What’s Yours is Mine and what’s Mine is Mine

Solicitors receive more calls regarding separation and divorce in January than at any other time of the year. This article provides an overview of the considerations in property related disputes for unmarried couples which are dealt with the under the Trusts of Land and Appointment of Trustees Act 1996 (“TOLATA”).

There is still no law giving cohabiting couples the same rights as those who are married although there are proposals for better protection in the future.  However, it is a long time coming.

Setting the scene:

It is New Year.  Your client appears with bank statements from the start of the relationship, handwritten statements and notes on pieces of paper from “friends”, files of B&Q receipts, supermarket receipts for food and drink which the other party denies having ever consumed because, they say, they now buy their own. Emotions are high, and so are the stakes. Your client says with all certainty that she or he is the “common law” husband or wife and they want their share of the so called matrimonial home.

First of all – there is no such thing as a common law wife or husband, even if (as the client states) they have been living together as “man and wife” for more than six months.

Secondly, living with another person does not necessarily give rise to an interest in the property.

However, let us assume that the client appears to have a case, or entitlement to a “share”, in the property that he/she is living in.

TOLATA claims

There are three main types of application that can be made under TOLATA:

  • to decide who is entitled to occupy the property
  • to decide the nature and extent of the ownership – a declaration as to shares
  • to ask for an Order that the property be sold so that the proceeds can be divided.

TOLATA does not give the court power to vary or adjust the proportions that each person owns so there is little point in thinking that a court will adjust shares accordingly; it is what it is.

Alternative Dispute Resolution (ADR) and pre-action considerations

Litigation is expensive and so, prior to engaging in full scale litigation and associated costs, ADR or mediation should be considered.  In fact, it should be positively encouraged.  A court may even impose costs sanctions on a party if ADR has not been explored, or if one party has offered ADR/Mediation and the other party has point blank refused without good reason.  ADR should also be considered at all stages of a dispute, not just at the start.

It is also essential to establish as soon as possible the strength or weakness of the case so as to avoid costs liability should the client be unsuccessful at trial. Early instruction of counsel is certainly advisable and a prudent first step is to obtain a copy of the conveyancing file if it is available to see what the parties’ intentions were at the outset.

Clients may be advised to sever any Joint Tenancy so as to become Tenants in Common and make a Will if they do not have one. The Notice of Severance may be registered against the property at the Land Registry and any court claim may also be registered as a pending land action.

The relevant procedure

A pre-action letter before proceedings is sent in the first instance.  It is a requirement for almost all situations.  The CPR states that insofar as possible, even if a specific pre-action protocol does not exist, parties must send a detailed letter of claim setting out the background to the claim and the legal principles relied upon.  It should allow a reasonable time for a response before a claim is issued (14 days for an acknowledgment and 30 days for a full response). In complex cases, a longer period of time may be needed for a full response and, perhaps, the exchange of further relevant documentation.

Urgent situations

It is sometimes necessary to by-pass pre-action conduct because of urgency, for example if an injunction is needed to preserve documents that are relevant to the dispute and one party is unwilling to disclose those voluntarily, or is likely to destroy them.  Another example may be to ensure a property is not dealt with in a way that might prejudice the case until the case is resolved.

Which court has jurisdiction?

If a claim is issued, the starting position is that a county court shall have jurisdiction whatever the amount involved and whatever the value of any fund or asset connected with the proceedings. You may be allocated a Judge with broad experience including family matters, especially if the parties have children.

The High Court may be more suitable for more complex cases, where significant sums of money are involved, and/or more than one property is involved and/or you are seeking ancillary remedies that are not readily available in the County Court.

Offers to settle

During the case, either party may make an offer to settle so as to avoid trial and a trial Judge will certainly expect to see proof that such offers were made.  These offers (known as Without Prejudice Save as to Costs or Part 36 offers) are handed up to the Judge at the end of the trial (if the case gets that far).  A trial Judge will take these offers into account on the question of costs.

FDR

FDR stands for Financial Dispute Resolution.  FDR hearings are often referred to in matrimonial and family matters.

The Civil Chancery Guide extends that concept to TOLATA cases. The procedure must be consensual; the parties must agree to it.  There will be an FDR ‘meeting’, although it is quite unlike any other type of hearing.

It is better described as a meeting in which the judge plays the role of both facilitator and evaluator. It is non-binding and without-prejudice.

The court will try to lead the parties to agree terms but cannot make a determination. The court will set up the meeting and give directions which aims to aid its success.  The parties are expected to attend before the meeting so they may hold initial discussions.

The parties are then called in before the Judge. The meeting is a dynamic process which has some similarities with an initial mediation meeting. If the parties request it, the judge may express an opinion about the issue or the claim as a whole.

Costs

The general rule is that “costs follow the event”. A successful claimant will recover their legal costs (or a proportion of them) and a successful defendant will also be entitled to the same should he or she succeed at trial. However, a court does have the power to make costs orders that it considers “does justice” to the case overall for example that there have been well pitched offers to settle throughout the case.

If you would like further advice about a potential cohabitation property dispute please contact our Property Dispute Resolution Team (and our Family Team if you have children).

Claire Lyon

E: Claire.lyon@dwfmbeckmman.com

T: 020 7408 8888