Boodle Hatfield's James Ferguson asks whether Mr Gallagher would
have been left with such a small share of the partnership assets if
the facts of this case were transposed to a heterosexual
The Court of Appeal last week made the first ruling of its kind
to deal with the division of civil partners' assets on the
breakdown of their civil partnership.
Peter Lawrence, 49, and Don Gallagher, 56, were together for
over 11 years. In December 2007, they entered into a civil
partnership but separated nine months later. During the
relationship, the couple divided their time between a London
apartment worth £2.4m and a Sussex cottage worth just under
In the first High Court ruling relating to civil partnerships,
actor Don was awarded 42% of the total assets of £4.175m.
This was made up of the cottage, a pension of £200,000, a
lump sum of £577,778 and £90,000 of deferred compensation awards
from Mr Lawrence's employment.
Equity analyst Peter Lawrence appealed to the Court of Appeal
which yesterday ordered that Don's award should be altered to
reduce the lump sum to £350,000 and remove his entitlement to the
deferred compensation awards, which reduces Don's share from 42% to
33%. Mr Lawrence had been seeking to reduce the award to 13%
which the appeal judges described as "quite unrealistic" and "so
far from achievable as to be almost fanciful."
It is established law that on the breakdown of a civil
partnership, civil partners should be treated the same as divorcing
spouses. This was reiterated by the Court of Appeal.
The judgment confirmed that if a civil partner owned a property
before the civil partnership ceremony, the fact that it is or has
subsequently become the partnership home means that it is available
for sharing. This is already an established concept in
divorce cases. It also made clear that just because both
partners work outside the home and do not have children, it does
not mean that the partners can be categorised as if they were a
"dual career" couple so that their capital and income should be
treated as being separate, particularly if they had intermingled
The case highlights that an outcome for civil partners at trial
can be just as uncertain and inconsistent as it can be for
divorcing spouses. One judge's idea of a fair outcome is very
different from another's. The Court of Appeal expressed the
view that the arguments have become overly complicated, which some
may consider to be as a result of the voluminous case law which
sets precedents which lower courts are bound to follow.
The judgment referred to a Law Commission review which will be
considering the extent to which one party should be required to
meet the other's needs and how "non-matrimonial" property should be
treated when a relationship ends. Although this may
eventually result in greater clarity, there is no prospect of
change in the foreseeable future as the report is not due until
2013. To try and minimise uncertainty in the meantime, it is
advisable for civil partners, as for spouses with pre-nuptial
agreements, to explore making a pre-civil partnership agreement to
try to determine how the available assets should be divided in the
event that the relationship breaks down.
The start point in these bigger asset cases is or ought to be
50:50, irrespective of whether it is a marriage or a civil
partnership. There are established reasons to depart from
this. However, there was no apparent rationale in this
judgment for such a substantial departure from equality which has
left Mr Gallagher with 33% and his former partner with 67%.
It is debatable whether Mr Gallagher would have been left
with such a small share of the partnership assets if the facts of
this case were transposed to a nearly 12 year heterosexual
This article by James Ferguson first appeared on the
Money Observer website on 5 April 2012