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OUTER HOUSE, COURT OF SESSION

[2006] CSOH 200

F45/00

OPINION OF LORD BRODIE

in the cause

A.B.

Pursuer;

against

C.D.

First Defender;

and

BANK OF SCOTLAND TRUST COMPANY (INTERNATIONAL) LIMITED

Second Defender:

________________

Pursuer: Mrs Scott, Advocate; Morton Fraser LLP

First and Second Defenders: No appearance

22 December 2006

[1] This is an action of divorce in which the pursuer seeks financial provision. The pursuer is AB. She resides in Scotland. The first defender formerly resided at Mergie House, Rickarton, Stonehaven. He left that address in about 2005. He has not disclosed any subsequent address to the pursuer. The second defender is the Bank of Scotland Trust Company (International) Ltd, a company having a place of business at Eagle House, 4 Don Road, St Helier, Jersey. The second defender, which has not lodged defences, is called as trustee under a trust constituted by instrument dated 30 September 1992 according to the laws of Jersey and known as "the Mergie Trust".

[2 ] No issue arises in relation to jurisdiction but as issues may arise in relation to the enforcement of such award of financial provision as is made, it is convenient to note that jurisdiction in the action is founded on the habitual residence of the pursuer in Scotland throughout the period of one year prior to the raising of the action as is provided by section 7(3)(b) of the Domicile and Matrimonial Proceedings Act 1973. That is not, however, the only connection of the parties to Scotland. The pursuer was born and has lived for most of her life in Scotland. In the course of the proceeding the first defender provided an affidavit, dated 22 June 2005, which, at paragraph 3, includes the following information:

"I have always had a fairly nomadic lifestyle. I am not employed on a regular basis. From 1952 - up to date. I have lived in a number of different countries including Denmark, Sweden, Switzerland, France, England and Scotland with an average of stay in each country of 4 to 7 years. It can safely be said that my only home of any permanence has been in Scotland with 12 years residence."

The defender was living in Scotland in 2004. While I make no finding on the matter, it would therefore appear that the defender is a person who, at least in 2000 when this action was raised, if not of Scottish domicile (as ex facie he may very well have been), had a very substantial connection with Scotland and had been habitually resident there for something of the order of eight years.

[3 ] The matter came before me for proof on 1 December 2006. The pursuer was represented by Mrs Scott, Advocate. The first defender was not present and not represented. I directed that the action might proceed as undefended in respect of the merits, as is provided by Rule of Court 49.28(c). That did not obviate the need for proof. Decree of divorce cannot be granted without the grounds of action being established by evidence: Civil Evidence (Scotland) Act 1988 section 8(1) and (2). Moreover, an application for financial provision on divorce requires, except where parties have otherwise agreed, to be supported by evidence which must be considered by the judge: Ali v Ali 2001 SC 618 at 626F-627D. I accordingly heard the parole evidence of the pursuer and of Mr Bruce Graham, chartered accountant, and I considered the affidavits of Jennifer Anne Hess, Patricia Ann McCowan and Elizabeth Anne McCarter, all dated 21 November 2006; together with the affidavit of the first defender dated 22 June 2005. I also had regard to the lodged documentary productions, all of which I accepted as being what they bore to be, having regard to the parole evidence and their demonstrated provenance.

[4 ] Although the proof proceeded without the participation of the first defender it is important to note that this is not because of any absence of opportunity having been given to him. The action was raised in 2000. There was a lengthy sist between 1 December 2000 and 10 December 2003 in order to allow the pursuer to apply for legal aid. On 10 December 2003 the first defender was appointed to lodge defences and he did so. On 11 January 2005 warrant was granted for service of the summons, as amended, on the second defender, which was appointed to lodged defences, if so advised. The second defender did not lodge defences, nor has it otherwise taken part in the action other than to produce statements of accounts in response to an order made by the Royal Court of Jersey. The first defender was, for some time, represented by Messrs Russell & Aitken, Solicitors, in putting forward an active defence to the conclusions for financial provision. He was, for example, represented (and attended) at the hearing of the motion for interim aliment on 24 June 2005. However, on 20 October 2006, having lodged the fourth inventory of productions for the first defender, Messrs Russell & Aitken advised that they were no longer acting for him. There followed the procedure provided by Rule of Court 30.1, in terms of which the first defender was required to state whether he was insisting in his defences, under certification that failure to do so might result in the court making such order as it thought fit. The first defender responded by letter of 4 November 2006 enclosing the appropriate form stating that he was insisting in his answers to the cause (No 23 of process). On 27 October 2006 Lord Carloway made an order in terms of section 20 of the Family Law (Scotland) Act 1985 requiring the first defender to provide details of his resources as at the relevant date (the date of final separation of the parties) and at the present date. The first defender responded to that order by letter dated 15 November 2006 explaining why he could not comply with the precise terms of the order, referring to information which he said had been the subject of communication between the parties solicitors over the past eight years and stating that as at the present date he had neither direct nor indirect assets. The case called for proof before Lord Drummond Young on 21 November 2006. On that date Lord Drummond Young had before him the first defender's letter of 15 November 2006. Lord Drummond Young refused the pursuer's motion to allow the proof to proceed as undefended on 21 November 2006. He discharged the proof fixed for that day and in lieu fixed 1 December 2006 as a diet of proof. He appointed the pursuer's solicitors to intimate this diet to the first defender, under certification that, if he failed to appear or be represented at that diet, the action would proceed as undefended and decree might be granted against him with expenses. The first defender's response was by way of letter dated 26 November 2006 in terms of which he informed the court that he would not be present on 1 December. He requested that all answers already provided by him and recorded in the Record (No 24 of process) be fully considered and taken into account. He nominated Dr Roy Clarke as his representative. The first defender did not attend court on 1 December 2006, nor was he represented by counsel or other person having a right of audience before the court. Dr Clarke is not someone having rights of audience before the Court of Session but he did attend and observed the proceedings from the public benches.

[6 ] I am satisfied that the marriage between the pursuer and the first defender has broken down irretrievably as established by the first defender's behaviour towards the pursuer during the time that they lived together. It is therefore appropriate to grant decree of divorce in terms of the first conclusion of the summons. There being no children of the marriage, the remaining issues relate to financial provision. The pursuer seeks financial provision, preferably by payment of a capital sum of £1 million. The first defender's position, as summarised in his third and fourth pleas-in-law is that there are no circumstances justifying an order either for payment of a capital sum or payment of periodical allowance and, in any event, the sums concluded for being excessive, no such awards should be made. He claims to have no assets.

[7 ] Before turning to consider what properly might be regarded as the matrimonial property of the pursuer and the first defender at the relevant date, it is convenient to note my findings in relation to the first defender's business activities and the assistance provided to him by the pursuer during the period when they lived together after the marriage. The first defender was an entrepreneur with a variety of business interests. His expertise lay in identifying an idea or project which had a potential for profit, developing it into an ongoing business and then selling the business on. When the parties met in 1988, the first defender had been involved in a property development in France. By the time they got married he was involved in a property development in London. This was not successful and the first defender came under pressure from the bank. He instructed Messrs Strutt & Parker, Estate Agents, with a view to selling Mergie House. The pursuer put £35,000 into the first defender's bank account. This avoided the need for a sale of Mergie House. This payment is acknowledged in the Minute of Agreement between the pursuer and the first defender dated 7 and 14 June 1995, No 7/18 of process. In terms of that Minute of Agreement the pursuer became entitled to 10 percent of the increase in value on sale of Mergie House over the agreed purchase price of £350,000. In about September 1995 the first defender acquired rights in relation to a process for manufacture of a non-allergenic pillow. A company known as Scotfill Ltd was established to manufacture and market the pillow. The first defender sold back his interest to the inventor of the process in 1997 for a consideration of the order of 3 million Danish Kroner (DKK). The first defender acquired from a Danish friend rights in respect of a process for growing algae under controlled conditions for a consideration of £15,000. At the pursuer's suggestion the first defender contacted the Department of Marine Biology at the University of Stirling. As appears from his letter of 28 May 2002, No 7/22 of process, Dr Roy Clarke was involved in what was referred to as the BioProcess project. A United Kingdom company, BioProcess Scotland Ltd was established as were Danish and (so it would appear from Dr Clarke's letter) Icelandic companies. While these projects may have been dependent upon the first defender's entrepreneurial expertise, the pursuer provided him with important assistance. Not long after they met, the first defender was diagnosed with a stress related, late onset epileptic condition. The result of this was that the first defender could not drive and, accordingly, the pursuer required to drive him about. She attended business meetings with him. The first defender's spoken English was fluent but his written English was not correct. He was not computer literate. The pursuer accordingly assisted him by drafting business letters on her laptop computer. She looked after Mergie House and helped to entertain the frequent business visitors there. The pursuer has a degree in economics and a diploma in housing management. At the time when the parties first met the pursuer had been working as the manager of a housing association. At the time of her marriage, the pursuer had been working for Phillips, auctioneers, in Edinburgh. She was unable to continue doing so after she moved back into Mergie House. In 1996 when the first defender required money to assist with the development of the non-allergenic pillow project, the pursuer provided him with the sum of £10,000 which she took from a TESSA account.

[8 ] The pursuer acknowledged that on or not long after the parties' separation in June 1999, the first defender made payments to her totalling £79,000. She used this sum to purchase her house. The aliment paid to the pursuer subsequent to their separation amounted to ten monthly payments of £400 (paid by the Mergie Trust). The first defender has made no further payments to the pursuer notwithstanding the court's award of interim aliment on 24 June 2005 at the rate of £1,000 per month. However, when Mergie House and associated land was sold in 2005 the pursuer received payment of some £19,000 in implement of the obligation constituted by the Agreement of 7 and 14 June 1995, No 7/18 of process.

[9 ] The pursuer's current financial circumstances are modest. She prepared a schedule of salary and outgoings for the purposes of her application for interim aliment with explanatory notes. These are Nos 6/41 and 42 of process. Brought up to the date of proof they disclose that the pursuer has a monthly net income of £1,400 and outgoings of the order of £1,871.

[10 ] The principles to be applied by the court in deciding what order for financial provision, if any, should be made, are set out in section 9 of the Family Law (Scotland) Act 1985. In this case it appears to me that the principles to be found in paragraphs (a) and (b) of sub-section (1) are of particular relevance, although all principles must be had regard to. The paragraph (a) and (b) principles are (a) that the net value of the matrimonial property shall be shared fairly between the parties to the marriage; and (b) that fair account shall be taken of any economic advantage derived by either party from contributions by the other, and of any economic disadvantage suffered by either person in the interests of the other person. Application of these principles requires, as a first step, determination of the net value of the matrimonial property at the relevant date. The definition of "matrimonial property" is to be found in section 10(4) of the 1985 Act. The matrimonial property means all the property belonging to the parties or either of them at the relevant date which was acquired by them (otherwise than by gift or succession of a third party) either before the marriage for use by them as a family home or as furniture or plenishings for such a home; or during the marriage but before the relevant date. Mrs Scott, on behalf of the pursuer, conceded that it was appropriate to regard the £79,000 received by the pursuer about the time of the separation of the parties as matrimonial property. She submitted that, in addition, there were assets "belonging" to the first defender which fell to be regarded as matrimonial property, with the result, on the basis of fair sharing, that an award of capital payment should be made in favour of the pursuer in the sum of £1 million. In assessing the evidence as to what belonged to the first defender as at the relevant date, Mrs Scott reminded me that the proper approach to be taken is that set out in Ali v Ali supra at 626G:

"Where a defender fails to make a full and frank disclosure of his or her assets inferences adverse to him or her may be drawn from other evidence in the case."

Reference may also be had to Berry v Berry 1991 SLT 42 at 43 and Cochran v Cochran 1992 GWD 27-1579.

[11 ] The assets that Mrs Scott invited me to hold as falling into the matrimonial property were: two motor vehicles; cash, some of which may represent the proceeds of the sale of the first defender's interests in Scotfill Limited; Mergie House; and shares in two companies, BioProcess A/S and BioProcess Holdings (the "BioProcess shares"). The motor vehicles present no difficulty. On the basis of the pursuer's evidence and the documentary productions I find that a Cherokee Jeep valued at about £10,000 and a classic Astin Martin valued at £36,000 belonged to the first defender at the relevant date and are matrimonial property. Mrs Scott's submission in relation to the other assets presents a little more difficulty by reason of the interposition of the Mergie Trust. No 6/79 of process appears to be a financial statement for the Mergie Trust for the period from 1 July 1996 to 5 April 1997. It is prepared by the second defender and approved by the second defender on 6 May 2005. It is stated not to have been audited. Nos 6/80 to 6/87 are financial statements for the Mergie Trust for the seven financial years commencing 6 April 1997. Each statement contains a balance sheet, capital account, income account and relative notes. Each statement bears not to have been audited. Each statement bears to have been prepared and approved by the second defender. A surprising feature of these accounts is that the accounts from 1997 to 2002 were approved about a month after the date when the accounts of 2003 to 2005 were approved. Similarly, the 2002 accounts would appear to have been approved before the 2000 and 2001 accounts. As Mr Graham confirmed in his evidence one would expect to finalise earlier years' accounts before later years.

[12 ] No 6/81 of process is a financial statement containing accounts for the Mergie Trust for the year to 5 April 1999. The balance sheet discloses net assets of £1,079,649. The assets include Mergie House, valued at £450,000; cash at the bank of £309,696; and unquoted investments valued at £319,953. The notes to the accounts indicate that the unquoted investments consisted of 1,059,200 ordinary shares in BioProcess A/S valued at £105,920 and 255,000 ordinary shares in BioProcess Holdings valued at £214,033. No 6/82 of process are accounts for the year to 5 April 2000. Net assets are stated at £896,310. Mergie House appears as an asset, valued at £450,000. Cash at bank is £389,210. The value of unquoted investments is, however, only £57,000. These consist of 571,000 ordinary shares in BioProcess A/S. Notes to the accounts indicate that in February 2000 488,200 shares in BioProcess A/S and 255,000 in BioProcess Holdings were sold in return for: (1) shares in Danmist ApS valued at DKK 13,852,928; (2) instruments of debt with Danmist ApS for DKK 5,397,082; and (3) a loan to Danmist ApS from Novi for DKK 3,500,000. The notes go on to state that the trustees immediately called in DKK 3,250,120 of the Danmist ApS loan and this was received in the period. The notes state that at the time of signing the accounts the trustees had been advised that Danmist ApS was dormant with little value. Danmist ApS appears in the notes as a debtor to the extent of DKK 5,646,962, presumably in respect of the unpaid consideration for the purchase of the shares in BioProcess A/S and BioProcess Holdings, but a nil value is ascribed to that debt, presumably reflecting a judgement that the debt was irrecoverable.

[13 ] Mr Graham gave evidence as to his assessment of the value of the assets of the Mergie Trust as at 6 June 1999 on the basis of his review of the accounts and the other documentary productions. His conclusions are set out in his report which is No 6/151 of process. Mr Graham identified that a valuation depends upon what is to be made of the transaction whereby Danmist ApS acquired shares in BioProcess A/S and BioProcess Holdings from the Trust in February 2000. A valuation also depends on what is taken as the market value of Mergie House as at 6 June 1999. As Mr Graham explains in his report, on the face of the accounts, the shares were sold to Danmist for a total consideration of some £1.884 million some eight months after the relevant date. Taking that as the value of the shares as at 6 June 1999 and attributing a value of £542,000 to Mergie House (to reflect, on a straight line basis, the accrual of value of the property up to the date of its sale in April 2005) would produce a figure for the total net assets of the Mergie Trust of £2.729 million, at the relevant date. If, on the other hand, a nil value was attributed to the BioProcess shares, the 6 June 1999 value would be £1.114 million.

[14 ] I am satisfied on the evidence that Mergie House was acquired by the pursuer and the first defender for use by them as a family home, as provided by section 10(4) of the 1985 Act. I am further satisfied that the first defender's interest in Scotfill Limited and the BioProcess shares were acquired during the marriage and before the relevant date. Now, at the relevant date title to Mergie House was held by the Mergie Trust, the first defender having disponed the farm and lands of Mergie to Pirunico Trustees (Jersey) Limited by Disposition dated 6 and recorded 7 November 1995 and Pirunico Trustees (Jersey) Limited having then disponed the property to the Mergie Trust by Disposition dated 22 August and recorded 21 October 1996. Mergie House appeared in the statements of Trust accounts as an asset of the Trust until disponed to Sherlock Management Incorporated by Disposition dated 5 and recorded 12 October 2004. At least on the basis of the Trust statements of account, the cash and the BioProcess shares were the property of the Trust at the relevant date. That being so can it be said that these assets can be regarded as "property belonging to" the first defender as that expression is used in section 10(4) of the 1985 Act? For reasons that I shall set out I consider that that question should be answered in the affirmative.

[15 ] On the face of the trust instrument dated 30 September 1992 (No 6/38 of process), the Mergie Trust is a discretionary Trust constituted according to the laws of Jersey, the first defender's interest being no more than that of one potential beneficiary. On the other hand, Mrs Scott, in submission, characterised the Mergie Trust as the first defender's "piggy bank". On the evidence before me, I favour Mrs Scott's characterisation.

[16 ] The first defender had explained to the pursuer that the purpose of the Trust was to put his assets beyond the reach of his creditors. Whereas the potential beneficiaries of the Trust originally included any person who for the time being was or who had been a spouse of the first defender, according to the accounts, such a spouse was removed from the list of potential beneficiaries in the financial year ending 5 April 2000, the year of the parties' final separation. Exclusion of a beneficiary from future benefit is stated to be within the power of the Trustees, if done by instrument. According to the financial statements, in financial year ending 5 April 2005 Sherlock Management Inc, a company incorporated in the British Virgin Islands, was added to the list of potential beneficiaries. Again, the Trustees have power to add a person to the class of beneficiaries. On 5 October 2004 Mergie House was conveyed by the Trust to Sherlock Management Inc for no consideration. Sherlock Management subsequently sold Mergie House at (as it would appear) under value.

[17 ] Mr Alistair Shepherd, solicitor, formerly of Messrs Henderson Boyd Jackson and now of HBJ Gateley Wareing, has acted both for the first defender and Sherlock Management. Consideration of items from his file (Nos 6/90 to 134) is instructive. A few instances provide the flavour. The file contains what appears to be a communication from the first defender to Mr Shepherd under reference to a letter dated 24 January 2000, proposing that "the trust" take on a loan, thereby indicating that it was a matter for the first defender's decision as to whether the Mergie Trust should incur a debt. Communicating with the second defender by e-mail on the subject of the Mergie Trust Mr Shepherd states:

"I've spoken to [the first defender] and we both think it would be best just to keep the money there and let the trust carry on for say a year until the dust settles. A.B. therefore can continue to be paid her monthly sum until further notice".

Writing to the first defender on 14 October 2004, Mr Shepherd advises that he is awaiting a legal opinion as to whether "A.B. will be able to unpick the tangled web of the Mergie Estate in any way". In an e-mail to the first defender dated 29 November 2004 Mr Shepherd expresses the view that he is too:

"much involved in the affairs of C.D., Mergie Trust and Sherlock Management Inc to represent yet another party as regards the Mergie Estate".

On 3 December 2004 the first defender was giving instructions in relation to the sale of Mergie House.

[18 ] Messrs Strutt & Parker considered it appropriate to take instructions from and submit an invoice to the first defender in respect of work done in relation to the prospective and then actual sale of Mergie House at times when the proprietor was, on the face of the title, the Mergie Trust or Sherlock Management.

[19 ] The affairs of the Trust appear to have been conducted with a degree of informality. I have already drawn attention to the fact that accounts were not drawn up for a number of years; were drawn up only at a time when the pursuer's legal advisors were pressing for financial information from the Trust; and were approved in a somewhat idiosyncratic order. The second defender resisted providing financial information in relation to the Trust to the representatives of the pursuer, notwithstanding her position as a potential beneficiary, until ordered to do so by the Jersey courts and, indeed, had thought it appropriate simply not to reply to correspondence from the pursuer's legal representatives requesting information which, to judge by the subsequent order of the Royal Court of Jersey, they were entitled to get. The second defender made payments into the bank accounts of the first defender as and when directed to do so by the first defender. By way of example, the first defender sent a fax to the second defender, dated 19 April 1999 (No 6/40 of process), in the following terms: "Please transfer from the Mergie Trust account the sum of GBP 10,000 (ten thousand pounds) to account ... thanking you in advance". The first defender occupied Mergie House for some ten years following the taking of title to the property by the second defender as trustee of the Mergie Trust. In only two of these years is any rent recorded as being paid by the first defender in respect of his occupation of the property. Between 6 July 1996 and 5 April 2005 a total of £1.378 million was distributed by the Trust of which only £4,000 was stated in the accounts as having been made to a person other than the first defender. That payment of £4,000 was made by way of discharging the first defender's obligation to aliment the pursuer. In addition to these distributions, the second defender made an interest free loan of £54,000 to the first defender in year ending 5 April 2001. The second defender, as trustee, conveyed Mergie House to Sherlock Management gratuitously.

[20 ] On the evidence, I am satisfied that the first defender controlled Sherlock Management Inc. Sherlock was introduced as a potential beneficiary of the Mergie Trust which had, up to that date, been conducted for the sole benefit of the first defender. The first defender gave instructions as to the marketing and sale of Mergie House after title had been taken in the name of Sherlock. After Mergie House had been sold the first defender instructed his solicitor, Mr Shepherd, to remit the proceeds of sale to an account with Danske Bank. In his e-mail of 30 May 2005 to Mr Troels Brinch of Danske Bank International S/A, Mr Shepherd thought it appropriate to request Mr Brinch not to "'kill off' Sherlock quite yet" thereby indicating that Sherlock Management, for which he acted, was no more than a temporary participant in a scheme for the transfer of assets.

[21 ] On the evidence, I am further satisfied that what appeared in the accounts of the Mergie Trust from time to time as assets of the Trust (the cash, Mergie House and the BioProcess shares) should be regarded as belonging to the first defender. I had no evidence that the second defender, as supposed trustee, on any occasion independently exercised discretion. Rather, every action and every purported decision of the second defender, as trustee of the Mergie Trust, was for the benefit of the first defender and no other person. The Mergie Trust, as it was operated, was no more than a means of managing assets for the benefit of the first defender, presumably in the hope that they would thereby escape the notice of the pursuer (and perhaps other creditors or prospective creditors of the first defender) and that diligence would be elided.

[22 ] This brings me to the question of valuation. Cash obviously presents no problem. I accept Mr Graham's approach, which is to value Mergie House at £542,000. That leaves the BioProcess shares. On the evidence before me I propose to take their value at the relevant date as being £1.884 million. That is the total consideration recorded as received for their sale some eight months after the relevant date. That when the second defender came to draw up accounts in excess of five years after the transaction it chose, for essentially unspecified reasons, to write off the value of the shares in Danmist ApS and the instruments of debt, does not persuade me to adopt a value other than that attributed to the BioProcess shares by the parties to the transaction in February 2000. It is true, as Mr Graham acknowledged, that little or nothing is known about that transaction. Nothing is known about Danmist or what happened to the BioProcess shares after February 2000. It cannot be asserted that the transaction was at arms' length or on an open market basis. It cannot be presumed that the second defender acted as a prudent trustee in accepting the consideration for the BioProcess shares because, on the evidence before me, on every other occasion it appears simply to have acted on the instructions of the first defender. All this presents difficulty in arriving at something approaching a secure valuation. However, the difficulty arises from how the first defender has chosen to arrange, or rather conceal, his affairs and, more particularly, his failure to make a full and frank disclosure of his assets for the purposes of this litigation. On the authority of Ali v Ali supra I consider it appropriate to draw an inference which may be adverse to the first defender but which is, in my opinion, fully warranted by the whole of the evidence and, in particular, the Mergie Trust accounts.

[23 ] On the approach I have taken to valuation, the matrimonial property at the relevant date may be stated as having a value of £2,854,000 (£79,000 in respect of the pursuer's property and £2,775,000 in respect of the first defender's property). It is of course the net value of the matrimonial property that is relevant but no information has been put before me in relation to debts.

[24 ] Application of the principle of fair sharing of the net value of matrimonial property as set out in section 9(1)(a) of the Family Law (Scotland) Act 1985 justifies a payment of £1,000,000 and, as on the evidence before me I cannot find any limitation of resources (notwithstanding assertions made by the first defender in his pleadings and correspondence), I would accordingly consider it appropriate to order payment of that sum. That is all that the pursuer seeks by way of her second conclusion but because questions may arise in relation to enforcement of the decree for payment of a capital sum, it is important that I provide a little more detail as to what I am doing in pronouncing an order for financial provision in this case. Before doing that, it is convenient to outline what questions the pursuer apprehends as arising in relation to enforcement of a decree for payment.

[25 ] A decree for payment is only useful insofar as it is capable of enforcement. Broadly speaking, enforcement will depend on recognition of the decree by a jurisdiction that can effect the application of the judgment debtor's assets for the benefit of the judgment creditor. The first defender no longer resides in Scotland or any other part of the United Kingdom. In his pleadings he states that he "resides part of the time in France". He does not disclose where he spends the rest of the time but he does refer to having invested in property in Israel. It would appear therefore that if the decree in her favour is not to be simply illusory, the pursuer will have to take steps to enforce it outwith the United Kingdom. Her prospects of doing so successfully will be enhanced if, in a Contracting State, she can bring herself within the provisions of the EC Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968 (the Brussels Convention) or the Parallel Convention of 16 September 1988 (the Lugano Convention). These Conventions are usually referred to simply as "the Brussels Convention" or, more recently, "Brussels I". They have been ratified by the United Kingdom and enacted into the domestic law of Scotland by the Civil Jurisdiction and Judgments Act 1982 and the Civil Jurisdiction and Judgments Act 1991. Brussels I is concerned with civil and commercial matters and not, as is provided by the second paragraph of article 1, "(1) the status or legal capacity of natural persons, rights of property arising out of a matrimonial relationship ...". However, in terms of article 5 of Brussels I:

"A person domiciled in a contracting state may, in another contracting state, be sued: ... (2) in matters relating to maintenance, in the courts for the place where the maintenance creditor is domiciled or habitually resident or, if the matter is ancillary to proceedings concerning the status of a person, in the court which, according to its own law, has jurisdiction to entertain those proceedings, unless that jurisdiction is based solely on the nationality of one of the parties; ..."

The application for financial provision in this action is "ancillary to proceedings concerning the status of a person". It has been brought in a court which, according to its own law, has jurisdiction to entertain those proceedings. The relevant jurisdiction has nothing to do with the nationality of the parties. But, where the application is for payment of a once and for all capital sum and where that is the financial provision awarded, is the matter one "relating to maintenance" with the result that a decree for capital payment pronounced by a Scottish court should be enforceable in a Contracting State? On authority, that question gets a qualified affirmative answer. I would refer to the decision of the European Court of Justice in Van den Boogaard v Laumen [1997] ECR 1-1147. This was a reference by a Netherlands court to which a former wife had applied for enforcement of an English decree for ancillary relief by way of transfer of certain property and payment of lump sum consequent on divorce. In the Dutch proceedings the husband contended that the final order pronounced by the English court concerned rights in property arising out of a matrimonial relationship rather than maintenance and therefore was not enforceable, either under the Hague Convention of 1973 or Brussels I. The Netherlands court referred a question in, inter alia, the following terms to the European Court of Justice:

"Must the decision of the English judge, which in any case relates in part to a maintenance obligation, be regarded as a decision which relates (in part) to rights in property arising out of a matrimonial relationship within the meaning of the first indent of the second paragraph of article 1 of the Brussels Convention...?"

The European Court answered that question to the effect that a decision rendered in divorce proceedings ordering payment of a lump sum and transfer of ownership in certain property by one party to his or her former spouse must be regarded as relating to maintenance and therefore as falling within the scope of the Brussels Convention if its purpose is to ensure the former spouse's maintenance. In paragraph 20 of its judgment, it recognised that:

"[On] divorce courts in England and Wales have a wide discretion to make financial provision. They may, in particular, order periodical payments or lump sum payments to be made and ownership in property belonging to one spouse to be transferred to the former spouse. Thus, they have the task of regulating, in a single decision, the matrimonial relationships and maintenance obligations arising from dissolution of a marriage."

Therefore, when making an order for ancillary relief on divorce, an English court (and, I would add, when making an order for financial provision, a Scottish court) may be making both an order in respect of "rights in property arising out of a matrimonial relationship" and "maintenance" as these expressions are used, but not defined, in Brussels I. The importance of the distinction is, of course, that while Brussels I provides that an order in respect of maintenance should be enforceable in a Contracting State it makes no such provision in relation to an order in respect of rights in property arising out of a matrimonial relationship. In drawing the distinction the form of the order is not critical. An order in respect of maintenance need not be by way of periodical payment. It may be made in the form of a lump sum. What is determinative is the aim of the court, as deduced from its reasoning. If this shows that a provision is designed to enable one spouse to provide for himself or herself or if the needs and resources of each of the spouses are taken into consideration in the determination of its amount, the decision will be concerned with maintenance. On the other hand, where the provision awarded is solely concerned with dividing property between the spouses, the decision will be concerned with rights in property arising out of a matrimonial relationship and will not therefore be enforceable under the Convention. A capital sum fixed with a view to ensuring a predetermined level of income may be of the nature of maintenance: Van den Boogaard supra at paragraph 23, as may be an award designed to compensate as far as possible for the disparity which the breakdown of the marriage creates in the respective living standards of the spouses: De Cavel v De Cavel (No 2) [1980] ECR 731.

[26] A result of the potential for difficulty in discerning what is properly a matter of maintenance, as identified in Van den Boogaard, is to impose a duty on a court making an order which may have to be enforced as a maintenance provision in terms of Brussels I to make clear with what its decision is concerned: maintenance or division of property or both, it being borne in mind that, in accordance with article 42 of Brussels I, a judgment can be enforced in part if it clearly shows the aims to which its different parts correspond: Van den Boogaard supra at paragraph 22. That being so, I must say something more about the basis upon which I propose to make an award in the present case.

[27 ] In Scots law marriage does not of itself affect the respective rights of the parties to the marriage in relation to their property: Family Law (Scotland) Act 1985 section 24(1). We do not have a regime of community of property consequent on marriage. There is no such thing as, for example, the huwelijksgoederenrecht recognised by Dutch law, as mentioned in Van den Boogaard. In Scots law the expression matrimonial property is no more than a description of the aggregate of the property held severally by the parties to the marriage and acquired by them during the marriage or as a family home in prospect of the marriage. Its use is specific to the determination of what order, if any, should be made for financial provision on divorce. That the principle set out in section 9(1)(a) is that the net value of the matrimonial property should be shared equally and that in many cases the court will not explicitly have to go beyond an application of that principle does not mean that a Scottish court is or is solely concerned with rights in property arising out of a matrimonial relationship when it makes financial provision on divorce. In terms of section 9(1) the court must have regard to all the principles set out in the paragraphs of the sub-section. These include (b) - fair account of economic advantage and disadvantage; (d) - reasonable adjustment where a party has been dependent for financial support; and (e) - relief from hardship over a reasonable period. The factors to be taken account in applying the paragraph (b), (d) and (e) principles are set out, respectively, in subsections (2), (4) and (5) of section 11. As appears from sections 9 and 11 a purpose of an award of financial provision is to provide for the maintenance of the economically weaker spouse by the economically stronger spouse. Financial provision may be made by any one of the orders identified in section 8(1) but, in terms of section 13(2), it is provided that the court may only make an order for periodical allowance where the order is justified by a (d) or (e) principle and the court is satisfied that an order for payment of a capital sum or transfer of property would be inappropriate or insufficient. It is therefore quite clear that an order for payment of a capital sum may (and commonly will) have among its aims the maintenance of the spouse in whose favour it is made (see, for example McConnell v McConnell (No 2) 1997 Fam LR 108 at 20-36). As Mrs Scott pointed out in her submissions, that a spouse has not been adequately alimented during the subsistence of the marriage (as may be said to be the case here) does not prevent her relying on the (e) principle with a view to obtaining an award of financial provision with the aim of providing for her future maintenance: Haugan v Haugan 2002 SLT 1349.

[28] Thus, as appears to be the case in England and as is recognised as conceptually possible by the European Court in the context of Brussels I, an award of capital payment by a Scottish court in terms of section 8(1)(a) of the 1985 Act may have as its justification and its aim (or part of its justification and part of its aim), the provision for the future maintenance of the spouse in whose favour it is made.

[29 ] I have already indicated that I propose to make an award of capital payment in favour of the pursuer in the sum of £1,000,000. Of that sum I would attribute £500,000 to maintenance as that expression is used in Brussels I. I immediately recognise that the process of selecting that figure involves impression rather than precise science. However, it does reflect what is part of my aim in making an award of financial provision and that is to provide the pursuer with the means to provide for herself to the extent of some £27,500 per annum or thereby over the rest of her life (according to the relevant Duxbury calculation) over and above her current annual net salary of £16,800. Given the relevant statutory principles and factors, that appears to me to be reasonable. I have taken the first defender's resources into account insofar as the evidence before me has permitted (any inadequacy in that evidence being the responsibility of the first defender and not the pursuer). Looking at it at the relevant date even if a nil value is attributed to the BioProcess shares the sum of £500,000 represents less than a half of the first defender's assets. For completeness I would confirm that I have considered the terms of the Agreement between the pursuer and the first defender, dated 21 November 1998 (No 7/12 of process). In my opinion it does not constitute a discharge of or otherwise bear on the pursuer's entitlement to seek financial provision on divorce.

[30 ] I shall grant decree of divorce, as first concluded for. I shall grant decree for payment of £1,000,000, as second concluded for, with interest at eight per cent per annum from the date of decree. As I indicated in response to Mrs Scott's applications made on 4 December 2006, I certified Mr Graham as an expert witness and allowed an additional fee.