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Fairbairn v. Fairbairn [2003] ScotSC 34 (09 May 2003) F730/01

JUDGMENT OF

SHERIFF PRINCIPAL IAIN MACPHAIL QC

in the appeal

in the cause

BARBARA BRYCE or FAIRBAIRN

Pursuer and Respondent

against

PETER CLARK FAIRBAIRN

Defender and Appellant

_________________________

Act: Tait; Drummond Miller WS

Alt: Arthurson, Advocate; Blacklock Thorley

EDINBURGH, 9 May 2003

The Sheriff Principal, having resumed consideration of the cause, on the unopposed motion of the defender and appellant allows the inventories of productions tendered to be received and form nos 6/2 and 6/3 of process; refuses the appeal; adheres to the interlocutor of 25 February 2003 complained of; finds the defender and appellant liable to the pursuer and respondent in the expenses of the appeal; allows an account thereof to be given in and remits the same when lodged to the Auditor of Court to tax and to report; certifies the appeal as suitable for the employment of junior counsel; remits the cause to the Sheriff to proceed as accords.

NOTE

Introduction
[1] This is a wife's action for divorce and various financial orders. The husband defender has been in default on two occasions, having on each occasion failed to implement an order to provide details of his resources in terms of section 20 of the Family Law (Scotland) Act 1985 ('the 1985 Act'). On the second occasion the Sheriff pronounced an interlocutor in terms of rule 33.37(2)(a) of the Ordinary Cause Rules 1993 allowing the cause to proceed as undefended and by way of affidavit evidence. Against that interlocutor the defender now appeals.

The facts

[2] The following narrative is derived from the documents in process and from information given to me at the hearing of the appeal which was agreed or uncontradicted. The parties, who have no children under 16, separated on or about 20 August 1999. Some two years later, in August 2001, the wife discovered that the husband had had before the separation, and continued to have, interests in businesses and heritable properties of which she had been unaware. On 13 September 2001 the wife's solicitors wrote to the husband's then solicitors seeking disclosure of all his assets and sources of income at the date of separation and at the date of the letter. That firm of solicitors did not reply, but on 31 October 2001 a second firm of solicitors instructed by the husband wrote to the wife's solicitors the letter which is no 5/3/1 of process. In it they said that they were not aware of any assets the husband had other than his interest in the matrimonial home; that he had been receiving some £400 per month from a business known as Leisure Machine Hire, but that had stopped in April 2001; and that since then he had been living on savings.

[3] The wife raised the present action on 11 December 2001. In article 4 of the initial writ she made specific averments about the items of matrimonial property at the date of separation and the resources of the defender insofar as she was aware of those matters. As to the defender, she averred that he received an income from Leisure Machine Hire, of which he was the sole proprietor; from the Burke & Hare public house, of which he was the licensee; from the Babe Watch Show Bar in Tenerife in which she believed he had an interest; and from the rental of heritable property at 4 High Riggs, Edinburgh which, unknown to her, he had purchased in 1998. She further averred that the defender had failed to disclose the extent of assets held by him at the date of separation and the extent of any current resources.

[4] The defender lodged a notice of intention to defend together with a motion to sist the cause 'to allow the parties to negotiate settlement terms' (no 7/1 of process). The motion was unopposed and was granted on 7 January 2002. On 28 February 2002 the pursuer's solicitors wrote to the defender's solicitors (no 5/2/1 of process). They pointed out that they had not had a candid disclosure of the defender's financial circumstances in response to their letter of 13 September 2001. They sought information about the circumstances in which he had purchased the property at 4 High Riggs, and about his interests in the Burke & Hare public house and the Babe Watch Show Bar and the income he derived from each of these. The defender's solicitors, however, did not produce any further information.

[5] On 11 October 2002 the pursuer lodged a motion seeking the recall of the sist 'in respect that no negotiations have taken place', the fixing of an options hearing and a period of adjustment, and an order in terms of section 20 of the 1985 Act for the defender to provide details of his resources within fourteen days. The defender did not oppose the motion and the court granted it on 17 October 2002. The motion should also have sought an order for defences, but that was overlooked. A further unopposed motion by the pursuer (no 7/3) seeking the discharge of the options hearing, an order for defences and a fresh options hearing was granted by an interlocutor of 22 November 2002. The interlocutor of 17 October ordained the defender to provide details of his resources within 14 days of intimation of the interlocutor. The defender failed to comply with that order. Nor did he comply with the interlocutor of 22 November requiring him to lodge defences.

[6] On 11 December 2002, accordingly, the pursuer lodged a further motion (no 7/4 of process). In that motion she sought a finding that the defender was in default in terms of rule 33.37(1) in respect that he had failed to implement those two orders, and she asked the court to allow the cause to proceed as undefended and for proof by way of affidavit evidence. On 19 December 2002 the defender's solicitors wrote to the court intimating that they had withdrawn from acting for him. On 23 December 2002 the court fixed a peremptory diet for 24 January 2003 and assigned the same date for the hearing of the pursuer's motion no 7/4 of process.

[7] On 24 January 2003 the peremptory diet and the motion no 7/4 of process called before Sheriff Stoddart. The defender was present and was now represented by a third firm of solicitors. His solicitor intimated that the defender intended to proceed with his defence. He did not, however, tender any defences or any financial information. The Sheriff found the defender to have been in default in the two respects founded on, but the pursuer's solicitor did not insist in her motion that the cause should proceed as undefended on the ground that that would perhaps have been opportunistic. Instead, she sought an order for defences within seven days. The defender's solicitor, having stated that the defender had not been in good health, asked for 14 days. The Sheriff ordered defences within 14 days, fixed 7 March 2003 as the last date for making adjustments and assigned 21 March 2003 as a second options hearing in terms of rule 9.2A. He also made an order requiring the defender to provide details of his resources in terms of section 20 within 14 days. The defender's solicitor did not oppose the making of the latter order. It is important to notice that the Sheriff also made clear to the defender the seriousness of his two defaults and found him liable in the expenses to date as taxed.

[8] Thereafter the defender lodged defences, but he failed to comply with the section 20 order. The defences, which were lodged on 7 February 2003, are curious. They begin with craves for declarator that the defender is entitled to insist in an action of division and sale of the matrimonial home and for declarators that he is entitled to insist in a half share of the right, title and interest in various insurance policies. The answers to the condescendence are in the following terms:

'1. Admitted.

2. The averments relating to the existence of jurisdiction are admitted. Quoad ultra denied.

3. Admitted that the marriage has broken down irretrievably. Admitted that the parties separated on or about 20 August 2003. Quoad ultra denied.

4. Denied.'

It will be noted that those defences, lodged over a year after the commencement of the action, and after the events narrated above, are skeletal in content. In particular, the pursuer's circumstantial averments in article 4, referred to in paragraph [3] above, are met with a bare denial.

[9] Upon the expiry of the 14 days allowed for compliance with the section 20 order, the pursuer lodged a further motion (no 7/6 of process). The motion was in three parts: (1) to find the defender in default in terms of rule 33.37(1) in respect of his failure to comply with the order; (2) to allow the cause to proceed as undefended and for proof by way of affidavit evidence, in terms of rule 33.37(2); and (3), failing an order under (2), to ordain the defender to appear and explain his failure to implement the section 20 order. The motion called before Sheriff Lothian on 25 February 2003. After hearing the parties' solicitors the Sheriff granted parts (1) and (2) of the motion, discharged the options hearing and found the defender liable to the pursuer in the expenses of the motion procedure.

[10] In his note written for the purposes of this appeal the Sheriff gives the following narrative:

'I am bound to say that the motion was opposed only in the sense that there was an appearance on behalf of the appellant, whose agent gave me certain information. This was to the effect that it was conceded that the appellant was in an "unenviable" position. I was told that his agents had "taken on the case" on the strict understanding that this would be the appellant's last chance to collect the information which was legitimately being sought by and on behalf of the pursuer. I was told that at two meetings the agents had stressed to the defender the importance of complying with the requirements of the pursuer in this regard. I was told that the agent appearing before me did not have enough information from his client even to enable him to give an excuse for not producing the required information. It was confirmed that the appellant had been told of the possible consequences of failure to comply.'

[11] The pursuer's solicitor gave the Sheriff the narrative of the procedure in the action to date, including the information about the defender's medical condition which had been given to Sheriff Stoddart. She also took him through the parties' pleadings and the pursuer's inventory no 5/2 of process. That inventory includes various documents containing information about the defender which the pursuer's solicitors had obtained. Thus it shows (no 5/2/2) that the defender is the sole trader in the firm of Burke and Hare, a matter which had first been admitted on the defender's behalf on 21 February 2003 (a few days before the hearing of the motion) but about which no specific information had been provided. His interest in that business is referred to in a letter from a firm of chartered accountants (no 5/2/3) of which, strangely, only the first page has been produced to the pursuer's solicitors. The inventory also establishes (no 5/2/4) that he is the heritable proprietor of a flat at 4 High Riggs, another matter admitted on the same date. His rental income from it, however, was not disclosed. Another document (no 5/2/5) refers to the Babe Watch Show Bar, in which his interest was also then admitted, without further specification. A further document (no 5/2/6) gave the defender's address as 27 Waverley Park, Redding, Falkirk; and that led to the discovery that he was the heritable proprietor of property there (no 5/2/8), a fact that had never been disclosed to the pursuer. The inventory ends with a schedule of information known to and called for by the pursuer (no 5/2/9).

[12] It was accordingly clear that there was much relevant information which the defender should have been able to give in obedience to the section 20 order. As the Sheriff records, however, the defender's position at the hearing of the motion was that he had not complied with the order and had 'no excuse for not doing so even in the face of clear warnings from his own agent about what the consequence of such failure might be.' The Sheriff therefore pronounced the interlocutor which is the subject of the present appeal.

[13] After the Sheriff gave his decision the defender instructed a fourth firm of solicitors, who are his present solicitors. On 4 March 2003 these solicitors lodged a note of appeal (no 13 of process) and an inventory of productions (no 6/1 of process). In the note of appeal it is admitted for the first time that the matrimonial property at the date of separation consisted of the items averred by the pursuer. That admission is of course quite inconsistent with the general denial in the defences. The inventory of productions includes valuations of the matrimonial home, the flat at 4 High Riggs, an insurance policy and a personal equity plan (nos 6/1/1 to 6/1/4) but otherwise contains little that the pursuer did not know about already, and indeed includes documents which the pursuer's solicitor had produced to the defender's solicitors in the past. No information is given about the property in Redding, Falkirk. A further inventory of productions (no 6/2 of process) was lodged at the hearing of the appeal. These bear to show that a Miss V Wyllie was trading as The Burke & Hare from the year ending 31 October 1997 until the year ending 25 August 2000. No explanation was tendered about these documents or about the description of the defender as the sole trader in that firm in the document obtained by the pursuer (no 5/2/2). In any event such information as is given in the defender's inventories is essentially of historical interest. The information required by the section 20 order, however, was details of the defender's 'present and foreseeable resources': that is the definition of 'resources' in section 27(1).

Submissions at the hearing of the appeal

[14] Counsel for the pursuer moved me to recall the Sheriff's interlocutor of 25 February 2003 and to remit the cause to the Sheriff to fix of new an options hearing (as in Grimes v Grimes 1995 SCLR 268 at page 271C). He rehearsed the procedural history of the case. He referred to the material in the inventories lodged by the defender's present solicitors. He stated that all that material had been available in the files they had obtained from his previous solicitors, and it was a mystery why the performance of the solicitor who had appeared for the defender before the Sheriff had been so abject.

[15] Counsel accepted that the defender had been in default, but he argued that the Sheriff had exercised his discretion unreasonably in the circumstances. There were three relevant factors which required to be taken into account. First, the defender had and continues to have health problems. He had a heart condition and an abscess, and he found it difficult to concentrate. Counsel produced a very brief manuscript medical report, apparently from the defender's general practitioner, dated 29 April 2003 (no 6/3 of process). It states that the defender suffers from chronic atrial fibrillation for which he takes medication and 'attends cardiology', and that he has had two operations for an abscess, in March 2002 and March 2003. The report does not say that he finds it difficult to concentrate or that his ability to attend to his affairs is affected in any way.

[16] Secondly, counsel submitted that the Sheriff should have taken account of the fact that the defender had been entitled to adjust his defences until 7 March. The Sheriff could have delayed making the order sought in part (2) of the motion until the options hearing assigned for 21 March; or he could have prorogated the time for implementing the section 20 order in terms of rule 33.37(4); or he could have granted part (3) of the motion by ordaining the defender to appear to explain his failure to implement the order.

[17] The third and most important relevant factor, said counsel, was that if the action were to proceed as undefended the pursuer would obtain a windfall of all the financial orders craved: the defender's interest in the matrimonial home, which was unencumbered, his interest in various joint insurance policies and a capital sum of £50,000, amounting in total to assets of some £286,000. That would be contrary to the fair sharing principles in the 1985 Act.

[18] Counsel further submitted that the defender had a statable defence to the pursuer's financial claims, and that his present solicitors had taken immediate steps to restore the situation. There had been no wilful disobedience on the part of the defender, and he would suffer considerable hardship if the action were to proceed as undefended. Counsel cited Wanderers World Ltd v Marco's Leisure Ltd 1999 SCLR 930 at page 935E-G, 2000 SLT (Sh Ct) 79 at page 82I-L; Samson v Fielding 2003 SLT (Sh Ct) 48 at page 50E-L; and Macphail, Sheriff Court Practice (2nd edn) page 446, paragraph 14.14.

[19] The pursuer's solicitor, who had acted for her throughout and who had appeared for her at each hearing, discussed the history of the matter in detail and submitted that the defender was still stubbornly refusing to produce the information required. If the action were to proceed as undefended, the pursuer would not acquire a 'windfall': she would have to justify the financial orders she sought by reference to the principles in section 9 of the 1985 Act and by producing information in the form of affidavits and appropriate documentary evidence: Ali v Ali 2001 SC 618 at page 626F-627C; 2001 SCLR 485 at page 493A-E; sub nom Ali v Ali (No 2) 2001 SLT 602 at page 608C-G. The Sheriff had not been moved to take any of the alternative courses referred to by counsel for the defender. It was unlikely that the defender would have complied with the order if he had been given a further opportunity to do so. The sanction of a finding of liability in the whole expenses to date after his failure to comply with the first section 20 order had failed to persuade him to comply with the second one. No other sanction remained. The pursuer's solicitor referred to McKelvie v Scottish Steel Scaffolding Co Ltd 1938 SC 278, 1938 SLT 159; Niven v Holmes 1979 SLT (Sh Ct) 15; Stewart v McDaid 1987 SCLR 342; and Differ v GKN Kwikform Ltd 1990 SLT (Sh Ct) 49. This was not a case of default through some isolated inadvertence or procedural error: it was much more serious. If the defender would not produce relevant information, the action relative to the pursuer's financial claims could not proceed in the normal way. The appeal should be refused.

Decision

[20] In my opinion the decision of the learned Sheriff is unassailable. It was conceded that the defender was in default. It was then for the Sheriff to decide, in the exercise of his judicial discretion, whether to allow the cause to proceed as undefended. I am not satisfied that he exercised his discretion wrongly. Indeed it is difficult to imagine that any reasonable sheriff would have exercised his or her discretion in any other way.

[21] The material facts are not in dispute. They have already been set out in earlier paragraphs of this note. The pursuer's solicitor had been trying since September 2001 to obtain the information to which she was entitled. It is now clear that the defender deceived his second firm of solicitors ([2]). He obtained a sist on the ground that he would negotiate settlement terms, but he did not provide any information ([3]). He failed to comply with the first section 20 order and with the accompanying order for defences ([5]). Having been found to be in default and having been made liable in expenses ([7]), he failed to comply with the second section 20 order and lodged skeletal and untruthful defences ([8]). He failed to give his solicitors - now his third firm of solicitors - either the information required by the section 20 order or any excuse for his failure to produce it ([10]). The abject performance of his solicitor before the Sheriff ([10]), said to be a mystery ([14]), is readily explained by the fact that the solicitor knew that the defender had failed to produce any significant information which the pursuer did not already have ([13]). By the time of the hearing of the appeal the defender still had not produced any significant amount of substantial new information ([13]). In these circumstances it is not possible to accept that there has been no wilful disobedience on the part of the defender.

[22] I am unable to accept that the defender had any relevant health problems ([15]). I also consider that the Sheriff cannot be criticised for failing to take any of the alternative steps suggested by the defender's counsel. The Sheriff was not invited to do so. There would have been no purpose in delay or prorogation because the defender had already been clearly told that this was his last chance ([10]). Nor would there have been any point in ordering the defender to appear to explain his failure, because his solicitor had told the Sheriff that he had no excuse ([12]).

[23] I cannot agree that if the action proceeds as undefended the defender will suffer unfair hardship because the pursuer will obtain a windfall in the shape of an interlocutor granting her every financial order which she seeks. The true position is that she will be obliged to substantiate her claims. In Ali the Court said (at paragraphs [23] and [24]):

'[23] It is plain that, whatever precisely the legal foundation for it, there has been since at least 1966 a well-established rule (at least of practice) that an application for financial provision on divorce should, except where parties are agreed, be supported by evidence and that such evidence should be considered by the judge or sheriff when deciding whether or not to grant the application. That rule is recognised by the specialist books on practice (Clive, Husband and Wife (4th edn) para 24.017; McInnes, Divorce Law and Practice in Scotland, page 152; Bennett, Divorce in the Sheriff Court (5th edn) pages 130-133). Where a defender fails to make a full and frank disclosure of his or her assets, inferences adverse to him or her may be drawn from other evidence in the case (Berry v Berry 1991 SLT 42 at page 43; Cochran v Cochran 1992 GWD 27-1579 per Lord Coulsfield at page 4). But in all cases, except where there is agreement, it is appropriate that there be an evidential basis to warrant the award.

'[24] . . . Moreover, not only does compliance with the rule ensure that the application is supported by sworn testimony, but, if the rule is properly followed, the affidavit evidence should give a full, accurate and up to date explanation of why the amount claimed would, having regard to sections 8 and 9 of the 1985 Act, be justified and reasonable.'

[24] I would accept that it is not impossible that the defender may have some kind of statable defence to the pursuer's financial claims, because experience suggests that in a family action defended quoad the pursuer's financial claims there is often room for factual dispute. The defender has failed, however, to disclose what his defence is, beyond an assertion made in general terms in paragraph 7 of the note of appeal, and repeated at the hearing, to the effect that the granting of the pursuer's claims would be inequitable and unfair and not supported by the principles in the 1985 Act. That, however, is not enough. A proper adjudication of financial claims in a defended action requires the disclosure of information of the kind that the pursuer has vainly sought in this action. If such disclosure is not made, the progress of a defended action becomes impossible. If a defender persistently fails to comply with orders for disclosure and fails to respond to the sanction of being made liable for the whole expenses to date, the court cannot reasonably be expected to tolerate indefinite delay. The pursuer is entitled to the determination of her claims, and if the defender chooses to withhold the information she reasonably requires, the court has little alternative but to allow the action to proceed as undefended. No doubt the absence of a contradictor makes that course of procedure short of ideal, but it is much less imperfect than the only alternative course of proceeding with the action as defended and awaiting information which the defender has repeatedly demonstrated he has no intention of providing.

[25] This is not a case of default in the form of an isolated error or an understandable procedural mistake by a party to a bona fide dispute who has satisfied the court that he has a substantial defence (cf McKelvie). It is rather a case where the party in default has deliberately employed dilatory tactics and has shown a total disregard for the need to comply with the regular procedures and little interest or urgency in putting forward a reasonable presentation of his defence (cf Stewart v McDaid at page 343.) I am accordingly satisfied that the decision of the learned Sheriff is not open to challenge.

[26] The defender's counsel conceded that the defender should be found liable in the expenses of the appeal in the event that it was refused. He also conceded that in the event that the appeal was allowed, payment of the expenses within a specified time should be made a condition precedent of the recall of the learned Sheriff's interlocutor, as in Coatbridge Health Studios Ltd v Alexander George & Co (Investments) Ltd 1992 SLT 717 at page 721F-G. He moved me to certify the appeal as suitable for the employment of counsel in view of the unusual nature of the circumstances and the value of the property concerned. The latter motion was unopposed. I have therefore refused the appeal, found the defender liable in expenses, certified the appeal as suitable for the employment of counsel and remitted the cause to the Sheriff to proceed as accords.