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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> BILL CLEGHORN, AVER CHARTERED ACCOUNTANTS [2017] ScotCS CSOH_114 (31 August 2017)
URL: http://www.bailii.org/scot/cases/ScotCS/2017/[2017]_CSOH_114.html
Cite as: [2017] ScotCS CSOH_114
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Page 1 ⇓
OUTER HOUSE, COURT OF SESSION
[2017] CSOH 114
P452/16
OPINION OF LADY WISE
In the note by
BILL CLEGHORN, Aver Chartered Accountants
Noter
for an Order under subsection (2) of section 98 of the Proceeds of Crime Act 2002 for
authority to carry out the disposal of a right of interest in a family home
against
MARGARET DUNCAN
Respondent
Noter: Ower; Brodies LLP
Respondent: D McLean; Balfour + Manson LLP
31 August 2017
Introduction
[1] The noter is a chartered accountant appointed as enforcement administrator in terms
of section 128 of the Proceeds of Crime Act 2002 (“the 2002 Act”) to take possession of the
realisable property of James Lynn Calderwood Duncan (“Mr Duncan”). He has brought
these proceedings to seek the disposal of the family home at 4 Douglas Street, Blantyre (“the
property”) and decree of removal of the said Mr Duncan and his family, including the
respondent and her granddaughter, from that property. The proceedings are brought in
Page 2 ⇓
2
terms of section 98 of the 2002 Act. The respondent is the ex-wife of Mr Duncan and
opposes the application. A Proof took place as there were one or two contentious issues of
fact in addition to the application of the law to the facts being in dispute.
The Agreed Facts
[2] There was substantial agreement in relation to many of the facts and I record my
gratitude to counsel for that as considerable efforts were made to limit the scope of the
factual dispute at the hearing. A very detailed Joint Minute was presented and requires to
be set out in full as it provides much of the background to the legal argument that took
place. It was in the following terms:
“The confiscation order
1. In 2007, James Lynn Calderwood Duncan, formerly residing at 4 Douglas
Street, Blantyre G72 0DW and now at c/o HMP Prison Shotts, Shotts,
Lanarkshire, ML47 4LE (‘Mr Duncan’) was charged, along with others of
being concerned in the supply of cannabis, and with murder.
2. Following a trial before the Honourable Lord Carloway (as he then was) and
a jury in November and December 2007, Mr Duncan was convicted of those
charges. He was sentenced to a period of five years’ imprisonment on the
charge of being concerned in the supply of cannabis and he was sentenced to
life imprisonment in respect of the murder charge, with a punishment part of
17 years and six months, both sentences to run from 23 November 2007.
3. Subsequently, a Joint Minute was entered into between the Advocate Depute
and counsel for Mr Duncan, in terms of which it was agreed as follows:
‘(1) That the proceeds of general criminal conduct of the said
JAMES LYNN CALDERWOOD DUNCAN is £740,075.48.
(2) That the realisable assets of the said JAMES LYNN
CALDERWOOD DUNCAN are as follows:-
(i) His interest in the heritable property at 30 Shawburn
Street, Hamilton ML3 9DX.
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3
(ii) His interest in the heritable property at 4 Douglas
Street, Blantyre G72 0DW.
(iii) The sum at credit of Halifax account roll number
[D/….]
(iv) The sum at credit of Halifax account roll number
[2/….].
(3) That a Confiscation Order be made in the sum of £159,248.66.’
4. Accordingly, on 12 January 2009, in terms of Section 92 of the Proceeds of
Crime Act 2002 (‘POCA’), the court made a confiscation order in the sum of
£159,248.66 (Production 23/6).
5. In terms of that confiscation order, Mr Duncan was required to pay to the
Sheriff Clerk at Lanark the sum of £159,248.66, within six months from the
date of the Order.
The appointment of the pursuer as enforcement administrator
6. By interlocutor dated 15 December 2015, the Noter was appointed, in terms of
Section 128 of POCA, as enforcement administrator, to take possession of the
realisable property of Mr Duncan, including (but not restricted to):
(i) 4 Douglas Street, Blantyre;
(ii) Toll Cottage, Lamington (‘Toll Cottage’); and
(iii) 40 Ayr Road, Rigside.
(Production 23/1)
Sums paid in terms of the confiscation order
7. Prior to the appointment of the Noter as enforcement administrator, Mr
Duncan had paid £81,069.69 of the total sum due.
8. The sums paid include £48,240.77 in respect of the free proceeds of the sale of
30 Shawburn Street, Hamilton, which were received by the Sheriff Clerk at
Lanark in or around January 2011, and £17,096.31 in respect of the free
proceeds of the sale of Toll Cottage, which were received by the Noter on or
around 29 April 2016.
9. The outstanding balance due to be paid in terms of the confiscation order
amounts to £61,082.66.
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4
10. In addition, interest in the sum of £46,397.42 remains outstanding, assuming
interest to run at 8% a year in accordance with section 117 of POCA.
(Production 23/24)
The properties
11. Mr Duncan is the heritable proprietor of 4 Douglas Street, Blantyre, Glasgow
G72 0DW, which is the property registered in the Land Register for Scotland
under Title Numbers LAN193262, LAN121499 and LAN202705 (‘the
Property’). (Productions 23/3, 23/4 and 23/5)
12. The Property comprises three titles:
(i) Mr Duncan purchased the property registered in the Land Register for
Scotland with title number LAN121499, for a consideration of
£115,000, on 22 October 2004 (Production 23/4);
(ii) on 5 February 2007, the property registered in the Land Register for
Scotland with title number LAN193262 was transferred to Mr Duncan,
for love, favour and affection; and
(iii) On 25 March 2008, the property registered in the Land Register for
Scotland with title number LAN202705 was transferred to Mr Duncan,
for no consideration.
(Productions 23/5 and 23/3)
13. As at 1 December 2016, the market value of the Property was £115,000.
(Production 23/13).
14. Mr Duncan obtained a mortgage in respect of the Property, and granted a
standard security over the property in favour of Halifax Plc, which was
registered on 12 November 2004. (Production 23/4)
15. As at 30 September 2016, the balance due in respect of the mortgage due to
Halifax Plc was £63,726.37. (Production 23/12)
16. Mr Duncan is also the heritable proprietor of 40 Ayr Road, Rigside, which is
registered in the Land Register for Scotland under title number LAN165063.
(Production 23/2)
17. Mr Duncan purchased the property at 40 Ayr Road, Rigside (‘the Ayr Road
property’) on 24 February 2006 for £15,000. (Production 23/2)
18. The Ayr Road property is a commercial property. Mr Duncan operated a café
from the Ayr Road property. It was later leased to a tenant, but then
damaged by fire. It has a value of approximately £20,000. (Production 23/23)
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5
Family home in terms of Section 98 of POCA
19. The Property is a family home in terms of Section 98(5) of POCA. The
respondent resides at the Property.
20. The Noter has asked the respondent to agree to the sale of the Property. She
has declined to do so. (Production 23/8)
The respondent
21. The respondent was born on 2 September 1948. She is 68 years of age. She
married Mr Duncan on 23 March 1967. The respondent and Mr Duncan were
divorced on 4 December 1980. (Production 24/1)
22. The respondent and Mr Duncan have four children, namely JD, CD, JLCD,
and RD.
23. The respondent also has eight grandchildren (G aged 27, J aged 24, A aged 21,
A aged 18, L aged 15, A aged 15, Christie aged 16, and R aged 8), and one
great-grandchild aged 7. Her grandchildren include Christie Wilson, who is
the child of CD and her ex-husband lW. Christie was born on 24 December
2000 and is now 16 years old. The respondent lives at the Property with
Christie.
24. The respondent has a history of epilepsy since 1995. (Production 24/2).
25. Prior to their divorce, Mr Duncan and the respondent resided in the
matrimonial home at 10 Morven Avenue, Blantyre (‘the Morven Avenue
property’).
26. The Morven Avenue property was a council owned property, purchased by
the respondent exercising her right to buy in March 2001, for £13,650. Her
title to the Morven Avenue property was registered in the Land Register for
Scotland with title number LAN150624. (Production 23/14)
27. The respondent financed the purchase of Morven Avenue with a loan from
the Royal Bank of Scotland plc, obtained on the basis of her income at the
time, which consisted of Disability Living Allowance and Incapacity Benefit.
28. On 15 April 2004, the respondent sold the Morven Avenue property for
£48,000. (Production 23/15)
29. The net free proceeds of the sale were £35,530.20. The respondent received a
cheque in that sum from Messrs Goldsmith & Hughes, Solicitors, on or
around 26 April 2004. She paid it into her account with Halifax plc (Sort Code
…..; Account Number ……) and thereafter transferred £35,000 to Mr
Page 6 ⇓
6
Duncan's account, which was also with Halifax plc (Sort Code ….; Account
Number …..). (Productions 24/7 and 24/11)
30. Following the sale of the Morven Avenue property the respondent and Mr
Duncan moved into a property at 62 Birdsfield Street, Hamilton (‘the
Birdsfield Street property’). Mr Duncan's title to the Birdsfield Street property
was registered in the Land Register for Scotland with title number LAN
112955.
31. Mr Duncan purchased the Birdsfield Street property in November 2002 for
£60,000. (Production 23/17)
32. In September 2004, Mr Duncan sold the Birdsfield Street property for £80,000.
(Production 23/18)
33. In November 2004, following Mr Duncan's purchase of the Property, Mr
Duncan and the respondent lived at the Property for a short time.
34. In April 2005, Mr Duncan purchased Toll Cottage for £168,401.53. Mr Duncan
and the respondent moved into Toll Cottage.
35. The respondent and Mr Duncan attempted to sell the Property, but failed to
secure a quick sale. As a result, Mr Duncan and the respondent required to
service two mortgages, namely those in respect of the Property and of Toll
Cottage.
36. At some point in 2005, Mr Duncan and the respondent moved to a property
on Griffiths Way in Carluke (‘the Griffiths Way property’). Title to that
property was taken in the name of Mr Duncan. Mr Duncan and the
respondent also required to service the mortgage for the Griffiths Way
property.
37. After purchasing Toll Cottage in April 2005, Mr Duncan started to grow
cannabis in the garage of Toll Cottage, for the purpose of sale and
distribution. The respondent was aware of Mr Duncan's business activities, in
that regard. The funds generated by Mr Duncan as a result of those business
activities assisted with the mortgage payments which Mr Duncan and the
respondent required to meet in relation to the Property, Toll Cottage, and the
Griffiths Way property.
38. Things ‘got a bit nasty’ because of some of the people that Mr Duncan was
involved with. The respondent became concerned at the type of people
calling at the Griffiths Way property, to visit Mr Duncan. Mr Duncan and the
respondent moved from the Griffiths Way property, which was subsequently
sold.
Page 7 ⇓
7
39. Mr Duncan was remanded on 23 November 2007, which is the date to which
the punishment part of his sentence backdated.
40. The Respondent moved back to the Property in about 2009, and has resided
there since that date.
The respondent's income and expenditure
41. The respondent has not been in regular paid employment, and has not been
in receipt of a regular income, other than as follows:
2001/02
Incapacity Benefit - £6,081.65
Disability Living Allowance - £2,428.15
Total - £8,509.80
2002/03
Incapacity Benefit- £5,972.40
Disability Living Allowance - £2,736.30
Total - £ 8,708.70
2003/04
Incapacity Benefit- £ 2,411.15
Disability Living Allowance - £2, 783.10
Total - £5,194.25
2004/05
Disability Living Allowance - £2,853.20
Total - £2,853.20
2005/06
Disability Living Allowance - £2,939.60
Total - £2,939.60
2006/07
Disability Living Allowance - £3,021.40
Total - £3,021.40
42. The respondent's expenditure, insofar as relating to payments made to credit
cards and loans, in each of the years 2001/2002 to 2005/2006, was as follows:
•
2001/2002 - £6,284.61
•
2002/2003 - £6,215.18
•
2003/2004 - £12,724.68
Page 8 ⇓
8
•
2004/2005 - £7,366.93
•
2005/2006 - £4,625.42
43. It follows that, in 2001/2002 and 2002/2003, the respondent was able to make
payment of the sums due in respect of credit card and loan payments from
the income she received. In each of the following years to 2005/06, she did not
have sufficient income from Disability Living Allowance to meet the required
payments.
44. The respondent's income is presently approximately £230.60 per week,
comprised of: State Pension (£50.99); Pension Credit (£104.61); maintenance
from Christie’s father (£37.50); and maintenance from Christie's mother
(£37.50). Prior to 6 September 2016, the respondent had been in receipt of
Disability Living Allowance at the rate of £307.60 every four weeks. Prior to
12 September 2016 the respondent's Pension Credit payment had been
£166.46 per week.
45. The mortgage over the Property is in arrears, but the respondent has made
certain payments towards the outstanding indebtedness. In recent times, the
respondent has made, inter alia, the following payments towards the loan
secured over the Property:
•
£210 on 29 October 2013;
•
£210 on 26 November 2013;
•
£210 on 27 December 2013;
•
£450 on 2 June 2014;
•
£250 on 26 August 2014;
•
£340.77 on 19 October 2015;
•
£200 on 2 November 2015;
•
£200 on 1 December 2015;
•
£800 on 20 April 2016;
•
£200 on 3 May 2016;
•
£200 on 31 May 2016;
•
£200 on 28 June 2016; and
Page 9 ⇓
9
•
£200 on 26 July 2016.
Christie Wilson
46. Christie's date of birth is 24 December 2000. She recently turned 16. Her
mother is CW, the respondent's daughter. The respondent is her (maternal)
grandmother.
47. Christie has lived with the respondent at the Property with her since about
the summer of 2015.
48. Until the end of 2016 Christie was a pupil at school in East Kilbride. She
decided to leave school when she turned 16. She is currently undertaking a
six month course in Social Care at college.
Alternative accommodation
49. The respondent has her name on the waiting list for a council house.
50. There are a number of privately owned homes in South Lanarkshire available
for rent. There may also be properties available for rent through South
Lanarkshire Council. The average weekly council rent in South Lanarkshire
for 2016/2017 is £63.06 per week. (Production 23/22)”
The Evidence Led at Proof
[3] During the course of the evidence, some of the matters already agreed in the Joint
Minute were repeated, understandably as background to both the more contentious areas. I
will summarise only the evidence that either elaborated on the Joint Minute or was in
dispute. It was agreed that the respondent, Mrs Duncan should lead at Proof and she gave
evidence as did her granddaughter, Christie Wilson.
[4] Mrs Duncan gave evidence about the nature of her relationship with her ex-husband.
The bare facts of their marriage in 1967 and divorce in 1980 belie a much more complex
relationship. Throughout the marriage, the parties’ relationship was turbulent and
characterised by arguments about Mr Duncan’s extramarital affairs. When the parties
divorced in 1980, Mrs Duncan was awarded custody (as it then was) of the couple’s four
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children. While proceedings had been raised because of Mr Duncan’s behaviour, following
the divorce the relationship of the couple continued almost in a similar fashion to that before
the divorce. They separated and reconciled from time to time between the divorce and the
time that their first grandson was born about 1997. Thereafter they lived together on almost
a full-time basis until Mr Duncan’s incarceration following his conviction for murder and
the supply of cannabis in 2007. Mrs Duncan continued to visit her ex-husband in prison for
around the first 4½ years of his sentence after which the visits stopped, primarily at
Mr Duncan’s instigation as he wanted the respondent to get on with her own life.
[5] The property in Blantyre that is the subject of the present dispute was purchased by
Mr Duncan in 2004. He and the respondent were engaged in a relationship at that time.
Property is a semi-detached 2-storey house including attic. There is also an extension at the
rear of the building. The house fronts on to a busy traffic route and is in need of some
upgrading. The accommodation in the property comprises an entrance vestibule, a lounge,
a rear hall/kitchen and a dining room with three bedrooms and a bathroom on the first floor.
There is a separate single car garage adjacent to the property which is held under a separate
title. One of the central issues in dispute was the extent if any to which the respondent
contributed towards the purchase price of the property. That involved some exploration of
previous properties owned by either the respondent or Mr Duncan and in which they had
lived at different times.
[6] During their marriage the respondent and Mr Duncan had lived for some years at a
property at 10 Morven Avenue, Blantyre (“Morven Avenue”). This was a council owned
property and the respondent was the tenant. She had moved out of the property and lived
with her mother for about a year prior to divorcing Mr Duncan while he remained at
Morven Avenue. Following the divorce, Mrs Duncan moved back into the Morven Avenue
Page 11 ⇓
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property which she purchased, exercising her statutory “right to buy” in March 2001, for a
price of £13,650, financed with a secured loan. For some time the respondent serviced the
mortgage over the Morven Avenue property and there were periods that she lived there
without Mr Duncan, given the volatile nature of their relationship. The situation became
embarrassing for the respondent as neighbours in the area got to know the nature of the
problems between her and Mr Duncan. For that reason, in about 2003, the respondent
decided to live in the property of her daughter, JD who in turn moved into Morven Avenue.
In 2004, JD decided she wished to move, so the respondent decided to sell the property, as
she did not wish to return there. The agreed proceeds of the sale of the Morven Avenue
property were £35,530.20 which sum was credited to the respondent’s Halifax Plc account
on 26 April 2004. It was not in dispute that a few days thereafter, that sum was transferred
into Mr Duncan’s bank account. The respondent’s evidence was that she had understood
that Mr Duncan was keeping the money in his account until they purchased a new property
together. However, the documentary evidence (No 35/7 and 35/11 of process) illustrate that
Mr Duncan transferred £35,000 in two tranches out of his bank account on 5 May 2004.
There was no property purchase immediately following the sale of Morven Avenue.
Mr Duncan at that time already owned another property, at Birdsfield Street, which he had
purchased in November 2002 for the sum of £60,000. In evidence, Mrs Duncan had a clear
recollection that her ex-husband had purchased that property around the time that she had
sold the Morven Avenue property. However, the documentary material (No 23/17 of
process) illustrated clearly that he had taken entry to the Birdsfield Street property on
4 November 2002. Mrs Duncan also had a clear recollection of she and her husband living
for a short period in that property but it was small and the couple decided to move. It was
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the sale of the Birdsfield Street property in September 2004 that immediately preceded the
purchase of the property at 4 Douglas Street, Blantyre.
[7] The productions relating to the sale of the Birdsfield Street property and the
purchase of 4 Douglas Street were put to the respondent. Her recollection was that she and
Mr Duncan had instructed a firm of solicitors (Goldsmith & Hughes) to act for them in the
sale of Birdsfield Street. The disposition relating to that sale (No 23/18 of process) records
that the respondent consented to it as spouse of Mr Duncan and residing with him for the
purposes of the Matrimonial Homes (Family Protection) (Scotland) Act 1981. The solicitor
involved witnessed the signatures of both the respondent and Mr Duncan on the
disposition. It had clearly been inaccurate for Mrs Duncan to be referred to as Mr Duncan’s
spouse in the disposition, but the respondent indicated that she and her husband did
present themselves as a married couple at that time. The respondent neither sought nor was
offered any advice about the title position when the Birdsfield property was sold and the
property at Douglas Street was purchased. In her mind, she felt she had contributed at
least £35,000 to Birdsfield Street from the sale proceeds of the Morven Avenue property. She
did not consider it a problem that she had given the sale proceeds of Morven Avenue to
Mr Duncan. The couple had been back together for a while by that stage and she felt he had
settled down and “stopped his carry on”, a reference to his previous extra marital affairs.
[8] The respondent and Mr Duncan lived at Douglas Street for only a short period after
Mr Duncan purchased it in November 2004. A new set of traffic lights were erected outside
the property and impacted adversely on the respondent’s enjoyment of living there. It was
partly for that reason that Mr Duncan then purchased Toll Cottage, a remote property close
to the River Clyde in April 2005. The respondent and Mr Duncan lived at Toll Cottage
following its purchase and allowed Mr Duncan’s nephew, Ronnie Duncan, his wife and two
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children to reside at Douglas Street. In fact the plan had been to sell the property at Douglas
Street to Ronnie Duncan and his wife but the sale did not proceed because of problems with
the title, in particular relating to the garage. That resulted in there being two mortgages to
service (Toll Cottage and Douglas Street) and the secured loans were changed such that only
the interest on the loans was serviced thereafter. The respondent and Mr Duncan did not
live permanently at Toll Cottage. There was a move to a property at Griffiths Way in
Carluke 2005, so that they could be near their daughter, JD in order to assist her with a very
young baby.
[9] Mrs Duncan was asked about the agreed evidence that she was aware of
Mr Duncan’s activities growing cannabis in the garage of Toll Cottage for the purpose of
sale and distribution. Her position was that she was not aware immediately of Mr Duncan’s
activities. She did then become fully aware of them not long after they moved into the
property. However, she was adamant that she had never been aware of his more extensive
involvement in cannabis “grow rooms” in Glasgow. She said she did not feel she would
have been able to persuade Mr Duncan to stop growing cannabis at Toll Cottage although
he did at one stage say he would stop. Mrs Duncan was clear that she was unaware of any
threats being made by Mr Duncan’s associates until after the police had become involved.
She did recall being concerned about the type of people calling at the Griffiths Way property
to visit Mr Duncan but found out only much later that threats were being made against him.
At one stage the respondent and Mr Duncan moved to East Kilbride and stayed with their
daughter, CD, there. The respondent said that she had understood at the time the purpose
of the move was to assist CD who had recently divorced. In fact Mr Duncan had an ulterior
motive of hiding from his associates who were threatening him. She found out
subsequently that the threats related to a cannabis crop being grown in Glasgow and a
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dispute about whether the crop had failed or whether it had been sold and the proceeds
disposed of by Mr Duncan and possibly by others.
[10] The respondent explained that it was following Mr Duncan’s conviction for supply
of cannabis and for murder that she moved back to the property at Douglas Street, Blantyre.
Thereafter there was a period when she required to vacate the premises as damage had
occurred in a storm. She then continued with her efforts to sell the property but when it
failed to sell, she moved back there in 2009 and has stayed there ever since. She arranged for
Toll Cottage to be let out while Mr Duncan was in prison. However it was badly damaged
by tenants and eventually sold in about May 2013 with the net free proceeds of sale being
only £17,096.31 which were paid to the noter in about April 2016. When the respondent
moved back to Douglas Street, one of her sons and one of her grandsons lived with her. She
continues to live there to date and her granddaughter, Christie, has lived with her since
about the summer of 2015. The respondent is now being awarded child benefit in respect of
Christie (No 35/15 of process). She gave evidence that the property is also used for family
gatherings at Christmas and other times and is regarded by the wider family as the family
home.
[11] The respondent spoke also to the state of her health. She was diagnosed with
epilepsy in 1995 although she had been having seizures before that. As a result of her
epilepsy, she is classified as “severely disabled” for the purposes of benefits payments
(No 35/3 and 35/5 of process) . So far as her financial circumstances are concerned, the
respondent’s income was agreed in paragraph 44 of the Joint Minute. Her expenditure
includes mortgage payments, council tax, building and contents insurance, mobile
telephone, Virgin television, gas and electricity, TV licence, Christie’s bus pass, food and
household items and clothes and other travel. Many of these items appear as debits in the
Page 15 ⇓
15
respondent’s bank statements (No 36/6 of process). The respondent said that there is “not a
lot” left over at the end of a week. She accepted that she did not pay the interest payments
on the secured loan over Douglas Street consistently. She tended to let arrears accrue and
then make payments to stave off any enforcement. She said that she did so because there
was little point in servicing the mortgage consistently when her residence in the property
was under threat.
[12] Under cross-examination copy statements in relation to the account of Mr Duncan
into which the proceeds of sale of Morven Avenue had been paid were put to the
respondent. She agreed that the balance in that account before the credit of £35,000 from
Morven Avenue was received was £7,281 and that five days after the transfer in of that sum,
Mr Duncan had transferred out two sums, one of £7,000 and the other of £28,000. The result
of that was a balance in the account of £6,741.91, about £500 less than he had held in the
account the day before the proceeds of Morven Avenue were transferred in. Mrs Duncan
accepted that she could not say what had happened to the £35,000 but she assumed that it
had been paid into a different account of Mr Duncan’s. In relation to the sale of the
Birdsfield Street property, it was put to the respondent that the sale proceeds, received by
Mr Duncan in September 2004 following that sale, was the sum of £35,978. The respondent
denied that, and claimed the proceeds of sale of Birdsfield Street were £14,000. Her
recollection was Birdsfield Street had been purchased for £65,000 or £60,000 and sold
for £80,000. She accepted that documentations did not accord with her recollection either as
to date or purchase prices. So far as the purchase of Douglas Street was concerned, the
respondent was challenged about having made a contribution to that. She accepted that the
purchase price of Douglas Street comprised a £50,000 and a £65,000 secured loan. She
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16
accepted that on the face of it Mr Duncan paid the deposit but she regarded the £35,000 that
she received from Morven Avenue as her contribution, whether direct or indirect.
[13] The documentation relating to the current secured loan over Douglas Street was put
to the respondent. The balance due as at 30 September 2016 was £63,726.37 and only the
interest thereon is being serviced. The remaining term of the mortgage was 3 years and
1 month at the time of the last mortgage statement, such that the secured loan will come to
an end in November 2019. Mrs Duncan agreed that the sum that would require to be repaid
to the lender in November 2019 is about £63,000. She accepted that she had no endowment
policy or similar investment from which she could meet that sum. In relation to the extent
of her income during the period 2001-2007, Mrs Duncan appeared initially to dispute the
figures contained in paragraph 41 of the Joint Minute. She said that she was working in a
cafe operated by Mr Duncan for some of those years. She had no recollection of claiming
benefits at that time other than her disability living allowance which is not means tested.
However, she then accepted that she was not paid income as such for her work in the cafe,
that the takings from that enterprise were paid into her husband’s bank account. Ultimately
she agreed that the impact of paragraphs 41 and 42 of the Joint Minute was that, from
about 2003 onwards, her agreed expenditure exceeded her income. However, her position
was that through working in the cafe operated by her husband she was contributing to their
joint resources in such a way that she regarded herself as making payments to the secured
loan together with Mr Duncan. The proceeds from the cafe went into a bank account from
which the secured loan repayments were made.
[14] The respondent accepted that a three bedroom property like Douglas Street was a
little larger than one person would require for themselves. However, in addition to her
granddaughter, Christie living with her, other family members come to the house often and
Page 17 ⇓
17
stayed there occasionally. The respondent accepted also that if allocated a council house for
which she is on a list presently, she would be able to afford rent at the current level imposed
by the council which is about £63 per week. She accepted that she had not entered the
confiscation proceedings in 2009 when representations could have been made in respect of
Douglas Street although she indicated that she had consulted a lawyer who she thought
might have helped her.
[15] The respondent’s granddaughter, Christie Ellen Wilson is 16 years old, having been
born on 24 December 2000. She explained that the circumstances in which she came to live
with the respondent in the summer of 2015 were that she moved there following an
argument with her sister as a result of which her father told them both to leave. Prior to
living with her grandmother, she and her sister had always lived with her father rather than
her mother. She now regards the property at Douglas Street as her home. She gets on well
with her grandmother and is happy living there. The respondent has taken on de facto
parental responsibility for Christie. When she was still at school in East Kilbride but living
with her grandmother, Christie took a bus to school from outside the respondent’s home. At
the time of proof, she was undertaking a 6 month course in social care at college which she
hopes will enable her to undertake an HNC for the academic year 2017/18 before attending
university where she would like to study midwifery. She indicated that were the property
at Douglas Street to be sold, she would intend to continue living with her grandmother
although whether that would be practicable is unknown. She has no desire to return to live
with either of her parents. She would be upset if the property at Douglas Street was sold.
[16] The respondent led only one witness and that was the noter, William Thomas Mercer
Cleghorn. Mr Cleghorn is a chartered accountant and licenced insolvency practitioner of
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great experience. It is some 50 years since he initially qualified as a chartered accountant.
He spoke to his extensive experience in insolvency matters and his more recent Proceeds of
Crime Act work. He has appeared as an expert witness in many cases within this
jurisdiction and elsewhere.
[17] In relation to the circumstances of the present case, Mr Cleghorn confirmed that he
had examined Mr Duncan’s banks statements, and noted there were many withdrawals in
cash. In his experience this was typical of a situation someone had been involved in the
drugs business. Illegal drugs are sold for cash and the money is paid into the supplier’s
bank account in cash and withdrawn in cash. The frequency of transactions noted in
Mr Duncan’s bank account was typical of such a business. It was also common for proceeds
of crime to be used to acquire valuable property, such as heritable property in an effort to
“launder” the money. In relation to the sum of £35,000 transferred into Mr Duncan’s bank
account on 30 April 2004, Mr Cleghorn was happy to accept that it was the respondent who
had provided that sum. However, it was clear that monies totalling £35,000 were
transferred out of Mr Duncan’s account a few days later. The principles of tracing money
proceeded on an assumption that the earlier funds in a bank account are part of what is
taken out. This was standard accounting convention practice. In other words, the £3,000
that was held in Mr Duncan’s bank account before Mrs Duncan credited the proceeds of sale
of Morven Avenue into it, would be deemed to have been transferred out of his bank
account first. The second transfer out of £28,000 must have, to some extent, come from
the £35,000 transferred in by the respondent. Ultimately, the £35,000 credited to the account
was transferred out but to an unknown destination. It had occurred by 16 June 2004 by
which time only £2,000 of the £35,000 credited to the account from Morven Avenue could be
said to remain using conventional accounting principles.
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[18] So far as the net free proceeds of Birdsfield Street were concerned, Mr Cleghorn had
seen a statement of information from Crown Office confirming that the net free proceeds of
sale of Birdsfield Street were £35,978.62. He had also examined a mortgage statement in
relation to that property. His evidence in relation to Mrs Duncan’s recollection that the free
proceeds of Birdsfield Street had been £14,000 was that the respondent was probably
confused between the difference in value from the purchase of Birdsfield Street to its sale
(£60,000 increasing to £80,000) and in that confusion had forgotten or had no information
about the secured loan. Mr Cleghorn had seen the document showing the amount required
to redeem the secured loan over Birdsfield Street at the time of sale was £45,000. It was on
that basis that he had been able to verify the free proceeds of sale as £35,978.62.
Mr Cleghorn having traced through the bank account statements, calculated that between
November 2003 and March 2005, sums totalling £141,000 had been paid out of Mr Duncan’s
bank account and over the same period sums totalling £158,805 had been paid in. Many of
the receipts had been made in round sum deposits. His understanding was that
Mrs Duncan had not been in a position to contribute to the secured loan repayments during
the material time.
[19] Under cross-examination, Mr Cleghorn accepted that the tracing exercise he had
carried out told him nothing about the underlying intention of the account holder and that
he could conclude with certainty no more than that Mr Duncan’s account had certain sums
paid into it and withdrawn from it. He accepted also that the lodging and withdrawal of
round sum deposits did not appear in Mrs Duncan’s bank account, the transactions on
which appear to be normal domestic ones. The single large sum payment into her account
had been the £35,000 from the proceeds of sale of Morven Avenue which, as agreed had
immediately been transferred to Mr Duncan’s bank account.
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The Applicable Law
[20] Part 3 of the Proceeds of Crime Act 2002 makes provision for Confiscation Orders in
Scotland. The Confiscation Order made in this case was made under section 92 of the
2002 Act. Section 92(8) provides:
“Before making an order under this section the court must take into account any
representations made to it by any person whom the court thinks is likely to be
affected by the order.”
[21] Section 98 of the 2002 Act relates to the disposal of a family home. Subsection 1
provides that the circumstances to which it applies are where a Confiscation Order has been
made and the prosecutor has not satisfied the court that the person’s interest in his family
home has been acquired as a benefit from his criminal conduct. It is agreed that the
provision is applicable in this case. The remaining subsections of section 98 are in the
following terms:
“(2) Where this section applies, then, before the administrator disposes of any right
or interest in the person’s family home he shall-
(a) obtain the relevant consent; or
(b) where he is unable to do so, apply to the court for authority to carry out
the disposal.
(3) On an application being made to it under subsection (2)(b), the court, after
having regard to all the circumstance of the case including-
(a) the needs and financial resources of the spouse or former spouse of the
person concerned;
(b) the needs and financial resources of any child of the family;
(c) the length of the period during which the family home has been used as a
residence by any of the persons referred to in paragraph (a) or (b),
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may refuse to grant the application or may postpone the granting of the
application for such period (not exceeding 12 months) as it may consider
reasonable in the circumstances or may grant the application subject to such
conditions as it may prescribe.
(4) Subsection (3) shall apply-
(a) to an action for division and sale of the family home of the person
concerned; or
(b) to an action for the purpose of obtaining vacant possession of that home,
brought by the administrator as it applies to an application under
subsection (2)(b) and, for the purposes of this subsection, any reference in
subsection (3) to the granting of the application shall be construed as a
reference to the granting of decree in the action.
(5) In this section-
‘family home’, in relation to any person (in this subsection referred to as ‘the
relevant person’) means any property in which the relevant person has or had
(whether alone or in common with any other person) a right or interest, being
property which is occupied as a residence by the relevant person and his or her
spouse or by the relevant person’s spouse or former spouse (in any case with or
without a child of the family) or by the relevant person with a child of the
family;
‘child of the family’ includes any child or grandchild of either the relevant person
or his or her spouse or former spouse, and any person who has been treated by
either the relevant person or his or her spouse or former spouse as if he or she
were a child of the relevant person, spouse or former spouse, whatever the age
of such a child, grandchild or person may be; and
‘relevant consent’ means in relation to the disposal of any right or interest in a
family home-
(a) in a case where the family home is occupied by the spouse or former
spouse of the relevant person, the consent of the spouse or, as the case may
be, of the former spouse, whether or not the family home is also occupied
by the relevant person;
(b) where paragraph (a) does not apply, in a case where the family home is
occupied by the relevant person with a child of the family, the consent of
the relevant person.”
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[22] This case is apparently the first opposed application under section 98(2) of the
2002 Act. There is no directly equivalent provision in England that would allow the delay of
the sale of a family home. The English courts do have discretion in relation to the realisation
of property, but the court’s powers must be exercised with a view to the satisfaction of the
Confiscation Order. Accordingly, English decisions under provisions applicable to that
jurisdiction require to be considered with a degree of caution.
Submissions made on Behalf of the Parties
[23] On behalf of the respondent Mr McLean invited the court to refuse to grant the
orders sought by the noter, failing which to grant the application subject to a condition that
the property be disponed to the respondent for no consideration, and failing either of those
outcomes to grant the application subject to a condition that the net free proceeds of sale are
divided by the noter and the respondent, with the majority going to the respondent. The
fourth final fall-back position was that failing any of those first three outcomes the
respondent would invite the court to postpone the granting of the order for 12 months. It
was argued that the terms of section 98 are sufficiently wide such as to allow the court to
take into account the respondent’s financial contributions to the property by either ordering
that the title be transferred to her or by donating a percentage of the net free proceeds of sale
that should be given to her. Mr McLean submitted that a discretion afforded to the court
under section 98 permitted either of those outcomes.
[24] It was common ground that the property was a family home within the meaning of
section 98 and that the prosecutor had not satisfied the court that Mr Duncan’s interest in it
was acquired as a benefit from his criminal conduct. Counsel summarised the respondent’s
reasons for opposing the application. She had not been involved in Mr Duncan’s criminal
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activities although she accepts that she knew he was growing cannabis at Toll Cottage. But
while her knowledge of his criminal activity was a factor to be weighed in the balance it was
not as important as it would be under the different position south of the border. Standing
the terms of the Scottish provision, knowledge of spouse’s criminal activity could never be a
“decisive” factor in this jurisdiction. Secondly, the evidence illustrated that some of the
equity in the property came from the proceeds of previous properties, in particular
Morven Avenue and the Birdsfield Street property. That could not be said to be attributable
to any criminal activities and as the repayment method had been changed from capital and
interest to interest only for both secured loans, there had been little change in the equity in
the relevant property for a considerable period of time, probably since before the period of
criminal activity specified in the indictment against Mr Duncan. Accordingly, while the
noter was in a position to seek disposal of the property, it was not “tainted” in the way that
some of the properties referred to in the English authorities were. Thirdly, it was
undisputed that the respondent had transferred the whole of her sale proceeds from her
Morven Avenue property to Mr Duncan in April 2004. Regardless of whether a tracing
exercise did not result in that sum of money being identified as part of the deposit for
Douglas Street, the respondent’s evidence was that she expected that money would be used
to fund a new purchase. While Mrs Duncan had not used that expression it was an
inference that could be drawn from her evidence.
[25] Mr McLean submitted further that the respondent had in many ways been a victim
of Mr Duncan’s criminality. She is of very modest means. Her weekly income and
expenditure figures reveal that she is living “hand to mouth”. Sale of the property would
result in her losing her family home and it is unlikely that she would be able to buy an
alternative property. The best she was likely to achieve was a property rented from the local
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authority and the nature and extent of any assistance she might receive from the state was
speculative. A sale of the property would cause hardship to the respondent’s
granddaughter Christie. She had no involvement in any criminality and did not know
anything about it. She has found a degree of stability in recent years living with her
grandmother with whom she has a good relationship. Christie now has aims for further
education. It was unrealistic to conclude that Christie could continue living with the
respondent were the property to be sold. She has experienced a considerable amount of
instability in the past so far as her living arrangements are concerned. She cannot
reasonably live with either of her parents. It would be particularly detrimental to Christie to
grant the order. The respondent’s health was an additional factor.
[26] Mr McLean accepted that, as an outright refusal of the application would result in
the property staying in the ownership of Mr Duncan, that might be thought to be
unsatisfactory. It was on that basis that his two main fall-back positions were proposed.
Since the essence of the respondent’s position was that she had made a significant capital
contribution to the purchase of the property and that she continues to make contributions to
payment of the secured loan, it might be just to grant the application but with a condition
that the noter would dispone the property to the respondent for no consideration. That was
the outcome in the English case of Crown Prosecution Service v Richards &c [2006] EWCA Civ
849 albeit in very different circumstances. In that case the judge at first instance found that
all but one of the family assets were the proceeds of drug trafficking and that the wife knew
of the husband’s criminal activities from the outset. The judge ordered the sale of all the
properties but granted a declaration that the wife was entitled to payment of a lump sum
out of the proceeds. On appeal by the Crown Prosecution Service the Court of Appeal
allowed the appeal and set aside the order for payment of a lump sum to the wife. The Note
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25
of Appeal included that the judge at first instance had failed to give sufficient weight to the
inevitable consequence of a finding that all of the assets were tainted as the proceeds of drug
dealing. The argument in that case was whether any of the assets could be distributed to
satisfy the wife’s claim for ancillary relief. Ultimately the wife in that case was awarded a
lump sum but that related particularly to her present and future care of a child of the
marriage.
[27] Mr McLean submitted also that there was some similarity between the provisions of
section 98 of the 2002 Act and the terms of section 40 of the Bankruptcy (Scotland) Act 1985,
now re-enacted as section 113 of the Bankruptcy (Scotland) Act 2016. While there have yet
been no decided cases under section 113 there have been decisions under section 40 of the
1985 Act. One example of the court’s approach to the exercise of discretion in the situation
of bankruptcy where the sale of a family home was sought could be found in Burns’ Trustee
v Burns 2001 SLT 1383.
[28] Mr McLean urged me to dispose of the proceedings in such a way that would
recognise that the respondent had made a capital contribution, albeit indirectly, to the
property and that considerable hardship would be caused by the order being granted. His
final fall-back submission would be one that would give her and her granddaughter a
period of time to consider their future accommodation options.
[29] For the noter, it was submitted that the application should be granted in the terms
sought on the basis that the evidence led did not support any refusal of the order sought. In
the absence of the respondent’s consent what the noter sought was authority from the court
to carry out the disposal of the property. As a fall-back position, the noter would suggest
postponing the granting of the application for a short period such as three months to enable
the respondent’s granddaughter in particular to make alternative accommodation
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26
arrangements while not interrupting her studies. Ms Ower submitted that the second and
third options proposed by the respondent (ordering a transfer of the property to the
respondent which failing a percentage of the sale proceeds) should be regarded as
unmeritorious and discounted completely.
[30] Turning to the circumstances on which the respondent relies on record for refusal of
the order, these included the state of her health, her financial position and the needs and
resources of various family members including Christie Wilson. In relation to the
respondent’s evidence, counsel for the noter submitted that the following 10 points from
that evidence were material to the substantive issue in dispute. These were as follows:
(i) The only condition from which the respondent suffers is epilepsy. There was
no suggestion that it was not well controlled by medication.
(ii) In April 2004 the respondent sold her property at Morven Avenue and
transferred the whole free proceeds of £35,000 to Mr Duncan. At its highest,
her evidence was that the £50,000 deposit paid by her husband for the purchase
for the property at Douglas Street included that £35,000.
(iii) Douglas Street is a three bedroomed property valued at £115,000. The
respondent accepted in evidence that she could not afford the acquisition of
such a property on her own.
(iv) The secured loan over Douglas Street has a balance of £63,000 outstanding and
expires in November 2019. The respondent accepted that the property would
have to be sold if the loan was not repaid at that time and there was no
evidence that she could raise the funds to pay off the loan. It could easily be
concluded that the house will have to be sold at that time.
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27
(v) The respondent and Mr Duncan lived together as husband and wife
notwithstanding their divorce in 1980. He trusted her with his affairs and gave
her power of attorney when he was in custody. It was clearly a close
relationship.
(vi) As agreed at paragraph 37 of the Joint Minute, after the couple moved to
Toll Cottage the respondent became aware not long after Mr Duncan started
growing cannabis for sale and distribution that he was doing so.
(vii) There were three separate secured loans to be serviced after the purchase of
Toll Cottage. The respondent’s evidence was that she could not service them
and they were paid for by her husband. An inference could be drawn that
these were serviced, at least in part, from the proceeds of crime.
(viii) From about 2003/2004 the respondent’s outgoings exceeded her income. That
was sufficient to conclude that she had not contributed at all to the secured
loan repayments.
(ix) The respondent could afford to rent a property from the council following the
sale of Douglas Street because she will no longer require to service any secured
loan.
(x) The respondent returned to live at Douglas Street in 2009 but Christie Wilson
had been residing there only from 2015.
[31] Ms Ower made certain submissions about Christie Wilson’s evidence. There is no
doubt that her original family circumstances had been chaotic. However, she had accepted
in evidence that while she would like to continue living with her grandmother the property
was larger than required for the two of them. She had also indicated an intention to live
with the respondent wherever the respondent was residing and it was apparent from her
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28
evidence that she had attended school in East Kilbride while initially living with her
grandmother that appropriate transport arrangements could be made following a move. So
far as the noter was concerned Ms Ower submitted that his evidence should be accepted in
its entirety. While there was no doubt that the respondent had given her ex-husband the
sum of £35,000 representing her whole proceeds from Morven Avenue that was simply one
adminicle of evidence in the case. The respondent had been in receipt of legal advice at the
time of the confiscation proceedings and did not enter the process. These proceedings were
not the correct stage at which she could make a claim on capital. There was nothing that
could be done to rectify any perceived unfairness through giving her ex-husband the capital
from her property. She could have claimed in the confiscation proceedings that she had a
capital interest. The confiscation proceedings clearly related to the Douglas Street Property
as well as others. There was simply no power to transfer title to Mrs Duncan in these
proceedings, particularly where she had never had title to the asset in question. In essence
she would never have had a proprietary claim to the property. At its highest, had she made
a claim for unjust enrichment, she could have achieved at best a sum of money. She could
not and should not receive in these proceedings something that she could only receive if she
was married to Mr Duncan and sought to divorce him.
[32] Ms Ower submitted further that the only conditions that the court could impose in
terms of section 98 were those that would be consistent with the granting of the order.
Those conditions could not extend to giving someone a real right in property to which she
had no proprietorial interest. The imposing of conditions could also not extend to awarding
a sum of capital to someone who may or may not have a personal right to claim against her
former spouse for unjust enrichment. The donation of £35,000 to her ex-husband in 2004
was simply a factor in deciding whether to postpone the application. In any event, it was
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29
not correct to suggest that the respondent received nothing in return for the capital she gave
her husband. She has enjoyed the benefit of living in a substantial property that she could
not have afforded that was purchased by her husband. That had to be balanced against her
argument that she had given the money and received no proprietorial interest in return.
[33] In the application of the law to the facts the question of whether to grant or refuse an
order involves an exercise of discretion. Reference was made to English decisions such as
CPS v Richards [2006] 2 FLR 1220. In that case the knowledge by the wife of the husband’s
drug trafficking was determinative. Ms Ower did not suggest that such a decision was of
direct application to this case. The respondent’s knowledge of Mr Duncan’s criminal
activity was simply a factor. Similarly, the case of Re: O [2006] EWHC 3543 (admin) in
which Collins J had refused an application to realise a matrimonial home in satisfaction of a
confiscation order on the basis that the wife was entirely innocent and did not know of the
husband’s planned criminal activity could easily be distinguished not simply because of the
different way in which the English legislation is framed but also because in that case the title
of the property was in joint names and the wife could always have sought a minimum of
50% of its value. It was submitted that refusing the order in this case would not be a
proportionate outcome balancing the interest of the state in recovering the property as
against the respondent’s claimed right to occupy it. At best for the respondent a short
postponement would achieve a proportionate outcome balancing those interests. It was
significant that the respondent, will, on the evidence, require to leave the property in less
than three years because refusal of the order would not result in her being able to stay there
in the long term. She has resided in a property for many years that she could not have
afforded to purchase.
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[34] As the English authorities were of limited assistance, Ms Ower also referred to the
analogy of Scottish bankruptcy situations. She relied in particular on an example from the
sheriff court in the case of Salmon’s Trustee v Salmon 1988 (sh ct) 49. In that case, the sheriff
was faced with an action of division or sale by a permanent trustee against the bankrupt’s
wife. The family home was the only asset in the sequestration and the wife had very limited
resources albeit that her unrealised interest in the family home was substantial. There was
one child of the family who had yet to complete his schooling and the property had been a
family residence for about 16 years. The sheriff decided that in balancing the interests of the
creditors and the public interest and having the sequestration completed within a reasonable
period on the one hand and the other considerations referred to above on the other the
public interest outweighed the considerations advanced by the wife and decree was granted
with extract superseded for four months. Ms Ower suggested that a similar course should
be followed in this case. In contrast, in Gourlay’s Trustee v Gourlay 1995 SLT (sh.ct.7) a sheriff
at Glasgow had refused an application to sell a family home in a face of opposition by the
debtor’s spouse. In that case the stress involved for the debtor in moving from the family
home would have been considerable with potentially fatal results and such a move would
have been materially detrimental to the health of his spouse. It was suggested that Gourlay
was an exceptional case with very different circumstances to those before the court.
[35] The applicable provision (section 98(3) of the 2002 Act) in this case contained a non-
exhaustive list of three particular aspects that the court must consider. So far as the needs
and the financial resources of the respondent were concerned it was submitted that her
epilepsy was not sufficient to warrant any specific type of housing. While she is of limited
means the amount she pays currently towards the secured loan could be used for a council
tenancy. Her claim to have made a direct contribution of £35,000 to the property was not
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31
supported by Mr Cleghorn’s evidence using accepted accounting principles. In any event,
financial contribution to the property was not a circumstance listed in section 98(3) albeit
that it formed part of the general circumstances. It was important that the respondent could
have made representations in the confiscation proceedings. The only child of the family
who required to be taken into account was Christie Wilson and, as submitted, she was likely
to continue to live with the respondent in a different property. Finally, on the length of
period during which the family home was used as a residence, while the respondent had
been living there for eight years (since 2009) Christie had been living there for less than two
years. This factor was insufficient on its own or even taken together with the other
circumstances to warrant refusal of the application.
Discussion
[36] There are two separate issues that arise for determination in this case. First there is
an issue of principle between parties as to the scope of the court’s power in terms of
section 98(3) of the 2002 Act. In particular, there is an issue about whether the court has
power to make an order granting the noter authority to dispose of the property but subject
to a direction that the title shall be transferred to the respondent or that the proceeds of sale
shall be divided in a particular way. The second aspect of the case is the consideration of the
evidence before deciding what disposal would be appropriate having regard to all the
circumstances. I will deal with each of these in turn.
[37] In my view, the provisions of section 98 of the 2002 Act are clearly designed to
relieve hardship on spouses, ex-spouses and children who might be rendered homeless by
the granting of an order to dispose of the property. The protection is of occupation, not of
any proprietorial or financial interest. This is clear for a number of reasons. First, in order to
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fall within the definition of “family home” in section 98(3), a spouse or former spouse must
occupy the property as a residence. The child of the family becomes relevant to the
determination only if that child is also occupying the property. Occupation may be with the
relevant person (in this case Mr Duncan) as well as a spouse or former spouse and or a child
of the family. Importantly, there is no reference whatsoever to any proprietorial or financial
interest on the part of a spouse or former spouse. Only the relevant person requires to have a
right or interest in the property, whether alone or jointly. Just as the protection afforded to
those in occupation of a family home by the Matrimonial Homes (Family Protection)
Scotland) Act 1981 applies regardless of whether they have any proprietorial interest in it,
similarly section 98 of the 2002 Act would appear to protect a restricted category of people
whose residence in the family home would be unfairly or unjustly disrupted by an order
authorising disposal of the property. The non-exhaustive list of circumstances to which the
court must have regard in section 98(3) is clearly directed taking account of the length of
time during which the family home has been occupied as a residence and the financial
constraints that might impact on a spouse, former spouse or child were the property to be
sold with the consequence that the affected spouse could no longer live there. In my opinion
the provision is inapposite to distribute capital between the various parties involved or to
interfere with the existing title position. There are limited circumstances in which a court
can make orders transferring title of heritable property from one party involved in an action
to another. The best known example is contained in section 8 of the Family Law (Scotland)
Act 1985 which empowers the court, in an action of divorce where one spouse seeks
financial provision, to make a transfer of property order depriving a spouse with a
proprietorial interest in property by transferring it to his or her spouse where that is justified
in accordance with the principles of financial provision on divorce. Such a specific statutory
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power to transfer property is generally required before the court can become involved in
altering title to heritable property. Further, the circumstances in which the court may direct
that the proceeds of sale of a property be divided in certain proportions are also restricted.
There is some scope for that in the context of division or sale proceedings. However in the
present case, the respondent is not a joint title holder of the property and so division or sale
proceedings are not required. In any event, the plain terms of section 98(3) of the Act
militate against the interpretation suggested by counsel for the respondent in this case.
While it is clear from subsection (3) that in addition to granting, refusing or postponing an
application to dispose of property the court may grant the application subject to such
conditions as it may prescribe, interpreting that provision as empowering the court to
impose conditions that interfere with title or the distribution of sale proceeds would in my
view stretch the statutory language too far. The conditions to which an order may be subject
cannot properly extend to granting an application and then immediately thwarting it by or
ordering the noter to transfer title of the property to the respondent. The context of the
order being sought by the noter is that a confiscation order has already been granted that
includes the property at 4 Douglas Street as one of the realisable assets of Mr Duncan in
respect of which confiscation has been permitted. I consider that the court’s powers under
section 98 are rather more limited than suggested by Mr McLean.
[38] Of course there may be cases where the parties are still married where the court
would require to take into account that proceedings relating to the title to the property or
the distribution of its proceeds might also be continuing. It is easy to see the merit in
postponing an application of this sort in respect of a matrimonial home where there are
ongoing divorce proceedings and in that context there is an application for a transfer of
property order. In a situation where the respondent is a former spouse and so her claims to
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34
financial provision on divorce have already been determined, the basis upon which refusal
or postponement of an order of this sort may be justified is in my view restricted to the need
for continued occupation of the property, whether for financial reasons or otherwise. There
was some mention in submissions of whether Mrs Duncan may have or have had a claim in
respect of unjust enrichment against Mr Duncan. I express no view on whether any such
claim has or would have had a reasonable prospect of success or as to whether it would
have prescribed. The relevance of the reference to unjust enrichment in my view is that in
principle it can provide a remedy for someone who has given money in the expectation of a
set of circumstances that did not ultimately arise. It is a separate route of litigation and
cannot form part of the exercise the court requires to carry out under section 98 of the
2002 Act to determine the strength or otherwise of an application. Again, had the
respondent brought or indicated that she intended to bring proceedings in respect of unjust
enrichment that might be a factor militating in favour of postponement of an order such as
that sought by the noter in this case. For the reasons given, I conclude that there is no power
under section 98 to grant the orders second and third sought by Mr McLean. Even if I had
decided otherwise, I would not have regarded it appropriate to effect such a distribution in
the circumstances of this case where, as I explain below, any capital contribution made by
Mrs Duncan cannot be traced directly to the purchase.
[39] Turning to a consideration of the evidence before determining whether the grant,
refusal or postponement of the order should be the outcome, there were only a very limited
number of facts ultimately in dispute. The first of those is the extent of any to which the
respondent can be regarded as having made a capital contribution to 4 Douglas Street. I
have set out the evidence on this in some detail. In essence, when she sold her property at
Morven Avenue Mrs Duncan gave the net free proceeds of sale of £35,530.20 to her
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ex-husband. That sum was not immediately invested in other property. It was transferred
out of Mr Duncan’s account shortly after it was deposited, I can make no findings as to what
happened to it thereafter. There is no doubt that during a period when they were living
together as if husband and wife albeit divorced Mrs Duncan lost the only capital asset she
had at a time when she trusted her husband and did not feel she required to safeguard her
position legally. She was confused in her evidence about dates and in relation to the level of
the sale proceeds of Mr Duncan’s property at Birdsfield Street. I cannot make a finding that
Mrs Duncan contributed about £35,000 of the £50,0000 deposit paid by Mr Duncan when
4 Douglas Street was purchased. None of that £50,000 can be traced directly back to the
proceeds of sale of Morven Avenue because of the movement of the money as identified by
Mr Cleghorn and also the passage of time between 2004 and 2007 during which there were
numerous deposits and withdrawals on Mr Duncan’s bank account such that, apart from the
net free proceeds of sale of Birdsfield Street, the source of the deposit for 4 Douglas Street
cannot be clearly identified. However, what I do take from this chapter of evidence is that,
but for the sale of Morven Avenue and the transfer of the whole free proceeds of sale to
Mr Duncan, Mrs Duncan would have either still owned a property or have had some capital
to invest. By her own admission she would not have been able to acquire a property as
substantial as 4 Douglas Street but the consequence of her disposal of the sale proceeds of
her only property is that she now has no prospect of owning her own home again at all.
This is a factor to be taken into account as one of the relevant circumstances of the case.
[40] The second issue about which there was some dispute in the evidence was that of the
respondent’s contribution to the family finances during the years 2003 – 2009. She accepted,
ultimately, that her income and expenditure for those years must be as agreed in
paragraphs 41 – 43 of the Joint Minute but she maintained that through working in a café for
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her husband, the takings of which were paid into her husband’s bank account with her not
receiving any direct remuneration, she had indirectly contributed to the payment of secured
loans of those years. The difficulty with the respondent’s position on this issue is that there
was no evidence of the number of hours worked or of the level of takings of the café in
which she worked for her husband, far less the level of profit. Accordingly I am unable to
make any specific finding in relation to any contribution made by her, indirectly, to the
servicing of Mr Duncan’s secured loans during those years.
[41] Looking at the whole evidence in the case, there are clearly circumstances both in
favour of and against granting the order sought by the noter. The needs and financial
resources of the respondent and indeed her granddaughter Christie are sufficiently limited
that they do not have the freedom to obtain a proprietorial interest in other property. Any
house move is likely to be to local authority housing. The property in which the respondent
and Christie Wilson reside is a family home and both have expressed a strong desire to
remain there. Although Christie’s residence in the property is of more recent origin, the
respondent has been living in the property for some eight years. She is 68 years old and not
in the best of health, although her epilepsy is well controlled by medication and would not
prevent a house move. Mrs Duncan had knowledge of Mr Duncan’s criminal activity for
most of the time he operated in the production and sale of cannabis. That too is a factor to
be weighed in the balance. The respondent has, as already indicated, relinquished the only
capital she had and has lost out as a result. Christie has a very close relationship with the
respondent who looks after her and provides parental guidance and support to her, but her
evidence was to the effect that she would be likely to relocate with the respondent if the
home was sold. Also, the evidence does not support a conclusion that the respondent and
Christie Wilson would be able to reside in the property following expiry of the period of the
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secured loan in November 2019. In the absence of any evidence of a source of funds from
which Mrs Duncan could use to redeem the loan, her occupation of the property (and
Christie’s) would come to an end at that time even if the order sought by the noter was
refused. I accept also the submission made by Ms Ower for the noter that it is not correct to
regard the respondent as having received nothing at all in return for the capital she gave her
ex-husband. She has enjoyed the benefit of living in a property that she could not otherwise
have afforded and until Mr Duncan’s incarceration she did not on the face of it contribute
financially to the servicing of the secured loans.
[42] So far as the assistance, if any, that can be derived from the analogy with bankruptcy
situations, it seems to me that decisions in that area are particularly fact sensitive, as this
case is, and as future applications under section 98 of the 2002 Act will be. The court
requires to balance the public interest in enforcement of confiscation orders against the need
to take relevant circumstances of a spouse or former spouse and child of a family into
account and so avoid undue hardship where possible. I have found the English decisions
referred to in submissions of very limited assistance in light of the different context in which
those cases took place. In particular, standing the decision I have reached in relation in the
inability to distribute capital or property through applications such as the present one and
the extent to which a lack of innocence in respect of a spouse’s criminal dealings is almost
determinative in that jurisdiction, any direct analogy is rendered inappropriate.
[43] In considering all of the evidence and the submissions made to me carefully, I
consider that the needs and financial resources of the respondent and Christie Wilson are
not particularly significant matters in deciding whether the order sought by the noter should
be granted. The limited means of the respondent will alter little should the order be
granted. She may secure tenancy for a local authority accommodation in due course, which
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failing it is agreed that there are a number of privately owned homes in South Lanarkshire
available for rent. Her current financial resources prevent her from acquiring a property of
the size and value of the home at 4 Douglas Street. Neither is the length of the period
during which Mrs Duncan and subsequently her granddaughter Christie have occupied the
family home as a residence a particularly significant issue in this case. The evidence
illustrated that prior to Mr Duncan’s custodial sentence Mrs Duncan had never been
particularly content to live at Douglas Street because of the volume of traffic passing outside
the property. She did not live there with her ex-husband for any substantial period of time.
Her granddaughter Christie has lived there for a relatively short period. Although I have
taken into account the full history of Mrs Duncan having given the only capital she had from
the proceeds of sale of Morven Avenue to her ex-husband this is not something that could,
even if it was appropriate to do so, be rectified in these proceedings. Refusing the order
sought in this case would result in Mr Duncan retaining title to the property and there was
no evidence at all about what would happen to the property in that event. The couple have
been apart for many years and the respondent said that it was at Mr Duncan’s instigation
that she had stopped visiting him in prison. I cannot easily infer that refusal of the order
would result in Mrs Duncan being able to reside in the property in the long term, standing
the date on which the secured loan requires to be redeemed or the property sold in 2019. So
far as other circumstances are concerned, I accept the submission made by counsel for the
noter that the epilepsy from which Mrs Duncan suffers is well controlled. It would not
impede a move to new accommodation. Having regard to all these circumstances and the
evidence of Christie Wilson that she is likely to relocate with the respondent I am not
persuaded that the circumstances of this case justify refusal of the application. However, I
consider it reasonable to allow a period of postponement to enable the respondent and her
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granddaughter to secure alternative accommodation. She is already on a waiting list for
local authority accommodation and will be able, during the period of postponement, to
advise a local authority that in the expiry of that postponement, she will be in urgent need of
accommodation.
Disposal
[44] In all the circumstances, I am satisfied that the order sought by the noter should be
made. However, I intend to postpone the granting of the application for a period of
4 months, on the expiry of which the noter will be entitled to obtain vacant possession of the
property with a view to disposing of Mr Duncan’s interest in it, and I will do that by
superseding extract. I will reserve meantime all questions of expenses.