Business

'Unfair' laws for cohabiting couples highlighted again

Leonard Kernott and Patricia Jones
Image caption An earlier judgement about Leonard Kernott and Patricia Jones was a landmark one for unmarried couples

The recent English county court case of Pamela Curran and Brian Collins highlights the difficulties that arise when unmarried couples in England and Wales separate and it should serve as a warning to others in a similar position.

Pamela, 55, and Brian, 52, had been in a relationship for 30 years and together ran a successful kennel company, the Haven Boarding Kennels and Cattery, in Ashford, Kent.

Both the business and the family home were in Mr Collins' sole name which meant that when his relationship with Ms Curran collapsed, she was effectively left penniless.

Ms Curran described how she had trusted that she would be provided with a "fair share" of the assets if the relationship broke down.

She was claiming a share in the home and business of her partner.

However, the county court judge ruled that Ms Curran had no right to share in the family home or the business, stating that he had no other option but to ignore his "human sympathies" and "apply the law" as he saw it.

On her subsequent application for permission to appeal against this decision, she told Lord Justice Toulson that she had "been destroyed" by the events following her separation from Mr Collins.

She said that despite working hard in the business, which Mr Collins had suggested to third parties was a partnership, she had been left with nothing by the court.

Persistent myth

Ms Curran has now been allowed to appeal against the decision, as Lord Justice Toulson recognised that: "The law of property can be harsh on people, usually women, in that situation. Bluntly, the law remains unfair to people in the appellant's position... "

In order for her appeal to be successful, Ms Curran will have to show that the couple originally intended for her to have a share in the property and business which was originally purchased for £750,000.

There are many unmarried couples who believe that they are protected by common law as if they were a wife or a husband.

This is a myth which is not supported by the law.

When an unmarried couple separates, each party retains the assets which are in each of their names - irrespective of whether that is the family home or the family business.

To contest this, the party whose interest has been undocumented will have to go through the struggle of establishing that there was a joint intention for them to have an interest.

Is there any hope for Ms Curran?

In the case of Leonard Kernott and Patricia Jones, the Supreme Court decided in 2011 that the couple's jointly-owned property should be divided 90% to 10% in favour of Ms Jones, rather than 50/50 as was suggested by their joint ownership.

The court decided that this was a fair division of the property, given that Ms Jones had been paying the entire mortgage for the past 13 years.

The common problem in both of these cases was that both couples failed to set out in writing what the objective for ownership was at the outset.

Put it in writing

Whether an asset is to be held in joint names or one party's sole name, a document clearly stating what the parties intend for each one to own allows for transparency and certainty.

Image caption Asserting your rights without a written agreement is fraught with difficulty, says Katie O'Callaghan

In the absence of such clarity, the court will interpret the intention based on fairness, by looking at the behaviour of both parties during the period of ownership.

Both financial and non-financial contributions can be taken into account.

But the extensive examination process of the relationship can prove costly and time-consuming and most worrying of all is that the outcome is, of course, uncertain.

The best way for anybody purchasing a property or a business with anyone else - be it a partner, a friend or a family member - is to have a formal document such as a cohabitation agreement or a declaration of trust.

Both of these can be prepared by family lawyers to record each person's share, who has contributed what, and what will happen should the asset be sold or if the relationship breaks down.

Law is still unfair

The government has not yet stepped in to rectify the current law described by Lord Justice Toulson as "unfair".

It appears unlikely to do so in the near future.

Until that happens, judges will continue to be constrained to apply the law as it is.

Ms Curran's situation highlights the need for couples who are business partners, as well as those living together, to have a proper written agreement in place.

Couples who cohabit simply do not have the same rights and responsibilities afforded to them by the law as married couples.

Therefore it is important for them to try to protect their financial position as best they can from the outset.

Purchasing a house with someone is an exciting time, but it is also a serious financial investment.

As such, the easiest, most efficient way to protect oneself legally against this old-fashioned and outdated aspect of property law is to record each party's intentions in a legally binding document at the outset.

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