Why cohabiting women should take care to protect their own interests
Earlier this year, Elissa Da Costa-Waldman successfully represented a cohabitant in her claim to be entitled to the entire proceeds of sale from a house she owned in her sole name, after the relationship broke down and her former partner claimed the property was his. Elissa argues that while her client was successful in this case, there needs to be more knowledge shared regarding rights over property in relationships and better advice at the conveyancing stage to protect people in her client’s position.
In July 2016, the case of Cahill v Farrer case hit the headlines in a number of newspapers, when the judge ruled that Stephen Farrer was not entitled to receive any of the net profits from the sale of a £1 million house owned by his former partner, Kirsty Cahill.
The case turned on whether the funds provided by Mr Farrer to bridge the gap between Kirsty’s self-certified mortgage and the purchase price were a gift or a contribution to the purchase price, entitling Mr Farrer to share in the net sale proceeds. The problem arose out of an act of humiliation of his cohabitant and the mother of his three children. Farrer made it clear that he would never marry again having been “stung” by a previous divorce. In a heartless gesture just two months after the birth of their third child, at Christmas in front of Kirsty’s family, he got down on one knee and offered his grandmother’s ring to Ms Cahill but whispered that it was not an engagement ring. Ms Cahill, concerned at her continued financial insecurity insisted that if he was not going to marry her and their relationship broke down, she should have something. Mr Farrer agreed, which led to the purchase of the disputed property, bought as an investment property to ensure the financial security Kirsty very sensibly sought.
When the relationship broke down, Mr Farrer claimed that the house was his and that he was entitled to some or all of the proceeds when the house was sold.
The couple had met when Ms Cahill was a teenager, besotted by someone who was 20 years older than her. At the time of the proceedings they had been in a relationship for 20 years. Mr Farrer controlled everything in the relationship, from the money to Ms Cahill herself including managing the conveyancing process when the disputed property was purchased. Mr Farrer told the court that the purchase of the house in Ms Cahill’s sole name was “merely a mechanism for raising finance and the property would be beneficially owned by him and be part of his property development business.”
The Court found in favour of Ms Cahill that she was indeed the sole legal and beneficial owner and thus entitled to the entirety of the net proceeds of sale.
It was recognised by both counsel and the judge that this case really turned on the facts and not the law. His Honour Judge Gerald made the point that while the relationship subsisted, Mr Farrer was content for Ms Cahill to be the sole owner of the property but his views changed when the relationship soured, hence his change of heart that the money he contributed was no longer consider a gift and he convinced himself and sought to convince others, notably the court, that Ms Cahill was his nominee and that the property and later its proceeds of sale were rightfully his. The judge did not accept this, and awarded the proceeds of sale, misappropriated rental income and legal costs to Ms Cahill.
Ms Cahill succeeded, but there will be many more like her who will reach their fifties with no financial security and be cast out from their family homes because, unlike her, they failed to achieve any form of financial protection.
This case highlights the need for legislation to protect the hapless cohabitant as well as the need for those who conduct conveyancing for cohabiting couples to suggest having a cohabitation agreement, particularly where there are disparate contributions to the purchase price. At the very least, there should be firm and clear advice as to the different ways in which property can be owned and the pitfalls of not taking that advice.
This case also highlights the ‘knowledge deficit’ that indicates that Josephine Public still thinks there is such a thing as the ‘common law wife’ and that such a ‘wife’ has rights in these relationships or that simply being a cohabitant for six months or more gives them those rights. It does not.
The safeguards are to enter into a living together agreement setting out all the rights and obligations of the financial relationship between the parties and/or to ensure that in any property transactions both parties are separately represented, especially in the case of the financially weaker party. Time, effort and indeed legal fees involved in taking this sensible course of action at the outset of the relationship/property purchase represents sound insurance against expensive, protracted and emotionally draining litigation in the future.