Lesley Gordon

The number of cohabiting families in the UK has almost doubled in the last 20 years and, in 2006, Scotland led the way by introducing legal protection for cohabitants from unfair situations arising in the event of separation or death.

As a result, cohabitants can now seek financial compensation at the end of their relationship, when one party can demonstrate economic disadvantage as a result of the relationship, and the other party has a corresponding advantage.

The legislation allows the courts a high degree of discretion when assessing claims and many have watched with interest as a variety of cases have been considered. The Supreme Court decision in Gow v Grant [2012] UKSC 29 is the leading authority on cohabitation claims and provided important clarification on the interpretation of the 2006 Act. It focused on where parties were at the start of the relationship, compared to their circumstances at the end, to achieve broad fairness between the parties.

The more recent case of M v S [2017] CSOH 151 showed that the courts were willing to grant large capital settlements to cohabitants, when more than £900,000 was awarded. Both parties had progressed their careers / business interests during their relationship, and incurred joint expenses for living and childcare costs.

The pursuer didn’t ask for an award based on the financial position overall, but two specific disadvantages, the first in relation to contributions made to a farm. The pursuer made payments of £600 pcm into the joint bank account towards the mortgage. This was half of the mortgage payment. When the mortgage rate reduced she continued to pay £600 pcm and eventually her monthly contribution was double the mortgage payment.

She sought half of the increase in the value of the farm during the period of cohabitation, after deduction for renovations carried out by the defender. Secondly, she sought redress for the disadvantage she had suffered in the interests of the parties’ two children. She had reduced her working hours and she sought one half of her income loss – recognising that it should be shared between her and the defender. The court agreed in both instances these were fair and appropriate ways to quantify her claim.

We recently acted in a complex claim in the Court of Session which resulted in the highest capital sum to date in a cohabitation case in Scotland. A payment of more than £2 million was granted. Our case was based on very specific advantages and disadvantages. The defender had benefited to the extent of one half of the value of two properties purchased in joint names, but paid for entirely using the pursuer’s pre-relationship assets. In addition, the defender had benefited by receiving sums from the sale of the pursuer’s business. The defender also became involved in the business to facilitate a tax-efficient sale. The capital sum repaid corrected the resulting unfairness.

It’s encouraging that we are seeing a move away from a “broad brush” approach, and greater certainty in cohabitation cases can only be positive for the many cohabiting families in Scotland. However, the arguments in such cases will undoubtedly continue to require careful consideration.

The Scottish Law Commission will soon re-examine the legislation governing claims by cohabitants and we may see some aspects of the regime modernised. There’s a suggestion that the Family Law (Scotland) Act 1985, which provides a regime for financial provision following the breakdown of a marriage or civil partnership, may provide a useful model for consideration on the breakdown of cohabitation. That would certainly provide greater certainty over the current cohabitation regime. We await developments with interest.

Lesley Grant is a partner at BTO