Clarion Blog

Limiting the Costs of Divorce

Fri, 27 Jan 2012 16:29:58 UTC

The costs of divorce are notoriously high, and not only on a financial level. The emotional cost of divorce varies depending on the circumstances of each case, but it is acknowledged that the majority of divorces will impact upon the parties and any children to the marriage quite highly.

In this blog I will only consider the financial impact of divorce. The costs involved in a divorce stem from various sources – the Court fees for the procedure itself, and solicitor fees for resolving any financial matters between the parties. The common factor that exacerbates the level of cost is the level of disagreement – if parties are not willing to negotiate and be reasonable then the costs are likely to be much higher. Unfortunately this is a common problem in many divorces as either one or both parties is annoyed or upset about the breakdown of the relationship and this hinders their ability to act reasonably.

The issue of costs in relation to divorce is even more relevant in light of the Legal Aid, Sentencing and Punishment of Offenders Bill, which is currently before the House of Lords. The changes proposed include significant reductions to the availability of Legal Aid in family and children matters, which will increase the financial burden on the parties.

At the end of 2011, Resolution carried out a survey of its members who undertake Legal Aid work, to ascertain the predicated impact of the Legal Aid, Sentencing and Punishment of Offenders Bill. 87% of the members surveyed say that the Bill would mean that less than 25% of people they currently help would still qualify for Legal Aid. How are the other 75% going to afford legal representation? This is a question to which no-one has an answer.

One approach which is useful to reduce the costs of divorce is if the parties can agree to sign a pre-nuptial agreement, a post-nuptial agreement, a separation agreement or a parenting agreement before the breakdown of the relationship. Utilising some form of agreement between the parties will assist them should the relationship break down and will assist the Court in deciding any matters between the parties. Whilst in the UK, pre-nuptial agreements are not yet considered binding, case law has indicated that the courts may hold the parties to the terms of the agreement, if the terms are fair, and if both parties entered into the agreement freely and with full knowledge of the circumstances. More information on the benefits of pre-nuptial agreement can be found in my blog, Case Law Developments on Pre-nuptial Agreements.

The vastly confusing procedure involved in the family justice system means that the majority of people require specialist legal advice when considering divorce. Hopefully this position will improve in the future, but at this stage it is recommended that the assistance of a solicitor is used to guide you through the process and to facilitate any negotiations that are needed. The Family Justice Review has made proposals to improve the family justice system, and for further discussions on these proposals, see the blog ‘Is change on the way?’

Whilst the divorce procedure itself requires the Court to be involved, there is no such requirement for the Courts to be involved in decisions regarding the children or the finances. However, if parties are unable to agree, the Court can be involved. As I have already highlighted, the current family justice system through the Courts is not the most satisfactory and various commentators have observed that recourse to the Court should be a last resort. To this end, many solicitors recommend the use of mediation or collaborative law to resolve matters. Collaborative law is a process by which the courts are formally excluded, and the parties agree that neither of them will apply to the Court and will instead resolve matters through a series of structured meetings. Our Justine Osmotherley and Emma Blackstone are collaboratively trained and would be happy to discuss this option with you in more detail if this is something that interests you.

We also have strong links with counsellors and divorce support coaches should you require additional support when negotiating the emotional minefield of divorce, and we would be happy to refer you to these if needed.

Communication between the parties, and cooperation, are key factors that will help to keep costs to a minimum. I appreciate that it is not always possible for parties to enter into an agreement when there are heightened emotional states involved, but this is by far the most simple and beneficial outcome. Whilst many parties do not like to consider the breakdown of their marriage before this has happened, the idea of a pre-nuptial or post-nuptial agreement can help to put parties’ minds at rest in the event of the unfortunate breakdown of their marriage. It is much easier to agree what would happen in the event of the relationship breakdown before this has happened. Some form of agreement can place the parties on a level footing, with a greater understanding of the others position.

If you require any advice or would like to book an appointment with a member of the Family team in relation to any of the issues raised in this article, please contact our Family Department on 0113 336 3241 or email amy.scollan@clarionsolicitors.com

The Family Justice Review — A Quick Update

Tue, 24 Jan 2012 12:38:26 UTC

The blog Is Change on the Way? discussed the final report of the Family Justice Review, published in November 2011. The proposed changes in this final report have been welcomed to the Family Justice system, but it has been questioned whether in fact these are achievable aims in light of the Legal Aid, Sentencing and Punishment of Offenders Bill. Amy Scollan noted in the above blog that it will be interesting to watch any developments in response to the report. It is for this reason that I write this blog today. Mr Justice Ryder has been appointed as the Judge in charge of the Modernisation of Family Justice. So what does this actually mean?

Mr Justice Ryder has released a first update on what he calls the Family Justice Modernisation Programme. In this update, Mr Justice Ryder observes that “my aim is to have agreed proposals for the modernisation of family justice and to have a plan for their implementation by [the end of July 2012]”. This is certainly an ambitious plan and Mr Justice Ryder has acknowledged that the timetable proposed is going to be challenging.

Mr Justice Ryder has been consulting with various groups and hopes to reflect their observations in his role. The Government response to the final report of the Family Justice Review will be needed before any further action can be taken. However, Mr Justice Ryder has identified various “work streams” in need of change. These are as follows:

Family justice governance;

Family management information (including performance and effectiveness);

Judicial and interdisciplinary training and communication;

Unified Family Court;

Judicial leadership and management;

Judicial deployment (including patterns and listing guidance);

Gate keeping and allocation (including tracking and continuity);

Case management (including case progression, timetables and deadlines);

Use of experts and assessors; and

External services including Court social work, mediation and ADR, contact services, safe guarding, testing, experts, representation and support in Court.

The role of Mr Justice Ryder is to reflect the views of the judiciary and it is hoped that his appointment will assist in the unified approach that is so desperately needed to enable any changes to be put into effect.

The official Government response has not yet been received, but the Telegraph has reported that the Government is taking steps to make provision in law for both parents to be given access to children following a divorce. This decision would be at odds with the final report of the Family Justice Review. It will be interesting to see if such provision is put in place despite the clear position of the Family Justice Review, which, it must be remembered, was a Government commissioned report. The Government is expected to provide its formal response by the end of January 2012. So watch this space!

Jenny Leithgoe is a trainee solicitor in our Family Department. If you have any queries about this blog or if you would like to arrange an appointment with any of the Family team please email jennifer.leithgoe@clarionsolicitors.com or telephone 0113 336 3373.

Is Change on the Way?

Mon, 16 Jan 2012 17:54:47 UTC

The final report of the Family Justice Review, published in November 2011, highlighted various problems in the family justice system and made several proposals for reform. This report was commissioned by the Ministry of Justice, the Department for Education, and the Welsh Government, to consider the various arms of the family justice system.

The initial stage for the Review was a fact-finding exercise seeking to obtain a clear picture of the current family justice system, and this commenced in June 2010. An interim report was published on 31 March 2011, to allow a period of consultation before the final report was published.

The final report has been welcomed by many bodies involved in family justice as the problems it acknowledges have been widely experienced by these bodies, and they hope that the changes proposed can be implemented. The case load of the family justice system has been under strain for some years, and therefore the final report has been positively received.

The current problems observed in the family justice system are as follows:

Substantial delays – care and supervision cases, on average, take 56 weeks. In private law cases, “an average of 32 weeks allows conflict to become further entrenched and temporary arrangements for the care of children to become the default”.

High costs (not only to the individual, but also to the tax payer) - the report observed that perhaps current resources are not spent in the most efficient or effective way.

A lack of understanding in the processes involved - the report acknowledges that both children and adults are confused with the over-complicated procedures involved in family justice.

A lack of shared objectives and organisational structure - this has led to an overlap of the agencies involved, with no clear roles, and the performance of the system as a whole has never been assessed.

For those individuals needing to seek the assistance of family justice system, whether that be for the breakdown of a family or for parenting and relationship issues, the current system is far from ideal. The above problems were noted in both public and private law. Whilst solicitors can help clients to navigate through the difficult process, this report highlighted the fact that change is needed.

The main changes that were proposed in this report are as follows:

There should be a new six month time limit in care cases to reduce the delays.

There should be judicial encouragement to enable people to agree their own arrangements for children upon separation, making recourse to the Court a last resort (see also our blog on Contact Orders and Agreements which discusses this point.)

There should be a unified and united family justice system incorporating the required agencies and professionals under one umbrella, to ensure that the experience and outcomes for families are more appropriate.

David Norgrove, who was the head of the Family Justice Review has said, “every year 500,000 children and adults are involved in the family justice system. They turn to it at times of great stress and conflict. It must deliver the best possible outcome for all the children and families who use it, because its decisions directly affect the lives and futures of all those involved and have repercussions for society as a whole”.

Of potential concern is the fact that the Bar Council Law Society, Family Law Bar Association and Resolution have all questioned whether the aims of this report can in fact be achieved in light of the Legal Aid, Sentencing and Punishment of Offenders Bill. It must be said that such substantial reform may well be difficult when the family justice system is facing significant cuts to Legal Aid.

It will be interesting to watch for any developments in response to this report. The proposals it puts forward would certainly have a positive impact on the family justice system if implemented. In the meantime, solicitors will need to continue to assist their clients in navigating the complex and confusing system.

If you require any advice in relation to any children or contact matters, please contact our Family team on 0113 336 3241 or email amy.scollan@clarionsolicitors.com.

Warning to Proposed Administrators: Give As Much Notice As You Can To Avoid an Invalid Out Of Court Appointment

Mon, 09 Jan 2012 12:53:30 UTC

There have been various cases decided over the last few months as to the technical requirements for notifying various persons of a proposed out of court appointment of Administrators.

A failure to properly and fully comply with the precise notice requirements set out in the Insolvency Act 1986 (the “Act”) and Insolvency Rules 1986 (the “Rules”) will result in an invalid appointment which the Court cannot subsequently ratify.

It is therefore important that all proposed Administrators and the appointors ensure that the notice requirements (as currently understood) are followed to the letter to ensure that the appointment is valid.

On 21^st December 2011 two High Court decisions were made in different courtrooms but on that exact same day, with neither Judge knowing of the other’s decision.� Both judges granted orders that wholly contradict each other, but both decisions hold the same degree of authority in terms of setting a binding precedent.

The conflicting decisions are:

National Westminster Bank Plc v Msaada Group (a firm) & Others [2011] EWHC 3423

In Msaada it was held that where the directors are making an out of court appointment all of those persons listed in Rule 2.20(2) must be served with a notice of intention to appoint an administrator and must be given at least 5 business days notice prior to the appointment being made, regardless of whether or not there is a Qualifying Floating Charge Holder (“QFCH”).

The persons listed in Rule 2.20(2) are:�

the company;

any enforcement officer charged with execution or enforcing other legal process against the company;

anyone who has levied distress against the company’s assets; and

the supervisor of any Company Voluntary Arrangement which the company is subject to.

This case followed the earlier decision in Minmar (929) Ltd v Khalastchi & Another [2011] EWHC 1159 (Ch) (in which it was decided that failure to notify the company of the proposed appointment resulted in the appointment being invalid) and determined that Hill & Another v Stokes [2010] EWHC 3726 (Ch) was wrongly decided (in which case it was held that a failure to notify a landlord who had levied distress did not invalidate the appointment).

The effect of this case is that:

even if there is no QFCH, all of the persons listed in Rule 2.20(2) must still be given at least 5 business days notice of the proposed appointment; and

if there is a QFCH and they give consent to the appointment prior to the expiry of the 5 business day period, the appointment cannot validly be made unless all of the parties who are given notice under Rule 2.20(2) have also consented in writing or the 5 business days has elapsed.

�Re Virtualpurple Professional Services Ltd [2011] EWHC 3487

This case followed the Hill v Stokes decision rather than the Minmar decision.

In this case it was held that where there is no QFCH, the directors have no obligation to give the company (or indeed any of the persons referred to in Rule 2.20(2)) any notice of intention to appoint an administrator.

The court went further and also held that, even if there were an obligation to notify the parties in Rule 2.20(2), a failure to do so did not automatically make the appointment invalid, with the court having discretion to waive any procedural defect if appropriate.

CONCLUSION

Until such time as a further case is decided on whether and to what extent the parties in Rule 2.20(2) must be given notice of intention to appoint an administrator or the Act or Rules are amended, it would be prudent to adopt the following course of action:

Have the QFCH make the appointment (in which case no one in Rule 2.20(2) need be given notice);

If there is no enforcement officer charged with execution or enforcing other legal process against the company, no one who has levied distress against the company’s assets and no Company Voluntary Arrangement which the company is subject to, have the company itself make the appointment under paragraph 22(1) of Schedule B1 to the Act (depending upon how easy and cost effective it will be to obtain shareholder approval) so at least avoiding the need to serve the company itself which you would have to do if it were a directors’ appointment;

In any other proposed out of court appointment, ensure that at least five business days notice are given to all persons in Rule 2.20(2), including the company itself.� If the appointment is to be made before the expiry of the five business day period, ensure that all persons that were given notice have consented in writing to the appointment.

Practitioners should also remain aware of the requirement in Minmar which remains unaffected, namely that any appointment by the directors under paragraph 22(2) of Schedule B1 to the Act must be made from a decision of the directors that is in accordance with the company’s Articles of Association.� The practitioner should ensure that a board meeting was validly convened, review the board minutes from that meeting and ensure it accords with the requirements set out in the company’s Articles.

Should you have any queries regarding the content of this article, then please contact Helen Bates on 0113 222 3233 or at helen.bates@clarionsolcitors.com.

Private agreements on children issues are the most satisfactory way forward…..

Fri, 06 Jan 2012 16:35:22 UTC

When a couple with children separate, often the issue of who is to be the resident parent, and how much contact the non resident parent is to have with the children, becomes a real point of conflict.

In many cases, the parents are able to agree on the contact arrangements without the assistance of mediators, solicitors or the courts. However, if an agreement cannot be reached then either parent can apply to the court for assistance, pursuant to the Children Act 1989.

The court will only impose an order if to do so, would be better than doing nothing. This is the no order principle. Further, the court has the welfare of the child or children involved in the proceedings, as it’s primary consideration.

The scenario of a mother and a father separating and seeking the court’s assistance in relation to their children, is not the only circumstances where the court can become involved in a child’s life. In today’s society, a much broader spectrum of relationship types exist and these raise new issues. For example, sperm and egg donation, surrogacy, cohabitation, and civil partnerships have all raised new questions for the courts to deal with.

There has been a recent case in which Justice Hedley considered some of these issues. Re P and L (minors) 2011 concerned two children, and four significant adults. In summary, the adults in question were two same-sex couples, and both children were conceived by IVF. The female couple advertised for a male same sex couple who would be interested in starting a family. The first child was conceived, and lived with the two females with some level of contact in favour of the male couple. A few years later, the two couples agreed to repeat the process and the second child was born, again living with the two females. However, a dispute arose between the parties and the two males applied to the court for a solution as to the nature and extent of the contact they should have with both children.

Several court hearings were held, in which it was confirmed that the biological mother, her female partner, and the biological father all had parental responsibility. The granting of parental responsibility (PR) attaches various rights and responsibility in relation to a child, and any person with PR must be consulted when significant decisions need to be made about the child. PR is automatic for any parent who appears on a child’s birth certificate since 1 December 2003, or for married parents to a child. For anyone else, the court can grant PR where appropriate or PR agreements can be signed and registered.

In the given case, the court expressed concern that the ongoing conflict was having a detrimental effect on the children. On 29 July 2011, the matter came before Justice Hedley who gave his first judgment regarding the nature of the relationship the parties had intended, and ordered contact in favour of the male couple.

Hedley J applied a principal of primary and secondary parenting, as he observed that this case was not that of a ‘conventional’ nuclear family.

On 20 December 2011 Hedley J’s final judgment was handed down. He observed that the parties:

“did not think through to an agreement the role that the men were to play and, perhaps surprisingly, failed twice so to do”

“the only guidance I feel able to give is threefold: first to stress the importance of agreeing the future roles of the parties before the first child is born; secondly, to warn against the use of stereotypes from traditional family models […]; and thirdly, to provide a level of contact whose primary purpose is to reflect the role that either has been agreed or has been discerned from the conduct of the parties.”

As family lawyers, it is important that we consider the implications of this case as it’s message is that emphasis in a dispute should be on achieving an agreement that works in the particular scenario of the case in hand, when the parameters of contact and residence are unclear and the family are in the frame of mind to discuss the issues frankly and fairly.

Hedley J imposed his judgment with reluctance, highlighting that any court order would not be likely to satisfy either party, and would be inferior to any agreement that the parties could reach themselves. In relation to a court impose order, Hedley J explained that:

“the consequence is that each party will be deeply disappointed by this judgment and the order subsequent upon it.”

These are words that any experienced family lawyer, will know to be true in respect of many court orders.

Our family team have experience of drafting and negotiating parenting agreements to assist clients. Should you require any further information, or an appointment to discuss a parenting agreement, please contact our Amy Scollan on 0113 336 3349 amy.scollan@clarionsolicitors.com

Over The Finishing Line

Tue, 13 Dec 2011 17:48:25 UTC

Finished! All over! Done and dusted! And didn’t I just save the best for last?!

The Kielder Forest duathlon sounded great when I signed up. Running in a forest – a lovely end to my series of events.

My suspicions should have been aroused by the words “off road” which suddenly started to appear in the title of the event. Perhaps I should have noticed that the website for the duathlon featured the words “high terrain events”.

Even if I had paid heed to this earlier on, I don’t actually think it would have prepared me for the reality of the duathlon a week ago. It was a 7k trail run, 24k mountain bike followed by a further 6k trail run

For my brutal finale, I found myself in freezing temperatures with snow, Glastonbury style mud and wind – and that’s just my wife’s description of it from the sidelines!

It is a pretty accurate description though so I am suitably chuffed that I managed the course in a sub 4 hour time of 3 hours 54 minutes – and that’s having picked up an injury after the first 20 minutes.

Although I’ll certainly be glad of a break over the festive period, my thoughts are already turning to what events I could do next year so it seems I have been well and truly bitten by the endurance event bug!

One thing that has kept me going through each of the 10 events I committed to this year, is the knowledge that I am raising money for 3 very worthwhile charities. So far, I have raised £2,285 for the firm’s 2 chosen charities - The Spinal Injury Project of The UK Stem Cell Foundation and the Paediatric Intensive Care Unit (Leeds Teaching Hospitals Charity Foundation) and for Martin House when I took part in the Leeds Triathlon.

For everyone who has already sponsored me, thank you very much indeed – your generosity has kept me going in some very difficult and testing conditions. If you haven’t yet sponsored me and would like to, I would very much appreciate trying to get the total to £2,500! You can sponsor me at:

http://www.justgiving.com/mark-burnsdecathlonukscf

http://www.justgiving.com/mark-burnsdeacthlonpicu

http://www.justgiving.com/mark-burnsdecathlonmartinhouse

All that remains is to wish you all a very merry Christmas and a happy New Year – I’m off to hibernate!

Settling In?

Mon, 05 Dec 2011 16:44:40 UTC

That’s the thing about moving, house or job, there is a feeling of real excitement about the new place one is going to and at the same time, some regrets about the life and people one is leaving behind. We take a forward and positive step into the future but at the same time give up some of our familiar securities. Well, that is what I have experienced over the years.

I have moved to Clarion because I was offered the chance to become part of the management team of a young and successful firm that is going places. Clarion is growing its business and for me, the chance to really expand the offer to high net worth clients using my experience and professional network is too good a challenge to miss. So, I am excited by my move and please do not misunderstand me, I haven’t really looked back.

Of course, I miss my colleagues from LCF in Ilkley and many of my clients. I have always tried to build long term relationships with clients. I find this builds understanding and trust. It is of course also, an investment in terms of future potential business. I have not approached previous clients to move their files to Clarion but quite a few have discovered where I have moved to and followed me. Which, is great recognition of my previous service to the particular client and very satisfying. I will be carrying on with this philosophy and applying this approach to my new clients in Clarion.

So, have I made the right move? I am certain I have. I have a great set of colleagues in Private Client and in the wider Clarion team. The culture is very friendly and welcoming and at the same time, very professional. Have I settled in? Well, what do you think?

Case Law Developments on Pre-nuptial Agreements

Fri, 25 Nov 2011 14:46:01 UTC

Following on from our blog entry on 4 November 2010 concerning Radmacher v Granatino, I thought it would be worth commenting on the recent decision in Z v Z (2).

In Radmacher v Granatino, a Pre-nuptial Agreement was upheld but the Supreme Court left a qualification that Pre-nuptial Agreements would be upheld by the court “unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.

In the recent case of Z v Z (2), it was held that the agreement entered into by the parties should be binding. To summarise the facts of this case, both parties were French and had been married for 14 years. Before the marriage there was a period of cohabitation of approximately 4 years. There were three children to the marriage. The parties moved to England in 2007.

Before the marriage, the couple entered into a marriage contract, or Separation des Biens, in accordance with French law. This contract was entered into voluntarily, and represented a normal step for the parties in their culture - many couples in France enter into agreements pre marriage to elect the relevant property regime their assets should be divided pursuant to, in the event of divorce.

If the divorce case was dealt with in France, the French court would have held the parties to their Separation des Biens. The Wife issued divorce proceedings in 2008 in England and there followed a contested jurisdiction dispute. It was decided that the English courts had jurisdiction to hear the case, as the parties were both resident in England at the time the divorce proceedings were issued.

The Husband would have been well advised at the time that the marriage was close to breakdown, to issue proceedings in France on the basis of his domicile to secure the French jurisdiction! However, such a course would not guarantee success because of a European law that divorce cases, should be heard in the jurisdiction that is most convenient. Therefore, if the majority of the parties’ assets were in England, there is a chance that the French court would transfer the case to the English courts in any event.

At the time of separation, the assets totalled some €15,000,000.00. The terms of the agreement expressly excluded the sharing of assets. However, the Wife in the case wished for all assets to be shared on an equal basis, following the principle established in White v White, pursuant to English law.

The Husband was of the view that the agreement was binding and therefore sharing was excluded, but that ‘needs’ had not been excluded and could still therefore be considered.

The agreement between the parties in Z v Z(2) was upheld, but the Judge made provision for the Wife’s needs, as the agreement did not mention maintenance. The Judge calculated the needs of the Wife and capitalised this using the Duxbury calculations. The ultimate share given to the Wife in this case was 40% of the total matrimonial wealth. This was despite the fact that she would have care of the three children. This would ensure that the Wife’s needs were met but did not cause unnecessary departure from the agreement reached.

The principle of ‘fairness’ was considered in line with Radmacher test, and despite the fact that

i) neither party had had legal advice before entering into the agreement, and

ii) on separation the husband signed a letter to the wife setting out much more favourable terms that the agreement provided,

the court upheld the agreement. It was felt that it was fair to do so as the parties had the opportunity to vary or revoke the agreement whilst married and never took steps to do so.

It will be interesting to watch for further developments in this field, as it may be that legislation addressing the matter of pre-nuptial agreement is produced. However, the Judges in both Radmacher v Granatino and Z v Z(2) seem to be applying a common sense approach and it is interesting to note that both cases involve Pre-Nuptial Agreements made in foreign countries.

It certainly seems that pre-nuptial agreements are being taken more seriously by the courts. Contrast this with the position only years ago where such agreements were only considered as a relevant ‘conduct’ factor in divorce cases.

If you would like advice or assistance in preparing or entering into a pre-nuptial agreement please contact Jennifer Leithgoe to arrange an appointment with one of the family team, on 0113 336 3373 or email jennifer.leithgoe@clarionsolicitors.com

Nine Down . . .One To Go!

Thu, 24 Nov 2011 10:29:22 UTC

I can't believe that it was 19 April when I posted my blog, One Down . . . Nine To Go - and now here I am with only one event left!

A little bit like my running I am crawling towards the finish line of my Decathlon. Two of the last three events I have done have been a little surreal for me as a Derby County fan as they have both taken place in Nottingham. First was the Men’s Health Survival of the Fittest which was a 12 Kilometre race with 10 obstacles ranging from 8 foot high walls and hurdles through to an urban jungle and army assault course. The best moment was the stair climb which took place inside the away supporters end at the City Ground, a kilometre before the end of the race. It did put a very large smile on my face to think of my fellow Derby County fans standing there only a few weeks earlier celebrating our team beating our local rivals 2-1 having spent 89 minutes of the game down to 10 men.

My eighth event took me to Sherwood Pines Forest Park near Mansfield to participate in the Robin Hood 10K trail race. I think we do all need reminding that it was the “evil Sheriff” that came from Nottingham and the good Robin came from somewhere near Doncaster. I think this is an argument that might help boost our friends at Welcome to Yorkshire’s bid to increase tourist traffic into this county.

Both events were however for their own reasons extremely enjoyable. They were certainly not events I was likely to have entered but for doing this strange Decathlon

My third recent event was the Leeds Abbey Dash yesterday. At least I didn’t have to travel far to be at the starting line for this! Building on the gauntlet thrown down for the same event last year, I challenged my colleagues to enter departmental teams. The competition was to be the fastest departmental team by average time of the first three team members crossing the line! I rather suspect that my litigation colleagues may have claimed first prize after a sterling sub 45 minute time recorded by John Mackle.

The final event in my decathlon will involve a substantially longer journey to Kielder Castle on the Scottish Border for the Kielder off road Decathlon. Last year the course was snow covered. I have currently got my fingers crossed that I won’t be wearing thermals for the event. Sponsor opportunities are still available simply by going to the given pages in my blog posts. Please give generously for these fantastic causes.

Jones v Kernott — A Landmark Ruling for Cohabitees?

Tue, 15 Nov 2011 12:14:17 UTC

Lawyers around the country have waited with baited breath for the Supreme Court ruling on Jones v Kernott [2011] UKSC 53. The ruling has now landed and I have read with interest the numerous different newspaper articles and legal commentary arising out of that Judgment. The overwhelming view appears to me to be that it is a triumph for those who buy property together but who choose not to marry, as the parties are not now necessarily bound by the legal ownership of the property.

The case involves an ordinary couple, in an ordinary relationship who began a relationship in 1980. Ms Jones bought, in her sole name, a mobile home in 1981 and Mr Kernott moved in, in 1983. The mobile home was sold in 1985 and the property, the subject of this dispute 39 Badger Hall Avenue was bought in their joint names in 1985. The deposit was put down from the proceeds of the sale of the mobile home and the balance by way of an endowment mortgage. Works were done on the property; the mortgage and utilities were paid but they separated in 1993. Mr Kernott moved out of the property and attempts were made to sell 39 Badger Hall Avenue, without success. The parties agreed to encash a joint life insurance policy and the proceeds were divided between them. Out of Mr Kernott’s share, he put the deposit on a home of his own and purchased his own property in 1996, partly by this deposit and the balance on mortgage. This property was purchased in Mr Kernott’s sole name.

In 2006, when the children were adults, Mr Kernott initiated correspondence with a view to claiming his interest in the property. Ms Jones started Court proceedings in October 2007, and, four Courts later, the Supreme Court has ruled that her interest in the property is 90% and Mr Kernott’s interest 10%. The case has been through the County Court; High Court; Court of Appeal and, finally, the Supreme Court.

The Supreme Court ruled on the correct approach to calculating beneficial interests in property with unmarried parties, where the legal title is in joint names but there is no express statement of how it is to be shared. The Court ruled that, in this case, the parties’ intentions as to ownership had changed after their separation, and awarded a departure from 50/50.

It is fundamental to understand that the law relating to married couples and unmarried couples is completely different. There is a common misconception that after living together for a while the parties become “common law husband and wife”. This is not the case. A divorcing couple knows, with certainty, the various matters taken into account when considering how the assets should be divided. All the circumstances of the case are considered, the first consideration being the welfare of any children of the family under the age of 18 and, under the Matrimonial Causes Act, there is a list of factors the Court has regard to. The aim of the Court is to achieve fairness. We can therefore advise divorcing clients, with some degree of certainty, as to how their assets are likely to be split. Sadly, the same cannot be said for cohabiting couples.

In cases where an unmarried couple buy a house together, the starting point would always be to look at the ownership of the property, namely the title deeds. When the parties buy a property, they complete a Land Registry form TR1. The form asks for an “X” in the appropriate box as to how they are to hold the property, namely:

they are to hold the property on trust for themselves as joint tenants

they are to hold the property on trust for themselves as tenants in common in equal shares

they are to hold the property on trust

In my experience, often both parties automatically cross the box confirming they hold it as joint tenants. This means legal ownership is 50/50. When advising clients, therefore, we have always looked at this as the starting point. There is a presumption that if the legal title is owned jointly, then the beneficial interest is also held jointly. However, this case shows that this presumption can be rebutted by evidence that it was not, or over a time it ceased to be, the common intention of the parties to hold the property jointly. In some cases, this will be easy to see, for example, where the parties did not share their financial resources. However, in the absence of clear evidence of intention, the conduct and dealings between the parties needs to be examined to see if this presumption can be displaced and, if so, can allocate different shares to the parties. Each case is therefore dependent upon its own facts.

It is clear to see in this case that it is “fair” for the equity in the house to be divided as the Court has ruled. It determines that even though the house was held in the joint names of both parties, Judges can divide the equity more fairly.

The worry moving forward is that this now could lead to more litigation for other parties. It is unlikely, over the years, that conversations will have been recorded; documentary evidence kept as to who spent what and on what basis. In some cases, there will be clear evidence, as in this case. In other cases, the evidence may not be so clear and it may boil down to one person’s word against the other. My view is that it is right that the Courts can now look beyond the legal ownership of the property and this has to be right. However, until there are clear reforms in the law, there is going to be an element of uncertainty for both parties.

This can, however, be avoided by the parties taking steps to protect themselves early on. We always advise couples that are going to be living together to enter into a living together agreement (commonly known as a “Cohabitation Agreement”). This will show what the parties’ intentions are and, more importantly, will set out what is to happen if the parties separate. Many people view these as unromantic but, sadly, it is a fact of life that relationships do end and all this document does is set out what is to happen if, not when, the relationship ends. As long as the agreement is fair and well thought out; not signed under pressure; that legal advice was taken at the time of signing and the parties have declared their true financial positions to the other, it is likely that the Courts will uphold them.

Justine Osmotherley is a Partner in the Family Team at Clarion and can be contacted on justine.osmotherley@clarionsolicitors.com or 0113 336 3323.