Scottish Court of Session Decisions

[1] In this action the pursuer seeks damages from the partners in a now-dissolved firm of solicitors. The pursuer avers that she separated from her husband, after some 15 years of marriage, in May 1990. In September 1991 she consulted an assistant solicitor employed by the said firm of solicitors in relation to her matrimonial affairs, including the financial aspects thereof. Her husband also consulted solicitors. Following negotiations between the two firms of solicitors a draft Minute of Agreement was prepared and revised by the respective agents and was executed by the pursuer and by her husband on 20 and 30 May 1992. In terms of that Minute of Agreement the pursuer accepted a financial settlement specified therein (No.12/1 of process) in full and final satisfaction of all claims that she might have against her husband. The pursuer avers that she was not properly advised by the solicitor whom she consulted as to the extent and character of her rights to financial provision on divorce. In particular, it is averred, she was not given proper advice in relation to the nature of the matrimonial property owned by the parties and was given no advice at all in relation to her rights in respect of her husband's pension rights. Her husband was then employed as a prison officer and was a member of a work-related pension scheme. He had been a member of that scheme for many years and it is said that he had, by 1990, obtained valuable benefits thereunder. The effect of the omission to give her adequate advice was that she undervalued whatever financial claims she might maintain against her husband. The pursuer alleges that by discharging her rights against her husband in return for the settlement contained in the Minute of Agreement she surrendered and thus lost valuable rights, the true value of which she was ignorant of as a result of the solicitor's failure to give her proper advice.

[2] The pursuer claims that she suffered loss and damage as a result of breach of an implied term between herself and the solicitors. It is said that there was an implied term that they would exercise the skill and care of reasonably competent solicitors, and they failed to do so by not properly advising the pursuer of her rights in terms of the Family Law (Scotland) Act 1985.

[3] At the procedural hearing the pursuer was represented by Mr MacNair. The defenders were represented by Mr Hanretty. It was a matter of agreement that negligence was not an issue at this stage in the case. This Court must therefore proceed upon the basis that the pursuer can establish to the satisfaction of the Court that the defenders were in breach of contract.

[4] The Minute of Agreement (No. 12/1 of process) is incorporated in the pleadings brevitatis causa. Clauses 1 and 7 thereof contain discharges by each of the parties to the agreement of all claims competent against the other. Clause 2 deals with custody of the children under the age of 16 years and provides that the husband shall pay to the pursuer a total of £300 Sterling monthly "for both children". Clause 3 of the agreement provides that the husband is to convey to the wife for a consideration of £10,000 his one half pro indiviso interest in the matrimonial home. The pursuer was to assume sole responsibility for the standard security over that property. Clause 4 provided that two endowment policies related to the loan over the matrimonial home were to be transferred from the names of both parties to the name of the pursuer. Clause 5 provided that the pursuer was to have the whole contents of the matrimonial home. Under Clause 6 both parties renounced certain occupancy rights specified therein. There were other incidental provisions.

[5] At the Procedure Roll, the issue was whether or not the pursuer had in her pleadings given fair and sufficient notice and specification of the claim that she was making against the defenders. In Article 3 of the Condescendence the pursuer avers that she "is now prevented by the terms of the said agreement for making any claim in any divorce proceedings." In response to that, the defenders found upon the right of the pursuer in terms of section 16(1)(b) of the Family Law (Scotland) Act 1985 to seek variation of the said minute. At this Procedure Roll parties were agreed that, provided the case went to proof before answer, these averments should remain on the Record.

The pursuer's averments in Article 3 continue:

Article 5 of the Condescendence is in the following terms:

[6] Mr Hanretty pointed out that no divorce action had been raised and indeed that the pursuer was making it plain that it was not intended to raise divorce proceedings until the outcome of the present action was known. Under reference to Article 5 of the Condescendence Mr Hanretty submitted that the averments made about the resources available to the pursuer's husband to make payment of any sum justified by the relevant provisions of the Family Law (Scotland) Act 1985 were wholly unspecific. No particular resource was mentioned other than the husband's interest in the matrimonial home and his earnings as a prison officer. It was argued that the question of resources was highly relevant, having regard to the terms of section 8(2)(b) of the 1985 Act. The time for examining the resources of the parties would properly be the date when the section 8 order fell to be made, whenever that date might be. It would not be the same date as the relevant date for the purposes of section 9(1)(a); that was the date of separation, in May 1990. The likely date of any award in an action of divorce would be a number of years ahead, and certainly some years later than May 1992, when the Minute of Agreement was signed. He drew attention to the observations of Lord Nimmo Smith in Fulton v Fulton, 1998 S.L.T 1262 where the Lord Ordinary held that although he was bound to have regard to the question of resources that did not mean that a party could introduce evidence about resources without any foundation on Record. It followed that in the present case the pursuer would not be able to lead evidence about the resources of the husband, other than in relation to his interest in the house, possibly his interest in the car, which was minor, and perhaps in relation to his earnings. By making the averment that "the pursuer's husband had sufficient resources to make payment of any sum justified by section 9..." the pursuer had recognised her obligation to make appropriate averments about the resources of her husband, the potential defender in the divorce action, but the other pleadings were wholly unspecific to enable the Court to ascertain what these resources were likely to be at the appropriate date. He referred to the fact that section 8 had been amended, with effect from 19 August 1996, by section 12A of the Family Law (Scotland) Act 1985, inserted by the Pensions Act 1995. In this regard reference was made to the helpful discussion of the matter in Clive on "Husband and Wife" paragraphs 24.099 and 24.0100. The first of these paragraphs correctly stated that prior to August 1996 the difficulty in relation to pension benefits had to be overcome by ordering payment out of other assets, or deferring payments or by making an unequal sharing or, if all else failed, by reducing any order drastically under section 8(2)(b) because of the non-availability of resources. In the present case the pursuer had not condescended upon any "other assets". She had an averment about possible payment by instalments but there was no specification at all as to what these might be or when they might commence or how long they might endure or from what source they might be financed. There was no hint in the pleadings as to what effect the non-availability of instantly realisable resources would have upon the sharing of the matrimonial property and no indication as to how any order might be "drastically" reduced. Thus there was no guidance whatsoever given to the Court to enable this matter to be determined. There was simply no basis for asserting that the pursuer's husband had "sufficient resources". This was a matter for the pursuer to aver. Defenders in the present type of action, as solicitors, were not in the same position as a husband defending an action for divorce including a claim under section 8 of the 1985 Act. The defenders could not be expected to know anything about

[7] In reply, Mr MacNair submitted that the pursuer had averred sufficient to give fair notice of the case she was making. This was a claim for loss and damage arising from breach of contract. The first element of claim was to be calculated by reference to the pursuer's loss of a capital sum, derived by applying the principle contained in section 9(1)(a), that the net value of the matrimonial property should be shared fairly between the parties to the marriage. The pursuer had given ample averments as to what she maintained was the matrimonial property and indeed there had been no criticism of these averments. In relation to the possibility of an increase based on the principle contained in section 9(1)(b) the pursuer had averred the facts and circumstances which she maintained would entitle the Court to vary and increase the award in her favour by applying that principle. The pursuer had nothing to add to these averments. There was nothing that could properly be added. The material there averred would be sufficient to enable the Court to decide whether or not any such increase was warranted. It was routine for the Court to apply this principle in the light of facts such as the pursuer had averred. The pursuer did not accept that it was incumbent upon her to aver anything at all about the resources of her husband. However, because the defenders had, in Answer 5, called upon the pursuer to specify "whether the husband was in a position to make payment of any capital sum," she had responded by condescending upon the fact that the husband had an interest in the house, which interest plainly had a substantial value he also had a salary from his work and pension interests. As to the law applicable, it was trite law that the Court could, at the material date in the early 1990's, make an order deferring in whole or in part the payment of capital sums awarded to a successful pursuer against her husband. In support of the sufficiency of the averments in relation to the possible increase in the award applying the principle in section 9(1)(b) reference was made to the leading opinion in Cunniff v Cunniff 1999 SC 537, at p.543, which indicated that, even although the Court might find itself in no position to quantify with precision the relevant matters, the Court would nonetheless be entitled to conclude that on an overall view it was appropriate to invoke this principle and reflect that in the award. The income of the husband was relevant to his resources: see Cunniff v Cunniff at p.546 and McEwan v McEwan 1997 S.L.T. 118. In relation to the criticism that the pursuer's averments contained no predictions as to the likely date of any award in a divorce action, being the date on which resources would become relevant, (assuming that that date was possibly significant), he referred to Fernandez v Lindsay & Kirk 1997 Rep.L.R. 14. That case showed that where, as here, it was impossible to predict with any precision when a Proof would take place and when judgment would follow it was unnecessary to do so as the court was able to use its own knowledge as to the likely timescale of an action of this kind. Reference was also made to the discussion of the nature of a claim against solicitors for breach of contract resulting in the loss of a right to make a claim, in paragraph 3-10 of the Lord Ordinary's opinion. It was notorious that in a case of this kind, as in the kind of action under consideration in Fernandez v Lindsay & Kirk supra, that there were many imponderables and the Court required to make the best estimate it could on the material available. He specifically conceded and asserted that it would be impossible for the pursuer in the present action to lead evidence of specific resources possessed by the husband at any time, other than those condescended upon in Article 5 of the pleadings. In that regard, he had no quarre

[8] In my opinion, this is an action in which the pursuer claims that as a result of a breach of contract she has lost the right to advance a legal claim. In this regard I can do no better than refer to the opinion of the Lord Ordinary in Fernandez v Lindsay & Kirk; there, under reference to the case of Kyle v P & J Stormonth Darling, W.S. 1993 SC 57, the Lord Ordinary pointed out that, if it could be shown that, at the time when it was lost, the claim had a value, then there would be both injuria and damnum and the only remaining issue would be the potentially difficult one of assessing the true measure of loss. In my opinion, the criticisms of the pursuer's pleadings suffer from a failure by the defenders to appreciate the true character of the pursuer's claim. The date when the breach of contract constituted injuria was the date when the Minute of Agreement became effective, namely in May 1992. It was at exactly the same moment that she suffered the loss, which was the loss of a right to make the claims that she surrendered and discharged by signing that Minute of Agreement. The damnum crystallized at that time. The way to measure her loss, the damnum, is to calculate the amount at which she could then have properly valued her claim and to deduct from that amount the amount that she in fact received for surrendering that claim. So the task is to put a value on what the claim was worth when she surrendered it. The task of evaluating the respective financial rights, liabilities and claims of two parties to a marriage which has ended is an everyday task for solicitors in Scotland. It is well within the knowledge of the Court that when marriages break down both parties are likely to seek independent legal advice as to their financial rights and responsibilities and receive such advice. It is also well within the knowledge of the Court that although some such cases have to be litigated in whole or in part, many such cases are settled before or after Court proceedings have been raised. The task of assessing what award the Court is likely to make under the provisions of sections 8 and 9 of the 1985 Act is routinely undertaken by the parties' respective legal advisers. The principal materials that have to be looked at are the facts relating to heritable and moveable property owned by either party or by both, including property in the nature of pension rights or other postponed potential benefits which are not immediately realisable. The assessment of the value of a claim by, say, a wife against her husband is a commonplace task and is undertaken by examining all the relevant data and making judgments as to how the Court would come to apply the factors in sections 8 to 17 of the Act. In order to evaluate the claim, whether one is advising the party making the claim or the party against whom the claim is made, it is unnecessary for the legal advisers to know with precision when the case, if there is to be a case, might result in a judgment. It is unnecessary to make predictions about wholly unknowable factors, such as whether or not the husband's income will continue or either party will win the lottery or anything else that might eventuate and bear upon the financial position of the parties. If there is no reason to assume otherwise, the lawyers advising either party in such a matter will properly assume that there will be no material change in the relevant financial circumstances. But what must be emphasised is that the aim must be to evaluate the claim which has been lost as at the date when it is lost, namely the date when the right to make it has been forfeited or discharged.

[9] Against this background, I am satisfied that the pursuer's averments are entirely adequate. The statement in Article 5 of condescendence, "she would have sought a settlement taking account of the pension or she would have sought financial revision in divorce proceedings" is properly read as a statement that she would have sought a settlement on the basis of proper advice about the relevance of the husband's pension rights to such a settlement and, failing any compromise settlement would have sought and obtained her rights by order of the Court. She is not here saying there are two entirely different ways of calculating the value of her claim. Presumably, if she were properly advised, she would not be advised to accept a settlement that was materially less beneficial to her than the settlement that she could expect to receive in the Court. In that context, the pursuer has averred with ample specification what the matrimonial property was. In relation to the possible application of section 9(1)(b) of the 1985 Act, her averments are of a character such as would enable a Court, if called upon, to decide the matter and hold that the relevant economic advantage of either spouse had a bearing upon the size of the capital award. In relation to the matter of resources, it is not for this Court to determine where the onus lies. That is a decision to be taken, if necessary, by a judge who has heard the proof. It also appears to be clear that, as a matter of fair notice, the pursuer in the present action would not be entitled to lead evidence of any resources available to her husband other than those specifically averred, namely those referred to in the detailed averments about the matrimonial property, the earnings of the husband at the material time and his pension rights. Mr MacNair accepted that that was so. Any issue as to the admissibility of evidence would, of course, fall to be decided by the Lord Ordinary hearing the Proof. The averment "the pursuer's husband had sufficient resources to make payment of any sum justified by section 9 of the Family Law (Scotland) Act 1985" is properly read a statement of an inference which the pursuer in the present action would invite the court to make when determining what order a Court might have made under section 8, with a view to evaluating her claim arising from the breach of contract. It would be open to the Court to draw that inference to be drawn on the basis of the evidence adduced in support of the specific averments made. I regard the pursuer's averments in this connection as entirely adequate.

[10] In the whole circumstances I am of opinion that the attack upon the pursuer's averments for irrelevancy owing to lack of specification fails. I shall therefore allow both parties a proof before answer without repelling any of the pleas.