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JPM v. BWL [2003] ScotCS 192 (13 June 2003)

OUTER HOUSE, COURT OF SESSION

F37/00

OPINION OF LORD BONOMY

in the cause

J.P.M. or L. (A.P.)

Pursuer;

against

B.W.L.

Defender:

________________

Pursuer: Macnair, Q.C., Louden; Brodies, W.S.

Defender: Hanretty, Q.C., Dowdalls; Balfour & Manson

13 June 2003

[1] The L's were married at Munlochy on 25 April 1985. They separated on or about 16 June 1998. There are three children of the marriage. B.A.L. born 1 October 1985, is now seventeen years of age and is a pupil at G. School. The other children are both under sixteen. S.J.L. was born 25 November 1987 and F.J.T.L. was born 18 July 1996.

Procedural History of the Case
[2] This action seeking divorce and financial provision was raised in the summer of 2000. Proof was allowed and a diet allocated for 8 January 2002. That was discharged in October 2001 because the pursuer had legal aid difficulties and because the defender had failed to make full disclosure of his assets. I was advised that his counsel had accepted that there was a need for him to be candid in his pleadings. A further diet of proof was allocated for 18 June 2002. That was discharged in May 2002 because of a difficulty the defender had in having valuation of his assets completed. The defender's pleadings were skeletal in relation to financial matters. I was advised that the solicitor advocate then acting for the defender was not at that stage in a position to amplify his pleadings. A third diet of proof was then allocated for 10 June 2003.

[3] In the period leading up to the proof there was a fair deal of court procedure. Between 20 February 2003 and the proof diet interlocutors were pronounced by the Court on seven separate days. In addition, the defender attended a commission as a haver and in the course of May he swore three affidavits. It is difficult to imagine what more could have been done to alert him to the urgency of instructing his agents and counsel fully and candidly to enable his case in relation to financial provision to be pled and presented to the Court. In the event, counsel tendered at the bar, and intimated to counsel for the pursuer in court at the commencement of the proof diet on 10 June, a minute of amendment and a list of witnesses.

Defender's Motions to Amend and to Discharge the Proof
[4] In presenting the minute of amendment, Mr Hanretty, Q.C., senior counsel for the defender, frankly conceded that he could not explain why the defender and those acting for him had not between them taken steps to ensure that the necessary information was assembled to enable his case to be adequately pled. Junior counsel appearing with Mr Hanretty had advised a number of weeks ago that instruction of a forensic accountant was absolutely necessary. In spite of that, an accountant had first been instructed on 5 June. He had been able to give some advice about the approach that might be taken to valuation of the defender's shareholding in the L and R Group of companies which was the defender's principal asset. However, meetings which had taken place on 6 and 9 June had not satisfied the accountant that he had been provided with enough information to prepare a report. Mr Hanretty invited me to allow the minute of amendment to be received at the bar and to discharge the diet of proof to enable the necessary further investigation of the defender's financial situation to be completed. He submitted that that would be in the interests of justice since the defender had substantial financial liabilities and outgoings about which there was currently nothing averred, in particular a debit balance in excess of £300,000 in the account of a partnership associated with the aforementioned companies, a significant mortgage for the house which he now occupied with his new domestic partner and her family, and commitments for the maintenance of the family of the marriage including the school fees for his elder son. He also submitted that a proof without the proposed amended pleadings and the results of the further inquiry would be a mockery. The defender's business affairs were complex, involving a partnership, a holding company and a large number of subsidiary companies. The defender would be bound to meet the expenses occasioned by the introduction of the minute of amendment and the discharge.

[5] Mr Macnair, Q.C., senior counsel for the pursuer, opposed receipt of the minute of amendment and discharge of the diet of proof. He narrated the history of the case as set out above. He submitted that what the defender now sought to do was to introduce averments relating to changes in his capital position since the relevant date, the current value of his capital, and the realisability of that capital into a case initiated almost three years ago in which no issue over the defender's ability to make payment of any award made by the Court had been raised. If these matters became issues in the case the forensic accountant instructed by the pursuer would require to reconsider a huge volume of paperwork to enable him to report and the pursuer to answer the averments. That exercise would take several full days. In the absence of an indication of the views of the forensic accountant instructed by the defender that exercise could not even begin. The defender's accountant had not reported and was not yet in a position to report finally. Mr Macnair opposed any further delay in the case being heard in view of its history.

[6] I was invited by Mr Hanretty to allow parties some time for "dialogue" since there was some measure of agreement between the parties. Indeed a draft joint minute was already the subject of discussion. Following an adjournment of over an hour and a half I was advised that the defender insisted upon his motions to amend and discharge the diet. It was not suggested that the minute might be received in part. Indeed I was advised by Mr Hanretty that further amendment would follow.
[7] I refused to allow the minute of amendment to be received in view of the history of the case and because that would have had the inevitable consequence of discharging the proof. The defender had had more than sufficient time to provide those acting for him with the information necessary to enable them to plead and present his case. His own counsel had given advice weeks before about the need to instruct an accountant, but the defender had failed to act on that advice until 5 June. Even then the information provided was insufficient to enable the accountant instructed to formulate his opinion and to report. It is almost five years since the parties separated and almost three years since the action was raised. The defender has had every opportunity to set his case before the Court. He has delayed unconscionably in disclosing his assets and in providing adequate instructions to those acting for him. It was my opinion that it would be contrary to the interests of justice if the defender's failings were to result in any further delay in the determination of the issues arising from the parties' separation and continuing uncertainty in the lives of the pursuer and the parties' children.

Divorce
[8] Evidence was led only for the pursuer. While the pursuer was giving evidence the defender completed a form of consent to divorce. In a joint minute dealing with a number of issues relating to the identity and valuation of matrimonial property the date of separation was stated to be 16 June 1998. The evidence of the pursuer and her brother confirmed that the parties separated then and have not lived together nor had marital relations since that date.

Arrangements for the Welfare of the Children
[9] The only order sought in relation to the children was payment of the school fees and other related costs for the attendance of B at School. Sarah had also been a pupil at that school. Shortly before she was due to commence her second year of secondary education in autumn 2000 the defender decided not to continue payment of the fees for her attendance. As a result she moved to an Academy. The pursuer, her brother and her mother each gave evidence that the removal from the school had been a blow to Sarah, who still hankered to some extent after the life that she had enjoyed there. The pursuer felt that her education had suffered and said that, if she could afford to, she would send S back there. Of course, even if she wanted to send her back, obtaining re-entry might not be possible. The matter had not been explored. I was satisfied that S is happy and well looked after in the care of her mother, albeit her school days have not turned out to be quite what she would have wanted. F is at primary school and no issue arises over his education. The defender makes payment of £600 per month voluntarily for the support of the children. I assumed that he would continue to make that payment. The defender has occasional contact with the children and hopefully will want to maintain and develop his relationship with them. Unfortunately his current attitude towards that relationship is not clear, since he elected not to give evidence. It was plain that the matrimonial home had played and continues to play an important part in the lives of each of the children. It was, therefore, a pleasing aspect of the case that in the end the defender conceded that an order should be made transferring the matrimonial home and his interest in its contents to the pursuer. In light of the awards for financial provision which I decided to make in favour of the pursuer I was satisfied that she would be able to meet the expense of running and maintaining the matrimonial home and thus securing it as the children's home. In all these circumstances I was satisfied that no order needed to be made in relation to any of the children other than one for payment of the expenses associated with B's attendance at school.

Orders Sought for Financial Provision
[10] In his submissions at the close of the Proof Mr Macnair sought a number of orders for financial provision. I have already mentioned the order for transfer of the title to the matrimonial home together with the defender's interest in the contents. In addition the pursuer sought an order for payment of capital, an order for payment of periodical allowance of £1,500 per month, and an order in terms of sections 2 and 3(1)(c)(i) of the Family Law (Scotland) Act 1985 awarding aliment at £900 per month from 7 September 2000, when the action was raised, until 2 May 2002 when an award of £250 per month was made, and at £650 per month from that date until the date on which I would pronounce decree of divorce.

[11] I shall deal with aliment first. The effect of the orders sought would be the award of £900 per month interim aliment from the raising of the action until decree of divorce was pronounced. I refused to make any order for payment of aliment. The issue was not heralded in the pleadings. In relation to financial provision, the proof was concerned with arriving at a fair division of the parties' assets and securing for the pursuer the opportunity to move forward in her life.

[12] The other orders sought were inter-linked. To determine what capital sum should be awarded it was necessary to identify and value the matrimonial property, including the matrimonial home and contents, as at the relevant date for that purpose in terms of the Family Law (Scotland) Act 1985, Section 10(3), viz the date of separation. It was then necessary to make allowance for the order transferring the home and contents to the pursuer. The question of periodical allowance arose in the context of implementation of any order made for payment of capital. The identity and value of a number of items of matrimonial property were agreed in a joint minute. I deal first of all with the items of property about which there were particular issues to be determined.

Matrimonial Home
[13] The title to the matrimonial home at North Kessock, was held by the defender. The contents were joint property. The only evidence as to the value of the house was that given by James David Carnegy-Arbuthnott, chartered surveyor. Mr Hanretty objected to evidence being led of the value placed by Mr Carnegy-Arbuthnott on the house as at the relevant date on the ground that there were no averments about its value. I repelled the objection because it was plain from the reference in Article 5 of Condescendence to the matrimonial home as an item of matrimonial property that its value would be an issue at proof, and because the impact on the division of the remainder of the matrimonial property by transferring the title of the former matrimonial home to the pursuer had to be taken account of. Mr Carnegy-Arbuthnott's report setting out his opinion on value had been lodged timeously. He valued the house at £220,000 as at the relevant date. I had no hesitation in accepting his evidence. It was given firmly and confidently. His opinion was based on a wealth of experience and the research he had carried out into the value of comparable properties.

[14] There was little evidence about the value of the contents. Mrs L mentioned some antique furniture, and in one of three affidavits, which I was invited to consider so far as they were relevant to issues at the proof, Mr L also identified certain items which he thought would have some value. No particular issue was made of the contents. I shall return to the question of their value when I explain the course which I followed in dividing the matrimonial property.

Certain Personal Assets of the Defender
[15] The defender had a policy with the Prudential. In his affidavit of 20 May 2003 he had stated its then current transfer value to be £13,923. He had also stated that a valuation as at the relevant date was being calculated. There was no other information before me at the proof. No basis was suggested for considering that the figure that the defender had given was excessive. I accordingly proceeded on the basis that that was the value of the policy as at the relevant date.

[16] The position was similar in relation to an account which the defender held with the Alliance & Leicester Building Society. At a commission held in January 2002 the defender had undertaken to produce a statement of the amount standing in the account as at the relevant date. He failed to do so. However, the pursuer was able to produce a statement relating to the account as at 31 January 1999 showing a credit balance of £6,068.52, including interest credited during the year to 31 January 1999. There was no evidence of the date at which the interest had accrued. In the absence of any evidence led by the defender to suggest otherwise, I considered it to be an appropriate inference to draw that that was also the balance in the account as at the relevant date. In my opinion it is precisely in these circumstances that it is appropriate for the Court to draw from the available facts the appropriate inference most favourable to the pursuer - O'Donnell v Murdoch McKenzie & Co Limited 1967 SC(HL) 63, Lord Upjohn at 71.

[17] There was evidence that the defender had £30,000 in funds held overseas. That evidence came from two bank statements found by the pursuer within the matrimonial home. One recorded an international transfer of £10,000 made on 5 January 1999. The second recorded a similar transfer of £20,000 made on 13 May 1999. Both sums were paid into a personal account held by the defender in the United Kingdom and bore to have been transferred from accounts in his name held outwith the United Kingdom. In the absence of evidence to the contrary I considered it be an appropriate inference to draw from that evidence that the funds were held abroad by the defender at the relevant date. I accordingly considered that overseas funds of £30,000 were part of the matrimonial property at the relevant date.

The Defender's Business Interests
[18] Much of the proof was concerned with the valuation of the defender's business interests. Michael John Gilbert, a chartered accountant experienced in the valuation of businesses, shareholdings and matrimonial property, gave evidence of his assessment of the value of the defender's business interests, principally his interests in the L and R Group of companies. At the relevant date the defender held 25% of the shares in L & R Ltd. The other 75% were held by Mr R. That company was the holding company of a large number of subsidiary companies involved in a variety of activities including property investment, property development, farming, restaurants, Christmas trees and motor cycle sales. The defender, therefore, held a 25% interest in the L & R Group, which was reflected in the value of the shares he held in L and R Ltd. Management services were provided to the Group by a partnership called the L & R Partnership in which the defender held a 25% interest and Mr R a 75% interest. In addition the defender had a 30% shareholding in a company called Graeme Mundy Gallery Ltd. Mr Gilbert's approach was to value the shareholdings and the defender's share of the partnership at a pro rata proportion of the total value of each calculated on a net assets/net liabilities basis.

[19] Mr Gilbert took as the foundation for his valuation the accounts of the various companies and the partnership as at 31 March 1998. Where there was reliable information to proceed upon, he adjusted the 31 March 1998 figures to take account of developments affecting the businesses between 1 April 1998 and 16 June 1998. His objective was to seek to determine a fair and reasonable "willing buyer/willing seller no restrictions" valuation of the defender's interests based on the information available about the businesses. He considered that a potential purchaser at the relevant date would look at the accounts to 31 March 1998 and would also want to know about any material developments in the various businesses between 1 April and 16 June 1998. Having carried out a review of each of the businesses and having considered the nature of its activity, the results over the years leading up to the date of separation, and the dormant or active status of each business, he had reached the conclusion that each one should be valued on the basis of its net assets or liabilities. The other two possible bases of valuation - a dividends basis or an earnings basis - would not, in his opinion, have provided an accurate valuation of the defender's interests. Since the companies had no record of paying dividends, the former was not appropriate, and since the returns from the companies were low in relation to their assets, the latter was also not appropriate. A valuation carried out on an earnings basis would require to be adjusted for goodwill to reflect the underlying value of the assets of the companies in any event.

[20] In contrast to a submission made by Mr Hanretty, I found Mr Gilbert's evidence anything but dogmatic. In my opinion he gave careful thought to each question posed and gave sound reasons for valuing the companies and the partnership on an assets/liabilities basis. It was plain to me, from both his evidence and the terms of his report, that he had exercised great care in carrying out the major task of placing an accurate value on the defender's shareholdings and partnership share. In dealing with the L and R Group he had valued L and R Ltd, the holding company, and each of the subsidiaries, and arrived at a total value for the Group. He had worked his way through a mass of audit papers, and demonstrated throughout his evidence that he had successfully untangled the fairly complex web of companies and had allocated the assets correctly among the companies. He had also corresponded with and spoken to the financial controller of the L and R Group. On each occasion that some doubt about the allocation arose it was clear that Mr Gilbert had attributed assets correctly among the companies. In addition to taking account of relevant developments after 31 March 1998, he had also identified throughout his report situations where it might be appropriate to take account of an actual valuation of a property asset if one was available or was to be obtained and made available to him, for example where property was held as an isolated asset or was held as stock for resale. Otherwise assets would appear in the accounts and in his report at cost. In many instances no further information had been provided to him and the figures remained as he had originally worked on them.

[21] A good example of how Mr Gilbert treated developments after 31 March 1998 can be found in the accounts of, and the reference in his report to, L & R Western Ltd. Between 31 March 1998 and 31 March 1999 property, which stood at a book value of £508,807 in the accounts to 31 March 1998, had been sold for £750,000, an increase over the previous valuation of £241,193. Audit notes showed that by 23 April 1998 a purchaser had been prepared to pay £600,000. A later file note of 15 October 1998 confirmed that the purchaser had offered £750,000. Mr Gilbert considered that the final sale price of £750,000 was relevant to the valuation as at 16 June because, in his opinion, by then the negotiations would have progressed beyond £600,000 towards what he considered would have been the company's target price of £750,000. As a result of similar exercises, values had been increased in the case of L & R Developments Ltd and L & R Team Valley Ltd, and reduced in the case of AM PM Shop Ltd, Roadside Developments Holdings Ltd and L & R Foodcourts Ltd. A separate non-contentious adjustment had been made in the case of Osprey Seafoods (Highlands) Ltd. In evidence Mr Gilbert adjusted his figures in the case of L & R Farms Ltd. That was done on the basis of information which had recently come to his attention and had not been reflected in his report. The effect was that net assets of £1,205 were reduced and replaced by a net liability of £12,863.

[22] One of the subsidiary companies was Roadside Developments Scotland Ltd. An asset held by that company at the relevant date was a site at 125-129 Renfrew Road, Paisley. That site had been valued in December 1998 for bank lending purposes by Stephen Alan Campbell Robertson, chartered surveyor. Planning consent for a drive-through fast-food outlet had been granted for the site on 30 July 1998. With the benefit of that planning permission the site had been valued by him at £275,000. In evidence Mr Robertson expressed the opinion that the site was worth that, or at most 2.5%-5% less, as at the relevant date, about six weeks before planning consent was granted. Mr Robertson acknowledged that there could be unusual features affecting any site that was the subject of a planning application, e.g. a large number of local objectors, but, in his opinion, in the absence of any particular adverse feature, the value of the site with planning permission was not likely to be substantially greater that its value six weeks earlier at a stage when the application would already have been submitted. In Mr Robertson's opinion the site was particularly suited to the purpose of a drive-though fast-food outlet because of its shape and location beside a filling station. He, therefore, thought that the value at the relevant date was between £250,000 and £275,000. In preparing his report Mr Gilbert had taken the figure of £275,000. That was £25,000 more than the £250,000 placed on it by the company in their accounts for the year ending 31 March 1998. I considered it appropriate to make a modest reduction from £275,000 in view of Mr Robertson's evidence that, before planning permission was granted, the site would be marginally less valuable. To be fair to the defender I proceeded on the basis that at the relevant date the site would be worth the low point in the range given by Mr Robertson, which was £250,000.

[23] In his report Mr Gilbert had calculated the total value of the L and R Group of companies as £6,633,163. He had valued the defender's shareholding at 25% of that, viz, £1,658,291. The adjustment to L & R Farms Ltd reduced that figure to £1,654,774. The effect of my determination of the value of the site held by Roadside Developments Scotland Ltd was to reduce the defender's interest in the Group by a further £6,250 to £1,648,524.

[24] Mr Hanretty was critical of Mr Gilbert's failure to apply any discount to the 25% pro rata valuation which he made of the defender's shareholding in the Group. In his submission it was unrealistic to value a minority shareholding without allowing for the fact that in the Articles of Association power was given to the directors to reject any purchaser of shares without reason. In this case that gave Mr R a veto over the disposal of the defender's shareholding. Mr Gilbert acknowledged that it might be appropriate, in a situation where the defender's interests were to be sold, to make a modest adjustment from the pro rata valuation to reflect that feature. He also acknowledged that, should there be no market for the shares, then in the real world they were worthless. He pointed out, however, that he was not being asked to value the interests on the basis of either of these circumstances. He was asked to value the interests at a particular date to enable the Family Law (Scotland) Act 1985 to be applied. There were other real life situations in which his value would be appropriate. For example, if the group of companies as a whole was sold, then the defender's interest would be pro rata 25% of the price. Since the defender was fully and actively involved in the conduct of the businesses, he would have to be replaced in the event that he sold his interests and left. The business arrangement between Mr L and Mr R bore the appearance of a quasi-partnership. They were the sole directors and shareholders and were both actively involved in the operations of the group of companies. They were partners in the business which provided management services to the group of companies. They had no partnership agreement. Their relationship appeared to be one based on mutual confidence and trust. The companies were appropriate vehicles for carrying on the various enterprises that Mr L and Mr R had entered into. In the case of a quasi-partnership shares were normally valued on a simple pro rata basis. In any event the sale of the shares was not in issue. In the rather artificial situation in which his valuation had to be made he proceeded on the basis that anyone acquiring the defender's shareholding would be accepted by Mr R and entered on the share register. Even if it was appropriate to apply some discount Mr Gilbert could not imagine that it could be more than 10-15 %. The sole basis advanced for discounting the valuation was the potential problem for a purchaser of the defender's shares that he might not be acceptable to Mr R.

[25] I considered that the reasons given by Mr Gilbert for valuing the defender's interest in the group of companies in the way in which he did were sound. He had reached his conclusions about the way in which the businesses were conducted from a careful in-depth study of extensive records. No evidence was led to contradict his assessment of the defender's relationship with Mr R. There was no evidence before me to suggest that any other approach would be appropriate. There was also no evidence before me advancing any other approach. Nor was there evidence to support the submission of Mr Hanretty that I should discount the resultant figures. Even if there had been some support for that submission, there was no satisfactory evidential basis for assessing an appropriate discount. I, therefore, accepted the resultant value arrived at by Mr Gilbert, subject to the modification which I have mentioned above.

[26] His identical approach to the valuation of the defender's interest in the partnership resulted in a deficit of £302,854. Mr Macnair submitted that I should revise that figure in the light of information which had come to the attention of Mr Gilbert after he had completed his valuation. He had learned from the accounts to 31 March 1999 that the defender's expenses had wrongly been attributed to drawings and had thus artificially increased the drawings set against his name. However, the evidence presented to me did not provide an adequate basis on which to adjust the figures in the partnership accounts. I had no way of judging the extent to which the defender's interest in the partnership might be increased. I, therefore, proceed on the basis of the figures in the accounts as invited to by Mr Hanretty. It followed that the defender had a liability of £302,854 to be set against his assets in the overall computation.

[27] The defender's 30% shareholding in Graeme Mundy Gallery Ltd was valued by Mr Gilbert at £12,652, both at the end of March 1999 and the end of March 1998. There was no issue between the parties over that valuation.

[28] In formulating his report Mr Gilbert had taken account of an increase in the value of paintings included both in the accounts of the partnership and the accounts of Graeme Mundy Gallery Limited. Parties were agreed that these increases should be left out of account in the valuation of both.

The Matrimonial Property
[29] There was no dispute over the identity or value of any other items of matrimonial property owned by the parties as at the relevant date. In an affidavit of 7 May 2003 the defender had identified a number of items of property which I considered were of insignificant value or ought, as particularly personal items, to be left out of account in the overall division of matrimonial property. I thus left out of account his guns, watches, camcorder, motorcycle, shares in Bula Resource and shares in Riverbank Ltd. The property which I considered to be matrimonial property at the relevant date and the appropriate values thereof were accordingly as follows:

Property	Mr L
Matrimonial Home	£220,000
L & R Partnership	-£302,854
L & R Ltd	£1,648,524
Graeme Mundy Gallery Ltd	£12,652
Deposit - Bank of Scotland	£106,714
Royal Bank of Scotland Account 190562	£945
Standard Life Policy 27452960AB	£5,481
Skandia Life Policy 6087688	£1,246
Alliance & Leicester Account 2190220126O	£6,668
Prudential Policy G120U528	£13,923
Winterthur Life UK Policy	£21,268
Norwich Union Shares	£662
Scottish Widows Policy 4561019	£10,903
Boat	£5,000
Overseas Funds	£30,000
Total	£1,781,132
	Mrs Larsen
Royal Bank of Scotland Account 277269	£5,600
Nationwide Account 0916-275207012	£2,608
Total	£8,208
TOTAL MATRIMONIAL PROPERTY:	£1,789,340

Computation of Capital Sum to be Paid to the Pursuer
[31] The principles governing division of matrimonial property on divorce are set out in sections 9 and 10 of the Family Law (Scotland) Act 1985. The basic principle is stated thus:

"Section 9 - (1) The principles which the court shall apply in deciding what order for financial provision, if any, to make are that -

(a) the net value of the matrimonial property should be shared equally between the parties to the marriage...

Section 10 - (1) In applying the principles set out in section 9(1)(a) of this Act, the net value of the matrimonial property shall be taken to be shared fairly between the parties to the marriage when it is shared equally or in such other proportions as are justified by special circumstances."

In Jacques v Jacques 1997 SC(HL) 20 any doubt surrounding the effect of these provisions taken together was removed when it was stated clearly that section 10(1) pre-supposed that only in the event of there being special circumstances justifying an unequal division should the matrimonial property be divided other than equally. There was no basis in the present case for departing from the basic principle of equal division. A fair sharing of the matrimonial property was, therefore, an equal sharing.

[32] One half of the matrimonial property amounted to £894,670. The pursuer had property worth £8,208. Deducting that from one half of the matrimonial property left a balance of £882,058. To give the pursuer a half share required the transfer to her of assets totalling £886,462 from the defender. £220,000 was accounted for by transfer of the matrimonial home as conceded by the defender, leaving a balance of £666,462. To reflect the fact that the property transfer included the defender's one half interest in the contents of the house of an unspecified value, I considered that the appropriate capital transfer to effect an equal sharing of the matrimonial property would be £650,000 for which I pronounced decree.

Periodical Allowance
[33] Mr Macnair also sought periodical allowance of £1,500 per month in terms of Section 9(1)(d) of the 1985 Act. That subsection is in these terms:

"A party who has been dependent to a substantial degree on the financial support of the other party should be awarded such financial provision as is reasonable to enable him to adjust, over a period of not more than three years from the date of the decree of divorce, to the loss of that support on divorce."

Mr Macnair sought that sum as a necessary safeguard for the pursuer in light of the possibility that she might not receive payment of the capital sum awarded for some time. The history of the case demonstrated that the defender would not easily relinquish his property. Section 17(2B) of the Legal Aid (Scotland) Act 1986 entitled the Scottish Legal Aid Board to recover their outlay for the pursuer's expenses from any capital sum awarded. The first £4,275 of any capital awarded was exempt, but over that amount the pursuer would receive nothing until sufficient had been recovered to meet the Board's commitment for her expenses. The pursuer had been, and remained, dependant to a substantial degree on the financial support of the defender, and that dependence would continue pending settlement of the capital sum. As the evidence of the pursuer, her brother and her mother had shown, she had required continuous substantial additional support from her brother and mother, supplemented by occasional acts of kindness by others, to enable her to make ends meet. Mr Macnair acknowledged that, if the capital sum was paid in full, there would be no need for an award of periodical allowance. Mr Hanretty acknowledged that there were problems in the way of prompt payment of capital.

[34] In my opinion these are appropriate circumstances in which to apply section 9(1)(d) and to make an award of periodical allowance until payment of the capital sum awarded. The maximum period for which such an order may be made is three years. I sincerely hope that payment of the capital is made much earlier than that. However, if there is substantial delay, it is only right that the pursuer and the children should be provided with the support that was plainly demonstrated as necessary and as having been provided by her family and the generosity of friends. That support should be provided by the defender who has control of the bulk of the parties' assets. I accordingly made an order for payment of periodical allowance until payment of the capital sum awarded or until the expiry of three years from the date of decree of divorce, whichever falls earlier. In view of the defender's ongoing commitment of £600 per month towards the support of the children and his obligation to meet the school fees for B, I modified the award to one of £1,000 per month.

Interlocutor
[35] I accordingly repelled the defender's first and second pleas-in-law; sustained the first plea-in-law for the pursuer and pronounced decree of divorce; sustained the second plea-in-law for the pursuer to the extent of making an order in terms of the fourth conclusion for transfer of the matrimonial home and the defender's interest in the contents thereof to the pursuer and granting decree for payment of a capital sum of £650,000 and a periodical allowance in the sum of £1,000 per month for a period of three years or until the capital sum is fully paid, whichever is sooner, in terms of the third conclusion; sustained the third plea-in-law as amended to the extent of ordering the defender to pay the school fees and other costs associated with Benjamin's attendance at school quoad ultra I dismissed the action.

[36] I made these various orders on the morning following conclusion of the proof. In advising parties of my determination I expressed the hope that, in arranging implementation of my interlocutor, Mr and Mrs L would never lose sight of the need at all times to secure the welfare of their children.