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Pullar v. Higgins [2003] ScotCS 344 (30 December 2003)

OUTER HOUSE, COURT OF SESSION

F1/03

OPINION OF M.G. THOMSON, Q.C.

Sitting as a Temporary Judge

in the cause

MIRIAM EMILY PULLAR or HIGGINS (known as EMILY PULLAR)

Pursuer;

against

BERNARD HIGGINS (formerly known as BERNARD FRANKLIN HIGGINS)

Defender:

________________

Pursuer: Wise; Turcan Connell, W.S.

Defender: Macnair, Q.C.; Henderson Boyd Jackson

30 December 2003

Introduction
[1] This action concerns aliment for the two children of the parties' former marriage. The pursuer is their mother and the defender is their father. The pursuer seeks an order under section 3(1)(b) of the Family Law (Scotland) Act 1985 ("the 1985 Act") for payment by the defender of the schools fees and outlays in respect of their younger daughter. She also seeks variation in terms of section 7(2) of the 1985 Act of a Minute of Agreement between the parties by increasing the agreed rate of aliment payable by the defender to the pursuer in respect of each of the two children. She seeks an increase from £1100 per child per month to £1850 per child per month in the event that the order for payment of school fees is granted, and to £2100 per child per month in the event that that order is refused. The defender maintains that the pursuer has effectively discharged her right to seek an order against him for payment of school fees for their younger child and, in any event, that the orders sought are not justified by any change of circumstances and that the sums sought are excessive. The first part of that defence depends upon the terms of the Minute of Agreement.

Factual background
[2] At proof, evidence was led from the pursuer, Mr Ian Barbour, one of her employers, Mrs Sally Keenan, a friend of the pursuer and an associate in the dental practice where the pursuer is employed, and the defender. The evidence was largely uncontested and the following facts emerged.

[3] The pursuer graduated with a business degree in 1988. She was employed by Standard Life Assurance Company until early 1991. While working for Standard Life, the pursuer met the defender, an actuary, who was then employed by Standard Life. When his career required him to move to Canada in 1991, the pursuer gave up her job and followed him there. They were married on 1 February 1992 and their first daughter, Hanne-Mary, was born in Canada on 27 April 1992. Their second daughter, Emilia, was born on 17 December 1996. By that time the parties had returned to Edinburgh and had set up home together at 63 Cluny Gardens, Edinburgh. The parties separated on 6 September 1998. They entered into a Minute of Agreement dated 10 July and 4 August 2000 ("the Agreement") in order to regulate various financial affairs consequential upon their separation. They were divorced on 26 September 2000.

[4] After the parties' separation, the pursuer continued to live within the former matrimonial home with her two children. She obtained part-time employment as a receptionist with the Barbour Dental Practice at 39 Mayfield Gardens, Edinburgh, in September 1999. She was introduced to the practice by her friend, Mrs Keenan, an associate in the practice. That was the pursuer's first employment since leaving Standard Life in 1991.

[5] Since September 1999, the pursuer has continued to work as a dental receptionist. She is highly regarded by the practice. She works from 8.30am to 2.15pm and is allowed to take three weeks unpaid leave during the school summer holidays. There is a small office area within the practice where either or both of the children can be supervised by the pursuer, if required. The flexibility of these arrangements, together with the proximity of the pursuer's home, the dental practice and the girls' school, are particularly advantageous for the pursuer. Because the practice has a second part-time receptionist, there is no reasonable prospect of the pursuer's hours of employment being increased, nor of her being promoted to practice manager. At the date of the Agreement she earned £7,795 per annum, approximately £570 per month net. By the date of proof her salary had increased to £12,000 per annum, approximately £750 per month net.

[6] Hanne-Mary and Emilia have remained in the care of the pursuer throughout. They both attend George Watson's College. Hanne-Mary was a pupil there at the time of the Agreement. At that time the parties had agreed that Emilia should also attend that school but she had not yet started there.

[7] The pursuer's life appears to centre around her children. They spend time together after school and at weekends and on holidays. The girls enter fully into school life and on a variety of extra curricular activities. This involves the pursuer in extensive transport arrangements for the children as well as trips away together. The pursuer has endeavoured to compensate for the breakdown of the marriage by providing a secure, comfortable and active home and life for each of the girls. They enjoy days out together and have had holidays in Devon and in Denmark where the pursuer's parents have a house. She has found it very difficult to provide family holidays for the three of them, unless their accommodation is free.

[8] The pursuer lodged a schedule of income and expenditure (No.45 of process) which showed that her largest fixed monthly outlays were in respect of her house and car and Emilia's school fees. Her monthly mortgage payment is £1,100 with a further £117.94 in respect of linked endowment policies. She pays a car loan of £300 per month and Emilia's school fees are currently £460 per month. With the exception of Emilia's school fees and the cost of her school lunches and uniform, the schedule made no attempt to differentiate between expenses incurred by the pursuer and those incurred directly for the children. She accepted in evidence that she probably spent about £125 per month on herself alone, with most of the other monthly expenditure benefiting herself and the children more or less equally. Some of the items in this schedule were based on actual expenditure over a certain number of months and then converted to show a monthly average. Others, such as the cost of car and house maintenance, were the result of a more hypothetical exercise, in that they were based on anticipated, recurring capital costs which were then expressed as a monthly average. The schedule also showed expenditure of about £220 per month on "weekend entertainment" which included such activities as trips to the cinema, lunches, days out, weekends away, Festival tickets and visits to the Royal Highland Show. The monthly figure for holidays was £150 which covered flights to and from Denmark, car hire and spending money for the pursuer and both children.

[9] The pursuer stated in evidence that she had formed no new relationship and had no new partner since separating from the defender. That evidence was not challenged.

[10] The defender has one son from his first marriage. He has re-married and has one daughter of this marriage, Katie, who is aged about 31/2 and attends St. George's Nursery School. The defender's wife has a child from a previous marriage who suffers from cerebral palsy. The defender considers his family to consist of himself, his wife and these five children, including Hanne-Mary and Emilia.

[11] At the date of the Agreement the defender was employed by the Royal Bank of Scotland plc as Deputy Chief Executive, Retail Banking. His basic salary was £160,000 per annum, £8,141 per month net. He is now Chief Executive, Retail Banking and his current basic salary is £500,00 per annum. The defender's tax returns for the years to 5 April 2002 and 2003 showed that he was taxed on gross payments of over £1.3 million and £1.2 million respectively. The difference was accounted for by substantial bonuses and the realisation of share options, which he had been given in previous years and which he had exercised in these particular tax years. The defender was at pains to emphasise that such bonuses were unpredictable and the possibility of realising existing share options profitably in the future was even more unpredictable. In evidence the defender treated the finer details of his salary and overall remuneration package as being of somewhat academic interest because he accepted that he could afford to meet the pursuer's current claims in full. His position was that he should not have to do so. He was determined that only the correct amount of aliment should be paid by him.

[12] At the time of the Agreement the defender was living in Glasgow. Shortly thereafter he moved to Edinburgh and bought a house in Gamekeeper's Road. He has re-invested his recent windfall profits from the exercise of his share options in a house in Italy and, more recently, one in Elie. Both properties are intended by him for holiday use. The defender's job is a demanding one. He works long hours and is often away from home for two or three days a week. He hardly sees his daughter Katie during the week. One of the points of contention between the parties was the apparent infrequency of the defender's contact with Hanne-Mary and Emilia. The pursuer had prepared a schedule showing the contact which had taken place between the defender and his daughters between January 1999 and October 2003. Its accuracy was not seriously disputed by the defender. It showed contact on fourteen occasions in 1999, ten in 2000, seven in 2001, twelve in 2002 and eight up to the middle of October 2003. Some of these contacts were overnight visits, while others were day visits. Emilia had once been on a family holiday with the defender to Arran about three and a half years ago. Hanne-Mary had never been on holiday with the defender since the parties' separation. Katie, by contrast, had been to the defender's home in Italy on five or six occasions. His explanation was that that house was not yet ready for big family holidays but, when it was, he hoped that Hanne-Mary and Emilia would be able to holiday there too. Part of the problem was also the practical burden on the defender's present wife of looking after her son. The practical consequence has been that the full responsibility of providing holidays for Hanne-Mary and Emilia has fallen on the pursuer. This had had a direct financial cost for her, as well as an indirect one in requiring her to take unpaid leave from her employment. The pursuer is also concerned that it is hard for Hanne-Mary and Emilia when they are visiting the defender's home to be shown holiday photographs of their step-sister Katie enjoying exotic holidays that they have not enjoyed with the defender, and that the pursuer is unable to afford to give them. The defender enjoys holidays in South Africa, on average once a year.

[13] The other main bone of contention between the parties concerns school fees. The pursuer is anxious that both Hanne-Mary and Emilia should continue to attend George Watson's College. The defender is more ambivalent about the advantages of private education. He and his son attended a comprehensive school. He had been prepared to go along with the pursuer's wish that Emilia, as well as Hanne-Mary, should attend a private school, whereas the pursuer's perception of the matter was that the defender had willingly seen the advantages of George Watson's College after having attended an open day there, and that he had been wholeheartedly behind Emilia being enrolled there as soon as possible.

[14] The defender regarded his financial provision for the pursuer herself and for their two daughters, both at the time of the Agreement and since, as being very generous. The pursuer's schedule of income and expenditure shows that when his present payments to her of £1,000 per month come to an end at the end of 2003, she will be unable to afford the standard of living presently enjoyed by Hanne-Mary, Emilia and herself. The pursuer had considered more remunerative employment and had taken some positive steps. In September 2001 her name had been put forward for a sales position with Ethicon Limited and she had written to them with a copy of her CV to follow up that introduction. She had also applied to George Watson's College, speculatively, seeking a position as either a classroom assistant or as a member of their administrative staff. The prospect appealed to her because of the convenience of holidays that would coincide with her daughters' school holidays and the possibility of discounted school fees for employees. She had also approach Standard Life by telephone seeking employment with them. None of these attempts had been successful. The pursuer had since improved her skills by learning to type. She had already been on a practical computer skills course. She accepted that she had not been actively job-searching recently. If the current application to the court is unsuccessful, the pursuer's plan would be to move to England to be nearer her parents, who could provide the necessary extended child care to enable her to undertake full-time employment. The defender's position was that he would be "confused" if the pursuer left Edinburgh for the sake of keeping their children in private education.

[15] Since the date of the Agreement, the fees for children attending George Watson's College have increased at a rate significantly greater than the rate of inflation. For the school session 2000/2001 the annual fee for Primary 1 and Primary 2 was £3,504 and for Primary 3 to Primary 7 it was £4,227. The corresponding figures for the session 2002/2003 were £4,209 and £5,070 respectively, and the latter figure is now £5,520.

The 1985 Act
[16] Aliment is now regulated by sections 1 to 7 of the 1985 Act. Section 1 provides:

"1-(1) From the commencement of this Act, an obligation of aliment shall be owed by, and only by - .....

(2) For the purposes of this Act, an obligation of aliment is an obligation to provide such support as is reasonable in the circumstances, having regard to the matters to which a court is required or entitled to have regard under section 4 of this Act in determining the amount of aliment to award in an action of aliment."

Section 2 prescribes the type of action in which a claim for aliment may be made. It provides inter alia:

"2-(1) A claim for aliment only (whether or not expenses are also sought) may be made, against any person owing an obligation of aliment, in the Court of Session or the sheriff court. ......

(4) An action for aliment may be brought -

(a) by a person (including a child) to whom the obligation of aliment is owed;

(b) by the curator bonis of an incapax;

(i) the parent or guardian of the child;

(iii) a person with whom the child lives or who is seeking a residence order (within the meaning of section 11(2)(c) of the Children (Scotland) Act 1995) in respect of the child."

Section 3 is concerned with the powers of the court in an action of aliment and provides inter alia:

"3-(1) The court may, if it thinks fit, grant decree in an action of aliment, and in granting such decree shall have power -

(a) to order the making of periodical payments, whether for a definite or indefinite period or until the happening of a specified event;

(b) to order the making of alimentary payments of an occasional or special nature, including payments in respect of inlying, funeral or educational expenses;....".

[17] Section 4 is important for present purposes because it is concerned with the amount of aliment and I set it out in full:

"4-(1) In determining the amount of aliment to award in an action for aliment, the court shall, subject to sub-section (3) below, have regard -

(a) to the needs and resources of the parties;

(b) to the earning capacities of the parties;

(2) Where two or more parties owe an obligation of aliment to another person, there shall be no order of liability, but the court, in deciding how much, if any, aliment to award against any of those persons, shall have regard, among the other circumstances of the case, to the obligation of aliment owed by any other person.

(3) In having regard under sub-section (1)(c) above generally to all the circumstances of the case, the court -

(a) may, if it thinks fit, take account of any support, financial or otherwise, given by the defender to any person whom he maintains has a dependent in his household, whether or not the defender owes an obligation of aliment to that person; and

(b) shall not take account of any conduct of the party unless it would be manifestly inequitable to leave it out of account.

(4) Where a court makes an award of aliment in an action brought by or on behalf of a child under the age of 16 years, it may include in that award such provision as it considers to be in all the circumstances reasonable in respect of the expenses incurred wholly or partly by the person having care of the child for the purpose of caring for the child."

Section 5 deals with the variation or recall of decrees of aliment and section 6 with interim aliment. Section 7 contains provisions in respect of agreements on aliment:

"7-(1) Any provision in an agreement which purports to exclude future liability for aliment or to restrict any right to bring an action for aliment shall have no effect unless the provision was fair and reasonable in all the circumstances of the agreement at the time it was entered into.

(2) Where a person who owes an obligation of aliment to another person has entered into an agreement to pay aliment to or for the benefit of the other person, on a material change of circumstances application may be made to the court by or on behalf of either person for variation of the amount payable under the agreement or for termination of the agreement."

The Agreement
[18] The Agreement provides for Hanne-Mary and Emilia to reside with the pursuer. The defender is to have contact with them at such times as may be mutually agreed between the parties. Clause (FOUR) provides for the defender to pay aliment to the pursuer for each child at the rate of £1,100 per month indexed linked annually to the Retail Prices Index for the immediately preceding year. Clause (FIVE) provides for payment by the defender to the pursuer of "aliment or periodical allowance" for her own benefit at the rate of £1,000 per month until and including 27 December 2003 with no increases to take account of inflation. Clause (FIVE) specifies that after 27 December 2003 "there shall be no obligation on either Party to pay personal aliment or periodical allowance to the other." There is also provision for these payments to cease immediately in the event of the pursuer's re-marriage or death. In terms of Clause (SIX) the pursuer is entitled to receive the whole child benefit payable in respect of both children for as long as they reside with her.

[19] Clause (SEVEN) provides:

"In the event of any material change in the financial circumstances of either Party, or of the children of the marriage, either Party will have the option of seeking a variation of the amount of aliment provided for in Clause (FOUR) hereof by giving one month's written notice. If the Parties are unable to agree within one month of written notice being so given, the amounts to be paid in the changed circumstances, either Party will be entitled to apply to the Child Support Agency for a determination, insofar as that Agency has jurisdiction, and/or to apply to a Court of competent jurisdiction for variation of this Agreement insofar as the Courts have jurisdiction based on a material change of circumstances, in terms of Section 7(2) of the Family Law (Scotland) Act 1985 or any re-enactment thereof."

Clause (EIGHT) then provides:

"In respect that the said child Hanne-Mary presently attends George Watson's College, it is hereby agreed by the Parties that the said child Emilia should also be enrolled as a pupil at said George Watson's College when she attains the age to commence primary education. It is further agreed in principle by the Parties that the said children should continue to be privately educated irrespective of the place of residence of the First Party [the pursuer]. In the event of the First Party deciding to live furth of Edinburgh, the Parties will consult with each other about the most appropriate alternative school for the said children to attend. Irrespective of which school the said children attend, the First Party shall pay the fees, uniform costs and cost of extra-curricular activities incurred in respect of the attendance at such school by the said child Emilia. The Second Party [the defender] shall pay the fees incurred in respect of the attendance at such school by the said child Hanne-Mary, together with a maximum of £300 per school term in respect of uniform costs, luncheon costs and the costs of extra-curricular activities."

[20] Clause (NINE) provided for the conveyance of the defender's one-half pro indiviso share of the former matrimonial home to the pursuer, and this was done. Clause (TEN) provided for the consequential transfer of the mortgage secured over the former matrimonial home to the pursuer and released the defender from any further liability in respect of that mortgage. Clauses (ELEVEN) and (TWELVE) were also consequential upon the transfer of the property. Clause (ELEVEN) clarified that after the date of transfer the pursuer would be responsible for all household bills and accounts in connection with the former matrimonial home, and Clause (TWELVE) assigned two endowment assurance policies to the pursuer. Those policies would provide funds with which to repay part of the mortgage in about 2015 or 2016, the balance of the mortgage being an interest and principal one. Clauses (THIRTEEN) to (FIFTEEN) concerned various moveable property, including the pursuer's car. Clause (SIXTEEN) provides for the Agreement to remain in full force and effect after decree of divorce and for the remaining clauses of the Agreement to remain enforceable in the event of any clause being declared to be unenforceable. Clause (SEVENTEEN) provides:

"Both Parties agree by their subscription of these presents to accept the provisions of this Agreement in full and final settlement of all and any rights they have or may have against the other to claim a capital sum and/or an order for the transfer of property and/or an order for financial provision and/or an order for periodical allowance and/or an order for interim aliment and/or an order for aliment in terms of the Divorce (Scotland) Act 1976 or any re-enactment thereof or the Family Law (Scotland) Act 1985 or any re-enactment thereof whether arising on the divorce of the Parties or otherwise now and in all time coming and each Party by his or her subscription hereto hereby irrevocably renounces and discharges all and any such rights, except insofar as provided for herein."

Clause (TWENTY) provides:

"The Parties hereby acknowledge that they have had the benefit of independent legal advice in relation to the contents of this Agreement and they hereby acknowledge that having regard to the whole circumstances prevailing at the time this Agreement was entered into, the terms of the Agreement are fair and reasonable."

The Effect of the Agreement
[21] Counsel for the defender submitted that as between the parties Clause (SEVENTEEN) was a bar to the variation of Clause (EIGHT). What the pursuer was attempting to do in this action by means of a separate conclusion to obtain decree against the defender for payment of Emilia's school fees, was barred for the same reason as variation of Clause (EIGHT). Counsel accepted that Emilia herself could claim her school fees from the defender, but he would then be able to recover them from the pursuer under the contractual arrangement contained in Clause (EIGHT). Counsel submitted that the liability of the pursuer and the defender to Emilia in respect of school fees or other aliment was joint and several. The Agreement then regulated the liability of the pursuer and the defender inter se.

[22] Counsel for the defender submitted that Clause (SEVENTEEN) was an effective discharge of the pursuer's right to claim school fees from the defender in respect of Emilia. He accepted that it did not discharge Emilia's own right to claim various school fees from the defender. He pointed to the decision of Sheriff Macphail in Claudia Cedrone, known as Coppola v Antonio Cedrone, 19 March 1997 (unreported), where a discharge by a mother of her right to claim aliment on behalf of a child was held not to bar a subsequent claim for aliment made by the child herself. Sheriff Macphail held that the child's mother had given up her right to claim aliment on the child's behalf under section 2(4)(c)(i) and (ii) of the 1985 Act, but she had not given up the child's right to claim aliment on her own behalf by virtue of section 2(4)(a) of that Act. At that time section 2(4)(c)(ii) provided for an action of aliment to be brought by the tutor of a pupil.

[23] Counsel for the defender also submitted that the discharge contained in Clause (SEVENTEEN) was effective and was not struck down by section 7(1) of the 1985 Act because the pursuer had had the benefit of independent legal advice and had accepted that the terms of the Agreement were fair and reasonable at the time, as was evidenced by the terms of Clause (TWENTY).

[24] Counsel for the pursuer accepted the distinction emphasised in Sheriff Macphail's decision between a child's right to aliment and a parent's right to claim aliment on behalf of a child. She submitted that neither right was barred by Clause (SEVENTEEN). Clearly the child's right could not have been barred, not least because the child had not been a party to the Agreement. The only doubt on the matter was raised by the dual meaning of "aliment", which could relate to the pursuer herself prior to divorce or to a child at any time. She submitted that any discharge by the pursuer of her right to claim school fees in respect of Emilia would have required to have been done expressly. She referred to the discharge contained in the Agreement under consideration in the Cedrone case. The provision in that agreement was in the following terms:

"Furthermore, the Second Party deems the foregoing payment to be in full and final settlement of all claims competent by her against the First Party at either common law or in terms of the Divorce (Scotland) Act Nineteen Hundred and Seventy Six, Family Law (Scotland) Act Nineteen Hundred and Eighty Five or any other statute or otherwise now and in all time coming. Furthermore she gives up any right she may have to claim aliment on behalf of the child of the marriage Claudia Cedrone."

That, counsel submitted, was what was required to discharge a parent's right to claim aliment under section 2(4)(c)(i) of the 1985 Act. In the absence of such an express provision, the pursuer's present claim in respect of the school fees for Emilia was not barred by the terms of Clause (SEVENTEEN). She further submitted that the express right to seek variation of the aliment payments in Clause (FOUR) contained in Clause (SEVEN) favoured the construction that Clause (SEVENTEEN) was not intended to relate to any aspect of aliment for the children. Counsel for the defender's contrary submission was that Clause (SEVEN) was deliberately confined to variation of aliment under Clause (FOUR) and excluded variation of school fees under Clause (EIGHT), which was otherwise barred by Clause (SEVENTEEN).

[25] As I understood counsel for the pursuer's submission, she accepted that the pursuer's claim in the present action in respect of Emilia's school fees was presented as a direct claim rather than as a variation of Clause (EIGHT) in an attempt to avoid the possible discharge issue raised by Clause (SEVENTEEN). The relevant conclusion is worded so as to seek payment by the defender "of all accounts for school fees and outlays due to George Watson's College... as these are submitted each term and covering the attendance at that school.... of the parties' daughter, Emilia Alice Higgins." I note that if those accounts were to be submitted directly by the school to the defender, the pursuer would not be involved in the transaction at all. Nevertheless, the pursuer avers towards the end of Article 5 of Condescendence under reference inter alia to that conclusion: "Said orders would constitute variation of the existing agreement". She does not seek express variation of Clause (EIGHT).

[26] In my opinion Clause (SEVENTEEN) of the Agreement does not effectively discharge the pursuer's right under section 2(4)(c)(i) of the 1985 Act. It is clear from the terms of section 3(1)(b) that payments in respect of school fees are alimentary payments which may be ordered in an action for aliment brought under section 2(4). With regard to the construction of the Agreement I agree with the submissions by counsel for the pursuer. The entire terms of Clause (SEVENTEEN) are apt to deal with the pursuer's and the defender's rights against each other as individuals. Although the word "aliment" could refer to aliment for Emilia, including her school fees, there is no express reference to aliment for children. Without such an express reference, the use of the word "aliment" in Clause (SEVENTEEN) is apt to cover the obligations owed by the pursuer to the defender and the defender to the pursuer between the date of the Agreement and the date of divorce. In the absence of any express discharge in respect of child aliment contained in Clause (SEVENTEEN) the question is whether it would be reasonable to infer from Clauses (FOUR), (SEVEN) and (EIGHT) that the parties had intended Clause (SEVENTEEN) to cover child aliment in respect of school fees and other school related expenditure. In my opinion, no such inference can reasonably be drawn. The reason is simply that, notwithstanding a reference in Clause (SEVEN) to Clause (FOUR) only, the school fees and related expenses specified in Clause (EIGHT) are but one aspect of aliment and such a provision could readily be defeated by a corresponding variation of aliment under Clause (FOUR). If that had been the intention of the parties at the time of contracting, it would have been necessary, I think, for that intention to have been set out expressly to prevent this simple avoidance mechanism.

[27] I am reinforced in this view by consideration of counsel for the defender's submission on joint and several liability of the parties to Emilia in respect of aliment. I disagree with that submission. Section 4(2) of the 1985 Act not only makes the parties both potentially liable for aliment, but also provides that in deciding how much, if any, aliment to award against either parent the court shall have regard, among the other circumstances of the case, to the obligation of aliment owed by the other parent. That provision, in my opinion, is inconsistent with any notion of joint and several liability. It would mean, in the present case, that if an action had been raised against the defender in the name of Emilia and a curator ad litem had been appointed to her, and she sought payment of her school fees, the court would have to have regard to the obligation of aliment owed by the present pursuer. That would immediately involve consideration of the pursuer's liability under Clause (EIGHT) of the Agreement. If, therefore, it was impossible to vary Clause (EIGHT) because of the discharge contained in Clause (SEVENTEEN) Emilia's right to claim her school fees from the defender would be inhibited by the terms of section 4(2) of the 1985 Act and the terms of the Agreement. The practical consequence of such a discharge would be, in my opinion, not only to prevent the pursuer from seeking an order in respect of school fees under section 2(4)(c)(i) or a variation of the Agreement under section 7(2) of the 1985 Act, but also to restrict Emilia's own right to seek payment of her school fees from the defender, regardless of whether he had a subsequent right of relief against the pursuer. If this analysis is correct, it is all the more reason why such a discharge by the pursuer of her right to seek to recover the cost of Emilia's school fees from the defender should have been set out expressly in the Agreement if that had been the intention of the parties. Emilia would have had to have been referred to in Clause (SEVENTEEN).

[28] If I am wrong about the effect of Clause (SEVENTEEN) I would have held that any discharge contained therein of Emilia's school fees was of no effect by virtue of section 7(1) of the 1985 Act because the defender had failed to demonstrate that it was fair and reasonable in all the circumstances of the Agreement at the time it was entered into. The sum of money at stake was potentially substantial. It is apparent from production 6/32 that at the time of the Agreement Emilia's school fees would amount to a sum in excess of £60,000. At the time of the Agreement the defender's income and financial prospects were very substantially better than those of the pursuer. It is not apparent from the terms of the Agreement that Emilia received anything to compensate her for any restriction of her future right to recover the cost of her school fees from the defender. Even if counsel for the defender's submission had been correct that Emilia could have recovered the cost of her school fees from the defender who would then have had a contractual right of relief against the pursuer, if the terms of Clause (EIGHT) could not be varied, the result might well have been that Emilia could only ever recover the cost of her private school fees at the expense of her, Hanne-Mary's and the pursuer's standard of living. I do not consider such a state of affairs to be self-evidently fair or reasonable.

[29] Counsel for the defender relied on the pursuer's acknowledgement in Clause (TWENTY) of the Agreement that its terms were fair and reasonable and the fact that that acknowledgement was made with the benefit of independent legal advice. That proposition may be sound where the terms of a discharge contained in an Agreement are plain and clearly stated. For the reasons already stated, I do not consider that Clause (SEVENTEEN) did discharge the pursuer's rights in respect of Emilia's school fees but, if I am wrong about that, it is far from self-evident that Clause (SEVENTEEN) had that effect, nor was it suggested in evidence to the pursuer that she had been advised at the time of entering into the Agreement that Clause (SEVENTEEN) had that effect. I conclude therefore that the pursuer is free to seek the two orders which she does in this action. I consider, however, that since the school fees claim in this action is plainly not one being made by Emilia herself or by the pursuer in a strictly representative capacity, this part of her claim is presently inhibited by the terms of Clause (EIGHT). There is no reason, in my opinion, why the pursuer should not now seek to have the terms of Clause (EIGHT) varied either to include any new arrangement regarding payment of Emilia's school fees or to remove the pursuer's liability for them so as to clear the way for the claim which she presently makes.

Changes of Circumstances
[30] Parties were agreed that in considering the exercise of the power to vary an agreement under section 7(2) of the 1985 Act, three questions had to be addressed. First, has there been a material change of circumstances since the Agreement was entered into? Secondly, do any such changes justify a variation of the terms of the Agreement? Thirdly, if a change is justified, how much should it be? Parties were also agreed that for the purposes of this part of the argument it was to be assumed that the terms of the Agreement were fair and reasonable at the time it was entered into.

Submissions for the Pursuer
[31] Counsel for the pursuer accepted that it was for her to show that there had been a material change of circumstances since the date of the Agreement. She submitted that the defender's income position had changed very substantially. At the time of the Agreement the defender had earned £160,000 per annum gross. That was his basic salary but it had not been suggested that his earnings at that time had been greater than that. His salary now was about £1.2 million per annum with a net average over the past two years of between £750,000 and £800,000. It was necessary to consider, she submitted, the extent to which Hanne-Mary and Emilia should benefit from this increase in the defender's income. She recognised that the change in the pursuer's income was a more contentious issue because of the fact that the contractual payment under Clause (FIVE) of the Agreement would end with the last payment on 27 December 2003. While that would bring about a change in the pursuer's income, it was a change that had been known at the date when the Agreement had been entered into. She submitted that the significance of this change in the pursuer's income was in relation to the third question which I had to consider, namely the amount of any variation of aliment. She did, however, submit that the pursuer's inability to replace the income of £1,000 per month under Clause (FIVE) was a change of circumstances. Counsel submitted that there had been substantial increases in Emilia's school fees, greater than the rate of inflation, since the date of the Agreement. The burden of looking after the children had increased now that they were both at school and both were actively involved in a number of extra-curricular activities.

[32] Counsel submitted that the needs of the children should be regarded as relative and not basic. Regard had to be had to the almost extravagant lifestyle enjoyed by the defender. Counsel referred to the discussion of relative need by Lord Penrose in McGeoch v McGeoch, 1998 Fam. L.R. 130. In the present case there was no authority against the proposition that the court should have regard to the standard of living and lifestyle of the defender's third daughter, Katie. Indeed, it was possible to construe section 4(3)(a) of the 1985 Act as specifically enabling this to be done. In an attempt to deal with the argument that the pursuer's present action was no more than an attempt by her to replace the income for herself under Clause (FIVE) of the Agreement which she had previously agreed should be for a finite period, counsel submitted that section 4(4) of the 1985 Act was a complete answer to that point. The court was entitled to take account of the expenses incurred by the pursuer for the purpose of caring for Hanne-Mary and Emilia. The evidence was that the pursuer's spending on herself alone, approximately £125 per month, was modest and most, if not all of her other expenditure, while incidentally benefiting herself, was incurred for the purpose of caring for the children.

[33] The annotated schedule of income and expenditure (No.45 of process) should be regarded as a reasonable statement of the position. It clearly demonstrated that the pursuer did not have an excess of income over expenditure. Unless this action is successful, when the pursuer ceases to receive £1,000 per month from the defender in terms of Clause (FIVE) of the Agreement, she will be obliged to remove from Edinburgh and to settle in England near to her parents who would then be able to provide a degree of child care and support necessary to enable the pursuer to seek more remunerative employment. The defender stated in evidence that when improvements to his house in Italy were completed, he would hope to have Hanne-Mary and Emilia to stay there on holiday. Counsel for the pursuer invited me to reject this evidence on the basis of the defender's failure to date to take either child on holiday other than the one occasion when he took Emilia to Arran. His daughter Katie had already been to Italy on five or six occasions. Counsel accepted the defender's evidence that the pursuer's claims in the present action, even if met in full, did not raise an issue of affordability by the defender. Nevertheless the actual amount of his income was relevant to the determination by the court of what was a reasonable amount of aliment in light of the criteria in section 4 of the 1985 Act.

Submissions for the Defender
[34] Counsel for the defender emphasised the defender's evidence that affordability was not the issue. He submitted that in that somewhat unusual state of affairs, the real issue was need, however that might be defined. As the defender had also said that affordability was not the issue at the time when the Agreement was entered into, counsel submitted that the terms of the Agreement should be deemed to have taken account of all the factors in section 4 at the time when it was concluded. It should also be remembered that aliment for the children was only part of an overall package which included capital and incoming provisions for the pursuer herself. Those provisions had been accepted by her as satisfying the principles in section 9(1) of the 1985 Act. What the pursuer was doing in the present action was attempting to re-visit the whole Agreement. Only aliment could be varied and even that required the pursuer to show a change in needs, and this she had failed to do. There was no corresponding schedule of the pursuer's income and expenditure at the date of the Agreement.

[35] The defender's position with regard to school fees had been that he was prepared to go along with the pursuer's wish that Emilia too should attend George Watson's College but he did not wish the burden of meeting those school fees to fall on him. His position had not changed. Counsel demonstrated that if one deducted from the pursuer's schedule of current expenditure the cost of Emilia's school fees and related extras and then divided the result by three, the resultant cost in respect of each of the three members of the pursuer's household was broadly £1,200 per month. That figure reflected each child's contribution to the mortgage from which ultimately the pursuer alone benefited as sole owner of the house.

[36] Counsel observed that certain items in the pursuer's annotated schedule of income and expenditure related to house and car maintenance and were based on anticipated expenditure which might or might not occur rather than on historical costs. In these circumstances counsel doubted whether the court could be satisfied that the schedule properly set out the pursuer's actual expenditure. Counsel also submitted that the pursuer's degree in business ought to enable her to obtain significantly more remunerative employment than her present part-time job and that her attempts to obtain employment had been very limited. In particular, she had made no attempt to apply for any advertised job. She did not present as someone who would have any particular difficulty in obtaining employment if she seriously attempted to do so.