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17 June 2013
Lawrence v Gallagher (2012) EWCA Civ 394. Court of Appeal (Civil Division). Thorpe LJ; Ryder J; Moses LJ. 29 March 2012
The court allowed an appeal against a financial order made following the dissolution of a civil partnership because the judge’s approach had been too theoretical. The court emphasised the importance of judges consistently applying the criteria in the Matrimonial Causes Act 1973 s.25 and the Civil Partnership Act 2004 sch.5 rather than developing new and overcomplicated approaches to dealing with financial provision when marriages and civil partnerships ended.
Lawrence appealed against a financial order made following the dissolution of his civil partnership with Gallagher. The civil partnership was treated as having lasted for 11 years and seven months. The available assets totalled £4,175,000. Lawrence owned a London flat, which he had bought before the cohabitation began.
The flat had escalated in value during their time as a couple, from £650,000 to £2.4m. Both parties also contributed to the purchase of a country property worth £822,000. Lawrence was an equity analyst with a pension worth £580,000, whereas Gallagher was an actor with a small pension.
The judge treated the flat as partnership property and adopted the sharing principle. Gallagher was awarded a pension sharing order of £200,000. The judge indicated that Gallagher was entitled to 45 per cent of all of the assets, excluding the pension, which would give him £1,484,485. Alternatively, a similar figure would be reached by awarding Gallagher one half of both properties and of the savings and investments, but giving credit to Lawrence for £500,000 to represent the value of the London flat at the outset of the partnership. She therefore awarded £1.6m to Gallagher, comprising £200,000 for Gallagher’s pension, £822,000 for the country property and a lump sum of £577,778. Held
It was not important that the claim arose from the dissolution of a civil partnership rather than a marriage, since the language of the Civil Partnership Act was intended to achieve the same ends as the Matrimonial Causes Act 1973.
This case was comparatively simple: the parties were an affluent couple who had enjoyed the use of two properties, but once separated each needed his own home. Self-evidently, Lawrence should have the flat, which predated the partnership, and Gallagher should have the country property.
The next stage was to consider whether fair sharing required a balancing payment to reflect the flat’s greater value and what funds each needed to live comfortably. Lawrence was self-sufficient, whereas Gallagher’s income was less secure. There was no rationality in the lump sum award of £577,778 to Gallagher.
The most significant feature of the case was the increase in value of the flat. The judgment did not explain why it was fair to give 55 per cent of the assets to Lawrence, given his contribution of the flat.
The judge’s approach was also too theoretical and marred by the fact that there was no evidential basis for the pre-cohabitation valuation of the flat at £500,000. Rather than a global quantification, which produced a lump sum by mathematics, it would have been safer to have assessed the fair lump sum from the starting point that Gallagher would have the country property and his pension share as the foundations of the award. Whether approached on a needs basis or a fair sharing basis, a lump sum of £350,000 was appropriate.