Scottish Sheriff Court Decisions

Johnston v. Adams [2004] ScotSC 42 (18 June 2004)

The Sheriff, having resumed consideration of the cause, and the Joint Minute of Admissions.

19. In the year to 31^st August 1995, the business made a net profit of £3,924 divisible equally between the two partners and the Pursuer drew a salary of £6,000.

21. In the year to 31^st August 1997, the net profit for the year of the business was £6,129 divisible equally between the partners. The Pursuer drew a salary of £6,000 for that year.
22. In the year to 31^st August 1998, the net profit of the business was £2,997 divisible equally between the partners. The Pursuer drew a salary of £6,000 for that year.

1. Finds in fact and in law

1. That the relevant date is 19 June 1998;
2. That the Defender did not suffer any economic disadvantage, nor did the Pursuer gain any economic advantage during the marriage which justifies the award of a capital sum to the Defender from the Pursuer, nor are there any special circumstances justifying such an award.

THEREFORE , Sustains the Pursuer's 2^nd plea-in-law; Repels the Defender's plea-in-law; Reserves meantime all questions of expenses.

In this action, the only live crave is the Defender's crave for payment by the Pursuer to her of a capital sum of £30,000. Evidence was led from the Defender, the Defender's sister, Kathleen Cole, and from the Pursuer. I repelled a objection to the evidence of Mrs Cole. That was based on a failure to give the requisite notice. I took the view that if Mrs Cole had anything to say about the financial position of the parties, it was beneficial that I have the fullest information as background to my decision. A draft Joint Minute was lodged at the bar on the date of the proof, but the principal was lodged on 15 June.

In terms of Section 8(1)(a) of the Family Law (Scotland) Act 1985, the court may order the payment of a capital sum provided that can be justified in terms of the principles set out in section 9. For the purposes of this action, the relevant principles were agreed to be those set out in Section 9(1)(a) and (b), namely that the net value of the matrimonial property should be shared fairly, and that fair account should be taken of the economic advantage derived by either party from the contribution by the other and any economic disadvantage suffered by either party in the interests of the other party or of the family. In terms of section 10(1), fair sharing means equal sharing, unless there are special circumstances, which are dealt with in section 10(6).

Mr Findlay submitted that the sum of £30,000 was a reasonable amount which the Pursuer should be required to pay to the Defender.

Mr Findlay stated that the resources of the parties are set out in the Joint Minute of Admissions (No. 16 of Process) from which it is clear that the Pursuer has an interest in the farm, that he sold part of that which allowed him to build another property. The Pursuer therefore has the resources from which the £30,000 can to be paid.

Mr Findlay accepted that there was a parity of assets retained by each of the parties as set out in the schedule attached to the Amended Record (No. 12 of process). He went on to submit, however, that that parity did not take account of the Defender's contribution.

The Pursuer was a farmer, but prior to his inheriting his father's share of the farm, he was employed at the farm as a labourer and he received £30 per week for himself, the Defender and their two children. The Defender had been advised by the Citizen's Advice Bureau (CAB) that an economic wage was £140 per week, and she was therefore receiving an uneconomic wage.

After the inheritance, the parties worked together for the benefit of the farm, but clearly the Pursuer expected the Defender to work. Not only had the Defender worked on the farm, but she had taken other employment on either a full-time or a part-time basis because that was necessary to support herself and the family. The major effort in bringing up the children had been that of the Defender and accordingly there were special circumstances which justified the Defender's receiving a capital sum.

The evidence showed that the Defender had requested the Pursuer to sell the farm and Mr Findlay's submission was that if the farm had been sold, the Defender would have got the benefit of the Pursuer's share of the free proceeds.

A list of authorities had been lodged for the Defender but although the following cases appear on that list, none, with the exception of Wilson infra, was referred to in the course of submissions. The list of authorities for the Defender is Wilson v Wilson 1999 SLT 249; Fulton v Fulton 1988 SLT 1262; Davidson v Davidson 1994 SLT 506; Jesner v Jesner 1982 SLT 999 and Jacques v Jacques 1997 SLT 459.

Mrs McTaggart submitted that the Defender was not entitled to payment of any capital sum.

She submitted that the Record disclosed a case based on economic advantage only and if the Defender was wishing to found on special circumstances these ought to have been pled. In that connection, she referred to the case of Thirde v Thirde 1987 SCLR 335. On the basis of the pleadings therefore this was a case based on Section 9(1)(b) only.

In her submission, a fair sharing under Section 9(1)(a) means an equal sharing unless there are special circumstances and that in terms of 9(1)(b), economic advantage and economic disadvantage have the meanings ascribed to them by Section 9(2). In addition, however, it is clear from Section 11(2) that the economic advantages or disadvantages of one party have to be balanced against those of the other party and the court has then to consider the extent to which any resulting imbalance should be corrected by the sharing of the value of the matrimonial property or otherwise.

Following upon the separation, the furniture in the house had been divided between the parties, but the Pursuer had paid for a suite for the Defender and also had paid for her car for a period of one year. Against that background, Mrs McTaggart submitted that the assets as disclosed in the Schedule attached to the Amended Record, and the terms of the Joint Minute of Admissions meant that the total value of the matrimonial property as at the relevant date was £39,846. Of that figure, the Pursuer had £12,788 and the Defender had £17,577 (including the car, the value of which had now been agreed at £6,500). The furniture had been shared equally and while the parties still had a timeshare, that had a debt attached to it which the Pursuer had undertaken to pay. In all the circumstances, the Defender would therefore come out of this action with more than 50% of the assets.

So far as special circumstances were concerned, Mrs McTaggart submitted that there were none in this particular case. The Pursuer was a farmer, his wife had contributed to the working of the farm, but in return the Defender had been supported by the Pursuer. There was nothing particularly unusual in that situation. She cited Jacques as authority for the proposition that even if there are special circumstances, that does not of itself justify an uneven distribution. She went on to submit that there was no evidence about any economic advantage to the Pursuer arising from the fact that the parties had perhaps a lower income than others. Furthermore, there was no evidence to show how the family's position differed from the norm. The Defender had known about life on a farm, the parties had chosen to operate the farm and there was no evidence that the Defender had been seriously insisting upon the sale of the farm.

The Defender had known about the possible inheritance, but there was no evidence to show that the Pursuer's position had been improved as a result of his becoming a partner; he had had to pay off the debts left by his father, and pay out his sister. Had the farm been sold, it had been said that the Pursuer could find alternative employment, but to some extent the precise nature of that employment and any remuneration therefrom was speculation. It was clear that the overdraft had been paid off following upon separation and accordingly any disadvantage had been suffered only by the Pursuer. The evidence established that the Defender herself had given up nursing voluntarily, and it was also clear that the Defender had supported herself following the separation without any assistance from the Pursuer.

In Mr Findlay's submission, there is no need to refer to special circumstances in the pleadings; it was sufficient if there is anything disclosed in the pleadings which justifies a departure form the normal fair sharing. He asked me to accept that the Pursuer had received the car from the Defender by way of aliment. It was quite clear that she had helped him to keep the farm going but she looked after the children while also helping on the farm. He referred to Lord Marnoch's opinion in Wilson, a case in which one of the assets was a farm.

In summary, his position was that there had been a clear economic advantage to the Pursuer and a clear economic disadvantage to the Defender which could, and should be, remedied by the payment of a capital sum to her of £30,000.

I shall deal firstly with the question whether "special circumstances" needs to be pled. In my opinion, a fair reading of the pleadings would indicate that a submission on that might be advanced. The case of Thirde is, in my opinion, distinguishable, as it dealt with an award of periodical allowance which must be supported by pleadings. "Special circumstances" is a factor to be prayed in aid of a plea, rather than something requiring a particular plea in itself. In any event, evidence was led which would permit such a submission, and that evidence was not objected to, nor was the submission. That said, the submissions for the Defender were on the basis of economic disadvantage, rather than special circumstances, but in reaching my decision, I have considered the issue of special circumstances

Turning to the Defender's claim, I am not persuaded that the Defender is entitled to any capital sum on the basis of economic disadvantage. While I accept that the list of special circumstances set out in section 10(6) is not exhaustive, the evidence led did not relate to any of the situations listed, and no other argument was advanced.

The distribution of the assets as disclosed in the Schedule to the Amended Record is virtually equal. In addition, the Defender keeps her Peugot car valued at £6500. There is still a debt over the Property Bond which the Pursuer has undertaken to pay. It is worth £10,000 and the debt is approximately £4,500 or £5,000. The Defender therefore she leaves the marriage with a greater share of the matrimonial property. (Mrs McTaggart calculated that the Defender's share would be £17,557 including the car, and that is the figure in the Joint Minute. However, the figures disclosed in the Schedule to the Amended Record would make the total £17,057, but the difference, even if I am correct, is de minimis.)

The submissions based on economic disadvantage related to the Defender's input to the upbringing of the children, her working without payment on the farm, the low income of the Pursuer while he was an employee, the Pursuer's unwillingness to sell the farm, and the Pursuer's sale of part of the farm which has enabled him to purchase a new property.

It is not uncommon for a wife to have a greater input into the rearing of the children than the husband. That is not therefore a special circumstance, but there was nothing in the evidence to indicate that that resulted in an economic advantage to the Pursuer, or an economic disadvantage to the Defender, and accordingly, I am not persuaded that the existing unequal division of the matrimonial property should be added to by the award of a capital sum in favour of the Defender.

It was not disputed that the Defender worked on the farm, particularly at busy times, without payment. I do not accept that she expected to be paid for this, and I accept the Pursuer's version which is that he would have had to do the work, if the Defender had not assisted. I take the view that the unpaid work on the farm was a family activity, in which the Pursuer's mother was also involved and that it was open to the Defender to work or not as she chose. That does not in my opinion merit a capital payment, either on the basis of economic disadvantage or special circumstances.

I am not persuaded that the weekly income of the Pursuer, while he was an employee, resulted in any economic disadvantage to the Defender. Her position was that she had been advised by the CAB that an economic wage at the time, i.e. when she decided to go out to work, was £140 per week. I do not doubt that that is what she was told. However, I assume, but I do not know, that that figure was based on customary outgoings, such as rent, and/or rates, electricity and the cost of travel. There was no evidence about what figure the CAB would have given for an economic wage for someone in the Defender's position, i.e. living in a house, in respect of which the outgoings were paid for by the farming parnership, and in addition, the fuel for her car and the Pursuer's car were also paid in that way. There was therefore no evidence which would entitle me to conclude that £30 per week was, in these circumstances, lower than, or much lower than an economic wage, and hence nothing which would permit me to redress any imbalance with an award of a capital payment. Furthermore, I have formed the view that the Defender chose to work, rather than being forced to do so. Her income was do doubt welcome, but that would enhance her economic position rather than make it worse.

It was not disputed that the Pursuer was unwilling to sell the farm. His account, which I accept, was that this was a family business, that his father had left debts which he wanted and needed to repay, that he had to compensate his sister for her share of the farm which she inherited on her father's death, and that at that time, farming was not particularly profitable. No evidence was led showing the value of the farm at the time of the Pursuer's father death, but, in any event, the farm was a partnership asset. As is made clear by Lord Marnoch in Wilson v. Wilson, and, in any event, is trite law, a partnership is a separate legal persona distinct from the partners of whom the firm is composed. It was not therefore open to the Pursuer either to sell his share, or to sell the whole farm without his mother's involvement. In any event, I take the view that the issue of selling the farm was merely a suggestion by the Defender and not something which she strongly pressed, and even if she had, the hurdle identified above, would still have had to be overcome. There was in any event no evidence to establish the extent to which the Defender would have been better off, had the sale taken place. That therefore does not entitle the Defender to a capital payment.

The fact that the Pursuer has sold part of the farm and has, as a result, been able to build another house does not merit a capital payment to the Defender, because what was sold was part of the partnership property, and what was acquired is, I assume, also partnership property. I say "I assume" because there was nothing in the evidence to establish what the free proceeds of the sale of the part were, and whether these were used in whole or in part to acquire the new property, nor in whose name the title to the new property stands. The mere acquisition of a new property does not, in my opinion, of itself, give the Pursuer an economic advantage, nor does it amount to a special circumstance.

Although the Defender's sister gave evidence about the Defender's involvement with the children and the parties' financial position, she was not a regular visitor, she was relatively young at the time, and could not therefore be in a particularly strong position to make an informed assessment of the parties' finances.

The principles set out in section 9 promote a fair sharing and the norm would be equal sharing, unless there are special circumstances. The division agreed between the parties is an unequal sharing, but significantly in favour of the Defender. There was nothing in the evidence led which persuaded me that the Defender suffered an economic disadvantage, nor that the Pursuer had had an economic advantage. Indeed, it is rather the case that both parties may have suffered an economic disadvantage because of the financial position of the farm at the time of the Pursuer's father's death. That would not merit the payment of a capital sum, as there is no "balancing exercise" such as is envisaged by section 11(2), which could be done. There were no special circumstances either, and so I have not made any award.

I was not addressed on the question of expenses and so I have reserved these.