A Review of Cohabitation Rights in the 21st Century?

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Sections 25-29 of the Family Law (Scotland) Act 2006 were brought into force on 4 May 2006, providing for the first time cohabitating couples with a set of statutory provisions  to regulate property and economic claims at the end of their relationship.

These statutory provisions have not however been without their critics, particularly section 28 which provides the principal financial remedy to parties. Problems have persisted over how section 28 is meant to be applied by the courts given the lack of detailed statutory guidance contained within it. There has also been criticism over the definition of “cohabitant” and the strict provisions in terms of time bar, where failure to adhere to those time limits could prove catastrophic to a party’s right to claim.

About Time – Two?

It is now almost 30 years since the Scottish Law Commission last looked at this area of law, and in addition to any perceived weakness in the current legislation itself, the SLC’s report highlights that since the last consultation took place, the number of couples who choose to cohabit rather than marry or enter into civil partnerships has increased and continues to do so.

Interestingly, and perhaps importantly to note, the numbers of family actions being brought under the 2006 Act appear to be surprisingly low compared to the number of couples who cohabit and also, in comparison to other types of family actions which are raised . There also appears to be a real lack of public knowledge in relation to what rights cohabitants do and don’t possess.

It would appear timely therefore that the SLC are running this consultation on cohabitation (see link https://www.scotlawcom.gov.uk/files/1115/8270/8061/Aspects_of_Family_Law_-Discussion_Paper_on_Cohabitation_DP_No_170.pdf).   (Due to Covid-19 the consultation period in which responses can be made has been extended until 30 June 2020.)

The SLC consultation considers the law affecting cohabitants during cohabitation and when it ends by separation; how cohabitants’ rights are protected in other jurisdictions; and ways in which Scots law might be improved to better meet the needs of cohabitants.  The cohabitation provisions which are being reviewed by the SLC are sections 25-28 of the 2006 Act, in addition they also look at the use of cohabitation agreements and the doctrine of unjustified enrichment.

Is the law still relevant?

At Para 2.58  of the SLC’s discussion paper an Irish Commentator is quoted as saying that in Ireland  “Marriage is no longer the only, or even the preferred life choice for enormous numbers of people … and if our legal system ignores these trends, it risks becoming irrelevant, and worse, providing no protection to people who may be in great need of it.” 

The SLC’s paper sets out the original policy considerations which led to the implementation of sections 25-28. Consideration was given at that time to the need to balance the legal and economic vulnerabilities of many cohabitants, while at the same time, avoiding an unwieldy legal framework which would unduly interfere with the rights of private individuals.  The significance of marriage was also considered against cohabitation.

In their paper the SLC consider if the 2006 provisions were sufficiently clear in their objectives; provided effective remedies; and remain appropriate for 21st century family life.

The SLC reviews the current legislation against the protections afforded to persons in marriages and civil partnerships, and also those persons who wish to opt out of these type of relationships.  They highlight the need to consider the social context which now exists in Scotland and look at how the law can complement it in relation to cohabitating couples to ensure the law is fit for purpose.

They seek comments on what is the correct balance between those who deliberately opt not to marry/enter in to civil partnership but nonetheless commit to an enduring family relationship, which may include raising children; the autonomy of a person; and ensuring suitable protections are in place protecting an economically vulnerable partner at the end of a relationship.

Chapter 2 of the SLC’s paper looks at the separate regimes of marriage/civil partnership and cohabitation.  It considers the financial provisions pertaining to marriage and civil partnerships and how they are seen as comprehensive and fair, contrasting the limited measures set out for cohabitants.  They ask if aligning rights for cohabitants at the end of their relationship with those of spouses/civil partners would risk removing individuals’ freedom of choice or, should the protection of economically vulnerable cohabitants be prioritised

Chapter 2 asks fundamental questions about where cohabitation should sit in today’s society. Does there remain justification for retaining separate regimes in Scotland for financial provision on cessation of cohabitation and for financial provision on divorce and dissolution of civil partnership? If so, should the regime for financial provision for cohabitants who separate be aligned more closely to that of divorce and dissolution?  If not, is there a need or policy justification for a single regime for financial provision when adult intimate relationships come to an end otherwise than on death, and what special provisions, if any, should be made for cohabitants within that regime?

Important considerations will arise from conclusions drawn from the responses to this chapter.  Responses to the questions posed in Chapter 2 must surely dictate how existing legal provisions are to be assessed, varied and/or rewritten, and whatever balance is found will be the “keystone” for the statutory provisions which follow.

How do I know if I’m really Cohabitating?

Chapter 3 considers the definition of cohabitation.  Section 25 provides that a cohabitant means either member of a couple consisting of a man and a woman who are or were living together as if they were husband and wife or, else two persons of the same sex who are or, were living together as if they were civil partners. While some guidance is provided to a court to determine if this relationship exists/ed, there is still considerable discretion available to the court in determining this matter. No minimum period is required to establish cohabitation.

The consultation notes that this definition is seen as outdated, explaining for example that spouses/civil  partners may not own property together, live in the same house, have sexual relations with one another.  None of these factors are essential to establish a marriage or civil partnership; the only characteristic required being registration of that relationship.  Section 25 has also been criticised as not taking account of couples “living apart together; being disrespectful of same sex relationships; old fashioned; and vague and inconsistent with other legislation.

International models are varied but include establishing cohabitation by a qualifying period; a more detailed list of factors to assess the relationship against; or registration of cohabitation.

SLC ask whether the definition should be changed, and if so in what way. Should the wording be more modern, for example would a definition such as “enduring family relationship” be more appropriate in today’s society. If cohabitating couples who separate are to be given more financial remedies, should there be a more robust test to establish cohabitation and what should that be? Should registration be a means of establishing cohabitation?

Household Goods, Moveables and an Allowance

Chapter 4 looks at sections 26 and 27.  Section 26 deals with rights in certain household goods and provides a rebuttable presumption that each cohabitant has a right to an equal share in household goods acquired during the period of cohabitation. Goods relate only to moveable goods. The presumption is rebuttable, if one party can show that they acquired the goods from their own funds.

Section 27 deals with rights in relation to certain money and property derived from any allowance made by the other party to household expenses or similar and such money or property is treated as belonging to each cohabitant in equal shares.

The SLC suggest that other than considering the wording of section 27 as now being outdated, they noted no particular issues arising with these two sections.

Is “Fair” Enough – The Problem with Section 28?

Chapter 5 looks at Section 28.  Their review is considered in two parts, first, the purpose and the test, and second the remedies offered.

Currently, section 28 provides for financial provision where cohabitation ends otherwise than by death. Under this provision the court can make one of three orders, (1) a cohabitant can be ordered to pay a financial sum to the other; (2) one cohabitant can be ordered to pay a sum to the other for the economic burden of caring for a child of the parties after the end of the cohabitation; and (3) such interim order as the court thinks fit. There is no provision for any periodical allowance, or transfer of property. The section does not provide or mirror the kind of provisions which are available on divorce/or the end of a civil partnership. Any application under section 28 must be made within one year after the day on which the cohabitants cease to cohabit.

Section 28 has generated the most case law and also, a great deal of criticism about how the test is to be applied. The SLC note that consultees consider that the policy objectives of section 28 have not been met and lack clarity. The test itself is unclear and complicated and this is particularly so, when this section is compared against the financial provision tests set out in the Family Law (Scotland) Act 1985 for divorce or the end of a civil partnership.  Additionally, the narrower definition as to what children are included in section 28 has also been criticised.

While Gow v Grant 2013 SC (UKSC) 1 reached the Supreme Court and Lord Hope in giving the court’s judgement clarified that fairness was the guiding principle in determining applications under section 28, it would appear that the terms of that judgement have not been sufficient to provide the necessary guidance to allow courts, practitioners and clients to understand what kind of awards may be made. The “fairness” principle set out in Gow v Grant still provides decisions makers with a wide discretion and there is little guidance in the legislation to assist in the assessment of such applications.

As Lord Drummond Young in Whigham v Owen 2013 SLT 483 said  “… the result is that the court must arrive at an award under s.28 or 29 without any proper guidance in the legislation as to what the amount of that award should be.”.

Looking at different jurisdictions it appears that where rights are given to cohabitants at the end of cohabitation, the rights appear to either align more closely with the rights of spouses/civil partners or alternatively,  they come with detailed guidance as to the legal test, factors or exceptions which are to be considered in their application.

Internationally, where rights have been enshrined in law for cohabitants the concept of “justice and equality” appears to be a recurring theme in those jurisdictions.

If law is to have a practical purpose, resolves issues and provide justice and equality then it would appear that section 28 does not meet these objectives.  The SLC’s paper highlights that the criticisms of section 28 have left practitioners in a difficult position when it comes to advising clients on probable outcomes. It also appears likely that the vagueness of section 28 has deterred parties from pursing legal recourse under these provisions as they do not realistically know what the outcome is likely to be.

The SLC advise that the “The option of leaving the legislation as it was, was  not favoured by any of the groups we have spoken to. Appetite for improvement, greater certainty and clarity and a wider range of possible remedies for parties has not declined since 2010.”

Views are sought on what the terms of this important provision should be.

The second part of the Section 28 review relates to remedies. The SLC note that the remedies available under section 28 are limited when compared to those available on divorce or dissolution in terms of the 1985 Act.

The SLC’s review notes the lack of remedies available (currently only a capital sum payment), has also been much criticised. Consideration of what other remedies may be appropriate is set out; for example a property transfer order may be seen as a more practical remedy for a number of parties. The SLC highlight that while they are told most actions settle, many do so on a basis that could not be achieved under the current provisions (for example, by agreeing a transfer of property) or on a purely economic basis, having regard to the uncertainty of outcome and the limited orders that are available.

SLC seek views on what alternatives to a capital sum may be appropriate, noting that where there are limited cash resources or there is inadequate capital and a need to provide accommodation for children, alternatives to a capital sum may be welcomed.

You’re Out of Time

Chapter 6 considers the time limits for bringing applications. The SLC note that there is concerning lack of public awareness of this area of the law and this includes the strict time limits that apply.

Section 28(8) provides that applications must be made within 1 year of the date on which parties cease to cohabit.  This provision has been criticised, as while providing a degree of certainty and avoiding stale cases being brought at a later date, it is felt that one year is a relatively short period in which to organise your affairs after cohabitation has ended, particularly when a party may have other more pressing, practical matters to address, before they get round to seeking advice on what legal rights they may have.  In addition to the short time frame currently provided, there is no discretion open to a court to allow late applications. Parties can therefore be severely prejudiced where they fail to meet the time limit.

International comparisons show a number of countries provide longer periods in which to raise proceedings; and a number of countries also provide a right to the court to allow late applications.

The SLC seeks views on whether the time limit should be extended; and should there be an ability for the court to accept late applications and if so, on what basis. Further, should parties be able to agree to extend the time limit, if for example they were in the process of agreeing terms of settlement.  This would negate the requirement to raise proceedings to merely avoid their claim prescribing.

To Agree or Not To Agree?

The use of cohabitation agreements is considered. At present the ordinary law of contract applies to such agreements and there are limited rights to reduce any such agreements. There are no similar provisions, such as those contained in section 16 of the Family Law (Scotland) Act 1985, allowing for cohabitation agreements to be set aside or varied.

SLC seek views as to whether a court should be allowed to have regard to the terms of these agreements when applications for financial provision at the end of cohabitation come before them; and also should there be provision to allow those agreements to be reviewed in the event of perceived unfairness or changes in circumstances, or both.

Unjustified Enrichment is Still Alive and Kicking.

The SLC note that decision of  the Inner House in Pert v McCaffrey [2020] CSIH 5 clarified that the remedy of unjustified enrichment remains available to cohabitants, at least in some circumstances. They note that this decision would have been welcomed by the legal profession given that it clarified that remedies exist for parties where the provisions of the 2006 Act could not be utilised.  However, they also suggest that this common law claim may not provide a solution to everyone who needs it.

Some of the issues that this chapter raise overlap with other chapters, particularly Chapter 6 and the time limit provisions.

The SLC do not seek consultees’ comments on unjustified enrichment, but it is relevant to bear in mind the issues raised by the law of unjustified enrichment when considering comments on time limits and remedies.

Conclusion

Cohabitation is a growth area. Law should be relevant and meet the needs of the society it exists for.  There are important considerations set out in this consultation, which raise questions about the rights of private individuals and the relationships they form.   There is a clear need to consider where the balance lies in 2020 between different types of formal relationships, personal autonomy, and the protection of economically vulnerable parties.

If justice and equality are concepts to be pursued, then this review of cohabitation rights would appear to be overdue.