In 2006, everything changed with regard to cohabitees, thanks to the Family Law (Scotland) Act 2006. Before this Act, rights for cohabiting couples were limited, but since this came into force, cohabitees rights have been revolutionised. The Act clarified who ‘cohabitees’ were, and stated that in the event of a cohabiting relationship breaking down, couples now have the right to make a financial claim against the other in certain circumstances. This claim consists of a capital sum against the other party. It is up to the courts to decide if a capital sum is due, and they must take into account whether one party has suffered an economic advantage due to the other party being in the relationship, and whether that other party has suffered an economic disadvantage.
Case law has developed in this area, and various cases have been decided in Sheriff Courts across the country. Recently, the leading case of Gow v Grant helped clarify some of the different judgements made in the last 10 years. In this case, it was decided that the Act was not intended simply to enable the courts to correct and clear any economic imbalance which has arisen during the cohabiting relationship, but instead it was designed to enable fair compensation to be awarded for contributions made or economic disadvantages suffered by parties in the interests of the relationship. So, what does this mean for you? Well the courts now adopt a ‘broad brush approach’ when making awards to cohabitees. This means that they would perhaps make a capital sum to a woman who has not worked, and has stayed at home to bring up children, whilst her partner has been out working and developing his business.
It is important to note that there is a strict timescale for seeking a claim under the Act. This must be raised within one year of the parties’ separation. In reality, this is not a long time, so if you separate from your cohabiting partner, you should seek legal advice as soon as possible, in case you miss your chance to make a claim.
The Act also gives cohabitees the right to make a claim against the other in the event of death of their cohabitee, if the deceased died with no Will. There is a wide discretion to the court in these circumstances, however there is also a strict 6 month time-scale for this, so if you are in this position, please seek legal advice as soon as possible. A court action can however be raised within the above time-scale, and then simply frozen to allow matters to progress and perhaps settle. If you haven’t raised the action in time, however, you have missed your chance.
So, taking into account this change in law, how can you best protect yourself? Well, often the most obvious difficulty for cohabiting couples is in respect of a house purchase. When two people who are not married buy property together, if one party is contributing more money to the purchase, or the parties have an economic imbalance, then we can draft a Pre-cohabitation Agreement, setting out what would happen in the event of subsequent separation. This agreement would ring fence certain assets, or narrate what each party will receive in the event of a separation. Having this agreement saves a significant amount of legal costs, not to mention emotional strain, if your cohabiting relationship breaks down.