Scottish Sheriff Court Decisions

Case Reference Number: A264/98

JUDGMENT OF SHERIFF G J EVANS in the cause LORNA ANN McKELVIE HOUSTON or FRASER, residing at 12 Hamilton Avenue, Tayport, Fife PURSUER against ALEXANDER FERNIE FRASER, residing at 3A Grey Street, Tayport, Fife DEFENDER

CUPAR, February 2004. The Sheriff, having resumed consideration of the cause, FINDS-IN-FACT:-

1. The parties are as designed in the instance. The pursuer is aged 65 (DOB: 21.8.38) and the defender 68 (DOB: 23.11.35).
2. The parties were married at Kilbirnie on 8 July 1961. There are 4 adult children of the marriage.
3. The pursuer, apart from a short time as a supply primary teacher at the start of her married life, had no earnings and was financially entirely dependent on the defender throughout the marriage. She nonetheless enjoyed a comfortable lifestyle and did not miss going back to teaching.
4. She contributed to the marriage by looking after the family home and raising the children, thus allowing the defender to pursue his full time career.
5. The defender is presently a consulting engineer in private practice. He is the sole employee of a limited company, Sandy Fraser Associates, which began trading on 1 June 1998. He does not enjoy good health, having suffered a heart attack in 1995. Most of his former business contacts are either dead or retired.
6. During the marriage he worked for the Ove Arup Partnership until his retirement in 1997, when he was 62. He then became entitled to certain pension and other benefits. On 23 December 1997 he received an ex gratia payment of £18,000 from his employers. His membership benefits under his pension scheme entitled him to benefits under a Final Salary part of the scheme, consisting of a pension and a spouses' pension defined in terms of his Final Salary, part of which was commutable for a tax free lump sum, resulting in payment to him on or around 31 December 1997 of £98,000. In addition he also had Money Purchase contracts that were used to purchase benefits at retirement, viz an Equitable Life AVC scheme and a Norwich Union AVC.
7. The parties lived together until their separation on 13 August 1997. They have not resumed living together or had sexual relations since that date. There is no prospect of a reconciliation between them.
8. Prior to their separation, the pursuer discovered that the defender had been carrying on a relationship with Inguta Zute from Latvia, whom he had first met whilst in Latvia on business.
9. Miss Zute thereafter came to Scotland to study and she subsequently co-habited with the defender at 3A Grey Street, Tayport and has committed adultery with him there.
10. The defender and Miss Zute continued to co-habit at said address and her son Chris lives there with them.
11. Miss Zute's circumstances are that she is completing a post graduate degree at the end of 2003. If she obtains a Visa thereafter from the Home Office, she will gain employment. Her son, Chris, from her previous marriage in Latvia, is now aged 16 and attends Madras College where he is in his fifth year. He gets no support from his father in Latvia.
12. Since said separation, the pursuer has received from the defender the sum of £106,551.07 by way of financial provision for her and he has paid her regularly interim aliment for the past 6 years at the rate of £1,050 per month.
13. The pursuer used her payment from the defender to inter alia purchase her present home at 12 Hamilton Avenue, Tayport, Fife. In 1999 £30,000 of that money was given by her over to one of her children to invest on her behalf. She does not draw on that sum nor make use of the investment income. Her sole income is the interim aliment of £1,050 per month she receives from the defender together with her state pension of £188.40 per month, giving her a total monthly income at present of £1,238.40.
14. The pursuer's monthly outgoings are as per her handwritten schedule of income and expenditure, viz £1,029.33 per month. The figure of £367.54 therein for a Lloyds TSB loan relates to a 3 to 4 year loan taken out by the pursuer both to clear her credit cards and to finance a foreign holiday for herself and her daughter at a time when they were both getting over serious medical problems. The pursuer had breast cancer and does not keep good health.
15. The defender's monthly income comprises £2,181.10 per month from the Ove Arup pension, an annuity from Norwich Union of £247.20 per month and his state pension of £374.32 per month, totally £2,802.62 per month.
16. In addition he currently makes between £10,000 and £12,000 net per annum from his company business, say a further £950 per month.
17. His monthly household expenditure, excluding the interim aliment of £1,050 per month for the pursuer and various payments to charity, comprises:

18. In addition, the defender has to service a number of credit card balances and these amount to approximately £700 per month regularly. He also makes regular annual payment to various memberships detailed in his statement of income and expenditure which average out at £22.58 per month, thus giving a total additional expenditure of £722.58 per month.
19. The defender's total monthly income and expenditure therefore is as follows; £3,752.62 income and £1,778.96 expenditure, leaving a balance of £1,973.66 per month.
20. Since said separation, the pursuer agreed at some unproved point to transfer to the defender her one half share in the former matrimonial home and the defender now has sole title to the same.
21. The defender has accordingly following the separation, retained the former matrimonial home, the proceeds of his pension and AVC schemes, the contents of the former matrimonial home plus the price from the sale of part of his Doulton collection therein, and his various Scottish Widows pensions.
22. The pursuer has since the separation retained her jewellery but no other item of matrimonial property.

FINDS-IN-FACT-AND-IN-LAW:-

1. The parties' marriage has broken down irretrievably by reason of the defender's adultery with Inguta Zute.
2. The relevant date for the ascertainment and valuation of the parties' matrimonial property is 13 August 1997.
3. The total matrimonial property together with its valuation as at said date is agreed between the parties to be as follows:-

4. Apart from the lack of resources, there are no special circumstances justifying anything other than an equal division of the matrimonial property between the parties.
5. The pursuer, on the basis of an equal division, would be entitled to receive payment of £388,860.21 under deduction of the value of her retained jewellery (£8,000) and the sum already paid to her by the defender, viz the sum of £106,551.07, leaving a balance of £274,309.14 as the capital sum she ought prima facie to receive under Section 9(1)(a) and Section 10(1) of the Family Law (Scotland) Act 1985.
6. It would not be reasonable to make an order for payment by the defender to the pursuer of that full sum having regard to the resources of the parties, particularly those of the defender, as allowed by Section 8(2)(b) of said Act, it being necessary for the defender to retain the former matrimonial home to house both himself, his co-habitee and her son.
7. Due to the defender's advanced age, it would not be feasible for him to raise further capital on the former matrimonial home.
8. It would be reasonable and affordable for the defender to make payment to the pursuer of a capital sum of £150,000 by way of an initial deposit of £10,200 and the balance of £139,800 by way of monthly instalments of £1,165 payable over a period of 10 years.

Sustains the pursuer's first and second pleas-in-law (insofar as founded on Section 9(1)(a) of said Act), and Repels the pursuer's fifth plea-in-law; Repels the defender's first and second pleas-in-law; Sustains the defender's third and sixth pleas-in-law; Finds it unnecessary to deal with parties' remaining pleas-in-law; Accordingly Grants the pursuer decree of divorce from the defender on the ground that their marriage has broken down irretrievably by reason of the defender's adultery with said Inguta Zute; Grants decree against the defender for payment to the pursuer of a capital sum of ONE HUNDRED AND FIFTY THOUSAND POUNDS (£150,000.00) STERLING payable by way of (a) an initial deposit of £10,200.00 payable within 3 months, ie 12 weeks from the date hereof with interest thereon at the rate of eight per centum per annum from the end of said 3 months until payment and (b) by payments of £1,165.00 per calendar month commencing from the date hereof for a period of 10 years until said capital sum shall be paid with interest in default of any outstanding monthly payment at the rate of eight per centum per annum until the same shall be paid; and Decerns; Reserves meantime the question of expenses and Fixes 23 February 2004 at 10.00am as a hearing thereon.

NOTE:-

This is an action of divorce in which the pursuer seeks payment of the (now amended) capital sum of £274,309.15 and a periodical allowance of £600 per month, with an incidental order to sell the former matrimonial home. The story is a familiar one. After a long marriage of some 36 years the husband/defender met a younger woman and left his wife/pursuer to live with her. During the marriage the parties have raised a family of four now adult children. The defender followed a successful business career and the pursuer ran the home and looked after the children, sacrificing her own career prospects and opportunities to ensure and promote those of the defender. The adultery which has caused the irretrievable breakdown of the marriage has been fully proved by way of Affidavit evidence and I am satisfied that the ground of divorce has been established. The proof before me dealt purely with the question of what financial orders I should make on divorce.

I heard evidence over 2 days, viz 8 October and 5 November 2003. The pursuer was represented by Mrs Walker, Solicitor, Kirkcaldy and the defender by Mrs Price, Solicitor, Dundee. The only evidence was that given by the parties themselves.

It was submitted by Mrs Walker that there was no reason to depart from the 50:50 sharing which was the starting point under the Act. The separation, and thus the relevant date, occurred prior to the defender's subsequent retirement and at the date of proof he was of course now in receipt of his pension etc. He was now getting £2,181.00 from it. That did not take into account the income he derived from his own business. He withdrew £700.00 per month from that but the accounts lodged showed that he could withdraw £3,800.00 to £4,000.00 per month and that was a better measure than the drawings. The evidence was that the pursuer, who was recovering from breast cancer was not in a position to take up employment. Her income was restricted to her state pension and the interim aliment paid to her by the defender. The defender had now offered to pay an additional capital sum of £120,000.00 at £1,000.00 per month over 10 years. That would mean that overall the pursuer would have got only some 29 to 30% of her 50% share in the matrimonial property. The pursuer accepted that she might have to accept the bulk of the capital to be paid by instalments and that the Court had to look at the parties' resources. There was, however, a resource in the shape of the former matrimonial home, which could be sold. The pursuer, given her age and state of health, would like to receive as much capital as possible now. She would like to be able to do some of the things that she was planning to do, such as visiting friends in Turkey, without having to take out another loan or dip into her own savings. The defender should be ordered to pay a lump sum now and the balance in monthly instalments at a sum no less than the interim aliment presently enjoyed. It was a matter of comment that a substantial amount of the defender's outgoings were credit card debts which did not disclose what they were covering. It was accepted that there were not sufficient resources for the pursuer to receive both a capital sum by instalments and a periodical allowance as well. What she sought was a part payment of a capital sum now and the rest by instalments in the region of £1,500 to £1,800 per month. I was invited to sustain the pursuer's second plea-in-law for a capital sum as third craved and, if necessary, sustain the pursuer's fifth plea-in-law for a incidental order for sale of the former matrimonial home as sixth craved.

In reply, Mrs Price for the defender submitted that the issue was basically one of resources. I should accept the evidence of the defender that he was not trying to avoid paying the full amount but that he simply could not. He had paid a high level of aliment to the pursuer for 6 years as well as furnishing her with a large part payment of a capital sum. His pension was now in payment, making the actuarial value of it at an earlier date somewhat high in the circumstances. His only guaranteed income was as stated in his schedule of income and expenditure. That expenditure was not outrageous and was fairly normal. Although the defender intended to carry on working, he was now past the normal retirement age by some 3 years already and could not continue for much longer, given his past heart attack. The Court could not get blood out of a stone. The former matrimonial home was subject to a mortgage with 15 years or so to go and at the defender's age he could not be expected to obtain further finance on the basis of a second or increased mortgage. The defender was willing to pay the capital sum of £120,000.00 over 10 years and also to meet any premium on the insurance that the pursuer might take out in order to guarantee such a payment in the event of his death. If he had any money, he would give it to the pursuer. The factual position was that he was supporting his co-habitee and her son who was in full-time education, with every intention of pursuing tertiary education. The offer was a practical, reasonable and fair one in the circumstances and decree should be granted along those lines.

I have not found this an easy matter to decide as the proof has left a number of issues either unanswered or unclear. This is against a background of the Record having been closed away back on 23 September 1998 but due to parties' various procedural manoeuvrings, there was no proof on that Record until some 5 years later. No attempt was made to update the pleadings and I did not appreciate until after the proof, that there had been a change in the position of the matrimonial home. According to the pleadings, the property was held in joint names. Yet it is implicit in the Joint Minute of Admissions that the defender is retaining the whole of the former matrimonial home. How could this be? It was only after making inquiries of both agents after the proof that I found out via the Sheriff Clerk that there had indeed been a transfer to the defender of the pursuer's share in the former matrimonial home. This was not evident from the actual proof. The pursuer's evidence consisted of setting out her own financial circumstances and the fact that she had no prospect of future employment and no longer enjoyed good health. She accepted that she might have to settle for part payment of the capital sum by way of instalments but she wanted sufficient now to allow her to enjoy life more and have a chance to travel. Her main concern was having an opportunity to enjoy her retirement without looking over her shoulder at every little expenditure. There was nothing in her evidence to explain why she was willing to transfer her half share in the former matrimonial home to the defender (although it might just have been as a quid pro quo for getting sufficient from the defender to allow her to purchase her own home). The only passing reference the defender made to the former matrimonial home in his evidence was in cross-examination when he said that it now had a mortgage over it of £36,000 the reason for that being to effect further improvements on the property. This explains why I have made it a definite Finding-in-Fact that the pursuer did transfer her share to the defender although strictly speaking there was no evidence led one way or another.

Thus the broad picture is that the defender has managed to retain the bulk of the matrimonial property after separation but subject to him giving the pursuer sufficient money for her to acquire her own home. Such a result is heavily weighted in favour of the defender and needs obvious correction at this point, the issue being to what extent. It is evident that the pursuer has been dependent to a substantial degree on the financial support of the defender throughout the marriage and indeed for the 6 years that have elapsed since their separation. Her earning capacity is nil and she has not been able to provide a pension for herself. From the submissions made to me, it is clear that she is realistically prepared to drop her crave for a periodical allowance and, as a consequence, the requirement for any short-term transitional or adjustment allowance provided for under Section 9(1)(b) of the 1985 Act disappears. Such a provision is certainly meant to be in addition to any capital sum or property transfer order due by virtue of Section 9(1)(a) or (b) (cf Thomson: Family Law in Scotland (4^th edition) at page 162), but if the capital sum is made payable by monthly instalments, so that it thereby performs the role of a periodical allowance over at least that transitional period, then there is no need to proceed under this particular section, as the pursuer's second plea-in-law appears to do, given that the defender's resources would not in any event stretch to both. That plea-in-law also implies a reliance on Section 9(1)(b) ie for the Court to take fair account of any economic disadvantages suffered by the pursuer in the interests of the defender or their family. It is true that the pursuer did not pursue or build up her career as a primary school teacher and as a result has no pension of her own, her reasons for so doing being the furtherance of the defender's own career and the welfare of their family. In return, however, she enjoyed the benefits of financial security and a comfortable life. My impression of her evidence was that she was not at all reluctant to give up her school teaching and I consider that it suited her to take on the role of a full time wife and mother. That being the case, any economic disadvantages have been off-set by the type of lifestyle she enjoyed during the marriage (cf Welsh v Welsh 1994 SLT828) and Section 9(1)(b) of the Act does not apply.

This is therefore purely a Section 9(1)(a) case and that was recognised by each of the agents. The statutory brake on the application of Section 9(1)(a) is to be found in Section 8(2)(b) of the Act, ie that any order made must be "reasonable having regard to the resources of the parties". I respectfully agree with the comments in Clive on Husband and Wife (4^th edition) at page 441, viz:-

That was the approach adopted by Lord McCluskey in the Outer House in the case of Crockett v Crockett 1992 SCLR591. I accept in broad terms the submission by Mrs Price that this is a case in which a much lesser capital sum than is really due to the pursuer will have to be awarded given the defender's current resources. The bulk of that sum will have to be paid out of income over the next 10 years, that being the period suggested by the defender. It may be optimistic given his advanced age, his declining health and his shrinking business opportunities. The amount awarded, however, cannot be altered and would continue to be exigible from the defender's estate on his death. I am inclined to accept at face value the various figures given by both parties as to their respective income and expenditure. Even on those figures, the defender could afford more than he claims he can. That is despite the difficulties I have in the case of obtaining any clear picture of the defender's finances. The pursuer has in the past resorted to commission and diligence and also a motion under Section 20 of the 1985 Act ordering the defender to provide details of his financial resources but neither of these procedural ploys have thrown up anything of substance. Thus in the 5 years that have elapsed since the proof was formerly discharged, the pursuer has not been able to come across any hidden pot of gold. Nonetheless some unanswered questions do arise. I note for example that at one point the defender received an ex gratia payment from his employers of £18,000 and I do not know what happened to that. Nor do I know why only certain of his china collection was sold and it may be that there are a number of items of value remaining in the matrimonial home that could raise him some money. None of these things have been satisfactorily explored in evidence. The impression remains however that the defender is slightly underplaying his hand. I consider that the defender could raise some capital, however limited, and could afford to pay more than he does at present by way of interim aliment in such a way that would leave him neither destitute nor suffering a grave financial hardship. What I am prepared to discount as a resource is the former matrimonial home. It is clear from the evidence that, as the defender said, even if he had to sell the former matrimonial home he would have to buy some other house for both himself, his co-habitee and her son. This is going to be the position for the foreseeable future and the house is in my view a sterile asset. He is too old to raise any further money on it himself. It may be that if he were in the future to marry his co-habitee and then put the house into their joint names, if she were then earning, she could assist him by obtaining a further loan over the property. Marriage however is not something that is bound to happen and for aught yet seen his co-habitee may leave him. There was no evidence to suggest how feasible it might be for the defender to rent property for himself, his co-habitee and her son in the Tayport area and that in any event would have an impact on his available income.

The way that I have approached the matter is to work out what sort of size of capital sum would give the pursuer at least two thirds of her overall half share of £388,860.21. The answer to that is £259,240.14 and that would represent a reasonably large proportion of what she should be awarded providing it is still within the reasonable resources of the defender. From that is to be deducted what she already has, ie her jewellery (£8,000) and her previous lump sum (£106,551.07) leaving a balance of something in the region of £144,689.07. On the basis of that figure, I consider that a reasonable award for a capital sum would be in the region of £145,000 to £150,000 with a bias towards the upper figure given the still large shortfall of one third of what she is really due. In my estimation, this could be met by the defender having to pay both by way of monthly instalments and by way of an immediate lump sum payment, thus allowing the pursuer some immediate capital. Something in the region of £10,000 would mean that the pursuer would be able to enjoy some foreign travel if she so wished in the next one to two years before her health further declines, if she is not willing to draw on her own savings at this point. A reasonable monthly payment, given the defender's current income, would be certainly over the £1,000 per month now offered. I would not wish to make that too much over due to the defender's willingness to pay any premium on any insurance taken out so as to guarantee the full payment in the event of his death. I would have to leave some scope for that. The figures I have come up with, which would result in an overall capital payment of £150,000, are firstly a capital payment of £10,200 and secondly an instalment payment of £1,165 per month ie £13,980 per annum, leading to a total payment over 10 years of £150,000 (ie £10,200 plus £139,800). This is plainly not an exact science and as already explained the proof has failed to tie up all the loose ends. It is however a manageable decision for the defender (he has 3 months in which to make payment of the initial lump sum) which will alleviate the pursuer's position for some time to come. I have so awarded and have continued the matter for a hearing on expenses.