Cohabitation and Separation - a developing line of case law

Posted On: 31 August 2011

Author: Alison M Wild

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Cohabitation and separation – a developing line of case law

Since 4 May 2006, The Family Law (Scotland) Act 2006 (“the 2006 Act”) has given cohabitants the right to make a claim for financial provision following the breakdown of their relationship or where a cohabitant dies intestate.  For the purposes of this article, I will be concentrating on the provisions in section 28 of the 2006 Act which deals with the breakdown of a relationship.  The provisions are not as detailed as those for divorcing couples and that has caused some difficulty in knowing how to advise former cohabitees.  It is helpful that some cases have now been decided and a few awards have been made. 

A recent case is Lindsay v Murphy 2010 GWD 29-604. The circumstances were unusual in that throughout the cohabitation, neither of the parties were in employment and their income comprised various benefits.  However, they built a house which was latterly worth in the region of £350,000 and was unencumbered by any secured loans.

The parties started dating in about 1992 and the relationship became serious in about 1997.  In 1998, the pursuer had their first child.  She had been in full time employment but she did not return to work after her maternity leave.  When they met, the pursuer was living in a council house which she owned jointly with her mother, her mother having been the original tenant. 

In October 2001, the defender moved into the pursuer’s home and the parties began to cohabit. By this time they had two children together.  In 2003, the parties bought a plot of land in joint names for £6,000.  The original owner of the land was a lady who kept her horse on it.  She wanted someone to look after her horse and sold the land for £6,000 to the defender’s brother.  Meantime, the pursuer obtained outline planning permission for the land which increased the value of the land to £80,000.  Regardless, the defender’s brother transferred the land to the parties for the sum he purchased it for.  A few months later, the pursuer and her mother sold the council house.  A house was then built on the land, using the whole proceeds of sale of the council house, the pursuer’s mother having allowed her to use her share.  In 2004, the pursuer intended to return to work, but found that she was pregnant with the parties’ third child.  The house had not been finished and the pursuer’s mother provided further financial support in the sum of £29,500 to complete the house build.  The pursuer had obtained a quote from a professional builder and had ascertained that for a professional contractor to build the house, the total cost would have been £220,000.  By carrying out much of the contractor’s role, the parties saved £136,500 on the project.

The parties separated on 24 September 2007 and the pursuer moved out of the house with the children.  As at 1 September 2008, the house was valued at £350,000.  In November 2008, the parties entered into an irrevocable agreement to sell the house.   Effectively, during the cohabitation, although neither party was in employment, but they both gained a significant economic advantage as a consequence of the building of their home.

At the time of proof, there had been little interest in the property.  The two older children were at primary school and the youngest was at a pre-school nursery, the pursuer having returned to work in January 2010.

The sheriff looked at the five elements that made up the value of the house – the value of the purchase price of the land; the estimated increase in the value of the land with planning permission; the costs of construction; the saving in not employing a contractor to build the house and the increase in value since construction.  He considered how each of the parties had contributed to the five elements.

 

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