When are ‘contributions’ relevant?
As quickly as the sadness of a relationship breakdown begins to fade, anger, and often unreasonableness, generally appear next on the emotional ‘menu’.
Second only to the death of a loved one and just above the stress of moving house, divorce is, as we are all aware, an emotional rollercoaster.
Anger and unreasonableness are very closely aligned to the question of money and, very often, attention turns to the ‘contributions’ that either party has made during the relationship that recently ended. We are all human, after all and, perhaps, that is a sad indictment of the species, but one where this question almost always arises during initial conversations. Reflecting on this theme has prompted me to write this blog piece.
Most of this piece will centre on the aspect of ‘contributions’ within a marriage and therefore consideration which will be given to those ‘contributions’, when considering a division of the marital assets on divorce. I will end the piece with a short discussion on ‘contributions’ in a cohabiting relationship.
‘Contributions’ during a marriage
In short, the two forms of ‘contribution’ most common are financial and non-financial. By financial we mean of money/payments, etc., and of a non-financial nature we would mean anything else, such as childcare/homemaking.
The general rule applied in nearly all matters is that the needs of the respective parties, and particularly of any minor children from that relationship, will take priority over all else, including the ‘contributions’ made. Afterwards, the length of the relationship will dictate whether any consideration will be given to ‘contributions’ and the longer a relationship, the far less those ‘contributions’ will be considered as relevant to the outcome. The exception is where the assets far exceed the need of the parties, i.e. ultra high wealth matters.
I use the word ‘relationship’ here, deliberately from the word ‘marriage’. There is significant law, precedent, and judicial indication that where cohabitation before marriage exists, i.e. living as if married; sharing financial burdens jointly i.e. a mortgage; or pooling of resources in a joint account, then the length of the marriage for determining a financial division, shall be considered to extend beyond the actual date the parties formally got married.
As the needs of the respective parties takes priority, it is, therefore, usually irrelevant that one party has ‘always paid the mortgage’, or the ‘monthly bills’.
It is neither more important that one party has always been the homemaker, while the other has been the breadwinner in the relationship either. I would refer to my previous blog post on equality not necessarily being a 50/50 division which considers these roles further, in the round of division of marital assets on divorce.
That is not to say that ‘contributions’ will be dismissed, ‘out of hand’. They will always be considered as a circumstance of the case; the court being required to do so in order to discharge its duty under section 25 of the Matrimonial Causes Act 1973 (MCA). The weight given to such consideration changes based on other factors, most notably the need of each party.
Where financial ‘contributions’, particularly, will be given more weight, is often based on timing.
In a short, childless, marriage (deliberately used because of the explanation below), ‘contributions’ are a much greater consideration because the primary need dictating the division of assets – (minor/dependent) children – is not present. In such cases, for example, the financial ‘contribution’ of a property that was present at the beginning of a relationship (deliberately used, as explained above), or of an inheritance received prior to, or during, the relationship can be ringfenced as being an asset to be returned to the party that ‘contributed’ it.
Where a financial inheritance is received late on in the marriage, and perhaps during the part of it when the emotional aspect of the marriage has already broken down, or a physical separation has taken place, that asset is viewed slightly differently to the marital assets that have accrued, such as a jointly owned property, investments, or pensions. Where the needs of the parties can be met, wholly or largely, from the marital assets accrued, the inheritance can be left untouched. However, if the needs cannot be met without recourse to that inheritance, regardless of when it was received, it will be used to meet the parties’ needs.
In certain circumstances, an asset which has been contributed by one party and has never been considered marital, or joint, but only used by one party, and only maintained, and paid for, by one party can be ‘ringfenced’, subject, again, to the needs of the parties being met.
‘Contributions’ in a co-habiting relationship
To add a further layer of complexity, due to the continuing lack of applicable law for cohabitants a mishmash of law and precedent cases/judicial indication dictate when ‘contributions’ may be considered.
The most obvious scenario is where cohabitants jointly own a property during the relationship.
When the relationship breaks down, there is no applicable law – such as divorce – which dictates what must be considered. Instead, the Law of Property Act (LPA) and The Trust of Land and Appointment of Trustees Act (ToLATA) provide some guidance.
Above all, however, the determining factor is often how the property is held, i.e. in whose name is the property registered.
Where the property is registered in joint names, the starting point will be an equal division of the equity in accordance with that ownership regardless of ‘contribution’, unless there is a specific Declaration of Trust or Cohabitation Agreement in place. Where additional ‘contributions’ have been made – such as sole payments to a joint mortgage which one party seeks to be returned – evidence will be key. In the absence of voluntary agreement for such credit to be given, a ToLATA application must be made, and the case will be tried on the evidence as to the contributions alleged.
Where the property is registered in a sole cohabitant’s name, the non-named cohabitee faces an uphill battle to prove an interest in the property. The onus of displacing a presumption of sole ownership – as directed by the property title with the Land Registry – lies on the party contending for a different outcome. That party must establish, firstly, that the parties had a different common intention than the one indicated by the ownership documents. In the absence of any document to the contrary, the challenge is to convince a court that the conduct of the parties – how they acted during the relationship, such as significant financial ‘contribution’, or payment of the mortgage – was such that it was reasonably understood the intention was different than the ownership documents suggest.
Notice that the use of the wording deliberately leaves plenty of room for objectivity and discretion.
In such cases, a co-habitation agreement is often advisable, particularly before an investment is made, or a Declaration of Trust is created before property is purchased, especially where unequal contributions to the purchase price are being made, which clearly and explicitly provides for the property to be held in unequal terms. Here, unlike in a marriage, those documents will carry much more weight, as there is almost no provision to address, or requirement to meet, the needs of the parties on the breakdown of a cohabiting relationship as there is under the MCA.
Complicating matters further, where there are children born of a cohabiting relationship (and where needs are not considered on the breakdown of such a relationship) the Children Act Schedule 1 provides a route to enable the primary carer for the child to seek a formal court order that, regardless of ‘contributions’ or property title ownership, financial provision is made for the child while they remain a minor (i.e. up to the age of 18, usually). That provision can be in the form of a property for them to live in with the primary carer, or for monthly/annual financial assistance from the non-primary carer to meet regular or education needs. That is a whole other blog post in the making, however.
Please do contact us to discuss your particular circumstances, so you can be sure of your position and any next steps to take. Contact family law solicitors in our Brailes office to book your appointment.
