This week, 25-29 November, marks Cohabitation Awareness Week, organised by Resolution. This organisation campaigns on policy issues relevant to family justice professionals. This year’s topic seems highly fitting in an area that remains unfamiliar to those to whom it applies, and difficult for practitioners to advise on.
The law regarding cohabitation was set down in the Family Law (Scotland) Act 2006. For the first time, cohabitants living in Scotland were given specified rights available to them upon separation, or in the event either cohabitant were to pass away. Here, we will focus on rights upon separation.
Cohabitation is the legal term applied to unmarried partners living together in a relationship as if they married, but haven’t gone through this ceremony.
Cohabitation isn’t a “common law marriage” and the possible rights that might apply are completely different to marriage.
As a starting point, the rights are not automatic and must either be negotiated or pursued in court. There is a strict timescale for doing this – one year after the date of separation. There is no maximum or minimum time for the relationship to have endured for these rules to apply, as long as the relationship is a cohabitation then this law applies.
There are further differences when looking at financial claims available to cohabitants. The right essentially extends to a capital sum to be awarded from one cohabitant to the other. Essentially the capital sum is viewed as a form of compensation to take into account any financial imbalance, rather than equal division of all the property that has been acquired during the period of the relationship (as is the starting point in divorce cases). It is not possible to obtain pension sharing orders, or property transfer orders, through the courts in cohabitation cases, although of course these aspects can be negotiated and agreed. There is also the possibility of seeking a capital sum or regular interim payments for the costs of childcare where there is a child or children of the relationship.
In calculating the appropriate capital sum payment, there isn’t a concept of “cohabitation property” like matrimonial property. Instead what you are looking at is the following:
Whether he/she had suffered an economic disadvantage during the period of the relationship; and that the economic disadvantage had not been offset by an equivalent economic advantage during the period of their relationship.
Each case depends on its own circumstances and, as any award would be down to the discretion of a Sheriff or Judge dealing with an application for a capital sum claim, it is difficult to advise what exactly to expect upon separation from a cohabiting relationship.
An entirely discretionary approach is taken, going through a balancing exercise looking at the circumstances where there has been financial advantage to one party in the relationship, against financial disadvantage between the couple. As this is so wide ranging, this can be a difficult and intrusive exercise, particularly as you are not just restricted to what assets were in the relationship at the date of separation. Technically speaking, everything is capable of being scrutinised. Whilst claims such as pension share or property transfers cannot be made, this does not mean those assets escape scrutiny. Their values may be requested or considered to work out the value of a capital sum payment due from one person to the other. Also, if a capital sum award is granted, it may mean one person has to sell property or commercial assets to meet a cohabitation claim.
Due to the strict time limits in making cohabitation claims upon separation, there has been an increase in court actions which are raised and then sisted (paused) until settlement is agreed. This then protects the case from becoming time barred after one year. However the result is that this can often be an unnecessary expense where a settlement is thereafter agreed through other means – for example mediation or solicitor negotiations.
The benefit of Scottish law is that cohabitants have rights available to them upon separation to a financial claim, which is not possible in other jurisdictions. However, there remains a lack of awareness of those rights, or even the time limit to obtain those rights. This means that sadly there remain people who are entirely unaware of these options being available to them, or by the time they realise their options the one year time limit it up.
Conversely, there are those who were also unaware of potential rights and are faced with litigation and lengthy negotiations in trying to agree any financial claims upon separation. The law remains uncertain as to exactly what to expect in these cases and much financial information needs to be produced.
Either way, it is clear that there is a real benefit to entering into a cohabitation contract when moving in or buying a property with your partner to cater for future financial claims and provide much needed certainty.
Such awareness weeks in this area are to be welcomed, and advice should always be taken if there is any uncertainty as to rights or potential rights available to cohabitants.