Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 36

P1207/13

OPINION OF LORD STEWART

In the cause

CRAWFURD ALEXANDER MAITLAND HILL

Petitioner;

for

Suspension of charges for payment and interdict;  and suspension and interdict ad interim

and Answers for

SALLY-ANNE MARY HUNTER

Respondent:

Petitioner:  Mohammed;  Thorley Stephenson SSC

Respondent:  Fraser;  Russel + Aitken

27 March 2015

[1]        The petitioner, Crawfurd Hill (51), seeks suspension of two charges for payment served by his ex-wife, Sally-Anne Hunter, the respondent (50).  I heard evidence on 11 and 12 December 2014 and made avizandum.  I have now decided that the petition is largely ill‑founded. 

Maintenance for the children and the ex-wife: the terms agreed
[2]        These proceedings are about the fallout from a divorce.  The parties were married on 29 August 1993 and divorced on 19 April 2004.  There are two children of the marriage Hannah, born 16 November 1994, and Callum, born 27 February 1997.  The ex-wife respondent has brought up the children.  The ex-husband petitioner has re-married and started a new family.  The new wife is AH. 

[3]        Following the divorce, by minute of agreement signed on 31 May and 2 June 2005, the parties made arrangements for, among other things, maintenance of the respondent for a period of five years and for the children up to the age of 18 years.  The key terms are:

“1.       THE CHILDREN

[...]

B)         ...  Mr Hill will aliment the said children at the rate of Seven Hundred Pounds (£700.00) Sterling per child per calendar month, payable monthly and in advance to Ms Hunter for the maintenance of each child ... with interest at 8% per year on each instalment of aliment from its due date until paid ...

C)        ...  Both Ms Hunter and Mr Hill accept that either party may apply to the Child Support Agency for a maintenance assessment to be made to replace Clause 1(B) hereof insofar as the Child Support Agency may have jurisdiction.  In the event that an assessment is made, then Mr Hill will have no further obligation in terms of Clause 1(B) hereof, other than any arrears that have arisen prior to the Child Support Agency assessment being made.

2.         SPOUSAL ALIMENT AND PERIODICAL ALLOWANCE

A)        Commencing on the last date of signature of this Agreement, Mr Hill will pay to Ms Hunter the sum of THREE HUNDRED POUNDS (£300.00)  per calendar month in advance by way of aliment or, following upon upon [sic] decree of divorce being granted, periodical allowance, for Ms Hunter’s own benefit for a period of five years from the last date of execution of this Agreement, after which period there will be no obligation on either party to pay aliment or periodical allowance to the other.”

The aliment for the children was expressed to be linked to the RPI with appropriate percentage increases at 1 April annually.  The minute of agreement was registered in the Books of Council and Session for preservation and execution.

The history of non-payment
[4]        The petitioner has had difficulty in meeting his commitments.  On 5 September 2008 the petitioner was sequestrated by the sheriff at Edinburgh, at the instance of the respondent, in respect of arrears of maintenance, etcetera of £31,461.25.  The effective date of sequestration was 8 August 2008.  The petitioner was discharged from bankruptcy on 5 September 2009.

[5]        On 1 June 2010 the respondent served a charge for payment on the petitioner in the sum of £9,257.00 made up of a principal sum of £8,597.50 with interest of £452.37 and expenses of diligence of £207.13 [“the first charge”].  The answers to the petition show the sum demanded (exclusive of the expenses of diligence) to be made up of arrears incurred in terms of the minute of agreement since September 2008 as follows:

The significance of the start dates and end dates for the periods of arrears is explained in the next paragraph.

[6]        The start date for the arrears of both periodical allowance for the respondent and aliment for the children is the date of sequestration.  The end date for the arrears of aliment for the children, the end of January 2009, is the date from which a Child Support Agency [CSA] assessment took effect.  In terms of clause 1(C) the CSA assessment superseded the obligation to aliment in terms of clause 1(B).  The CSA assessment, effective from February 2009, was £149.22 to start with.  No payment via the CSA was actually made until April 2012.  Clause 1(B) expressly preserves rights and obligations in respect of arrears of aliment accrued before the making of an assessment.  The obligation to aliment Hannah in terms of the agreement ceased altogether on her eighteenth birthday, 16 November 2012.  The obligation to aliment Callum in terms of the agreement has ceased altogether, since the proof, on his eighteenth birthday, 27 February 2015.  The end date for the arrears of periodical allowance, May 2010, is, in terms of clause 2(A), “five years from the last date of execution” in terms of the minute of agreement, therefore five years from 2 June 2005.  The charge was served at or about what was then perceived to be the date for termination of the obligation to pay periodical allowance.  The respondent subsequently worked out―there is an issue as to whether she got it right―that the agreement gave a claim to one more month of periodical allowance, she thought for June 2010.

[7]        Another charge [“the second charge”] was served on 19 December 2011 for the sum of £4,200.00 exclusive of expenses.  Mr Fraser, counsel for the respondent, concedes that the bulk of this sum, £3,900.00, was caught by the sequestration and discharged so that only £300.00 remains in issue.  The balance of £300.00 is arrears of periodical allowance for the month of June 2010 thought to have been omitted from the arrears calculation in the first charge. 

The dispute over the second charge
[8]        The dispute over the second charge is now confined to the question whether another month’s periodical allowance is due.  In terms of the agreement five-years worth of monthly payments were due to be paid in advance (for the month following) commencing on the last date of execution 2 June 2005.  I treat the expression “per calendar month in advance” etc as being tantamount in the context to “monthly at the beginning of the month”.  The annual twelve-monthly cycle should have started with a first monthly payment for the month of June and ended with a twelfth monthly payment for the month of May.  The final monthly payment, in the fifth year, was due on 2 May 2010.  Altogether 21 monthly payments were due for the period September 2008 to May 2010 inclusive making a total of £6,300.00 as stated in the calculation of the gross amount due in terms of the first charge.  There is some rather hazy evidence that payments did not start until July 2005.  If true this might mean that the final payment was due in June 2010.  But I am not prepared to accept this without supporting contemporary documentation when on the face of the agreement payment should have started immediately.  If the first instalment was outstanding at the date of sequestration it was or ought to have been discharged by the sequestration.  I conclude that there was no debt to justify the service of the second charge.

The dispute over the first charge: the evidence
[9]        The issue around the first charge is whether certain payments made by the petitioner and his second wife to the respondent in the period since the petitioner’s bankruptcy should be ascribed to and applied in reduction of the claimed arrears.  The petitioner says that the payments should be so ascribed with the result that the arrears have been all but extinguished.  The respondent acknowledges that payments have been made: but she has taken only some of those payments into account in arriving at the arrears figure to the date of the first charge of £8,597.50 (exclusive of interest).  She has declined to take into account what she regards as “voluntary” payments made to help her meet ongoing costs notwithstanding the CSA assessment.

[10]      Oral evidence is offered by the petitioner on one side of the issue and by the respondent on the other side.  Their evidence was given with reference to a small number of documents, principally spreadsheets, bank statements and contemporary documentation of the parties’ intentions in the form of emails.  It goes without saying that there was no formality in the arrangements for payment, no running account, invoices, receipts or similar documentation.  The single most important point in favour of the respondent and against the petitioner is that there is no contemporary statement of an understanding that the payments were made and received to pay off the arrears.  Beyond that I find the determinative evidence to be the email exchanges construed in the light of surrounding circumstances.  On the few points where the evidence of the petitioner and the respondent was in conflict with no means of cross-checking, I tend to prefer the evidence of the respondent. 

[11]      Periodical allowance was due to be paid at the rate of £300.00 a month until May 2010.  In the 21-month period from September 2008 to May 2010 sequential payments of £300.00 or in a multiple of £300.00 were paid only from May to October 2009 in the total sum of £1,500.00.  The multiple payment, being a payment of £600.00, was paid in July 2009 following the month of June in which no payment had been made.  There was never more than one payment a month.  Standing the obligation to pay £300.00 a month and in the absence of any indication to the contrary it is reasonable to infer that the payments were payments of periodical allowance.  The payments have been treated as such by the respondent and the sum of £1,500.00 paid has been credited accordingly [see table above].

[12]      The controversial aspect is about other payments made from and after the date of the CSA assessment, which terminated the agreed obligation to aliment, particularly about the payments made after the first charge was served.  The CSA assessment was made on 30 January 2009 with monthly payments appointed to start on 16 February 2009.  On the respondent’s figures, leaving periodical allowance out of account, I calculate that a total of £6,807.76 has been paid in the period from 30 January 2009 to 17 November 2011 when payment stopped.  The petitioner’s figure is slightly different but the precise amount does not matter.  During the whole of this period a CSA assessment was apparently in place: but no payments were made via the CSA.  Payments via the CSA did not start until April 2012.

[13]      As at the date of the CSA assessment the obligation for aliment with RPI uplift (both children) stood at £1,559.50 per month.  The petitioner would have had access to the online CSA maintenance calculator.  On 28 January 2009, while he was apparently still waiting for the formal assessment to come through, the petitioner emailed the respondent to say:

“In terms of the CSA and for your planning, I intend to keep paying an overall fee of £750/month which will come partly through the CSA according to their calculation, and the balance directly by debit, both on or around 5th of every month.”

The monthly aliment which the petitioner apparently committed to in the email just quoted was £750.00 inclusive of CSA payments.  This was something under half of the superseded contractual entitlement, inclusive of RPI uplift, for both children.  In other words it represented roughly what would have been payable for one child before the CSA assessment took effect.  During the period 28 January 2009 to 23 June 2010 I find that the following three direct payments―not including payments of periodical allowance amounting to £1,500.00―were made:  13 February 2009, £400.00; 13 March 2009, £400.00; 16 April 2009, £200.00.  This makes a total of £1,000.00 for the children in the period of seventeen months when the hoped for payment at £750.00 a month would have been £12,750.00.  There is nothing else in the way of contemporary documentation of the parties’ intentions until 23 June 2010 following termination of the periodical allowance obligation and service of the first charge.

[14]      The service of the first charge seems to have provoked an exchange of views of which something, perhaps only a fragment, is evidenced.  On 23 June 2010 the respondent emailed the petitioner seeking a telephone discussion about, among other things, “a written commitment from you to a payment plan” for debts and “a written commitment from you to make financial contributions to the children”.  The petitioner’s email reply stated:

“...  I can’t commit to a debt contribution deal as I don’t have income or assets ...  I have discussed with AH the need to contribute to child maintenance and as long as I don’t have a job this will be limited to £200/month from July plus the costs of their phones and their time with us.  I have an application in for a local part-time job, and if this, plus AH’s business can afford to pay me, then we can have an agreement to review the payment which I will be happy to sign...”

By email dated 30 June 2010 the petitioner re-stated his position as follows:

“As far as finances are concerned, I re-iterate that I have no income and no assets, nor can I enter into any debt arrangement whilst I am subject to the terms of the sequestration agreement...  AH has offered for the family to provide £200 towards the children’s maintenance, plus ongoing support of the phones, ad hoc pocket money and the cost of their staying here, this from July.  AH has offered to keep you informed when the company is able to employ or payment for my role, over and above the £200 plus other costs that she will be paying again from July...”

Payment re-started with a bank transfer of £200.00 on 3 August 2010.  Payments were made every month, except in January 2011, till November 2011.  The payments were never less than £200.00.  The highest payment was £800.00.  The total over the period was £5,807.76 with the average over the period of sixteen months being £363.00 a month.

[15]      There is contemporary email documentation that throws light on the intention behind two or three individual payments.  Parties agree that the payment for October 2010 was £397.76 paid on 5 October.  On 5 October the petitioner emailed the respondent stating:

“The monthly amount from AH is £210―the £10 is for Callum’s phone you were to provide.  The CCF cost you agreed to pay is £45.  The guitar tuition for next terms 10 lessons is £142.76 I have already paid this terms guitar tuition (and all of last year’s) therefore the minimum that is acceptable is for you to pay this term’s in full.  The total amount required therefore is £397.76.”

The payment was described in the payer’s bank statement as “Hannah ins” meaning “Hannah insurance”, which, from recollection, was a reference to riding-lesson insurance.  The same description was applied to all direct payments thereafter.  By mid-2011 the petitioner’s financial position seems to have improved considerably.  On 17 July 2011 the petitioner emailed the respondent stating:

“Just for clarity, I started employment as of the 1st of this month on £40K a year; I have yet to have the first payslip but will forward this to the CSA then.  In the meantime, I will be paying £650/month to you; £320 being the assessment based on the CSA calculator, and the balance to go towards the children’s upkeep this month and next.  You received a payment on account on the 8th of this month.  We will have a better idea of what can be afforded towards Hannah’s university funds and Callum’s school fees in August.”

In an email two days later the respondent wrote: “You have agreed that you will pay an additional amount over and above the CSA assessment to bring the total to £650 towards Hannah and Callum’s monthly upkeep.” Payments of £650.00 were made on 8 July and 10 August 2011, which is in accordance with the quoted email exchange.  (As stated above, no payments were received through the CSA until April 2012).

[16]      The emails tend to negate the proposition for which the petitioner contends, viz that payments were made to pay off the arrears in respect of which the first charge had been served.  The payments were expressed to be made for ongoing maintenance.  Also, in the email of 30 June 2011 the petitioner implied that he was legally disabled from making unilateral arrangements to settle the arrears “while subject to the terms of the sequestration agreement”.  Possibly the high point of the petitioner’s evidence in examination-in-chief was towards the end, when he said: “I was in arrears but I continued to make payments for maintenance―I treated it as both obligations combined”.  The high point in cross-examination was when he said of the payments from November 2010:  “In my mind these were payments of arrears―I just saw it as going into the maintenance pot.”  A possible complication arises from the fact that all but two of the payments made after the first charge was served, that is all payments from and including the payment of £210.00 on 8 September 2010 to and including the payment of £300.00 on 17 October 2011 were made by transfer from AH’s personal account.  However, AH did not give evidence; and the only information available about the intention in making the payments is the content of the petitioner’s emails referred to above, the evidence of the petitioner, the descriptions in the bank statements (“Hannah ins”) and a piece of hearsay from the respondent.  According to the respondent, following service of the charge, AH told a newspaper that she would pay £200.00 a month “for the children”.

Dispute over the first charge: submissions
[17]      Mr Mohammed for the petitioner easily persuades me that the concept of ad hoc agency explains how payments by a third party, typically a company in the same group or a spouse, go to discharge another’s debt [Whitbread Group Plc v Goldapple Ltd 2005 SLT 281 at [12] to [14]].  But, I observe, this does not resolve the difficulty of whether the payments in this case were made towards the arrears of aliment or towards ongoing child-rearing costs.  As a matter of commonsense, counsel submits, there is no basis for ascription of the payments to anything other than the arrears which are the subject of the charge for payment.  It is commonsense because the petitioner did not want to be sequestrated again.  After the CSA made an assessment the petitioner had no obligation to pay aliment in terms of the agreement.  The respondent attaches too much weight to the emails.  The emails do not constitute a new, unilateral undertaking.  (At this point counsel for the respondent signifies agreement.)  The respondent’s position on ascription of the payments is entirely arbitrary.  On an analogy with interdict, if after service a charge is satisfied, it is wrongful to do further diligence.  If the debt is partially discharged the charge can be suspended pro tanto and can be enforced for the balance [G Stewart, A Treatise on the Law of Diligence (Edinburgh, 1898), 204, 769].  (Counsel for the respondent agrees with both these points.)  In this case the acknowledged payments exceed the charge.  The petitioner’s pleas-in-law should be upheld and suspension and interdict granted as craved. I have one observation of my own to add. The petitioner and AH stopped making direct payments when the arrears had been paid off, more or less: but nothing was made of this by the petitioner in his evidence and no significance was attached to this in submissions.

[18]      Counsel for the respondent, Mr Fraser, goes through the arithmetic again and submits that even on the best case scenario for the petitioner there is still something to pay on the arrears.  Unless the debt is paid in full a charge cannot be set aside in its entirety [G Maher, The Law and Practice of Diligence, 1^st edn (Edinburgh, 1990), 169; Dickson v United Dominions Trust Ltd 1983 SLT 502 at 505 per Lord Cameron with whom the Lord President and Lord Grieve agreed].  Mr Fraser refers to the emails and submits that “it is quite clear” that the payments made after service of the first charge were for ongoing maintenance of the children.  If all we had, counsel submits, were the CSA assessment then the petitioner would be in a stronger position.  Counsel adds that currently (at the date of the proof) the petitioner is contributing to the cost of Hannah’s university education and is contributing to the maintenance of Callum through the CSA and with a top up.

Decision
[19]      I am disappointed that there is no rule of law about ascription of payments, at least none suggested by counsel and none which springs to my mind without researching the matter, by which this dispute can be instantly resolved.  Having said that I have to note that both counsel have presented their cases in an economical, moderate and well-structured way.  I hear what Mr Mohammed says about commonsense and there is a lot in that but, as I see it, the petitioner had a number of objectives without the means to achieve all of them.  I infer that the petitioner’s motivation was mixed: he genuinely wanted to do his best by his older children, wanted to have contact with them, did not want to be thought ill of by them, all worthy sentiments in themselves but not necessarily businesslike.  He also, as he stated in the witness box, did not want to be made bankrupt again.

[20]      I have reviewed all of the evidence carefully.  There were passages in the petitioner’s evidence which made a poor impression at the time.  I do not need to be explicit because I am sure counsel have noted them.  I do not want to be hard on the petitioner.  I thought his mood was flat.  For all I know he was anxious and depressed about appearing in court; and his memory for details was not what it should have been.  It is enough to say that insofar as his evidence can be interpreted to mean that his intention at the time was to pay off the arrears, it is unreliable.  In any event there is no evidence that he made it clear to the respondent that the payments were to go towards the arrears.  If anything, quite the contrary.

[21]      My decision is that the payments which are in controversy are not to be ascribed to the arrears of maintenance.  Insofar as parties had a shared intention it was that the payments were to be for the ongoing costs of child maintenance.  The first charge does not fall to be suspended.  The second charge does fall to be suspended for the reasons given above.  I shall continue the case by order, without issuing an interlocutor, to hear parties’ submissions, hopefully parties’ agreed submissions, on the arithmetic in relation to the first charge.  At most there seems to be a small difference in parties’ calculations.  The position as regards further diligence is protected for the time being by the interim suspensions granted on 27 November 2013.  I reserve meantime all questions of expenses.  One thing that struck me was how well Hannah and Callum seem to be progressing.  This says a lot for them and it also says something for both their parents, principally the respondent I suspect, but also the petitioner.  AH has to be complimented for contributing.  My inclination is to think that the interests of justice and of all individuals concerned would be best served if this action were not finalised for a few months to allow parties to make their own arrangements to settle the dispute.  I shall hear parties’ views on the matter.