Lawrence v Gallagher

Financial provision following dissolution of a civil partnership is governed by the statutory criteria in Schedule 5 of the Civil Partnership Act 2004, whose language is identical to s.25 of the Matrimonial Causes Act 1973. Judicial concepts such as sharing, needs, source of property and dual-career relationships are aids to applying the statute, not additional heads of claim or terms of art. Over-elaboration risks double counting. Property brought into the relationship may still be treated as partnership property where it is the parties’ home. A lump sum should be assessed from the parties’ actual housing and income foundations, rather than produced mathematically to reach a global target. Annual bonuses deferred and conditional on performance are income-stream items, not present capital assets to be shared as such.

This was an appeal by Lawrence from a financial order made by Mrs Justice Parker in the Family Division following the dissolution of the parties’ civil partnership. The relationship had lasted 11 years and 7 months. The parties had used two properties, including a flat acquired by Lawrence before cohabitation and a country cottage acquired during the relationship.

The High Court treated the flat as partnership property and made an order including the cottage, a pension share, a substantial lump sum and 45% of deferred bonus schemes when paid. Lawrence challenged the inclusion of the flat, the characterisation of the relationship as a sharing case rather than a dual-career case, several factual findings, the lump-sum calculation and the treatment of the bonuses. The central issues were the proper statutory approach and the fair treatment of property and deferred remuneration.

The Court of Appeal unanimously allowed the appeal and varied the financial order. Gallagher retained Pine Cottage and the £200,000 pension share. The lump sum was reduced from £577,778 to £350,000, and the award of 45% of the deferred schemes was deleted.

1. Statutory approach. Schedule 5 of the Civil Partnership Act 2004 used language identical to s.25 of the Matrimonial Causes Act 1973. The statutory criteria therefore remained the controlling checklist. Concepts developed in authorities such as CR v CR (2008) IFLR 323 and White v White [2001] AC 596 were aids to achieving fairness, not separate heads of claim. Excessive reliance on such terminology risked double counting and unnecessary complexity.
2. Property and fairness. The distinction between property acquired through the parties’ common endeavour and other property was relevant, but the matrimonial-home exception applied even where the home had been brought into the relationship at the outset. The flat could therefore be brought into the reckoning. The facts did not support a dual-career categorisation because the parties had intermingled their capital and income. Each needed a home, and fair assessment required consideration of both any balancing payment for the disparity in property values and the funds necessary for each to live comfortably.
3. Lump sum. The High Court’s global figure was not rationally explained. It was principally a mathematical residual after assigning other assets. The safer and more orthodox method was to start with the cottage and pension share as the foundations of the award and then assess the fair lump sum. That assessment produced £350,000.
4. Deferred bonuses. The bonuses were annual payments deferred in collection and conditional on performance. They were not vested capital assets but part of Lawrence’s income stream. There was no principled basis for awarding Gallagher 45% of them as though they were present capital. Questions concerning future bonuses in a continuing periodical-payments order did not arise on this appeal.

• Court of Appeal (Civil Division) — In [2012] EWCA Civ 394, the appeal was allowed and the financial order was varied.
• High Court of Justice, Family Division — Mrs Justice Parker made the original financial order after the dissolution of the civil partnership, including transfer of Pine Cottage, a £200,000 pension share, a £577,778 lump sum and 45% of deferred schemes when paid.