Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2013] CSOH 29
	OPINION OF LORD DRUMMOND YOUNG in the cause JACQUELINE WHIGHAM Pursuer; against STEVEN OWEN Defender: ________________

Pursuer: Hayhow; Morisons

Defender: Speir; Turcan Connell

20 February 2013

[1] The pursuer seeks an order in terms of section 28(2)(a) of the Family Law (Scotland) Act 2006 for payment of a capital sum from the defender following the cessation of cohabitation between the parties. This area of the law has been the subject of recent guidance from the United Kingdom Supreme Court in Gow v Grant, 2012 SLT 829; [2012] UKSC 29. Following that guidance, the pursuer now seeks payment of capital a sum that will give her the equivalent of half of the parties' net assets at the date of the cessation of cohabitation, or £397,279; the defender submits that she is entitled to nothing.

Background
[2] The parties began to live together in about July 1984 and continued to do so until the beginning of January 2011. They lived at a number of addresses. For some months in 1984 and 1985 they lived together at Market Street in Musselburgh, and thereafter they lived for some months in a house at 215 Ferry Road, Edinburgh. In October 1985 they moved to Habbie's Howe Hotel, Ninemileburn, where they lived until 1990. From that time until the cessation of their cohabitation they lived together at Spittal House, Ninemileburn. There are three children of their relationship, Danielle Aitken Owen, born on 14 June 1985, Lauren Mary Owen, born on 16 September 1986, and Kieran Daniel Owen, born on 17 November 1992.

[3] At a time when the parties' relationship began, the pursuer was employed as a commis chef at the Lady Nairne Hotel in Duddingston, Edinburgh; she lived with her mother nearby. She gave up that employment when she became pregnant with the parties' elder daughter, towards the end of 1984. The defender was working as a plumber, having finished his apprenticeship two or three years previously. He had worked for East Lothian District Council for a short time, but at the time when the parties' relationship began he was in business on his own account. Many of his activities were in partnership with his brother, William Owen, who was employed at a managerial level in the plant hire business and who was able to secure some degree of financing for their ventures. Initially the defender carried out contract plumbing work under the names Stevie Pipes and then Aitken Sinclair, which was a partnership with his brother. The defender and his brother carried out a number of property developments. They renovated two flats in Musselburgh, and then built two houses in Cockburnspath. The Musselburgh project, which was the first, apparently began very shortly before the beginning of the parties' relationship. In these projects the defender carried out the plumbing and some other parts of the work; his brother's role, by contrast, was in the field of administration and arranging finance. The ventures were generally profitable. It is not necessary to go into details of the profits on the individual projects, because these were used in part to pay for the living expenses of the pursuer, the defender and their family and were otherwise rolled over into the next project. Thus they are ultimately reflected in the parties' capital assets at the date of the cessation of cohabitation.

[4] When the parties moved into 215 Ferry Road, Edinburgh, the property had recently been purchased by the defender and his brother, and rooms in the property were let during the period when the parties lived there. At the same time the defender carried out substantial renovation work on the property. The property was sold at a profit, which was rolled over into the purchase of Habbie's Howe Hotel, Ninemileburn. The hotel was run as a business by the partnership of the defender and his brother, although most of the practical work was done by the pursuer; this comprised most of the cooking and cleaning work. The building was considerably renovated, in the same manner as the earlier developments. By about 1990, however, it became apparent that the hotel was not very profitable; the pursuer blamed this on stricter enforcement of the drink‑driving legislation. The defender and his brother then decided to develop the hotel into three houses, and at the same time to build a house for the parties on an area of ground attached to the hotel. That is the house known as Spittal House, which because the parties' family home and is still owned by the defender. It is a fairly substantial building. The hotel business ceased and the building was split into three houses; each was sold in due course. The defender and his brother carried out a number of other developments in Edinburgh, Roslin, West Linton and Lasswade. In about 1999 or 2000 the business relationship between the defender and his brother came to an end in somewhat acrimonious circumstances. Each of the two went his own way, William Owen emigrating to Australia, and the developments carried out by the defender thereafter were on his own account. These were at Habbie's Howe Hotel.

[5] At the same time the defender continued to carry on his plumbing business. In 1990 the partnership of Aitken Sinclair had come to an end, and the pursuer carried on business on his own account under the name Town & Country Plumbing. In about 1991 or 1992 that business developed into a drain‑clearing business known as "Dial‑a‑Rod". The defender still carries on that business. For most of the time he employed another plumber in the business, and the pursuer was responsible for taking telephone bookings and other administrative tasks. The defender became interested in other business projects. In about 2005 he set up a business called Gadget Wizard, a mail order business for the purchase of certain types of electronic device. The pursuer played a part in that business by taking and sending out orders. The defender also planned a business to organize horror tours in the Old Town of Edinburgh. When the parties separated, his main activity was the Dial‑a‑Rod business.

[6] I will begin by setting out the legal basis for the pursuer's claim, and discussing the implications of the recent decision in Gow v Grant, supra. This area of law has caused enormous difficulty in practice, and the approach to the evidence must be informed by a proper construction of the statutory provisions. Thereafter I will discuss the witnesses and the evidence that they gave; the relevance of the evidence is inevitably conditioned by the analysis of the legislation. Finally I will attempt to determine whether any award should be made in favour of the pursuer and, if so, what the amount of that award should be.

Legal basis for pursuer's claim
[7] The pursuer's claim is based on section 28 of the Family Law (Scotland) Act 2006. The right is entirely statutory; there is no corresponding right at common law. Section 28 is in the following terms:

"Financial provision where habitation ends otherwise than by death

(1) Subsection (2) applies where cohabitants cease to cohabit otherwise than by reason of the death of one (or both) of them.

(2) On the application of a cohabitant (the 'applicant'), the appropriate court may, after having regard to the matters mentioned in subsection (3) --

(a) make an order requiring the other cohabitant (the 'defender') to pay a capital sum of an amount specified in the order to the applicant;

...

(3) Those matters are --

(a) whether (and, if so, to what extent) the defender has derived economic advantage from contributions made by the applicant; and

(b) whether (and, if so, to what extent) the applicant has suffered economic disadvantage in the interest of --

(i) the defender; or

(ii) any relevant child.

(4) In considering whether to make an order under subsection (2)(a), the appropriate court shall have regard to the matters mentioned in subsections (5) and (6).

(5) The first matter is the extent to which any economic advantage derived by the defender from contributions made by the applicant is offset by any economic disadvantage suffered by the defender in the interests of --

(a) the applicant; or

(b) any relevant child.

(6) The second matter is the extent to which any economic disadvantage suffered by the applicant in the interest of --

(a) the defender; or

(b) any relevant child,

is offset by any economic advantage the applicant has derived from contributions made by the defender.

... ."

"Child" is defined in subsection (9) as meaning a person under 16 years of age. In the same subsection, "contributions" are defined as including indirect and non‑financial contributions, and in particular any such contribution made by looking after a relevant child or any house in which the parties cohabited. "Economic advantage" is defined as including gains in capital, income and earning capacity, and "economic disadvantage" is to be construed accordingly.

[8] The application of this section has proved to be extremely difficult in practice. The Scottish Law Commission considered the other principal section of the 2006 Act dealing with the consequences of cohabitation, section 29, in the course of a project dealing with the law of succession (the report is the report of Succession: Scot Law Com No 215; the consequences of cohabitation are considered in Part X), and it became clear in the course of the project that sheriffs, who deal with the great majority of cohabitation claims, were extremely dissatisfied with the existing legislation. The main complaint was that it gave them no guidance as to how to approach the quantification of a claim. The solution suggested by the Law Commission was that the judge or sheriff should initially consider the nature of the cohabitation and relate proportionately to a marriage; thus a cohabitation that has lasted many years, with many of the features of marriage, might be rated at 80 or 90% of a marriage, and one that has not lasted long, or has been intermittent, might be rated at 10 or 20% of a marriage. The court should then determine the amount that would be payable under the Family Law (Scotland) Act 1985 in equivalent circumstances in the case of a marriage, and award the proportionate amount in respect of the cohabitation. On consultation with an advisory group of sheriffs, this solution met with general approval. The Scottish Law Commission's recommendations have not been implemented, however. The result is that the court must arrive at an award under section 28 or 29 without any proper guidance in the legislation as to what the amount of that award should be.

[9] Section 28 was considered by the United Kingdom Supreme Court in Gow v Grant, 2012 SLT 829; [2012] UKSC 29; the proceedings in the Court of Session are reported at 2011 SC 618; [2011] CSIH 25. The facts of that case were very different from the present, in that the cohabitation had only lasted for 4 1/2 years; the parties had significant capital at the start of the relationship; and the pursuer sold her house in large measure to pay off debts that she had accumulated. In the Court of Session section 28 was construed as being limited in scope, on the basis that its objective was to enable the court to correct any clear and quantifiable economic imbalance that might have resulted from cohabitation. This was an attempt to avoid the difficulties which had been encountered in practice at first instance, and which were made clear in the Scottish Law Commission's Report on Succession. In the United Kingdom Supreme Court, however, a different approach was adopted. Lord Hope stated (paragraph [33]) that the wording of subsections (3), (5) and (6) should be read broadly rather than narrowly. The earlier report of the Scottish Law Commission on Family Law (Scot Law Com No 135, published in 1992) was relied on as supporting such a view, although in fact the 2006 Act departs in various respects from the wording of the Law Commission's draft Bill. Lord Hope indicated that the foregoing subsections were "designed to correct imbalances arising out of a non‑commercial relationship where parties are quite likely to make contributions or sacrifices without counting the cost or bargaining for a return" ibid. He continued

"[I]n most cases it is quite impracticable to work out who has paid for what and who has enjoyed what benefits in kind during the cohabitation, as people do not keep such running accounts and the cost of working things out in detail is quite disproportionate to the task of doing justice between the parties".

Lord Hope further stated (at paragraph [36]):

"[A] claim based on contributions or sacrifices in non-commercial relationships of the kind that family law must deal with cannot often be valued precisely. Section 9(1)(b) [of the Family Law (Scotland) Act 1985] enables fair compensation to be awarded, on a rough and ready valuation, in cases where otherwise none could be claimed. Section 28 is designed to achieve the same effect. So it may be helpful to refer to cases decided under section 9(1)(b) when the court is considering what might be taken to be an economic advantage, disadvantage or contribution for this purpose or how the economic burden of caring for a child is to be dealt with under s. 28(2)(b)".

Finally, it was stated (paragraphs [40] and [54]) that regard must be had to where the parties were at the beginning of the cohabitation and where they were at the end, and that the overriding principle was one of fairness rather than precise economic calculation.

[10] What seems to be envisaged, therefore, is a rough and ready calculation. In deciding what are economic advantages and disadvantages and contributions, the calculation should take into account the factors that are relevant for that purpose in divorce cases. That is not to say that the awards in divorce cases are to be followed, because clearly marriage is a relationship involving a very much more significant commitment than cohabitation. Nevertheless, it appears that the divorce cases may provide some sort of guide as to what are the factors to be taken into account under section 28(3). The approach seems to be based on the proposition that it is difficult to establish precise causal relationships between contributions on one hand and economic advantage or disadvantage on the other; consequently a broad discretion must be exercised in order to achieve overall "fairness". It is clear that most judges and sheriffs feel uncomfortable with the notion of a very broad discretion. I am bound to say that I share that unease. I also have difficulty with the notion of "fairness" in the absence of a proper economic context, but this is perhaps merely an aspect of the breadth of the discretion that the court must exercise.

[11] For the defenders it was submitted that the pursuer had neither pled nor proved any basis on which her claim could be quantified. If the arguments submitted on her behalf were correct, a similar claim could be made in most cohabitation cases. That, it was submitted, was not the intention of Parliament. In my opinion the approach advanced by the defender is clearly inconsistent with the approach taken by the United Kingdom Supreme Court in Gow. In particular, at paragraphs [33], [36] and [40] of that case it is emphasized that precise evaluation is unnecessary. Thus it is not necessary for the pursuer to establish that contributions to the defender's business activities actually increased the value of the business or its profitability, or that there was any specific causal connection between the assets held by the defender at the cessation of cohabitation and the contributions made by the pursuer during the period of cohabitation. For the defender it was submitted that the assets that the defender had when cohabitation ceased derived not from anything that the pursuer did but from his partnership with his brother, who clearly possessed considerable business ability, and from the defender's own hard work. While those are factors that require to be taken into account, I decline to hold that the pursuer made no economic contribution to the businesses; indeed, the evidence very clearly indicated the contrary. In addition, it is necessary to take account of the very important non‑economic contribution that the defender made to the care of the family and the running of the household. For the defender it was also submitted that the pursuer had failed to establish what she might have done had she not formed a relationship with him at a fairly early age. Once again, this is an argument that is in my view contradicted by the approach taken in Gow by the United Kingdom Supreme Court.

[12] Counsel for the defender referred to a number of divorce cases, but I did not think that any of these was of real assistance. He referred in particular to Coyle v Coyle, 2004 Fam LR 2, where it was stated by Lady Smith (at paragraph [37]) that there must be established an identifiable economic advantage which derives from an identifiable contribution by the other spouse. Whatever the position may be under the 1985 Act, so far as section 28 is concerned that seems inconsistent with the remarks of the United Kingdom Supreme Court in Gow. Counsel also referred to the decisions in B v B, 2011 Fam LR 91, and De Witnon v De Winton, 1998 Fam LR 110. I did not find these cases helpful. They were both divorce cases where the defender's principal asset was a farm. An owner‑occupied farm is perhaps the most illiquid of assets, and thus special problems will inevitably be presented in any such case. In the present case the most valuable asset is Spittal House, the former family home of the parties. It can if necessary be sold without serious prejudice to the defender's business activities. Thus the issues in the present case are quite different. Reference was also made to Simpson v Downie, 2012 Fam LR 121, but that case was concerned with the time limits in section 28, which are not an issue in the present case. Finally, it was submitted for the defender that the attempt by the pursuer to obtain half of the parties' total net assets was incorrect. That would be appropriate in a divorce case, but the same rules did not apply to cohabitation. I agree with that proposition; the relevance of divorce cases is limited to identifying the type of economic advantage, disadvantage or contribution that may be relevant. Generally speaking I am of opinion that awards in cohabitation cases should be lower than those in divorce cases. For reasons that I discuss later, however, this particular case appears to me to lie towards the upper end of the range of awards that might be made under section 28.

Witnesses
[13] Evidence about the history of the relationship was led from both parties. In addition the pursuer led evidence from the parties' two daughters, and the defender from his father, Charles Owen. The defender also produced two affidavits, one from his brother, William Owen, who now lives in Perth, Western Australia, and one from Stephen McKenzie, who is currently the bookkeeper for the defender's drain clearing business, Dial‑a‑Rod. The affidavits were concerned with the defender's business activities. Where the parties' accounts differed, I generally preferred the evidence of the pursuer. I found her to be on the whole a credible and reliable witness. It was clear during her evidence that she felt extremely bitter towards the defender, but in view of the history of the relationship and the way in which it came to break down this is hardly surprising. The pursuer's evidence was supported by her two daughters, whom I found to be good witnesses. The defender, by contrast, I found to be an unsatisfactory witness in dealing with the parties' general relationship and the pursuer's contribution to his business ventures, although he appeared more reliable in dealing with his own business. His grasp of finance, however, did not appear particularly good. At times I noted that his evidence appeared contrived; an example occurred when he was giving evidence about the business carried on by the parties at Habbie's Howe Hotel. I also noted that at times he appeared to be clearly exaggerating, and at other times, for example dealing with the parties' financial arrangements, he seemed vague. In cross‑examination he looked very uncomfortable, not looking at other people and at times becoming very evasive. Consequently, in dealing with the details of the parties' relationship, I generally prefer the evidence of the pursuer to that of the defender. I should add that the evidence from Charles Owen was almost entirely hearsay, as he and the defender had been estranged for substantial periods (a fact which only emerged in cross‑examination). I attach no significance to his evidence.

Facts
[14] There was some dispute as to when the parties' cohabitation began and ended, although the differences between their positions are insignificant for practical purposes. The pursuer gave evidence that she started to cohabit with the defender in July 1984, in Market Street, Musselburgh. The defender gave evidence that the cohabitation did not begin until the spring of 1985, when the parties were living at 215 Ferry Road in Edinburgh. For what it is worth, on this matter I prefer the evidence of the pursuer. Her evidence was that she became pregnant while living in Market Street and gave up work. Her medical records indicated that in December 1984 she gave her address as "c/o Market Street, Musselburgh", that she had been unemployed from September 1984, and that she intended to move house in January 1985. That entry is entirely consistent with the pursuer's position. The defender gave evidence that the pursuer had stayed overnight in his flat in Market Street from time to time, although he also gave evidence that the parties' relationship was such that they very much wanted to be together at that time. I prefer the pursuer's account, and hold that cohabitation began in Market Street in about July 1984.

[15] As to the cessation of cohabitation, the pursuer's position was that her relationship with the defender had been deteriorating for some time and they had split up for about one month in 2009. The defender had taken a holiday in Egypt towards the end of November 2010, without the pursuer. When he returned things improved for a short period and then went back to their previous state. The family spent Christmas together, but on New Year's Day 2011 the defender refused to take his lunch in the same room as the pursuer and her family. The pursuer was offended by this and moved out of the parties' bedroom. She continued cooking and cleaning for about two weeks, but the relationship broke down, and on 9 January she told the parties' children that they had separated. She gave the same information to friends on 13 January. It is a matter of agreement that on 1 February the defender was detained following an alleged assault at Spittal House, and that thereafter he did not return there until the pursuer moved out in September of that year. The evidence of the parties' daughter Danielle generally corroborated the pursuer's account. The defender gave evidence that, when on holiday in Egypt, he met a man who told him about his own separation, and he realized that when he returned home it was better for the parties to "move on" and separate. He then told the pursuer that the relationship was coming to an end, but he stayed with her over Christmas. Against that background I think that the date of cessation of cohabitation can be taken as 1 January 2011.

[16] For the purposes of the present action, the critical issues are the extent to which the defender has derived economic advantage from contributions by the pursuer during the period of cohabitation and the extent to which the pursuer has suffered economic disadvantage in the interests of the defender and the parties' children when they were under 16 years of age: those are the criteria in section 28(3). In addition, it is necessary to consider the extent to which economic advantages obtained by the defender are offset by economic disadvantages suffered by him, and whether economic disadvantages suffered by the pursuer are offset by economic advantages that she has derived from the defender's contributions.

Pursuer's contributions
[17] In my opinion it is quite clear that the pursuer made contributions towards the welfare of both the defender and their children that were very substantial indeed. So far as the children were concerned, it was clear from the evidence that the pursuer had been the person primarily responsible for their care. The defender made contributions too, to a reasonably significant level, but these were inevitably very limited by comparison with the pursuer's contributions because of the demands of his job. The practical care of the children was provided by the pursuer; she was responsible for cooking and feeding the family, cleaning the house, washing and ironing clothes, and household tasks in general. That emerged from the pursuer's evidence and also from the evidence of the parties' two daughters. It was not seriously disputed by the defender that the pursuer was responsible for most of the domestic tasks within the family.

[18] It also appeared that the pursuer made significant financial contributions towards the defender's business activities. I am satisfied on the basis of the pursuer's evidence that she assisted in the letting of 215 Ferry Road when the parties were resident there. The defender indicated that her involvement was very limited, but she was able to describe what she did in considerable detail, and I therefore prefer her evidence. She also contributed to a limited degree to the redevelopment of that property. At Habbie's Howe Hotel, it was very clear that the pursuer worked hard in the business during the five years of its operation, from 1985 to 1990. She gave detailed evidence on this matter, which I accept. It was clear that she worked very long hours in the hotel, cooking, cleaning, making beds and the like. She was paid a small amount of money; she said £15 per week and the defender £35 per week. Nevertheless, it is quite clear, and indeed was accepted by the defender in evidence, that this did not reflect the economic value of the work. As I have already mentioned, the profits from the hotel business were rolled over into further developments.

[19] The pursuer was also involved in the Dial‑a‑Rod drain‑clearing business from the start of its operations in about 1991 or 1992 until the parties' separation. Her involvement there was spoken to by the parties' two daughters in their evidence, as well as by the pursuer herself. She was responsible for taking telephone calls and making bookings. It is very obvious that this was a critical aspect of the business, as the defender was engaged in the actual drain‑clearing work and thus could not conveniently take such calls or organize future activities. The pursuer was also responsible for the financial administration of the business, sending out invoices and in due course passing the paperwork to the firm's bookkeeper. For a number of years she was officially the proprietor of the business; that indicates close involvement. The pursuer was not paid for the work which she did for the business. Nevertheless, the income generated by the business was the main source of income for the parties and their family following the ending of the defender's business relationship with his brother in 1999 or 2000. The defender made serious criticisms of the way in which the pursuer conducted the affairs of Dial‑a‑Rod, suggesting that she failed to send out invoices properly or to collect and bank funds. In addition, after the parties separated, it was necessary to perform considerable work to establish the business's tax liabilities; those liabilities had to be paid. Overall, I consider that there is some force in these criticisms. The pursuer's administration of the business was inefficient in a number of respects, and the tax affairs of the business undoubtedly became very confused; that was supported by the affidavit taken from Stephen McKenzie, who is now the bookkeeper for Dial‑a‑Rod. Nevertheless, the pursuer was allowed to carry on the administrative side of the business, and it is clear that she put very substantial effort into it. In addition, as her relationship with the defender broke down during its later stages, it is clear that she was quite seriously affected and that this had an impact on her work.

[20] Furthermore, the problems with the tax affairs of the business were not entirely the pursuer's fault. The affidavit from Stephen McKenzie states that when he took over the books they were "an absolute mess". He adds, however, that the paperwork passed to him from the previous bookkeeper contained a distinct lack of information; all that he received was a trial balance for the business as of January 2011. There was no back‑up information provided and no payroll records. An accounting system known as SAGE was used by him and had been used by the previous bookkeeper, and the back-up data should have been available within that system. The previous bookkeeper, however, had indicated that she could not find the relevant disc when she moved house. The problems thus appear to have been in large measure created by the previous bookkeeper. The major problem related to the PAYE returns, and it appears that the state of those returns was in large measure the fault of the bookkeeper. Nevertheless, the tax involved (although not the penalties) would have had to be paid in any event. I should record that there was evidence in Mr McKenzie's affidavit and from the defender himself that, after the parties' separation, the defender took over the firm's accounting functions and that everything was now run much more efficiently. I have no reason to doubt that evidence.

[21] At this point I should briefly note two allegations made by the defender against the pursuer. First, in his averments the defender alleged that the pursuer had forged his signature on Dial‑a‑Rod cheques. This was put to the pursuer in her evidence, and she accepted that she had done so but stated that it had been done with the defender's full knowledge and consent; she stated that this had been the subject of jokes within the family. The defender ultimately accepted that that was so. I therefore attach no importance to those allegations, except that they tend to indicate that the defender was less than straightforward in his presentation of his case. Secondly, the defender alleged use by the pursuer of secret bank accounts, details of which were concealed from him, the funds being used by her for her own purposes. The pursuer gave evidence that she had not been systematic in the keeping of business records and had been confused about bank accounts belonging to the business. To the extent that she had used funds from accounts, it had been for the maintenance of herself and her family, paying household bills. I accept that evidence.

[22] The pursuer gave evidence that, during the period after 2000 the defender's involvement in the business was not as constant as it had been previously. Much of the plumbing work, she said, was done by the series of plumbers employed by the business. The defender was thus enabled to indulge in a hobby of building and flying aircraft and building a hangar for his aircraft. He was also able to devote time to setting up other projects, such as the Gadget Wizard business and the potential business running horror tours in the Old Town. The defender, by contrast, stated that he was heavily involved in the Dial‑a‑Rod business throughout. I think that the defender was almost certainly involved in the business throughout, although it is clear that he was able to devote considerable time to other activities. This does emphasize, however, that the pursuer's involvement in the defender's business activities was important.

[23] For a time in about 1990 and 1991 the pursuer worked at a mushroom farm near Spittal House. The income generated from that was applied by the pursuer to the purposes of the family. The pursuer's evidence was that she worked at the mushroom farm for about two years until she became pregnant with the parties' son. I consider it likely that that evidence is accurate, and I accept it.

Comparison of finances: beginning of cohabitation
[24] At the start of the parties' cohabitation, the pursuer had no savings or property of any value; that is accepted in the joint minute concluded between the parties. She had no qualifications and was working as a commis chef in a hotel. The defender became engaged in the series of business enterprises described above. Initially most of the ventures, including the Aitken Sinclair plumbing business, were carried out in partnership with his brother. The defender accepted that his brother was the financier for the firm and for the various developments, whereas he did the physical work, especially the plumbing, although others would be employed to perform specialist trades. His brother was able to obtain funding because he had a regular job at management level and was paid a salary. Thus the borrowing was in his brother's name, although securities were granted over the properties under development. The defender's brother was responsible for paying other tradesmen and keeping all of the financial records of the business. It seems clear that at this time the defender did not have assets against which borrowing could be secured or a sufficiently regular income to satisfy the requirements of lenders. The defender and his brother agreed that they would share the profits of the business equally; that was stated in evidence by the defender. It was clear that the defender's brother played a major part in all of these enterprises, identifying properties for development and arranging finance and tradesmen to carry out the necessary work.

[25] The properties developed by the defender and his brother were held in a number of different ways. The Musselburgh properties are agreed to have been in the brother's name, whereas the property in Cockburnspath was in the defender's name. The latter property was purchased for development at a cost of £4,000 in December 1983 and was sold in September 1985 for £40,850. The defender accepted, however, that the purchase price of this property had come from the sale of other property. This property was owned by the defender at the start of the parties' cohabitation, but it was not explained how much development work had been done before cohabitation began. The profit was rolled over into subsequent projects. On that basis I conclude that the defender's only capital asset at the start of the cohabitation was the property in Cockburnspath, although the profit from this property was to be shared equally with his brother, and at the same time he was to share in the profits of any other developments. It was also apparent that the defender and his brother had started a partnership which in fact proved profitable over the next 15 years or so. Nevertheless, I think that I must hold that, on the basis of the evidence led, the value of the defender's assets at the beginning of the cohabitation was £2,000.

Comparison of finances: end of cohabitation

[26] At the end of the parties' period of cohabitation, the defender had very substantial assets. The identity and value of these were agreed in the joint minute. Counsel for the pursuer produced a schedule summarizing the assets and their values. This contained an entry for "Monies removed from [Bank of Scotland] a/c...", stated to amount to £49,221. In fact, on the evidence, it was clear that, while monies were removed from that account towards the end of the parties' period of cohabitation, they were moved to another account with the Birmingham Midshires Building Society, which was included in the schedule with a value of £50,313; the relevant evidence came from the defender, but was supported by documentary productions. I accordingly hold that that item was included in the schedule in error. One other item in the schedule was subjected to criticism, in my view correctly. This related to the contents of Spittal House, which were valued at £10,000, with £9,000 being allocated to the defender and £1,000 to the pursuer. Section 26 of the 2006 Act states that there is a presumption that household goods should be shared equally. The result is that those goods are already owned equally, and there is no need for any further order. The unequal division in the schedule was based on evidence that the pursuer had left a substantial number of items that she did not want in the house. That does not alter the fact, however, that she is entitled to those items. Generally speaking the household goods should not come into the determination of whether any sum is due in terms of section 28, because they are already presumed to be owned equally.

[27] In the schedule, after adjusting for the two matters referred to in the preceding paragraph, the total value of the parties' property as at cessation of cohabitation was £758,000. Of that, £10,331 was attributable to the defender and the remainder to the pursuer. The principal asset owned by the defender was Spittal House, which has an agreed value of £387,500. Other land at Habbie's Howe/Spittal House is valued at £125,000. His car was valued at £4,000, and an aircraft and aerial photography equipment at £2,000. The Dial‑a‑Rod business had an agreed value of £6,149. The balance consists of a variety of investments, including pension policies and sums in bank and building society accounts. The pursuer's assets consisted pension policies with a total value of £8,176 and a car valued at £2,155. She also had some furniture, but I am leaving that out of account for the reasons described previously.

Conclusion
[28] It can thus be seen that at the end of the parties' cohabitation the defender had significant assets, amounting to £747,669. By contrast, the pursuer's assets amounted to slightly over £10,000. The disparity is very striking. The pursuer now lives in a rented local authority property in Penicuik, and provides accommodation for the parties' son. He suffers from depression and is unable to work. The pursuer has attempted to obtain work as a cleaner and childminder, but owing to her own depression she was unable to keep that going. She would like to obtain sufficient funds to put down a deposit on a house and run her own arts and crafts business. At present she is in receipt of state benefits. The defender still lives in Spittal House, the family home. This is a substantial property with five bedrooms. His present income from the Dial‑a‑Rod business in the last year for which figures are available was in excess of £54,000.

[29] For the pursuer it was submitted that virtually the whole of the parties' wealth was created during their cohabitation. I accept that. At the same time, it must be borne in mind that the wealth was created through the defender's business activities, initially in partnership with his brother. As I have already stated, the defender's brother clearly played a major part in facilitating those activities. The pursuer did, however, make a considerable contribution towards the business. She also put great effort into looking after the family. Those contributions were made willingly; the pursuer gave evidence that she and the defender considered that their relationship was akin to marriage, although the defender refused to accept that in cross-examination. On that basis payment is sought of a capital sum of £397,279. That represents a sum equivalent to half of the parties' net assets, and would fall to be reduced for the reasons described in my comments on the schedule of assets. When those adjustments are taken into account, the equivalent of the sum claimed would be £368,669 (half of the difference between the value of the pursuer's and the defender's assets).

[30] For the defender, it was submitted that the pursuer had not established any contributions that resulted in a net economic advantage to the defender, nor any net economic disadvantage suffered in the interests of the parties or the children. The pursuer was, in a broad sense, no worse off at the cessation of cohabitation than she was at the outset. She had not lost any property or career. Her contributions, in particular to the Habbie's Howe Hotel and Dial‑a‑Rod, did not result in any increase in the defender's capital, income or earning capacity.

[31] I have no hesitation in rejecting these submissions for the defender. I have already, at paragraph [9] above, rejected the primary proposition on which the submissions were based. In my opinion the whole contributions by the pursuer were very substantial. This relates both to her contributions to the running of the household and her contributions to the defender's business activities. The former were clearly very significant; the pursuer was the person responsible for the great bulk of the work involved in keeping house and looking after the children. In my opinion that must be reflected in a substantial award. So far as the contributions to the business were concerned, it is not sufficient in my opinion to look at the net contribution to the defender's capital at the end of the period of cohabitation. Instead a broad approach must be taken. The business provided the family with a good livelihood. They lived in a large house, they enjoyed foreign holidays, and the children were able to participate in a range of leisure activities that were dependent on the family's having a reasonably good income. The defender was able to fly a private aircraft as his hobby. The pursuer made a substantial contribution to all of that, both by running the house and by her assistance with the business activities. In my view that must be compensated under section 28.

[32] For the reasons stated above at paragraphs [7] and [8] it does not appear to be necessary to calculate a payment under section 28 on a precise mathematical basis. Indeed, it appears to be accepted that in the great majority of cases of this nature such a calculation would be quite impossible. If the parties had been married, it is likely that the capital payment to be made by the defender would have been of the order of £368,000, representing half of the difference between the parties' assets. That is under a precise statutory regime, however, and it is not a guide to the amount that should be payable on the termination of cohabitation. Nevertheless, it seems to me that this is a case of the sort that was perhaps at the forefront of the minds of legislators when the cohabitation provisions in the 2006 Act were passed. The parties cohabited for more than 26 years. The pursuer made very substantial contributions, both financial and non‑financial, to the family, and the defender unquestionably benefited from these. At the same time, the pursuer was unable to develop any career of her own. To that extent she has been disadvantaged, although obviously she benefited from the parties' generally high standard of living. The result is that in middle age she is without formal qualifications and virtually without assets. In short, this is a particularly deserving case. In all the circumstances I am of opinion that an award of £250,000 would be appropriate. I will order the defender to make payment to the pursuer of a capital sum of that amount. Parties may if they wish address me on the question of whether extract should be superseded to enable assets to be realised.