Scottish Court of Session Decisions

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URL: http://www.bailii.org/scot/cases/ScotCS/2018/[2018]_CSOH_47.html
Cite as: [2018] ScotCS CSOH_47, 2018 SCLR 695, [2018] CSOH 47, 2018 Fam LR 63, 2018 GWD 18-233

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F96/14

OUTER HOUSE, COURT OF SESSION

[2018] CSOH 47

OPINION OF LORD ERICHT

In the cause

against

Pursuer: Innes; Beveridge and Kellas

Defender: Cheyne; Turcan Connell

Pursuer

Defender

15 May 2018

Introduction

[1] The parties married on 20 May 2000 and separated on 4 April 2009, which is the

relevant date for the purposes of section 10(3) of the Family Law (Scotland) Act 1985. The

wife was the pursuer and the husband the defender.

[2] There were two adopted children of the marriage: a son born in 2004 and a daughter

born in 2005. They were both adopted on 9 August 2007. Residence and contact were

determined by interlocutor of this court on 4 March 2015.

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[3] The case called before me in relation to decree of divorce and financial provision.

Both parties consented to divorce on the basis of two year separation.

[4] However, parties were in dispute on various matters of financial provision. The

proof on financial provision ran for ten days. The parties’ financial position was complex.

This was in part due to them having embarked during the marriage on a major construction

project of a holiday house in Italy (the “Italian Property”). This project was funded from

assets and loans and had involved the transfer of substantial sums abroad to meet purchase

and construction costs. Further complications were caused by the international nature of the

parties’ careers and investments. They had bank accounts in various countries and

denominated in various currencies, and transfers between these accounts often involved

currency conversion.

Legislation

[5] The Family Law (Scotland) Act 1985 provides:

“9 Principles to be applied.

(1) The principles which the court shall apply in deciding what order for

financial provision, if any, to make are that—

(a) the net value of the matrimonial property should be shared fairly

between the parties to the marriage ..;

(b) fair account should be taken of any economic advantage derived by

either person from contributions by the other, and of any economic

disadvantage suffered by either person in the interests of the other

person or of the family;

marriage under the age of 16 years.. should be shared fairly between

the persons; …

(2) In subsection (1)(b) above and section 11(2) of this Act—

‘economic advantage’ means advantage gained whether before or during the

marriage … and includes gains in capital, in income and in earning capacity,

and ’economic disadvantage’ shall be construed accordingly;

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‘contributions’ means contributions made whether before or during the

marriage..; and includes indirect and non-financial contributions and, in

particular, any such contribution made by looking after the family home or

caring for the family.”

Section 10 provides:

“10 Sharing of value of matrimonial property.

(1) In applying the principle set out in section 9(1)(a) of this Act, the net value of

the matrimonial property….shall be taken to be shared fairly between

persons when it is shared equally or in such other proportions as are justified

by special circumstances.

(2) Subject to subsection (3A) below, the net value of the property shall be the

value of the property at the relevant date after deduction of any debts

incurred by one or both of the parties to the marriage….. —

(a) before the marriage so far as they relate to the matrimonial property, and

(b) during the marriage ,which are outstanding at that date.

(3) In this section ‘the relevant date’ means whichever is the earlier of—

(a) subject to subsection (7) below, the date on which the persons ceased to

cohabit;

(b) the date of service of the summons in the action for divorce.

(4) Subject to subsections (5) and (5A) below, in this section and in section 11 of

this Act ‘the matrimonial property’ means all the property belonging to the

parties or either of them at the relevant date which was acquired by them.

(otherwise than by way of gift or succession from a third party)—

(a) before the marriage for use by them as a family home or as furniture or

plenishings for such home; or

(b) during the marriage but before the relevant date…..

(6)In subsection (1) above ‘special circumstances’, without prejudice to the

generality of the words, may include—

(a) the terms of any agreement between the persons on the ownership or

division of any of the matrimonial property ..

(b) the source of the funds or assets used to acquire any of the matrimonial

property where those funds or assets were not derived from the income

or efforts of the persons during the marriage ;

(d) the nature of the matrimonial property the use made of it (including use

for business purposes or as a family home) and the extent to which it is

reasonable to expect it to be realised or divided or used as security;

(e) the actual or prospective liability for any expenses of valuation or transfer

of property in connection with the divorce “.

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Credibility and reliability of parties

[6] The defender’s general overarching position was summed up in his averment on

record that “the defender is concerned that the pursuer has taken action throughout the

marriage to utilise his assets and capital to her advantage and to her family’s advantage”. I

did not find his evidence on this general position to be either credible nor reliable. In the

witness box, he made wild and extravagant speculative allegations with no foundations in

the evidence, for example that the basement of the parties’ holiday house in Italy was used

for illegal purposes. A particular example of his lack of credibility and unreliability in

respect of his overarching position arises in relation to his statement in the witness box that

long before they got married the pursuer had planned to get his assets when they separated.

The defender’s evidence (in a document referred in his affidavit) had been that he started

going out with the pursuer in June of 1997. That is consistent with the pursuer’s evidence

that they started going out in June 1997 and met at a party at the defender’s brother’s house.

The defender had been divorced previously and had entered into a formal separation

agreement with his previous wife dated 30 October 1996. In the witness box the defender

stated that, although he had thought that the pursuer came on the scene later than that, it

was the pursuer who had got him to sign that separation agreement in 1996 : she had been

involved with his finances at that stage and had been ecstatic as she got to know where his

money was. The defender’s insistence that the pursuer was plotting to deprive him of his

assets by becoming involved in the financial aspects of his previous failing marriage before

she was even going out with him is inherently unlikely and is an example of how his

evidence is distorted by his belief that the pursuer has been plotting to deprive him of his

assets.

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[7] On the other hand, there were also difficulties with the general credibility and

reliability of the pursuer. The pursuer was not entirely straightforward in her financial

dealings. For example, she maintained that she was entitled to a share of the rents for a

property at Goswell Road, London, and yet she had not accounted to the Inland Revenue for

this as her income. Further, the pursuer failed to disclose certain assets in the current

proceedings and the defender discovered these through his solicitors’ investigations or

commission and diligence procedure.

[8] In these circumstances, it is necessary to assess the credibility and reliability of both

parties not in general terms, but specifically in relation to each matter under dispute and in

the context of the other oral, affidavit and documentary evidence about each matter.

Agreed matrimonial property

[9] The parties are joint owners of a property in Italy. The land was bought by them by

a preliminary contract of sale with completion on 26 November 2004 and they thereafter

constructed a house on it. The parties were agreed that the Italian Property should be sold

and I shall provide for this in the order. The pursuer’s evidence was that the contents were

all matrimonial property other than a desk and unspecified items in the lounge. Counsel for

the defender made no submission in relation to the contents. I shall order sale of the

proceeds other than the desk, which is the only item of the contents which the pursuer

specified as belonging to her.

[10] The following items of matrimonial property were also agreed:

(a) The pursuer had an interest in the Shell Contributory Pension Fund with the

value of £125,565.

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(b) The defender had an interest in the Shell Contributory Pension Fund and

Shell Overseas Contributory pension fund with a total value of £295,439.

(d) Joint bank account with Bank of Scotland ending 546 with balance of

£9,384.88.

(e) Joint bank account with UniCredit Banca Di Roma ending in 104 with a

balance equivalent to £19,685.50.

(f) Joint UniCredit Banca Di Roma deposit account ending 232 with a balance of

£21,379.

(g) The pursuer’s Credit Suisse “Red Geese” Euro current account ending 42-2

with balance of equivalent of £1,516.29.

(h) The pursuer’s Credit Suisse “Red Geese” US dollar account ending 780 with

balance equivalent to £3,085.25.

(i) Joint TD Ameritrade share trading account with balance equivalent to

£14,169.

(j) The pursuer’s Halifax Guaranteed Saver Account ending 545 with a balance

of £9,698.76.

(k) The pursuer’s Credit Suisse “Red Geese” Safekeeping account with a balance

of £35,418.

(l) The defender’s ABN AMRO current account ending 084 with a balance of the

equivalent of £6,708.78.

(m) The pursuer’s and defender’s Halifax Shell Sharesave account each with a

valuation of £9,750.

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(n) The pursuer’s interest in Baronsmead Second Venture Trust plc with a value

of £14,446.

(o) The defender’s 99 Shell US shares with a value of £3,980.27.

(p) The defender’s 108 Shell UK shares with a value of £1,652.20.

(q) The increase in the defender’s Barclays Endowment Policy during the

marriage of £3,776.21.

(r) The defender’s savings with Intelligent Finance with a value of £29,950.

(s) The household contents of the Italian property

(t) The household contents of the Aberdeen property

Disputed matrimonial property

Intesa Sanpaolo account

[11] The pursuer gave evidence that her mother had gifted her a flat in Milan on

2 August 2006. Her position was that it was normal in her family that significant gifts of

property were made within the family to hand down family properties for further

generations. The pursuer’s position was that it was understood that although the flat was a

gift, the income would remain her mother’s. The pursuer wrote an undated letter to her

mother in the following terms:

“Dear Mum,

You gave me your flat …

You explained to me the reasons for which you decided to do this, reasons which I

share.

You also explained to me, and I fully agree with this, that all the costs relating to the

gift are at your expense, in the same way that every future expenditure or cost will

be at your expense, including any tax liability, while all advantages and income from

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the flat itself will be to your benefit, which you will be free to manage at your full

discretion.

I will grant you specific power of attorney so that you can make every suitable

arrangement/use that you think appropriate in respect of the flat (including resale at

your absolute discretion; in that situation, the income will remain yours in its

entirety).

If resale does not happen, the flat should be considered as having been given in

respect of my share of inheritance.

[Signature]”

[12] The pursuer’s evidence was that shortly after the gift was made, the property was

rented out and the rental income was paid into an account with Intesa Sanpaolo in the name

of the pursuer. The pursuer’s position was that although the account was in her name she

did not use the account. Her mother used the account and drew money out of it periodically

by bank card. The pursuer submitted an income tax return to the Italian tax authorities in

respect of the income from the flat.

[13] The pursuer submitted that the balance at credit of this account at the relevant date

should be excluded from the division. Her reason was that it contained rental income from

a property gifted by her mother on the basis that her mother would continue to enjoy the

rental income for the remainder of her life.

[14] The defender submitted that as the sum at credit at the bank account was income

acquired during the course of marriage and saved in an account it had acquired the

character of capital and was therefore susceptible to sharing between the parties.

[15] It was a matter of agreement that the sum at credit at the relevant date was the euro

equivalent of £12,015.70.

[16] It is clear that the flat itself is not matrimonial property as it was acquired as a gift.

The dispute between the parties was the sum in the bank account at the relevant date.

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[17] It is difficult to make much sense of an arrangement whereby a gift is made of

property, but the donor retains the right to the income, and yet it is the recipient and not the

donor who pays the tax on the income. No evidence was led as to how the situation would

be treated in Italian law. It seems to me that the key element in analysing such a transaction

is who pays the income tax on the income. As a matter of principle, a person does not pay

income tax if they are not entitled to the income. What arrangement the person then makes

with a third party so that the third party can have access to the person’s income is a separate

matter.

[18] Accordingly, I find that the sum of £12,015.70 in the Intesa Sanpaolo bank account is

property of the pursuer acquired during the marriage and is therefore matrimonial

property.

Flat in Switzerland

[19] The parties were in dispute as to whether the pursuer owned a flat in Switzerland.

[20] The pursuer’s position was that the flat was owned by her father. Her father

provided an affidavit and also gave evidence by videolink from Switzerland. His evidence

was that he had bought the flat in December 2010. He rents it out as a holiday property

when he does not need it for his family. A contract of the sale of the flat to the father in

December 2010 from a third party was produced to the court. The father gave evidence that

under Swiss property law the entire block was owned by a company and the owners of the

individual flats owned shares in the company. The chairman of the company was Mr Savoy.

The pursuer produced a letter from Mr Savoy confirming that to his knowledge the pursuer

has never had a share certificate in the company for the past 18 years and that there was no

trace of such a certificate or lease at least since 1997. The father’s evidence was that he

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rented the flat out for holiday lets himself through an agent, but sometimes got help from

the pursuer who had put the property on an internet site for him. The internet site

advertised holiday lets. The pursuer explained in her evidence that she did so on a website

of which she had been a long-term member and accordingly the website listed her as the

“owner”.

[21] The defender’s position was the flat was owned by the pursuer as she was listed as

owner on the internet letting site. The defender stated in evidence that he could see no

reason why the father would want to buy another property when he was in his eighties. The

defender did not accept the letter from Mr Savoy as being accurate: the father knew

Mr Savoy well and had power over him.

[22] I accept the evidence of the pursuer and her father, supported by the contract of sale

document and the letter from Mr Savoy, that the Swiss flat is the property of the father and

not the pursuer. The father gave his evidence in a convincing manner, and it was supported

by documentation. I find him to be a credible and reliable witness. I accept that the

explanation for the pursuer being listed as “owner” on the website is not that she actually

was the owner, but that she was the person who was listing the property on that website on

behalf of the owner. Accordingly, I find that the flat in Switzerland is not matrimonial

property.

“Quick” Swiss Bank account

[23] The defender claimed that the parties had a Swiss bank account in the name of

“Quick”. The pursuer and her father gave evidence that that account was her father’s. The

defender led no independent evidence in favour of his contention. As I have found her

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father to be a credible and reliable witness, I find that the “Quick” account belonged to him

and not the parties.

Property in Goswell Road

[24] The pursuer’s position is that £1,218 due to her from her brother in respect of rents of

a property at Goswell Road, London are matrimonial property. The pursuer produced

accounts resulting in that figure. The defender disputes the amount.

[25] There is also a dispute as to whether the defender invested personally in the

property, and the defender seeks for this to be taken into account under section 9(1)(b). The

defender seeks payment of the value of a one sixth interest in the property, which he values

at one sixth of £950,000 less purchase costs (without any deduction for mortgage due to lack

of any evidence as to mortgage) which comes to £141,498. He also seeks reimbursement of

his purchase cost of £16,835. He also seeks a one sixth share of rental income which he

estimates as £2,000 per month for 17 years totalling £68,000.

[26] The pursuer gave evidence that in 1999 the pursuer’s brother was working abroad

and wanted to invest in rental property in London. She agreed with her brother that she

would participate to the extent of a one third share of the equity of the property and the

rental profit. A mortgage was obtained for £220,000. The pursuer contributed £24,751 being

one third of the balance of the purchase price and her brother contributed the other

two thirds. At that time the pursuer and the defender were engaged. The pursuer funded

part of her share by borrowing from the defender, and he paid this into her brother’s

account. She could not remember why she had to borrow the money, nor whether she paid

it back. The rental payments and payments for outlays were made through her brother’s

bank account. The brother paid tax on the entire profits. However, she was entitled to

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one third of the profits. Her agreement with her brother was that she would receive an

accounting for her share of the profits when it reached £5,000. She received payment into

her HSBC account of £2,000 in July 2000, £1,800 in October 2001. That account became a

joint account in March 2004 and she received a further payment of £500 into it in December

2007. The agreement between her and her brother was formalised in writing on 21 June 2001

in the following terms:

“This letter confirms the agreement reached verbally and by e mail in August 1999

with regards to the property at [ Goswell Road] which encompasses a two bedroom

flat and a parking space:

1. The property is under the legal and tax ownership of [the pursuer’s brother].

The main purpose of the property is to provide income to [the pursuer’s

brother] and [the pursuer] in the form of rent.

2. [The pursuer] is joint owner of equity in the property equal to one third of its

value (including its contents). The remainder two thirds belongs to [the

pursuer’s brother].

3. [The pursuer] managed the purchase and furnishing of the property and is

now its administrator being in the possession of a Power of Attorney from

[the pursuer’s brother].

4. [The pursuer’s brother] is responsible for ensuring all tax matters are kept up

to date and Income Tax is paid as per the relevant UK legislation. [The

pursuer] will not be held responsible for any failure in the part of [the

pursuer’s brother]. to do this (eg penalties for late return of tax forms, failure

to disclose relevant information, etc.)

5. All income from the property is to be deposited directly to [the pursuer’s

brother]...

6. [The pursuer] is to provide full accounts of all expenditures to [the pursuer’s

brother] quarterly or as otherwise required.

7. Net revenue from the property is to be split according to the equity

ownership (66.6% to [the pursuer’s brother], 33.3% to [the pursuer] ). This

will hold whether the net revenue is a positive or negative figure.

8. The net revenue is to be calculated as follows:

o Income from rental of flat and/or parking place

o Less agency fees

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o Less expenses connected with the maintenance of the property and other

miscellaneous items (breakdown to be provided by [the pursuer] )

o Less income tax at the actual rate paid

o Less mortgage interest (the burden to be split 140/220 by [the pursuer’s

brother] and 80/220 by [the pursuer] )

9. [The pursuer] will ask [the pursuer’s brother] to transfer revenue from the

property on an ad hoc manner as and when this accrues. [The pursuer’s

brother] will automatically transfer these moneys whenever they reach £5,000

whether the transfer has been requested or not.

10. Should [the pursuer’s brother] decide to take residence in the property, he

will pay to [the Pursuer] a sum equal to 33.3% of the rent as per current

market rates, less of any maintenance costs less 80/220 of the mortgage

interest.

11. Should either party decide to sell its equity stake in the property, the other

will have first refusal on the outright purchase of the property. In this case

the value will be determined by use of a Property Surveyor. Should [the

pursuer] be the buyer, matters will be organised so as to minimise Stamp

Duty costs.

12. Neither party may choose to sell its equity stake in the property for a minimal

period of five years from the purchase date of January 21st 2000 unless

mutually agreed.

13. Should both parties choose to put the property on the market, the net

proceeds from the sale will be split according to the equity holding (66.6%

[the pursuer’s brother] and 33.3% [the pursuer] ). Any contents which will

not be sold with the property are to be split amicably between the parties on a

2:1 basis according to the original purchase price.

14. The net proceeds from the sale will be calculated as follows:

Sale price

Less any agency fee

Less solicitors costs

Less ancillary costs.”

[27] The pursuer’s brother gave evidence which supported that of the pursuer. He stated

that neither the pursuer nor the defender had at any time made any mention of the defender

having contributed to the purchase price. The purchase was funded to the extent of £220,000

by a mortgage with Birmingham Midshires but no paperwork in relation to the mortgage

application was before the court.

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[28] The defender’s position in evidence was that he had paid £14,030 to the pursuer on

the basis that the pursuer and the defender would own a joint one third share of the

property. He produced bank statements vouching these payments. He also incurred £2,805

on his visa card to help furnish the property.

[29] It was agreed by Joint Minute that the value of the property was £365,000 at the date

of marriage, £550,000 at the relevant date and £950,000 at 31 October 2016.

[30] It appears to me from the information available to me that that the position was that

the mortgage was in the brother’s name alone. He repaid part of the mortgage in 2009 and

the correspondence from the Birmingham Midshires Building Society in relation to that was

addressed to him alone and not to him and the pursuer as joint borrowers. It is therefore

rather surprising to find that the pursuer and the brother treat each other as joint borrowers.

In an email of 22 May 2009, after the part repayment, the pursuer asked the brother “How

much my share of the mortgage was at the time we purchased it and how much is it now?”

On the same day he replies saying “The mortgage at the time of purchase was for 220,000

GBP (of which your share was 80,000 GBP). Currently the mortgage is 160,000 GBP (your

share has remain unchanged so is still 80,000 GBP)”.

[31] No evidence was led nor were any submissions made about the status of the

property in English law. Accordingly I am not in a position to say whether a trust has been

constituted by English law. It may or may not be that under English law a trust has been

created in favour of the pursuer by the 2000 document. It may or may not be that under

English law an implied trust has been created in favour of the pursuer and the defender by

contributions to the purchase price. This court simply does not know.

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[32] The pursuer’s position on the Goswell Road property is highly unsatisfactory. If her

account of the nature of her investment is true, then it would appear that she has not

disclosed the true nature of the transaction to either HMRC or the mortgage lender.

[33] She claims that she is entitled to income from the property but that it is not her but

her brother who is liable for the income tax on it. She offered no explanation as to who

would pay the Capital Gains Tax on any sale, nor any Inheritance Tax, but the logic of the

pursuer’s position is that it would be her brother who would be liable. Her position on tax

is not consistent with her position on ownership.

[34] Further, there is documentary evidence which tends to show that the pursuer has

accepted in the past that she and the defender invested jointly. In 2002 the parties drew up

informal wills and in connection with that exercise listed their various assets. The one third

of Goswell Road is listed as being owned jointly by the pursuer and the defender.

[35] The difficulties in regard to the Goswell Road property arise from the failure on

behalf of the pursuer, the defender and the defender’s brother to give proper legal effect to

whatever their intention was in relation to Goswell Road. It would have been an easy

matter for them to do this: a solicitor would have been involved in the conveyancing of the

purchase of the property and could easily have drawn up the necessary legal documentation

defining the legal and equitable ownership of the property. Had this been done, it would be

clear from the legal documentation whether the pursuer and defender were joint owners of

one third, or if the pursuer was the sole owner of one third. This would of course have

meant that the pursuer would not have been able to make the arrangement she did with her

brother that he would pay income tax on her income. It would also have meant that the

mortgage lender would have been informed about the true position about the borrowing

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being joint, rather than it being left under the wrong impression that the brother was the

sole borrower.

[36] A divorce action is not the appropriate place to make any redress in respect of any

failure to properly document a property investment. The Goswell Road property is not

matrimonial property. It was acquired prior to the marriage and not for use as a

matrimonial home. Nor is it appropriate in all the circumstances for redress to be given

under section 9(1)(b). That subsection provides for the taking into account of any advantage

derived from the contributions of the other person, not for the rectifying the lack of proper

legal documentation giving effect to the intention of the parties in respect of a pre-marital

property investment which may have been joint or may have been by the pursuer alone.

[37] Accordingly I find that the Goswell Road property is not matrimonial property and I

make no section 9(1)(b) adjustment in relation to it. I do however find that the sum due to

the pursuer from her brother in respect of profit as at the relevant date is matrimonial

property. This would be the case whether or not it was a joint investment with the defender:

it is either a sum belonging to the pursuer which was acquired by the pursuer during the

marriage or a sum belonging to them both. In the absence of any documentary evidence

that the figure in the accounts is wrong, I accept the figure due at the relevant date is that set

out in the accounts, that is £1,218.

[38] It follows from the above that I will make no adjustment in respect of the one-sixth

share of rents since 1999 which the defender says are due to him as owner of one sixth of the

property. Any right to these rents flows from any right he may have as owner, not from his

marriage. If any such right exists, this matrimonial litigation is not the place to seek to

vindicate any such rights. Nor will I make any adjustment for reimbursement of any

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purchase costs by him, or of the value of the property. Again these matters flow from the

property investment transaction (if any), not from marriage.

The pursuer’s interest in the Shell Performance Share Plan

[39] As at the relevant date, the pursuer had an interest in the Shell Performance Share

Plan. She had vested shares at that date with a value of approximately £2,000. However, the

parties were in dispute as to her entitlement in respect of 2007, 2008 and 2009. Counsel for

the pursuer submitted that as the awards were subject to conditions, the shares had not

vested as at the relevant date, and accordingly did not “belong” to her at the relevant date

within the meaning of section 10(4) of the Family Law (Scotland) Act 1985. She referred by

way of analogy to S v S 2012 GWD 14-282. She further submitted that esto they were

matrimonial property, it was impossible to place a value on them at the relevant date.

[40] Counsel for the defender accepted that it could not be said that the pursuer had a

vested right, but submitted that she had a contingent right to the shares and had thus

“acquired” (within the meaning of section 10(4)) property which belonged to her. The

property which she had acquired was the right in expectation to the shares. That right was

capable of being valued. The defence expert witness Dr Pollock gave evidence of a value of

the rights at the relevant date, based on their probability of vesting: in other words, he

calculated the contingent interest. The court should accept Dr Pollock’s valuation.

[41] I was referred to the Rules of the scheme as at 2010, which both parties treated as the

Rules applicable to the pursuer’s options.

[42] The Rules provided that the company could grant an Award. The shares would vest

at a later date. “Vesting” was defined as “a Participant becoming entitled to have the Shares

transferred to him subject to these rules”.

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[43] Rule 5 provided:

“No transfer of awards

No Awards nor any rights in respect of it can be transferred, pledged, encumbered,

assigned or otherwise disposed of.

A Participant must not create, buy or sell any derivative involving an Award or any

Shares subject to it. If an Award or rights in respect of it are transferred or if such a

derivative instrument is created, bought or sold the Award will lapse.

This rule 5 does not imply to the transmission of an Award or the death of a

Participant to his personal representatives.”

[44] Rule 10 provided that as follows:

“10 Vesting of Awards

Except where rules 13, 14 or 16 apply, an Award shall Vest on the latest of the

following:

(a) The date on which the extent to which any Performance Condition or

other condition set out under rule 3.2 is satisfied or waived has been

determined; or

(b) the Qualifying Dates.

To the extent that an Award has not lapsed or Vested on that date, it will lapse on

that date.”

[45] Rule 13 provided for the lapse of an award if the employee ceased to be an employee.

Rule 14 provided for the award vesting on the death of the employee. Rule 15 provided for

the lapsing of awards on the misconduct of the employee.

[46] In respect of the awards granted to the pursuer in 2007, 2008 and 2009 there were

two performance conditions. The vesting of half the awards was linked to Shell’s business

performance over a three year period, with the remaining half linked to the relevant total

shareholder return, again assessed over a three year period. As at the relevant date, the

performance assessment periods to determine vesting for the 2007, 2008 and 2009 awards

had not yet finished for any of these: the assessment period for the 2007 awards did not end

until 1 January 2010, with the 2008 and 2009 awards later than that. Accordingly all of these

Page 19 ⇓

awards remained unvested as at the relevant date. In the event, the conditions were met

and the shares vested in due course.

[47] Dr Pollock is a practising actuary who qualified as a Fellow of the Faculty of

Actuaries in 1975 and has extensive experience of acting as an expert witness. In a report

contained in a letter of 25 April 2017 he agreed that taking the realisable value as £2000 for

2006 and nil for the other grants was one approach. However, he pointed out that this

ignored the fact that had the pursuer remained in employment and fulfilled the vesting

criteria, then the awards would have generated value for her in due course. He calculated

the value as:

(600 + 750+750) x £15.47= £32,487

600, 750 and 750 were the number of share options granted in 2007, 2008 and 2009

respectively. £15.47 was the share price at the relevant date. He stated that the court may

need to consider this value, albeit that it would need to be reduced for taxation and face

further restrictions if the underlying performance criteria were not met. In

cross-examination Dr Pollock departed from that valuation on the basis that he had not seen

all relevant documentation. He had what he described as a “stab” at a calculation, which he

worked out for the first time in the witness box. The method of his calculation was that he

calculated the probability of the award vesting at 85%. He then applied 85% to the awards

made. He indicated that a further reduction of 40 or 45% would have to be made for tax,

depending on the pursuer’s tax position.

[48] The question for the court is whether the unvested shares were matrimonial

property. That turns on whether the options “belonged” to the defender at the relevant date

within the meaning of section 10(2). It is clear from the terms of the Rules that until the

shares vested the pursuer had no right to the shares and could not realise them nor transfer

Page 20 ⇓

them. As at the relevant date, it was not possible to know whether the shares would vest as

it was not possible to know whether the conditions would or would not be fulfilled. In my

opinion in these circumstances the unvested shares were not matrimonial property.

Matrimonial liabilities

Agreed matrimonial liabilities

[49] The following matrimonial liabilities were agreed in the Joint Minute:

(a) A debt of £10,000 due by the parties to the defender’s brother.

(b) The outstanding balance on the defender’s Barclaycard credit card amounting

to £4,188.48.

loan secured over his property at Aberdeen (“the Aberdeen house”).

(d) A debt due by the defender relative to the Shell Executive Loan Plan

Agreement in the amount of £11,000.

(e) The sum of £146,499 due by the pursuer to Birmingham and Midshires in

respect of a loan secured over her property at Kew.

Loan from the pursuer’s father of €50,000

[50] The parties were in dispute about the amount of £45,557 being the sterling equivalent

of €50,000.

[51] The pursuer’s evidence was that in 2008, the build of the Italian Property was

progressing and the parties needed to put further cash into it. As they were reluctant to cash

in shares, the pursuer and the defender agreed to ask the pursuer’s father to lend her money

so that they could inject cash into the building project without having to realise other

Page 21 ⇓

investment. Her father agreed to make a loan of €50,000 which was paid on

18 November 2008 directly into the parties’ joint account with Unicredit bank. Her position

was that the loan had been repaid by her to her father after the relevant date.

[52] The defender’s position was that there was no loan from the pursuer’s father and

that the pursuer was deliberately attempting to falsify the loan’s existence so as to gain

advantage over the defender. The defender maintained that there was no credible evidence

in relation to the loan and that there was no document of loan. Nor was there any reason for

the loan to have been made as the evidence was that it was the father who was supervising

the building project, and in many cases paying for the work and then seeking

reimbursement of expenditure from the parties.

[53] I accept the evidence of the pursuer on this matter. Her account was supported by

that of her father, whom I found to be a credible and reliable witness. It was also supported

by documentation. The pursuer has produced a bank statement from the UniCredit account

showing payment of €50,000 from her father into the account on 18 November 2008. An

email from her father to her dated 24 September 2008 referring to him instructing payment

on 17 November 2008 uses the heading “Euro loan”. I do not find it in any way surprising

that in a family transaction such as this there was no formal loan agreement, particularly as

the email documents the transfer as being a loan.

[54] Accordingly, I find that the loan of £45,557 was a matrimonial debt. As the entire

loan was repaid by the pursuer, the pursuer is to be regarded as having the whole of this

liability at the relevant date.

Page 22 ⇓

Loan of £10,000 from defender’s brother

[55] As indicated above, it was agreed in the joint minute that as at the relevant date the

parties’ matrimonial liabilities included a debt of £10,000 due by the parties to the defender’s

brother.

[56] The loan had been made in 2004 and was used in the purchase of the Italian

Property. It was repaid by the pursuer after the relevant date in three payments which were

vouched by the relevant bank statements, that is £3,000 on 7 October 2009, £2,000 on

27 November 2009, and £5,000 on 14 January 2010.

Loan of €10,000 and £75,000 from defender’s brother

[57] This was a matter of dispute.

[58] The pursuer gave evidence that the parties had borrowed money from the defender’s

twin brother. The loans were applied to the purchase of the Italian Property. The loans

were €10,000 and £75,000 (in each case including interest). The pursuer provided bank

statements vouching that payments of the amount of the loans net of interest (i.e. €9.500

euros and £71,000) were paid into the pursuer’s father’s account and the Credit Suisse

account ending in 42-89 respectively. These loans were repaid in various tranches, namely

four payments into the bank account of the brother and his wife and the final tranche being

sent to their solicitor.

[59] The brother’s wife gave evidence supporting the account of the pursuer. The wife

confirmed that she and her husband lent €9,500 and £71,250, and that €10,000 and £75,000

was to be repaid including interest. She explained that in August 2005 she and the

defender’s brother returned to live in the UK and wanted to buy a house. They asked for

the two loans to be repaid. Four repayment instalments were made into their bank account

Page 23 ⇓

totalling £40,000. The final instalment was repaid by the pursuer’s father sending £42,000 to

their conveyancing solicitor. The defender’s position was put to her in cross: that the

brother’s wife was colluding with the pursuer; the three instalments paid by the pursuer

were not loan repayments but were payments being made by the pursuer to her; and the

loan did not exist but was just a pretext for the pursuer transferring money to her father.

She rejected the defender’s position.

[60] The pursuer’s father acknowledged that the payment had been made from his bank

account to the solicitor but due to the passage of time could not remember why.

[61] On the other hand the defender in his evidence was adamant that no such loan had

been made or repaid. He said that there was no need to take out a loan as the parties had

sufficient cash. He made unsubstantiated and implausible suggestions that the payment

from the father to the solicitor’s account was a moneylaundering scheme; that the transfer

to the solicitors was not from the father but was from the brother’s wife; and that the

brother’s wife had falsely shown the transfer as coming from the father.

[62] The defender’s brother’s position in his affidavit was that his wife dealt with their

finances. He was aware of just one loan, which he had consented to, to assist with the

funding of the Italian Property but did not know how much it was for. He had understood

from his wife that the whole loan had been repaid about the time that they returned to the

UK and purchased their house. He had been unaware of the £10,000 loan referred to in

paragraph [55] until after the parties had split up. In the witness box his position was that

his wife had threatened to scupper his chances of a new job that he had been offered if he

did not tell the truth rather than what he had said in his affidavit. He adopted his affidavit.

He maintained that the managing partner of the solicitors had told him that there was no

Page 24 ⇓

record of the £42,000 coming in. No oral or documentary evidence was led from the

managing partner.

[63] Assessment of the credibility and reliability of the witnesses on this matter was

complicated by an unusual family dynamic. The pursuer and the defender’s brother’s wife

were close friends and had been for many years. In each family, it was they and not their

husbands who looked after financial matters. This friendship had survived despite the

brother’s wife recently discovering that the pursuer had had an affair with the brother many

years previously. The brother and his wife had lent substantial sums to the defender to

finance the current litigation. The brother’s wife was visibly shocked to discover in the

witness box that her husband was not supporting her account. Despite a warning from me

at the end of her evidence not to discuss the evidence with her husband, it would appear

that the brother’s wife spoke to her husband before he gave his evidence.

[64] In view of that dynamic, it is important to test the witnesses’ evidence against

independent evidence. The independent evidence supports the account of the pursuer and

the brother’s wife. The pursuer’s father was managing payment of the purchase and

construction of the Italian Property and produced an account showing receipt of the sum of

€9,500 on 24 August 2004. The sum of £71,250 was paid into the pursuer’s Credit Suisse

account ending 42-89 on 5 July 2004. This was vouched by the Credit Suisse Bank statement.

In respect of repayment, a CHAPS payment of £5,000 was received into the bank account of

the brother and his wife and is vouched by bank statement. On 30 June 2005 two payments

were made into their bank account of £10,000 and £20,000 respectively. On 1 July 2005 a

payment of £5,000 was made. These payments are vouched by bank statements which show

them coming from the parties’ bank accounts. I accept the evidence of the brother’s wife

that the reference on the transfer of the £10,000 and the £5,000 to a ski holiday is an error

Page 25 ⇓

carried over from a previous payment: the context (i.e. that it is one of three payments made

in the same two days) is indicative of it being the loan being repaid in tranches, and the error

about the ski holiday is not made in the other payment which is sent from a different bank.

£42,000 was paid to the client account of the conveyancing solicitor by the pursuer’s father

on 22 August 2005. This was vouched by a contemporaneous document from the father’s

bank in Switzerland documenting a transfer of £42,000 from the father’s account to the

solicitor’s bank account with the legend “Client Account for [name of brother]”. There was

no reason for the pursuer’s father to make such a payment to the brother’s solicitor other

than as part repayment of the loans. The amount paid by the father was the amount

required to complete repayment of both the euro loan and the sterling loan.

[65] Accordingly, I find that the defender’s brother made loans to the pursuer and

defender of €10,000 and £75,000 in 2004 which was repaid in full in 2005, with £42,000 of the

repayment being effected by the pursuer’s father paying £42,000 into the client account of

the solicitor of the brother and his wife. As the loans were repaid in full before the relevant

date, they are not a matrimonial liability.

Division of joint accounts after the relevant date

[66] The parties continued to operate certain joint accounts after the relevant date.

Accordingly if each party now realised one half of the amount currently at credit in these

accounts, they might not receive an equal division of the sum which was at credit in the

relevant date. It is necessary to consider the movements on these accounts after the relevant

date and to consider whether any adjustments require to be made to ensure that the parties

receive their correct share of the relevant date value.

Page 26 ⇓

Joint accounts with HSBC ending 983 and Bank of Scotland ending 546

[67] As noted above (paragraph [10]), the sums standing to the credit of the joint HSBC

and Bank of Scotland accounts at the relevant dated were £34,410.90 and £9,384.88

respectively, giving a total of £43,795.48. The HSBC account was closed on 5 January 2010.

The Bank of Scotland account remained open. The bank statements were lodged as

productions.

[68] The pursuer produced a detailed analysis of each transaction on these accounts after

the relevant date.

[69] The pursuer’s evidence was that the only payments credited to the HSBC account

after the date of separation were her wages, rental income from the Kew property, and her

child benefit. This was her main account from which she met domestic expenditure. Her

position was that no credits made to that account after the date of separation came from the

defender’s funds: he was living in Holland and his wages were being paid into his ABN

AMRO bank account in Holland.

[70] She stated that she transferred £27,000 into the joint Bank of Scotland account in the

period between the relevant date and the transfer to the defender from the relevant date.

These transfers were made from the joint HSBC account under a reference containing the

defender’s name. Her evidence was that the defender had during that period made a series

of withdrawals from the HSBC account, for matters such as payment of bills for his credit

card, mobile phone, the monthly mortgage on his property at Aberdeen and other bills, and

occasional withdrawals of relatively small amounts of cash from ATMs. The total sum

withdrawn by him over that period was £30,647. When that sum is deducted from the total

of £43,796 that leaves £13,148. Accordingly her position was that £30,647 should be allocated

to the defender and the £13,148 be allocated to her.

Page 27 ⇓

[71] I accept the evidence of the pursuer on this matter. Her evidence is consistent with

the bank statements. Accordingly I will allocate £30,647 to the defender and £13,148 to the

defender.

Joint Unicredit Account ending 104

[72] This was the joint bank account which the parties used in relation to the construction

of the Italian Property. The balance at the relevant date was £19,685.50 (see paragraph [10]

above). The pursuer’s evidence was that after the relevant date she continued to apply the

funds in that account towards the Italian property, and used all of the funds in that account

for that purpose. The pursuer produced the bank statements and a detailed analysis of each

transaction on the accounts after the relevant date. This showed that sums were paid from

this account for completion of the construction work on the Italian Property, and thereafter

on its maintenance costs. It also shows that rental income from holiday lets of the Italian

Property was paid into this account.

[73] I accept the evidence of the pursuer on this matter. Her evidence is consistent with

the bank statements. The Italian Property is matrimonial property. What has happened is

that joint matrimonial property in the account has been applied to joint matrimonial

heritable property which is to be sold and the proceeds divided equally between the parties.

As the post-relevant-date expenditure was for the Italian Property and will be accounted for

by the division of the proceeds of the sale of that property, no adjustment is required to the

relevant date figure.

Page 28 ⇓

Joint Unicredit Account ending 232

[74] I accept the pursuer’s evidence that on 10 June 2009 $14,027.36 was transferred from

this account to the Unicredit Account ending 104. I also accept her evidence that $20,000

was transferred from this account temporarily to her father on 12 March 2010 but then

returned to her HSBC bank account on 19 November 2012 and 4 March 2013 and from there

to the Unicredit 104 account and was then applied to the maintenance of the Italian

Property. Her evidence is vouched by bank statements and her detailed analysis.

[75] However, in her detailed analysis the funds are treated as coming from her

personally rather than as repayment of the temporary loan. In order to correct this, she

should be taken to have retained $20,000 (sterling equivalent of £12,593 at the relevant date)

with the remainder being split evenly between parties. The effect of this is that she should

be treated as having retained £16,986 and the defender £4,393.

Ameritrade account

[76] The parties had a joint account with TD Ameritrade. This was an on-line share

dealing account.

[77] The sum of $20,907.34 (equivalent of £14,169) standing to the credit of the account at

the relevant date was retained by the pursuer. By July 2009, the value of the shares had

risen to $29,720.88. On 29 July 2009 the pursuer transferred $29,000 into the parties’ joint

Unicredit account ending 232. The account was closed in 19 August 2009 with the residual

balance of $720.88 also being paid into that joint account.

[78] These proceeds were then used to fund the construction of the Italian Property.

[79] I find that no adjustment requires to be made to the allocation of the Ameritrade

account in respect of post-separation dealings. The proceeds went into a joint account and

Page 29 ⇓

were used largely to pay interest charges on the joint account and any balance ultimately to

the funding of the Italian property

[80] I also heard evidence about the circumstances of the closing of the account and the

payment of the final balance of $720.88 into the joint Unicredit euro account.

[81] The pursuer’s position in evidence was that she drafted and printed out a letter to

Ameritrade closing the account and both she and the defender signed it. Her position was

that the defender signed because he agreed with her that there was no point in keeping the

account as it had so little money in it. The defender’s position was that the pursuer had a

track record of taking all of the financial decisions during the course of the marriage and this

extended to encashing assets without his knowledge or consent. The signature on the letter

closing the account was not his and the finger of suspicion pointed in the direction of the

pursuer as a person with the access, motive and opportunity to forge the defender’s

signature. In support of his position, the defender led an experienced and well-qualified

handwriting expert, Dr Kathryn Thorndycraft who was of the opinion that it was a high

probability that the signature was not his. Dr Thorndycraft had not examined the original

signature but only a copy of it. She agreed with counsel for the defender that seeing the

original document would only have enhanced her conclusion: seeing the original would

allow her to see if there had been any hesitation when trying to draw the signature. In cross

she agreed she could not rule out that the signature was genuine.

[82] Looking at all the circumstances, I do not find it proved that the defender’s signature

was forged by the pursuer. Dr Thorndycraft’s opinion was not determinative of the matter

as she had not examined the original signature and she accepted that she could not rule out

it being genuine. Looking at the wider circumstances, it seems to me that the pursuer had

no motive to commit this forgery. The amount of money at stake, when converted from

Page 30 ⇓

dollars, was worth a mere few hundred pounds and was insignificant in the context of the

parties’ whole assets. The pursuer did not gain personally from that few hundred pounds:

it went into the parties’ joint account and was used for joint purposes. In these

circumstances I accept the evidence of the pursuer that the defender signed the letter.

Parties’ proposals for an unequal division of the matrimonial property

[83] Both parties sought an unequal division of the matrimonial property in terms of

sections 9 and 10 of the Act. Parties were agreed that the law on section 10 was as set out in

Jacques v Jacques 1997 SC (HL) 20. In that case Lord Clyde stated that the presumption was

for equality and that it is for the court of first instance to determine whether a special

circumstance justifies a division in proportions other than equal (p22).

[84] The matters on which the parties sought an unequal division were as follows.

Aberdeen Property

[85] The house at Aberdeen was owned by the defender prior to the marriage. Parties

were agreed that it was not matrimonial property. As at the date of the marriage, there was

a mortgage outstanding over the property of around £30,000. Further loans were secured

over the property during the course of the marriage. It was agreed in the joint minute that

the sum of £346,985 due by the defender to Intelligent Finance in respect of a loan secured

over the Aberdeen property and referable to the period of the marriage, was a matrimonial

liability.

Initial Renovation of Aberdeen Property

[86] The pursuer sought an adjustment under section 9(1) (b) in respect of the sum of

£50,000 borrowed against her non-matrimonial property at Kew and applied to the

Page 31 ⇓

renovation of the defender’s non-matrimonial property at Aberdeen. She argued that this

resulted in a loss of capital which was an economic disadvantage she suffered in the interest

of the defender.

[87] The Aberdeen property had been purchased by the defender in 1997. The parties

married on 20 May 2000. A building warrant for the renovation was granted on 26 May

2000, and a completion certificate was granted on 25 January 2001.

[88] The pursuer’s evidence was that she and the defender had planned the renovation of

it together while they were engaged with the intention that it would be the family home.

The pursuer’s position was that in order to fund the renovation work a total of £61,000 was

borrowed, £50,000 of which came from a further advance over the mortgage with

Abbey National over her pre-martial home at Kew. Her position was that this was a tax

efficient way to borrow money as the Kew property was rented out. Her evidence was that

the remainder of the cost was met through a loan of £11,000 which the defender took out

with his employers Shell under the Shell Executive Loan Plan (“SELAP”).

[89] The defender’s position was that the renovation was not financed in that way. His

evidence was that it was paid outright by him and more or less completed prior to marriage.

He paid for it from his off-shore bonuses. The cost of the kitchen upgrade was barely a few

thousand.

[90] It is understandable that due to the passage of time, there was little in the way of

documentation against which the differing accounts of the pursuer and defender could be

tested. No invoices from builders were produced. Some indication of what the costs might

have been can be gleaned from the architect’s letter which referred to an interim architect’s

fee which appears to have been based on a total building cost of £34,350. The pursuer

sought to extrapolate from that a final building cost of £41,732. She said that in addition to

Page 32 ⇓

that there was a cost of a new bathroom of £8,500 and wall to wall cupboards in two rooms

of £2,500 giving a total bill cost of £52,732. Her position was that the Shell Executive Loan

Plan Agreement loan was taken out in July 2000 in connection with the renovation.

[91] We do not have any invoices nor were any bank statements available showing

payment to the architect or builders. What we do have, however, is the pursuer’s loan

application to Abbey National signed by her and dated 19 July 2000. In that application it is

stated that the money is to be used for “extension on other property”.

[92] The defender, on the other hand gave evidence that the pursuer had planned the

loan from Abbey National so that she could use it against him when they separated, as she

had been planning ways to take his money even before they were married. I find his

position not to be credible. As indicated above, I do not accept the defender’s overarching

position that the pursuer acted throughout the marriage to utilise the defender’s assets and

capital to her advantage. Further, it is clear from a letter from the architect dated 7 June 2000

that the works had not been put out to tender by that date, so they clearly could not have

been completed before the marriage on 20 May 2000.

[93] The position of the pursuer, on the other hand is supported by her loan application

for further borrowing to be secured over her Kew property which refers to the use of the

money for renovation for a property other than Kew. It is also supported by the architect’s

letter which shows that the costs of the renovation were likely to have been around the order

of the amount borrowed. It is also supported by the timing of the SELAP loan. I do not

accept the defender’s evidence that the renovation was undertaken prior to the marriage:

the building warrant and completion certificate show that this was not the case.

[94] I find that the application of the £50,000 borrowed by the pursuer against Kew and

applied to the renovation resulted in a loss in capital which was an economic disadvantage

Page 33 ⇓

which she suffered in the interests of the defender. However, as the additional borrowing of

£50,000 was paid off during the course of the marriage it was in effect converted to

matrimonial monies and so her loss is limited to one half of the sum borrowed i.e. £25,000.

SELAP Loan

[95] On 7 July 2000, the defender took out a loan of £11,000 from the Shell Executive Loan

Plan Agreement. The loan was outstanding as at the relevant date.

[96] The pursuer submitted that the loan was taken out for the works to the Aberdeen

Property and therefore consistent to her approach to other loans should be left out of

account in the overall division between the parties.

[97] The defender’s position was that it should be included as a matrimonial liability.

[98] I accept the pursuer’s evidence that the SELAP loan was taken out in relation to the

renovation of the Aberdeen property, which is supported by the timing of the loan. As it is

loan taken out by the defender for the purposes of his non-matrimonial property I shall

leave it out of account.

[99] The defender also claimed £1,100, being half of the SELAP interest paid after

separation. He did so on the basis that the loan was taken out for joint purposes. However,

as I have found that the purpose of the loan was not for joint purposes, I reject this claim for

interest.

Kitchen renovation of Aberdeen Property

[100] Further works were done on the Aberdeen house when a new kitchen was installed

in around 2004-2005. The pursuer submitted that this was work to the defender’s

non-matrimonial property but funded from matrimonial sources. As a result of the

Page 34 ⇓

expenditure matrimonial funds on this work which was to the benefit of the defender as

owner of the property, the pursuer had been economically disadvantaged to the extent of

50 per cent of the cost. Her evidence was that the cost of the kitchen was £12,293.57.

[101] The defender’s evidence was that they spent barely a few thousand on the kitchen as

he did most of the work himself. He disagreed that any expenditure on the property should

be repaid when they were both living in it and using it and it was just general wear and tear.

A lot of work was required to bring the property up to a reasonable standard of décor after

they left. There was nothing done by the parties during the marriage which would have

added any real additional value to the property.

[102] At the time of the kitchen renovation the parties were living in the Aberdeen

Property. The pursuer continued to do so until the relevant date and thereafter until she

moved to a rented property. She had the benefit of the renovated kitchen for that period of

time. The renovation was paid for from matrimonial funds and was used for matrimonial

purposes. In these circumstances she has not suffered a disadvantage in respect of the

kitchen of which account should be taken under section 9(1)(b)

Interest on mortgage secured over Aberdeen Property

[103] After the relevant date the defender continued to pay the interest on the Intelligent

Finance mortgage secured over the Aberdeen Property and used to finance the Italian

Property. He continued to do so until he sold the Aberdeen Property in 2013.

[104] The defender claimed half of the interest paid after the relevant date under section

9(1)(b).

[105] There was a factual dispute between the parties as to the amount of interest paid

after the relevant date. The defender submitted to the court a schedule of matrimonial

Page 35 ⇓

property which stated the amount as being £38,572.22 and as being based on mortgage

statements. The pursuer submitted that the amount was £15,209.84. As the mortgage

statements vouch the figure given by the pursuer and not that given by the defender, I find

that the amount of interest paid by the defender on the mortgage between the relevant date

and the sale of the Aberdeen Property was £15,209.84. Accordingly half of the interest

would have been £7,605.

[106] Section 9(1)(b) provides that fair account should be taken of any economic advantage

derived by either person from contributions by the other, and of any economic disadvantage

suffered by either person in the interests of the other person. The defender did not sell the

Aberdeen Property until June 2013, some 4 years after the relevant date. Nor did he rent the

Aberdeen Property during that period. Had the defender sold the Aberdeen Property as

soon as practicable after the relevant date then the interest incurred after the relevant date

would have been negligible. Had he rented the property out the total of the rental payments

could reasonably be expected to have been more than the interest. The property had been

rented out for £400 a month in 2007, and most of the monthly interest payments were less

than that. The figure of £7,605 is not significant in the context of the parties’ financial

dealings. In any event, the pursuer too has made interest payments after the relevant date in

respect of borrowings used for the Italian Property and secured over her non-matrimonial

Kew Property so in the interests of fairness these would also have to be taken into account

and set off, thus reducing the £7,605 figure further. In these circumstances, in my opinion it

would be fair for the £7,605 not to be taken into account.

Page 36 ⇓

Kew

[107] The house at Kew is not matrimonial property. The pursuer owned the house before

her marriage to the defender.

[108] The parties were in dispute as to funds expended on renovation works on the

Kew House. The works were undertaken in 2008-9. The pursuer’s position was that around

£97,000 was spent – this comprised £70,000 from a mortgage from Birmingham Midshires

and £27,000 from the joint Bank of Scotland account.

[109] The defender’s position was that the cost of the renovation was £131,468, comprising

£130,058.22 before the relevant date and a further £1,409.90 thereafter. The defender’s

position was that this had all come from joint funds, and so he contributed half of the

construction costs, ie £65,734.

[110] I accept the evidence of the defender as to the cost of these works. The defender had

been personally involved in managing the renovation project, and produced detailed

vouching of the costs.

[111] On the other hand, I accept the evidence of the pursuer on how these works were

funded. Her evidence that they were funded as to £70,000 from further borrowing from the

Birmingham Midshires is vouched by a mortgage statement from Birmingham Midshires

showing an additional loan being made on 3 July 2008 and the statements from the parties’

joint HSBC bank account showing the £70,000 being paid in to that account.

[112] The pursuer accepted that about £70,000 was spent from the Birmingham Midshires

mortgage on renovating the Kew property and that accordingly £70,000 of the balance of the

loan at the relevant date should be left out of account. I shall give effect to this by reducing

the loan from £146,499 to £76,499.

Page 37 ⇓

[113] As the total construction cost was approximately £132,000, then once the £70,000 loan

is deducted that leaves the remainder of the construction cost as £62,000. As that £62,000

came from joint matrimonial property and was spent on a property owned solely by the

pursuer, half of that figure (ie £31,000) represents an economic disadvantage which the

defender suffered in the interests of the pursuer.

Rents of non matrimonial property

[114] The pursuer submitted that both parties rented out their non-matrimonial property

for periods during the marriage. They both benefitted from the income generated. There

was no economic advantage or disadvantage as a result.

[115] The defender sought a one half share of the rental income of the pursuer’s

non-matrimonial property during the marriage. He estimated the rental income of the Kew

Property as £2,000 a month for 8 years, and sought one half of this being £96,000. He

estimated the rental income of the Goswell Road Property as £2,000 a month for 17 years,

and sought one sixth of this being £68,000. He also sought one half of the rental income of

the Milan flat during the marriage, but did not quantify this. However, the Aberdeen

Property had been rented out while they were abroad between 2001 and 2004, and part of

the property was let out from their return to 2007.

[116] I will make no adjustment under section 9(1)(b) for the rents for the Goswell Road

property because these relate to the dispute as to the nature of the property investment

(see paragraph [38] above). I will make no adjustment for rents from the Milan flat. Any

advantage derived by the pursuer was not from the contribution of the defender but from

the gifting of the flat by the pursuer’s mother.

Page 38 ⇓

[117] That leaves the Kew Property rents. So what we are left with is that rents have been

generated by both the pursuer’s property in Kew and the defender’s property at Aberdeen.

I am required by section 9(1)(b) to take fair account of any economic advantage derived by

either person from contributions from the other, and of any economic disadvantage suffered

in the interests of the other person. During the marriage rents have been generated from

properties owned by each of the parties. Taking a broad brush view, I find that there is no

overall advantage or disadvantage to either party and that it is fair that no adjustment is

made in respect of the rents from either.

Gifts from the pursuer’s uncle

2001 gift

[118] The parties were in dispute as to whether the pursuer had received a gift of €50,000

from her uncle in April 2001.

[119] The evidence the pursuer and the uncle gave was that there was no such gift.

[120] The defender’s position was that there had been such gift. The only evidence he

produced to support his position was a file-note of a meeting between parties solicitors on

17 June 2011. That file note was taken by the pursuer’s solicitors. The meeting was for the

purpose of the litigation and numerous aspects of the parties’ financial affairs were

discussed. The note states:

[121]

“My father opened an account in Switzerland in 2001, as her father lives there. The

account was named ‘Red Geese’ for simplicity, as my client had started a company

named ‘Red Geese Consulting’. The account was started with around 50,000 €,

which was a gift from her uncle.”

I find that there was no such gift. The only evidence for its existence is the file note,

which is not a record of the gift but merely a record of a discussion between the parties’

solicitors during the course of this litigation. The note is clearly mistaken. Bank statements

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for the Swiss bank account were lodged and these showed that the account was not opened

with such a payment. I accept the evidence of the uncle.

2007 gift

[122] The parties were in dispute about whether a gift of €50,000 from the pursuer’s uncle

in 2007 was a gift to both of the parties or to the pursuer only.

[123] The defender’s position was that the gift of €50,000 from the pursuer’s uncle was a

joint gift to both the pursuer and the defender. He remembered writing to the pursuer’s

uncle to thank him for it. He claimed that the pursuer had made up a fictitious story about

the loan from her father as a means of getting back the gift from the uncle.

[124] The pursuer’s position was that it was given to her alone and that she applied it to

the Italian Property.

[125] The uncle gave affidavit evidence that the gift was intended to benefit the pursuer

only and was not intended as a joint gift to the pursuer and defender. He explained that the

context was an ante-mortem distribution of the estate amongst various members of his

family. He produced vouching showing that the gift was made in 2007 and that at the

pursuer’s request it was paid into her father’s Swiss bank account.

[126] I accept the evidence of the uncle that the gift was to the pursuer only. His position

was supported by the email trail regarding payment to the pursuer and making no reference

to the defender. Accordingly I shall make a deduction to reflect the pursuer’s sharing of the

gift to her from the uncle.

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Dissipation

[127] As indicated above (paragraph [6]), the defender’s general position was that from

even before the parties became engaged the pursuer had been taking action to utilise his

assets for her advantage. He made particular claims in respect of Brunei and the USA, and

the build cost of the Italian property.

Brunei and USA

[128] The defender makes a claim under section 10 that the pursuer appropriated and

dissipated $211,041 during their time in the United States of America and €230,000 during

their time in Brunei. He calculated these figures on the basis that the pursuer had

substantial earnings in Dubai and the United States and that the parties should have been

able to make significant savings when they were living there. However, there was no

independent evidence of her having earnings of the amount which he claimed, and the

independent evidence of her tax returns and bank accounts supported her evidence that she

earned much less (see paragraph [165] and [166]). I do not find it proved that the pursuer

appropriated these sums.

[129] The defender gave evidence that the pursuer took suitcase loads of money to

Switzerland. There is no basis in other evidence for this. The Swiss bank account statements

have been analysed by expert accountants for both the pursuer and the defender and neither

found any unexplained cash deposits. I accept the pursuer’s position, supported by the

reports from Mr Miller and Mr McGregor referred to below, that the funds from Brunei

were mainly used for the purchase of the Italian Property and the remaining balance was in

the Credit Suisse accounts at the date of separation.

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[130] Accordingly I find that there was no dissipation in respect of the parties’ earnings in

Dubai and the USA.

Italian Property

[131] The pursuer also seeks to be compensated under section 10(6)(c) for a discrepancy

between the funds sent abroad and the expenditure for the construction of the Italian house.

[132] The financing of the construction of the Italian house was a complex matter, as the

parties used various sources of funds. The sources included monies from joint bank

accounts, monies from non-matrimonial assets and loans from family members. In tracing

the funds through the various bank accounts, the court has had the invaluable assistance of

expert accounting evidence on both sides. The pursuer’s expert was Brian William Miller, a

chartered accountant since 2007 and Director of Forensic Accounting at Henderson Loggie

Chartered Accountants. The defender’s expert was Robin McGregor, a qualified solicitor

and chartered accountant at Christie Griffith. Both accountants produced initial reports, and

then further reports having considered each others. They then met. As a result of this, they

were in agreement apart from in relation to three matters. They are both to be commended

for their painstaking and detailed work in analysing numerous entries in a very large

number of bank statements relating to the entire period of the parties’ marriage, and for the

constructive way in which they each engaged with each other’s work in advance of the proof

in order to narrow the issues.

[133] The experts examined the payment trail of funds sent abroad up to the relevant date

and compared it against the amount spent on the Italian Property.

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[134] The defender’s expert Mr McGregor found a discrepancy of €163,159. Counsel for

the defender submitted that there was dissipation of this sum within the meaning of section

10 as interpreted in EP or G v GG [2016] CSOH 32 2016 Fam L R 30.

[135] On the other hand, the pursuer’s expert Mr Miller reconciled almost all the payments

and was left with an unexplained amount of €3,746. That sum is de minimis in the context of

the financial dealings of the parties, and so for all intents and purposes Mr Miller’s

conclusion can be taken to have been that that there was no significant discrepancy between

the amounts remitted abroad and the amount spent on the Italian Property, and therefore no

dissipation.

[136] There were 3 components to the discrepancy of €163,159 found by Mr McGregor.

€50,000 gift from pursuer’s uncle

[137] The first component was in respect of €50,000 and related to the gift from the

pursuer’s uncle in 2001. Both experts recognised that this component was a matter of fact to

be determined by the court. If the court accepted the defender’s position that there was such

gift then there was a discrepancy of €50,000. If the court accepted the pursuer’s position that

there was no such gift then there was no discrepancy. I have found in paragraph [121] that

there was no such a gift. Accordingly €50,000 of the €163,159 falls away.

£75,000 loan from pursuer’s brother

[138] The second component is in respect of €63,560 which relates to the loans from the

defender’s brother discussed in paragraph [57] ff. Again both experts recognised that this

component too was a matter of fact. The pursuer’s position was that there was such a loan

of £75,000 (including interest) and that that the repayment in 2004 was achieved in part by

Page 43 ⇓

the pursuer’s father making a payment to the defender’s brother’s conveyancing solicitor.

That gave rise to what was in effect a short term loan by the father to the pursuer of the

amount which he had paid the solicitor. The father was repaid with part of the proceeds of

an additional borrowing of £45,000 on the existing mortgage with Northern Rock on 31

October 2005. The pursuer’s expert’s view was that this resulted in a double count in the

defender’s calculation of the discrepancy as the funds were not applied to the Italian

Property but instead were used to repay a loan to the pursuer’s father. The defender’s

expert agreed that if the pursuer’s position were factually correct then there would be a

double count. However, his opinion was based on his instructions that the defender’s

position is that there was no loan repayment to the defender’s brother, in which case the

sum was properly included and there was no double counting. I have found in

paragraph [65] that there was such a loan and it was repaid in part by the pursuer’s father.

Accordingly a further €63,560 of the €163,159 discrepancy falls away.

Build costs of the Italian Property

[139] The third component is €37,175 in respect of the costs of the Italian Property up to the

relevant date. The pursuer’s position is that they amounted to €1,183,351 and the defender’s

that they amounted to €1,146,176, the difference being €37,175. Again this is a matter of fact:

if the pursuer’s position is correct there is no discrepancy.

[140] In the initial stages of the project, until the parties opened a joint bank account in

Italy, payments for the Italian property project were organised through the pursuer’s father,

who provided account of what had been spent. I found him to be a credible and reliable

witness and I accept these accounts as accurate. Thereafter, payments were made through

the joint Italian bank account and vouched by the bank statements. The pursuer provided a

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detailed analysis of the costs incurred and what they were incurred for. I accept the

evidence of the pursuer on the costs. She, either herself or through her father, was the

person managing the project. She was able to specify the precise item of construction cost

on which each payment had been spent. There was no evidence that any payment had been

spent other than on the specified item.

[141] Accordingly I accept the pursuer’s figure for the build cost of €1,183,351. The

consequence of that is that a further €37,175 of the €163,159 euro discrepancy falls away.

Conclusion on discrepancy

[142] Once these three components fall away, the discrepancy is reduced to €8,678.

Mr Miller was unable to precisely establish the composition of this remainder, but believed

that it was immaterial in the context of the case and may have arisen because of differences

in methodology between him and Mr McGregor. In terms of section 10 I have to consider

whether departure from equal sharing is fair in circumstances. In my opinion a potential

discrepancy of this relatively small amount does not justify a finding that there has been

dissipation.

Italian Property maintenance and rental income after the relevant date

[143] The defender claimed one half of the rental income of the Italian property after the

relevant date. He claimed that the property had been let. On an occasion when he had

visited the property it had been occupied by a family on holiday. He quantified his claim on

the basis of the property being let for 16 weeks a year for 8 years at a rent of £2,500 a week.

That gave a total of £320,000, of which his one half claim was £160,000.

Page 45 ⇓

[144] The pursuer’s evidence was that there had been some lettings of the property as a

holiday destination. However, she stopped letting it out as the uncertainty caused by this

litigation meant that she did not want to take bookings which might not be honoured. She

produced bank statements from the Unicredit account ending 104 showing receipt of rents

and the receipt and return of deposits.

[145] I prefer the evidence of the pursuer on this matter. The family on holiday was one of

the lettings which was vouched by the bank statements. There is no basis in evidence for

any lettings beyond those in the bank statements. The defender’s quantification was

speculative and was based not on evidence but on an unwarranted assumption that the

property was let out for lengthy periods.

[146] The pursuer claimed that she had suffered an economic disadvantage in respect of

maintenance costs of the Italian property from the relevant date. She claimed £22,900 in

respect of an accounting for these costs. I accept the evidence of the pursuer on this matter.

Her claim was vouched by the bank statements for the Unicredit account ending 104 from

the relevant date and an analysis by her of these bank statements showing the payments

made in to the bank account by each party and the maintenance costs. The defender

accepted in evidence that he had made a payment into the account in respect of the Italian

property after the relevant date. That was a payment of €10,000 in September 2009. No

payment was made by him into the account thereafter. The accounts show that

subsequently the pursuer has been regularly making payments into the account when the

balance had been depleted by maintenance costs. It is self-evident that a house requires to

be maintained and utility bills and other maintenance costs met. The defender is joint owner

of the property and requires to meet his share of the maintenance.

Page 46 ⇓

Sale of defender’s shares in the Shell Sharesave Scheme

[147] The defender claims in respect of shares owned by him in the Shell Sharesave

Scheme and sold during the marriage and shortly after the relevant date. He claims the sum

of £121,000, as being the approximate value of the shares less the amount that they were

cashed in for. He makes his claim under section 10(6)(c) on the basis that there has been an

alienation of property.

[148] The defender participated in a sharesave scheme with his employer Shell. His

position was that he would never have cashed his shares in as they were valuable, secure

and produced fantastic dividends. His position was that he had participated in three

tranches. The first from 1992 to 1996 would by now be worth well over £250,000, but these

must have been sold by the pursuer. The second was from 1997 to 2002. 5669 shares were

sold in three tranches: 5214 on 26 May 2004 for £20,591; 343 on 20 July 2005 for £1,770 and

112 in March 2009. If they had been retained they would have been worth £85,998 at the

relevant date and £121,600 at 17 October 2016, the date of his affidavit. The third tranche

was from 2002 to 2006 and had been sold by the pursuer without his knowledge or

approval. Further, there were 1202 US sharesave shares sold on 20 May 2004 for the dollar

equivalent of £4,734 which would have been worth £18,234 at the relevant date and £25,782

at the date of his affidavit. There were 43 Eurosharesave shares sold for £1674 on 27 October

2003 which would have been worth £652 at the relevant date and £922.35 at the date of his

affidavit.

[149] The pursuer’s position in relation to the first tranche was that that there was no

evidence of the defender having these shares. I accept the pursuer’s position. There was no

independent evidence from documents or other third party witnesses that the defender had

these. There was no such evidence that they had been sold during the marriage, nor that the

Page 47 ⇓

proceeds had been received into any bank account. Indeed the only relevant documentary

evidence pointed to the opposite conclusion: the interest in the Sharesave Scheme was not

listed as an asset of the defender in the very detailed division of the assets of the defender

and his former wife in their formal separation agreement entered into on 30 October 1996.

[150] The pursuer accepted that the shares in the other tranches had been sold. Her

position was that they had been sold with the consent of the defender to finance the Italian

Property.

[151] In support of his contention that the pursuer had sold the shares without his consent,

the defender drew attention to a series of emails in January 2004 relating to the need for the

defender to withdraw from one aspect of the Shell scheme, ie the Global Employee Share

Purchase Plan, because of a re-organisation.

[152] On 8 January Sam Clark, the person within Shell dealing with this, emailed the

pursuer saying inter alia:

“Further to previous emails from Christine Duthie and Ken Edmends with regard to

the recent Circular form the GESPP Plan owner about the need for Participants in

non-Participating Countries to withdraw from the Plan. We do not have a record of

you contacting us or we are still awaiting your decision/paperwork and bank

details”

The email went on to ask the defender to choose between the options of a refund of

contributions or sale of the shares, and asked him to send bank information. The defender

replied by email on 16 January 2004 giving bank details and stating:

“However, please confirm if I had made a decision as to what to do, i.e. a

contribution refund OR to sell the shares. If this decision has not been executed

please let me know straight away, without you acting on it, and I will get back to you

by return as to my (new) decision. This is obviously in the light of what has

happened to the Shell share price over the last week and thus wish to make the right

financial decision”

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Sam Clark emailed back the same day stating “Unfortunately the shares have already been

sold. Amount is €1674.14 coming to you”. Later that day the defender forwarded that reply

to the pursuer with the message “FYI” meaning “For your information”.

[153] The defender’s position was that he would never had sold the shares as they were

such a good investment and the pursuer must have sold them. He should have raised this

with her at the time of the emails, but did not do so until after separation.

[154] The pursuer on the other hand submitted that there was no evidence that the pursuer

was involved in the sale at all. The most likely interpretation of the emails was the share

price had changed and the defender was trying to review his previous decision to sell.

Another interpretation was that he had simply forgotten that he had previously instructed

the sale.

[155] In my opinion the defender has not established that the pursuer sold these shares

without his consent. No matter how good an investment the shares might have been, it

would not have been possible for the defender to keep the shares as he was no longer

eligible to participate in that particular scheme. The email correspondence with Sam Clark

is inconclusive one way or the other as it can be interpreted in different ways. The defender

has produced no documentary evidence as to by whom or when the sale was instructed. He

made no complaint to the pursuer at the time about her selling the shares without his

consent: the email to her is merely sent for her information.

[156] In my opinion, the sale of the second and third tranches must be seen in the context

of the parties’ joint Italian property project. The timing of the sales is consistent with the

timing of the project. The proceeds of the sales were used to fund the Italian property

project. The defender has acknowledged that he cashed in certain of his pre-marital

investments in order to finance the Italian property: he gave oral evidence that this was the

Page 49 ⇓

case in relation to a Virgin Personal Equity Plan. The defender is joint owner of the Italian

Property and will share in the proceeds when it is sold. In these circumstances I find that

there has been no alienation of the shares. All that has happened is that they have been

cashed in and applied to the purchase of matrimonial property, as part of a construction

project being undertaken willingly by both parties to the marriage.

[157] As I have found that there was no alienation, it is not necessary for me to come to a

finding on the dispute between the parties on quantification in relation to the shares sold in

2004 and 2005. However, as I heard evidence on this I set out what my view would have

been had I found that alienation had occurred. The quantification set out by the defender in

respect of the shares sold in 2004 and 2005 failed to take proper account the effect on share

prices of the restructuring of Shell and Royal Dutch Petroleum in 2005. I accept the evidence

of Dr Pollock that if the shares had been retained they would have had a value at the

relevant date of £30,541. As they were sold for £27,096 the defender’s loss as at the relevant

date would have been £3,445.

Use of pre-marriage property

[158] Both parties accepted that there should be an adjustment under section 9(1)(b) for the

application of their pre-marriage property for joint purposes, as there had been an economic

disadvantage to one and an advantage to the other. However they disagreed on how much

that adjustment should be.

[159] The pursuer sought an adjustment in respect of her pre-marriage property totalling

£56,867. This comprised £14,499 in respect of Phoenix Life, £7919 in respect of Phoenix life

compensation for a pre-marriage event, £7,109 for Lincoln National Investment, £8,500 for a

Page 50 ⇓

Virgin Maxi ISA, £7,167 for a Vanguard 500 Index Fund, £2,020 for Alliance and Leicester

shares and £9,653 for Tate and Lyle shares.

[160] The defender sought an adjustment in relation to his pre-marriage property totalling

£64,500. This was the value of the savings and investments belonging to him in terms of the

formal separation agreement from his former wife in 1996. His position was that he had not

realised these items prior to his re-marriage to the pursuer. The pursuer did not accept this

figure. She argued that there was no proof that the assets listed in the separation agreement

still belonged to the defender at the start of their marriage. She calculated the adjustment as

amounting to £31,253. This comprised £13,945 in relation to a Virgin PEP, £7,558 in relation

to a Legal and General policy and £9,750 being the balance of the Sharesave account. I

accept the evidence of the defender as to the figure of £64,500. The separation agreement is

compelling evidence that these assets belonged to the defender in 1996. Between 1996 and

his marriage to the pursuer in 2000 the defender was in well-paid employment and would

not have needed to sell off these assets and there was no evidence that he had done so.

[161] Section 9(1)(b) provides that fair account should be taken of any economic advantage

derived by either person from contributions by the other, and of any economic disadvantage

suffered by either person in the interests of the other person. These pre-matrimonial assets

of both parties were, in the main, cashed in to fund the Italian property project. That was a

joint project which both parties had embarked on and both wanted to undertake. That

project, which they both agreed on. It required to be financed and they both put pre-

marriage assets towards that financing. The completed project was matrimonial property

and jointly owned by them. Further, any disadvantage or advantage was minor. The

pursuer contributed £56,867 of pre-marriage assets and the defender £64,500. When these

figures are set off against each other, the difference between them is not significant in the

Page 51 ⇓

context of the costs of the project or the parties’ overall financial dealings. In my opinion, in

these circumstances fairness will be achieved by making no adjustment in respect of either

party.

Loss of salary and pension rights

[162] The defender’s position was that he had changed his career path within his

employer, Shell, in the interests of the pursuer and his family and had therefore suffered an

economic disadvantage. He sought £223,092 in respect of loss of income resulting from the

change and £844,600 in respect of loss of pension rights.

[163] In order to set the evidence on this matter in its context, I require to firstly set out the

employment history of the parties during the marriage.

[164] When the parties first met, the pursuer was working with an international company

in the USA. She had worked with them in the UK since 1989 and had moved to the

United States on secondment in 1996. She was offered a permanent position in the United

States, but took redundancy in order to return to the United Kingdom to be with the

defender. At that time the defender worked for Shell in Aberdeen. After spending around a

year in London, the pursuer moved to Aberdeen in February 2000, when she worked for a

company related to the oil industry at a salary of £60,000, with no pension provision. At that

time, the defender was working for Shell as a well engineer at job level group four.

[165] In January 2001, the defender was posted by Shell to Brunei for a four year role. The

pursuer gave up her job and moved to Brunei with him. She found employment through a

local manpower agency at a rate of £600 per day less an agency percentage. Her evidence

was that she worked for a total of about 120 days during their stay in Brunei, and the agency

Page 52 ⇓

paid her wages in to the HSBC Brunei account in Brunei dollars. The defender’s evidence is

that she was paid in cash or cheques and her earnings were substantially more as she only

paid a fraction of the cheques into the bank. I accept her evidence on her earnings in Brunei

as it is vouched by bank statements. At that time the pursuer’s salary was in the range of

£65,000 per annum, paid in local currency tax free, together with free accommodation and

travel allowance.

[166] In August 2002, the defender took up a position with Shell in the United States of

America. The pursuer gave up her contracting job in Brunei and moved to the USA with

him. In the USA the pursuer set up a consulting company. Her evidence was that during

their time in the USA the company made a tax loss of $9,242.09. I accept her evidence on her

earnings during this period as it is vouched by her tax returns. In August 2004, the defender

took up a new role working for Shell in Aberdeen, still as a well engineer. The parties

returned to live in Aberdeen, and the pursuer started a career with Shell in November 2004.

[167] Towards the end of 2008, both parties were looking for new job opportunities within

Shell. The pursuer applied for a role as Commercial Manager in Rome, Italy. She was

offered the role but declined it as it was offered on local rather than expatriate terms. She

remained in Aberdeen. The defender applied for and obtained a role as a “Game Changer”

in the Netherlands, starting work there in February 2009. The parties separated on 4 April

2009. The pursuer remained in Aberdeen. In January 2010 she was promoted to Business

Improvement Manager and remained in that role until she was made redundant in October

2014. The pursuer worked in the Netherlands in the Game Changer position until he left

Shell in 2015.

[168] The defender’s claim under this heading arose from the circumstances in which the

defender took up the job as Game Changer in the Netherlands in 2009. The defender’s

Page 53 ⇓

position was that if a couple both worked abroad for Shell, you could allocate one as the

main carer and the other as the breadwinner. This allowed additional benefits to flow to the

breadwinner as it led to enhanced ratings being applied to pension benefits and salary.

However, the downside was that for the carer the speed of career progression and rate of

pension benefit multipliers would be stunted. His evidence was that the carer role was

changed to the defender to allow the pursuer to take on a job in Rome.

[169] In order to understand the decisions made by the parties at that stage, it is necessary

to have to an understanding of the personnel procedures within Shell. Shell operated a

human resources system whereby all jobs were graded. Jobs were graded in three

categories. The lowest category was designated by numbers on a scale of 10 to 1, with 1

being the highest in the scale. Thus, for example, senior managers would be graded 1 or 2.

The next classification was designated by letter, ranging from C to A, with A being the

highest for a very senior role such as a Country Manager. The third grading was for the

very highest levels and did not have a number or letter classification. In addition to the

relevant grade for the job which the employee was doing at present, each employee was also

graded in respect of their potential career prospects. The grading of their career potential

was called “Current Estimated Potential” (CEP) and was revised every two years. Thus, for

example, a senior manager with a job at grade 1 but who had the potential to progress to

becoming a Country Manager would have a job grade of 1 but a CEP grade of A.

[170] It is also necessary to understand how Shell treats spouses. The defender’s position

was that Shell had a policy that in dual career families, one partner was designated as

having the lead career and was given the career opportunities, and the other partner was

designated as the following career. The defender was insistent that this was the case. The

expert report from Mr Davies was instructed on the basis that this was Shell’s policy. The

Page 54 ⇓

pursuer’s position was that Shell had no such policy. Although various Shell documents

were produced in evidence, none of them contained nor made any reference to anything

which could be construed as such a policy. Indeed, it would be surprising, in the era of sex

equality, that a company would have such a policy. Counsel for the defender submitted that

although it was clear that Shell did not have a policy which forced an employee to adopt a

subsidiary role when his or her partner was also employed by Shell, that was what

happened in this particular case. The strength with which the defender insisted upon the

existence of this policy in his oral evidence reflected badly on his credibility and reliability.

[171] Another important consideration in relation to remuneration of Shell employees is

whether the particular employee has the job on “local” terms or “expatriate” terms. If the

employee is on “local” terms he or she receives the relevant remuneration for that grade of

job. However, if the employee is on expatriate terms, the employee receives an additional

range of benefits which can, depending on family circumstances, include travel allowance,

relocation, free accommodation, tax-free salary et cetera.

[172] Against that background, I turn to look at the circumstances in which the parties

decided to seek new jobs within Shell in late 2008.

[173] At that time, the pursuer was working in a job in job group 2 and her CEP was set at

letter category. In other words, she had the potential to progress to the letter grading of job.

The pursuer’s job in Aberdeen as a well manager was graded at job group 3. At some point

his CEP was reduced from job group 2/1 to 3/4 but there was no independent evidence as to

the reason for the downgrading.

[174] The pursuer’s evidence was that she applied to a role as Commercial Manager in

Rome, Italy. This was attractive as her father and stepmother lived in Rome and would have

been able to help with childcare, and also that it was only an hour away from the Italian

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Property which was under construction. However, she was only offered the job on local

terms. On the other hand, the defender had been offered the job in the Netherlands on

expatriate terms. The pursuer’s position was that both parties agreed that this was

financially untenable and that the defender would go to the Netherlands and she would

remain in the UK. The defender’s position was that the pursuer had already decided to

separate and she deceived the defender into taking the Game Changer job.

[175] I do not accept the evidence of the defender that his move to the Game Changer role

in the Netherlands was him adopting a subsidiary role. At the time when he left Aberdeen,

the pursuer and defender were on a similar salary. The defender’s salary was about £85,000,

which was taxable. His package in Holland was a salary of around £85,000 per annum

tax-free, £16,000 per annum travel allowance and free accommodation. Accordingly his

overall remuneration was increased when he took the Game Changer role.

[176] Nor do I accept his evidence that he was unwilling to move out of well engineering

and into being a Game Changer. The defender’s position on this in the witness box was

extremely unsatisfactory. He contradicted himself, saying at one point that he was quite

happy to leave well engineering, and then shortly afterwards saying that he was reluctant to

leave that discipline. In contemporaneous emails to his superiors he expressed enthusiasm

for the move. In an email dated 10 October 2008 he stated:

“I have noticed the following opportunity that I am very interested in which would

be a good solution. [The Game Changer job in the Netherlands] which I believe

might as well have been written for me…! I would expect that such business

opportunities seldom come up and this would allow me to really shine as I could

fully utilise and further develop my strengths and meet my development

opportunities.”

In an email in February 2009, after he had taken up his new role, he stated:

“I am having an absolute ball here in my new role with a superb team – basically

anything goes! The work is very varied and am certainly in demand by the rest of the

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team due to my background, previous experiences and contacts and certainty able to

contribute already in many areas.”

In the witness box he showed little understanding of the difference between the truth and a

lie, maintaining that what he stated to his superiors was not a lie because he had to say that

it was his perfect job in order to get it.

[177] Further, I note that the alleged disadvantage to the defender arises at a very late

stage in the parties’ time together. The parties were together from their marriage in 2000

until the relevant date on 4 April 2009, a total of around nine years. It was the pursuer who

followed a subsidiary career for much of the time until the defender took up his job in the

Netherlands in February 2009. She followed the defender on his postings to Brunei and the

United States, and in neither of these places was able to obtain employment of a comparable

level to that which she obtained when they settled in Aberdeen in 2004. During their time in

Aberdeen, neither was in a subsidiary role.

[178] Further, the defender has not established that his career has suffered in Shell because

he took the Game Changer role. The defender’s position was that as a result of the move to

the Game Changer role, he lost the opportunity to be promoted. There was conflicting

evidence led as to whether the defender had withdrawn from a course which was a

requirement for promotion, but the defender ultimately accepted in evidence that he had

completed the course. He successfully re-applied for the Game Changer job in 2010. His

position that it was difficult to move back into well engineering from the Game Changer role

is not supported by any independent evidence. In any event in 2015 he left Shell. He has

not established that his departure was caused by him taking the Game Changer role.

[179] Accordingly, I find that the defender has not suffered an economic disadvantage for

the benefit of his family.

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[180] In view of this finding, it is not necessary for me to make a finding on the

quantification of the defender’s loss in respect of that economic disadvantage. However, as I

did hear expert evidence on the matter, I shall deal with briefly with how I would have dealt

with quantification had a disadvantage been established.

[181] The defender submitted that he had suffered a loss of income of £223,092. In support

of this quantification he led evidence from Peter Davies. Mr Davies has a background in

vocational rehabilitation. He is regularly instructed to provide reports in personal injury

and matrimonial cases.

[182] The question which Mr Davies had been instructed to address in his report was “Has

[the defender’s] career been damaged by [the pursuer] taking over his position in Shell as

breadwinner?” Mr Davies concluded that it had and quantified the loss. In his opinion his

projected net earnings to the date of the report in January 2017 had his career not been

damaged were £661, 720. In his opinion he would have earned £223,092 more with Shell

than he actually did. Mr Davies report was based in almost its entirety on information

provided by the defender. It proceeded on the basis that Shell had a policy for married

couples whereby one has the lead career and the other’s career will be subsidiary to that of

the first: my finding as set out above is that there was no such policy. It proceeded on the

basis that had the defender not taken the Game Changer job he would have been promoted

in February 2009. There was no independent evidence from Shell either before the court or

supplied to Mr Davies which established that Shell would have promoted him at that time.

All that can be said is that he had attended a course which was a prerequisite of promotion.

[183] There were a number of difficulties with the approach that Mr Davies took to

quantification of the loss. The first was that he approached the quantification of loss in the

same way as would be done in an award for personal injuries. This is inappropriate for the

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reasons set out by Lady Smith in Coyle v Coyle 2004 FAMLR 2 at paragraph [49]. The second

is that he made various assumptions which had no basis in evidence. For example, he

assumed that the defender would be promoted in 2009 and again in 2010. He himself

volunteered in the witness box that he was not an expert on Shell’s internal salary structure,

and yet he made assumptions about their salary structure by extrapolating from one year’s

information in 2016, and assumptions about where the defender’s salary would sit within

the pay grade. He volunteered in cross-examination that he was speculating. No deduction

was made for any earnings after he left Shell as he (and indeed the court) had no

information as to what earnings he had then. In these circumstances I would not have been

satisfied that the defender had proved the quantification of his loss of salary.

[184] The defender claimed loss of pension rights in the sum of £844,600. In support of his

quantification he led expert evidence from Dr Pollock. Dr Pollock was asked to consider the

additional value of pension rights that would have been accrued by the defender had he not

restricted the level of his career to support his wife during the marriage. Dr Pollock

calculated two periods of pension loss. The first was for the period from the date of

marriage to the relevant date and amounted to £237,300. The second was from the relevant

date until retirement at 60 and amounted to £607,300. These calculations were based on the

factual scenario and figures in Mr Davies report. As I have not accepted the factual scenario

or figures in Mr Davies’ report, it follows that I would not have been satisfied that the

defender had proved his quantification of pension loss.

Section 9(1)(c) capital contribution for children’s school fees etc

[185] I was informed that the pursuer and the defender were litigating in Aberdeen Sheriff

Court about aliment for the children.

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[186] In the present case, the pursuer sought a capital sum of £105,000. That was

calculated on the basis of it being half the amount to be spent on the children until each of

them reaches 16. The school fees for both children amount to £53,000 per annum. Her

evidence was that additional holiday childcare, clothing entertainment and other expenses

amount to a further £7,000 per annum. That gave a total of £60,000 per annum until the son

was 16, and £30,000 per annum when the son was over 16 and the daughter was under

£16,000. That gave a total of £210,000. The pursuer’s position was that she was using capital

to fund this and was receiving no assistance from the defender so it was reasonable that part

of the matrimonial capital be set aside for application to the defender’s £105,000 share of

these costs.

[187] This court granted residence to the pursuer from 2014, initially on an interim basis.

Prior to 2014, the children had been living with the pursuer in the Aberdeen area. They

attended local schools in the area which catered for the son’s dyslexia and behavioural

problems. In 2014 the pursuer and the children moved to Chester as the pursuer had

obtained employment in Wales. The children went to local schools. In 2015 the pursuer left

that employment and set up her own consultancy business. She obtained consultancy work

in Switzerland and commuted from Chester to Switzerland, returning on Thursday nights to

spend the weekends with the children. The children attended local schools and were looked

after by a nanny. The pursuer was of the view that the local schools did not adequately

cater for the son’s special needs. The pursuer wished the children to attend a boarding

school in Wales which caters for special needs. The daughter wished to attend the same

school as her brother. The children were offered a place at the boarding school in July 2016.

The defender did not agree to them going to the boarding school and did not agree to pay a

share of the school fees. By that time, the defender had stopped working for Shell in

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September 2015 and had no income. The pursuer wished the children to go to the boarding

school and they are now at the school, with the fees being paid by the pursuer. It appears

that both children are happy at the boarding school.

[188] The principle set out in section 9(1)(c) of the 1985 Act is that the economic burden of

caring for the children should be divided fairly between the parties. In the current case, the

children were educated in the state system while parties lived together and indeed for

7 years from the date of separation. The children moved to boarding school in accordance

with the wishes of the pursuer and against the wishes of the defender. Immediately prior to

the move to boarding school the pursuer was commuting weekly to Switzerland and the

children were being looked after at home by a nanny during her absence. There was no

independent evidence that the son’s special needs could not have been met in the state

sector. In these circumstances in my opinion it would not be fair for the defender to be

required to meet boarding school fees through the ordering of a capital sum. The other

elements of the capital sum sought relate to the children’s normal day to day living

expenses which can properly be dealt with in the normal way through the Child Support

Agency or ( if relevant) in the sheriff court action, and do not justify a capital award.

Summary on matrimonial property

In the light of the above, I summarise the parties’ positions as follows:

JOINT PURSUER DEFENDER

Shell Pension

HSBC account

Bank of Scotland joint account

Total of HSBC and Bof S joint accounts

UniCredit ending 104

UniCredit ending 232

34,411

9,385

43,796

19,686

21,379

125,565

13,148

9,843

16,986

295,439

30,647

9,843

4,393

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Credit Suisse ending 42-2

Credit Suisse ending 780

Intesa Sanpaolo

TD Ameritrade

Halifax ending 545

Credit Suisse ending 1-45

ABN AMRO ending 084

IF savings account

Halifax Shell Sharesave ending 946

Shell Share Options

Baronsmead VCT

Rents for Goswell Road

99 Shell US shares

108 Shell UK shares

Barclays Endowment

Loan due to defender’s brother and

sister-in-law

Barclaycard

IF mortgage over Aberdeen house

Loan from pursuer’s father

Pursuer’s sharing of gift from uncle

Mortgage over Kew house

14,169

35,418

1,516

3,085

12,016

7,085

9,699

35,418

9,750

2,000

14,446

1,218

(10,000) (5,000)

(45,557)

(76,499)

89,162

7,085

6,709

29,950

9,750

3,980

1,652

3,776

(5,000)

(4,188)

(346,985)

47,051

[189] Adding the figures from the table for the pursuer and defender gives a total of

£136,213. Half of that is £68,106. From that there falls to be deducted the defender’s

property of £47,051 and repayment of the half share of the loan from the defender’s brother

of £5,000. That leaves a balance of £16,055 due by the pursuer to the defender.

[190] The following further adjustments then require to be made:

Pursuer’s contribution to Aberdeen

Property

Defender’s contribution to Kew Property

Pursuer’s contribution to maintenance

costs of Italian property after the

relevant date

PURSUER DEFENDER

25,000

22,900

31,000

47,900

31,000

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[191] When the totals in the above table are balanced off against each other, there is an

imbalance of £16,900 in favour of the pursuer.

[192] When the £16,900 in favour of the pursuer is deducted from the previous total of

£16,055 due by the pursuer, the balance is £845 in favour of the pursuer.

[193] The balance of £845 is de minimis. Accordingly, I find that no payment of a capital

sum is due to or from either party.

Fairness of proposed financial provision

[194] I have considered whether the above result would be a fair one in the light of the

circumstances and the parties’ current financial position. In my opinion it would.

[195] The complexity of the parties’ financial affairs is the result of their joint decision to

undertake the Italian Property project. Had they not done so, their financial affairs would

have been relatively straightforward. They would have had various investments which they

made pre-marriage, their houses at Aberdeen and Kew respectively, and their matrimonial

property. Their joint decision to undertake the Italian project required to be financed. They

did not have sufficient free cash for this. Therefore they had to use their various

investments, assets and properties, either by cashing them in or by increasing the borrowing

secured on them. They also had to borrow money from family members on both sides of

the family. Very substantial funds were realised through such means, and applied to the

Italian project. This process was managed by the pursuer. Due to the complexity of this

financing, and the large sums of money involved, it is understandable that the defender

found it difficult to understand where the money had gone, how little of the parties’

previous assets remained and how much the borrowing secured over their UK assets had

increased. The Italian property has required to be maintained since the relevant date. The

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Italian property is now to be sold with each party being entitled to a one half share. In my

opinion this gives a fair result. The parties agreed to undertake the Italian project and they

will share in the proceeds of it.

[196] I also require to consider whether the proposed financial provision is reasonable

having regard to the parties resources or whether the award should be reduced on the basis

of the paying parties’ resources.

[197] Both parties have limited resources.

[198] The pursuer is in employment. Since the relevant date she has bought and sold

various heritable properties and financed this by mortgages over these properties and over

her Kew property. In addition to the Kew and Milan properties, and her interest (if any) in

the Goswell Road property she has two mortgaged properties in Chester, one of which she

lives in and the other is let out. She has calculated her total net worth (not including the

Italian Property or the Milan property and on the assumption she had a one third share of

the Goswell Road property) as at 24 May 2017 as being a negative figure of £45,535.

[199] The defender is not in employment. The net proceeds he received from sale of the

Aberdeen Property (after repayment of the mortgage secured over it for the purposes of the

Italian property project and other expenses) amounted to around £25,000. He has no

heritable property other than the Italian property and his interest (if any) in the Goswell

Road property. He lives with his father in a house owned by his father.

[200] As no capital award is to be made in favour of either party, the financial provision is

to be met in its entirety from the proceeds of the sale of the Italian property.

The pursuer valued the Italian property at €850,000 and the defender valued it at €1.55m

(£1,350,000). The true value of the property will be determined by the sale price.

Page 64 ⇓

[201] In my opinion the financial provision will be a fair one in all the circumstances of the

case.

Order

[202] Accordingly, I shall:

(1) uphold the pursuer’s first plea in law and grant decree of divorce;

(2) uphold the pursuer’s fourth plea in law and repel the defender’s fifth plea in

law and grant an order for sale of the Italian property and contents (other

than the desk owned by the pursuer) and make directions as to the proceeds

of sale;

(3) repel the pursuer’s fifth plea in law, uphold the pursuer’s seventh plea in law

and the defender’s fourth, sixth and seventh pleas in law and find neither

party liable to pay a capital sum to the other;

(4) make incidental orders to facilitate the closing down of certain bank accounts;

(5) reserve all questions of expenses (including certification of experts) in the

meantime.