Couples frequently purchase their shared home and commonly their most valuable asset with little or no discussion as to the extent of their respective interests in the property. The Court of Appeal recently reflected upon the law applicable to cohabiting couples and upon the Courts approach to determining the parties’ beneficial interests in respect of their property (whether owned in the parties’ joint names or one party’s sole name).

The Courts seek to uncover the parties express intentions with regard to shared ownership yet it appears few couples enter into any verbal or written agreement at the time of purchasing a property or moving in together. In the absence of any such agreement the Courts adopt a ‘holistic approach’ to the ‘whole course of dealings’ between the parties in order to infer a common intention to share the property from the parties conduct. Therefore beneficial interests may be deduced from examination of the parties’ financial contributions to mortgage repayments and household outgoings. Most recently the Court was faced with unravelling the parties’ intentions some 12 years after their separation in the case of Kernott v Jones. In this case the change in the parties’ attitudes and approach to the property post-separation created difficulties in evaluating the parties course of dealings.

The case was described as a cautionary tale as the Courts emphasised the dangers inherent in the failure of cohabiting couples to ‘address their minds to the size and fate of their respective beneficial interest on acquisition, separation and thereafter.’ Critics suggest reform of the law relating to cohabitants is long overdue.  The Courts aim to ensure a fair outcome in the circumstances however the Court’s focus upon inference of a common intention to share ownership in the absence of express agreement permits a large degree of uncertainty. Whilst legislative overhaul of this area of law is not forthcoming it is essential for shrewd couples to heed these words of warning from the Courts and take matters into their own hands by entering into cohabitation agreements.

Proposals to introduce an EU regulation to determine the country in which couples of different European nationalities are able to issue Divorce proceedings (as considered in a previous blog of 6th May 2010) have now been endorsed by Austria, Belgium, Bulgaria, France, Germany, Hungary, Italy, Latvia, Luxembourg, Malta, Portugal, Romania, Slovenia and Spain.

There is considerable momentum for change to the current system to simplify the rules applicable to cross-border divorces and allow couples to elect the country where their Divorce will be heard. This choice will be subject to the parties establishing a ‘close link’ to the Member State (such as long term residence or nationality). It is intended that these reforms will reduce the risk of one spouse rushing to issue proceedings to ensure a Court of their preference is seized with control of their Divorce.

These changes are welcomed to ensure greater certainty and predictability for international couples and ensure spouses are not able to exploit an unfair advantage. The impact of these reforms will however be restricted as the regulations will only be binding upon the14 participating Member States.

The reforms must now be referred for consultation before the EU Parliament and we therefore wait to learn if this legislation will be passed.

The case arising from the separation of husband and wife Lisa Tchenguiz and Vivian Imerman recently reported in the press involved two brothers who took matters into their own hands to assist their sister Lisa Tchenguiz in protecting her financial position following the issue of Divorce Proceedings. The Tchenguiz brothers, who worked alongside their brother-in-law Mr Imerman, accessed and removed a large quantity of material from a shared computer system totalling 7 lever arch files supplied to the wife’s solicitors. Whilst the Judge criticised the conduct of the brothers as ‘extreme’ behaviour, the circumstances of the case nonetheless highlight the scepticism rife in the matrimonial context where spouses are frequently cautious of accepting disclosure provided by their partner at face value where trust has so often broken down between them.

Where matrimonial financial matters are concerned there is a clear obligation on both parties to make full and frank financial disclosure of all material facts and relevant financial documents however the parties may be reluctant to rely on their spouse adopting an honest and fair approach to their disclosure obligations. The higher the stakes the greater may be the suspicion of concealment of assets as in the case of Lisa Tchenguiz where a multi-million pound matrimonial pot remains to be divided between the parties.

The Court sanctions for non-disclosure by either party to proceedings include costs orders against the offending party attributable to their non-disclosure. However faith in the current system may be undermined when it is considered that the majority of cases result in a negotiated settlement without the necessity to revert to the Courts and such orders do not therefore come into play.