Tue 29 Aug 2023

Scotland v England - Differences in the transfer of unresolved financial family law claims following death

A recent UK Supreme Court (UKSC) decision in Unger and another (in substitution for Hasan) v Ul-Hasan (deceased and another) [2023] UKSC 22 has emphasised further the difference in approach to financial provision (or financial relief, in England) between Scotland and England.

This case concerns whether or not the availability of a claim for financial relief in England is an individual's personal right (i.e. ends on death) or is one which survives the death of a spouse. If the latter, then the court was asked whether or not the claim was capable of being brought against the spouse's estate.

Spouses Nafisha Hasan and Mahmud Ul-Hasan married in 1981 and subsequently divorced in Pakistan in 2012. Hasan applied to the High Court for financial relief in England on the basis that the parties' overseas divorce was recognised in England, affording her the ability to make financial claims similar to that as home-divorcing couples.

Hasan raised an action for financial relief however Ul-Hasan passed away before the matter was determined by the court. Hasan sought to continue the action against her husband's estate. The High Court refused Hasan's claim stating that, in brief, the right to claim for financial relief is a personal right that ends upon death of the spouse in line with previous Court of Appeal authority. Notwithstanding he was bound by the Court of Appeal's decision - the Judge questioned whether it was wrongly decided and granted Hasan a 'leapfrog' appeal directly to the UKSC. The UKSC granted permission to appeal and assigned the final hearing. However, Hasan died prior to the appeal hearing and the appellant was substituted by her daughter and son-in-law.

The UKSC affirmed the High Court's view and clarified the law as follows:

  1. Rights against spouses for financial relief are personal rights which end upon death. If these rights survived death, it would create implications for insolvency and succession law. To change the law would require parliament's involvement as their intention to create a personal right was clear in legislation and successive case law.
  2. Given the above position, the court need not consider whether such an action can survive against a spouse's estate.

In Scotland the transmissibility of lifetime monetary actions to the deceased's executors in the event of a pursuer or defender's death before court order, is a matter of established general legal principle. The status of marriage or civil partnership comes to an end on divorce or dissolution of the partnership, or else when one of the parties dies. It follows that a party's ability to claim financial provision on divorce (or dissolution of a civil partnership) against their spouse or civil partner also terminates on death, but it is replaced by rights of succession insofar as those rights have not been revoked by prior agreement during lifetime. In other words, a surviving spouse or civil partner has an automatic right to receive a fixed amount of the deceased's net heritable and moveable estate even if the pursuer and the deceased were separated. A spouse or civil partner's right to inherit from the other's estate cannot be defeated by a Will. There are only two ways a spouse or civil partner will lose their rights of succession. The first is to formally discharge them during lifetime (which is often done following separation and before divorce/ dissolution is granted). Or, secondly, upon getting divorced or upon dissolution of a civil partnership per section 1 of the Succession Scotland Act 2016.

Interestingly contrast this with the right of a cohabitee in Scotland. Cohabitation does not confer the same legal status to marriage. It does not require legal intervention to bring it to an end. A relationship terminates upon cessation of cohabitation which is a matter of fact. Therefore, a former cohabitant cannot replace a lifetime action brought under section 28 of the Family Law (Scotland) Act 2006 ("the 2006 Act") for a section 29 claim in the event of the other's death. A section 29 claim is only appropriate if the deceased died intestate; was domiciled in Scotland; and was cohabiting with their former cohabitant immediately before death. A former cohabitant has no entitlement to inherit any extent of their partner's estate unless there is specific provision made for them in a Will, nomination or survivorship destination. However, a cohabitant does have the right to make a monetary claim against the deceased's estate so long as that action is served on the executors within six months of the deceased's date of death.

What happens if a party to a section 28 claim dies before an agreement is reached, or an order of the court granted? Can the former cohabitant's claim be transferred from the deceased to the deceased's estate (or vice versa)?

There is no specific authority regarding the transmissibility of section 28 claims. Accordingly, general principles would apply which state that pecuniary claims can be made on behalf of and against the estate of a deceased, and this was reiterated by the Scottish Law Commission (Report No.135) prior to the enactment of the 2006 Act. Assuming a section 28 claim has satisfied the definition of cohabitation and was brought within one year of separation, it is a contingent liability of the deceased's estate which requires to be determined by the court, or conceded by the executors, in the same way as any other liability due against the deceased's estate.

The Scottish Law Commission are actively reviewing the Law of Cohabitation in Scotland. There is, however, no proposed change to the above legal procedure should a party to an action die before the matter is resolved insofar as the authors are aware.

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