Cohabitees' rights unchanged

11 Aug 2004

In an earlier Life Matters we focused on issues affecting unmarried people living together and the legal position if they separate at a later date. The recent case of Elayne Oxley and Allan Hiscock received some attention in the national press. Newspaper reports of the case may have given the misleading impression that unmarried cohabitees have been given additional rights on separation, moving their position in law closer to that of married people so now is a good time to revisit the subject. Their case is also a good example of why you should record how a property is to be owned before moving in together.

The start of the relationship

Mr Hiscock and Ms Oxley's relationship began in the mid-1980's, but Mr Hiscock was frequently working abroad. When he was in England he lived in Ms Oxley's home at 39 Page Close, Bean, Kent. This was a council house and at his suggestion she exercised her right to buy at a significant discount. The whole of the purchase price was provided by Mr Hiscock with his investment being protected by a mortgage over the property. In 1991 they moved to 35 Dickens Close, Hartley, Kent. The price of the house was 127,000 and the property was to be registered in Mr Hiscock's sole name. He contributed £60,700 (which included the amount he had paid to buy the former council house which was now being sold) and Ms Oxley contributed £36,300 to the purchase price of their new house. The balance of the purchase price was raised with a mortgage of £30,000.

The solicitors acting on the purchase of 35 Dickens Close were concerned about Ms Oxley's position. They pointed out that if a dispute arose in the future Ms Oxley would have difficulty in establishing a claim in respect of any investment she had made in the house. They suggested that the property should be purchased jointly, or at least Mr Hiscock should enter into a Trust Deed to set out their respective shares in the property. Alternatively, Ms Oxley could have a second mortgage on the house. Notwithstanding this sound advice Ms Oxley said that she was quite satisfied with the arrangements and she felt she knew Mr Hiscock well enough not to need to protect her position formally. 35 Dickens Close became their home with both parties making improvements to the property and each contributing towards the total outgoings. Curiously when the matter went to court there was no evidence as to how the mortgage was paid. The Court of Appeal concluded that it was arguable that the parties should be treated as having contributed equally to the mortgage repayments.

The end of the relationship

Mr Hiscock and Ms Oxley's relationship broke down and 35 Dickens Close was sold. A dispute arose as to how the sale proceeds should be divided. The Judge ordered that the net proceeds should be divided equally as she found that "there was an intention to share the benefit and burden of the property jointly and equally". Mr Hiscock appealed. The Court of Appeal considered that the Judge had placed undue weight on the fact that the parties had regarded both 39 Page Close and 35 Dickens Close as their joint homes. They said it does not follow from the fact that parties live together in a property they both regard as their home that they share its ownership equally. The Court of Appeal's view was that in this case the question to be asked was "what would be a fair share for each party having regard to the whole course of dealing between them in relation to the property?" They concluded that it would be unfair to Mr Hiscock if there was to be an equal division of the net proceeds as it would give insufficient weight to the fact that his direct contribution to the purchase price was nearly twice that of Ms Oxley's. As there was a subsequent "classic pooling of resources" it would be fair to treat them as having made approximately equal contributions to the balance of the purchase price, via the mortgage repayments. As a result the Court of Appeal awarded a 60/40 split in Mr Hiscock's favour.

Conclusion

Despite the reports in the press there has been no significant change in judicial approach. The case has helped clarify the law and when resolving cohabitee disputes one must look at how people have dealt with a property throughout their relationship. When purchasing a property with another it is always sensible formally to set out in writing your common intentions. Depending on individual circumstances these may be recorded on the title to the property at the Land Registry, in a trust deed, by way of a mortgage, or in appropriate circumstances in a cohabitation contract. As this case illustrates failure to do so may result in lengthy and costly litigation at a later date.

For more information, please contact Philip Rutter on 020 7468 7287

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