The Division of Property Following Separation - Essay Example

Should the Law continue to treat married couples differently from unmarried cohabitants in property disputes? Introduction The division of property following separation continues to treat married couples and unmarried cohabitants differently. Post-separation property disputes for married couples are dealt with under the Matrimonial Causes Act 1973 (as amended) (Matrimonial Causes Act 1973, Section 25). However, with respect to unmarried cohabitants, there are no statutory provisions conferring upon the courts the kind of discretion accorded the courts relative to married couples under the Matrimonial Causes Act 1973. Instead, post-separation property disputes between unmarried cohabitants are resolved by reference to the law of trusts (George, 2008). The decision of the House of Lords in Stack v Dowden addressed one issue arising between unmarried cohabitants in a post-separation property dispute: the correct division of the beneficial interests in the absence of an express declaration of trust in a title deed where both cohabitants hold the legal title (Stack v Dowden, 2007). However, Stack v Dowden does raise some issues about the appropriate principles that should be applied to property disputes in the family contexts regardless of whether the family is comprised of a conventional married couple or not, however, those issues remain unresolved (Gardiner & Davidson, 2011). The primary issue is determining the interpretation of imputing or inferring the parties’ common intention, which remains the primary method of resolving property disputes between unmarried cohabitants (Gardiner & Davidson, 2011). This paper considers whether or not it is realistic, given the social realities of the modern family to treat post-separation property disputes between married couples and between unmarried cohabitants differently. This paper is divided into two parts. The first part of this paper examines the current state of the law relative to the division of property between unmarried cohabitants and the second part of this paper considers whether or not it remains appropriate for the law to continue to treat post-separation property disputes between unmarried co-habitants differently than it treats married couples. Post-Separation Property Division Between Unmarried Cohabitants There is no statutory authority for the courts to determine how to settle property or property rights relative to unmarried cohabitees who having cohabited for a significant period of time, have come to the decision to separate. Unmarried cohabitees therefore have limited options. They may attempt to have their property disputes resolved by engaging in civil suits if a contract of some sort exists (Deech, 2010). Alternatively, unmarried cohabitants may have the issues resolved by reference to the principles of equity and trusts (Singer, 2009). Under the current state of the applicable principles of equity and trust relative to unmarried cohabitants, the common intention of the parties is the primary method by which the courts attempt to imply a constructive trust in a fair division of the property (Dyson, 2008). The common intention of the parties was first referred to in the case of Lloyds Bank Plc v Rosset (1991). Essentially, the courts will seek to determine whether or not there was a common intention on the part of the parties to divide the property a specific way despite the descriptions rendered by the legal title and the declaration of beneficial interests. The result is the imposition of a constructive trust. Thus a constructive trust imposed by evidence of a common intention is intended to avoid unconscionable consequences in circumstances where the title deeds do not reflect the realities of the acquisition and holding of the property (Pawlowski, 2006). Unfairness arises because, the principle of common intention seeks to determine matters of trust involved in relationships and has evolved as decidedly unclear and unpredictable, making it difficult for unmarried cohabitants to know and assert their property rights with a degree of certainty (Hicks, 2005). In Stack v Dowden (2007) the House of Lords, discussed the consequences of legal title and the declaration of beneficial interests in property. Essentially, the House of Lords ruled that the legal title and the declaration of beneficial interests reflected in the title deeds will generally reflect the status of the parties’ interest in the unless there is evidence of a common intention capable of refuting this presumption. In other words, equity will follow the law unless the parties’ common intention demonstrates that as a matter or equity, the property should be divided differently (Stack v Dowden, 2007). It was also held that the presumption that equity will follow the law will only be successfully rebutted in unusual cases. Where the legal title to the property is held by one party, the court will examine all facts and circumstances in order to determine if a common intention exists to support a contention that the other party was intended to have a share of the beneficial interests and if so, the extent to which the beneficial interest should be divided. If both parties share the legal title, and there is no declaration of beneficial interests, the court will examine facts and circumstances indicative of how the parties dealt with the property, their earnings and other finances to rebut the presumption that they should jointly share the beneficial interests in the property and if not, how the beneficial interests should be divided between them (Stack v Dowden, 2007). In Stack v Dowden (2007) the legal title to the property at issue was held in names of both parties with a declaration of joint beneficial ownership reflected in the title deeds. Ordinarily, this would mean that the parties owned the legal and beneficial title equally. However, the House of Lords held that since the couple kept their financial matters separately, and the female cohabitant earned more than her male cohabitant, it would be imputed that the common intention of the parties was that the female cohabitant would be entitled to a larger share of the property. As a result, the property was divided so that the female cohabitant was awarded 65% of the beneficial interest in the property with the male cohabitant receiving the remainder shares of the beneficial interests (Stack v Dowden, 2007). Hudson (2010) argues that the House of Lords in Stack v Dowden emphasized the parties’ entire methods of dealing with other all their property as opposed to looking at what was fair and conscionable. Hudson (2010) also argued that it is also reasonable to conclude that had the parties shared their finances jointly, the court might have concluded that regardless of how the property at issue was held, the parties common intention was to share the property equally. These kinds of results are inevitable considering that Baroness Hale stated that the court’s role is to determine what the parties’ common intentions are relative to the property by reference to the “whole course of conduct in relation to it” (Stack v Dowden, 2007). It can be argued that the decision of the House of Lords in Stack v Dowden along justifies reform of the law relative to unmarried cohabitants as it represents regression rather than progress. The ruling in Stack v Dowden essentially emphasizes financial contributions which further distinguishes the law relative to unmarried couples from the law relative to unmarried couples. In the case of married couples the court will take account of non-financial contributions (see Pettit v Pettit 1970; Gissing v Gissing, 1971). As Probert (2007) argued the ruling in Stack v Dowden is far too concerned with financial contributions and contradicts the presumption that equity is concerned with preventing unconscionable results and unjust enrichment. Thus the ruling in Stack v Dowden arguably contradicts the position taken by the courts that equity is primarily concerned with doing justice between the parties and avoiding unconscionable consequences (Westdeutsche Landesbank Girozentrale v Islington London Borough Council, 1996). Subsequent rulings following Stack v Dowden have attempted to restore the previous position that financial contributions alone will not determine the parties’ common intention. For instance in Fowler v Barron (2008) it was held that financial contributions alone will not automatically rebut the presumption that the parties’ common intention is reflected in the title deeds. The Privy Council ruled similarly in Abbot v Abbot (2007), although the Privy Council appeared to be persuaded by the fact that the couple shared a joint finances and shared responsibility for the mortgage. Jones v Kernott (2011) however, followed the ruling in Stack v Dowden more closely and preferred the view that the registry of records would be the first place to look for the true nature of the interest in the property. Moreover, the courts would be very careful not to impute an intention to the parties that they did not share. This means that although the property may have been acquired in a way that manifests one common intention, the court will be cognizant of evidence demonstrating that the parties’ common intention had changed. Again the emphasis is on the evidence of how the parties dealt with the property since its acquisition to the breakdown of the relationship. Essentially, the main question arising out of the equitable principles relative to imposing a constructive trust under the principle of common intention is whether or not the results are fair to unmarried couples. As demonstrated above the ruling in Stack v Dowden, created an illusion out of the equitable principles applicable to imposing a constructive trust on the basis of the parties’ common intention. What actually occurred is an emphasis on financial contributions as a means of determining the parties’ common intention. This not only creates confusion but further distinguishes the law’s treatment of unmarried couples from that of its treatment of married couples. Given that the results for unmarried couples can be unfair and unconscionable, the question is whether or not it is fair and should remain the law. Should the Law Continue to Treat Property Division for Unmarried Cohabitants Differently than it Treats Married Couples? Probert (2007) reported that cohabitation among unmarried couples began during the 1960s and has now become a social pattern. The Law Commission reported that more and more children are born in families headed by unmarried cohabitants (Law Commission, 2007). (Douglas et al (2009) argue that since cohabitation among unmarried couples has become “increasingly common” there is a need for reform to address the “current unfairness” particularly since it does not adequately recognize or respond to the issue of “unjust enrichment” (p. 24). The ruling in Stack v Dowden certainly raises the issue of unjust enrichment because it places far too much emphasis on financial contributions. For instance, in the event a couple determines that it is perhaps better for the family’s welfare if one party remained at home and looked after the couple’s children while the other worked and dealt with the family’s finances, the results would be different for an unmarried couple than it would be for a married couple. Section 25(2)(f) of the Matrimonial Causes Act directs the courts in dividing the property between the married couple in divorce proceedings to take account of the: The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family (Matrimonial Causes Act 1973, Section 25 (2)(f). It therefore follows from this provision that married partners who do not share financial responsibilities or make financial contributions to the family home can expect to have their non-financial contributions looked upon as decisive of whether or not they should receive a property settlement. In the absence of a similar statutory provision, unmarried cohabitees can have no reasonable expectation that their non-financial contributions to the welfare of their families will be taken into account in the division of the family’s property. In the absence of a statutory provision for unmarried cohabitants and given the current unclear state of the law, unjust results such as the decision in Burns v Burns (1984) can be expected to continue. The ruling in this care reflects the kind of unconscionable consequences that unmarried cohabitants confront in light of the fact that there are no legislative provisions determining their property rights in post-relationship property disputes. In Burns, the cohabitants were not married and thus Section 25 of the Matrimonial Causes Act 1973 was not applicable, and the case was determined by virtue of existing property law. The female cohabitant had lived with the male cohabitant for 19 years and had committed 17 years to caring for the family home which was subsequently the subject of the dispute litigated. The property had been purchased by the male cohabitant and his name alone appeared on the deed of title (Burns v Burns, 1984). On the facts of the case, it was revealed that the female cohabitant had not made any financial contributions to the family home. She had not contributed to the initial purchase price and she had not contributed to subsequent mortgage payments. However, the female cohabitant had arguably made significant contributions to the family’s welfare as she raised the two children she shared with her male cohabitant and she took care of the family home, using her own income to discharge household expenses. The female cohabitant also purchased furniture, fixtures, appliances and spent time and money decorating the family home. As a result, the female cohabitant felt that she had acquired a beneficial interest in the family home. The court however felt differently and ruled that ultimately, some form of direct financial contribution to the acquisition of family home was necessary to support a claim for a beneficial interest. Had the female cohabitant contributed to the purchase price or the mortgage payments or had assumed some financial responsibility so that the male cohabitant’s income was freed to discharge the mortgage she would have succeed in her claim (Burns v Burns, 1984). It therefore follows that in the absence of a legislative provision similar to that of the Matrimonial Causes Act 1973, unmarried cohabitants seeking to obtain equitable relief can expect to see results such as those expressed in Burns. The fact is, unmarried cohabitants are required to rely on the equitable principles of resulting and constructive trusts and hope that the courts will imply a common intention that will rebut the presumption that equity follows the law. The state of the current law is such, that the equitable principles as applied by the courts generally assume that the description of the property title and beneficial interest in the deed of title will be the starting point from which the court will determine post-separation property disputes (see Walker v Hall, 1984; Springer v Defoe 1992; Huntingford, 1993). Conclusion The law and practice of treating property settlement of unmarried cohabitants differently than it treats married cohabitants is inconsistent with realities of family construction and trends in modern times. Married couples can generally expect that when they purchase property after marriage, it is generally assumed that they intended that the property was purchased as a family home and thus both parties intended to share the beneficial interest in the property. Anything said or done prior to the purchase may well be relevant to establishing the common intention of the married couple. As demonstrated in the case law discussed in this paper, the emphasis for unmarried cohabitants is at the time of purchase. Moreover, for married couples, the mere fact that there is a declaration of beneficial interests and both parties hold the legal title will typically be looked upon as hard evidence of the parties’ actual intentions relative to the division of property. However, as demonstrated in Stack v Dowden, unmarried cohabitants do not have the benefit of this concession. The court will look at evidence capable of rebutting this presumption despite the fact that the courts have persistently stated that equity will follow the law. If the property is held in the name of only one of the unmarried cohabitants, the court will for the most part only look to the financial contributions to depart from its position that equity will follow the law. This is no statutory authority permitting the courts to look at non-financial contributions that are consistent with the position taken by Section 25 of the Matrimonial Causes Act 1973 where married couples can expect non-financial contributions to the family’s welfare to factor into the post-separation property settlement process. Therefore, in all the circumstances, given that unmarried cohabitants have the same family constructs, sacrifices and benefits that married couples, have it is entirely unfair that post-separation property settlements should be treated differently by the law. The reality is that children of unmarried cohabitants are not treated with the same value as children of married cohabitants. This disparity of treatment is manifested by the fact that a married cohabitant who raises the children and makes no financial contributions to the purchase of the family home will acquire a beneficial interest for his or her efforts. However, unmarried cohabitants will not be rewarded for their contributions to the family’s welfare should they remain at home to raise the children of the couple. The social reality is that unmarried cohabitants live together and share a family and a family home is the exact same way that married cohabitants do. The law however, does not treat the unmarried cohabitants with the same level of empathy that it treats married cohabitants. In other words the current status of the law is inconsistent with the social realities of modern families. It can thus be concluded that unmarried cohabitants are essentially discriminated against. Social realities dictated that the marriage as an institution is no longer the only method by which families are constructed and children are raised. The law should be reformed to recognize this reality by treating the property settlement of unmarried cohabitants with the same degree of concessions that are accorded married cohabitants. A provision similar to that of Section 25 of the Matrimonial Causes Act 1973 would go a long way to providing equal protection of the law for unmarried cohabitants. It would also express that children of unmarried cohabitants are no less valuable than children of married cohabitants. We may not be able to change the trend toward couples living together outside of marriage, but we can change the way that these families are marginalized. Post-property legislation is a good place to start. Bibliography Burns v Burns [1984] 1 All ER 244. Deech, Baroness Ruth. “Cohabitation” Family Law, 2010. Vol. 39: 39-41 Douglas, G.; Pearce, J. and Woodward, H. “Cohabitants, Property and the Law: A Study of Injustice.” The Modern Law Review, January 2009. Vol. 72(1): 24-47. Dyson, A. “All’s Fair in Love and Law: An Analysis of the Common Intention Constructive Trust.” Cambridge Student Law Review, 2008. 149-166. Fowler v Barron [2008] EWCA Civ 377. Gardner, S. and Davidson, K. “The Future of Stack v Dowden”. Law Quarterly Review, 2011, Vol. 127, 13-18. George, R. H. “Stack v Dowden – Do as we Say, Not as we Do?”. Journal of Social Welfare & Family Law, March, 2008, Vol. 30(1): 49-61. Gissing v Gissing [1971] AC 886. Hicks, A. “Conceptualising the Constructive Trust.” Northern Ireland Legal Quarterly, 2005. Vol. 56(4): 521-550. Hudson, A. Equity and Trusts, 6th Edition. Oxon, UK: Routledge-Cavendish, 2010. Huntingford [1993] I FLR 736. Jones v Kernott (2011) UKSC 53. Law Commission. Review of Cohabitation: The Financial Consequences of Relationship Breakdown, Law Com. No. 307 (HMSO 2007). Lloyds Bank Plc v Rosset [1991] AC 107. Matrimonial Causes Act 1973. Pawlowski, M. “Estoppel, constructive Trusts and Unconscionability.” Trusts & Trustees, 2006. Vol. 12(9): 10-15. Pettit v Pettit [1970] AC 777. Probert, R. “Review of Cohabitation: The Financial Consequences of Relationship Breakdown, Law Com. No. 307 (HMSO 2007).” Family Law Quarterly Review. 2007-2007. Family Law Quarterly, Vol. 41 (3): 521-536. Probert, R. “Equality in the Family Home?” Feminine Legal Studies, 2007. Vol. 15: 341-353. Singer, S. “What Provision for Unmarried Couples Should the Law Make when Their Relationships Break Down?” Family Law, 2009: 234-241. Springer v Defoe [1992] 2 FLR 388. Stack v Dowden [2007] UKHL 17. Walker v Hall [1984] FLR 126. Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669. Read More