The quiet revolution

Family law, particularly the making of new family law legislation, can be politically charged. The Law Commission in 2007 proposed that the current patchwork of law relating to cohabitees should be simplified (as it has been in Scotland) under one Act with clear guidelines as to financial provision when unmarried parties separate. The commission suggested bringing the rights of cohabitants a little closer to those of spouses and civil partners. More recently, the commission has recommended changes to the rules of intestacy so that cohabitees should be similarly entitled as spouses on the death of their partner.

The 2007 recommendations regarding financial relief on relationship breakdown were shelved in a rather low-key announcement by the justice minister Bridget Prentice on 6 March 2008. The proposed changes to the intestacy rules may go the same way.

The government's own poll suggests that the majority of people now favour a change to the law so that cohabitees can claim financial relief on relationship breakdown, so why is there no political will to make new law? The reason may be that no political party wants to be seen to be undermining the institution of marriage. The issue is perceived to be a potential vote loser.

In the absence of a legislative framework, it has been left to the judiciary to try to bend common law equitable principles in respect to property to fit the reality of how families pool their energiesand resources.

When the legal title of a property does not reflect how the property is actually owned, the legal process involved in establishing true beneficial ownership can be very complicated. Property disputes between cohabitees can be protracted, expensive and bitter. In the absence of any statutory framework, the courts are obliged to use rigid equitable doctrines of constructive and resulting trusts and proprietary estoppel. These principles are limited in their application and historically have often been unable to take into account factors beyond the fiscal. The evolution of these doctrines in the modern law began with Pettitt [1971] AC 886 and Gissing [1970] AC 777. The key issue was: had there been a common intention to co-own the property.

The common intention might be established by express agreement. It might be implied by the parties' conversations. Finally, it might be inferred from the parties' conduct. It was in relation to this last category, in Lloyds Bank PLC v Rossett [1991] HL, that Lord Bridgegave his oft-quoted view that direct contributions to the purchase price by the partner will justify the inference necessary to create a constructive trust but 'it is at least extremely doubtful whether anything else will do'.

This was a narrow interpretation and in the eyes of many practitioners has led to unfairness. In Burns v Burns [1984] Ch 317, a woman who had done everything that a part-time working mother of two could have done during the parties' unmarried cohabitation nevertheless got nothing at the end of a 19-year relationship. She did not contribute to the mortgage repayments, unlike Mr Burns, and was therefore unable to demonstrate any direct fiscal contribution.

First sign of change

The Court of Appeal decision in Oxley v Hiscock [2004] EWCA Civ 546 was the first sign of a sea change. A feature of this case was that the property in question was owned by one of the parties only, but that it was accepted by the sole owner that the other had a beneficial share. The decision of the court was therefore to determine the size of each party's share only. In doing so, the court departed from the historical approach of looking at direct contributions and looked at the wider context: 'The whole course of dealing '¦ in relation to the property including but not limited to all of the outgoings associated with running a family home.'

Thus, while Oxley introduced a more holistic and modern approach to the quantification of beneficial interests, the rigid Rossett test for whether any such beneficial interest existed at all remained in place.

The decision of the House of Lords in Stack v Dowden [2007] 2 AC 432 featured a property held in joint names in equal shares. Again, the question in this case was the size of each party's beneficial share; it was already clear that both had a share of some size. However, the case was significant, not least because it gave the House of Lords the opportunity to review the present state of the law. In essence, the conclusion was that in joint ownership cases such as this, the presumption would be that equity followed the law and thus joint legal ownership would commonly mean equal beneficial interests, albeit that presumption can be displaced and indeed was in the case at hand.

The speeches of Lord Walker and Baroness Hale also, however, provide a wider insight as to their thinking about how sole ownership cases should be dealt with in future, not just in respect of the quantification of beneficial interests but also establishing whether a common intention to share the beneficial interest in the property exists at all.

Rossett placed a straightjacket on the higher courts. In Stack, Lord Walker loosened the straps: 'Whether or not Lord Bridge's observation was justified in 1990, in my opinion the law has moved on, and your lordships should move it a little more in the same direction, while bearing in mind that the Law Commission may soon come forward with proposals which, if enacted by Parliament, may recast the law in this area. Any new legislation is likely to give the court new statutory discretions comparable to (but probably less far reaching than) those exercisable under the Matrimonial Causes Act 1973. The law would then become more flexible'¦'

A holistic approach

Since Stack, the Privy Council decision in Abbott v Abbott [2008] 1 FLR 1451 is significant. This case featured a property held in a sole name. However, the legal owner conceded in evidence that the claimant did have some beneficial interest. Therefore, like Oxley and Stack, the Privy Council was ultimately concerned only with the size of each party's share. However, the judges' comments in this case suggest that, in sole name cases where the issue of common intention is live, it will now be appropriate to look at more than just direct financial contributions to the property; Baroness Hale said in this case: 'The parties' whole course of conduct in relation to the property must be taken into account in determining their shared intentions as to its ownership.'

The House also approved a passage from the Law Commission's discussion paper on 'Sharing Homes' (2002, Law Com No 278, para 4.27): 'If the question really is one of the parties 'common intention', we believe that there is much to be said for adopting what has been called a 'holistic approach' to quantification undertaking a survey of the whole course of dealing between the parties and taking account of all conduct which throws light on the question what shares were intent'.

This appears to be a message to the legislators: if you do not act we will have to bend principles further to prevent injustice. But there is a limit to what the judiciary can do. Despite the change in emphasis in constructive trust cases, the court still cannot adjust ownership of property between cohabitees: it is locked into looking at the reality of ownership. It has been stated in a more recent case (Holman v Howes [2008] 2 FLR 1217 CA) that the question of what the court considers fair is impermissible. However, post Stack, it appears that the courts are laying the ground for the next sole owner case where the common intention of the parties is in dispute.

The changes may appear subtle, but the feeling is that if Mrs Burns had brought her case now, she may have succeeded in securing a share of the property over which she had no claim in 1984.