Financial remedy upon dissolution of civil partnership

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On 27 November the Supreme Court refused permission to appeal in Lawrence v Gallagher (details of the case are set out below) on the basis that it did not raise a point of law of general public importance.

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The Court of Appeal, in March 2012, handed down their Judgment in the first reported civil partnership case, Lawrence –v- Gallagher [2012] EWCA CIV 394.

Contrary to some of the news headlines which described the case as a test case as to whether financial remedies on civil partnership dissolution were to be different to those upon divorce, the Court of Appeal confirmed that the principle applied in financial cses are the same whether the couple were married or civil partners.

What the Court was being asked was to address the issue of how to divide the assets which were, on the whole, brought into the relationship by one party.

The Court was being asked how much Mr Gallagher, a successful actor, should receive as there had been a significant increase in the value of a property owned by his partner, Mr Lawrence, a financial analyst with J P Morgan.

Mr Lawrence and Mr Gallagher lived together for 11 years prior to entering a civil partnership in December 2007; their relationship broke down 7 months later. Mr Lawrence owned an apartment in Clink Wharf, London which he had renovated prior to the relationship with Mr Gallagher. It had a value, at the time of the Court Hearing, of £2.4m; he also had some savings and pension provision. Mr Gallagher entered the relationship with approximately £40,000. The two men owned a property in Sussex, Pine Cottage, which was subject to a Trust Deed setting out their respective shares (Mr Lawrence 62%, Mr Gallagher 38%). At the time the case was first before the Court it had a net value of £822,000. The total assets had a value of around £4m.

At first instance, Mrs Justice Parker awarded Mr Gallagher approximately £1.7m in total. The Court took account of the fact that the apartment in Clink Wharf had risen in value from the original purchase price of £650,000, the award gave Mr Gallagher a share of that gain.

Mr Lawrence sought to challenge Mrs Justice Parker’s Order in the Court of Appeal.

The Court of Appeal allowed Mr Lawrence’s appeal. LJ Thorpe gave the leading judgment commenting that the case was comparatively simple and it was self evident that following the breakdown of their relationship, what each party needed was a home of their own, and consequently Mr Lawrence should retain Clink Wharf while Mr Gallagher should have Pine Cottage.

Although Mr Lawrence was successful in securing a reduction from the original award it was by only a modest amount. Whilst L J Thorpe acknowledged the challenges to the original order to be correct, his view was the impact on the overall position was minor. He pointed out that until and unless the law is changed to provide clarity in relation to ‘non-matrimonial property’ or how one party should meet another’s need on relationship breakdown, “we must never forget the legislated checklist” (being the factors set out at s25 of the Matrimonial Causes Act 1973). Further, “the fact that the claim arises from the dissolution of a civil partnership rather than a marriage is of little moment since it is common ground that the language of Schedule 5 to the Civil Partnership Act 2004 is identical to the language of s25 of the Matrimonial Causes Act 1973”

The Law Commission is to undertake a review of two aspects of the law that entitle couples to claim financial provision from one another on divorce/dissolution. The Commission will examine the extent to which one party should be required to meet the other’s needs after the relationship has ended. It will also consider how what is commonly referred to as ‘non-marital property’ (acquired by either party prior to marriage/civil partnership, or received as a gift or inheritance) should be treated on divorce or dissolution. It is however unlikely that there will be any change to the law in foreseeable future as the Law Commission’s report is not expected before late 2013.

For further information, please contact the author Lindsey Alexander, Partner & Collaborative Lawyer

© TWM Solicitors LLP 2012 - All Rights Reserved.  Information contained in this article does not constitute legal advice and is provided for information purposes only.  Recipients should not act upon it, but should seek legal advice relevant to their own situation.

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