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02 August 2012
If you are living with and working alongside your partner in their business, make sure you protect your financial position – or you could end up walking away with nothing if the relationship turns sour.
Many cohabiting couples assume they will have the same legal rights as married couples if they split up, particularly if they have been together for a long time, but that’s not the case, warns family law expert Anne Blenkinsop.
“You may have worked hard alongside your partner for many years, helping them to build up a business, but it doesn’t guarantee you will receive a penny in recompense,” says Anne, a partner at leading south east law firm Furley Page.
The potential financial risk a cohabitant can face is starkly illustrated in the recent case of Geary v Rankine (2012).
Mrs Geary and Mr Rankine were in a relationship for 19 years, which began in 1990, and had a son together. At first they lived in London, where Mr Rankine ran a removal business. He later opened a second-hand furniture shop, where Mrs Geary did all the office work for him.
In 1996, Mr Rankine invested in a guesthouse in Hastings using £61,000 from his savings and planned to hire a manager to run it. Mrs Geary did not contribute any money to the purchase.
After having problems with his appointed manager, Mr Rankine had to move from London and try to run the business himself. Shortly afterwards, he invited Mrs Geary to join him because he could not cope on his own. The couple decided to keep their London home in case they later decided to move back.
Mrs Geary dealt with some of the paperwork and bank work as well as tasks such as preparing three meals a day and looking after students. When the couple split in 2009, she claimed she had acquired an interest in the guesthouse and that she and Mr Rankine were business partners. The Circuit Judge who initially heard the case, however, rejected Mrs Geary’s claims so she appealed.
The Appeal Judges noted that while the Circuit Judge had felt both parties had been untruthful at times when giving evidence, Mrs Geary had played a far greater role in running the business than Mr Rankine was prepared to accept.
Mrs Geary said she never received a wage for the work she did and if she needed money, she had to ask Mr Rankine who, she claimed, was reluctant to let her spend anything other than small amounts on herself.
When she asked him what security he was going to provide for her and her son if anything happened to him, Mrs Geary claimed he said the business would stay in his name only because if it failed, and he was made bankrupt, she could start it again in her name. When she asked him the same question some time later, he could not give her an answer or was non-committal.
“Unfortunately for Mrs Geary, the Court accepted that Mr Rankine had never intended for her to be a partner in the business,” says Anne. “The fact that she’d had to ask Mr Rankine for money showed she was not entitled to any of the profits and so could not have been a business partner.”
The Court also rejected Mrs Geary’s claim that she had an interest in the guesthouse because of a ‘common intention’ for the ownership to be shared. Subsequently the Judge, who felt it was not, and never had been, Mr Rankine’s intention to give Mrs Geary a share in the property, dismissed her appeal.
“It’s easy to see why Mrs Geary assumed she’d be entitled to something from the house and the business after all the years of hard work she’d put in,” says Anne.
“Had she been married to Mr Rankine, the position would have been very different and she’d have been financially compensated for all her efforts. But, as this case shows, if you are just living with your partner and working hard alongside them in their business, it doesn’t mean you will be recompensed.
“The law remains very complex in this area and anyone in similar circumstances should seek advice from a family lawyer experienced in this field to find out exactly where they stand.”
For further information contact Anne Blenkinsop call 01227 763939.