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The Court of Appeal recently ruled on the first reported case
dealing with financial issues arising on the dissolution of a civil
partnership and confirmed that the approach is based on identical
principles to the division of assets on divorce. Since the
matrimonial and civil partnership statutes are identical, and since
the decision of the House of Lords in White v White, the
English Court has long trumpeted the importance of
non-discrimination, the Court of Appeal's decision in this
regard is not surprising.
Mr Lawrence was 47 and Mr Gallagher 54. Mr Lawrence was an
equity analyst and Mr Gallagher an actor. The parties had been
together for 11 years, but in a civil partnership for less than a
year before the relationship broke down.
Mrs Justice Parker awarded Mr Gallagher roughly 45% of the
assets, including a cottage, a share of Mr Lawrence's pension
and a lump sum of £557,000, to bring the total award up to
£1.6m. In doing so the Judge rejected Mr Lawrence's
submission that either this was a dual career case and Mr Gallagher
should therefore be restricted to his needs only or, in the
alternative, that the valuable London property to be retained by Mr
Lawrence should be excluded from the case altogether as being
non-matrimonial as it had been acquired before the
cohabitation.
The Court of Appeal accepted that the Judge had made a few
incorrect findings, but supported Mrs Justice Parker's
rejection of the two major arguments referred to above. Lord
Justice Thorpe, however, criticised Mrs Justice Parker for not
explaining clearly how she arrived at a 45:55 split of the assets.
In his view, the lump sum should have been calculated on the basis
that Mr Gallagher would receive the cottage and the pension and
then consider what balancing lump sum was required, rather than
starting with a percentage and working backwards. He also felt that
the Judge had erred in awarding 45% of Mr Lawrence's deferred
compensation to Mr Gallagher; in his view this was not a present
capital asset as part of the shares had not vested and in any event
formed part of Mr Lawrence's future income. Without explaining
how he arrived at this figure, Lord Justice Thorpe determined that
a more appropriate figure for the lump sum would be
£350,000.
The case is a reminder of the broad discretionary ambit of the
Judges when applying the statutory criteria in deciding financial
cases on relationship breakdown. The case provides some helpful
guidance on the treatment of deferred income. Of significance was
also the care the Court of Appeal took in ensuring there was no
discrimination. Only a few sentences of the Judgment is dedicated
to the fact that Mr Gallagher's claim arose on a civil
partnership.
Beyond identifying the problem of sharing a deferred income
stream, however, the case does little to add to the array of case
law that purports to give guidance to practitioners on the
treatment of different categories of wealth. It is to be hoped that
the Law Commission's report on the division of property on
relationship breakdown, due in 2013 and referred to in the
Judgment, will make recommendations on the approach to be adopted
by the courts in cases involving pre-acquired or inherited
wealth.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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