20 December 2016

There is a warning in a recent Inner House decision that people should be very careful about what they agree in a Pre-nuptial or Post-Nuptial agreement.

Ten years ago, the Family Law (Scotland) Act 2006 significantly altered the landscape of family law in Scotland. 

One of the biggest changes it made was the introduction of cohabitants being able to make limited financial claims against each other in the event of their relationship terminating or on the death of one cohabitant.

The law is very clear: couples living together do not have the same rights as married couples and civil partners. However, the law remains unclear as to exactly how much couples will be entitled to if their relationship breaks down or if one of them dies.

The Act provides that claims can be brought when one party has derived an economic advantage and the other party has suffered an economic disadvantage as a result of the cohabitation. However, identifying an economic advantage or disadvantage is not straightforward. Everyone’s circumstances are unique and as a result, there isn’t a set rule as to how such a claim might be quantified.

The court generally adopt a broad brush approach by looking at the parties’ respective financial positions before the relationship and again after the relationship ended. The courts do not expect couples to keep a detailed financial accounting throughout their relationship.

Many people now choose to cohabit rather than marry and for that reason the introduction of cohabitant’s rights is very welcome. It is also appropriate that those who choose not to marry are not automatically put in the same legal position as those who do. However, it is concerning that 10 years on there is still doubt and uncertainty in quantifying claims.

Case law is of limited use as each case turns on its own facts and circumstances. There is also a lack of cases progressing through the court to give clear guidance on how cohabitation claims should be determined. This suggests that parties are negotiating with each other and reaching a resolution themselves without risking the uncertainty that court action will inevitably bring.

It is therefore sensible and prudent, if you are moving in with your partner, to consider having a cohabitation agreement drafted. This can provide very clearly for what is to happen in the event that your relationship subsequently breaks down.

There are very strict time limits to initiate a cohabitation claim. Following the break down in a relationship, a financial claim will be time barred if not raised in court within 12 months. After the death of a cohabitant, the time bar is even shorter at just 6 months. It is therefore imperative that early advice is sought, in either case.

Contacts

Debbie Reekie, Associate, der@bto.co.uk   T. 0131 222 2939
Sarah Feeney, Senior Solicitor, slf@bto.co.uk   T. 0131 222 2939