It is interesting to explore the case law which has developed within the past seven years around the Property (Rights of Spouses) Act (commonly referred to as PROSA). Those decisions which have sought to interpret various aspects of PROSA are of particular importance because they allow us to reflect on whether the act is operating as it was intended to.
In 2010, the Court of Appeal ruled in the case of B v B that PROSA was intended to have retroactive effect. Therefore, the act is equally applicable to parties who separated in 1980 as it is to parties who separated in 2010 because the one-year period within which a couple is entitled to make a claim starts after the grant of a decree absolute. So a couple who separated in 1980, but obtained the decree absolute in 2010, is still entitled to make a claim to an interest in property.
A decision of the Supreme Court on January 15, in the case of H v H, demonstrates some of the difficulties which may arise due to the fact that there is no 'real' limitation on claims being brought under the statute.
In that case, the couple married in 1990, separated in 1998 and obtained a decree absolute in 2010. The wife then made a claim under PROSA for a declaration of her interest in various properties. The action coming almost 12 years after the couple separated presented some difficulties because so many things had changed in that time. This difficulty is evident from the following comment by the Judge:
The practical effect of this is that either spouse may make such a claim for property rights even if they have been separated for 30 years. The blatant possibility of injustice this state of affairs may cause to one or both sides, in a case where they have sat upon their laurels for lengthy periods whilst the status quo may have changed several times over, seemed to have escaped the legislators.
The problems in this case relates to the fact that section 12 (2) of PROSA provides for spouses' share in property to be determined at the date they ceased to cohabit as man and wife. In this case, there was a lengthy marriage and an even lengthier separation; so by the time the action was filed:
A substantial portion of the family home had been demolished and rebuilt at the sole expense of the husband, who had remained in it.
The court had to consider whether there remained a family home to consider at all or whether the wife's claim to a 50 per cent interest in the family home was limited to the land and a small portion of the house, which had survived the demolition; namely one bedroom and a bathroom, walk-in closet and office.
Land in which the wife claimed a 50 per cent interest had been sold in 2006 and there was no evidence as to what had become of the proceeds of the sale.
The business in which the wife had held four shares had been sold in 2002 and there was no evidence as to the value of the business at the time of separation or the use to which the proceeds of sale had been put.
Awarded to the wife
In the end, the court ruled that the wife was entitled to:
1. 50 per cent interest in the land (alone) on which the family home sat and in the one bedroom and a bathroom, walk-in closet and office that remained after the family home was demolished.
2. 50 per cent of the net proceeds of sale of the land.
3. Two per cent interest in the business and an account of the financial operations of the company as of 2002.
When couples separate and have no intention of reconciling, they are usually advised to attempt to secure a 'clean break' by attempting to settle all issues surrounding the marriage, including property, children and maintenance. The result of this case underscores the importance of doing so. This is because the passage of time leads to many changes, such as the sale of assets and the dissipation of the proceeds of those sales. When a claim is finally made, the paying party, such as the husband in this case, is forced to identify resources he may no longer have to settled a debt.
This issue certainly deserves some focus and attention to prevent the potential injustice which the learned judge identified.
Sherry Ann McGregor is a partner and mediator in the firm of Nunes, Scholefield, DeLeon & Co. Please send your comments and questions to firstname.lastname@example.org or email@example.com