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Cite as: [2020] CSOH 63, 2020 GWD 23-308, [2020] ScotCS CSOH_63

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F96/18

OUTER HOUSE, COURT OF SESSION

OPINION OF LADY WISE

In the cause

ASA

against

AZD

[2020] CSOH 63

Pursuer

First Defender

and

UN BANK

Second Defender

Pursuer: Innes QC; BTO Solicitors LLP

First Defender: Party

Second Defender: No appearance

15 April 2020

Introduction

[1] This is an action of divorce at the incidence of the wife pursuer, (“ASA”). Her

husband (“AZD”) is the first defender. UN Bank has entered the process as a second

defender with an interest as secured lender in relation to one of the properties that the

pursuer contends should be the subject of a property transfer order in her favour. The

second defender did not participate in the proof but it was agreed that the bank would have

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an opportunity to make submissions on any proposed transfer of the relevant property

before the final order stage.

[2] ASA and AZD were married on 19 September 1994. There are three children of their

marriage all of whom are over the age of 16. Accordingly no orders are sought or required in

respect of those children, the youngest of whom is approaching the end of her secondary

school education and resides with the pursuer. The parties met when the pursuer was a

third year medical student and the defender was a second year student of dentistry. They

both have Pakistani heritage. Both parties have been educated and resident in the UK for

either all or most of their lives, but the religious, cultural and familial backdrop is relevant to

some of the issues in dispute in this case, including the date of the parties’ separation (“the

relevant date”) and in relation to certain land owned by AZD in Pakistan. The couple were

both brought up in the Muslim faith and continue to follow that religion. Theirs had been a

love match of which the pursuer’s family did not approve and with which her family sought

to interfere. At one point during cross examination the pursuer stated to her husband “I

chose to marry you against my brothers and family’s advice … I choose to divorce you – my

family wanted an easy settlement but I don’t”. Both parties demonstrated considerable

emotion during their evidence and the family influence featured strongly during the

evidence.

[3] 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 AZD has behaved in such a way that ASA cannot

reasonably be expected to cohabit with him. The marriage has broken down irretrievably

and there is no prospect of reconciliation. The proof in this matter took seven court days. In

addition to affidavits lodged from all witnesses other than experts, most of those who had

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sworn affidavits were presented for cross-examination. There were exceptions to that,

although none on issues material to my determination. In essence the primary areas of

dispute between the parties at proof included the following:

1. The relevant date

2. The value of the matrimonial home

3. The valuation of shareholdings in C D C Limited and the D S Limited

4. The valuation of two flats in Edinburgh

5. The nature and value of the defender’s interest in a house in Pakistan and the

distribution of the sale proceeds thereof

6. The instigation and consequences of proceedings against the defender in Pakistan

7. Calculation of matrimonial property and the proportions in which it should be

divided

8. Resources and the orders to be made to give effect to the determination on

division of the matrimonial property.

The legal framework within which the financial provision on divorce dispute operates is that

contained in the Family Law (Scotland) Act 1985 (“the 1985 Act”). I will not reproduce it

provisions but will refer to those applicable to each issue in the relevant section. I have taken

all relevant provisions of the legislation into account in reaching my decision.

[4] During the course of the proceedings the parties entered into two separate joint

minutes agreeing the nature and extent of nearly all of the matrimonial property and the

value of all of the first defender’s properties in Pakistan. That agreement is reflected in the

schedule of matrimonial property that appears towards the end of this opinion. I should

record that AZD, who represented himself, did so with unfailing courtesy to the court and

displayed a reasonably high level of skill in conducting an adversarial process. For her part,

senior counsel for the pursuer took considerable steps to adapt her presentation of the case to

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take account of AZD’s lack of legal representation. In particular, she ensured that he had fair

notice of all of the arguments she sought to make and of her detailed submissions. She relied

on very few authorities and set out her calculations in detail so that AZD could be very clear

of the case he required to meet. I am grateful to all those involved for the flexible approach

employed in this challenging case. I will address each of the issues of dispute in turn,

summarising some of the material evidence, my decision and reasons in each section.

[5] So far as credibility and reliability are concerned, I have no adverse comment to make

about any of the pursuer’s lay witnesses and will comment on the reliability of the expert

witnesses in the relevant sections. Issues arise in relation to the credibility and reliability of

the principal parties. ASA came across generally as an honest and reliable witness, with one

or two exceptions in relation to the proceedings against her husband in Pakistan and about

her reasons for setting up a trust, both which I deal with in the relevant sections. I had some

concerns about AZD’s credibility and reliability. He was aware that his conviction on two

charges of fraud in 2007 had been raised by his wife in the pleadings in this respect. In his

affidavit (at para 27) and oral evidence he acknowledged that conviction (and other less

relevant driving offences) saying he wanted the court to have the full picture from which he

did not shirk. He had lived with the consequences of his dishonesty conviction having been

disqualified from practising dentistry between 2010 and 2019, although from June 2019

onwards his name has been restored to the register, albeit under certain conditions (Decision

of the GDC number 7/21 of process). Questions remain about the operation of the business

he controlled prior to the relevant date and, as I explain later, he appears to have failed to

lodge tax returns in recent years. In evidence he was inconsistent in his account of certain

matters, particularly in relation to a house in Pakistan sold by him shortly after the relevant

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date. Where their accounts differed I have tended to accept the pursuer’s account other than

on the one issue mentioned above. However, with the exception of the relevant date, my

reservations on credibility and reliability have ultimately had relatively little impact on the

decisions I have had to make. My primary task is to determine financial provision on

divorce dispute in a way that is fair and in accordance with well-established principles and

so I have relied on the issue of credibility only where clear inconsistencies have to be

resolved.

The relevant date

[6] Section 10(3)(a) of the 1985 Act provides that the relevant date is the date upon which

the parties ceased to cohabit as husband and wife. The issue is one of fact. In Banks v Banks

[2005] Fam LR 116, Lord Carloway (in the Outer House) confirmed (at para 33) that as a

generality the court must look at the issue objectively. It is for the court to assess all relevant

factors. Further, while there is no absolute requirement for one of the parties to have decided

that the marriage has run its course or to communicate that to the other party, the intention

of the parties and any communication of them to each other may be relevant factors in the

equation. The passage in Banks setting out this approach was cited with approval by the

Second Division in HS v FS [2015] SC 513 at para 16.

[7] In her affidavit and oral evidence ASA’s position was that the parties finally

separated on 12 August 2017. In response to her husband’s assertion that the couple

separated in June 2016, ASA explained that in 2016 she and AZD went on a pilgrimage to

Mecca without the children who stayed behind in Scotland with their maternal grandmother.

The marriage having been unhappy for some years before that, the pursuer

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regarded 2016-2017 as one of the more peaceful times in her marriage. There were no

aggressive incidents in the house and the defender was calmer. The trip to Mecca was in

about May or June 2016 and the parties returned after it to the matrimonial home in

Glasgow. She disputed that there had been even a period of separation in 2016. She said that

the parties and their children had gone on holiday to Dubai and Malaysia in

July/August 2016. While in Kuala Lumpur they met friends from Glasgow, NB and SB, who

were also there on holiday. On 3 August 2016 the parties visited the main mosque together.

When they returned from holiday they attended the wedding of the AZD’s niece in

Birmingham. Photographs and a video (numbers 6/114 and 6/115 of process) show the

parties entering the wedding together doing what the pursuer referred to as “the couples’

walk”. In September 2016 a university friend of the pursuer stayed with the parties at their

home in Glasgow so that he and ASA could attend a university reunion. AZD accompanied

ASA to that reunion as her spouse.

[8] The pursuer’s position was that over the whole period of the marriage AZD would

often “come and go” but she stated that during the period 2016-2017 he was never away for

more than a couple of weeks. In April or May 2017 in the period leading up to the older two

children’s SQA exams he did tell the children that he was going to leave but that was not an

uncommon occurrence. By February/March 2017 the pursuer said that AZD was abstaining

from everything physical. When she and her husband would perform ablution and ready

themselves for prayer the defender would flinch if she accidentally touched his hand. He

refused to take any liquid drinks from her but there appeared to be no religious basis for

that. Apart from a complaint that when the pursuer’s male university friend was staying at

the home she had not covered her hair or had worn her head scarf loosely, AZD raised very

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few issues during the period 2016-2017. ASA rejected the suggestion that he returned home

only for a period to assist with the children’s exams. The oldest child had not performed so

well in his exams after his fourth year at secondary school and so the pursuer had tutored the

children after that. She accepted that her husband had moved to Stourbridge in the West

Midlands when the matrimonial home was being renovated in 2017 and that she had told

third parties that he had so moved. The pursuer and the children also left the home at that

time and stayed at the pursuer’s mother home which is very close by. Although the defender

took a lease of a property in Stourbridge the pursuer and the children went to see it. The

pursuer contacted him while he was there to ask if he wanted to come on the proposed

family holiday in 2017, which he said he did. She made clear to him that he should only

come if they were going together as a family and he said he understood that. The family

then went to Dubai and then to Pakistan on holiday in the summer of 2017. They stayed in

the home of one of the pursuer’s brothers and his wife. The pursuer was very clear that in

Islamic culture a couple who have separated simply do not spend time together and she and

AZD could not have stayed under the same roof if they had been separated. Further, during

the stay at her brother’s house her husband was introduced by the pursuer’s family to

various other people. She described AZD as being on his best behaviour while there and he

had told the pursuer’s sister-in-law that everything was going to be fine between the parties.

It was when the family then went to Dubai that AZD changed. He gave the pursuer a key for

a room for her and the children and did not tell her the number of the room in which he

intended to stay. There was an incident involving the parties’ daughter when AZD caused

some upset to her. Subsequently, when the parties arrived at the airport to fly home the

pursuer took her husband’s mobile telephone and put it in her bag and so the parties argued.

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They sat separately on the way home on the flight. On their return AZD apologised and put

the pursuer’s ring back on her finger and had photos of them as a couple sent to friends.

Then 2 or 3 weeks later he left the family home again. That was on 12 August 2017 and the

pursuer regarded it as the final straw. While previously he would always come back after 2

to 3 weeks he did not arrive at the home again until April 2018 and although he returned at

that point for a short period there was no proper reconciliation. By that time the pursuer

wanted the family to be involved in trying to resolve things as AZD had been away so long

that she knew there was no way back for the marriage.

[9] Under cross-examination by her husband on this aspect of the case the pursuer

agreed that there had been contact with Family Mediation West of Scotland and a letter from

that organisation dated 20 July 2017 (number 7/14 of process) was put to her. It referred to

the parties having separated. The pursuer said that she understood what a date of separation

was Islamically but was less clear about what it meant in Scots law. AZD put to her that a

couple can live under the same roof but be separated. To that she responded that so far as

she was concerned he would have to tell her he was separating from her for it to constitute a

separation and that it could not be just something that he thought individually. She said that

the context of the letter inviting her to attend mediation was that she thought her husband

was trying to take the children to Stourbridge and she regarded the offer of mediation as part

of a manipulative measure to achieve that. Accordingly she had chosen not to contact

mediation. When it was put to her that it was simply incredible that the parties would be

still living together as husband and wife and starting a mediation process the pursuer said

that she regarded it as all part of a process of separating. She was again adamant that if

separated Islamically she would have to have had a chaperone and would not have been able

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to travel together with her husband in the summer of 2017. A couple can only come together

by way of reconciliation. So in the summer of 2017 she did not regard herself as separated

Islamically because her husband had not told her that they were so separated. The physical

separation in 2017 was primarily because the family home was being renovated. The pursuer

disputed that AZD had moved out of the house in May 2017 after staying there for a few

months only for the period of the oldest child’s exams.

[10] SB also gave evidence on this matter in the pursuer’s case. She is a 41 year old

pharmacist and a friend of the pursuer who she has known for about 13 years. Her husband

and AZD attended university together. Mrs B knew of some of the difficulties in the parties’

marriage including AZD’s infidelity. She recalled an occasion in early 2016 when the

pursuer had become upset about that. She formed the impression at the time that the couple

were working on their marriage and were still very much together. After early 2016 she and

her husband went out on several occasions with the parties. In July or August 2016 Mrs B

and her family were on holiday in Malaysia for about 2 weeks. ASA, AZD and the children

were also there as part of their holiday and the two families spent about a week together.

Mrs B did not observe any arguments or difficulties between the parties at that time. The

following year Mrs B organised a 50th birthday party for her husband. It took place on

21 May 2017 and she recalled that ASA and AZD had attended as a couple. Shortly after that

Mrs B and her husband attended at the parties’ home for a meal to break the fast at

Ramadan.

[11] Under cross examination Mrs B said that it had never crossed her mind that AZD

might have arrived separately from his wife for the 50th birthday party, she had assumed that

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they were together. About twenty people had attended and many photographs had been

taken, although not of the parties embracing or standing close to each other.

[12] PS, the pursuer’s sister in law also gave evidence on this issue. She recalled that the

family had stayed with her and her husband in Pakistan in 2017. ASA had shared a room

with her husband and they were operating very much as a family with their children. Mrs S

knew of the couple’s marital difficulties, which ASA had discussed with her. She recalled a

conversation she had with AZD on 23 July 2017 when he said to her that he had made a

mistake and that he wanted to spend the rest of his life with his wife. AZD put to the witness

that she had been present at the parties’ home in Glasgow in May 2017 when he was

removing a bed, a bicycle and a sofa from the house in a van. Mrs S did recall that he was

taking furniture to what she referred to as his “weekend flat” but said that there had been no

mention of separation at that time. She knew that AZD had been down in the West

Midlands for a while after his father died but thought it was to support his mother, not due

to any separation from ASA. When reminded by AZD that his father had died in 2005 and

he was asking about 2017 Mrs S repeated that when the family came to Pakistan in 2017 and

stayed with her they were very much a couple. She recollected AZD stating to her at that

time that he and his wife needed counselling but that their children came first. She did recall

organising a driver for AZD to take him from Lahore to Islamabad during that visit and said

it was later in the period 23 July-1 August 2017, after there had been a barbecue with family

friends and some excursions. Mrs S said that ASA and the children had subsequently joined

AZD in Islamabad. She could not recall specifically how many nights AZD stayed in her

home but thought it was more than two nights. The children were given a separate room

from the parties. When it was put to the witness that the parties were separated but not

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divorced before the July 2017 trip Mrs S stated “She would never have travelled to Pakistan

with you and share a room with you. Even separated she wouldn’t – you know that.” In re-

examination she explained that she knew that ASA would never have shared a room with

her husband had they been separated because she had moral standards. There was also

unchallenged Affidavit evidence from AS, the pursuer’s nephew, who said that both parties

had confirmed to him that they had separated in about August 2017. There was a family

meeting in around December 2017 at which AZD had indicated that the parties had recently

separated.

[13] In his own evidence AZD stated that he and the pursuer separated in June 2016 when

he left the matrimonial home and moved to accommodation in Glasgow in the lower level of

premises from which one of his dental practices operated. He accepted that he returned to

live in the family home between November 2016 and May 2017 but said that was to assist his

son with preparation for examinations. In May 2017 he moved back to Stourbridge in the

West Midlands, although when his wife contacted him to request that he join her and the

children on a two week holiday in Dubai and Pakistan he agreed to that. AZD claimed that

he went on holiday on the condition that his wife respected that they were separated and

would remain so.

[14] Under cross examination AZD disputed that life had gone on as normal in the

marriage after the trip to Mecca in 2016 although he accepted he may have gone back to the

home on occasions prior to November 2016 when he moved back in to support his son. In

relation to the family wedding in Birmingham in 2016 he claimed that although he and his

wife had attended there had been separate male and female lines and they had not walked as

a couple. He agreed that he may have stayed at the family home at the time of his wife’s

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university reunion, initially stating that both he and the pursuer had attended Glasgow

university reunions in September 2016. He accepted that in September 2016 he formed a

company (D S (Stirling) Limited) and organised for the pursuer to be the shareholder. He

continued to assert that he had moved to the West Midlands in May 2017 and had taken a

large van of his belongings and furniture with him. He disputed that he and his wife had

attended Mrs B’s husband’s 50th birthday party as a couple and said they arrived separately.

AZD agreed, however, that there had been a few occasions when the B’s came over to the

family home for a meal with him and ASA, including at Ramadan.

[15] In relation to the holiday in July 2017 AZD denied that he and his wife had shared a

bedroom when staying at Mr and Mrs S’s house. He claimed that Mr and Mrs S knew at that

time that the parties had separated and were likely to divorce. He recalled attending one

barbecue and going to a shopping centre in a group during the short period he recalled

staying with the S’s in Pakistan, but couldn’t recall whether he visited the mosque. He

agreed that he had taken his wife’s passport at the airport in Dubai before the flight home

but only because she had taken his phone. When it was put to him that Islamically he and

ASA could not have lived under the same roof or spent time together if they were separated

he said that in Islamic law it was grounds for divorce if a couple had lived separately for six

months, but the act of separation does not negate the nikah (the marriage contract). He then

said that there is no concept of separation in Islam. He stated that in any event, as far as he

was aware the husband could still act as the wife’s chaperone during any period of

separation. Further, he said that in Islam a couple could go on holiday together even if

separated, although it would not be acceptable for a wife to form a new relationship until

after the nikah was dissolved. When pressed on living together after separation but before

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the nikah was dissolved AZD said that this was possible if there was a prospect of

reconciliation. He didn’t dispute that a separated couple could not attend the mosque

together but said it was “just a building”. He said it was “arguable” that a separated couple

could go on holiday together, but that if there were no marital relations they would not share

a room.

[16] AZD’s position was that his wife knew where he was after August 2017 but that she

did not know that he had gone to Bulgaria at the end of that year. He entered a nikah with

another woman in early 2018. Although Islamically it was not necessary for his nikah with

ASA to dissolve before he entered into that new nikah he said that his nikah to ASA was in

fact dissolved in May 2017 because they had agreed in about September/October 2016 that if

there was no reconciliation in four months from then it would dissolve. He said that he had

pronounced the dissolution and it became actual or final after four months.

[17] Taking all of the evidence into account I have concluded that the relevant date, the

date on which the parties ceased to cohabit for the purposes of the 1985 Act, was 12 August

2017. While the marriage had been unhappy for some years and their relationship had been

characterised by short periods of separation prior to that, the couple continued to live

together as husband and wife between November 2016 and the summer of 2017. I accept

ASA’s evidence that, given her beliefs, she would not have gone on holiday with her

husband and shared a bedroom with him in July 2017 had they been separated. AZD himself

appeared to accept towards the end of his cross examination on this point that there were

certain restrictions in Islam about what women can do if they are separated, particularly if

there is no prospect of reconciliation. This is an important factor in the circumstances of this

case because both parties follow the Islamic religion and seek to abide by its constraints. In

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any event, there is extraneous evidence supportive of the pursuer’s position that the couple

did not cease to cohabit finally until after the holiday in July 2017. Mrs B and her husband

were friendly with the couple and continued to socialise with them both on holiday and at

home until well into 2017. In particular it was clear from Mrs B’s evidence that she had no

reason to regard the parties as anything other than a married couple living together when

she invited them to her husband’s birthday celebration in May 2017 and subsequently

accepted their hospitality to break the fast at the end of Ramadan (which ended on 24 June in

2017). Mrs B knew of some of the difficulties in the parties’ marriage and so she would have

been alert to any noticeable change in how they presented themselves. I accept also the

evidence of PS that the couple shared a bedroom in her home when they came to stay in July

2017. She was also clearly aware of the parties’ marriage difficulties by then but spoke of

AZD speaking positively about a future with his wife. It was abundantly clear that Mrs S,

who indicated considerable respect for her sister in law, would not have countenanced a

situation where this couple holidayed together and stayed together under her roof if they

were separated. So there was ample evidence that the parties were socialising together as a

couple and conducting family life as a couple in mid-2017.

[18] Further, Mr AZD’s position on the date of separation was ultimately somewhat

opaque. His initial position was that he and his wife separated in June 2016 and did not

reconcile thereafter, albeit that he moved back into the matrimonial home between

November 2016 and May 2017. Under cross examination however, he seemed to pinpoint

May 2017 when he took some belongings to Stourbridge and effectively moved from the

parties’ home to a rental property there as the key event. He also relied on the invitation to

the pursuer to attempt mediation in the summer of 2017 as inconsistent with their still living

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together as it referred to separation. He then gave a new and confusing position on when he

and his wife had on his account discussed dissolving the nikah. In my view, far from

supporting AZD’s position these facts lent considerable support to ASA’s contention that this

was a difficult relationship in which her husband had often departed the home for a period

and then returned. She had always tried to accommodate that and always resumed

cohabitation after any short period of AZD’s absence until the end of the summer holiday in

2017. The slow and painful process of the ultimate separation was in a sense ongoing from

2016 but the date after which there was no effective cohabitation as husband and wife was

12 August 2017.

The value of the matrimonial home

[19] It was not ultimately in dispute that this asset was matrimonial property although the

pursuer contended that there were relevant special circumstances justifying a slightly

unequal division of its value, a point addressed later in the section on division of the

matrimonial property. The only valuation evidence led in relation to this asset was from

Paul Reilly an experienced surveyor and Director of DM Hall in Glasgow. In giving evidence

in the pursuer’s case, Mr Reilly explained that he specialises in residential property

valuations and conducts as many as 20-25 of these every working week. He has been a

qualified surveyor and Member of the RICS for almost 20 years. I am satisfied that he was a

skilled witness and well qualified to give opinion evidence on the value of the matrimonial

home.

[20] Mr Reilly spoke to his report number 6/283 of process. This was a desk top valuation

of the property prepared in October 2019 but with a valuation date of 12 August 2017. In

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preparing that valuation he had access to the report of a colleague at DM Hall who had

inspected the property in 2018. His colleague had valued the property at £700,000. Mr Reilly

considered that it would be worth less than that in August 2017 because he had information

that there was unfinished building work going on in the property in 2017 that would have

affected value had the property been sold on the relevant date. He had been shown the

builder’s quote for the works, number 6/213 of process, which confirmed a total estimated

bill of £83,712. Mr Reilly explained that this was not particularly relevant as there is not a

direct relationship between cost and added value. He had also spoken with the pursuer by

telephone to gather information about the condition of the property before reaching a view

on value. He was told that the accommodation in the attic, comprising a large master

bedroom and two en suite bathrooms had not been formed by August 2017 and so he had

stripped it out of the valuation. He also looked at comparable sales evidence. Taking all of

these factors into account his opinion of value as at 12 August 2017 was £625,000.

Subsequently he had seen the Affidavit of Michael Collins, the builder who undertook the

extensive work on the property in 2017 but there was nothing in it that caused him to alter

his opinion.

[21] Under cross examination Mr Reilly confirmed that he had not been asked to produce

a current valuation just a retrospective one as at 12 August 2017. A desktop valuation was

one reached using the skill of the surveyor, together with information from the client and

access to professional sales online systems. He confirmed that a desktop appraisal would

never be a sufficient basis for secured lending purposes. However, if the information

provided to the surveyor was correct, a desktop appraisal should be accurate. Mr Reilly

accepted that generally speaking visiting a property gives a better idea of its physical

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condition. In the case of the matrimonial home however, he had a file from October 2018

which included site notes and a plan and access to retrospective data online, using a platform

specifically for property professionals. He had working notes which he inputted into the

system and which could have been provided on request. He did not consider the UK house

prices index to be of particular use because it includes such a broad range of property,

although it can provide information about how an area of the country is performing in terms

of house sales.

[22] Mr Reilly agreed that changes to a property that increased floor space, such as an attic

conversion, would affect value. He was aware that the attic space had been developed

previously in the property but he had been advised that the builder’s view was that it had

not complied with building regulations and so couldn’t be regarded as developed usable

space prior to the 2017 works. When asked to describe the property he said it was a detached

sandstone villa built in 1900 with four public rooms, four bedrooms, a conservatory and a

garage. He agreed that Newlands is a popular area but disagreed with the assertion that

£625,000 was a ridiculously low value and that such a property would sell for £800,000 -

£900,000. He was content with his report as a desktop appraisal and as a cross check he

knew that DM Hall had valued the property at £700,000 in 2018. He had not been asked to

consider how much of the works undertaken in 2017 had been carried out by 12 August.

[23] While no other valuation evidence about this asset was led, the builder Michael

Collins also gave evidence. In his Affidavit he confirmed that he is a joiner with his own

business and was instructed by the pursuer to undertake a substantial renovation project at

the property in 2017. He coordinated the building work together with a structural engineer.

His recollection was that he started the job around May 2017 and completed the work in the

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November of that year. He thought the total cost was about £70,000. The work carried out

was that detailed in a quotation, number 6/213 of process, prepared not by him but by a

different firm. Under cross examination Mr Collins agreed that the configuration of the

property did not change through the works, at least on the ground floor. He accepted that

the property was not completely overhauled in the sense that some parts were already in a

reasonable condition, such as the kitchen. Some rooms such as the main lounge required

only repair of wallpaper that had come loose from the wall. Much more of the work

involved the first floor and attic space. A previous unsafe staircase had been put in to

connect those floors and had to be removed and replaced. Some supporting lintels were put

into load bearing walls. He confirmed that his bills had been paid partly in cash and partly

by cheque, some of which went to builders’ merchants.

[24] I am satisfied that as at the relevant date the matrimonial home was undergoing a

significant renovation project and that such work does not usually translate into a direct

increase in value of a property. However, on the basis that a valuation of £700,000 was

arrived at for the property at the conclusion of the project and unconnected with this

litigation, the value of £625,000 on a date when the renovation was about half way through

seems reasonable and consistent with that subsequent higher figure. The property was in a

far better state in 2018 than it was in August 2017, albeit that a purchaser might take into

account that work could be completed before the conclusion of any sale. As AZD led no

evidence to support his own contention that the property was worth £850,000 at the relevant

date, I have no hesitation in accepting the evidence of Mr Reilly and fixing the value of the

property at the relevant date at £625,000. There is a separate issue relating to funds provided

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to the pursuer for the renovation project and I will return to that in considering the division

of matrimonial property.

3. Valuation of CDC Limited and DY Limited

[25] The valuation of the shareholding in these companies was one of the major issues of

contention at proof. The background to the ownership of the shares in each is as follows. A

company known as The DS Limited was incorporated in 2006 by AZD. In 2007 he

transferred the shares in the company to ASA. CDC Limited was incorporated in 2014. By

the relevant date that company owned all of the shares in The DS Limited. Accordingly, as at

the relevant date the pursuer held the relevant shareholding to be valued as a matrimonial

asset. Notwithstanding his agreement recorded in a Joint Minute of Admissions that this

was the position, AZD sought to raise a number of issues about the shareholding and

appeared to have attempted to transfer the shares into his own name after the relevant date,

something that was subsequently rectified by the company all as outlined by the pursuer in

her Affidavit No 35 of process at paragraph 53. AZD’s position seemed to be that in Muslim

families it was quite common for assets to be owned by the wives even where the business

was operated by male members of the family, a type of nominal ownership. Certainly AZD

was the dentist in the family and ASA was working as a medical practitioner at all material

times. However, as a matter of legal ownership, the shares were held by ASA at the relevant

date and it is that shareholding which requires to be valued. The pursuer also owned 50% of

the shares in a surgery (DY Limited) on the relevant date, the other 50% being owned by a

Mr MO, a dentist working in the practice operated by that company in Aberdeen. I will

summarise the valuation evidence and my decision on each of those companies separately.

Page 20 ⇓

Two witnesses gave evidence on valuation of these assets, Mr Greg Rowand in ASA’s case

and then Mr Wilkinson for AZD.

[26] First, evidence was led in the pursuer’s case on the value of CDC Limited from Greg

Rowand, CA, a 55 year old experienced chartered accountant with Henderson Loggie. He

spoke to his report number 6/291 of process, appendix 1 to which contains his curriculum

vitae. He has vast experience of preparing reports in forensic accountancy matters for both

civil and criminal proceedings and has given evidence in this court on a number of occasions.

He is a recognised expert in his field in this jurisdiction and well equipped to give

independent evidence on company valuation. Mr Rowand was instructed to undertake a

valuation of CDC Limited (“CD”) as at 12 August 2017. The DS Limited (“DSL”) was a

wholly owned subsidiary of CD at the relevant date and so the value of that entity was

included in the valuation of the parent company. Neither party was a Director of either CD

or DSL at the relevant date, a Ms F being the sole Director of both companies at that time.

DSL operated seven dental surgeries across Scotland by August 2017. A previous surgery it

had operated in Edinburgh was sold in 2017 prior to August. Additionally there was a

practice in Kilwinning, the heritable property of which was owned by AZD alone but it never

operated fully and was closed in December 2017. AZD also owned the premises in Glasgow

and owned 20% of the premises in Falkirk, with the other 80% being owned on the face of it

by the second defender, the secured lender.

[27] In valuing the company, Mr Rowand’s approach was to calculate maintainable

earnings before interest, tax, depreciation and amortisation (“EBITDA”). He initially

summarised the profit and loss accounts for four years up to 31 December 2017 and noted

that the business had improved from being loss making to making a gross profit over time.

Page 21 ⇓

Despite undertaking a number of enquiries Mr Rowand was unable to make the sort of

adjustments to EBITDA he would normally consider before arriving at a maintainable figure,

such as to rent, rates and insurance, due to a lack of information about the detail behind the

figures in the accounts. He used an average of three years EBITDA to estimate a

maintainable EBITDA figure of £24,669. In the absence of budgets or projections that might

have justified weighting the most recent year, he considered that a simple average was best.

There were real concerns about the lack of reliable information about past results. To the

average EBITDA figure he applied an EBITDA multiplier. He explained that the level of

multiplier is a matter of professional judgement and experience. While he was not an expert

in dental practice valuation as such, he was able to obtain information about the industry in

the same way that he would when valuing a company in any sphere. He looked at a

published review of the key trends, activity and pricing of the dental market by

Christie & Co which included information on “current EBITDA multiples” and formed

Appendix 7 to his report. His approach to assessing the EBITDA multiplier was explained

fully in section 6 of his report. Ultimately he selected a multiplier of 4 and so valued the

goodwill of DSL at £98,676 at the relevant date. Then he added that figure to his estimate of

net assets at the relevant date using the balance sheet as adjusted to 12 August 2017 and

including the relevant proportion of post-tax profit. He deducted tax on the uplift

representing the value of goodwill and rounded up slightly to produce a value for the

company of £239,000. He provided a “sense check” on his valuation by calculating an

Enterprise Value (multiple of EBITDA/ earnings based valuation) by taking his goodwill plus

net assets valuation and working backwards. This gave an implied multiplier of 12.3 which

was at the top end of any reasonable range. The cross check suggested that the value arrived

Page 22 ⇓

at through applying a multiplier to maintainable EBITDA was if anything slightly high but

he was prepared to adhere to it. He had used this cross check method of an EBITDA

multiple/ earnings multiple because he understood that was the approach taken in the dental

practice sales industry. Further, Mr Rowand had looked at the sale price of ASA’s

shareholding in DY Limited and had access to some financial information for that company.

Using the sale price and the information about assets he had calculated that the EBIDA

multiple in the sale had been between 1.22 and 2. He set out his calculation on this in

Appendix 9 of his report. He confirmed he had not been instructed to value DY Limited as at

the relevant date.

[28] Mr Rowand had also examined something described as a Directors Loan account in

the DSL company balance sheet, but which did not relate to Ms F. He had produced details

of all payments made from that account during 2017 at Appendix 6 of his report. The

opening balance was £134,965.51 at 31 December 2016. Various payments were made during

2017, nearly all to ASA. In particular she received four payments of £25,000 each in May

2017. The closing balance on the Directors Loan account was £26,266.23 as at 31 December

2017.

[29] The witness had had sight of a valuation produced by AZD from a Ted Johnston of

Dental Elite which appeared to value DSL at £1.4 million. While it was not clear from the

report, he thought that this was intended to be a valuation of goodwill. The main thrust of

AZD’s cross examination of Mr Rowand was that as he was not a specialist dental practice

valuer his valuation should not be accepted. Mr Rowand explained that his expertise was in

company valuation and that involved him taking into account sector considerations for

numerous companies. He had looked at about half a dozen dental practice business over the

Page 23 ⇓

last 20 years and had conducted an information gathering exercise to assist his

understanding of the sector in preparing the valuation in this case. The principles of

valuation were similar. For example if an owner operates a business and leaves it on sale

that owner will have to be replaced. He was aware that some dental practices might be

associate led and others owner led as Christie & Co gave different multiples for those

different types of business, with the owner led business having lower multipliers.

Mr Rowand accepted that Christie & Co and Dental Elite specialised in the field of dental

practices. He could not accept an assertion that there were fundamental differences in

methodology between such valuers and his own approach, which was to add a figure for

goodwill to net assets. He accepted that different considerations would apply to, for

example, veterinary practices, but that would simply involve taking account of information

of that particular sector. Of course those specialising in a sector would have knowledge of

industry practices, regulations and so on and he would take account of that if provided.

However, having seen the Dental Elite report there were two things that didn’t make sense.

The first was a Future Maintainable Trading (“ FMT”) figure of £937,639 which appeared to

be based on half of the 2016 turnover figure. Secondly, there was a difference of £150,000 in

the EBITDA figure between Dental Elite and his own report. As Mr Rowand had taken his

figures from the company accounts, he could not comment on the credibility or otherwise of

the Dental Elite report without knowing where the figures came from.

[30] Mr Rowand’s approach was the accepted one of hypothesising a willing buyer and

willing seller on the relevant date. AZD asserted that it was all about what the purchaser

would pay, but Mr Rowand pointed out that a purchaser may not be willing to give the seller

the value that the purchaser will bring to the business. Various figures of what might have

Page 24 ⇓

been offered for certain practices within the business were put to the witness but he had no

details of these that would give content to the assertions made. He reiterated that he had

valued the company based on the financial results (and so the actual trading performance) of

the “group”, as he had not been given the figures for individual practices. Mr Rowand

accepted that if he had those figures he would have been able to look at the trading of each

individual practice and see whether there would be an impact on maintainable EBITDA.

There had been information missing that had never been provided.

[31] Mr Paul Wilkinson was called in AZD’s case. Mr Wilkinson had not been on any

witness list and produced a brief report with accompanying figures (number 7/40 of process)

a day or two before giving evidence. He explained that he was a co-owner of Dental Elite, a

business set up in about 2010, which is involved primarily in the sale of dental practices. Of

the 500 or so dental practices that change hands each year in the UK he thought his business

would be involved in about 130 of them. Until about 2017 when he had changed his focus to

concentrate on business strategy he had carried out about 12 valuations of such businesses

per week. Mr Wilkinson has no formal professional qualifications.

[32] In preparing his report Mr Wilkinson used the accounts of DSL for the year ended

31 December 2016. He was asked to value the business as at the end of 2016. Although his

working of the figures differed, he supported the valuation of £1.4 million suggested by his

colleague Ted Johnston in an earlier report, number 7/39 of process. In essence Mr Wilkinson

applied a multiplier of 5.25 to an EBITDA figure of £266,000 and rounded up from £1,396,500

to £1,400,000. The method he used was that employed by him in the course of his business

daily. He took the figure for total revenue or turnover for the relevant year (£1,795,790) and

deducted the costs, including materials, lab fees, payments to dentists and lab recharges to

Page 25 ⇓

arrive at a gross profit figure of £965,644. Then he took account of “establishment costs” of

maintaining the various business premises and deducted both those and the general running

cots of administrative staff, IT costs bank charges and so on. The figure arrived at after

stripping out all of those costs was an EBITDA of £266,313. An alternative approach was to

calculate FMT and apply a multiplier to that, but that assumed that the incumbent dentist

would be an owner operator.

[33] Under cross examination Mr Wilkinson said that his business did not do as much

business in Scotland as they would like, but since Ted Johnston joined he has been building

that up. He agreed that he had been instructed to attend court to speak to Mr Johnston’s

valuation but when he reviewed it he saw that it was based on 2018 gross revenue and so

was inaccurate and should be ignored. He agreed also that what he had done was essentially

value goodwill without factoring in assets or tax. In the deals he was involved in

accountants were brought in towards the end to sort such matters out. His valuations are not

accepted by the bank for lending purposes because he is not RICS qualified. His role was to

fix a “pitching point”. For the exercise he had carried out in this case he had not looked at

any previous years’ performance because he had only a very short time to carry out the

exercise and used what he had. In relation to his EBITDA figure of £266,313 Mr Wilkinson

referred to this as “normalised EBITDA” which assumed that a purchaser would change the

business operation completely. He eliminated costs (by adding them to the initial EBITDA)

that would normally be incurred in running such a business such as hire of equipment,

professional indemnity and so on. A list was provided of these “add backs” as he called

them in his report. Mr Wilkinson said this was standard practice. Those “add backs”

explained at least £102,115 of the difference between his EBITDA figure and that of Mr

Page 26 ⇓

Rowand. Another significant difference was in the approach to Associate Fees, i.e. payments

to the dentists working in the business. While Mr Rowand accepted the figure in the

accounts for this, Mr Wilkinson, using a spreadsheet provided by AZD had recalculated this

figure based on the Associates receiving 50% of gross revenue under deduction of various

costs and then deducting 50% of the lab costs from that. Accordingly he had a figure for

payments to Associates of £435,971 as opposed to the figure of actual payments in the

accounts of £584,018. This made a difference of £130,047 on the gross profit figure. He

sought to correct the figure in his workings on this from £584,018 to £564,405. He agreed that

if the lab cost were only half the figure he had included those would have to reduce as well

and this would affect the figure used for payments to Associates which would reduce to

£454,000 or so. His explanation for not using the actual figures in the accounts for these costs

was that the accounts wouldn’t reflect when each dentist came into the practice and so a rule

of thumb of 50% of revenue was used. Finally Mr Wilkinson had proceeded on the basis that

the Associates did not share in the Capitation and Continuing Care payments form the NHS,

while Mr Rowand had understood that they did. He agreed that if his information was

wrong on that his figures would have to be adjusted. An additional spreadsheet produced

by AZD (number 7/41 of process) was put to the witness who agreed that it looked as if all

the dentists in this business were receiving such payments. These differences explained

nearly all of the differences on EBITDA. Mr Wilkinson also explained why he considered the

purchaser would not “ inherit” the various add backs like accountancy fees, training costs,

equipment hire and so on, although he accepted that some purchasers would then have to

incur these costs of new in order to run the business and so it could be a matter for

negotiation in any given case.

Page 27 ⇓

[34] On the multiplier Mr Wilkinson had used 5.25 as against Mr Rowand’s multiple of 4.

Mr Wilkinson agreed that the factors adverse to this particular business taken into account

by Mr Rowand such as the competitive nature of the market, difficulties with dental

recruitment, issues with certain of the premises and allegations of fraud in relation to the

defender’s previous running of the business were all relevant. On profitability, while there

Mr Wilkinson accepted the level of profit was low although turnover was going up and

placed more reliance on that. He adhered to his multiplier of 5.25.

[35] In re-examination Mr Wilkinson confirmed that over 90% of the businesses he values

sell for at least the valuation he has placed on them. His approach was to make assumptions

based on what he is told.

[36] Mr Rowand was recalled to give further evidence so that he could comment on

aspects of Mr Wilkinson’s figures that had not been put to him due to the lodging of the

spreadsheet (number 7/41 of process) after his earlier evidence. In addition the accountant

Mr Khokar and practice manager Miss Chaudry provided further Affidavits correcting the

lab fees figures in the accounts, something not noticed until after the late spreadsheet was

produced by AZD. Having heard Mr Wilkinson’s evidence Mr Rowand remained of the

view that Mr Wilkinson had valued the goodwill of the business and not the company. He

had based his view on a single set of accounts and a pay sheet. The concept of normalised

EBITDA used by Mr Wilkinson makes the assumption that a purchaser will bring in

efficiencies to the business. While this was not a typical approach in business valuation for

divorce in this jurisdiction it might be a question of negotiation if it is a feature of a particular

industry. Mr Rowand was clear that the figure for Associates Fees and lab recharges he had

used was taken from the accounts. He did not seek to alter his own valuation having heard

Page 28 ⇓

Mr Wilkinson’s evidence although he too would have preferred to understand some of the

detail in the accounts. That might have helped him understand how Mr Wilkinson could

assume that a purchaser could readily achieve such an increase in gross profit.

[37] On the add backs included in Mr Wilkinson’s analysis, Mr Rowand would not make

those assumptions without having more detailed information. For example a purchaser

would either acquire the dental chairs that came with the business or have to buy or hire

their own. An expensive car for a Director would be in a different category but there was

none in this case. Professional and accountancy fees would be incurred going forward.

Mr Rowand so no reason to alter his view on either EBITDA or the multiplier he had

selected.

[38] I have concluded that Mr Rowand’s valuation is to be preferred. The difference

between the two valuations provided in relation to this company was significant. However

only one of those, Mr Rowand’s, was a valuation of the company at the relevant date.

Mr Wilkinson was asked to produce a valuation as at 31 December 2016, which neither party

had contended as a possible relevant date. Accordingly, even if I had been willing to accept

Mr Wilkinson’s approach, it would be difficult to accept his valuation as one apt for the

purpose of my determination. More importantly, it seemed to me that the business in which

Mr Wilkinson is engaged is in brokering deals to sell dental practices. The valuations he is

engaged in are prepared with a view to marketing. He accepted that accountants would

have to be involved at a later stage to resolve the detail of what would be taken into account.

I have no doubt that Mr Wilkinson is extremely successful at achieving sales at prices he has

tendered. However, the approach of this court in relation to valuation of shares in a

company as at the relevant date is a different exercise. It requires consideration of the price a

Page 29 ⇓

hypothetical purchaser might have paid and a hypothetical seller might have accepted for

the company on the relevant date following a negotiation where each party was willing but

not anxious. It is an attempt to assess the end point of such a negotiation not a starting point.

Mr Wilkinson freely admitted that he used the same approach in all of his valuations. The

same assumptions are made regardless of what the accounts reveal has in fact happened.

[39] One of the matters illustrative of the significant difference to the two valuations was

the approach to Associates Fees. Mr Rowand used the actual figures paid to Associates.

Mr Wilkinson used a rule of thumb of 50% of recalculated gross revenue and then deducted

50% of the lab costs. This made a difference of £130,000 to the gross profit figure and on a

multiplier of 5.25 accounted for £682,747 of Mr Wilkinson’s final valuation. It seems to me

that this is exactly the sort of issue that would have to be resolved by accountants in a sale

transaction even if Mr Wilkinson’s headline figure was accepted as a starting point.

Mr Wilkinson himself accepted that if the Associates were to remain with the business after

sale they would expect to be paid at the same rate as previously. The lab costs differed as

between 2016 and 2017 and so Mr Wilkinson’s figure on that could never have been accepted

as at the relevant date. On the Capitation and Continuing Care Payments, the spreadsheet

provided by the defender illustrated that Mr Wilkinson was wrong to work on the basis that

the Associates in the company did not receive these. In fairness to the witness, this was one

of the issues on which he may have erred because of payment differences between those

working in Scotland and England, Mr Wilkinson’s personal experience being exclusively in

the latter jurisdiction. For all these reasons I accept Mr Rowand’s approach of using the costs

actually incurred down to the relevant date. Similarly, the “add backs”, which assume that

the purchaser will not take on costs of equipment, professional fees, travel expenses and so

Page 30 ⇓

on, comprised £563,103 of Mr Wilkinson’s final valuation (by adding £102,115 to EBITDA

multiplied by 5.25) and so, it seems to me, inflated the value beyond that a hypothetical

purchaser would reasonably pay for the company as a whole. Regardless of whether the

costs change form, they are likely to be incurred by the purchaser. Of course, it may be that

larger players in the dental market are able to buy up smaller entities and make efficiencies,

but no detail of the level of such costs that could truly be added back to profit was ever

given. Finally, it is significant that when asked why he had used only the accounts to 31

December 2016 to carry out the exercise Mr Wilkinson stated that it was because he had

insufficient time to do anything else.

[40] I have considered carefully whether Mr Rowand’s multiplier of 4 was too low.

Mr Wilkinson’s knowledge of the sector means that he is well placed to make a judgement on

multipliers. However, Mr Rowand’s figure was not out of line with those supplied by

Christie & Co, being the average Scottish multiplier published by Christie & Co.

Mr Wilkinson accepted that the considerations Mr Rowand had taken into account were

relevant. It would be open to me to accept Mr Rowand’s approach but to use a higher

multiplier and recalculate the valuation and I have considered that. On balance, however, I

consider that he was entitled to take a conservative approach to this, standing the problems

faced by the business all as explained in his report and in evidence. I conclude that

Mr Rowand’s valuation of the company can be accepted as it stands. Had Mr Wilkinson

been given more detailed information and the time to examine it, he may well have been in a

position to assist the court more than he did on this issue and I intend no criticism of him.

He made clear that his report was as close as he might get to a “back of an envelope

Page 31 ⇓

calculation” and clearly had not been informed of the requirement in this jurisdiction to

value at a specified date or what that date was.

[41] Turning to DY Limited, there was an absence of any independent valuation evidence

as at the relevant date. The pursuer gave evidence in her affidavit ( at paras 57-58) that she

was in urgent need of funds during 2019 and so sold her 50% interest in this company to

SS Limited. That company is owned, or partly owned by Mr MO who held the other 50%

shareholding in DY Limited. ASA stated that she did advertise her interest through Christies

at their recommended price of £250,000 (£500,000 for the whole business). One possible

purchaser was interested but only at a level of £325,000 for the whole business. Ultimately

SS Limited paid ASA £165,000 for her interest in September 2019.

[42] AZD contended that his wife had sold her interest in Dyce for lower than valuation

and so the sale price should not be used. Her own evidence was that she needed money and

was desperate to sell and so she will not have achieved best price. AZD also sought to elicit

from Mr Wilkinson that the value of £500,000 for DY Limited as a whole was fair, but of

course Mr Wilkinson had no involvement whatsoever in valuing that entity. AZD pointed

out also that the pursuer had lodged no documents to support her contention that the only

other interest had been at the level of £325,000 for the whole business. He sought to rely on a

letter from Dental Elite ( number 7/39 of process) supporting a value of £500,000 in total for

DY Limited but the author of that letter did not give evidence.

[43] It is regrettable that neither side sought to have ASA’s interest in DY Limited valued

as at the relevant date in the absence of agreement as to that value. Mr Rowand looked at the

figures for DY as a cross check to his work on DSL and found that working backwards the

sale price achieved by ASA represented a multiplier of 1.22-2, depending on whether the

Page 32 ⇓

2018 results were taken into account. That is significantly lower than the average multiplier

being used in Scotland in 2017 according to Christie & Co and relied on by Mr Rowand for

DSL/CD. Appendix 9 to Mr Rowand’s report indicates that DY made a very healthy profit

for the year ended 31 July 2017, immediately before the relevant date. It is not for the court

to value assets of this type, where specialist valuation is normally tendered. That said it was

agreed to be a significant asset and competing submissions were made on valuation – the

pursuer wanted to take the 2019 sale price of £165,000, with the marketing price of £250,000

(half of £500,000) being AZD’s position and so I must do what I can to assess the relevant

date value. I cannot estimate what multiplier would have been appropriate but I have the

EBITDA figure of £183,364 for the year to 31 July 2017 from Appendix 9 of Mr Rowand’s

report and the average Scottish multiplier information referred to in his valuation of

CD section. I note that in Mr Rowand’s summary of the DY figures, EBITDA dropped from

£183,364 for the year to 31 July 2017 to £92,259 at 31 July 2018. I conclude that on balance,

whether or not the pursuer sold her shares in DY for below their value in 2019, the financial

results for that year not having been produced, the shares were worth more than £165,000 at

the relevant date in August 2017. The pursuer herself accepted that she was very anxious to

sell the shares in 2019 and so that sale may not represent a realistic willing buyer willing

seller transaction at that time as one party was not able to hold out for the best reasonable

price and the other being in a strong position to offer a lower than market price. Doing the

best I can on the information provided and taking a broad view I will place a value of

£200,000 on ASA’s shares in DY at the relevant date of 12 August 2017.

Page 33 ⇓

The valuation of two flats in Edinburgh.

[44] AZD purchased the upper two floors of the property from which the Edinburgh

practice operated and developed the premises into two flats. In evidence he maintained that

he had encountered considerable difficulties with the project. While planning permission

was obtained he said he had been unable to obtain a completion certificate. The windows are

not regulation compliant and he stated that they will have to be replaced with double glazed

sash and case units. The electricity provision as between the two flats has still not been

divided and there remains some soundproofing work to be done. AZD also claimed in

evidence that monies were due to a Mr WH in terms of an agreement (number 7/19 of

process) entered into between the two men when Mr WH lent money to AZD. The

agreement was dated July 2016 and it records that the project is anticipated to take about

6-9 months. Although the agreement indicates that Mr WH will receive a return on sale of

the finished project, in May 2017 DSL made payments of £100,000 to him. In giving evidence

AZD acknowledged that he had repaid the £100,000 due under the agreement but claimed

that there had been ongoing informal further loans to Mr WH and he still owed him

considerable sums of money, perhaps as much as £70,000. He produced no vouching of any

such additional sums and no evidence, affidavit or otherwise, from Mr WH. There is no

secured loan over the properties and AZD was living in one of the flats from time to time by

the date of proof. In the absence of any acceptable evidence to contradict that the £100,000

advanced by Mr WH was duly repaid in 2017 I take no account of any further unspecified

loans absent proof of dates, terms or details of partial repayment, all of which could have

been provided easily.

Page 34 ⇓

[45] Again neither side produced any independent valuation of these properties either at

the relevant date or at the current time. The pursuer sought to rely on schedules prepared

by the selling agent lodged at numbers 6/10 and 6/11 of process. These illustrate two

modernised and renovated apartments, one with a larger public room than the other and

both having two bedrooms. AZD accepted in evidence that the smaller one had been

marketed at offers over £290,000 and the larger at offers over £310,000. He said that they had

not sold at that price and had been removed from the market after a year. They were so

removed after the pursuer raised these proceedings at the end of November 2018 and

secured an inhibition.

[46] The absence of valuation evidence is unsatisfactory in relation to these properties just

as it is in relation to DY Limited. Evidence of an estate agent’s upset price for marketing is

not evidence of value, particularly as it seems that the properties did not sell at all when

advertised at that price. That said, if the properties had been on the market for over a year

prior to November 2018 as AZD stated, they must have been effectively completed by

August 2017. No quantification of any work still to be undertaken was produced and a firm

of reputable estate agents appears to have prepared property schedules showing fully

renovated apartments on the open market shortly after the relevant date. Again doing the

best I can and taking a broad view, I place a value on these properties of £550,000 (£265,000

and £285,000) a reduction of £50,000 on the marketing price to reflect the absence of evidence

that a willing buyer would have paid the full purchase price at the relevant date, or that there

was any interest at all when they were marketed at a total price of £600,000. In submissions

AZD suggested that £550,000 would be the value of the flats “once renovated”, which the

available property schedule photographs suggest was the position. The schedules describe

Page 35 ⇓

the property as “fully renovated and modernised” and on the only information available I

am unable to accept AZD’s suggestion that such a statement was inaccurate.

The nature and value of the defender’s interest in a house in Pakistan and the distribution of

the sale proceeds thereof

[47] AZD owns a number of properties in Pakistan that he had acquired by the relevant

date. He and Mrs Innes agreed, very helpfully, all of the valuations in relation to those

assets. What remained was a dispute about the nature of AZD’s interest in a property

described as House F, Islamabad (“the F house”) and the extent to which it was matrimonial

property. There was evidence that the property had been sold for an agreed price of 80

million PKR, the sterling equivalent of which is £583,561. It was proposed on behalf of the

pursuer that the full amount should be included in the matrimonial balance sheet on ASA’s

side. ASA’s position was that he inherited a 2/13th share of the property following the death

of his parents. The property had been transferred to him in order to sell it but he claimed he

had distributed the proceeds in accordance with his parents’ wishes. In essence he sought to

exclude it from the ambit of matrimonial property.

[48] In her affidavit and oral evidence the pursuer said that the house had belonged to

ASA’s father and that following her father in law’s death ASA had begun purchasing his

siblings’ interests in the property by instalments and that this began long after her father in

law’s death in 2003. ASA also began building a mansion (B House) on his father’s land in the

same village as the F house and the pursuer said it was part of the agreement that he was

doing so in part exchange for F being transferred to him. She said she had been present in

2015 at a meeting of her husband’s family in Stourbridge when they had all signed a power

of attorney agreeing to transfer the F house to her husband, a transaction that was completed

Page 36 ⇓

in November 2016. She said that everyone knew that the F house was to be a family home

for her, her husband and children in Pakistan. They had ID cards for Pakistan and the plan

was to spend time there. ASA recalled that her husband was always anxious about whether

his siblings would honour the agreement and transfer the house to him in return for the

money he had paid and the construction work on B House. AZD sold the house shortly after

the parties separated. During cross examination the pursuer commented to her husband that

the F house had been almost ready for them when they went over in 2009 and agreed with an

assertion put to her by her husband that he had sent money to Pakistan which his family had

agreed was part payment for their shares in the F house. She recalled also that when she had

spoken to her husband’s sister in law after the sale she had been told that the family were

upset because ASA had purchased their shares in the property for a low price and then sold

the property for a high price.

[49] In contrast, AZD’s position in at least his affidavit (number 45 of process) was that

after he inherited 2/13ths of the F house he undertook to sell it and then pay each of his

siblings their share from the sale proceeds. Under cross examination by Mrs Innes, however,

he seemed to acknowledge that he was buying his siblings shares in the property and even

mentioned a price of 35,000,000 PKR for his three brothers’ shares, each brother having had a

2/13th shares also, with women apparently receiving half of what male children do under the

succession law of Pakistan. He agreed that his wife had been happy with the idea that they

retain the F house as a family home. Then he said that every rupee from the sale had been

paid into the Bank Alfalah in which he had an account. The bank statements for that account

were lodged (number 6/282 of process) and AZD was asked about these. He accepted that

the entries did not quite correlate with the sale price, nor was there any vouching of sums

Page 37 ⇓

then being transferred to his siblings for the sums he mentioned being due to them. He

contended that funds had been put in a dollar account and cheques appear to have been

written on that account but those produced (at number 6/300 of process) were addressed to

the Bank Alfalah and not to any individual or individuals. There was some documentation

suggesting that monies had been transferred to three of AZD’s siblings from DSL prior to the

relevant date. AZD suggested that these related to the F house and had to be repaid but

again the amounts did not coincide with what he said were the shares held by those siblings

and the date of the sums stated to be loans, all in 2017, did not fit with the earlier account and

the transfer of the house to him in 2015.

[50] AZD then reverted to his original position that he had owned the F house only in

order to simplify the sale procedure. He said that he had been interested in buying the

property from his siblings but that property prices had increased and he couldn’t afford it

and so it was sold. He agreed that he had acquired a farmhouse plot and a number of

packages of other land after the sale of the F house but said that was at least in part from his

share of the proceeds. Then he stated that “… the money for these plots came from the sale

of F... which in turn came from the B House investment.” No evidence was tendered by

affidavit or otherwise from any of AZD’s siblings supporting either his account that the

transfer to him was merely to sell the property and that their shares had been paid from the

proceeds or that they had borrowed money from him in advance of receiving such proceeds.

In light of AZD’s inconsistent evidence in relation to this valuable asset, the lack of

supporting documentation and the undisputed evidence that as at the relevant date on

12 August 2017 he owned the property and sold it shortly afterwards, I prefer the account

given by the pursuer. Her account is consistent with such documentation as there is before

Page 38 ⇓

the court. I conclude that AZD acquired his siblings’ shares in the property by making

instalment payments and by paying for the construction of the B House. However, the

pursuer’s suggested computation of matrimonial property takes no account of AZD’s direct

inheritance of 2/13ths of the F house during the marriage, something that was not disputed.

As property inherited by a spouse does not constitute matrimonial property (section 10(4) of

the 1985 Act) and as he continued to hold his share of the title in the form inherited at the

relevant date, I consider that the value of the portion of the title directly inherited by AZD

should be deducted from the inclusion of this asset in the matrimonial balance sheet.

Accordingly, the value of the F house insofar as representing matrimonial property was

£493,783.

The instigation and consequences of proceedings against AZD in Pakistan

[51] There was a considerable amount of evidence in relation to proceedings raised

against AZD in Pakistan. In his pleadings AZD raised the fact that the pursuer’s brother is

an important man in that country. He averred that the pursuer has taken unfair advantage of

the considerable influence that her brother has in Pakistan and in evidence he contended that

the system there was sufficiently corrupt that he is unlikely to secure a fair hearing and that

he will be unable to retain his property in that jurisdiction. The pursuer’s evidence was that

when she discovered that her husband had sold the F house without telling her she made a

complaint to the Federal Investigation Agency (“FIA”) and raised a first action against her

husband in Pakistan. The writ and relative affidavit from that first action was lodged by

AZD at number 7/4 of process. The writ alleges that it is in fact the pursuer who owns a

number of properties in Pakistan that she is the “real and beneficial owner” of them and that

Page 39 ⇓

AZD’s interest was merely to hold them for her. The “verification” at the end of the writ

purports to be signed by the pursuer as plaintiff in that action. In evidence the pursuer

denied having signed or authorised the signature of that writ. Her position in evidence was

that she had panicked when she saw the writ, knowing as she did that she had not bought

and did not own the properties listed as hers therein. She said that she had not sworn the

first affidavit and that she had withdrawn those proceedings as soon as she became aware of

the errors in it. She appointed a new attorney and instructed fresh proceedings.

[52] In both sets of proceedings allegations are made against AZD. The second suit

(number 7/5 of process) includes a claim that the accountant of DSL informed the pursuer

(plaintiff in Pakistan) about his having undertaken what is averred to be a series of “dubious

and unauthorised” transactions for approximately £278,025.77. The accountant referred to,

Mr Zeeshan Khokhar, gave affidavit and oral evidence. He had dealt with the pursuer since

she took over running DSL in December 2017. On 8 October 2018 he had signed a letter on

his headed notepaper, number 6/3 of process stating that “as per information received from

the client” the sum of £278,025.77 had been withdrawn by AZD from the company without

authorisation. Mr Khokhar was clear that he had not made any allegation against AZD, but

had simply appended a schedule given to him and narrated in the letter what he had been

told by the pursuer and an employee of the company who had prepared the schedule.

[53] Under cross examination by AZD, ASA said that she wasn’t in Pakistan when the first

action was raised against him. She said that her brother in Pakistan had a power of attorney

to conduct her affairs there but that he hadn’t even seen the writ before the action was raised.

She accepted that both of her brothers, including the one of influence, were involved in

assisting her with the complaint to the FIA. She said that her brother had taken her to the

Page 40 ⇓

FIA offices but had not been able to enter and had waited outside. She denied that she had

signed the affidavit at page 24 of 7/4 of process. She said it was neither her signature nor that

of her brother. When asked whether she was then claiming it was a forged signature she said

“I don’t understand the legal system in Pakistan”. She then stated that she thought the

lawyer who lodged the action had signed it. ASA accepted also that the first action in the

Islamabad court had not been withdrawn until after her husband produced the writ as a

production in these proceedings. She acknowledged that it had been a mistake also to

include a Mr MJ as a second defendant in the first action and that he had wrongly also been

included in the second action, the writ for which was put to her. She now knows that MJ is

the legitimate owner of certain land mentioned in the proceedings. She said she had

followed advice to include him and now knew it had been wrong. ASA confirmed that she

was content with the second action and that she was hoping for an investigation into her

husband’s land and money in Pakistan. The affidavit relative to the second action had been

deponed by her brother MR who had power of attorney for her. As a result of the

proceedings in Pakistan AZD’s ID card (Nicop) had been frozen and ASA accepted that the

Nicop card is a particularly important document in that country.

[54] The lawyer in Pakistan currently instructed by the pursuer, a Mr Rashid Hanif gave

evidence through a live link. He is an experienced litigator in Islamabad. He had been

instructed to raise the second action against AZD which is ongoing. He confirmed that there

is a protective order in place which would prevent AZD disposing of any property during

the course of proceedings. If ASA withdrew the proceedings there would be no basis for

such a restriction. However, the FIA had power to investigate matters and to take action

such as freezing bank accounts and place restrictions on property transfer pending

Page 41 ⇓

investigation. In any event an active ID card is required to transact with property in

Pakistan. His understanding was that orders made by a Scottish court could be directly

enforced in Pakistan.

[55] Under cross examination by AZD Mr Hanif agreed that the purpose of an Affidavit in

the writ of proceedings in Pakistan was that the deponent is confirming that the assertions as

to fact made in the writ are true, a position he understood was uniform in common law

jurisdictions on which the law in his country was based. The affidavit requires to be sworn

before an Oath Commissioner, who is a state recognised person of standing. It is for the

lawyer representing the plaintiff to check the identity of the deponent. Mr Hanif had

undertaken that task for the second action, which had been deponed by a relative of the

pursuer who had power of attorney for her. He agreed that had he been presented with an

ID card that did not match the person deponing he would not have proceeded with the

action. It would be a serious matter for someone other than the litigant or someone to whom

they had given power of attorney to attempt to depone such an affidavit and criminal

proceedings could ensue. When the affidavit in the writ of the first action, 7/4 of process was

put to him, Mr Hanif agreed that on the narrative given there he would expect the signature

to be that of MR as holding power of attorney for ASA. For the second action Mr Hanif had

relied on the allegations made by ASA and the detail within the complaint she had lodged

with the FIA. He considered that it was within ASA’s ability to cease proceedings and have

the properties released. Mr Hanif had also been involved in withdrawing Mr MJ’s name

from the second action when it became apparent that he had been included, inadvertently as

a defendant. He had no reason to doubt the integrity of the lawyer previously instructed on

behalf of the pursuer for the first action, he knew of him although had no association with

Page 42 ⇓

him. He agreed that there were considerable differences between the assertions made in the

first action and those in the second. Finally, he agreed that the pursuer’s influential brother

would be shown due deference by all officials who came in contact with him, who would

stand and salute him. If he visited the FIA office that would be public knowledge.

[56] I conclude that AZD’s apprehension that, whatever the outcome of these proceedings,

there is a risk that the pursuer will continue to litigate against him in Pakistan and pursue the

FIA investigation into his affairs such that he will be unable to transact with his property

there is reasonable. The current proceedings (number 7/5 of process) claim that AZD bought

most of the plots of land in Pakistan with monies “ fraudulently withdrawn” from DSL and

seeks a declarator that the pursuer is the “rightful owner” of those properties. I am satisfied

that if those proceedings are not withdrawn the pursuer may receive both the financial

provision to which she is entitled here and orders relating to land that has been taken into

account in the calculation as being retained by her husband. ASA’s evidence in relation to

the first action was unsatisfactory. In light of Mr Hanif’s clear evidence of the procedure

adopted for affidavits in such proceedings, her denial that the relative affidavit had been

signed by her or her brother and that she did not know who was responsible was particularly

unsatisfactory. She instructed the raising of those proceedings. The writ (number 7/4 of

process) contains a number of direct assertions that ASA accepted were simply not true. The

first action was not withdrawn until AZD produced the writ as part of his defence to these

proceedings. This is significant because, although there are fewer difficulties with the second

proceedings, the effect of the suspension of AZD’s Nicop card and bank accounts in Pakistan

and his fear that he could be detained if he enters that country has a bearing on the division

of matrimonial property in this case. The pursuer was of course entitled to take steps to

Page 43 ⇓

secure protective orders in Pakistan as a holding measure as she has done in this jurisdiction.

However, no indication was given to me that the pursuer would drop the Pakistan

proceedings and send a clear message that she no longer sought the FIA investigation once

orders for financial provision are made and the orders she seeks in Pakistan go far beyond

the seeking of protective orders. In fairness, Mrs Innes did suggest that only a decision in

principle could be made at this stage, but that was primarily because of the position of the

second defender and not to give ASA an opportunity to resolve the Pakistan proceedings.

While I am not convinced that ASA has at any stage sought to use her brother’s influence in

Pakistan, I do consider it best that the orders for financial provision in her favour should not

be effected until all proceedings against AZD in Pakistan have been withdrawn. That will

permit him to transact with the property he is to retain as his share of the matrimonial wealth

and avoid any question of the pursuer receiving land that is agreed in these proceedings will

be retained by her husband.

Calculation of matrimonial property and the proportions in which it should be divided

[57] I have dealt with the matrimonial property where the extent or value of it was the

subject of dispute at proof. Nearly all other valuations were agreed, including individual

values for 13 separate plots of land in Pakistan owned by AZD, which were listed with

agreed values in a Supplementary Joint Minute of Admissions lodged prior to the close of the

pursuer’s case. I have used a single figure for these plots in the schedule below. The value of

AZD’s interest in B House was accepted to be matrimonial property and the value agreed.

Pensions and bank account figures had all been agreed in the first Joint Minute of

Admissions, save for a small amount held by AZD in a UBL account and vouched by a

Page 44 ⇓

document, number 6/295 of process. There remained one issue of relatively low value and

that was any sum due to AZD by a Mr MA. AZD accepted that he had made a loan of

£10,000 to a Mr MA prior to the acquisition of the dental practice in Edinburgh. Any sum

due to him and outstanding at the relevant date represents an asset to be included in the

matrimonial property held by him. There was no vouching of any amount outstanding at

the relevant date but AZD said that £5,000 was still due. No evidence was offered to

contradict that position and so I have inserted the sum of £5,000 as a debt due to AZD under

this heading.

[58] I have included that sum in the schedule below, which represents both agreed figures

and those on which I have made a determination on the evidence :

CDC Ltd

DSL Directors Loan

DY Ltd

Pursuer’s SPPA pension

Flats in Edinburgh

Falkirk Premises

Glasgow Premises

Kilwinning Clinic

¼ share B House

11/13ths F House

13 other Pakistan plots

TSB accounts (2)

Bank of Scotland a/cs (2)

Bank Alfalah a/c + UBL

Porsche

NHS Pension

Matrimonial Home

Loan to MA

Less UBL Loan

Total Net

ASA

£239,000

£16,966

£200,000

£170,427

£ 43,529

£5,269

£625,000

£1,300,191

AZD

£550,000

£105,000

£325,000

£95,000

£43,767

£493,783

£768,841

£2,088

£16,500

£339,367

£5,000

_____________

£ 2,744,346

(£ 35,208)

£ 2,709,138

Page 45 ⇓

[59] On the basis of these figures, the total net value of the matrimonial property as at

12 August 2017 was just over £4 million pounds, £4,009,329. There was a dispute about the

proportions in which the matrimonial property should be divided. AZD’s position was that

Mr Wilkinson’s valuation of the company should be preferred and so his submissions on

what a fair division of matrimonial property would look like were very different. There was

evidence and/or submissions in relation to five main aspects that could affect the proportions

in which the matrimonial property should be divided. First, the pursuer contended that the

source of funds used for the purchase of the matrimonial home should be reflected in the

division. She had paid a £25,000 deposit for the property from her pre marriage savings. In

response, AZD had initially suggested that he paid the deposit but later claimed that he had

repaid ASA her initial outlay in that respect. However, he emphasised also that he had made

payment of the secured loan taken out so that the parties could afford the property, albeit

that will have been from earnings during the marriage. The parties and their children lived

in this home for 23 years until the separation. The pursuer continues to have the benefit of

living in the home, considerably improved as it is with extensive work carried out with

matrimonial funds. In all the circumstances I do not consider it would be fair or appropriate

to reimburse the pursuer for her initial contribution from pre marriage savings in 1994.

[60] Secondly the pursuer claimed that AZD had dissipated matrimonial property by

withdrawing significant sums from DSL in 2017 leaving her with significant bills when she

took over running the business. Thirdly, the pursuer submitted that as she was likely to be

the one taking on financial responsibility for the parties children in future, albeit that all three

are over the age of 16, an overall departure from the norm of equal sharing was justified.

Fourthly AZD raised two issues relevant to this matter. He highlighted in evidence that the

Page 46 ⇓

pursuer had received payments of at least £100,000 from the business during 2017, which he

thought had been used in connection with the renovation of the matrimonial home and

Mr Rowand’s report had a schedule detailing those payments, which were not disputed.

Fifthly in submissions it became apparent that AZD had not submitted tax returns for the last

three tax years. I will address the issues arising from the second, fourth and fifth points

together as they all relate to sums taken from the business and then look at the issue of

support for the parties’ young adult children.

[61] In the pursuer’s case evidence was led about sums of money AZD had taken out of

the company DSL, particularly in 2017. Miss Nadya Chaudhary is 24 years old and is a

Director of DSL and practice manager for the seven dental surgeries. She gave affidavit and

oral evidence. She was previously a dental nurse in the business and had been employed by

AZD. In December 2017 ASA took over the running of DSL and asked Miss Chaudhary to

work in the business in an administrative capacity. Miss Chaudhary’s position was that

AZD had taken significant amounts of money “… from DSL and from [ASA} that he should

not have”, although she knew that AZD was running the business at that time. She said she

had been alerted to a problem by Mr Khokhar of Khokar McAdam, accountants who were

preparing DSL’s 2017 accounts. She referred to a letter number 6/3 of process with a

schedule of “unrecognised transactions” attached. The analysis was said to indicate that

AZD removed sums totalling £278,025 from the business account that year and the schedule

had been prepared by Miss Chaudhary from the bank statements of the relevant business

account. She narrated in detail in her Affidavit the destination of some of these sums. One

payment (£26,000) related to settlement of a claim made against AZD, one was for

refurbishing the Edinburgh and Glasgow flats owned by him ( £10,157), payments to his

Page 47 ⇓

siblings totalling £45,404 were made and she said Mr WH received a payment of £90,000.

Payments to AZD himself using his previous name totalling £78,750 were made and

payments to a Mr U of £6,939 were said to be for “ staff” although that individual had never

been an employee of DSL. That left a balance of £20,775 paid to other accounts.

[62] Miss Chaudhary had also examined previous years’ figures for DSL from 2014

onwards and said that she had found payments made to AZD personally. She had detailed

these in her Affidavit. However in submissions Mrs Innes, correctly in my view, did not seek

to have those payments taken into account in the division of matrimonial property. Any

such withdrawals pre date the relevant date by a considerable period and some may well

have been used to acquire assets already accounted for in the matrimonial balance sheet or

have been used to pay matrimonial debts. I consider that the same could be said for some of

the 2017 withdrawals. The payment to Russel & Aitken related to a sheriff court action

raised against AZD in early 2016 in connection with outstanding finance on a vehicle he had

purchased in 2013. While the action had initially been defended, ultimately decree by default

was granted in the sum of £15,000 plus interest and expenses on 29 April 2016. By the time

payment was made a total sum of £26,000 was required. This was a matrimonial debt settled

before the relevant date and regardless of fault on the part of AZD in delaying to meet it, I

consider it would be inappropriate to adjust the division of matrimonial property to reflect

that.

[63] I have accepted that sums paid to WH related to the repayment of monies advanced

by him for the refurbishment of the Edinburgh flats. Had I not done so, I would have

regarded those properties as subject to an unsecured loan in favour of Mr Hamid. AZD

raised this with the pursuer in cross examination, putting number 6/286 of process to her,

Page 48 ⇓

which lists the funds paid to Mr WH ( and some received) during 2017. The sums paid to

him that year totalled £123,475 and sums received were £12,500. AZD challenged the

accuracy of the £90,000 figure and that the idea that it somehow represented monies taken

out of the company that should then be awarded to the pursuer even in part. In submissions

Mrs Innes accepted that position. She sought a credit in the pursuer’s favour of 50% of the

monies paid to Russell & Aitken (dealt with above) and to AZD’s siblings. She also sought

such a credit in respect of the monies paid to AZD himself and to Mr U. Again, however, the

difficulty with payments made from the company direct to AZD is that, at least for money

taken before 12 August 2017 that money will either have been transmuted into assets already

taken into account or spent on living expenses. This is where the difficulty arising from

AZD’s failure to lodge tax returns arises. In submissions he indicated that he was aware that

he had failed to do so and was attending to the matter. Of course he will have to bear the

consequences of meeting any unpaid tax due together with any penalties imposed and will

have to do so from the wealth that he will retain following these proceedings or from future

earnings. Failure to meet payments of tax timeously cannot be condoned, but I acknowledge

that the pursuer will not, in fact, require to meet even indirectly the consequences of that

failure, despite it having arisen prior to the relevant date. Insofar as it appears that AZD

seems to have used monies earned within the company as his personal funds during a period

when he was running the business, the pursuer will have benefitted from that, at least up to

12 August 2017. It was submitted on her behalf that had the monies not been taken out of the

company Mr Rowand’s calculation of EBITDA would have been higher as he had excluded

them as an exceptional item. However, the company is an asset being retained by the

pursuer and had Mr Rowand contended for a higher value by adding these sums back in as

Page 49 ⇓

part of an EBITDA calculation that would have served only to reduce the vast difference

between his valuation and that of Mr Wilkinson. AZD appears to have sent money to his

siblings in Pakistan at various times and the basis of the 2017 transfers was unclear although

suggested by him at one stage to relate to the F house. It is difficult to know what to make of

this sum and I regard it as unexplained and therefore to be taken into account, at least in a

broad sense. The sum to Mr U is similar. If he worked in any capacity he was not properly

employed and there is no clarity on why he would be paid from company funds. All of the

sums taken from the company illustrate a casual approach on AZD’s part that failed to

acknowledge that the company was a separate legal entity when he was operating it.

[64] That leads to the issue of the sums taken out of the company and paid to the pursuer

which are not accounted for in the pursuer’s calculations. As already indicated it was not in

dispute that she had received such sums. The Directors Loan account (see 6/291 of process,

Appendix 6) was depleted from £134,965 in January 2017 to £26, 266 on 31 December 2017.

There were both debits and credits and in submissions it accepted that a figure of £16,966 as

at 12 August 2017 should be taken as the pursuer’s asset in the form of money due to her by

the company, as calculated by Mr Rowand at paras 4.3.7 – 4.3.10 of his report. I have

included that in the schedule, but it ignores a large sum of money – in particular four

payments of £25,000 each paid to ASA on 9 May 2017. The matrimonial home has been

valued on the basis that at the relevant date the renovations and improvements were far

from complete and there was evidence that the value in 2018 shortly after the works were

effectively finished was £700,000. It was submitted on the pursuer’s behalf that the removal

by the defender of large sums of money prior to her taking control of the business has left her

in a difficult financial situation. The pursuer was under no obligation to take over running

Page 50 ⇓

the business, although she said that she did so to try to salvage the situation for fear that

everything that had been built up during the marriage might be lost. I conclude that the

otherwise unaccounted for benefit to the pursuer in relation to the sums paid to her and not

otherwise taken into account in the sum due to her by the company at the relevant date must

be balanced against the arguments in her favour on the issue of the removal of monies from

the company to AZD personally.

[65] Finally there is the issue of ongoing financial responsibility for the children. As all

are over the age of 16, the pursuer is unable to utilise the principle enunciated in

section 9(1)(c) of the 1985 Act to ask the court to reflect the taking on such an economic

burden. There was disagreement between the parties about who would pay the school fees

following divorce. In her evidence ASA agreed that after an initial difficult period, the rent

due to AZD as landlord of the Bridge Street property were now being used to pay school

fees. The pursuer seeks transfer of that property to her on divorce. AZD said that it was

important for him to pay the school fees and would wish to do so after divorce. As there is

little more than a year of school fees still to be paid, it seems to me that the rent due for the

Glasgow premises could continue to be used for that purpose, regardless of which of the

parties owns the property. Thereafter, all of the children will have attained the age of

18 years and all are or will be involved in tertiary education. As a matter of law they can

look to both parents for alimentary support while they remain in education and are under

the age of 25 and both parties have on the face of it sufficient resources to make suitable

arrangements in that respect.

[66] However, the pursuer’s position went much further. She contended that a departure

from equal sharing to reflect that she would have the economic burden of caring for the

Page 51 ⇓

young adult children should be achieved by leaving the value of the dental surgery business

out of account in calculating the financial provision due to her. There was contested

evidence about the pursuer having set up a trust in about September 2018, with her children

as beneficiaries, into which she had transferred her shareholding. In her affidavit (at para 54)

and in her oral evidcne the pursuer said initially that she had done so as a result of pressure

from her husband in negotiations. Under cross examination however she conceded this was

not the case and she had done so of her own volition, albeit that at an earlier stage AZD had

raised the issue of a trust. She had received legal advice before setting up the trust. I have

decided to reject the pursuer’s claim in this respect. She retained the company as her own

property after separation. She then chose to put that property out of her legal reach by

placing it in a trust for her children, but she still seeks a transfer into her sole name of two of

the heritable properties of the business and it appears she intends to continue running the

business. To remove this asset from a division of matrimonial property would be

tantamount to condoning a transaction which had the effect of defeating the other party’s

claim to financial provision on divorce, something that can be challenged under section 18 of

the 1985 Act. There are competing claims for a capital sum in this case, AZD’s being based

on a much higher value of the company than I have ultimately accepted. At the time of the

transfer of her interest in the company to a trust these proceedings had not been raised and

so the nature and extent of each party’s claims was unknown. I am satisfied that ASA’s

intention is to protect family assets for the parties’ children and I do not suggest that she

made the transfer to defeat, albeit indirectly, any claims by her husband. On the value of the

company that I have now accepted, AZD has no direct claims against his wife as he has

retained assets to a greater value than those she retains. However, it would unfair to leave

Page 52 ⇓

one of those assets out of account in the task of dividing the value of the matrimonial

property between them.

[67] Section 10 (1) of the 1985 Act, read with section 9, provides a norm of equal sharing of

the net value of the matrimonial property. Where special circumstances, such as those

included in the non-exhaustive list in section 10(6), are proved to exist the court can decide

whether or not to depart from the norm – Jacques v Jacques 1997 SC (HL) 20. I have

considered the evidence and arguments for and against an unequal division of the

matrimonial property above. The matter is one for the exercise of my discretion and it is

rarely best determined by a process of accounting. This marriage subsisted for 23 years prior

to the relevant date. Both parties and their children benefitted from the fruits of the

company, particularly in the last three years or so. AZD took significant sums out of the

company but has acquired valuable property interests in Pakistan that have been taken into

account. I am not satisfied that he has dissipated matrimonial property in a way that justifies

an unequal division of its value, particularly when the sums received by the pursuer in 2017

are balanced against any sums taken by her husband that are not fully explained. In all the

circumstances I have decided that an equal division of the net value of the matrimonial

property held at the relevant date would be fair.

[68] I acknowledge that there were other issues raised by the parties but I have placed no

weight on them and they have not affected my conclusion. For example AZD was exercised

about a property investment in London (Webber Street) that had realised a decent gain

which he had used to acquire assets for the parties. That all took place during the marriage

and prior to the relevant date and does not alter the matrimonial balance sheet. There was

evidence about the Glasgow premises and whether part of it could not be occupied by the

Page 53 ⇓

dental practice with a related issue about rent payable to AZD. Miss Chaudhary had

prepared a calculation (number 6/226 of process). It illustrated that monies over and above

those paid to AZD were due to him but that the amount was almost identical to school fees

due for 2018 and 2019 and the parties had ultimately agreed that the school fees could be

paid that source. The parties now need to move on and apportion any ongoing

responsibility for their children’s education fairly between them. In making no adjustment in

respect of this matter I acknowledge that the effect is that AZD has been solely responsible

for the school fees to date. The pursuer also expressed concern that her husband had not

disclosed all of his assets and it was submitted that a recovery of documents procedure had

been required. As against that AZD pointed out that when he had initially raised divorce

proceedings in the sheriff court he had volunteered information about assets held by him

that the pursuer may not have known about. I cannot conclude with any confidence that

details of any assets have been withheld in these proceedings.

Resources and the orders for financial provision to be made

[69] Section 8(2) of the 1985 Act requires that I make orders for financial provision only if

these are both justified by the principles of the Act and reasonable having regard to the

parties’ respective resources. Resources are defined in section 27 as present and foreseeable

resources. There were few details of the value of each party’s assets at the current time. ASA

is a medical practitioner and a partner in a practice in Glasgow. During the marriage she

worked part time and her income was lower than that of her husband. Currently she works

part time but also operates DSL, albeit that the day to day running is delegated. The current

profitability of that company is unknown. AZD’s income is also unknown, but neither party

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seeks as award of periodical allowance and each will retain assets that are sufficiently

valuable that no question of ongoing dependence arises. ASA has inherited her father’s

house, a reasonably substantial property in Glasgow. For reasons that are not clear but seem

to be related to family matters on her side, it has not yet been conveyed to her, but she is

entitled to it in terms of his will. AZD has significant wealth tied up in land in Pakistan. As

he will be the payer in the orders that I will make in due course, I must give particular

consideration to his ability to meet those. He will have relatively few realisable assets in this

jurisdiction and I have already indicated that the proceedings raised against him in Pakistan

require to be resolved before he can raise money there. He may need some time to do that.

However, as there was no suggestion that he could not raise funds by realising some of those

interests and as the schedule attached to the supplementary joint minute suggests that most

of the land had risen in value since the relevant date, I do not consider that any reduction in

the sum that would otherwise be due should be made to reflect any resources difficulty. I

conclude that it remains reasonable to effect an equal division of value as at the relevant date.

[70] As calculated above, the total net value of the matrimonial property at the relevant

date was £4,009,329, of which the pursuer held £1,300,191. To achieve equal sharing, each

party should receive assets to the value of £2 million (£2,004.664) and so payments or

transfers to a value of £704,473 require to be made to the pursuer. She seeks a transfer of

AZD’s interest in the properties in Glasgow and Falkirk to her. A transfer of the Falkirk

property would reduce the sum due to her by £325,000 on the basis that the Joint Minute ( at

para 5 f) iii) agrees that the value “ was and is £325,000” and no issue arises from the

requirement to use current value for transfer of property orders absent exceptional

circumstances. That leaves £379,473 due to the pursuer. It was submitted on her behalf that

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the title to the business premises in Falkirk should also be transferred to her. It was agreed

(para 5f)(ii)) that the value of that property was and remains £105,000. There is a sum

outstanding to the UN Bank of £30,501. As I understand it, if that sum is repaid the bank

would be in a position to transfer the property to ASA unencumbered. The type of security

the bank holds is, as I understand it, one where (at least to the extent of 80% in this case) the

lender has an ex facie valid title but holds that only as security against the loan. The bank’s

interest in these proceedings as second defender is in respect of this matter. My

understanding is that they are likely to be able to comply with an order for transfer if the

outstanding debt is first repaid. The mechanics of that will require to be discussed at a By

Order hearing, but for present purposes I have assumed that AZD will take on the debt to the

bank and that ASA will receive the property unencumbered by any loan. If so she will still

be due to receive the sum of £274,473 from AZD by way of a balancing capital payment. As

it was agreed that I would allow submissions from parties before pronouncing final orders, I

will allow AZD to include any arguments he may have about the timescale for payment. I

have already indicated that I do not consider that the financial provision I will order should

be enforceable until it is clear that all proceedings against AZD in Pakistan have been

withdrawn. The fair division that I have sought to achieve would be disrupted were AZD to

be deprived of any of his assets in Pakistan as a result of the proceedings taken against him

there.

[71] For the reasons given above I will fix a By Order hearing for submissions to be made

on behalf of all parties, including the second defender, in relation to the precise form of

orders to be made to give effect to my decision. I will also expect submissions at that hearing

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on the question of expenses, which I reserve meantime and on confidentiality and

anonymisation should that be considered appropriate.