. It could be very complicated to seek to distinguish between the care provided to different children within the family and the economic effect on each party of the applicant's having provided that care.

6.214

The best view might be that it does not matter whose children the applicant stayed at home to care for, provided that it was explicitly or implicitly agreed by the parties that he or she should do this, while the family was supported financially by the respondent. It ought therefore to be open to the court to consider the extent to which any children who were not the respondent's had been treated by the parties as children for whom they had undertaken an obligation to care.

^[171]

We invite the views of consultees on the question of which children should be "relevant" to the provision of financial relief between "cohabitants with children".

OPERATING THE TWIN PRINCIPLES: ECONOMIC ADVANTAGE AND DISADVANTAGE

6.216

We now consider how the economic advantage and economic disadvantage principles would operate. In particular, we consider:

(1) how cross-claims from the respondent and multiple claims by the applicant would affect the net value of an award made to the applicant;

(2) various practical limitations on the extent of relief that could be granted; and

(3) the possible imposition of an additional "substantial" or "manifest unfairness" threshold for claims to succeed.

Respondents' claims: countervailing benefits^[172]

Inevitably, both parties would be in a position to argue that they had made contributions to the relationship, and it would be necessary to balance the parties respective claims in order to ascertain what, if any, financial relief should be granted and to whom.

6.218

No remedy to recognise the economic advantage conferred or disadvantage sustained by the applicant would be necessary where and to the extent that those contributions had been fully compensated by benefits received from the respondent during the relationship. Ordinarily, we do not think that it would be fair to allow respondents to assert the value of support

^[173]

However, it might sometimes be appropriate to allow respondents to defend claims by pointing to certain benefits they had provided to the applicant, even if those benefits were not retained by the applicant on separation. For example, suppose that the respondent had made transfers of capital to the applicant that were specifically designed to provide that applicant with long-term economic security, but which the applicant had instead squandered. It may be unfair to bar the respondent from defending the claim by reference to such payments, which could effectively be regarded as compensation paid in advance. There might be felt to be something inconsistent in allowing that defence, while requiring applicants asserting a claim on the basis of their financial contributions to demonstrate a retained benefit at the point of separation.

^[174]

It would also be necessary to take account of the effect of certain "contributions" to be made by each party following separation. For example, while one party might continue to provide care for the couple's children following separation, the other might make provision for the child by providing accommodation under Schedule 1 to the Children Act 1989 from which the applicant (primary carer) would indirectly benefit.

^[175]

^[176]

Applicants' claims: avoiding double-counting or over-compensation^[177]

There are various ways in which a particular contribution might be taken into account, and care would have to be taken to avoid including a particular contribution under more than one head of claim and so making provision for it twice over. In particular, any claim by the applicant based on economic advantage should be considered before those based on economic disadvantage. Since the latter claim would depend on there being a disparity in the parties' situations on separation, the applicant's position post-separation should be assessed in light of any provision which would be made under the economic advantage principle. The economic disadvantage claim would then only deal with any difference between the award made pursuant to the economic advantage claim, and the remaining extent of the economic disadvantage.

Practical limitations on claims

6.222

In addition to the limits implied as a matter of principle from the nature of the claims being made, there are practical limitations on what any order can fairly and reasonably achieve. These could, and in some cases should, cap awards that the principles alone might otherwise indicate. This discussion is particularly important in so far as awards would not be taken from a particular pool of property, but could in theory call on all financial resources at the disposal of each party, including future income.

Available resources and respondents' needs and obligations

6.223

The aim of financial relief on separation would be to distribute the parties' resources fairly between them in light of the economic advantages retained and economic disadvantages arising on separation. In the vast majority of cases, those resources would be limited.

^[178]

^[179]

Any court-based remedy would therefore take full account of the financial resources and existing obligations of the respondent in deciding whether to make any order in favour of the applicant, and the need for respondents to maintain themselves. The best that any award could be expected to do, therefore, would be to take fair account of economic advantage and economic disadvantage, in light of the assets available and the legitimate financial needs and obligations of the respondent. Moreover, since it would be preferable, where possible, to effect a clean break between the cohabitants,

^[180]

A needs-based ceiling?

One way of avoiding some of the potential forensic difficulties associated with proof of at least some forms of economic advantage and economic disadvantage might be to reduce substantially the theoretical function of those principles. Proof that relevant economic advantage had been retained or economic disadvantage had arisen on separation would be a precondition of any claim succeeding. But thereafter, the extent of any relief granted could be limited by reference to the needs of the applicant. For example, applicants would receive relief reflecting the economic disadvantage they had sustained, but only to the point required to maintain them; or put another way, applicants would receive needs-based remedies, but only in relation to needs caused by the division of functions in their relationship.

^[181]

As we have noted already, there may only be a very few cases where the assets are sufficiently extensive that an economic disadvantage award could in practice do more than simply alleviate applicants' needs. The courts' interpretation of needs in the divorce context tends to be conditioned, at least in the case of long relationships, to the standard of living to which the parties are accustomed.

^[182]

However, whatever the practical effect of awards in individual cases, we retain our reservations about using need as a basis for remedies. The arguments we made from paragraph 6.62 above about needs-based relief apply equally to the idea of capping economic disadvantage claims (or any other type of claim) at the point of need. Whilst perhaps pragmatically attractive, such capping would be difficult to justify as a matter of principle, as it would mean that the economic impact of the relationship on the parties might not be fully shared on separation.

6.228

Nor would this needs-based cap provide a way of avoiding the problems of proof and quantification associated with economic disadvantage. If it is accepted that cohabitants ought only to be responsible for their partner's needs on separation to the extent that those needs arise from the relationship, and not from factors such as disability and unemployment (for which the respondent has no responsibility), it would remain necessary to prove and quantify (at least in a broad-brush way) the extent to which the applicant's economic position on separation was attributable to the relationship and its termination.

Transitional support and retraining costs?

6.229

A final filter on claims: substantial or manifest unfairness?^[183]

Under our proposed scheme no award would be necessary at all unless it could be shown that, taking account of economic advantage conferred and disadvantage sustained, the parties' respective financial positions at the point of separation were unfair, and that some adjustment between them would therefore be appropriate. However, it might be helpful to add a final filter to claims, the purpose of which would be to make clear that legal intervention resulting in the award of financial relief would only be appropriate at all if and where it would be substantially or (more strongly) manifestly unfair not to provide a remedy. Such a threshold for claims might usefully provide a further deterrent to hopeless claims.

^[184]

We envisage that in most cases, the chief factor of fairness for these purposes would be the size of the claim: if the value of the retained benefit or economic disadvantage were small, it might be disproportionate to pursue a claim at all. But value is relative, and what may be a trifling sum for an affluent applicant might be of great practical value to someone less well-off.

6.232

An assessment of fairness might also depend on the parties' relative responsibility for benefits retained or sacrifices made, the parties' respective needs, and other wider circumstances of the case. It would be possible, and in our view desirable, for at least some of these wider circumstances to be expressly identified in the legislation as factors for the court to take into account in exercising its discretion. But often, these sorts of factors would make it unfair or otherwise inappropriate to make an award, rather than not to do so.

THE RELEVANCE OF CONDUCT

6.233

We do not consider it appropriate that fault or conduct generally should play a significant part in a new family law scheme for financial remedies between cohabitants on separation.

6.234

It is generally accepted that conduct is irrelevant to financial provision on divorce, save in the most extreme cases.

^[185]

^[186]

Separation by cohabitants clearly involves no formal adjudication or assessment of fault - the parties are free to separate for whatever reason, unilaterally or by mutual consent and without any official sanction. However, there may be cases where one party's behaviour had been such that it would be manifestly unfair to ignore it in the context of financial relief.

6.236

One clear example is financial and litigation misconduct.

^[187]

^[188]

It can be argued that it is inappropriate to introduce other aspects of conduct into financial relief. This is particularly so where the scheme for financial relief is essentially based on considerations of economic justice, since many forms of conduct have no direct bearing on those issues. However, as in the case of ancillary relief on divorce, it would be appropriate to leave room for the court to take account of conduct where it would be inequitable to disregard it, for example, where serious domestic abuse has impaired the applicant's economic security.

^[189]

We invite the views of consultees on the principles which should justify and quantify awards of financial relief between cohabitants on separation.

6.239

We provisionally reject the view that the substantive law governing financial relief between spouses on divorce (Part II of the Matrimonial Causes Act 1973

^[190]) should be extended to cohabitants on separation. Do consultees agree?

We consider that, in determining whether to grant relief and, if so, what the relief should be, the court should have regard to whether, and to what extent, either party's economic position following separation (in terms of capital, income or earning capacity) was:

(1) improved by the retention of some economic benefit arising from contributions made by the other party during the relationship ("economic advantage"); or

(2) impaired by economic sacrifices made as a result of that party's contributions to the relationship, or as a result of continuing child-care responsibilities following separation ("economic disadvantage").

Do consultees agree?

6.241

We invite the views of consultees on the factors to which the court should have regard when considering the justification for, and quantum of, any financial relief to be granted in accordance with the principles of economic advantage and economic disadvantage.

6.242

We invite the views of consultees on whether awards should be limited to "transitional support", with particular reference to the costs of retraining that may be necessary to enable the applicant to re-enter the labour market.

6.243

We invite the views of consultees on whether a new scheme for financial relief between cohabitants should include a power to make awards in appropriate cases to assist the party with whom any relevant children will principally live following separation with the costs of child-care.

6.244

We invite the views of consultees on whether awards should only be made where it would be substantially or manifestly unfair not to do so.

6.245

We consider that parties' conduct should not be taken into account in considering claims for financial relief on separation, save where that conduct relates to litigation or financial misconduct, or where it would otherwise be inequitable to disregard it. Do consultees agree?

THE COURT'S ORDER

6.246

Whether or not it would be appropriate to apply the substantive law of ancillary relief to cohabiting couples on separation, there is a clear case for putting the range of orders used in matrimonial cases at the disposal of courts providing financial relief between cohabitants.

^[191]

^[192]

Except for orders applying to pension funds and orders for sale, all of these orders are available to courts determining applications brought by survivor cohabitants under the Inheritance (Provision for Family and Dependants) Act 1975 ("the 1975 Act"), and applications made in relation to cohabitants' children under Schedule 1 to the Children Act 1989.

^[193]

The menu of family law financial and property orders

The orders that we have in mind are therefore as follows:

Financial provision

(1) periodical payments either until a specified event, or over a specified term, or until the order is superseded;

(2) secured periodical payments, for the same periods as above;

(3) lump sums, which may be payable by instalments;

(4) any of these may be directed to pension trustees, where pension earmarking is ordered;

(5) interim payments on account pending full trial or final settlement;

Property adjustment

(6) property transfer;

(7) property settlement, including orders requiring one party to make property available for the other's occupation until a certain event, at which point the property either reverts to the owner or may be sold and its proceeds divided between the parties in shares decided by the court;

Order for sale of property

(8) ancillary to secured periodical payments, lump sum or property adjustment orders; and

Pension sharing

(9) pension sharing involves a division of the pension fund so that part of it may be transferred to the applicant in order to form a pension fund in the name of that party, entirely separate from the pension retained by the other. It must be distinguished from pension earmarking whereby the fund is kept intact but the court directs the trustees to divert certain benefits to the applicant when those benefits become payable.

6.249

We provisionally propose that in granting financial relief to cohabitants on separation, the courts should have available to them the following menu of orders:

(1) periodical payments, secured and unsecured;

(2) lump sum payments, including by instalment;

(3) property adjustment;

(4) property settlement;

(5) orders for sale;

(6) pension sharing; and

(7) interim payments ordered on account pending a full trial or final settlement.

Do consultees agree?

6.250

Next, we consider three issues relating to the particular use of those orders:

(1) whether all forms of order should be available on the same substantive basis, or whether different principles should apply to different types of orders;

(2) what factors should be relevant to the court's choice of order; and

(3) whether there should be any restrictions on the making of periodical payments orders.

What basis for each type of order?

6.251

Some jurisdictions make different types of order available on different substantive grounds. For example, in New Zealand, capital orders are available to give effect to equal sharing and economic disparity principle, leaving needs-based claims to be satisfied by orders for periodical payments.

^[194]

We do not think that it is desirable to attach particular principles exclusively to particular forms of order. Outcomes of cases might otherwise depend arbitrarily upon the scale and liquidity of the respondent's capital. In cases that were asset rich, there would be no difficulty in ordering an immediate capital settlement of the claims by lump sums and other property transfers. If assets were not plentiful, but the law only permitted capital orders to be used to give effect to a particular principle, then it might be impossible to give applicants all that should be due to them. For the courts to be hostage to the particular pattern of available income and assets in this way is undesirable. Moreover, to have different principles for different sorts of orders may simply generate complex technical argument regarding the proper characterisation of a particular claim.

^[195]

We therefore consider that the court should have the full range of orders at its disposal in all cases. The various types of order ought instead to be viewed simply as vehicles for giving effect to the courts' conclusion about what degree of adjustment is required following application of a uniform set of principles.

^[196]

We consider that all types of order should be available to the court on the same substantive basis. Do consultees agree?

Considerations relevant to the choice of order

6.255

We have already examined the principles which we consider could be used to justify and quantify the value of any relief to be granted. When it comes to translating that conclusion into a particular set of orders, we consider that it is inevitable and desirable that the courts should take account of some additional matters that might have been excluded up to this point.

The adult parties' needs

6.256

Although we do not consider that relief should be granted on the basis of need, we do consider that it would be entirely appropriate, in deciding what particular type of relief to grant, to have regard to the parties' respective needs and the type of resources that they currently have available to them. So, for example, one party might have a particular need to occupy the parties' former home because of difficulties that he or she would otherwise encounter in attempting to find his or her own accommodation. Or the home might have been specially adapted in light of the applicant's disability; though needs associated with disability should not be a basis for granting relief or a factor that should affect the quantum of any relief granted, it ought to be relevant to the court's decision about what orders to make.

Children's needs and the interaction of a new scheme with Schedule 1 to the Children Act 1989^[197]

None of the principles that we have considered for cohabitants' cases would mean that the mere presence of children justified relief, though economic sacrifices associated with undertaking child-care would often underpin a substantial claim based on economic disadvantage. To that extent, our proposed scheme would differ from the Matrimonial Causes Act 1973, where "first consideration" is given, in general terms, to the welfare of minor children of the family in making orders for the benefit of the spouses.

^[198]

However, the presence of children (whether of the relationship in question, past relationships or new ones) should clearly be relevant to the nature of the financial relief ultimately granted between the adults. In particular, having determined the value of the adjustment that must be made, the court might decide which particular assets to use to satisfy the award by reference to whichever party has primary care for children of the family following separation.

6.259

This issue inevitably raises questions about the interaction of any new scheme providing remedies between the cohabitants with existing remedies for the benefit of the parties' children under Schedule 1 to the Children Act 1989. As we discussed in Part 4, one of the chief problems with the current operation of the Children Act remedies is that without the remedial flexibility afforded by the remedies available between the adults, it is often not possible to make the most of limited assets.

^[199]

In divorce cases, orders specifically for the children's benefit are not commonly required, as the children of divorcing spouses will be amply protected by orders made for the adult parties (for example in relation to the matrimonial home). But that is in the context of a far broader discretion for awards between spouses than is being contemplated here for cohabitants. Depending on the scope of any new scheme for cohabitants, we might expect that remedies for the children would continue to have greater significance in cohabitants' cases than they do on divorce.

6.261

In practice, the remedies granted for the benefit of the children and relief for the applicant would be considered as part of one overall package, not least given the fact that transfers of capital between the adults may be required to facilitate the provision of accommodation for both parties together with the children. But in order to ensure that the children's needs were properly catered for, it might be appropriate for the court to consider applications under the Children Act before turning to the claims between the adults. As we have seen, this would also affect the extent of the remedy required for the applicant's benefit, as that party would to some extent indirectly benefit from the Children Act orders, particularly from the provision of accommodation.

^[200]

We consider that by giving precedence to any Children Act application and ensuring that the needs of the children were taken into account when deciding what order to make between the adult parties, the welfare of the parties' dependent children would be given adequate weight.

^[201]

We consider that, having determined that some remedy is justified and calculated its quantum in accordance with the principles outlined above, the court should have regard, in particular, to the following factors when deciding what order(s) to make:

(1) the needs of both parties and any children living with them; and

(2) the extent and nature of the financial resources which each party has or is likely to have in the foreseeable future.

Do consultees agree?

6.264

We invite the views of consultees on:

(1) generally, how the welfare of children ought to be taken into account in the provision of financial relief between cohabitants; and

(2) specifically, how existing remedies for children of the cohabitants should interact with a new statutory scheme for financial relief between cohabitants on separation.

Periodical payments and the desirability of the clean break

6.265

Despite our general view that all orders should be equally available to the court on the same substantive principles, there may remain valid reasons for wishing to restrict the availability of periodical payments on other grounds.

6.266

Since its statutory recognition in divorce cases in 1984, the clean break principle has been given increasing emphasis.

^[202]

^[203]

^[204]

The clean break principle has no application to the financial obligations owed to the parties' children (obligations to pay child support and other liabilities continue after divorce) or to the parties' continuing social roles as parents. Moreover, it is recognised in divorce cases that where the parties have children and capital is limited (so that immediate capital transfer cannot effect an adequate settlement) a clean break between the spouses may be unwise.

^[205]

The clean break principle poses a dilemma. If pursued as an objective in its own right, and one which may take precedence over the substantive principles which otherwise justify particular relief being granted, it comes at the potential cost, where there is not enough available capital on separation, of leaving the applicant without full relief. It might appear unfair to pursue the clean break at the expense of achieving economic justice between the parties, to some extent leaving economic gains and losses lying where they fell on separation. On the other hand, the prospect of economic liability dragging on into the future with no clear end-point might seem unduly onerous. The policy underpinning the clean break may therefore be thought to attract some weight in its own right, even if it comes at the cost just identified.

6.269

In our view, part of the solution may lie in the use of orders for lump sums payable by instalments, and strictly time-limited periodical payments that cannot be extended. These options enable awards to be made even where there is insufficient capital immediately available to meet the award in full, but by settling the total quantum at the outset and then devising a schedule for payment of that sum over a defined, non-extendable period, both parties would know where they stood.

6.270

In any event, we anticipate that orders for periodical payments would be relatively uncommon. For periodical payments to be both feasible and necessary, the respondent must both be in a position to afford them and have insufficient capital to enable a clean break to be made.

6.271

Those observations aside, at the time of writing, we await with interest the decision of the House of Lords in McFarlane v McFarlane and Parlour v Parlour, which is expected to address the role of the clean break principle in divorce cases. Until that decision is available, we do not consider it appropriate to make any firm proposal for the precise operation of the clean break principle in cohabitants' cases.

^[206]

We invite the views of consultees on the weight to be attached to the clean break principle between cohabitants. In particular, how should the clean break principle relate to the operation of the substantive principles otherwise determining the award that should be made?

Periodical payments and the effect of repartnering

6.273

In divorce cases, periodical payments orders are automatically terminated by remarriage of the recipient.

^[207]

We need to consider what effect repartnering should have for periodical payments under a new scheme for cohabitants, where they were ordered at all:

(1) should they terminate automatically, or only on application to court?

(2) should the effect depend on the nature of the new relationship: whether it is a marriage or civil partnership, or a new cohabitation?

6.275

Under our provisional proposals, orders would not be based on need as such. The rationale suggested above for the termination of periodical payments on remarriage in divorce cases would therefore not apply directly. For example, the loss of earning capacity justifying relief based on economic disadvantage would remain. Moreover, particularly if the new relationship were not a long one, the recipient of the payments might not be able to claim equivalent relief from that new partner in the event of separation, as the economic disadvantage to which the applicant would remain subject would (largely) derive from the previous relationship.

6.276

However, there are nevertheless strong grounds for arguing that such payments should terminate, either automatically or on application to the court, where the recipient forms a new relationship, particularly if that relationship was or became one which made it eligible in the event that it too came to an end.

^[208]

^[209]

We invite the views of consultees on the effect that subsequent marriage, civil partnership or cohabitation with a third party should have on a periodical payments order made in favour of a former cohabitant on separation.

INTERACTION OF NEW REMEDIES WITH THE MATRIMONIAL CAUSES ACT 1973^[210]

The relevance of post-marital cohabitation to periodical payments ordered on divorce

We next need to consider the case of a divorced spouse receiving periodical payments who subsequently cohabits with a new partner. As we have seen, currently, cohabitation does not automatically terminate such payments as a matter of law, though the payer may apply to court for variation of the order in light of the financial contributions that the new partner can and should make to the former spouse's household.

^[211]

Where a new relationship failed to satisfy the eligibility requirements for a new scheme, there would seem little justification for taking a different view about the relevance of cohabitation to the periodical payments from that which is taken now. Unlike marriage or civil partnership, even eligible cohabitation

^[212]

On the other hand, the importance of maintenance obligations between spouses during marriage in practice lies in the fact that they can be enforced when the parties are separated but still formally married.

^[213]

Pre-marital cohabitation by spouses who later divorce^[214]

The divorce courts increasingly take account of pre-marital cohabitation as contributing to length of the relationship in granting ancillary relief. It has a bearing, amongst other things, on the way in which the court values the parties' contributions to the marriage,

^[215]

^[216]

Once the parties had married, they would no longer be eligible under any new statutory scheme for cohabitants. However, the divorce courts' current practice suggests that the fact of the parties' marriage transforms the pre-marital cohabitation, lifting it out of the general law that currently applies to that relationship. Marriage should therefore have the same effect where a new scheme took the place of the general law. There should therefore be no need to refer to the new scheme in a case involving cohabitants who had married by later divorced and sought ancillary relief under the Matrimonial Causes Act 1973.

6.283

We invite the views of consultees on the interaction of any new remedial scheme for cohabitants with the Matrimonial Causes Act 1973

^[217] in relation to:

(1) cohabitants who marry and subsequently divorce; and

(2) an ex-spouse in receipt of periodical payments who cohabits with a third party.

INTERACTION OF ANY NEW REGIME WITH EXISTING REMEDIES BETWEEN THE COHABITANTS UNDER THE GENERAL LAW^[218]

We might expect that a new statutory scheme for cohabitants on separation would largely take over from the general law of trusts and estoppel. It is difficult to envisage situations in which eligible applicants would fail to obtain relief under the scheme but would have a successful argument for a share in the respondent's property under the general law. The scheme would provide much fuller recognition and relief for non-financial contributions than the law of implied trusts and estoppel (in the absence of a sufficiently specific and generous common intention, representation or assurance

^[219]

^[220]

Moreover, successful invocation of the scheme would necessarily work as a trump card: an award under the legislation would necessarily interfere with whatever property rights of the respondent the general law would recognise.

^[221]

However, there would be cases where for some reason the general law would continue to govern the parties' respective rights and obligations on separation.

^[222]

^[223]

The continued relevance of the general law would to some extent therefore give rise to greater complexity than currently exists: any new scheme would add to the law already applicable. However, provided the new scheme were sufficiently generous to clearly eligible applicants that most preferred to invoke it instead of, rather than simply alongside, the general law, most cases should not in practice be weighed down by that theoretical complexity.

6.288

We invite the views of consultees on the interaction of any new statutory scheme with the general law as it applies to cohabitants.

REFORM OF EXISTING REMEDIES FOR THE BENEFIT OF CHILDREN

6.289

Subject to the criticisms made of its practical operation in Part 4, Schedule 1 to the Children Act 1989 is largely satisfactory in its own terms. It essentially mirrors provisions in the matrimonial and civil partnership legislation under which the courts may make orders for the benefit of children rather than the adult parties.

^[224]

The Child Support Act 1991 imposes a legal obligation to maintain a child only on those recognised by law as the parents of that child. The policy underpinning that Act is clear and it is no part of our present work to propose that child support obligations and the remit of the Child Support Agency should extend beyond legal parents. We are concerned exclusively with discretionary court-based remedies.

6.291

English and Scottish law part company on the issue of liability of non-parents. The English courts can make orders requiring someone to provide for a child of whom he or she is not the legal parent. However, that power only applies where:

(1) that person is a spouse or civil partner; and

(2) the spouses/civil partners have treated the child in question as a child of their family (whether or not either of them is the child's legal parent).^[225]

By contrast, the Scottish court can require a (former) cohabitant – or any others who "accept" a child as part of their family – to aliment^[226] a child of whom he or she is not the legal parent.^[227]

Particularly in view of the large numbers of cohabiting step-families,

^[228]

^[229]

It is important to appreciate that, unlike the Child Support Act, court-based remedies are discretionary. Whether such an order was made would therefore depend on the particular circumstances of the case. The Children Act specifically requires the court, in deciding whether to make an order against a married non-parent, to have regard to:

(1) whether that person has assumed responsibility for the maintenance of the child and, if so, the extent to which and basis on which he assumed that responsibility and the length of period during which he met that responsibility;

(2) whether he did so knowing that the child was not his child; and

(3) the liability of any other person to maintain the child.^[230]

The arguments in favour of some liability attaching to the non-parent perhaps centre on the premise that liability is appropriate if, and to the extent that, that individual has in fact assumed some responsibility towards the child and, in step-parental cases,

^[231]

It might be felt that it is only appropriate to infer such an assumption of responsibility where the non-parent has undertaken an explicit legal commitment towards the parent through marriage or civil partnership. But it is important to note that, in the case of married step-parents, the fact of marriage does not itself create responsibility towards the child. It is additionally necessary to demonstrate that the child was treated as a child of the family and the court will have regard to the factors outlined above. The fact that an assumption of responsibility towards the child is not assumed from the marriage itself might suggest that the fact of marriage need not be regarded as the key to liability in relation to that child. This may be particularly so in cases where neither spouse is a parent of the child, in which case there is no assumption of liability to a parent of the child at all.

6.296

Liability for non-parents raises difficult questions about the respective liability of parents and others where the child moves between successive relationships. It would be undesirable to use such liability as a way of relieving the child's legal parent (who is primarily responsible to maintain the child) from his or her obligations. However, there may be cases where the other person who would have been liable to maintain the child is clearly unable to do so, not least where that parent has died, and so where the non-parent might deliberately have undertaken a substantial moral (if not legal) responsibility towards the child. It would be a matter for the court to determine what provision, if any, from the non-parent would be appropriate.

6.297

We invite the views of consultees on whether the liability of those who are not parents under Schedule 1 to the Children Act 1989 should be extended to include "cohabiting step-parents" and other non-parents in cohabiting families.

CASES INVOLVING LIMITED ASSETS AND DEBTS

6.298

In the course of preparing this consultation paper, we have been aware that current family law, particularly as it applies to divorcing spouses, offers little guidance for the resolution of cases where parties' assets and incomes are very limited or where they have substantial debts, which may exceed the value of their assets. Most of the case law relating to divorcing spouses deals with "big money" cases where the available assets comfortably exceed the parties "needs", however the latter are construed. Inevitably, it is here that the principles, if any, that underpin awards in such cases can be most fully explored, as the ample asset pool imposes few practical limitations on the judge.

^[232]

By contrast, appellate decisions offer little reported guidance to those dealing with cases at the lower end of the economic spectrum about how their cases should be resolved. Judges dealing with divorce cases at least have at their disposal the broad discretion conferred by the Matrimonial Causes Act 1973. This permits them to adopt a pragmatic, problem-solving approach, unconstrained by the parties' formal property rights. The judge can seek to fashion an outcome which is as fair as possible in light of the circumstances of the parties and their past relationship, in so far as the limited assets enables him or her to do so. By contrast, save where the property is rented,

^[233]

^[234]

Any new scheme would go some way to alleviate the difficulties in cohabitant cases by providing judges with a set of substantive principles better suited to deal with the economic impact of separation and the remedial flexibility necessary to make the most of modest assets. It might be expected that the costs of resolving cohabitants' claims under a new, coherent scheme might be more proportionate to the asset pool at stake than the current law. The mix of civil and family proceedings, general property and statute law that must currently be negotiated necessarily makes cohabitants' cases disproportionately costly to resolve. Individuals acting without legal advice, common in those cases where the parties' assets and income just exceed the eligibility requirements for legal aid, would also benefit from clearer law. This is also a factor that must be considered when devising the procedure and court forms for any new law.

^[235]

However, there is only ever so much that private law remedies can do to alleviate, or share, financial hardship in these cases. Moreover, there is one limitation that constrains the courts' options, even where the parties are married: third party rights. Where the parties' problems are the result of debts, whether arising from a mortgage, other secured loan, credit card or other credit arrangements, the judges can only operate within the limits imposed by the law protecting the interests of those third party creditors. Nor can the court formally redistribute the debt between the parties.

^[236]

^[237]

We invite the views of consultees regarding any matters specific to cases involving limited assets and debts.

Ý
Ü Þ

Note 1    For example New Zealand, some Australian states, some Canadian provinces.    [Back]

Note 2    See extracts in Appendix A. Identical provisions in Civil Partnership Act 2004, sch 5, apply to civil partners on dissolution.    [Back]

Note 3    See, for example, A Barlow, S Duncan, G James and A Park, Cohabitation, Marriage and the Law (2005) and R Bailey-Harris, “Law and the unmarried couple – oppression or liberation?” (1996) 8 Child and Family Law Quarterly 137.    [Back]

Note 4    See R Deech, “The Case Against the Legal Recognition of Cohabitation” (1980) 29 International and Comparative Law Quarterly 480; M Garrison, “Is Consent Necessary? An Evaluation of the Emerging Law of Cohabitant Obligation” (2005) 52 University of California Los Angeles Law Review 815.    [Back]

Note 5    See, for example, R Bailey-Harris, “Law and the unmarried couple – oppression or liberation?” (1996) 8 Child and Family Law Quarterly 137; and “Dividing the Assets on Breakdown of Relationships Outside Marriage” in R Bailey-Harris (ed), Dividing the Assets on Family Breakdown (1998); and Mr Justice Munby, “Families Old and New – the Family and Article 8” (2005) 17 Child and Family Law Quarterly 487, at 496-7; and para 5.83.    [Back]

Note 6    But see discussion in Part 5 on the general issue of extending any form of financial relief to cohabitants.    [Back]

Note 7    In seeking principles suitable for the resolution of cohabitants’ cases, it is inevitable that we shall venture into territory covered by the Matrimonial Causes Act and its case law – given the breadth of that jurisdiction it would be impossible not to do so. The difference would lie in those factors and principles that were not transposed from ancillary relief to a scheme for cohabitants and the statutory delineation of the court’s discretion in cohabitants’ cases.    [Back]

Note 8    A Barlow, S Duncan, G James and A Park, Cohabitation, Marriage and the Law (2005) pp 116-117.    [Back]

Note 9    Current divorce figures may provide guidance here: in 2004, c.166,000 decrees of divorce were granted; by contrast, only c.31,500 orders for periodical payments, lump sums, property adjustment and pension sharing were made, of which c.12,000 were made by consent and c.15,600 were made for a child; a further c.58,000 ancillary relief orders are described as having been made by consent. This leaves only a small proportion of orders being made by adjudication: Judicial Statistics Annual Report 2004 (2005) Cm 6565, table 5.7. See also findings of G Davis, J Pearce, R Bird, H Woodward and C Wallace, Ancillary Relief Outcomes: A pilot study for the Lord Chancellor’s Department (1999): only 4.6% of cases in their study of 301 court files were adjudicated, rather than settled (7.3% at final hearing) or based on applications submitted with the consent of both parties (69.4%), cited in J Eekelaar, M Maclean and S Beinart, Family Lawyers: the divorce work of solicitors (2000) p 16.     [Back]

Note 10    Assuming that they can afford such advice or will be eligible for public funding.    [Back]

Note 11    It is unwise to rely to any significant extent on data about cohabitation in other jurisdictions, where the social, cultural, legal and public policy framework, particularly regarding employment, tax and welfare benefit law, may provide a very different context for cohabitants from that existing here.    [Back]

Note 12    Reform in New Zealand has been criticised for failing to consider the research evidence about cohabitants in determining what sort of regime might be appropriate for them: V Grainer, “What’s Yours is Mine: Reform of the Property Division Regime for Unmarried Couples in New Zealand” (2002) 11 Pacific Rim Law and Policy Journal 285.     [Back]

Note 13    S Cretney and J Masson, Principles of Family Law (6th ed) p 497.     [Back]

Note 14    Mr Justice Wilson, “Ancillary Relief Reform: Response of the Judges of the Family Division to Government Proposals” (1999) 29 Family Law 159.    [Back]

Note 15    Matrimonial Causes Act 1973, Part II; Civil Partnership Act 2004, sch 5. When the Law Commission has previously considered introducing systems of co-ownership or community of property for spouses, it was always envisaged that discretionary ancillary relief would remain available in the event of divorce: see Financial Provision in Matrimonial Proceedings (1969) Law Com No 25, para 67; First Report on Family Property: A New Approach (1973) Law Com No 52, para 56; Third Report on Family Property: Matrimonial Homes (Co-ownership and Occupation Rights) and Household Goods (1978) Law Com No 86, para 1.179 and following; Matrimonial Property (1988) Law Com No 175, para 3.6 and 4.20.     [Back]

Note 16    See the community of property, deferred community and community of acquests regimes applying in many other jurisdictions in Europe and beyond: see current research by E Cooke, A Barlow, T Callus, A Akoto and P Petkoff; their most recent published paper is E Cooke, A Akoto, A Barlow and T Callus, “Community of Property – A Regime for England and Wales? An Interim Report” [2005] International Family Law 133.    [Back]

Note 17    See for example Sweden: Cohabitees Act 2003; New Zealand: Property (Relationships) Act 1976, which applies equally to spouses, civil union partners and de facto partners with children or of three years’ standing (equal sharing is supplemented by discretionary capital awards based on economic disparity (s 15 of the 1976 Act) and by discretionary awards of maintenance (under the Family Proceedings Act 1980). Note also limited rules ascertaining ownership of some assets under Family Law (Scotland) Act 2006, ss 26 and 27; the effect of these provisions may, in many cases, be superseded by the court’s new adjustive powers on separation under s 28.    [Back]

Note 18    Schemes adopting this approach generally exclude from “relationship property” gifts and inheritances to one party, as well as property acquired by either party prior to the cohabitation (save where acquired in anticipation of and for the purpose of the relationship). In some other jurisdictions, the parties’ shared home is often included even if acquired by one party alone prior to the relationship. Debts may also be included.    [Back]

Note 19    See below para 6.92.    [Back]

Note 20    Compare some commentators’ preference for rights conferred by property law over discretionary family law remedies: A Bottomley, “Our property in trust: things to make and do”, in S Scott-Hunt and H Lim, Feminist Perspectives on Equity and Trusts (2001).    [Back]

Note 21    See the history of the Child Support Act 1991 – originally a complex formula, rendered more complex in 1995 in order to try to accommodate various additional factors; reform in 2000 abandoned that approach in favour of a much simplified formula, modifiable by the exercise of administrative discretion in limited circumstances.    [Back]

Note 22    See, for example, criticisms of the Swedish regime’s treatment of the shared home: E Ryrstedt, “Legal Status of Cohabitants in Sweden”, in J Scherpe and N Yassari (eds), Die Rechtsstellung nichtehelicher Lebensgemeinschaften (2005).    [Back]

Note 23    N Peart, M Briggs and M Henaghan, Relationship Property: Consolidated Legislation and Analysis (2001) p 18.    [Back]

Note 24    See P Parkinson, “Quantifying the Homemaker Contribution in Family Property Law” (2003) 31 Federal Law Review 1.    [Back]

Note 25    See para 6.62.    [Back]

Note 26    From para 6.92.    [Back]

Note 27    From para 6.115.    [Back]

Note 28    From para 6.128.    [Back]

Note 29    From para 6.150.    [Back]

Note 30    From para 6.195.    [Back]

Note 31    See from para 6.216 and from para 6.255.    [Back]

Note 32    From para 6.230.    [Back]

Note 33    In some jurisdictions, the general law of quantum meruit will recognise the positive value of non-financial contributions: eg Buysers v Dean [2002] NZFLR 1 (New Zealand).    [Back]

Note 34    The principles adopted for cohabitants in Scotland derive from Scottish divorce law, where they run alongside a number of other principles. Although there is case law addressing them in that context, they have yet to be tested as free-standing principles.    [Back]

Note 35    Family Law (Scotland) Act 2006, s 28, which came into force on 4 May 2006: the Scottish legislation deals separately with the economic burden of child-care following separation, whether it involves the costs of child-care or the primary carer’s inability to take up paid employment. We discuss the latter in terms of economic disadvantage following separation.    [Back]

Note 36    See para 6.246 below.    [Back]

Note 37    As in ancillary relief cases on divorce. For example, jointly held property is divided so that one party obtains the property and takes on the mortgage while the other receives some compensatory lump sum or other award, such as the benefit of an endowment policy.    [Back]

Note 38    See Example 5 in Part 7.    [Back]

Note 39    See The Law Commission: Ninth Programme of Law Reform (2005) Law Com No 293, para 3.6.    [Back]

Note 40    See the concept of “reasonable requirements” used in big money divorce cases, at least until White v White [2001] 1 AC 596.    [Back]

Note 41    Ideological objection is taken to the necessarily “dependent”, even supplicant, position in which this puts applicants for financial relief: see, for example, R Deech, “The principles of maintenance” (1977) 7 Family Law 229.     [Back]

Note 42    American Law Institute, Principles of the Law of Family Dissolution: Analysis and Recommendations (2002) p 789.    [Back]

Note 43    See for example Matrimonial Causes Act 1973, s 27, and equivalent provisions of the Civil Partnership Act 2004.     [Back]

Note 44    See para 6.265.    [Back]

Note 45    Whether the orders made in divorce cases are properly understood as needs-based, despite the prominence of needs in judges’ reasoning, is a complex question which we cannot address in depth here. Note the view of Hale J (as she then was) in SRJ v DWJ [1999] 2 FLR 176, 182, that the mere fact of need would be insufficient to justify even any award of maintenance in a short, childless marriage; see also N v N (Consent Order: variation) [1993] 2 FLR 868. See also n 50 below on whether awards on divorce will cover needs unconnected with the marriage.    [Back]

Note 46    Such awards may properly be understood as not being needs-based, but rather reflecting an entitlement arising from the parties’ contributions to a long marriage: see the abandonment of the “reasonable requirements” ceiling in White v White [2001] 1 AC 596. In so far as such reasoning reflects a “partnership” approach to ancillary relief awards, we consider it below.    [Back]

Note 47    We take this view even though some jurisdictions have extended (at least partly) needs-based remedies to cohabitants, including several Australian states and Canadian provinces; New Zealand law offers needs-based maintenance to cohabitants in addition to the division of relationship property, but the scope of that maintenance remedy is unclear: see J Miles “Financial Provision and Property Division on Relationship Breakdown: an analysis of the New Zealand legislation” (2004) 21 New Zealand Universities Law Review 268.     [Back]

Note 48    Although, perhaps somewhat inconsistently, means-tested welfare benefits law operates on the assumption – unenforceable between the parties as a matter of private law – that cohabitants do support each other; the “cohabitation rule” aggregates couples’ incomes and assets in assessing eligibility for means-tested benefits.    [Back]

Note 49    We acknowledge that the remedy currently available to the surviving cohabitant on death under the Inheritance (Provision for Family and Dependants) Act 1975 is needs-based. We shall examine the implications for remedies on death of our views on the proper basis for remedies on separation in Part 8.    [Back]

Note 50    The current scope of needs-based liability on divorce is unclear. In particular, although disability appears in the statutory checklist, Matrimonial Causes Act 1973, s 25, we are not aware of any reported case law which unambiguously establishes that spouses may be required, following divorce, to meet needs of their ex-spouse associated with long-term illness or disability. The court in Seaton v Seaton [1986] 2 FLR 398 did not impose a continuing obligation on the wife to support her disabled husband. But see K (formerly G) v G [2004] EWHC 88 (Fam), [2004] 1 FLR 997. The Court of Appeal in Fleming v Fleming [2003] EWCA Civ 1841, [2004] 1 FLR 667 seemed to accept that such liability could in principle arise. See also Bracklow v Bracklow [1999] 1 SCR 420 (Canada).    [Back]

Note 51    The courts also attach importance to providing the other parent with accommodation suitable for the children’s visits: M v B (Ancillary Proceedings: Lump Sum) [1998] 1 FLR 53; but there may not always be enough assets to enable the respondent to purchase a home: see for example B v B (Financial Provision: Welfare of Child and Conduct) [2002] 1 FLR 555. It seems that assets are often split in such a way that the primary carer gets the house, but receives no share in the pension, leaving that spouse vulnerable in the longer term: A Perry, G Douglas, M Murch, K Bader and M Borkowski, How parents cope financially on marriage breakdown (2000). Compare the big money cases often reported in the media, where equal sharing leaves each party with considerably more than either could ever meaningfully “need”. The Law Society has suggested guidelines for the sharing of assets: Financial Provision on Divorce: clarity and fairness (2003) pp 14-15.    [Back]

Note 52    See American Law Institute, Principles of the Law of Family Dissolution: Analysis and Recommendations (2002) p 790; R Bailey-Harris, “Dividing the Assets on Breakdown of Relationships Outside Marriage: Challenges for Reformers” in R Bailey-Harris (ed), Dividing the Assets on Family Breakdown (1998) p 86.    [Back]

Note 53    Particularly cases involving limited assets and debts: see paras 5.95 and 6.298.    [Back]

Note 54    New South Wales was the first state to legislate in this field and has the most extensive case law. The key, controversial and somewhat ambiguous decision is Evans v Marmont (1997) 42 NSWLR 70.    [Back]

Note 55    The original intention behind the provisions is evident from the Report on De Facto Relationships (1983) New South Wales Law Reform Commission Report No 36, para 7.42 and following. It seems that it was envisaged that a positive rather than negative (reliance loss/economic disadvantage) approach to valuing contributions would be adopted, and that experience from the divorce courts would guide valuation of domestic contributions.    [Back]

Note 56    Justice Chisholm, seminar paper “Looking for Destinations in Property Adjustment” (1995), cited by P Parksinson, “Quantifying the Homemaker Contribution in Family Property Law” (2003) 31 Federal Law Review 1, at 6, n 18.    [Back]

Note 57    See P Parkinson, “Quantifying the Homemaker Contribution in Family Property Law” (2003) 31 Federal Law Review 1, at 15, discussing cases within the matrimonial jurisdiction.    [Back]

Note 58    See, for example, Review of the Property (Relationships) Act 1984 (NSW) (2002) New South Wales Law Reform Commission Discussion Paper No 44, para 5.58 and following; and motivations for reforms to New Zealand’s matrimonial property regime, which was extended to de factos in 2001, in particular the introduction of additional compensation in cases of “economic disparity”: Property (Relationships) Act 1976 (as amended), s 15. Contrast Swedish law, which permits departure from equal sharing to let the property owner retain assets, but not to grant a greater share to the other party: Cohabitees Act 2003, s 15.    [Back]

Note 59    Combined with a principle of economic disadvantage.    [Back]

Note 60    For example, Sweden (which also has equal sharing for spouses and registered partners, but in relation to a wider asset pool than for cohabitants), New Zealand (which has largely the same rules for spouses, civil union partners and cohabitants). Note also the limited provisions relating to the ownership of particular assets in the Family Law (Scotland) Act 2006, ss 26-27, subject to the grant of relief under s 28.    [Back]

Note 61    Loosely speaking, detailed statutory rules in each jurisdiction prescribe which items of property fall within the pool subject to equal sharing. Parties retain outright ownership of assets not falling within that pool, save in so far as they are required to satisfy a claim under the general law in respect of those particular assets or a claim under some other principle of the family law scheme.    [Back]

Note 62    In English divorce cases, the parties’ contributions are one of eight factors to be considered, and, depending on the length of the marriage and the extent of the parties’ respective needs and available assets, they may often provide the basis for the court’s decision. It is likely that courts will take a similar approach to financial relief on the dissolution of civil partnerships. Compare White v White [2001] 1 AC 596; GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108; Foster v Foster [2003] EWCA Civ 565, [2003] 2 FLR 299.    [Back]

Note 63    See, for example, in relation to financial contributions of different value, Foster v Foster [2003] EWCA Civ 565, [2003] 2 FLR 299. See also Gazzard v Winders (1998) 23 Fam LR 716 (Australia), discussed in the Review of the Property (Relationships) Act 1984 (NSW) (2002) New South Wales Law Reform Commission Discussion Paper No 44, paras 5.55-5.56.    [Back]

Note 64    Some commentators and courts would qualify such an entitlement by reference to the factor of time, so that non-financial contributions would only yield an equal share if made over a long period: J Eekelaar, “Asset Distribution on Divorce – The Durational Element?” (2001) 117 Law Quarterly Review 552 and “Asset Distribution on Divorce – Time and Property” (2003) 33 Family Law 828; GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108. Compare R Bailey-Harris, Case Commentary: GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), (2003) 33 Family Law 386, 388. However, this approach may only be necessary and appropriate if the property to be shared is not confined to property acquired during the relationship, but also includes pre-acquired property. Compare Foster v Foster [2003] EWCA Civ 565, [2003] 2 FLR 299; A Scully-Hill, ”Presuming Equality or Doing the Section 25 Exercise?” (2003) 62 Cambridge Law Journal 570. See also the proposals of A Barlow and C Lind, ”A matter of trust: the allocation of rights in the family home” (1999) 19 Legal Studies 468.    [Back]

Note 65    See Foster v Foster [2003] EWCA Civ 565, [2003] 2 FLR 299, at [18] per Hale LJ.     [Back]

Note 66    See the terms of some rule-based schemes in other jurisdictions, and the practice of the English divorce courts: see, for example, White v White [2001] 1 AC 596 and subsequent cases dealing with inherited wealth, and GW v RW (Financial Provision: Departure from Equality) [2003] 2 FLR 236 and other cases, involving pre-acquired wealth. It is here, in particular, that the Australian divorce courts have run into difficulties: see P Parkinson, “Quantifying the Homemaker Contribution in Family Property Law” (2003) 31 Federal Law Review 1.    [Back]

Note 67    The Australian courts have been criticised for decisions in many divorce cases giving no clear guide as to how assets should be divided, particularly where the case involves pre- or post-acquired assets, inheritances and so on, as opposed to the standard case of the long marriage over the course of which the wealth was accumulated by the parties’ efforts: P Parkinson, “Quantifying the Homemaker Contribution in Family Property Law” (2003) 31 Federal Law Review 1; B Fehlberg, “With All My Wordly Goods I Thee Endow? The Partnership Theme in Australian Matrimonial Property Law” (2005) 19 International Journal of Law, Policy and the Family 176. Subject to the continuing debates about the relevance of the length of the marriage, pre-acquired and inherited wealth, and the remote possibility of the “stellar” contribution, English courts have largely come down against attempts to measure the parties’ contributions with any precision: Lambert v Lambert [2002] EWCA Civ 1685, [2003] 1 FLR 139; Parlour v Parlour [2004] EWCA Civ 872, [2005] Fam 171; but see Sorrell v Sorrell [2005] EWHC 1717 (Fam), [2006] 1 FLR 497.    [Back]

Note 68    Compare views of commentators referred to in n 64 above.    [Back]

Note 69    Compare the spectrum of relationships described by S Gardner, “Rethinking Family Property” (1993) 109 Law Quarterly Review 263, at 291-292, for the purposes of a developed law of trusts.    [Back]

Note 70    White v White [2001] 1 AC 596: it is used instead as a “yardstick” against which the judge’s decision must be checked to ensure that there is “good reason” for any outcome which does not involve equal sharing.    [Back]

Note 71    See the views of M Garrison, “Is Consent Necessary? An Evaluation of the Emerging Law of Cohabitant Obligation” (2005) 52 University of California Los Angeles Law Review 815, who argues against the extension of deferred community of property systems to cohabitants, in favour of more modest equitable remedies designed to respond to the particular economic impacts of the relationship, though she opposes statutory remedies devised on that basis specifically for “cohabitants”    [Back]

Note 72    And enshrined in a contract or declaration of trust over particular assets.    [Back]

Note 73    Equivalent research is currently being undertaken on money management by same-sex couples, by C Burgoyne (University of Exeter) and V Clarke (University of West of England).    [Back]

Note 74    See J Pahl, “Individualisation in Couple Finance: Who Pays for the Children?” (2005) 4 Social Policy and Society 381; C Vogler, “Cohabiting couples: rethinking money in the household at the beginning of the twenty first century” (2005) 53 Sociological Review 1.    [Back]

Note 75    Of over 1.2 million cohabiting home owners in England in 2004-5, over half a million were solely owned, giving a ratio of about 40:60 solely: jointly owned, though that may sometimes simply be the result of property being acquired before the relationship began (and so which could for that reason be excluded from a scheme based on partnership sharing, rather than a deliberate decision to maintain financial independence). Only 14% of cases involving spouses involved sole ownership by one spouse: data from Office of the Deputy Prime Minister, Survey of English Housing (2004-5), tables “Households: by household type by tenure” and “Owner-occupier households: by number of owners by whether own outright or buying with a mortgage”. Data for Wales is collected separately; data by reference to relationship status of household reference person is not yet available.     [Back]

Note 76    Unsurprisingly, given the current law, concepts of individual ownership currently drive cohabitants’ settlements on separation: S Arthur, J Lewis, M Maclean, S Finch and R Fitzgerald, Settling Up: Making Financial Arrangements After Divorce or Separation (2002).    [Back]

Note 77    See the evidence from a qualitative study of 42 couples between (first) marriage and the first wedding anniversary: C Burgoyne, J Reibstein, A Edmunds and V Dolman, “Money management systems in early marriage: factors influencing change and stability” (2006) Journal of Economic Psychology (forthcoming).     [Back]

Note 78    C Vogler, “Cohabiting couples: rethinking money in the household at the beginning of the twenty first century” (2005) 53 Sociological Review 1.    [Back]

Note 79    See also the view of P Parkinson, “Quantifying the Homemaker Contribution” (2003) 31 Federal Law Review 1.     [Back]

Note 80    Omnibus Survey findings from a study conducted in 1995 for the Law Commission by the Centre for Socio-Legal Studies. The question was asked in relation to both married and cohabiting couples, with only slightly less support in the cohabiting cases than the married cases. The following percentages of respondents thought that the primary carer (female) should get half the value of the house: when there were young children still at home, 77% (wives) and 73% (female cohabitants); when the children were independent, 80% (wives) and 73% (female cohabitants). A significant number of respondents favoured giving the entire value of the house to the primary carer when the children were still dependent.     [Back]

Note 81    31% half share, 20% a third, 29% nothing.    [Back]

Note 82    E Cooke and A Barlow, “Community of Property: a Regime for England and Wales?”, paper delivered at Centre for the Study of the Family, Law and Social Policy, University of Staffordshire (February 2006). 75 respondents, interviewed in depth.    [Back]

Note 83    Over half of respondents held this view in relation to a specific vignette involving a seven year relationship with no children, even if the parties were married; the suggestion of sharing other than by reference to financial contribution was even less popular for a similar cohabiting couple.     [Back]

Note 84    Only 10 out of 75 respondents favoured different treatment of spouses and cohabitants in cases involving children. 45 out of 75 respondents favoured equal division (with either deferred or, less popularly, immediate sale) in the cohabitants’ case.     [Back]

Note 85    C Smart and P Stevens, Cohabitation Breakdown (2000). See para 2.21 above on the incidence of unplanned pregnancies amongst spouses and cohabitants.    [Back]

Note 86    Particularly if the available capital was quite limited.    [Back]

Note 87    Compare the proposals of A Barlow and C Lind, “A matter of trust: allocation of rights in the family home” (1999) 19 Legal Studies 468.     [Back]

Note 88    Though there could be considerable scope for dispute about what property should be subject to sharing on this basis.    [Back]

Note 89    The Scottish Law Commission reached a similar conclusion in 1992, hence the omission from the principles adopted for financial relief between cohabitants on separation of the “fair sharing” principle from Family Law (Scotland) Act 1985, s 9(1)(a). See Report on Family Law (1992) Scot Law Com No 135, para 16.15.    [Back]

Note 90    Particularly given the tendency for many cohabitants to drift into and through their relationships, with possibly conflicting motivations and expectations as to how the relationship might develop: see J Mee, The Property Rights of Cohabitees (1999) p 11.    [Back]

Note 91    They were not, presumably, made on condition of the parties’ relationship continuing. Compare Law of Property (Miscellaneous Provisions) Act 1970, s 3 regarding engaged couples.    [Back]

Note 92    Consider facts such as Lissimore v Downing [2003] 2 FLR 308.    [Back]

Note 93    Contrast the sort of basic provision which respondents would certainly have had to provide for themselves, without the relationship; for example, the respondent who has received rent-free accommodation would otherwise have had to live somewhere, if not somewhere as luxurious as the home the applicant happened to provide.    [Back]

Note 94    Some Australian commentary questions the appropriateness of allowing such expenditure to be brought into account: J Wade et al, Australian De Facto Relationships Law, para 8-290, comment on Wilcock v Swain (1986) 11 Fam LR 302 (Australia). It is suggested that such contributions should be regarded as agreed living expenses, which simply reduce the fund available for distribution on separation and cannot be used to counterbalance a claim by the other party.    [Back]

Note 95    The contribution of these activities to “informal” GDP is substantial: Office for National Statistics, Social Trends 36 (2006) p 86 and table 5.27.     [Back]

Note 96    Less tax and the benefit of free bed and board during the relationship.    [Back]

Note 97    See, for example, D v McA (1986) 11 Fam LR 214 (Australia).    [Back]

Note 98    Eg Black v Black (1991) 15 Fam LR 109 (Australia); Evans v Marmont (1997) 42 NSWLR 70 (Australia).    [Back]

Note 99    Black v Black (1991) 15 Fam LR 109, 117, per Clarke JA. See also observations of Watkins J in Regan v Williamson [1976] 1 WLR 305, 308 and 309, considering damages for the loss of a mother’s services in the context of a fatal accidents case.    [Back]

Note 100    P Parkinson, “Quantifying the Homemaker Contribution” (2003) 31 Federal Law Review 1, at 17-18.    [Back]

Note 101    See Coyle v Coyle 2004 FamLR 2 (Scots), at [38].    [Back]

Note 102    See the analysis by P Parkinson, “Quantifying the Homemaker Contribution” (2003) 31 Federal Law Review 1, at 11 and 15-20; contrast the concerns of commentators L Flynn and A Lawson, “Gender, Sexuality and the Doctrine of Detrimental Reliance” (1995) 3 Feminist Legal Studies 105, at 108, that failing to take non-financial contributions into account leaves no room to reward applicants who have done most of the domestic work, as well as working outside the home. In so far as this imbalance in fact had no economic impact on the parties, Parkinson views this as a matter of relational rather than economic justice, and so not something that should be brought into account in granting financial relief.    [Back]

Note 103    See below, at para 6.150.    [Back]

Note 104    See para 6.116 above: this approach would bring parties’ economic sacrifices into account as well.    [Back]

Note 105    See n 57 and associated text above.    [Back]

Note 106    Which would also call for considerable care in conducting the balancing exercise and avoiding the risk of double-counting: for example, by rewarding an applicant both for the value of rent-free accommodation provided to the other party, and the positive value of mortgage payments made; or by providing a “commercial rate” award for non-financial contributions and a full economic disadvantage claim.    [Back]

Note 107    See Example 1 in Part 7.    [Back]

Note 108    It might be possible in many cases to regard such contributions as cancelling each other out in any event: for example, where one gives up paid work to make domestic contributions and the other provides financial support during the relationship.    [Back]

Note 109    See Examples 1, 1A and 8A in Part 7.    [Back]

Note 110    The applicant in this case ought to be able to demonstrate that his or her payments were necessary for the respondent to be able to afford the mortgage, as there would otherwise be insufficient connection between those payments and the retained benefit.     [Back]

Note 111    This would firmly enshrine the indirect financial contribution principle which remains elusive in the law of trusts.    [Back]

Note 112    See Examples 7 and 7A in Part 7. Compare Matrimonial Property and Proceedings Act 1970, s 37.    [Back]

Note 113    See P Parkinson, “The Property Rights of Cohabitees – is Statutory Reform the Answer?”, in A Bainham, D Pearl and R Pickford (eds), Frontiers of Family Law (2nd ed 1995) ch 21, comparing “restitutionary” and “partnership” approaches.    [Back]

Note 114    Special anti-avoidance rules (as used in divorce cases) would, of course, apply to deal with deliberate attempts to frustrate the applicant’s claim by the disposal of assets on separation; such rules would enable the courts either to recover such property in some circumstances, or prevent the respondent from disposing of it in the first place. See also discussion of financial and litigation misconduct at para 6.236 below.    [Back]

Note 115    See for example the failed economic advantage claim in Coyle v Coyle 2004 FamLR 2, at [35]-[39].    [Back]

Note 116    Compare S Gardner, “Rethinking Family Property” (1993) 109 Law Quarterly Review 263, at 283-285 on the impermissibility of “subjective devaluation” in these cases.    [Back]

Note 117    There might in some cases be potential for the argument to be framed instead in terms of economic disadvantage, for example in relation to lost opportunities to pay into a pension.    [Back]

Note 118    See Examples 1-1B, 3, 4, 6, 9 and 10 in Part 7.    [Back]

Note 119    See Example 9 in Part 7.    [Back]

Note 120    We do not consider it to be the job of family law to deal with wider issues relating to women’s earnings and employment, such as occupational segregation and unequal pay, as highlighted by the Women and Work Commission, Shaping a Fairer Future (2006), by aiming invariably to place parties following separation on an equal economic footing. Our focus is on the impact on earning capacity of the parties’ relationship.    [Back]

Note 121    Eekelaar has argued that compensatory claims ought to be scaled by reference to the living standard of the respondent (in order to avoid what is to some extent an inherently hypothetical inquiry into the scale of economic disadvantage suffered by the applicant in terms of earning capacity and so on) and having regard to the duration of the relationship and opportunities to mitigate the loss: “Friendship”, in Family Law and Personal Life (2006), in press. That might not be sufficient where the disadvantage stems from child-care responsibilities which may last much longer than the relationship itself.    [Back]

Note 122    See also the further limitation that would often be imposed by the respondent’s needs and financial obligations to others: para 6.223 below.    [Back]

Note 123    See paragraph 6.131 above. Compare Eekelaar’s analysis of this issue and the object of the loss in “Friendship”, in Family Law and Personal Life (2006), in press.    [Back]

Note 124    This assumes that parties share income equally within the household where one is not working full-time. However, research suggests that this is often not the case: see work discussed by K Rake (ed), Women’s Incomes over the Lifetime (2000) pp 92-3. If an equal sharing or partnership approach were adopted as a positive measurement of parties’ contributions, the applicant’s share in the fruits of the partnership might be regarded in itself as ample recompense for any past earnings losses.    [Back]

Note 125    And after any award had been made reflecting the positive value of the parties’ contributions: see para 6.216 below on the interaction of the two claims.    [Back]

Note 126    Though those who can afford to do so would undoubtedly seek to calculate the precise scale of the sacrifices made.    [Back]

Note 127    The case of choosing to work unpaid in the respondent’s business, thereby losing the opportunity to pay into a pension fund, perhaps sits on the cusp of this distinction, in so far as the applicant here has chosen to offer clearly marketable services for free.    [Back]

Note 128    If it were proved that the applicant had foregone a clear opportunity to return to work against the wishes of the respondent, one response might be to say that the respondent could be expected to share some responsibility for the impact of choices made during the relationship – continuation of the relationship may be regarded as assent to the consequences of the partner’s choice – but ought not to be forced to share responsibility for continuing, avoidable effects of those choices following separation. Contrast the approach taken in X v X [Economic disparity] [2006] NZFLR 361 (New Zealand).    [Back]

Note 129    P Parkinson, “Reforming the Law of Family Property” (1999) 13 Australian Journal of Family Law 117, at 136.    [Back]

Note 130    American Law Institute, Principles of the Law of Family Dissolution: Analysis and Recommendations (2002). The ALI proposals would not require applicants to prove that the relationship had in fact caused them any economic disadvantage; the remedy would be available wherever their earning capacity was substantially less than the respondent’s.    [Back]

Note 131    The available data report findings for married and cohabiting couples as one group: see data from 1996 reported by C Hakim, Work-Lifestyle Choices in the 21st Century (2000) p 209, table 7.4.    [Back]

Note 132    Contrast the American proposals which do, depending on the length of the relationship, have that aim: the longer the relationship, the greater the applicant’s justification for seeking equalisation with the respondent at separation: American Law Institute, Principles of the Law of Family Dissolution: Analysis and Recommendations (2002) ch 5.    [Back]

Note 133    M Harrison, K Funder and P McDonald, “Principles, Practice and Problems in Property and Income Transfers” in K Funder, M Harrison and R Weston (eds), Settling Down: pathways of parents after divorce (1993). See also P Parkinson, “Quantifying the Homemaker Contribution” (2003) 31 Federal Law Review 1, at 48-50. It is necessary to use data based on women’s earnings in order to protect private law respondents from being required to compensate their former partners for the gendered nature of the labour market: see n 120 above.     [Back]

Note 134    We have explained why, if the loss of earnings and earning capacity derived from disability rather than from parenthood, we do not think it appropriate to require the respondent to pay: see discussion of needs-based relief above, at para 6.62 and following.     [Back]

Note 135    Property (Relationships) Act 1976, s 15 (New Zealand). The first reported case to consider the provision (Fischbach v Bonnar [2002] NZFLR 705) adopted a technique described as “judicial plucking out of the air”: B Atkin, “Editorial: Courts trudge through statutory sludge” (2002) 4 Butterworths Family Law Journal 31. Since then, the courts have been more rigorous, but approaches differ.     [Back]

Note 136    Family Law (Scotland) Act 1985, s 9(1)(b), which applies on divorce, now also forms the basis of the new regime for cohabitants in the Family Law (Scotland) Act 2006, s 28. There are no reported cases involving cohabitants yet. The Scottish courts have been criticised for making insufficient use of s 9(1)(b) in divorce cases, instead favouring the use of the “serious financial hardship” principle under Family Law (Scotland) Act 1985, s 9(1)(e); this principle is not available to cohabitants under the 2006 Act: J Thomson, Family Law in Scotland (4th ed 2002) p 159.    [Back]

Note 137    The New Zealand legislation offers little explicit guidance to the courts regarding the operation of the “economic disparity” principle, and judges and academics have struggled to identify an appropriate approach: for analysis, see B Atkin and W Parker, Relationship Property in New Zealand (2001) ch 5 and J Miles, “Dealing with Economic Disparity: an analysis of section 15 Property (Relationships) Act 1976” [2003] New Zealand Law Review 535. In Scotland, guidance offered by divorce cases must be read in light of the fact that the economic advantage/disadvantage principles in that context are part of a wider scheme, which starts with “fair” (usually equal) sharing of the matrimonial property pool; in cohabitants’ cases, they are free-standing principles which, along with awards based on the economic burden of child-care following separation, provide the sole basis for awards. We must await decisions under the Family Law (Scotland) Act 2006 to see how the courts interpret them in this context.    [Back]

Note 138    V v V [2002] NZFLR 1105: applicant was qualified primary school teacher at the start of the relationship and the standard pay scale for that public sector job made it straightforward to determine where the applicant would have been had it not been for her career break. McGregor v McGregor (No 2) [2003] NZFLR 596: applicant worked as a secretary in a specialised field, in relation to which expert evidence from a recruitment consultant was adduced.     [Back]

Note 139    See Hardie Boys J in Turner v Turner (HC Dunedin, AP 16/86, 21 November 1986), quoted in Mackie v Mackie [1993] NZFLR 213, 217-8.    [Back]

Note 140    J Thomson, Family Law in Scotland (4th ed 2002) p 157.    [Back]

Note 141    Report on Family Law (1992) Scot Law Com No 135, para 16.20.    [Back]

Note 142    Wilson v Wilson 1999 SLT 249.    [Back]

Note 143    Adams v Adams (No 1) 1997 SLT 144; Coyle v Coyle [2004] FamLR 2.    [Back]

Note 144    Attitudes, even of individual judges, vary: compare remarks of Lord McCluskey in Cunniff v Cunniff 1999 SLT 992, 997F-I; and Ali v Ali (No 3) 2003 SLT 641, 647I-648D.    [Back]

Note 145    Loudon v Loudon 1994 SLT 381.    [Back]

Note 146    Coyle v Coyle 2004 FamLR 2, at [49]-[50] and [52].    [Back]

Note 147    The new Act does not include the “fair account” formula, but simply confers on the court a discretion to make orders “having regard to” the economic disadvantage, and “in respect of” the economic burden of child-care.    [Back]

Note 148    P Parkinson, “Reforming the Law of Family Property” (1999) 13 Australian Journal of Family Law 117, at 137.    [Back]

Note 149    And/or perhaps to retraining costs: see para 6.229.     [Back]

Note 150    Contrast New Zealand, where claims for economic disparity take effect over the relationship property pool: Property (Relationships) Act 1976, s 15. Scottish law does not confine economic disadvantage claims in that way.    [Back]

Note 151    We consider below the separate question of whether awards should take the form of capital or periodical orders.    [Back]

Note 152    Family Law (Scotland) Act 2006, s 28(2)(b). The Scottish Parliament consider it appropriate to include the economic burden of child-care following separation, a principle which covers child-care costs, as an element of financial relief between cohabitants, as something distinct from child maintenance (“aliment”): Scottish Parliament, Justice 1 Committee Official Report, Family Law (Scotland) Bill Stage 2 debates, col 2378 (23 November 2005), Deputy Minister for Justice (Hugh Henry).    [Back]

Note 153    J Thomson, Family Law in Scotland (4th ed 2002) p 160.    [Back]

Note 154    Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002, SI 2002 No 2005, reg 20(3), as amended. Note the concerns that child-care costs may still be too high for many parents: see Part 4, n 32. There may also be cases where the tax credit is not available because the parent is not eligible for it.    [Back]

Note 155    Child Support, Pensions and Social Security Act 2000, amending, amongst other legislation, Child Support Act 1991, s 11 and sch 1: based on a percentage of the non-resident parent’s net income, according to the number of children for which it is payable. There are still large numbers of cases in the system which are subject to the old formula: N Wikeley, “Child Support – Looking to the Future” (2006) 36 Family Law 360, at 361, discussing the future of child support in light of the current Henshaw review.    [Back]

Note 156    Contrast the more limited powers of the Scottish courts to order “aliment” for the child: Family Law (Scotland) Act 1985, ss 1-4, to the extent that the courts’ jurisdiction is not excluded by the Child Support Act 1991, s 8. Note the express provision for child-care costs in s 4(4) of the 1985 Act.    [Back]

Note 157    And not, for example, by way of a one-off capital sum or the provision of accommodation for the child.    [Back]

Note 158    Child Support Act 1991, s 11 and sch 1, as originally enacted.    [Back]

Note 159    See para 3.68 above. The child support carer element was calculated by reference to income support levels, not the standard of living of the parents and child. For discussion see S Cretney and J Masson, Principles of Family Law (6th ed 1997) pp 512-3. It was controversial amongst non-resident parents, particularly former cohabitants, who objected to having to support their former partners in this way when (unlike former spouses) they had never been under any legal obligation to support the parent with care. The view of the Scottish Law Commission when the old child support formula was in force was that there was no need for the “economic burden of child-care” principle to be adopted for cohabitants: Family Law (1992) Scot Law Com No 135, para 16.16.    [Back]

Note 160    It simply covered the welfare benefit otherwise payable to that individual, and so was not tailored to the actual costs of professional child-care or the actual extent of the loss of earnings and earning capacity incurred by the parent with care.    [Back]

Note 161    Department of Social Security, A new contract for welfare: Children’s Rights and Parents’ Responsibilities (1999) para 2.5.     [Back]

Note 162    That is to say, not just in those “big money” cases that exceed the jurisdictional limit of the Agency: Child Support Act 1991, s 8(7).    [Back]

Note 163    Re L M (a minor), judgment of 9 July 1997, Court of Appeal (unreported): a case regarding a 15 month old child.    [Back]

Note 164    Re L M (a minor), judgment of 9 July 1997, Court of Appeal (unreported), per Sir Stephen Brown, President.    [Back]

Note 165    Child Support Act 1991, s 8(6); F v G (Child: Financial Provision) [2004] EWHC 1848 (Fam), [2005] 1 FLR 261.    [Back]

Note 166    See Example 4 in Part 7.    [Back]

Note 167    See Part 9 n 71.    [Back]

Note 168    See Example 1A, and the discussion in Part 4 regarding the paradox of Children Act 1989, sch 1, for this party: the older the children, the less long such a party will be indirectly benefited by remedies made for the benefit of the children, despite the fact that the carer has been performing that role for many years.    [Back]

Note 169    Perhaps with no overnight stay.    [Back]

Note 170    Family Law (Scotland) Act 2006, s 28(2)(b). It was suggested that a claim could be made against the respondent parent for aliment of the child in such cases.    [Back]

Note 171    Whether or not that had been formally enshrined, for example, in a joint residence order.    [Back]

Note 172    See Example 1B in Part 7.    [Back]

Note 173    Or a luxurious lifestyle.     [Back]

Note 174    See para 6.144 above.    [Back]

Note 175    The interaction of Schedule 1 to the Children Act 1989 with any new scheme is considered below at para 6.259.    [Back]

Note 176    In our view, the same would not apply to payments of child support. These are legally required from the non-resident parent (respondent) as a contribution towards that child’s needs. The parent with care (applicant) does not derive a benefit from those payments which is equivalent to that provided by accommodation necessarily shared with the child. However, the fact of the respondent’s child support payments would clearly be relevant to the court’s decision about what relief, if any, to grant in so far as they reduced the extent of the resources available for that purpose.    [Back]

Note 177    By confining the scheme to retained benefits and economic disadvantage following separation, there is considerably less risk of double-counting than might arise under a “global accounting” scheme of the sort we have rejected. If, contrary to our currently preferred view, a wider “partnership” approach were adopted as a way of positively valuing contributions, that would further limit the role required of an accompanying economic disadvantage principle; a partnership award might often be expected to reduce the disparity between the parties on separation considerably.    [Back]

Note 178    In some big money cases, the scale of the assets is almost meaninglessly large, in the sense that the income and living standards they provide can be attained with only part of the massive fortune involved – the surplus makes no difference.    [Back]

Note 179    See n 51.    [Back]

Note 180    See para 6.265.    [Back]

Note 181    See para 6.67 and following.    [Back]

Note 182    They would not necessarily take the same view when dealing with cohabitants.    [Back]

Note 183    See Examples 8A and 9 in Part 7.    [Back]

Note 184    Though, conversely, it might also encourage parties to exaggerate claims in an attempt to ensure that they overcame that threshold.    [Back]

Note 185    But see Miller v Miller [2005] EWCA Civ 984, [2006] 1 FLR 151, heard on appeal in the House of Lords in February 2006.    [Back]

Note 186    Facing the Future: A Discussion Paper on the Ground for Divorce (1988) Law Com No 170, and Ground for Divorce (1990) Law Com No 192. See also the finding of recent research by financial and business advisers Grant Thornton that 96% of solicitors from the top 100 family law firms think that conduct should not be taken into account on ancillary relief applications because it would result in longer and more hostile proceedings: reported in “Family lawyers fear inclusion of conduct in divorces” (2006) 150 Solicitors Journal 485.    [Back]

Note 187    For example Clark v Clark [1999] 2 FLR 498 and Le Foe v Le Foe and Woolwich plc [2001] 2 FLR 970; see generally S Cretney, J Masson and R Bailey-Harris, Principles of Family Law (7th ed 2003) paras 14-062 to 14-063.    [Back]

Note 188    See discussion in Part 11.    [Back]

Note 189    For examples from the ancillary relief jurisdiction of domestic violence being taken into account see Jones v Jones [1976] Fam 8; H v H (Financial Provision; Conduct) [1994] 2 FLR 801; H v H (Financial Relief: Attempted Murder as Conduct) [2005] EWHC 2911 (Fam) (unreported). See also the views of P Parkinson, “Quantifying the Homemaker Contribution” (2003) 31 Federal Law Review 1, at 50-51 on situations where the loss arising at the end of a relationship can be regarded as self-inflicted.     [Back]

Note 190    And to civil partners under the Civil Partnership Act 2004, sch 5.    [Back]

Note 191    With the obvious exception of variation of nuptial settlements.    [Back]

Note 192    See Part 4.    [Back]

Note 193    Orders for the benefit of children are not listed separately here. Children Act 1989, sch 1, replicates for the children of cohabitants and others the range of orders available to the children of spouses and civil partners under the Matrimonial Causes Act 1973 and the Civil Partnership Act 2004, with the apparent exception of the order for sale.    [Back]

Note 194    Property (Relationships) Act 1976, Family Proceedings Act 1980.    [Back]

Note 195    See J Wade et al, Australian De Facto Relationships Law, para 7-955.    [Back]

Note 196    This view has been accepted in the context of ancillary relief on divorce: McFarlane v McFarlane, Parlour v Parlour [2004] EWCA Civ 872, [2005] Fam 171, decided that periodical payments ought not only to be deployed for the purpose of meeting needs.    [Back]

Note 197    See Example 1 in Part 7.    [Back]

Note 198    This includes step-children and other children treated by them as children of the family, as well as the children of both of them: Matrimonial Causes Act 1973, s 52, excluding foster children. See also the Civil Partnership Act 2004, sch 5, para 20.    [Back]

Note 199    See para 4.34.    [Back]

Note 200    See para 6.220 above.    [Back]

Note 201    We address the procedural interaction of claims under Children Act 1989, sch 1, and those under any new scheme in Part 11.    [Back]

Note 202    Matrimonial Causes Act 1973, s 25A. See McFarlane v McFarlane, Parlour v Parlour [2004] EWCA Civ 872, [2005] Fam 171.    [Back]

Note 203    The clean break may even extend beyond the grave, barring each party from making a claim against the other’s estate on death: Inheritance (Provision for Family and Dependants) Act 1975, s 15 and s 15 ZA. We discuss this in Part 8.    [Back]

Note 204    In another sense, a clean break would be fostered by our proposed short limitation period for the making of claims between cohabitants, which would (by contrast with spouses’ cases) prevent the making of an original application for relief long after the parties had separated: see Part 11.    [Back]

Note 205    Suter v Suter [1987] Fam 111, Atkinson v Atkinson [1996] 1 FLR 51, Fleming v Fleming [2003] EWCA Civ 1841, [2004] 1 FLR 667.    [Back]

Note 206    Argued in February 2006, on appeal from the Court of Appeal: [2004] EWCA Civ 872, [2005] Fam 171.    [Back]

Note 207    Or formation of a civil partnership. Matrimonial Causes Act 1973, s 28 and Civil Partnership Act 2004, sch 5, para 47.    [Back]

Note 208    In which case an application for financial relief from the new partner could be made in the event of separation.    [Back]

Note 209    See also P Parkinson, “Reforming the Law of Family Property” (1999) 13 Australian Journal of Family Law 117, at 137-138: this question also has implications for the calculation of capital awards, particularly if the applicant is in a new relationship at the time when the application is considered – ought the capital sum to be discounted to take account of the contingency (or actuality) of a new relationship? If anything, and contrary to the clean break principle, this might make the use of periodical payments (terminating on a new relationship) appealing, as a means of guarding against both over- or under-compensation.    [Back]

Note 210    And equivalent provisions of the Civil Partnership Act 2004.    [Back]

Note 211    Suter v Suter [1987] Fam 111, Atkinson v Atkinson [1996] 1 FLR 51, Fleming v Fleming [2003] EWCA Civ 1841, [2004] 1 FLR 667.    [Back]

Note 212    See Part 9.    [Back]

Note 213    Orders will automatically terminate if the parties live together for more than six months: Domestic Proceedings and Magistrates’ Courts Act 1978, s 25.    [Back]

Note 214    Or form a civil partnership which is later dissolved.    [Back]

Note 215    For the purposes of Matrimonial Causes Act 1973, s 25(2)(d) and (f).    [Back]

Note 216    See for example CO v CO (Ancillary Relief: Pre-Marriage Cohabitation) [2004] EWHC 287 (Fam), [2004] 1 FLR 1095; GW v RW (Financial Provision: Departure from Equality) [2003] EWHC 611 (Fam), [2003] 2 FLR 108. Dates of engagement have also been considered pertinent, even if the parties are not then cohabiting: J v J (Ancillary Relief: Periodical Payments) [2004] EWHC 53 (Fam), [2004] 1 FCR 709. For criticism, see S Gilmore, “Duration of marriage and seamless preceding cohabitation?” (2004) 34 Family Law 205; J Edwards, “Duration of marriage: From ‘I do’, ‘I promise’ or ‘I may’?” (2004) 34 Family Law 726.    [Back]

Note 217    And with equivalent provisions of the Civil Partnership Act 2004.    [Back]

Note 218    Where the cohabitants were engaged or had agreed to form a civil partnership, consideration would also have to be given to the interaction of any new scheme with the Law Reform (Miscellaneous Provisions) Act 1970, ss 2-3 (and Civil Partnership Act 2004, s 74). See Cox v Jones [2004] EWHC 1486 (Ch), [2004] 2 FLR 1010.    [Back]

Note 219    J Mee, “Property rights and personal relationships: reflections on reform” (2004) 24 Legal Studies 414, at 447.    [Back]

Note 220    That would be a requirement in some cases of retained benefit, though the relief granted would not necessarily have to derive from that source.    [Back]

Note 221    See Tee v Tee [1999] 2 FLR 613 in the context of divorce. Third party rights over any property belonging to either party would clearly still take priority.    [Back]

Note 222    It would, of course, remain relevant to the extent that it is necessary to establish the parties’ ownership during the relationship and where third party interests are at stake. Moreover, if the new legislation were not invoked by either party, the general law would apply by default. We do not think it would be appropriate to provide that the scheme should apply as a code to the exclusion of the general law (contrast Property (Relationships) Act 1976 (New Zealand), s 4); our scheme would be remedial, rather than generating entitlements to defined shares in assets on separation.    [Back]

Note 223    Save where an express trust had conferred a beneficial share on the applicant in any event.     [Back]

Note 224   One important difference is that orders for sale can be made for the benefit of children under the Matrimonial Causes Act 1973, but not under the Children Act 1989.     [Back]

Note 225    Children Act 1989, sch 1, para 16(2); J v J (A Minor: Property Transfer) [1993] 2 FLR 56.    [Back]

Note 226    Meaning “to maintain”.    [Back]

Note 227    Family Law (Scotland) Act 1985, s 1. See J Thomson, Family Law in Scotland (4th ed 2002) p 198.    [Back]

Note 228    See para 2.7(2).    [Back]

Note 229    There could be a case for extending non-parent liability, as in Scotland, beyond even cohabiting relationships. To that extent, the issue must be regarded as being outside our terms of reference.    [Back]

Note 230    Children Act 1989, sch 1, para 4(2).    [Back]

Note 231    Contrast the cases where neither cohabitant is a parent of the child.    [Back]

Note 232    The nature of the assets, in particular their liquidity, may impose some constraints on the form of order that can be made, if not the quantum of the relief.    [Back]

Note 233    In which case the tenancy transfer remedy, combined with the potential payment of housing benefits, offer a solution.    [Back]

Note 234    See para 4.38.    [Back]

Note 235    See Part 11.    [Back]

Note 236    Though in appropriate cases, an order could be made for periodical payments or a lump sum to cover all or part of the debt formally owed by just one party.    [Back]

Note 237    The law relating to insolvency, mortgagees’ and other creditors’ rights is beyond the scope of this project. Third party rights also impose restrictions where, for example, the parties’ home is co-owned by another family member. For research into how couples currently manage debts on separation, see S Arthur, J Lewis, M Maclean, S Finch and R Fitzgerald, Settling Up: Making Financial Arrangements After Divorce or Separation (2002), especially pp 46-7.    [Back]

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You are here: BAILII >> Databases >> The Law Commission >> Cohabitation: The Financial Consequences of Relationship Breakdown [2006] EWLC 179(6) (04 May 2006) URL: http://www.bailii.org/ew/other/EWLC/2006/179(6).html Cite as: [2006] EWLC 179(6)