The Family Law (Scotland) Act 2006 ("the 2006 Act") has been
causing headaches for family lawyers and their clients since it
came into force in May 2006. The main issue with the provisions for
separating couples is that the legislation is ambiguous and overly
complicated. Until now the law has not been tested by the appeal
courts. Indeed only a handful of claims have gone to a final
hearing with the vast majority settling out of court. The decision
of the Inner House of the Court of Session in the first Appeal
concerning the rights of cohabitants on separation in the case of
Gow v Grant, has clarified matters to a degree.
The Case
The facts of Gow v Grant are relatively
straightforward, and all too common. Mr Grant and Ms Gow met in
2001. They began living together in a property owned by Mr Grant in
June 2003. Their relationship ended in January 2008. During their
relationship, Ms Gow sold a property in her sole name.
Ms Gow raised a court action seeking a capital sum payment as
she claimed that she had suffered a financial disadvantage in the
interests of Mr Grant because she had sold her flat when they were
living together.
The Sheriff at Edinburgh agreed with Ms Gow and awarded her a
lump sum of £39,500. Mr Grant appealed this decision and succeeded
on appeal in overturning the Sheriff's decision.
Why is it important?
The decision of the Court of Session Judges is significant in
two main respects. Firstly, the Judges took the view that the 2006
Act should not be interpreted in a similar fashion to the law which
governs financial provision on divorce. Individuals who make a
claim when they stop living together should not expect to receive
as much as a spouse would on the breakdown of their marriage.
Secondly, and perhaps more importantly, they took the view that
an award can only be made if the party suffering the financial
disadvantage has done so in a way that was intended to benefit the
defender. This would seem to suggest that in order to be successful
it must be shown that the defender had been financially advantaged
in some way.
Ms Gow failed to satisfy the Appeal Court that any financial
disadvantage she suffered was intended to benefit Mr Grant. The
free proceeds of sale were, however, either used for Ms Gow's own
purposes (she paid off debts in her sole name and gifted funds to
her children) or to meet the parties' joint living expenses. It is
interesting to note that even the latter of these was insufficient
to support her claim. Even the fact that Mr Grant had encouraged Ms
Gow to sell her property was insufficient to draw the inference
that the transaction was in his interest.
What does it mean for you?
This case may help lawyers to dismiss spurious claims more
readily but the law is still developing. The best way to protect
your wealth is to obtain specialist legal advice and to enter into
a Pre-Cohabitation Agreement before moving in with your partner or
before progressing any major transaction such as a sale. That
should avoid any need to raise or defend a claim under Section
28.
Call our specialist team now for advice on
Pre-Cohabitation Agreements and all areas of Family Law.