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Cite as: [2020] CSOH 54, [2020] ScotCS CSOH_54, 2020 GWD 25-333, 2020 Fam LR 95

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F1/19

OUTER HOUSE, COURT OF SESSION

[2020] CSOH 54

OPINION OF LADY WISE

In the cause

SCA

against

MMA

Pursuer: Brabender QC, McAlpine; Morton Fraser LLP

Defender: Cheyne; DAC Beachcroft; Levy & McRae

Pursuer

Defender

28 May 2020

Introduction

[1] This is an action of divorce at the instance of the wife pursuer, (“SCA”) against her

husband (“MMA”), in which financial provision is the contentious issue. The parties were

married on 14 February 1989. There are two sons of their marriage, both now adult, one of

whom (“M”) works with his father in the family business. Their other son lives in London

and receives both emotional and financial support from SCA. The agreed date of the

parties’ separation is 14 June 2018; that is the “relevant date” for the purpose of identifying

and quantifying their matrimonial property. The parties continued to live in the same

property for most of these proceedings but the pursuer has now secured rented

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accommodation and the family home is being sold. The issues in dispute between the

parties relate primarily to the value of the matrimonial property and its division.

[2] So far as the merits of the divorce action are concerned, on the basis of the affidavit

and oral evidence led I am satisfied that the marriage has broken down irretrievably and

there is no prospect of reconciliation. MMA consents to decree of divorce. There were eight

days of evidence and a full day for submissions in this case. Affidavits were lodged from all

witnesses other than skilled witnesses who had prepared reports. There was extensive

agreement on the nature, extent and value of much of the matrimonial property and during

the proof certain additional agreements were reached on the value of a number of

properties. I intend to limit this Opinion to dealing with the issues that remained in dispute

and give my decision on each issue with reasons before listing the assets and liabilities of the

parties at the relevant date to reflect those decisions. Where there were issues of credibility

and/or reliability of any witness I will address those in context.

[3] The legal framework within which financial provision on divorce disputes operate is

that contained in the Family Law (Scotland) Act 1985 (“the 1985 Act”). The provisions of

sections 8-16 of the Act are relevant to financial provision on divorce (or dissolution of civil

partnership which is not relevant here). Section 8(2) of the legislation provides that before

making any order for financial provision the court must be satisfied both that it is justified

by the principles listed in section 9 of the Act and reasonable having regard to the parties’

resources. Section 9 has five principles. They relate to both marriage and civil partnership

but as this is a divorce I will restrict any references to that situation. Insofar as relevant to

these divorce proceedings only three principles are directly or indirectly applicable, namely:

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

the parties to the marriage,

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(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,

and

(d) A person who has been dependent to a substantial degree on the other

person should be awarded such financial provision as is reasonable to enable

him to adjust, over a period of not more than three years from the date of

decree of divorce, to the loss of that support on divorce.

[4] The court’s initial task is to conduct a process of identifying the matrimonial

property, which is defined in section 10 (4) as:

“…all the property belonging to the parties or either of them at the relevant date which was

acquired by them or him (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 and plenishings for such

home; or (b) during the marriage but before the relevant date”

Section 10(5) makes clear that the proportion of value of life policies and pensions relative to

the period of the marriage until the relevant date constitute matrimonial property. Once the

value of each item or asset has been determined and a total value calculated, matrimonial

debts must be deducted to achieve a figure for the net value of the matrimonial property.

Matrimonial debts are those of either party and incurred before the marriage if they relate to

matrimonial property or are otherwise incurred during the marriage and “which are

outstanding” at the relevant date. When the calculations are complete, a schedule of

matrimonial property can be drawn up. The court then requires to determine whether the

value of the matrimonial property should be shared equally or in such other proportions as

may be justified by special circumstances [section 9(1)(a), section 10(6)]. Equal sharing is the

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norm and the existence of special circumstances does not inevitably lead to an unequal

division of value – Jacques v Jacques 1997 SC (HL) 20. Section 10(6) includes a non-exhaustive

list of special circumstances that may be taken into account in determining the division of

value, one of which is prayed in aid by the defender in this case, namely:

“...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...”

The issue of division of value is essentially one for the court’s discretion and other decisions

taken at first instance are simply examples that may be of little assistance without a grasp of

the underlying factual matrix. Finally, the last stage is to consider the parties’ present and

foreseeable resources before deciding what order or orders to make. It was agreed at the

submissions stage that there would require to be a further hearing in this case to confirm the

specific orders to be made, including timescale for payment, after the determination in

principle is known. To the extent that valuation of assets was agreed, that agreement is

reflected (together with the figures following determination of the disputed valuation

issues) in the schedule of matrimonial property that appears towards the end of this

opinion.

MMA’s business interests

(i) Background

[5] The most significant and contentious issues at proof related to the value of MMA’s

various business interests. These were held in a number of different types of business entity

from sole trader to partnership to incorporated businesses. First it is useful to summarise

what the evidence established about the historical background to the various business

interests held at the relevant date, something relied on by MMA as special circumstances.

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MMA’s father, (“MLA”), explained in evidence that he had arrived in Scotland as a child in

1945. As an adult he owned and operated fish and chip shops. In 1987 and 1988

respectively he placed the title of two of his commercial properties in Glasgow (in Crookston

Road and Castlemilk Road, the latter of which he had purchased for the sum of £85,000) into

the names of his three sons, MMA, TA and RA. Initially the three brothers ran those together

(as M & Sons Fast Foods) but during the parties’ marriage (1996) MMA and TA purchased

RA’s share because he no longer wanted to be involved in the business. MMA is now the

sole surviving son, TA having died in 2007 and RA in 2018. MLA also formed a property

partnership with his sons MMA and TA. Property in Queen Street and St Vincent Place

Glasgow was held by them as trustees for the firm of Messrs A. The property is now owned

by MLA and MMA as trustees for the firm. MLA gave evidence about the early years of the

fish and chip shop business and also about the property partnership with the defender. He

was a colourful character who was clearly immensely proud of what he and his sons had

achieved. His stated objection to realising his interest in the property of the partnership by

joining with his son in a sale of the heritage was expressed in dramatic terms, declaring that

he would “rise from the ground and choke” any family member who tried to sell the Queen

Street premises if this was attempted after his death. MLA’s loyalty to his son is now

unwavering, although they have had difficulties in their relationship in the past. I conclude

that his evidence on the partnership issue was motivated by a desire to assist his son and his

grandson, the parties’ son M, with whom he sat in court after M gave brief evidence in the

defender’s case. Accordingly, while I accept his evidence about the origins of the business

and property insofar as held with his sons (and now the defender), I reject his evidence that

he would obstruct realisation of partnership assets if there was a reasonable financial

incentive for him and the defender was willing to sell.

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[6] At the time of the parties’ marriage, MMA and his brother TA were already

operating the fish and chip shops. SCA worked in the business as a counter assistant.

During the marriage MMA moved from the fish and chip shop business to the pizzeria

business. Again SCA helped in the business, making pizzas. Over the years restaurant

premises in Glasgow were purchased. MMA and his brother TA set up a holding company,

LVP Limited, for the restaurant businesses, in which they had equal shares and the business

of which they ran together until TA died in 2007. On 21 June 2013 LV(Scotland) Limited, the

new holding company for the restaurant businesses, was incorporated. A few days later, on

26 June 2013, LV(Scotland) Limited acquired the whole share capital of LVP Limited. As

illustrated in a formal agreement (no7/147 of process), MMA acquired the shares of the new

company in exchange for those he had held in LVP. From then the wholly owned subsidiary

companies of the new holding company operated each of the restaurants, five in total

(although Gordon Street was not yet trading) by the relevant date in 2018. As at 14 June

2018, MMA held 998 of the issued ordinary shares in the holding company and SCA held 1

ordinary A share. The parties’ son M held one ordinary B share. The trading companies

which operate LV restaurants are LVSS Limited (Newton Mearns), LVNS Limited

(Bishopbriggs), LVWE Limited (Byres Road), LVGS Limited (George Square) and LVGS

Limited (LVS). The relationship between the holding company and MMA as an individual,

and separately as a partner with his father was relevant to the issue of valuation because

three of the five of the restaurants operate from premises owned by MMA personally, the

fourth, George Square, being owned (save for a small part in St Vincent Place) by him and

his father as trustees for their partnership. The fifth business was not yet trading as at the

relevant date and its heritage was owned by G Limited. Both sides approached the

valuation exercise by instructing commercial surveyors to value the various businesses and

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subsequently asking forensic accountants to value the entities having regard to the

information provided by the commercial surveyors.

[7] During the proof, in a Supplementary Joint Minute of Admissions (no 47 of process)

and a Third Supplementary Joint Minute of Admissions (no 56 of process), the parties

agreed a number of commercial property valuations and also a number of fair maintainable

trade (“FMT”) and fair maintainable operating profit (“FMOP”) figures in respect of some

businesses about which there remained an element of disputed valuation. This narrowed

the scope of the business valuation issues considerably and so I will summarise the evidence

of the expert witnesses only insofar as relevant to the aspects that remained in dispute and

the basis for my conclusion about which evidence on those to prefer.

[8] As indicated, MMA owned a number of commercial properties as an individual at

the relevant date, the value of which was relevant to the overall calculation of matrimonial

property. These are listed in the first Joint Minute of Admissions, No 28 of process and

included the premises operated at Mearns Road (LVSS Limited) and Byres Road (LVWE

Limited) as well as part of premises at St Vincent Place Glasgow connected with property in

Queen Street Glasgow owned by him and his father as trustees for their firm and from

which LVGS Limited operates. Again, the relationship between MMA’s ownership of the

premises from which some of the restaurants operate and the valuation exercise was

relevant.

[9] MMA and SCA have equal (50% each) shareholdings in G Limited, a company which

owns three commercial properties, including the one in Gordon Street, Glasgow, which was

purchased in September 2017 and was being refurbished at the relevant date. By the date of

proof it was operating as a restaurant, LVS by the fifth wholly owned subsidiary mentioned

above. The current value of the parties’ interests in G Limited is relevant because it is

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anticipated that SCA will transfer her shares to her husband at the conclusion of these

proceedings. She had initially been keen to secure a transfer of her husband’s shares in G

Limited, although had indicated her willingness to transfer her interest to him before the

proof commenced. Finally, MMA held 51 of the 102 issued shares of a holding company, S I

(Holdings) Limited, the balance being held by a third party.

(ii) Valuation evidence

[10] Two main witnesses were led in the pursuer’s case on this issue. First, Mr Alan

Creevy, who is an experienced commercial property surveyor having qualified in 1989. He

has undertaken training as an Arbitrator and is a Member of the RICS in Scotland

Chairman’s panel of Experts and Arbiters for hospitability and leisure properties. He has

prepared many expert reports, usually for commercial proceedings involving lending

institutions and has given evidence as an independent skilled witness in such proceedings in

a number of cases in this court. He specialises in the valuation of businesses in the leisure

and hospitality sector and is joint founding director of his firm CDLH Leisure and

Hospitality Surveyors (“CDLH”). He spoke to his detailed report on relevant date values,

no 6/79 of process, and to a subsequent report (no 6/80 of process) on the Gordon Street

premises involving how to split the heritable value from the business if it was maintained on

a lease. He also provided a current date value for Gordon Street, given the likely transfer of

the G Limited shares. His main report lists (at page 7) nine properties that he had valued for

these proceedings as at the relevant date. Two other properties were valued by his

residential property colleague, Steven Toulson, who gave evidence but the value of the

residential property that remained in dispute when he did so was subsequently agreed. For

his valuations, Mr Creevy applied the guidance in the RICS work “Global Standards”,

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commonly known as “The Red Book”. His approach to valuation was set out in detail in his

report, including consideration of market conditions and comparable evidence of actual

sales in the sector. He had valued the restaurants having regard to their trading potential.

He valued the heritable interests of MMA as an individual and as a partner in the firm with

his father. The heritage owned by G Limited was also valued. Having assessed each

business and each heritable property on an individual basis he then considered the nature of

potential purchasers and whether the businesses would be sold individually or as a group.

Finally, he calculated the “lotting premium” that he considered would be paid by a

purchaser acquiring the whole LV (incorporated and unincorporated), although it was not

suggested on behalf of the pursuer in submissions that the figure including such a premium

should be used in the calculation of matrimonial property. For the partnership property,

Mr Creevy assumed that it would be transferred at the value in the accounts, revalued to

market value and sold at that price.

[11] The main issues of difference between Mr Creevy and Mr George Ranachan, a

surveyor instructed by the defender had initially included the calculation of FMT and FMOP

as part of valuing the trading potential of the various restaurants, but prior to Mr Creevy’s

evidence he and Mr Ranachan had met and had agreed these figures for Newton Mearns

and Byres Road and had agreed the FMT (but not FMOP) for George Square, in addition to

agreeing the total value of the Bishopbriggs business. The issue of the appropriate

multiplier to be applied otherwise remained contentious. Mr Creevy had arrived at a

multiplier by use of comparable evidence and taking into account all of the factors outlined

in his first report. He produced revised figures (No 6/187 of process) to reflect the partial

agreement with Mr Ranachan.

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[12] Mr Creevy explained that he and Mr Ranachan had been unable to agree an FMOP

figure for George Square because they disagreed on whether to value it as leasehold or take

account of MMA’s ownership interest, but they had agreed the FMT. The difference

between them was the annual rent payment and so unrelated to any issue of how the

business would be run after sale.

[13] Under cross examination, Mr Creevy reiterated that he considered that someone like

MMA would best maximise price by collapsing the current corporate structure and so

combining his ownership of the heritage and business assets into one, something he had the

power to do for all but possibly the George Square property, held for the partnership with

his father. The witness considered it likely that someone such as MLA, with a family

connection, would agree to sell his “piece of the property” to any proposed sale to maximise

price. He was asked about the comparators he had used in selecting relevant multipliers. He

agreed that three of the transactions related to a business that his firm had been involved in

when asked by the sellers to review market value. He considered this an ideal comparator

as he understood how the valuations had been reached. Mr Creevy agreed also that it was

highly unusual for a group of successful restaurants such as the LV ones to come on the

market as a group. He had experience of this only in a situation where trading figures are

not so good and a group wants to release some of its low earning outlets. An analogy for a

successful group might be a chain of public houses. Mr Creevy had knowledge of such a

group where the valuation involved a multiplier of six times profit but eight times profit

was achieved on sale.

[14] The two main factors that had influenced Mr Creevy’s judgement on multiplier were

location of the businesses and longevity of profitability, with the good quality fit out of all

the restaurants also being relevant. Demand for such well operated restaurants in locations

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such as Byres Road is very high. In this he differed from Mr Ranachan, who, Mr Creevy

said, had focused on a comparator in Cambuslang in fixing his multiplier. Mr Creevy

considered that business to be not nearly as good as the LV restaurants on both location and

longevity of profitability. He confirmed also that he had treated all of the premises as if they

were “freehold” given the absence of any lease arrangements and the identity of the owner,

with the single exception of George Square where a lease was in place. He understood that

this was the same approach Mr Ranachan had taken, other than that for George Square

Mr Ranachan had valued only the leasehold interest. Mr Creevy’s supplementary report

(6/80) took account of the ownership structure.

[15] Greg Rowand CA, a forensic accountant and partner in MHA Henderson Loggie

gave his opinion on the various business entities that took account of Mr Creevy’s

valuations, including the areas of compromise with Mr Ranachan. His initial report

(No 6/39 of process) set out his approach and he updated this to reflect the revised figures in

a subsequent document (no 6/196 of process). Mr Rowand’s curriculum vitae was appended

to his main report. He prepares reports regularly as an independent expert in financial

provision on divorce cases and has given evidence regularly in court over the last twenty

years or so. He has a wealth of experience in valuation of all types of businesses and is a

recognised expert in this field. His main report sets out in detail the material he had

available to him and his valuation approach.

[16] Mr Rowand confirmed that he had relied heavily on Mr Creevy’s specialist

surveyor’s valuation for the restaurant businesses. Like Mr Creevy, Mr Rowand considered

it most likely that MMA would have sold the heritable property of the relevant restaurants,

including George Square, together with the businesses operated there had he sought to

achieve best price at the relevant date. He adopted no 6/196 as part of his evidence, which

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constituted his final valuation. It included a final revised version of his Appendix 15, which

listed all relevant properties and business and their valuation figures. Mr Rowand had seen

a first report (no 7/130 of process) by Alan Robb CA and had prepared an initial comparison

of the two reports (no 6/189 of process) but matters had then moved on following the partial

agreement between the two surveyors.

[17] Under cross examination Mr Rowand disputed that his approach to valuing the

restaurant businesses as outlined in his main report at para 3.3 was unusual for a company

engaged in the restaurant business. It was an assets based valuation but took into account

the specialist surveyor’s valuation of the various operational entities and so the earnings of

each entity were included. Mr Rowand agreed that in valuing a company for a divorce

action he would look to see what the owner did, if he worked in the business, and calculate

the cost of his replacement as he was aware that the valuation should not assume that the

owner would continue to operate the business after a hypothetical sale on the relevant date.

If the future profitability of the business was dependent on an owner remaining that would

affect value for this purpose, although that would normally affect the FMP figure, not the

multiplier. All of that had been Mr Creevy’s role in this case, with Mr Rowand necessarily

altering his figures following Mr Creevy’s adjustments. Mr Rowand had been instructed to

illustrate the position if the existing structure was collapsed to effect a sale overall. The

figures for tenant premiums in his report were taken from Mr Creevy. In essence what

Mr Rowand had done was replace the accounts value of the fixed assets with Mr Creevy’s

tenant premium value, which was the value someone would pay to take over the operation

and continue to trade from the premises and occupy them on the same basis as the seller at

the relevant date. So the figures for fixtures and fittings and leasehold improvements were

replaced by Mr Creevy’s figures. Whether the exercise is referred to as acquisition of the

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leasehold interest or inclusion of tenant premium value it amounts to the same thing.

Where the properties are owned investment value was used. Mr Rowand did not include

any “lotting premium” to reflect the greater price by selling everything together in his

figures. He explained the difference between assuming that everything would be

transferred into one entity for sale (an assumption he made) and the idea of an additional

payment to reflect the benefit of buying all together (which he did not include). He had not

looked at the existence and/or terms of any leases as that was Mr Creevy’s territory.

[18] When pressed on whether he had taken into account that one party (such as MLA for

George Square) might not agree to selling all of the property and related business interests

together, Mr Rowand said that he had assumed Mr Creevy had used a willing buyer, willing

seller approach, which is what he would expect. MLA’s interest would be included in the

whole and on sale he would receive his share. For the value of MMA’s interest in that

partnership with his father, Mr Rowand had uplifted the accounts figured for the property

with market value as valued by Mr Creevy. It had been when Mr Rowand first looked at the

accounts of the various entities in this case that he realised these did not reflect the true

ownership structure. Sections 4 and 7 of his main report set out in detail what he had

considered to be the correct approach in order to reflect the ownership situation. He had

also illustrated what valuation using the existing structure (ie valuing each entity separately)

would look like at paragraph 8.2.2 – 8.2.3 of his main report (prior to the figures being

updated) and explained why the different approaches led to different valuations, which he

compared at paragraph 8.2.5.

[19] In the defender’s case evidence was led from Mr George Ranachan, a commercial

surveyor in Glasgow, who qualified as a chartered surveyor in 1991 and is currently a

Director of Christie & Co. Mr Ranachan has extensive experience of valuing commercial

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property and has in depth knowledge of the restaurant market in Glasgow. He was

instructed to value the “LV (Scotland) Limited Portfolio” and produced a main report,

no 7/129 of process. Like Mr Creevy he sought to provide a view on market value of the

various entities using the Red Book for methodology. Like Mr Creevy he was provided with

accounts and other relevant information for each entity. His valuations were initially lower

across the board than Mr Creevy’s and, subsequent to their agreement on certain matters as

already recorded, remained lower. He spoke to his detailed report and highlighted that he

had taken into account that MMA played a very significant role in the day to day running of

the business. His input exceeded what might be expected of a reasonably efficient operator

(“REO”) coming into the business and account was taken of that. Mr Ranachan explained

that when he met MMA he was taken with just how much control he had over each business

entity, visiting each daily, interviewing for waiting staff and acting as both purchasing

manager and HR manager, together with his son. This level of involvement was

exceptional.

[20] Mr Ranachan differed from Mr Creevy in relation to the approach to valuation in

that he valued each individual property and did not assess the group as a whole. He

considered that there was no basis for indicating that any “lotting premium” would be

added to price to reflect sale of all of the entities together. There was no evidence in the

market place of a transaction of that type taking place for a restaurant group in Glasgow or

even in Scotland. In any event, he had met MLA for a few minutes at a meeting and it was

clear that he would not agree to part with his interest in the George Square premises.

Accordingly Mr Ranachan had valued each entity on a going concern basis, with the

hypothetical purchaser being a restauranteur. He used evidence of similar transactions to

form a view of the appropriate multiplier and had listed the relevant comparators at page 25

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of his report, on which he commented. Mr Ranachan was critical of Mr Creevy’s

comparators as he considered that only Italian restaurants, which are generally identifiable

in terms of similar food, ambiance, fit out and so on, were direct comparators. Where

Mr Creevy had mentioned one Italian restaurant comparator it was not in the city of

Glasgow and the sale had taken place after the relevant date. Three of Mr Creevy’s

comparators were a single off market deal involving different types of eateries, only one of

which was an Italian restaurant. There was no basis for Mr Creevy’s assertion that a named

Italian restaurant group represented a possible purchaser.

[21] Following the production of his first report, Mr Ranachan had prepared a

Supplementary Report (no 7/186 of process) to provide a freehold valuation of the George

Square premises that reflected the current lease arrangement. Subsequent to that, he had

also prepared what he described as a “Further Supplementary Report” (no 7/188 of process),

a two page document which he had prepared following what he said was further

consideration of MMA’s contribution to the business. In that document he offered revised

figures for four of the restaurant businesses, including Bishopbriggs, notwithstanding the

agreement reached with Mr Creevy and recorded in the Third Supplementary Joint Minute.

I sustained an objection from Ms Brabender when it appeared that Mr Ranachan was

seeking to depart from that agreement and matters then proceeded on the basis that insofar

as he could offer revised evidence it could only be on matters that were not the subject of

agreement. Thereafter, Mr Ranachan’s position was that three of the restaurant businesses,

George Square, Byres Road and Newton Mearns should be given lower values than he had

originally thought because more detailed consideration of MMA’s remarkable contribution

had led him to revise his multiplier for each. This was something he had not taken into

account when he spoke with Mr Creevy.

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[22] Under cross examination Mr Ranachan accepted that his report indicated that MMA

had instructed him on an agent/client basis and that as part of his fee quote he had agreed to

include the production of a separate updated valuation for MMA for the bank used by the

business. When challenged on whether he had truly accepted instructions as an

independent expert in this case, the witness accepted that certain aspects of the RICS

guidance on expert witness reports had not been followed. His report had not stated that he

was instructed as an individual with a primary duty to the court with an accompanying

statement of truth, all which he said were errors on his part. He had stated in his report that

the usual complaints procedure would apply, something that would not normally be the

position for independent expert reports. His position was that notwithstanding that the

report was in the form of one prepared on a client instruction, he had understood his role as

an independent expert. During the period of his instruction he had met MMA on three or

four occasions, one of which was the meeting at which MLA was present. He had met

MMA without solicitors or counsel being present after a meeting with Mr Creevy. There

had been a consultation with solicitors and counsel after Mr Creevy’s evidence and at some

point thereafter Mr Ranachan reviewed his figures downwards.

[23] When the terms of his main report were put to him in relation to MMA’s daily

involvement in the business, something known to him from the outset, Mr Ranachan said

that he was unaware of just how many hours each week MMA put into the business until

recently. He had known previously that it was significantly more than a working week but

now knew it to be in excess of 80 hours per week. He maintained that there was no evidence

that a purchaser would acquire the group as a whole and so considered that there was no

premium in the LV brand. On the issue of the appropriate multiplier Mr Ranachan

considered that there was sufficient comparable evidence from Italian restaurants, which he

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regarded as suitably similar. While the FMT and FMOP figures for the LV businesses were

impressive, it was the comparator sales from the subsector (Italian restaurants) that

influenced the multiplier. It was accepted that a private transaction without bank input

could still be an example of a willing buyer, willing seller transaction, but the absence of

marketing would mean there was no ability to analyse its details. The witness accepted also

that the main comparators he had used all had a lower turnover than the LV restaurants.

Location affected multiplier and had been reflected in a higher figure for the Byres Road and

Newton Mearns restaurants which were situated in affluent areas, although such areas

tended to have more competition. Direct comparables were difficult as he had been unable

to identify a leasehold Italian restaurant sale in Glasgow in the last two years.

[24] On the George Square restaurant, Mr Ranachan had valued the leasehold business on

the basis that MMA would leave the business on sale, as he had with all of the other

restaurants and to that extent his valuations excluded any personal goodwill attaching to

MMA. The difference in value on George Square included a disagreement on FMT but that

depended on whether it was being valued as leasehold or not. In relation to his agreement

with Mr Creevy, the witness accepted that the FMOP figures did not assume MMA would

remain in the business but contended that these left it open whether the incoming REO

would be a third party or MMA himself. To reflect the removal of MMA’s presence he had

then revised his figures, although he accepted that the primary basis for the multiplier was

comparable sales. He disputed that what his revised figures did, in effect, was double count

the contribution of MMA to the business. There was a correlation between earnings as a

percentage of turnover and the multiplier, such that an adjustment could be made to

consider MMA as an REO. The approach taken in his revised figures was not one he had

employed in other reports he had prepared. When taken to extracts from the RICS “Red

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Book”, VPGA 4, the witness agreed with the definitions of FMOP, FMT and personal

goodwill provided there. He continued to maintain that he had better comparable sales

evidence than Mr Creevy, although both surveyors considered performance, profitability

and location to be material factors in determining a multiplier.

[25] In re-examination Mr Ranachan reiterated that he had been instructed as an expert

and that he had not revised his figures under any suggestion or persuasion from MMA. He

denied acting as an advocate for the defender’s side. On the changes he had made after

meeting MMA and his legal advisers part way through the proof he said:

“...following the consultation I became aware of the services provided by the current

operator ceasing on the valuation date and the impact that would have was

significant enough to alter the multiplier”.

[26] Alan Robb CA gave evidence, as Mr Rowand had in the pursuer’s case, to give a

valuation of the relevant business entities, that took account of the commercial surveyor

valuation reports he had been given. Mr Robb is, like Mr Rowand a chartered accountant of

very considerable experience, who routinely undertakes as part of his work, business

valuations for financial provision on divorce cases. He qualified in 1986 and was a partner

in a national accountancy firm before joining Robertson Craig, where he remains a partner,

in 2001. Mr Robb has appeared as an expert witness in such cases for many years in both

this court and in the sheriff court. He too had produced a main report (no 7/130 of process)

and then a Supplementary Report (no 7/189) with revised figures. His main report narrated

the approach he had taken, which was to value each of the various business entities and

provide a total, rather than to look at these as a whole. He adhered to his approach and said

that his later report simply fed in the new information from Mr Ranachan. The main

difference between his approach and that of Mr Rowand was in valuing the component

Page 19 ⇓

parts of MMA’s business interests separately, consistent with Mr Ranachan’ s valuation. He

adopted his Supplementary Report as his final valuation.

[27] Under cross examination Mr Robb was asked about a document he had prepared (no

7/11 of process) detailing the intercompany loans when he was attempting to reconcile the

various figures. He had noticed a bookkeeping error and said he had corrected that in

preparing his report. When he was valuing MMA’s sole trader entity, which owns three

trading properties, two office properties and a garage, he had made an adjustment to reflect

that the fixtures and fittings of these should be attributed to the relevant companies (the

restaurants) to reflect that they had incurred the expenditure. In relation to the partnership

between MMA and his father, Mr Robb accepted that in his main report he had assumed

that the partnership had a leasehold interest in the George Square premises but now

understand it was freehold, which he had then reflected in his revised valuation. He

accepted that the relevant documentation on this was in Mr Ranachan’s report but he

couldn’t recollect seeing it before he prepared his first report. For G Limited, which owns

properties including Gordon Street, Mr Robb had relied on Mr Ranachan’s valuations. He

had not been advised that there had been agreement on these and so that was not reflected,

even in his revised figures.

[28] Mr Robb accepted that MMA was the controlling mind of LV (Scotland) Limited. He

agreed that some of the changes to the intercompany loans reflected that MMA instructed

that large sums of money be moved around the various companies when required to fund

assets. One example related to G Limited. At the relevant date G Limited was owed over

£1million by LVS Limited, but G Limited was also shown as owing LV (Scotland) Limited

the sum of £2,766,195. However, Mr Robb maintained that it was appropriate to assume that

the intercompany loan could not be repaid in full because there was a net liability position if

Page 20 ⇓

all the loans were to be repaid. His figures on this differed from Mr Rowand’s consolidation

figures because he considered that each company would have to settle its own liabilities. Mr

Robb accepted that all of the companies listed in Appendix 8A of Mr Rowand’s report had a

net assets position as at 31 March 2018, but he had taken the liability figures from draft

management accounts that included the intercompany loans. There was one discrepancy in

the management accounts relating to the Directors’ loans and the final statutory accounts

contained the correct figures on that. Mr Robb had not been asked to provide any current

date valuations. He was also unaware that certain property valuations had been agreed

since his report, such as in relation to Bishopbriggs and the heritable property owned by G

Limited. He accepted that such agreement would change his valuation.

(iii) Discussion

[29] While the valuation evidence was detailed and took up considerable time at proof,

the reasons for my decision on the figures to be inserted in the matrimonial balance sheet for

these items can be summarised relatively briefly. Firstly and importantly, only Mr Rowand

produced figures that reflected all agreements reached between the surveyors. Mr Robb

was not told of the values agreed subsequently in relation to Bishopbriggs and the heritage

owned by G Limited and was not asked to update his figures in evidence. It would not,

therefore, be possible to accept Mr Robb’s evidence in its entirety, although not on this point

due to any issue of his different approach. Secondly and separately, both Mr Rowand and

Mr Robb relied on the opinion of the commercial surveyors instructed by the pursuer and

defender respectively for valuation of the restaurant businesses and other commercial

property, given the speciality of surveyors’ work in this area. Accordingly, if the approach

of one of those surveyors cannot be relied on, neither can the accountant’s report on which it

Page 21 ⇓

is based. I have reached the view that I cannot rely on the evidence of Mr Ranachan in this

case. While I have no doubt that he is a skilled and experienced commercial surveyor on

whose advice many can and will rely with confidence, in the circumstances of this particular

case as it evolved and for the reasons given below, I am unable to do so.

[30] Under reference to the approach in the UK Supreme Court authority of Kennedy v

Cordia (Services) LLP 2016 SC (UKSC) 59, Ms Brabender submitted that Mr Ranachan’s

evidence could not be described as impartial and that he had effectively acted as an

advocate for MMA, something that had been put to Mr Ranachan in evidence and which he

had denied. A number of points had been brought out in evidence in relation to the terms

on which Mr Ranachan had accepted appointment and the narrative in his report did not

conform to RICS standards for providing independent expert advice, something he accepted

was an error. There was also an element of a potential ongoing instruction in relation to a

valuation for the bank. While these are important matters and while those instructed as

experts must take particular care to be clear about the nature of their instruction before they

are in a position to provide opinion evidence to the court, I acknowledge Mr Ranachan’s

position that these were errors and that in general terms he understood the nature of an

instruction to be an independent expert. Had there been no issues of substance with the

views he expressed, I might have been able to overlook those errors as relating only to form.

However, as I have narrated above, what occurred in this case was that during the progress

of proceedings, after Mr Creevy’s evidence (and after the pursuer had closed her case)

following communication with the defender and his legal team, Mr Ranachan sought to

depart from his earlier view in relation to the effect on the valuation of MMA’s role in the

business.

Page 22 ⇓

[31] Mr Ranachan accepted in evidence that the FMOP figures he had agreed with

Mr Creevy (for all of the restaurants other than George Square) took account of the

assumption that MMA would leave the businesses on the hypothetical sale at the relevant

date and be replaced by a reasonably efficient operator, thus excluding ongoing personal

goodwill. Nonetheless his subsequent figures (7/188 of process) sought to revisit that issue

under the guise of adjusting the multiplier for each of the four relevant restaurants. His

reason appeared to be that he had underestimated the stellar contribution MMA made to the

businesses, particularly in terms of hours worked. This attempt was flawed for three main

reasons. First, as personal goodwill had been excluded in calculating FMOP, it could not

properly be factored in again when selecting a multiplier. Both surveyors agreed that

selection of a multiplier was a matter of judgement but that profitability and location were

the most relevant factors. As FMOP is an assessment of future profitability on the

assumption that the seller will leave the business, it would constitute double counting to

factor his contribution into selection of the multiplier. Secondly, Mr Ranachan’s initial

attempt to revise the figures included a view that Bishopbriggs should have a lower value

than that agreed with Mr Creevy. While he ultimately accepted that there could not be a

departure from the agreement on Bishopbriggs, it was clear that at the time of his post

consultation reflections, Mr Ranachan considered that it was open to him to do so. Thirdly,

when pressed on how he could alter his view on the multipliers given all that he had

accepted was behind the FMOP figures, he said that he had thought at the time that MMA

himself might be the reasonably efficient operator. This was incomprehensible given the

clear requirement for business valuation in cases of this type to assume no contribution after

the relevant date (and so no personal goodwill to the business) of a spouse who runs the

business. It was also inconsistent with the earlier agreement on FMOP and the view he had

Page 23 ⇓

expressed on valuation in his main report, which included a number of statements about

MMA’s central role in the business. Mr Ranachan made a telling concession that he had

never sought to change his own valuation in this way on any previous occasion.

[32] In light of the unsatisfactory nature of Mr Ranachan’s change of heart on valuation,

the backdrop of the absence in his report to his duties to the court and the other errors

mentioned take on more significance than they might have otherwise. I do not doubt

Mr Ranachan’s general motivation of course, but in light of the evidence about how his

views developed I consider that he has allowed himself to be influenced by MMA’s views

on the matter. As a result he departed from the necessary position of impartiality of a

witness giving opinion evidence and appeared to promote the defender’s cause on

valuation. His position in evidence was that he did not seek to defend all of his initial

valuations. As I cannot accept his final figures I am effectively left with no definitive

valuation by Mr Ranachan. For all these reasons I have concluded that I cannot rely on his

evidence at all and so cannot use any of his figures for the purpose of valuing the various

business interests. Neither Mr Creevy nor Mr Ranachan took account of the ownership

structure in expressing views on market value of each of the businesses, with the exception

of George Square, on which I will comment separately. Mr Creevy’s valuations appear to

me to be based on a sound understanding of the market and the particular features of the

business operations controlled by MMA and I accept his figures. Mr Creevy’s views on

lotting premium play no part in that calculation. What that section of his report does is

fortify the view that a willing seller on the relevant date who controlled the businesses

(MMA) would realise that collapsing the ownership structure would be the way to achieve

the best price. As indicated, I reject MLA’s evidence that he would stand in the way of such

a sale. In any event, Mr Creevy put the matter simply and correctly when he reiterated that

Page 24 ⇓

the basis of valuation for these proceedings was to hypothesise a willing buyer, willing seller

sale. The willing seller will want to get the best reasonable price he can for what he is selling

and the purchaser will see the benefit of securing the whole trading enterprise. It is

unrealistic in my view to contend that on the hypothesis that MMA had been willing on the

relevant date to collapse the structure and sell everything for a better price than he would

receive by realising the component parts of the entities, his father (who would also gain in

such a global sale) would stand in his way rather than agree to a sale of the heritage in

George Square and associated premises. On Mr Creevy’s figures the willing purchaser

would acquire everything for market value of the whole but without paying an additional

premium. I conclude that this satisfies the requirements of fair valuation.

[33] Turning to the accountants’ evidence, Mr Robb’s valuation is predicated in large part

on Mr Ranachan’s opinions of value (albeit without taking account of all of the agreed

values) and so cannot be relied upon. However, there were some differences in approach

between the two accountants that are also relevant. For example, as narrated, Mr Robb

treated each wholly owned subsidiary as a separate entity for the purpose of assessing

ability to repay intercompany loans and concluded on the basis of draft management

accounts that some of these could not be repaid. More fundamentally, he took

Mr Ranachan’s valuations and fed them into tenants’ improvements as a book exercise to

adjust the value of each of the subsidiaries and so the holding company, which was valued

as if there was no relationship between it and the owner of the heritage. Mr Rowand on the

other hand considered the value of the heritage of each restaurant and then the leasehold or

tenants’ value separately before preparing a valuation illustrating how the various business

entities would look if sold together on consolidation of the company, partnership and

individual interests. The intercompany loans are all accounted for within the net asset

Page 25 ⇓

position and no issue of repayment arises. I prefer Mr Rowand’s approach, as it reflects the

reality of MMA’s interest as the controlling mind of the whole enterprise and his ability to

transfer loans between companies and entities as he sees fit. There was evidence of him

being the sole actor not just in relation to the subsidiaries of LV (Scotland) Limited but also

in the way his sole trader property business and his partnership with his father were all

conducted, including their relationship with the company. To take one example, having

confirmed in evidence that the Byres Road property had been purchased just before TA died

in 2007 with borrowing from the bank, a property now owned by him as an individual,

MMA said “the bank just structured it, I just say I want to buy it and they tell me how to get

the best tax relief”. This explained why there were figures for “rent” in relation to such

properties owned by him (and run by subsidiary companies) where the payments were in

reality loan repayments. He agreed that for him it was all just his business, however

structured. On the basis of Mr Rowand’s revised report, the total value of MMA’s business

interests LV (Scotland) Limited, G Limited, property rental individually and in partnership

and LS amounts to £9,974,057, all as set out and calculated in his final revised version of

Appendix 15. That is the figure I have inserted below in the schedule of matrimonial

property.

Other valuation disputes

[34] There were a few other disputed issues in relation to the identification and/or value

of the matrimonial property that remained unresolved by the end of the proof. These were

far less valuable than the business interests but a determination is required on each.

Jewellery and watches

Page 26 ⇓

[35] There was contested evidence about the full extent and value of the parties’ jewellery

and watches, although the value of some items had been agreed. There was a dispute about

what watches MMA owned at the relevant date that should be included in the schedule of

matrimonial property. In evidence he accepted that he had two Rolex watches at the

relevant date, one of which (a gold Rolex) he had purchased on a family holiday to

Switzerland and continues to wear and the other (a black faced Rolex) which he said he had

purchased during the marriage but traded in for a Cartier watch in late 2018. There was a

possible special circumstances argument relating to the gold Rolex and no valuation of the

black faced Rolex because it had been traded in and so was not available for valuation.

[36] In the pursuer’s case, opinion evidence of the value of the jewellery and watches at

the relevant date was led from Samantha Maclachlan of Laings in Glasgow. Ms Maclachlan

is an experienced valuer of jewellery and a gemologist. She spoke to her qualifications and

professional memberships all as set out in her principal report (no 6/16 of process). In

addition to that report, Ms Maclachlan prepared a supplementary report (no 6/165) and also

provided paperwork illustrating her workings for the valuations she had reached. She

spoke to all of these documents in evidence. The basis of valuation for each item was an

open market value as at the relevant date based on a hypothetical public auction sale

without time or geographical constraints. Each value was intended to represent the

“hammer price” less commission and/ or premium on such a sale. Ms Maclachlan had

access to auction sites such as Bonhams, Christies and Sotheby’s which she had used to

research comparable prices. Her reports, which she adopted as her evidence, contained

careful descriptions of each item valued. When read together with her workings the basis

for each value could be seen.

Page 27 ⇓

[37] Ms Maclachlan had been shown the report (no 7/131 of process) of the defender’s

witness on jewellery valuation, Mr David Bercott. She did not know of Mr Bercott and said

that his name did not appear on the register of gemologists and he was not a member of the

Institute of Valuers. She had reviewed her own valuations where these differed with

Mr Bercott’s but expressed the view that she had come to the correct conclusion on each.

She pointed out that a valuation for insurance purposes, which was referred to in

Mr Bercott’s report, was a very different type of valuation than the hypothetical sale at

auction approach that she had employed. Insurance value represented replacement cost if

an item was lost or stolen. On being taken through every item on which she and Mr Bercott

differed, Ms Maclachlan was clear that she was confident in her own methodology and

opinion for all of them. On the black faced Rolex she had been asked to provide a valuation

from a photograph as the item had not been available. She thought that the watch seen in

the photograph No 6/101 of process (of MMA wearing a watch) was probably the same

watch as the close up of a watch in the photograph no 6/102. She said that even without the

diamond embellishment such a watch would normally sell for about £20,000 but she had not

seen this one for valuation purposes.

[38] Under cross examination Ms Maclachlan explained that she had a software

programme built for appraisers and that she had used it to key in details of the items she

valued, such as whether and where hallmarked and the valuation date. The fixing of value

was however a matter of judgement having consulted auction websites for comparables.

She agreed that in one example she had produced, the item had gone for the lowest price in

the range estimated by the auction house and in another for lower than the lowest estimate.

She said that much depended on popular trends at the valuation date. The time of year and

fashion are relevant features. While it was not an exact science, she had used her

Page 28 ⇓

qualifications and experience to apply the methodology to come up with opinions she was

comfortable with. An Affidavit from Mr Bercott (no 40 of process) was put to the witness

which refers to a second hand sale value as providing “fair valuation”. Ms Maclachlan said

that second hand sale value would relate to items bought at auction and marked up in price

by a jeweller and so a higher value than hammer price. An individual looking to sell their

jewellery might achieve a little more than auction price from a high street jeweller but would

receive less than the price such jeweller would then give to a purchaser following mark up.

[39] Mr Bercott gave evidence in the defender’s case. MMA had given evidence that most

of the Italian families in Glasgow bought their jewellery from Bercotts, although he had no

recollection of buying more than one or possibly two items there himself. Mr Bercott

adopted his affidavit (no 40) and confirmed that he had 40 years of experience of buying and

selling jewellery and watches. He had studied gemology and antiques but that was long

ago. He is not a registered valuer. Mr Bercott was taken through the values he had placed

on each of the disputed items, as Ms Maclachlan had been in her evidence. Mr Bercott did

not use online auction sites to assist in valuation. He used his experience to get a feel for the

right price and then cross checked it against online sites for other retail shops. He had

looked at Laings website and saw that they had a higher price for a pearl bracelet that he

had valued.

[40] Under cross examination Mr Bercott said that he had known MMA and SCA for

30 years. MLA used to buy jewellery from him and then his son became a customer. MMA

personally had requested the jewellery valuation and asked for it to be dated 14 June 2018

(the relevant date). Mr Bercott accepted that his letter dated 14 June 2018 (no 7/131 of

process) referred to insurance value and said that was an error. It should have stated “for

asset purposes” or auction price. He had provided two valuations, (nos 7/131 and 7/132 of

Page 29 ⇓

process) and thought these had been prepared in October 2019. The witness confirmed that

he knew MMA and SCA had separated in June 2018 because he frequents the restaurant in

Newton Mearns and speaks to MMA regularly. When taken through his affidavit in relation

to SCA’s items of jewellery and his opinion as to their value, he was asked about the

expression “fair valuation” he had stated therein. He thought that second hand sale value

and auction value would be very similar, or at least that auction value would be slightly

below cost price. Insurance value would be retail sale price plus 10%. Mr Bercott then said

he was asked for an asset valuation and so had given values at auction prices. He agreed

that when he had described the value as second hand value at auction that should be read as

auction value.

[41] Mr Bercott had not seen Ms Maclachlan’s valuations prior to being cross examined.

When they were put to him he agreed that unlike Ms Maclachlan he had not followed the

standard laid down by the National Association of Jewellers. He was taken through the

various items of jewellery on which his valuation differed from the pursuer’s witness.

Mr Bercott did not consider that auction sites were a helpful guide at all because an auction

price depended on who was present at the time. In any event items often sell for below cost

price. Mr Bercott said he did not have any cause to review his views on valuation having

seen Ms Maclachlan’s figures. He is involved in the manufacture of jewellery and so is

knowledgeable about how diamonds are set and the impact of that on value. His business

sells a lot of second hand watches and he stated that he knows what they sell for.

[42] In re-examination Mr Bercott confirmed that gemology is the study of gemstones and

is unrelated to valuation of jewellery. His manufacturing work had given him good

knowledge of value because he buys all the stones and other materials for that on a daily

basis. Mr Bercott does not buy anything at auction because he gets two to three months

Page 30 ⇓

credit on used diamonds and doesn’t have to pay commission. On watches, he would sell a

Cartier Santos watch at most once or twice per year, as compared with Rolexes, which every

customer seemed to want and he could sell four per month, with considerable mark up in

the price.

[43] I have reached the view that Ms Maclachlan’s evidence of the value of the parties’

jewellery and watches should be preferred. Unlike Mr Bercott she was completely

independent of the parties. She had a clear remit which she followed and explained her

methodology. Mr Bercott’s instructions were a little casual and there was real confusion

about his basis of valuation, i.e. whether it was insurance value, second hand sale value or

auction value. Mr Bercott said that he did not look at auction prices, yet in cross

examination appeared to equiparate those with second hand sale value and indicate that

was his basis of valuation. In any event, the basis on which he arrived at value was unclear.

In fairness to Mr Bercott, he is a jeweller and jewellery manufacturer of very considerable

experience and I have no doubt that he provides an excellent service for his clients. He

appeared to answer questions openly and honestly. His written reports and oral evidence,

however, do not meet the standards of impartiality and attributed methodology necessary

for him to be categorised as an independent skilled witness for the purposes of providing

opinion evidence as an expert – Kennedy v Cordia ( Services), cited ante, at 51- 53.

Accordingly, I am unable to rely on his evidence and will use Ms Maclachlan’s figures in the

schedule of matrimonial property. I have included only the items that she saw and valued.

While it was ultimately accepted that MMA also owned a black faced Rolex watch at the

relevant date, its specification, age, condition and value at that time are unknown and it has

been disposed of. There was some evidence that it was traded in for a watch worth far less

Page 31 ⇓

than the £20,000 given by Ms Maclachlan as a very rough estimate on the information she

had. I do not consider that any acceptable evidence of value of that item has been led.

Publicly quoted shares held by the defender

[44] There was evidence from MMA that he had been gifted a number of shares by his

father and MLA was questioned in some detail about these as there was some dubiety about

what shares within MMA’s holdings should be disregarded as not constituting matrimonial

property. Unchallenged evidence was also given by Ms Hunter, solicitor, who provided an

affidavit (no 35 of process) as to value of all quoted shares held by MMA at the relevant

date. A table was also provided at no 6/177 of process. By the time of submission there did

not appear to be any remaining dispute about these and I have accepted Ms Brabender’s

figure of £24,523 for the quoted shares that constitute matrimonial property. Some of those

were purchased by MMA from the estate of his late brother TA.

Vehicles and cherished number plates

[45] There were two vehicles that were agreed to be matrimonial property and then two

about which there was no agreement as to their inclusion in the schedule. First there was

the Jaguar F-Pace, a car driven by the parties’ son M who gave affidavit evidence that his

father agreed to pay the instalments on the loan taken out to buy the car. The finance

documentation for the vehicle (no 7/10 of process) appears to be in the name of the defender.

The evidence as to the ownership of this vehicle was a little unclear. M was not asked who

owned it although the defender was and he said that it was M’s car and that he was the

registered keeper of the vehicle. MMA thought he had provided the vehicle finance

document when served with a specification of documents. A receipt (no 7/155 of process)

Page 32 ⇓

from a car dealer in Ayr was put to MMA who said that it reflected the deposit of £26,750

paid by M for the car and that the document had M’s signature on it. M had traded in a

Porsche for the Jaguar. MMA said he had checked that the finance document could run in

his name for M’s car and that M owned the car. An extract from Parker’s guide (no 6/145)

indicated that the used car price for such a vehicle might be £25,000 - £29,000 at the material

time. In submissions it was suggested that as there was finance over the Jaguar car it could

not be said to be in the ownership of either the defender or his son. I conclude that there is

insufficient reliable evidence that the vehicle was MMA’s property at the relevant date and

so have not included it in his assets. However, I will not deduct the outstanding finance due

on the vehicle as a matrimonial debt of the defender. This is consistent with the position

that if the debt is unpaid the car (which is worth more than the level of debt) will belong to

the finance company and with MMA’s position that what he agreed to do was service the

debt on his son’s car. The second vehicle in dispute was a Lambretta scooter, the document

for which (no 7/6 of process) confirmed it was registered in the defender’s name. MMA’s

evidence initially was that he was the registered keeper but not the owner of the scooter.

Under cross examination he said it didn’t work and was not in good condition and that he

hadn’t had an MOT certificate for it for two years. He agreed that it would be worth £4,000

if on the road and in good condition. It is kept at MMA’s restaurant in Newton Mearns. On

this vehicle I consider that there is sufficient evidence to infer the defender’s ownership of it.

In light of the evidence that it requires repair and an MOT I will discount the suggested

value of £4,200 down to £3,000 and include that in the schedule. The parties each had a

personalised number plate on their vehicle. The pursuer had produced (at nos 6/190 and

6/107 of process) estimates of value and the defender appeared to accept those in evidence,

albeit there was no formal agreement.

Page 33 ⇓

Matrimonial debts

[46] There were two disputed issues about the debts due at the relevant date that should

be deducted from the value of the matrimonial property (i) tax liabilities and (ii) sums due

by each of the parties to LV (Scotland) Limited. The first of these included an issue about

tax liabilities arising from an Employee Benefit Trust (“EBT”) in which MMA had been

involved some years prior to the relevant date. Such schemes were subsequently challenged

as constituting disguised remuneration and, like many others, MMA’s tax advisers have

been in a negotiation process with HMRC with a view to settling this liability. The issue in

principle was not raised on behalf of the defender until close to proof in this action. Mr

Cheyne was very clear as to the reason for that, namely that a view had been taken at an

earlier stage that the EBT liability would not fall within the definition of debt “outstanding”

as at the relevant date and so might not be deducted from the value of matrimonial

property. Mr Cheyne took the view that it did fall within the definition and so had

produced a Minute of Amendment to reflect that shortly prior to proof. While the matter

was not without controversy, I considered that the defender’s side should be permitted to

amend and so lead evidence about this matter.

[47] SCA gave evidence of a meeting she had attended in London and it was suggested to

her that she had been well aware that this related to the legal issues arising from the EBT

scheme. She had no recollection of the details of what was being discussed and I accept that

she was not involved in tax or accounting matters at all during the marriage. MMA spoke of

meetings he had attended on the issue of the EBT giving rise to a tax liability, but it was clear

that he relied heavily on professional advisers for all tax and accounting matters. Joyce

Fleming, an experienced accountant (FCCA) and now a Director of Consilium, the firm of

Page 34 ⇓

accountants who are instructed by MMA in all of his personal and business tax and

accountancy affairs, gave evidence about all of the tax liabilities of the defender at the

relevant date. She had prepared a letter (No 7/96 of process) setting out her understanding

of five separate tax liabilities of MMA’s as at 14 June 2018. Her support for the figures was

contained in five Appendices to the letter.

[48] First, Miss Fleming had estimated MMA’s personal tax liabilities as at the relevant

date to be £107,795, which with the benefit of hindsight and completion of his tax return for

the year to 5 April 2018 was now known. She acknowledged under cross examination that

the figure was not be completely accurate as it included a small amount of interest and a late

filing penalty not actually incurred by the relevant date. I have accepted that the correct

figure for this liability was £106,084. The second liability related to a scheme known as

Excalibur, which had been set up in relation to both MMA and his brother TA and which

had been challenged by HMRC because it had created losses that were deemed to be

sheltering trading profits. HMRC’s decision had been challenged, unsuccessfully, on MMA’s

behalf and the principal sum due had been paid by 2016. The sums outstanding at the

relevant date were interest and penalties, although an appeal to the tax tribunal was

outstanding in relation to the penalty. So far as MMA’s own liability in relation to Excalibur

was concerned, Miss Fleming had calculated this as £46,242 at the relevant date. However,

£5,655 of that relates to the penalty still under challenge and so cannot be regarded as a

liability outstanding as at the relevant date. I have included both the interest of £40,577 that

was relative to the now unchallengeable liability and the £5,665 in respect of the penalty as

matrimonial debts. Both relate to a period prior to the relevant date and there was no

evidence on whether the appeal was likely to succeed, such that the chance of that could

have been factored in.

Page 35 ⇓

[49] The third proposed tax liability related to the personal liability to HMRC of the late

TA in relation to the Excalibur scheme. The sum calculated by Miss Fleming as due in

respect of TA’s Excalibur liability and due at the relevant date was £142,128. Miss Fleming’s

position was that she had been told that the late TA’s tax was to be paid by MMA.

Correspondence from HMRC in respect of this matter and produced within Appendix 3 of

Miss Fleming’s Appendices was addressed to MMA as personal representative of the late

TA. Miss Fleming’s understanding was that the solicitor dealing with TA’s estate (Mr L

Franchi) had told the relevant lead partner in Consilium (previously Mr C Briton, now

Derek Shaw) that this debt was to be paid by MMA. That was consistent with MMA’s

evidence although when pressed he accepted that there was no document setting out any

agreement between him and his siblings that he would settle the debt. Ms Fleming agreed

that the usual position would be that such a liability would require to be settled by the

beneficiaries of TA’s estate as a debt of the deceased impacting the quantum of the estate for

distribution, but she had not seen any documents confirming how TA’s estate had been

distributed. She had taken over the discussions with HMRC on this and other matters in the

summer of 2018. She had produced email correspondence with HMRC offering settlement

terms in respect of this matter but she continues to await a response. Since December 2018

when she made the offer she has sent two reminders to HMRC. Mr Franchi had provided

an affidavit which supported MMA’s position on the tax liability of the late TA but the Deed

of Variation entered into by the beneficiaries (no 7/20 of process) made no reference to this.

Ms Brabender had made clear that she wanted to cross examine Mr Franchi but he was not

called to give evidence. Accordingly, there is insufficient evidence from which I can

conclude confidently that MMA had or has any liability, as between him and HMRC to

settle this debt. He would appear to have agreed informally with his siblings that he will do

Page 36 ⇓

so. The debt was not one incurred by MMA during the marriage but is a debt of a third

party that he seems willing to take on. It remained unpaid at the relevant date and at the

date of proof. That said, it seems to me that MMA’s offer to settle this particular tax liability

and the likelihood that he will do so is a special circumstance to be considered in division of

matrimonial property rather than as a debt incurred by him and due at the relevant date. It

forms part of a larger special circumstances argument about how TA’s estate was divided

between his relatives and I will address it in that context.

[50] The fourth liability included in Miss Fleming’s schedule was a sum of £9,853 in

respect of a dividend replacement strategy, “Akido”. The witness said that HMRC had

categorised this as a tax avoidance scheme. It related to the tax year ending April 2012 and

HMRC were now pursuing MMA for this personally. The relevant correspondence was

produced in Appendix 4 and dated from 2016. A revised tax liability for the tax year to

April 2012 had been calculated and the additional tax due was £9,853 in respect of Akido.

Miss Fleming did not know from which company the dividends had been paid, but they had

been paid to MMA personally and so he had liability for the tax. This seemed to me to be a

personal tax liability due by MMA arising during the period of the marriage and

outstanding at the relevant date and so I have included it as a debt.

[51] By far the largest tax liability said to be due was the fifth and last. This was the one

relating to the EBT referred to above. It arose from a trust set up by LVP and through which

MMA’s remuneration was filtered by way of “ loans” from the trust which have not been

(and it was ultimately accepted would never be) repaid. Schemes of this type are now

regarded as disguised remuneration and open to challenge by HMRC. The debt,

representing the tax and NI that should have been paid had there been no EBT, was due by

LVP, which went into voluntary liquidation in November 2017. In May 2018 Miss Fleming

Page 37 ⇓

registered an interest with HMRC in settling the tax liabilities arising from the EBT,

something that HMRC had invited. When asked whether she was acting for the liquidator

in that process Miss Fleming answered “Yes, and probably for MMA because he would have

to pay”. It was known that the company (renamed as “COU1” during in liquidation) would

not be able to settle the debt. There had been a tax tribunal case which the company lost.

Consilium advised MMA that it would be prudent to negotiate a full and final settlement

calculation. MMA agreed and by May 2018 it was known that MMA would be the payer.

He agreed to provide the sums to COU1 for them to pay the tax. Miss Fleming and Derek

Shaw had met the liquidator (Mr Bain) on a number of occasions and it had been made clear

to him that MMA would provide the funds. MMA had given clear instructions by May 2018

that he would settle the tax liability, although that hadn’t been reduced to writing. The draft

calculations were made in July 2018 and a draft agreement was in circulation by July 2019.

The total sum due was £583,420, although there was about £70,000 of money in the

company, part of which would be required to settle liquidators fees.

[52] During the course of the proof Miss Fleming produced a further document (no 7/197

of process) after being asked to expand on the EBT liability and how it would be worked

through. The document provided a breakdown of the total figure of £583,420 for the

liability. She was clear that she would not have entered into negotiations with HMRC on

behalf of the liquidator unless MMA had agreed he would settle the liability. Regulation

80 notices (under the Income Tax (PAYE) Regulations 2003) had been served on the

company, which had appealed. From her own experience she knew that if the company did

not pay the tax within 30 days following determination of the appeal, HMRC can pursue

MMA directly for the PAYE and NI contributions due because he was the income earner

whose remuneration was disguised. MMA’s agreement in May 2018 to settle the liabilities

Page 38 ⇓

voluntarily was the reasonable alternative to waiting for formal action to be taken against

him. Ultimately Miss Fleming’s best estimate of what MMA would have to pay (taking

account of the money in the company under deduction of the liquidator’s fees and expenses)

was £560,000 for this particular liability. The affidavit of Derek Shaw was put to the witness,

paragraph 3 of which states that agreement has been reached in principle for this debt that

will involve MMA paying the sum of £513,420. Miss Fleming indicated that the difference

between her estimate and Mr Shaw’s position was likely to be that her colleague may have

taken into account the extent of the liquidator’s fees, a note of which had been provided. As

she had indicated, her calculations did not take account of the money in the company.

[53] Derek Shaw, a practising chartered accountant since 1995 and a partner of Consilium

Chartered Accountants also gave evidence about this matter. He spoke to his affidavit (no

38 of process) and adopted it as his evidence. Mr Shaw’s now retired colleague Mr Burton

had been MMA’s accountant for many years and Mr Shaw had been involved from about

2008/9, although not as principal partner until August 2018. He had knowledge of the

accounts of the various entities already discussed in the valuation context. So far as the EBT

was concerned, he understood that Miss Fleming had made an accurate calculation but

because of the £70,000 in the company COU1 Limited (in liquidation), Mr Shaw thought that

the sum due was £513,420. He would defer to Miss Fleming for the final figure. Under cross

examination he agreed that the decision to wind up LVP had been taken after an adverse

decision about the legitimacy of EBTs in the English High Court, where HMRC’s challenge

was successful. The insolvency practitioner for the company had insufficient knowledge to

negotiate the tax settlement for the EBT and so Miss Fleming had become involved. He

understood that there was a firm agreement that MMA would pay the sum now calculated

for this liability to the liquidator who would then settle the debt. The sum agreed as due to

Page 39 ⇓

HMRC is £583,420, but how much of the £70,000 held by the liquidator would go on fees

was unknown. Mr Shaw was in no doubt that the agreed settlement would be effected by

payment of well over £500,000 by MMA. The only reason why the final agreement had not

yet been signed was because the liquidator was seeking legal advice, but there was no

question that MMA was taking on the liability. Mr Shaw had advised him that he might

well have this tax liability as early as the adverse legal decision for EBTs being issued.

[54] Alan Robb was also asked about the EBT issue in his evidence. His evidence on the

principle of the matter accorded with that of Miss Fleming and Mr Shaw. Mr Robb was

familiar with the procedure of the ultimate taxpayer offering voluntary settlement followed

by a delay while calculations are checked and a settlement agreement prepared. He was

clear that if such settlement was not reached HMRC would revert to Regulation 81 for

recovery of the tax and NI from the taxpayer. He thought that MMA’s settlement of the

liability in this case could not be regarded as voluntary in that he was just agreeing to pay

something that HMRC could recover from him anyway. For completeness I should add that

the pursuer had lodged an affidavit from an experienced chartered accountant and tax

specialist, Lachlan Fernie, of Geoghegan, chartered accountants in anticipation of the

defender’s evidence on this issue and that Mr Fernie gave evidence. His Affidavit confirmed

the position in principle about recovery from MMA personally of the tax that should have

been paid, although he considered that recovery of the employers’ NIC could not be sought.

Under cross examination however, he agreed that it was possible that a former Director

involved in an EBT scheme would agree to pay the Employers’ NIC also and that HMRC

would then pursue him. The distinction between employee and employer NIC was not

pursued on behalf of the pursuer in submissions.

Page 40 ⇓

[55] In light of the evidence summarised above, I conclude that the liability to settle the

tax due and arising as a result of the EBT entered into by LVP in respect of sums that were

MMA’s remuneration on which tax and National Insurance contributions should have been

paid was a matrimonial debt within the meaning of section 10(2) of the 1985 Act. The effect

of the scheme was that for a period during the course of the marriage MMA and SCA had

more income as a couple than they ought to have had because MMA was paid gross rather

than net of the relevant tax and national insurance. The liability to tax arose prior to the

relevant date and although the primary responsibility rested with the company, MMA has

to take responsibility for it to avoid HMRC pursuing him personally following the

liquidation of LVP and the consequent inability of that company to settle the large debt due.

Importantly, the offer to settle voluntarily on the basis of a payment by MMA personally

was made in May 2018, just prior to the date of separation. There was no suggestion that

there was any relationship between the parties’ separation and MMA’s instructions to his

accountants. It was accordingly clear from prior to the relevant date that (i) there was a

significant liability due in respect of unpaid tax, (ii) there was no defence to that liability and

(iii) the liability that would ultimately fall to MMA to settle and that he would do so. While

the position remained formally disputed, I sensed that the pursuer’s side felt rather

ambushed at the manner and timing of this issue arising rather than having any argument to

advance on the issue of principle. Ms Brabender made points about some of the evidence on

the issue, but very fairly included the whole debt in her calculation of the net matrimonial

property. Mr Cheyne suggested that the sum of £560,000 be deducted as a debt in keeping

with Miss Fleming’s best estimate. I accept Miss Fleming’s evidence and conclude that

£560,000 is the sum to be deducted as MMA’s liability.

Page 41 ⇓

[56] The other matter of dispute about matrimonial debt was the level of the sums due by

the parties to LV (Scotland) Limited at the relevant date. So far as SCA is concerned, she had

a debt to the company of £60,721 at the relevant date, a figure that was not disputed.

However, the sum arose because of a dividend of £135,000 issued to SCA as a shareholder in

LV (Scotland) Limited but which she did not receive as cash. It apparently related to monies

taken out of the company through the Directors loan account to spend on home

improvements that were then classified as dividend payments to SCA. Mr Shaw was clear

that SCA had shortly before the issue of the dividend received a class of share and that the

issue of the dividend was considered a tax efficient way of dealing with the monies taken for

home improvement. He said he had explained the situation to SCA at a meeting, although

he accepted that the money for the home improvements would have actually been taken out

of the company account by MMA. In her evidence SCA had said that she was shocked to

receive a tax demand about this and did not know (or at least didn’t understand) why she

would incur such a liability. Ms Brabender accepted that the sum should be included in the

schedule but should be considered as an economic disadvantage when considering the

division of matrimonial property. I will return to it in that context.

[57] MMA owed the sum of £36,885 to the company according to the accounts and

information provided to Mr Rowand, who gave evidence about it and who had checked the

positon on the sums due by the defender with Mr Shaw. Mr Robb had a very different

figure, the sum of £232,520, as owed by MMA to the company at the relevant date. He said

that he had taken this from draft management accounts as at 31 May 2018. However, he also

said that he had contacted Consilium when he had queried some of the intercompany loan

figures he had summarised (no 7/111 of process) from the accounts. He was told that a sum

stated of £196,755 due to “M & Sons” was an incorrect entry by an employee within the

Page 42 ⇓

company and that the sum should be classified as due to the property partnership, in which

of course MMA has a 50% interest. In broad terms, that figure accounts for most of the

disparity between Mr Rowand and Mr Robb’s figures. Mr Rowand treated the M & Sons

figure as being due to MMA personally because Derek Shaw told him that it should be a

credit balance to the MMA director’s loan account (see no 6/29 of process, para 4.4.2). When

he gave evidence Derek Shaw agreed that there may have been an error in recording this

reference to M & Sons, which was an entity that no longer existed, but also stated that the

preparation of accounts for the year to 31 March 2019 had not been commenced as at

December 2019 and that any error would be picked up when those accounts were prepared.

Against the background of MMA being the controlling mind of the whole enterprise with an

ability to move money around the entities at will, I consider that Mr Shaw’s initial position

to Mr Rowand should be accepted. If the sum of £196,755 due to M & Sons is credited to

MMA’s directors’ loan account as at the relevant date, he owed the company £36,885 as

calculated by Mr Rowand. Mr Robb’s figure fails to take any account of the £196,755 as he

did not appear to take it into account as a credit to the partnership account, whether as due

to MMA alone or otherwise. Mr Shaw’s later evidence appeared to be a suggestion as to

how the matter might be resolved in accounts as yet unprepared, rather than a statement of

the situation as at the relevant date. I will include Mr Rowand’s figure in the schedule of

assets and liabilities.

Calculation of the net value of matrimonial property

[58] I have determined the areas where the extent or value (or both) of the matrimonial

property was the subject of dispute at proof. I have used a single figure for MMA’s business

interests in the schedule below, consistent with my conclusions on the disputed valuation

Page 43 ⇓

evidence relating to that most significant issue. I have reached a view on each of the debt

issues, at least on quantum. Accordingly, the following schedule represents both agreed

figures and those on which I have made a determination on the evidence:

Matrimonial home

Contents

Investment flat

Bank accounts

Mercedes Benz car

Maserati Levante car

Lambretta Scooter

Vehicle number plates

Defender’s SIPP

Quoted shares

Jewellery and watches

LV (Scotland) Limited

G Limited

Sums due by G Limited

Business interests

Total (gross):

Less debts:

Mortgage

Vehicle Finance

Sums due to LV

Sums due to HMRC:

(i) personal £106,084

(ii) Excalibur £46,242

(iii) Akido £9,853

(iv) EBT £560,000

SCA

£5,215

£130,000

£1,489

£17,845

£3,500

£31,820

£4,406

£65,500

£21,000

_________

£208,974

£57,103

£9,997

£60,721

MMA

£962,500

£5,215

£4,046

£33,500

£3,000

£10,000

£474,538

£24,523

£7,638

£348

£9,974,057

£11,499,365

(£599,838)

(£13,885)

(£36,885)

(£722,179)

Page 44 ⇓

Total net:

£153,153

£, 10,126,578

Proportions in which the net value of the matrimonial property should be divided

[59] On the basis of these figures, the total net value of the matrimonial property as at

14 June 2018 was £.10,279.731 There was a dispute about the proportions in which the

matrimonial property should be divided. Ms Brabender’s position on behalf of SCA was

that a fair division of value would be an equal division. Mr Cheyne contended that an

unequal division would be fair because of the inheritance by MMA of TA’s share in most of

the business assets, particularly his interest in LPV, the previous holding company. It was

suggested that one half of the value of LV (Scotland) Limited should be deducted to reflect

that non-matrimonial source and that the assets of the partnership should be adjusted by

deducting one sixth of total value. The value of the Castlemilk Road property should also be

deducted from the SIPP. Determination of this matter requires consideration of the evidence

about how the late TA’s estate was divided, including on the issue of the debt apparently

taken on by MMA.

[60] The evidence about this came primarily from MMA, who spoke to certain documents

and was supported to some extent from Derek Shaw who was familiar with the general

agreement reached by the family. It was unfortunate that Mr Franchi, the solicitor

instructed in the executry was not called to give evidence, as there was some doubt, as

already explained, as to the basis upon which MMA regards himself as liable to settle his

late brother’s tax liabilities. However, certain facts about the late TA’s estate were led and

were in large part undisputed. First, the Confirmation relative to his estate (no 7/22 of

process) was lodged and spoken to in evidence. It had been prepared by Mr Franchi’s firm.

The total estate for Confirmation was said there to have a value of £2,235,327 and MMA

Page 45 ⇓

confirmed that he had signed that document as Executor Nominate. The main items

relevant to the arguments in these proceedings were TA’s interest in (i) M & Sons , with a

stated value of £380,911, and (ii) LVP Limited with a stated value of £767,192. TA’s capital

account in the partnership of TA and MMA was said to be in deficit and so given a Nil

value, as was his interest in the Firm of Messrs A (the three way partnership with MLA). It

was initially overlooked that a Shettleston Road flat and accompanying loan relative to the

TA and MMA partnership were held in TA’s name alone. When this was noticed and

confirmed in a letter from the accountants to Mr Franchi (no 7/94 of process) it resulted in a

revised deficit of £111,295 taken on by MMA. The fish and chip shops at Castlemilk Road

and Crookston Road were given a Nil value in the confirmation. TA’s interest was

transferred to MMA. He still retains the Castlemilk Road property in his SIPP and he sold

the Crookston Road property with the proceeds being added to the SIPP prior to separation.

MMA and his siblings entered into a Deed of Variation (no 7/20 of process) in terms of

which it was agreed that MMA would inherit all of TA’s business assets, other than the

property partnership involving MLA. It was agreed that MLA should receive any value at

credit of TA’s capital account in that partnership and that a new partnership would then be

drawn up between MMA and MLA. In broad terms, even allowing for the deficit, MMA

received business assets from the sources mentioned above to the value (in 2007) in the

region of £1 million from his brother’s estate. In addition he inherited the Castlemilk and

Crookston Road properties, albeit that in the Confirmation these were stated as not having a

net value at that time.

[61] So far as debts were concerned, there was some support for there having been a

departure from the usual rule that the deceased’s estate would normally settle all debts due

before distribution to beneficiaries. However, this was at best a verbal agreement and in the

Page 46 ⇓

absence of evidence from Mr Franchi about how the executry progressed and how debts

were treated, I have not deducted the sum of £142,128 representing sums still to be paid on

behalf of the late TA as a matrimonial debt notwithstanding that it seems clear that this will

be paid by MMA to HMRC. The fact that he will do so is a special circumstance in the

context of this case. While the separate liability that I have included as a matrimonial debt

arose from non-payment of tax during the years that LVP was operating, that debt related

primarily to personal income tax and National Insurance that should have been paid by

MMA at the time and has no real bearing on the value of the capital assets he received on his

brother’s death in 2007.

[62] Ms Brabender suggested that the defender’s evidence lacked candour and if that was

accepted it militated against any unequal sharing in his favour notwithstanding the

existence of special circumstances. Mr Cheyne on the other hand contended that the non-

matrimonial source of many of the valuable assets held by MMA should be reflected in a

significantly unequal division of at least some of the assets. I accept that it was likely that

had TA lived he would have remained in business with the defender and would have held a

half share in many of the business assets now owned wholly by MMA. On the other hand,

MMA has, through his industry and dedication to the business enhanced its value

considerably during the years leading up to the relevant date. The basic policy of the 1985

Act is to share fairly between the parties the fruits of their labour insofar as created during

the marriage and prior to the relevant date. Both parties contributed to this marriage in

different ways. SCA worked in the fish and chip shops and in the pizzeria, although was

also engaged bringing up the parties’ sons and running the family home. Their son M seems

set to take on the running of the family business one day. Their other son is likely to be

provided for by SCA, there being an unfortunate division of loyalties as already indicated.

Page 47 ⇓

It is not for the court to explore how or why that arose. However, the reality appears to be

that the division of assets effected by these proceedings may well work through to the next

generation. In my view, the defender did not display a lack of candour that would require

to be taken into account in considering the division of matrimonial property. He was vague

on many details and said in terms that he was not an educated man but knew how to run

pizzerias. He left matters of accountancy and tax to trusted advisers, but seemed to have a

clear understanding of what he regarded as his responsibilities in terms of his brother’s

estate. There were some inconsistencies in his evidence on minor matters such as whether

his late brother had gifted him a watch, a matter that I have taken into account in the sense

that he has the benefit of an item of matrimonial property not having been valued and so not

included in the assets. He also seemed to think that he had inherited some of TA’s share in

the property partnership, although the documentation illustrated that it was agreed that

MLA would receive that and his own interest was agreed to be matrimonial property. It

seemed to me that his misunderstanding was perfectly reasonable against the background of

his lack of attention to documentation. He, his father and TA had an equal three way

partnership and he and his father now have fifty per cent shares each in a partnership. The

current partnership was created after TA’s death and so is matrimonial property. However,

the assets held by the partners for the firm have effectively not changed and are now shared

between two rather than three. As Mr Cheyne put it, one sixth of the value property of that

partnership reflects what MMA received from TA’s interest, albeit indirectly, and so has a

non-matrimonial source regardless of what the Confirmation stated as to value.

[63] There are other matters that I must consider in deciding the proportions in which to

divide the matrimonial property. SCA was left with a debt of £60,721 to LV (Scotland)

Limited as a result of the tax liability arising from the dividend issued to her by the

Page 48 ⇓

company but which she did not actually receive. Ms Brabender contended that this

presented an economic disadvantage to her that should be taken into account and I agree

that it is part of the general picture within which I must decide on division of matrimonial

property. But in value terms it is a very minor matter as compared with the value of the

business assets and the arguments about the source of them. This is illustrated by the fact

that, in addition to the assets ascribed a value in the Confirmation relating to TA’s estate, the

property at Castlemilk Road, originally purchased by the defender’s father for £85,000 had a

value within the defender’s SIPP of £135,000 at the relevant date. In summary, the vast

majority of TA’s valuable or income producing assets were inherited and used by MMA as a

solid base to further develop the businesses he then held at the relevant date.

[64] What I must achieve is a balance that seems fair and reasonable having regard to the

undisputed history of the origins and development of many of the business interests that

now comprise matrimonial property. Those interests dominate the matrimonial balance

sheet, comprising about 97% of the net value thereof. Taking into account all of the

considerations mentioned above, including but not limited to the stated value of TA’s estate

and the proportion inherited by MMA directly and indirectly and his stated intention to

settle the tax, the requirement to effect fair sharing of the net value of the matrimonial

property would not be satisfied in the circumstances of this case by equal sharing. It is

rarely appropriate to effect some sort of reimbursement of the value of inherited wealth,

with or without an adjustment to reflect its relevant date value. In many cases, including

this one, it will have become intermingled with assets that have grown and provided the

parties with both income and assets since it was received, the value of which they are both

entitled to share after a lengthy marriage. The value of the defender’s inheritance from the

late TA and what happened to it thereafter is by no means a determinative factor. I have

Page 49 ⇓

taken all of the evidence into account in deciding how to reflect that inheritance and the

other special circumstances and economic disadvantage mentioned. I have concluded that

fair sharing of the matrimonial property in this case will be achieved by dividing its total

value in the proportions 58: 42 in favour of the defender. As the total net value of the

matrimonial property is £10,279,731, SCA will retain and/or receive assets and/or payment

to a total value of £4,317,487 to effect sharing in those proportions.

Resources and the orders for financial provision to be made

[65] There were few details of the value of the assets at the time of proof and it was not

suggested on behalf of MMA that financial provision should be reduced to reflect any

resources issue. That said, it is apparent that he will require to raise a very large sum of

money to meet the orders I intend to make and he will need time to do that. During the

proof I made an award of interim aliment in SCA’s favour and she is dependent upon that

for income meantime. It was not suggested that she would be entitled to any award of

periodical allowance once she has received a significant capital sum, but she will require

support until a sufficient proportion has been paid that will allow her to invest in income

producing assets. She has been a dependent spouse and she will require a short period to

adjust to financial independence of this kind. To achieve sharing in the proportions I have

determined would be fair, I must take account of the sum of £100,000 that SCA has already

received as a payment of capital to account and such assets as were held by her at the

relevant date. The combined effect of that is to reduce the capital she will receive from

MMA to £4,064,334. She has, however, indicated agreement to transferring her shares in G

Limited and her share in LV (Scotland) Limited to MMA. As a matter of law (section 10(3A)

1985 Act) he will require to pay current value for those in the absence of exceptional

Page 50 ⇓

circumstances justifying valuation at a different date, something that was not pled or

argued. I have accepted Mr Rowand’s evidence of the current value of G Limited. SCA’s

shares are now worth £381,500. Her interest in LV (Scotland) Limited was not revalued and

so I will use the relevant date value of £4,605. The combined effect of that would be to

increase the sum due to SCA to £ 4,450,439. If, as she now seeks, she receives transfer of the

defender’s SIPP (at its current value of £513,874) the capital sum then due to her will reduce

to £3,936,565.

[66] I will fix a By Order hearing for submissions to be made in relation to the precise

orders to be made to give effect to my decision, although neither the transfer to the defender

of G Limited nor the transfer of the SIPP were said to be in dispute. I will also expect

submissions at that hearing on the timing of the capital sum payment, including any

submissions on whether payment by instalments would be appropriate and if so, the size

and timing of those and of any periodical allowance be paid meantime. I will reserve

meantime all question of expenses, which should also be addressed at that hearing, together

with any confidentiality or anonymisation issues if parties consider those relevant in this

case.