April 5, 2012

Why is the Lawrence/Gallagher judgment a landmark?

In the last few days a landmark case has concluded in the Court of Appeal – but blink and you might have missed it.

The Lawrence/Gallagher case may have briefly hit the headlines before passing quietly into media archives, but the judgment is remarkable for several reasons. Not least of these is the matter-of-fact conclusion that the same rules that apply to a marriage breakdown should also apply to division of assets on dissolution of a civil partnership.

Peter Lawrence and Donald Gallagher lived together for ten years before entering into a civil partnership, which ended just seven months later. In June 2011 Mrs Justice Parker ruled that the partnership assets – including a London flat owned by Mr Lawrence which pre-dated the relationship – were worth around £4m and Mr Gallagher was entitled to a total settlement of around £1.7m.

Mr Lawrence took this to the Court of Appeal, where Lord Justice Thorpe said that Mr Lawrence’s attempts to remove the London property from the applicable assets were ‘quite unrealistic’. He did, however, allow the appeal in part, reducing the lump sum payable to Mr Gallagher by nearly a quarter of a million pounds.

Lord Thorpe explained that, although this was a civil partnership and not a marriage, the same rules applied, effectively reinforcing that legal treatment of civil partnerships on breakdown is equivalent to treatment of breakdown of a marriage. Lord Justice Moses and Mr Justice Ryder agreed; you can see the full judgment here.

It’s a sad fact that, as relationships become shorter and lifetime commitment rarer, what was once seen as a short relationship is now considered a medium or lengthy one. The longer the relationship, the weaker the argument for ring-fencing non-marital (or non-partnership) assets. This could also apply to post-separation acquest and, indeed, inherited wealth as well as pre-relationship assets.

Arguably, a much more important consideration is allowing for the parties’ respective needs and living expenses – and this, along with the assets, was a key factor in Lord Thorpe’s judgment.

Whether it’s a marriage or civil partnership that breaks down, it’s clear that the courts see no distinction. What’s important is to avoid the stress of going through the court process at all – especially as far as the Court of Appeal, with all the pressure and cost that involves.

Just as we would recommend a pre-nuptial agreement to even the happiest of engaged couples, so a cohabitation agreement or pre-cip (pre-nups for civil partners) could be key to an amicable outcome should the relationship break down. These agreements are easily updated as circumstances change and do not represent any lack of commitment to the pairing.

If it does all end in tears, don’t rush to the courts. Mediation and collaborative law are much less stressful, quicker and cheaper routes to reaching an amicable solution, and couples now have access to family law arbitration as a genuine alternative to the court process. Follow the links or visit the Jones Myers website for more information.