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Appeal judges reduce award in first civil partnership finance dispute

The Court of Appeal has overturned a first instance decision to award an actor £1.7m following the break-up of his civil partnership to a City analyst. The case is believed to be the first financial dispute following the dissolution of a civil partnership.

29 March 2012

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The decision reduces the award to actor Donald Gallagher by £320,000.

The court heard the challenge on the basis that the original estimate of the couple’s joint assets had been flawed.

Allowing the appeal in Lawrence v Gallagher [2012] EWCA Civ 394, Thorpe LJ said the first instance judge followed “too theoretical a map” to arrive at a fair outcome and that there was “no rationality” for the £577,778 lump sum award.

He reduced it to £350,000 and also removed Lawrence’s bonuses from the settlement but confirmed the £200,000 pension sharing order.

The original £1.7m settlement decided by Mrs Justice Parker included a property near Bankside, in London, that Lawrence bought before he met Gallagher.

Valued at £650,000 in 1995 the flat at Clink Wharf is now worth an estimated £2.4m and the JP Morgan analyst argued it should not have been treated as a shared asset.

In the meantime, the couple jointly bought a cottage in Sussex, valued at £822,000.

Thorpe LJ said the £1.7m capital appreciation on the London flat should not have been taken into account literally when determining the value of joint assets.

It was, the judge said: “The product of the demand for London properties in good locations, simply not matched by the performance of country cottages however pleasantly situated.”

“A crude comparison of the respective market values alone gives a misleading impression of the relative desirability of the two properties,” he added.

He said the main concern for judges considering similar cases was to ensure each of the parties had “a home of his own” and then “what funds are necessary for each to live comfortably in their own homes”.

Commenting on the decision and on behalf of Don Gallagher, James Ferguson, a partner in the family team at Boodle Hatfield said: “In one sense, this is a disappointing decision for my client. The High Court judge’s decision has been overturned, despite the fact that the appeal judge described it as ‘a careful and conscientious judgment’.

“The appeal judge was critical of the High Court judge’s method of calculating the lump sum figure of £577,778 but failed to set out the rationale for substituting it with the lower figure of £350,000.

“Although the Court of Appeal made it clear that civil partnership dissolution cases should be treated in exactly the same way as divorces, it is questionable whether the outcome would have been the same if the facts had been transposed to an 11.7 year heterosexual marriage.”

Actor Donald Gallagher, who recently starred in the West End musical Priscilla, Queen of the Desert, and investment banker Peter Lawrence cohabited for 11 years before entering into a civil partnership which only lasted seven months.

Last June, Mrs Justice Parker made a £1.7m award in favour of Gallagher, based on total joint assets of £4m.

Gallagher’s lawyers argued that although his assets were a comparatively modest £40,000 when he met Lawrence, he was the homemaker in the relationship.

The actor helped “create and maintain a lovely home in the flat in various ways – soft furnishings, planting on balconies, improvement of layout and fixtures, redecoration”, they said.

But Patrick Chamberlain QC, for Lawrence, argued that it would be wrong to use the principles applicable to divorce to the dissolution of a civil partnership.

For the full judgment see http://www.judiciary.gov.uk/Resources/JCO/Documents/Judgments/lawrence-gallagher-judgment.pdf

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