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FIRST DIVISION, INNER HOUSE, COURT OF SESSION
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Lord President
Lord Eassie
Lord Marnoch
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[2007] CSIH 11
A1642/01
OPINION OF THE COURT
delivered by THE LORD
PRESIDENT
in
RECLAIMING MOTION
in the cause
SUSAN DOW or SWEENEY
Pursuer and Reclaimer;
against
PATRICK CORNELIUS SWEENEY
(No. 3)
Defender and Respondent:
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Act: Wise, Q.C., Cheyne; Digby Brown (for HBM Sayers, Glasgow)
Alt: Mitchell, Q.C.; Brodies LLP
30 January 2007
Introduction
[1] This action
of divorce has a protracted history. It
was raised in September 1999 and came to proof in June 2002, two earlier diets
having been discharged. The proof ran
for nine days. The Lord Ordinary issued
his Opinion in October 2002. The hearing
on the Summar Roll took place in October 2003 and the court's decision was
issued in December of that year (reported at 2004 SC 372). As the outcome of that hearing gave rise to additional
questions between the parties, a further hearing was fixed. That hearing took place in June 2005, the
court's interlocutor on the merits being issued in August of that year
(reported at 2006 SC 82). We have now
had before us a discussion as to the disposal of expenses. The expenses incurred by the pursuer, we were
informed, were conservatively estimated at £100,000. As the Lord Ordinary did not, in the event,
deal with expenses, the issue is at large for this court.
The parties'
submissions
[2] Miss Wise for
the pursuer moved the court to grant to the pursuer expenses (in so far as not
already dealt with) in the Outer House and in the Inner House, to certify a Mr.
Alan Robb as an expert witness for the pursuer and to award to the pursuer an
additional fee in respect of the proceedings in the Outer House. She submitted that the pursuer had been
substantially successful, having at each stage of the litigation bettered such
extrajudicial offer in settlement as had been made to her; that she had acted reasonably throughout, a
judicial remedy being the only means of resort open to her, while on the other
hand the defender had had the opportunity to expand his wealth by pursuing his
business interests; that, although there
had been conflicting Outer House decisions on the issue of the proper treatment
of capital gains tax (ultimately resolved in the pursuer's favour at the first
stage of the reclaiming motion), the defender had in effect taken a gamble as
to the outcome of that issue and had lost.
[3] At the early
stages of the litigation the defender had offered less than £115,000 in
settlement. Shortly before the proof he
had offered a capital sum of £700,000 but without any award of periodical
allowance; the Lord Ordinary had in the event awarded a capital sum of £744,784
and a periodical allowance of £4,000 per month for one year. Between the two stages of the reclaiming
motion the defender had increased his offer to a capital sum of £850,000, again
without a periodical allowance; he had also offered to pay £25,000 towards the
pursuer's expenses. The court had
awarded a capital sum of £950,000. All
the above offers and awards of a capital sum had been on an instalment basis.
[4] It was
acknowledged that the principle that expenses followed success was not to be
applied in its full rigour in family actions (Little v Little 1990 SLT
785, per Lord President Hope at page 790B-D);
but the principle was still relevant, as was parties' conduct. The appropriate award of expenses was also
bound up with the resolution of what financial provision had been made; an award which disrupted the balance arrived
at in that provision would be inappropriate.
Such disruption would not be caused by awarding expenses against this
defender, who had a successful and expanding business, while this pursuer's
means were restricted to those she had secured in the action. We were referred to a number of Outer House
cases in which expenses in family actions had been considered - Macdonald v Macdonald 1995 SLT 72, Adams v Adams (No. 2) 1997 SLT 150, De Winton v De Winton
1997 SLT 1118 and Robertson v Robertson, 14 March 2001, Lord Eassie,
unreported.
[5] Mr. Mitchell
for the defender submitted that the appropriate order was of no expenses due to
or by either party, both in the Outer House and in the Inner House. The whole conduct of the parties should be
considered and expenses dealt with on an equitable basis. There might be cases where the relative
wealth or poverty of the parties after financial provision had been settled
would impinge on what was appropriate by way of an award of expenses. Here, however, the pursuer had, when account was
taken of what she already owned as well as the provision which had been made
for her by the court's order, an aggregate of property worth £2m. The defender's remaining assets were of an
approximately equivalent value. Neither
party had acted unreasonably in relation to the litigation. The defender had been forthcoming in
disclosure of his assets and co-operative in agreeing valuations. The approach adopted by Lord Cameron of
Lochbroom at first instance in Little v
Little (and not disturbed by the
Inner House) was to be commended. The
defender had not adopted an intransigent or unreasonable position in relation
to proposals for settlement. The proof
had not been conducted wastefully; a
number of matters were genuinely in issue.
The defender's co-operation at the proof had extended to providing the
expert accounting evidence on which the pursuer had relied. The final award of financial provision was
about equidistant between parties' positions
when account was taken of the pursuer's demand that interest be paid on
instalments of the capital sum from the date of decree. In settlement agreements in this class of
action (in contrast, for example, to personal injury cases) it was the practice
for parties to bear their own expenses.
While there was no rule of law to that effect, the situation was
analogous to the bringing to an end of a partnership when the expenses of
winding up its affairs were borne equally.
Discussion
[6] In Howitt v Alexander & Sons 1948 SC 154 Lord President Cooper said, on the
general matter of expenses:
"An award of expenses according to
our law is a matter for the exercise in each case of judicial discretion,
designed to achieve substantial justice, and very rarely disturbed on
appeal. I gravely doubt whether all the
conditions upon which that discretion should be exercised have ever been, or
ever will be, successfully imprisoned within the framework of rigid and
unalterable rules, and I do not think that it would be desirable that they
should be. In McLaren on Expenses (p. 21) the principle is laid down upon the
authority of a number of cases that 'if any party is put to expense in
vindicating his rights, he is entitled to recover it from the person by whom it
was created, unless there is something in his own conduct that gives him the
character of an improper litigant in insisting on things which his title does
not warrant'".
[7] Prior to 1985
expenses in what were then called consistorial actions were subject to a
special rule, namely, that the husband bore both his own and his wife's
expenses (the latter being regarded as "necessaries"), though even in this
field that rule was itself subject to exceptions and qualifications (see Nelson v Nelson 1969 SLT 323). By
section 22 of the Family Law (Scotland) Act 1985 that rule was
abolished; but Parliament did not
replace it with any specified alternative rule.
Regard being had, however, to the principles to be applied in
determining financial provision, it may be inferred that the court was expected
to exercise a discretion based on considerations of fairness and of
reasonableness. It is not inconsistent
with the principle of fairness that a party who is put to expense in
vindicating his or her rights should recover those expenses from the other
party; but the "expenses follow success"
rule, while not irrelevant, should not be applied "in its full rigour" to
disputes about financial provision on divorce (Little v Little, per Lord
President Hope at page 790). Thus the
mere circumstance that a claimant has succeeded in obtaining an award modestly
higher than what has been offered, judicially or extrajudicially, by the other
party will not ordinarily entitle the successful party to an award of the
expenses of process. What has gone
before will also be of importance.
Parties are to be encouraged to make full disclosure of assets and to
agree, where possible, on valuations, thus narrowing as much as practicable the
areas of any remaining disputes. Where
both parties have co-operated in such matters, the just disposal of expenses
may well be of no expenses due to or by.
On the other hand where a party takes the other party to proof on an
issue or issues on which he is unsuccessful to the extent of the other party's
securing an award significantly greater than any outstanding offer, the expense
caused to the successful party may well be recoverable by an award (Adams v Adams (No. 2), per Lord Gill at page 151). While each party should be explicit as to
what would be acceptable by way of settlement, it will be the relationship of
the judicial award to the offer of the obligant, as prospective payee, which
will ordinarily be of primary significance.
[8] In the
present case no criticism can properly be made of the parties' conduct of matters
prior to the proof. Both behaved
responsibly. The proof was conducted
efficiently and with co-operation between parties. A number of issues remained to be
resolved. These included the valuation
of the defender's business assets, the proportions in which that aspect of the
matrimonial property should be shared, the treatment of capital gains tax and
the award of a periodical allowance. On
these matters the pursuer was largely successful, either at first instance or
in the reclaiming motion. That success
made a significant difference to the capital sum which was awarded (or which
would have been awarded, if the Lord Ordinary had treated the capital gains tax
issue differently). The pursuer was
unsuccessful on certain matters put in issue (for example, as to whether a
house in Boswell was comprised within the matrimonial property); but these matters took up a relatively small
proportion of the time taken at proof and were not of major significance to the
assessment of financial provision. (An
issue of contact to a child of the marriage in the end occupied little
time). The amount which the Lord
Ordinary awarded to the pursuer by way of a capital sum exceeded by more than
£44,000 the capital sum offered in settlement by the defender at that stage; the Lord Ordinary additionally awarded to the
pursuer a periodical allowance at the rate of £4,000 per month for one year. In effect, accordingly, the total award of
financial provision made by the Lord Ordinary exceeded by more than £92,000 the
offer made by the defender.
[9] In these
circumstances, while the parties fully co-operated both prior to and during the
proof, the defender put in issue at the proof major items in which he was (or
should have been) unsuccessful; the
award made significantly exceeded his latest offer. Further, in terms of court time that occupied
by issues on which the defender was unsuccessful substantially exceeded those
on which he was successful. In these
circumstances the appropriate disposal of expenses, in our view, is to find the
defender liable to the pursuer in the expenses occasioned by the proof itself
but to find no expenses due to or by either party in respect of other
proceedings in the Outer House (in so far as not already dealt with).
[10] The major
issue in the reclaiming motion was the treatment of capital gains tax. On that, against opposition from the
defender, the pursuer was successful. We
do not regard the fact that this was a pure question of law as a ground for not
marking the pursuer's success by an award in her favour. On the other aspects of the reclaiming motion,
the defender was unsuccessful on the matter of special circumstances and only
partially successful on the matter of the resources of the parties. The award made in the Inner House exceeded by
£100,000 the defender's offer at that stage.
In these circumstances, due regard being had both to issues and to
result, the pursuer should, in our view, be found entitled to the expenses in
the Inner House.
[11] Those awards
of expenses would not disrupt the financial provision made, the defender being
able to meet them without undue hardship.
Ancillary matters
[12] Two ancillary
matters arise. The pursuer sought
certification as an expert witness of a Mr. Alan Robb. This motion was not opposed and should be
granted. She also sought under various
heads an award of an additional fee in respect of proceedings in the Outer
House. In the circumstances any award is
necessarily restricted to the expenses occasioned by the proof itself. In our view the pursuer is entitled to an
additional fee in respect of these expenses but only under heads (e) and (f) of
Rule of Court 42.14(3). The cause was
clearly of importance to the future lifestyle of the pursuer and the value of
the property involved was substantial.
Given that the award of expenses is so restricted, the application under
heads (a), (b), (c) and (g) is not made out.
