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Lindsay v. Rattray [2005] ScotSC 55 (05 August 2005)
SHERIFFDOM OF SOUTH STRATHCLYDE DUMFRIES AND GALLOWAY

F23/03

	JUDGMENT OF SHERIFF PRINCIPAL J C McINNES, QC
	in the cause
	WILLIAM LINDSAY (Assisted Person)
	Pursuer and Respondent
	against
	NICOLA ROMAINE RATTRAY OR LINDSAY (Assisted Person)
	Defender and Appellant

Act: Mr John Speir, Advocate, instructed by Nicol Harvey & Pierce

Alt: Mr Jonathan Brown, Advocate, instructed by Messrs McAndrew & Co

STRANRAER: 5 August 2005

The Sheriff Principal, having resumed consideration of the appeal recalls the interlocutor of the Sheriff of 7 February 2005 insofar as he refused the defender's motion (no 7/5 of process) as incompetent; remits the cause to the Sheriff to hear parties on the evidence led on a date to be afterwards fixed and thereafter to issue his judgment in respect of the matters in dispute; sanctions the appeal as suitable for the employment of counsel; meantime reserves the expenses of the appeal procedure.

NOTE:

Background to the appeal

The pursuer raised an action of divorce on 23 May 2003. Defences were lodged on 26 September 2003. In these the defender disputed that her adultery had caused the marriage to break down irretrievably. She made no financial claim. The Record was closed on 12 December 2003. A proof was fixed for 11 February 2004. On that date the Sheriff allowed a Minute of Amendment for the defender to be received. In that Minute of Amendment, for the first time, the defender sought payment of a capital sum from the defender. The sum sought was just under £62,000. The Sheriff refused a motion to discharge the proof. He heard evidence on the merits of the divorce action and divorced the defender from the pursuer. The Sheriff's interlocutor of that date includes the following passage:

"In terms of Rule 12(1)(b) of the Family Law (Scotland) Act 1985 allows a period of 12 months from this date for the granting of an order for a capital sum;".

In due course the Record was amended and a proof was fixed in relation to that issue for 12 November 2004. Evidence was led on that day, on one day in December and on two days in January 2005. On the last date on which evidence was led, 18 January, the Sheriff assigned 9 February as a diet of hearing on the evidence. On 7 February the Sheriff considered the defender's motion (no 7/5 of process) for an extension of the period of 12 months and refused it as incompetent. The extension sought was for one month or such other period as the court might consider appropriate to allow the hearing on evidence to be completed and to allow the Sheriff to issue a written judgment. The Sheriff granted leave to appeal against his decision.

The Sheriff's decision

Section 12(1)(b) of the Family Law (Scotland) Act 1985 provides that:

"An order under section 8(2) of this Act for payment of a capital sum or transfer of property may be made ... (b) within such period as the court on granting decree of divorce may specify."

On 11 February 2004 he allowed a period of 12 months from that date for the granting of an order for a capital sum. He regarded that as a final interlocutor which had not been appealed. A section 12(1)(b) order may only be made "on granting decree of divorce" when the court must specify a period within which an order under section 8(2) of the Act may be made. He regarded that statutory provision as being clear and unambiguous. The 12 month period had been a matter of agreement at the time and had been intended to provide ample time for the matter to be resolved. After setting out the various events which led up to the proof being fixed for 12 November 2004, he explained that the proof took as long as it did because there were issues such as the extent and value to be placed on a farm owned by the pursuer at the relevant date, the value of commercial woodland owned by him, the value of farm stock and implements and the value of an ice-cream manufacturing business operated by the pursuer. The pursuer and the defender operated a retail ice-cream business which required to be valued. They had debts which were disputed. As a result of various delays the hearing on the evidence was assigned for 9 February. He pointed out that it was not a practical possibility for him to make an order for a capital sum by the end of the day on 11 February following a hearing two days previously.

The motion to extend the 12 month period was opposed as incompetent and was refused on that ground. The agent for the pursuer founded on Mackin v Mackin 1991 SLT (Sh Ct) 22 and the unreported case of Fernando v Fernando, Aberdeen Sheriff Court 25 March 1996. Both cases were decisions of Sheriffs Principal of Grampian Highland and Islands. She submitted that the period of time specified in terms of section 12(1)(b) was not sacrosanct, need not have been specified and could be extended. The contrary argument with which the Sheriff agreed was that, given the clear and unambiguous terms of section 12(1)(b), the period specified became final once it was no longer competent for it to be appealed. A Sheriff had no power to alter his own order. The Sheriff refused to follow the decisions in the cases above mentioned. An order in terms of 12(1)(b) could only be made "on granting decree of divorce". It is only within such period that an order for payment of a capital sum or transfer of property may be made. The period specified would expire at midnight on the final day of the period. If no order was made within that period it could not competently be made thereafter. The Sheriff pointed out that, if the 12 month period were to be extended, it might be prejudicial to the pursuer. However he treated the matter as one of competence rather than one calling for an exercise of his discretion.

Submissions for the appellant

For a long time before the minute of amendment was lodged the pursuer had been aware from correspondence of the defender's intention to seek an order for payment of a capital sum. There had been difficulty with legal aid. As a result the claim had not been made until shortly before the proof. It had been agreed that the divorce would proceed on the day of the proof and that an order should be made in terms of section 12(1)(b) to allow her to make the claim. There had been lengthy periods for adjustment and answers which had either been of consent of on joint motion. The valuation of the farm was fundamental. Its acreage had to be established. Once the title deeds had been located an error in the acreage was found, with the result that the valuation had to be reconsidered. On the last day when evidence was led, 18 January, the understanding was that a hearing on evidence would take place on 28 January 2005. However there was a delay in extending the shorthand notes and, as a result, 9 February was fixed for the hearing on evidence. Because of the concern that no order might be made by 11 February the motion had been enrolled for an extension of the 12 month period.

The defender had led evidence over a number of days sufficient to justify an award of over £60,000 in her view. All the evidence had been led. Only the hearing on evidence required to take place before the Sheriff reached his decision. The effect of the Sheriff's refusal of the extension was to confer a windfall benefit on the pursuer. It was maintained that there had been no failures on the part of those advising the defender. The Sheriff's decision had led to a clear injustice which ought to be reversed.

The Sheriff had erred in law by refusing the defender's motion as incompetent. Reference was made to sections 8 and 14 of the 1985 Act. Section 8(1)(c) provided that in an action for divorce either party to the marriage may apply to the court for an incidental order within the meaning of section 14(2) of this Act. Among the incidental orders which may be made in terms of that sub-section is:

"(k) Any ancillary order which is expedient to give effect to the principles set out in section 9 of this Act and to any order made under section 8(2) in this Act."

Section 8(2) provides that where an application has been made for, inter alia, an order for the payment of a capital sum the court shall make such order, if any, as is justified by the principles set out in section 9 of the Act and reasonable having regard to the resources of the parties. Section 14(1) provides that an incidental order may be made under section 8(2) of the Act before, on or after the granting of refusal of decree of divorce. The extension of time which had been sought was competent in terms of section 14(2)(k) of the Act. Reference was made to Neill v Neill 1987 SLT (Sh Ct) 143 in which the Sheriff Principal had held that interim aliment could continue to be claimed until such time as the orders for financial provision were dealt with. That case could not be substantially distinguished from the circumstances of the present case and should be followed. The order sought was ancillary to the making of an order for payment of a capital sum.

The defender had had no control over the time it had taken to have that matter brought to proof. This was not a case such as Amin v Amin 2000 SLT (Sh Ct) 115. The circumstances were not analogous. In the present case the ancillary order was required to facilitate the making of an order for payment of a capital sum. The Act did not provide for an extension of the period but nor did it prohibit an extension being granted. It could not be assumed that Parliament intended such an injustice to occur. If there was a discretion the period should be extended. Reference was made to Newman Shopfitters Ltd v M J Gleeson plc 2003 SLT (Sh Ct) 83 in which Sheriff Principal Macphail at page 87 held that there was an inherent jurisdiction in the court at common law which could not be exercised in a manner inconsistent with statutory provisions. But where the legislation was silent it was open to the court to invoke that jurisdiction. See paragraphs 23-25 and 36-37 of his judgment.

If the situation on 9 February 2005 was that the period could not have been extended the court could have heard the parties that day and could have issued a decision by 11 February. It was accepted that the Sheriff had had other business but he could have given the best decision he could manage within the time available, even if he had to expand on it later.

So far as the first ground of appeal is concerned it was accepted that the contention that section 12(1)(b) of the 1985 Act does not require a restricted period to be fixed was not without its difficulties. The interlocutor of 11 February 2004 had been pronounced of consent but there had been no specific consent to the 12 month period. It had been submitted to the Sheriff that no period should be fixed. However he had considered that a period must be specified. There were difficulties with the decisions of the Sheriffs Principal in Mackin and Fernando, supra. It was not obvious that their views were consistent with the express terms of the statute.

In any event the interlocutor of 9 February 2004 was not a final interlocutor in that it did not dispose of the whole cause nor did it deal with the expenses of the action. This appeal opened up earlier interlocutors except in so far as they had already been extracted. Decree of divorce had been extracted. The remainder of that interlocutor would have been appealable with leave but no application for leave had been made. The 12 month period was not challenged at that time. It had not then been anticipated how long it would take to obtain the necessary documentation and valuations. If Fernando and Mackin, supra were correctly decided, the matter could be remitted to the Sheriff to proceed as accords. The appeal should be allowed. The Sheriff's interlocutor of 9 February 2005 should be recalled and an extension granted for, say, three months from the date of this court's decision. Alternatively, this court should direct the Sheriff that he could competently issue his decision and should remit to him to hear the parties on the evidence and thereafter issue a judgment.

Submissions for the respondent

The appeal should be refused. The cause should be remitted to the Sheriff to proceed as accords. The cases of Mackin and Fernando, supra were wrongly decided. In view of the acceptance by counsel for the appellant that these cases were wrongly decided, it was not clear what remained of his appeal. If his position was that a period of more than 12 months should have been inserted in the Sheriff's interlocutor he would have had to say that, as at February 2004, the 12 month period was not long enough. The Sheriff had been correct when he fixed a period. The interlocutor had correctly echoed the words of the sub-section. Reference was made to Lees on Pleading and Interlocutors at paragraph 41 and Christie v Christie 2003 SLT (Sh Ct) 115. Ordinary Cause Rule 33.51 provided that in an application after final decree, including an application for an order in terms of section 8(2) of the 1985 Act, shall be made by minute in the action concerned. That Rule could be applied to application for an order under section 12(1)(b) of the Act. In Christie, supra there had been no specified period. The legislation was not intended to open-ended. The terms of the sub-section are plain.

The Scottish Law Commission Report, which preceded the 1985 Act, had accepted a recommendation made to it that the court should be able to continue the action for such period as the court might specify to enable an order for payment of a capital sum or transfer of property to be made after divorce. The draft bill attached to that Report was in terms identical to those of section 12(1) of the 1985 Act. What was envisaged was a fixed period within which the matter would be dealt with. Section 14(2)(k) was properly seen as being ancillary to the order for financial provision not as ancillary to a procedural matter such as this. There was an entitlement to apply for a capital sum not an entitlement to such a sum. In Mackin and Fernando adjournments had been granted which had had the effect of removing the element of finality and increasing the burden on the person who had to make payment of the capital sum. That was not what the Act required. Fairness applied to both parties. There was no basis upon which it could be said that, as at February 2004, the 12 month period was inadequate. The Sheriff had been under the impression that parties had consented to it and that coincided with the instructions which counsel had received. Reference was made to McCue v Scottish Daily Record and Sunday Mail Ltd 1998 SLT 983 at page 989 I-K. In that case the court was considering the court's ability, when entertaining a competent appeal, to review prior interlocutors which had not previously been appealed against. The court said:

"... we consider that the statement by Maclaren, that "where a prior interlocutor is expressly or by implication a final interlocutor, a reclaiming note against a subsequent interlocutor does not submit the prior interlocutor to review", is correct."

That should be the approach of the court in the present case.

The case of Neill, supra lent no support to the proposition that section 14(2)(k) could be used for the purpose of which counsel for the defender contended. Section 12(1)(b) required a period to be specified. That statutory provision had been operated. Other sections of the Act were not there to enable the court to alter the effect of that particular sub-section. It was accepted that the court had an inherent jurisdiction but it was not accepted that it could be employed in this case. There was no uncertainty in the statutory provision. If section 12(1)(b) had been intended to allow for an extension of the period specified, it would follow that a series of extensions could be applied for. That would be inconsistent with the intention of the Act to achieve a resolution of financial matters on or soon after divorce.

So far as the inherent jurisdiction of the court was concerned, that jurisdiction should not be exercised in this case. There was no lacuna which the court required to fill. The case of Newman had been decided on its own facts. The Sheriff had not been addressed on the issue of the court's inherent jurisdiction in the present case. That issue arose for the first time in the context of the amended grounds of appeal. It was not conceded that the court had an inherent jurisdiction to deal with this issue in the way proposed. But it was accepted that it had jurisdiction to avoid injustice, provided that it did not thereby undermine law and practice. There was no provision either for extending the period or for providing relief, even if it was fair, just and equitable to do so. The court should only invoke an exceptional power with restraint, especially if to do so was contrary to the interlocutor of the court below and to the terms of the Act. Ordinary Cause Rule 29.20 provided that at the close of the proof or at an adjourned diet, if he has postponed the hearing, the Sheriff is required to hear parties on the evidence and thereafter pronounce judgment with the least possible delay. It had not been suggested that the Sheriff should have made a determination on the day when the hearing on evidence was due to take place. In the present instance the defender may have a right of relief against her legal advisers. There was no basis upon which the Sheriff's interlocutor could be overturned. He had reached the correct decision. The appeal should be refused.

Decision

Section 12(1)(b) of the Act provides that an order for payment of a capital sum may be made within such period as the court on granting decree of divorce may specify, if it does not make such an order when granting decree of divorce. On 11 February the Sheriff granted decree of divorce and allowed a period of 12 months from that date for the granting of an order for a capital sum. At first sight, if no such order is made within 12 months of 11 February 2004, the court had no power to make one. Whether or not the 12 month period was agreed to on that date, no issue was taken with the length of that period at that time. If at that time it was considered that the 12 month period was not long enough an appeal could have been marked, with leave, to have a longer period substituted. Leave was not applied for. No appeal was marked. If there had been an appeal against the 12 month period it would be difficult to envisage the Sheriff's exercise of his discretion in fixing that period being overturned. An explanation has been given as to why it has took as long as it did to get to the stage of a proof in connection with the defender's application for payment of a capital sum. The proof clearly took longer than had originally been anticipated. Evidence was heard over a period of four days, one day in November, one day in December and two days in January. There was not time on the last date, 18 January, for the parties to be heard on the evidence, with the result that the case was adjourned until 9 February. The defender's motion for an extension of the 12 month period was heard on 7 February and refused as incompetent. By then any realistic prospect of an order being made by the Sheriff following the hearing on the evidence had almost certainly disappeared. There is no point in this context attempting to investigate why it took so long to get this matter to proof and why, once the proof started, it took so long to reach the stage of a hearing on evidence. This court has to deal with the situation as it finds it.

All the evidence which was to be led has been led, at considerable expense. The parties anticipated that there would be a decision on the merits of the application for a capital sum. All that remained to be done was for the Sheriff to hear the submissions on behalf of each party and thereafter reach a decision on the merits of the application. The effect of what has happened is to prevent him from doing either of these things. The pursuer has claimed a capital sum of approximately £62,000. Whether she would have obtained such an order is a matter for the Sheriff on which this court neither can nor should comment. On the assumption that her claim has some merit, the events which have occurred will prevent her from obtaining a fair division of the net value of the matrimonial property. The pursuer will benefit to the extent that he does not require to comply with such an order and will retain matrimonial assets which he would otherwise have had to make over to the defender. The problem which has arisen arose in part because the court, for one reason or another, did not sit continuously from the start of the proof until its conclusion. If the court had done so, this appeal would not have been necessary. There would have been ample time for the Sheriff to issue his decision within the 12 month period. The question essentially is whether this court can and should avoid the injustice which would occur if the Sheriff's decision is allowed to stand. It is difficult to believe that this court does not have the ability to provide a remedy where the absence of such a remedy would cause such manifest injustice. If after the first two days of evidence the Sheriff had spent three months in hospital, the period within which such an order required to be made would have expired through no fault of anyone, but with the potential consequence that the defender would be deprived of her right to receive her fair share of the matrimonial property. That could not be right in those circumstances. The circumstances in the present case are not very different. It must be assumed that the court was not able to hear this case within such time after the proof commenced as would allow the issues to be determined no later than 11 February 2005. There is a very strong case in equity favouring a decision by this court which will allow the Sheriff to conclude the case before him by reaching a decision on the evidence already led.

I do not consider that salvation is to be found in section 14(2)(k). In my opinion extending the period of 12 months cannot properly be regarded as an ancillary order which is expedient to give effect to an order made under section 8(2) of the Act. See Amin v Amin, supra at page 116. I cannot read that provision as allowing a court to override the clear terms of section 12(1)(b).

I am satisfied that the Sheriff did what section 12(1)(b) required him to do, namely to specify a period within which the court might make the order concerned. I agree with the Sheriff and with counsel that neither the case of Mackin nor the case of Fernando take proper account of the terms of that sub-section which clearly requires a period to be specified by the court at the time when decree of divorce is granted.

In Mackin the Sheriff, who had granted decree of divorce, assigned a later date for consideration of the financial issues. The case was further adjourned because of lack of court time. It was contended that, because the adjourned date was not within any period which had been specified by the court on granting decree of divorce, it was incompetent for the Sheriff to make orders for financial provision. Sheriff Principal Ireland held that the only way that the court could give effect to the section 12(1)(b) of Act was to order a proof on a specified day. The adjournment of that proof to a later date could make no difference. The Sheriff Principal said that the obvious purpose of that provision was to enable the court to grant decree of divorce immediately but to allow time for inquiry into the financial issues. He commented that, if the court had specified a period, that would have led to no practical result. The only way in which the court could give effect to the Act was to order a proof on a specified day. With all due respect to the Sheriff Principal, it appears to me that the function of the court on granting divorce is to determine the period within which the financial issues must be dealt with. It is then up to the parties to arrange for the case to be dealt with within that period. What the Sheriff did in that case, in my opinion, did not comply with the terms of the sub-section.

In Fernando the Sheriff granted decree of divorce and dealt with certain other matters. On that date he continued the case in respect of the counterclaim which, amongst other things, sought payment of a capital sum. Again the issue of the competence of the counterclaim was raised. The argument in that case focused on section 16(2)(b) which was also in issue in that case. That sub-section provides that the court may make an order setting aside an agreement as to financial provision "on granting decree of divorce or within such time thereafter as the court may specify on granting decree of divorce". In Fernando no diet of proof could have been fixed because the pursuer's answers to the counterclaim had not then been lodged. It was argued that it must be competent, where decree of divorce was granted at a time before a proof on the financial issues could have been fixed, to fix a procedural hearing. Sheriff Principal Risk in Fernando took the view that a specific date had already been fixed for a hearing of the counterclaim and that that sufficiently complied with the terms of the section then under consideration. He agreed with the opinion of Sheriff Principal Ireland in Mackin. He considered that a court was not in a position to make an order for financial provision unless and until it had heard evidence and/or argument. That necessitated fixing a proof, a debate or some other hearing. He added:

"It is liable to produce injustice because if a "closing date" is fixed, an unscrupulous party could avoid his liabilities by delaying procedure beyond that date."

He therefore concluded that sections 12(1)(b) and 16(2)(b) of the Act envisaged that the court must fix a time within which the unresolved matters must be brought before it. Later he said:

"Until the counterclaim has been resolved the action remains alive".

In my opinion Sheriff Principal Risk made the same error as Sheriff Principal Ireland in that he was unable to conceive of a way in which the Act could be complied with other than by fixing a proof, debate or other hearing. I do not consider that there is any such difficulty. In Christie v Christie, supra the Sheriff allowed parties a proof of divorce by way of affidavit evidence and allowed them a proof in relation to the financial aspects of the case on a particular date. He purported to do so in terms of section 12(1)(b) of the Act. The proof which he fixed did not proceed and thereafter the defender counterclaimed for a capital sum. That was challenged as incompetent. The counterclaim was dismissed as incompetent. The Sheriff held that an order for payment of a capital sum could only be made on granting decree of divorce or within such reserved period as the court might specify. He was satisfied that, in the absence of any period of reservation of the financial issues "by allowance of proof", the claim was incompetent. While in my opinion he was right to conclude that in that case the claim was incompetent, he was on less sound ground when he held that it would have been competent had a proof been allowed. That case differs from this and from the two other cases in that the counterclaim was not incorporated into the defender's pleadings until over two years after the undefended divorce had been granted. In summary, I can see no difficulty in applying the provisions of sections 12(1)(b) and 16(2)(b) in the manner which was clearly intended, namely that the court should set a period within which the matters concerned require to be resolved. Accordingly I agree with the Sheriff in the present case that it was not open to him to extend the period which he had fixed by adjourning the proof.

In Newman Shopfitters Ltd, supra Sheriff Principal Macphail held that the Sheriff Court had an inherent jurisdiction, derived from the very nature of the court itself rather than from any statute or rule of court. In Hall v Associated Newspapers Ltd 1979 JC 1 that jurisdiction was described as:

"The indispensable power which is inherent in every court to do whatever is necessary to discharge the whole of its responsibilities".

Sheriff Principal Macphail quoted with approval an article by Sir Jack Jacob on Practice and Procedure in Halsbury's Laws of England, volume 37 (Revised 2001) paragraph 12 to the effect that the inherent jurisdiction of the court:

"has been defined as being the reserve or fund of powers, a residual source of powers, which the court may draw upon as necessary whenever it is just or equitable to do so, in particular to ensure the observance of the due process of law, to prevent vexation or oppression, to do justice between the parties and to secure a fair trial between them."

The Sheriff Courts (Scotland) Act 1907, section 5 provides that:

"Nothing herein contained shall derogate from any jurisdiction, powers, or authority presently possessed or in use to be exercised by the sheriffs of Scotland".

I am satisfied that the statement of the law by Sheriff Principal Macphail in paragraphs 23-26 is a correct statement of the law of Scotland in relation to the inherent jurisdiction of the Sheriff and other courts. I am further satisfied that this is an appropriate case in which to invoke that inherent jurisdiction to enable the Sheriff to do justice between the parties and to reach a conclusion on the evidence which he has already heard. It seems to me that that is the only basis upon which justice can be done between the parties since I am satisfied that the Sheriff was correct to hold that section 12(1)(b) required him to specify a period and that that period could not be extended using the provisions of the Family Law (Scotland) Act 1985. I have set out above the reasons why I consider it to be equitable to recall the interlocutor of the Sheriff insofar as he refused the defender's motion (no 7/5 of process) as incompetent. I have remitted the case to the Sheriff so that the parties may be heard on the evidence led and so that he may thereafter issue a judgment.

Both counsel moved the court to sanction the appeal as suitable for the employment of counsel. That I am happy to do. It was agreed that, if the outcome was as it is, it would be appropriate to reserve expenses.