The Scottish law commission and their recommendations on cohabitation law 

The Scottish Law Commission (“the SLC”) yesterday released its highly anticipated—at least among lawyers—Report on Cohabitation law. As was to be expected, the report suggests some very significant changes to the law governing cohabitants’ separation claims. Some of such suggestions are highlighted in this article.

Definition of cohabitant

The Family Law (Scotland) Act 2006 (referred to as “the 2006 Act”) contains the most recent legislation in this field. According to current law, a cohabitant is a member of a pair who resides with the other as if they were spouses. The length of time the parties shared a residence, the nature of their relationship at the time they shared a residence, and the scope and nature of their financial arrangements are all factors the court must take into account when evaluating whether a person is a cohabitant.

The SLC’s report makes it very evident that the definition as it currently stands has to be updated with one that is more contemporary and specialised and that the comparison to spouses is no longer relevant. According to SLC, a cohabitant should be regarded as a partner in a couple that is or was residing together as a permanent family unit.

The SLC also suggests including in legislation a list of factors that a court must take into account when evaluating whether a person is a cohabitant. These are the matters:

• the length of the relationship; the number of years the pair have spent living together;
• the degree to which the couple is or was financially reliant; and 
• whether the couple has children or children who are considered members of the family.

The test for financial provision based on current law

Currently, a separated cohabitant can ask the court to make an order requiring the other cohabitant to pay a capital sum or make payments in relation to the financial burden of raising the couple’s kid. According to the SLC report, the court receives no instructions on how to decide whether to issue an order at all. Advisors, decision-makers, and separated cohabiting spouses have had difficulty as a result.

The SLC has suggested a new two-part test in an effort to correct that. According to that standard, the court would first determine whether a financial provision order is appropriate by referring to a set of guiding principles. The SLC’s suggested guiding principles are:

1. When one cohabitant has benefited financially from the other’s contributions, that benefit should be fairly distributed;
2. when one cohabitant has suffered financially for the benefit of the other or a relevant child, that party should be fairly compensated; and
3. when a cohabitant is likely to experience severe financial hardship, that person should be given reasonable financial support for short-term relief of that hardship.

In addition to these four guiding principles, the cohabitation law suggests that legislation include a list of pertinent considerations. These elements must be taken into consideration by the court while deciding the issue of financial provision. Such a list’s declared purpose is to give the courts precise instructions.

Orders available to the court

The court can currently only award capital payments to a cohabitant after a separation. The SLC suggests that the following solutions be made available going forward:

1. a property transfer order,
2. a payment order to relieve severe financial distress for a period of up to six months, and
3. incidental orders to control family home occupancy or value property;
4. interim orders, as well as
5. supplementary charges that, for example, specify payment in installments.

Time limit

As it stands, a cohabitant who separates from their partner must ask the court for a pecuniary remedy within a year after the split. For advisors and separated cohabitants, this has undoubtedly led to issues. There has been substantial discussion regarding the SLC’s potential recommendation to extend this arbitrary one-year time limit. The SLC was not persuaded that extending the one-year time limit was the sole (or best) option. Instead, it is advised that the courts be given latitude to accept late claims. A court could only grant a late claim if there was specific justification. No matter the reason for the delay, a claim could not be accepted after two years of separation.

The SLC also suggests allowing the separated spouse to consent to a six-month extension of the one-year time limit. Such an agreement shall be in writing and in a particular form.

Cohabitation agreements

Cohabitation contracts are frequently signed by cohabiting spouses. Such agreements might be made in anticipation of cohabitation or to control financial issues in the event of a divorce. A cohabitation agreement, unlike one between spouses, cannot be invalidated by the court on the grounds that it was unfair and unreasonable at the time it was signed.

The SLC study emphasizes the need to achieve a balance between the need to protect uninformed or vulnerable cohabitants and the preservation of cohabitants’ rights to manage their own affairs, including via a contract. According to SLC, allowing a cohabitant to request a cohabitation agreement’s modification or setting aside would strike an appropriate balance.

What next for the Scottish law commission?

The report includes a proposed Cohabitation (Financial Provision) (Scotland) Bill as an annex. The Scottish Parliament’s support for the proposed law is still up in the air, as is the magnitude of that support.