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Working and living together – pitfalls for unwary cohabitants

14 June 2012

The recent case of Geary v Rankine [2012]  further highlights the potential financial disadvantage a cohabitant may face if he or she does not take steps to protect their financial position.

Mrs Geary and Mr Rankine were in a relationship for 19 years which began in 1990 when Mrs Geary was still married. She did not divorce her former husband until 2002. The parties had a son together who was born in 1992. At the beginning of the relationship Mrs Geary and Mr Rankine lived in London where Mr Rankine ran a removal business and, in addition to this business, later opened a second hand furniture shop. Mrs Geary did all the office work for Mr Rankine.

In 1996 Mr Rankine decided to purchase, as an investment, a guesthouse in Hastings for £61,000 using his own savings. Mrs Geary did not make a financial contribution to the purchase of the property. Initially Mr Rankine did not intend to live in the guesthouse or, indeed, run it himself. He intended to install a manager instead and continue living in London with Mrs Geary. However, there were difficulties with the appointed manager and Mr Rankine had to move down from London to try and run the business himself. Mrs Geary remained in London and worked as a receptionist. Shortly afterwards, Mr Rankine invited Mrs Geary to move to Hastings with him as he could not cope with running the business himself. They decided to retain their London home in case they later decided to move back.

Mrs Geary then became involved in running the business, dealing with some of the paper work and bank work and performing physical tasks such as preparing three meals a day and looking after students.

The parties separated in 2009 and Mrs Geary claimed that she had acquired an interest in the guest house and that she and Mr Rankine had been partners in the business.

The Circuit Judge who initially heard the case rejected both of Mrs Geary’s claims. Mrs Geary then appealed.

It was noted by the Appeal Judges that the Circuit Judge had felt that Mr Rankine and Mrs Geary had been untruthful on occasions when giving their evidence. Nonetheless, he concluded that Mrs Geary had played a far greater role in running the business than Mr Rankine was prepared to accept.

Mrs Geary stated was that she did not receive a wage for her efforts in the business and if she needed money Mr Rankine would give it to her albeit he was mean with it and reluctant to allow her to spend anything other than small amounts on herself. She further stated that she had asked Mr Rankine what security he was going to provide for her and her son should anything happen to him. The response from him was, according to Mrs Geary, that the business would stay in his name only because if it failed and he was made bankrupt, Mrs Geary could continue the business afresh in her name. When asked again, some time later Mr Rankine could not provide an answer or would be non committal.

The Court accepted that Mr Rankine had never intended that Mrs Geary should be a partner in the business. The fact that Mrs Geary had to ask Mr Rankine for money showed that she was not entitled to a share of the profits of the business and could not, therefore have been a business partner. Mr Rankine also had clear reasons for Mrs Geary not to become his business partner which he had expressed to her.

Insofar as the property was concerned, the Court rejected Mrs Geary’s assertion that she had acquired an interest in the guesthouse by virtue of a common intention that the ownership would be shared. A crucial factor was that the property had originally been acquired as an investment, rather than a home, and was paid for from Mr Rankine’s savings alone. There was no  intention at the time of purchase, therefore, that Mrs Geary should have a share in the property. The Judge went on to consider whether these intentions had changed over time. He found that there was no change in Mr Rankine’s intention and, as such, Mrs Geary could not establish a share in the guesthouse. Mrs Geary’s appeal was, therefore, dismissed.

It is easy to see how Mrs Geary might have assumed that she would at least be entitled to something from the house and business after her hard work over the years. This case serves to demonstrate, along with many others before it, the difficulties facing cohabitants in circumstances similar to Mrs Geary. Living with and working hard alongside your partner in his business does not guarantee you will receive a penny in recompense. The law continues to be complex in this area and anyone in similar circumstances to Mrs Geary would be well advised not to ignore the “non-committal” responses from his or her partner and find out exactly where they stand from a family lawyer experienced in this field.

Had Mrs Geary been married to Mr Rankine, the position would have been entirely different with Mrs Geary being financially compensated for her efforts during the 19 year relationship.

For further information contact Anne Blenkinsop, Partner and specialist in Family Law, Divorce and Cohabition matters on 01227 763939.
 

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