F458/02
JUDGMENT
OF
SHERIFF PRINCIPAL
JAMES A TAYLOR
in the cause
Mrs Patricia McKinnon
PURSUER/RESPONDENT
against
Angus McKinnon
DEFENDER/APPELLANT
GLASGOW,
November 2007.
The Sheriff Principal, having resumed
consideration of the appeal, Refuses the appeal; Adheres to the interlocutor of
the learned sheriff dated 26 April 2007; Finds the defender and appellant liable
to the pursuer and respondent in the expenses of the appeal as these might be
taxed; Allows the pursuer and respondent to make up an account of expenses and
upon it being lodged Remits the account to the Auditor of Court to tax and to
report.
NOTE:
[1] This is a divorce action which came to
proof before the learned Sheriff after the parties' solicitors had gone to
considerable lengths to successfully narrow the issues. In this respect they are to be
congratulated. The grounds for divorce
were agreed. The value of the
matrimonial property at the relevant date was agreed. It was agreed that the defender would retain
what had been the matrimonial home which at the date of separation had a value,
after deduction of the mortgage, of £14,000.
The issue was what should happen to the holiday home at 3 Callanish,
Isle of Lewis, which although acknowledged as being matrimonial property was
recorded in the name of the defender.
The defender proposed a scheme of division in terms of which he retained
the former matrimonial home and 3 Callanish, Isle of Lewis but made a balancing
capital payment to the pursuer of £9,480.27.
On the other hand, the pursuer proposed that the defender should
transfer the title in 3 Callanish, Isle of Lewis to the pursuer in return for
which the pursuer would make a payment to the defender of £1,519.73. In other words the pursuer wanted a property
transfer order and the defender wanted to make payment of a capital sum. In essence the parties wanted the court to
decide who should own 3 Callanish, Isle of Lewis. Both parties wished it.
[2] In such circumstances a possible
resolution would have been for the court to make an incidental order in terms
of Section 14(2) of the Family Law (Scotland)
Act 1985 for the sale of the property.
Both parties would then have been able to bid for the property and thus
their respective desires to own 3 Callanish, Isle of Lewis would be put to the
ultimate test. Before such an order can
be made one or other party must make application to the court for such an order. No such application was made. In the course of the appeal hearing there was
a discussion with regard to such an application being made but it was generally
accepted that it came too late in the day.
[3] The learned Sheriff heard evidence on
the parties' respective desires to have ownership of 3 Callanish, Isle of
Lewis. He was unable to make any
findings-in-fact on this issue.
[4] The learned Sheriff decided to make an
order ordaining the defender to transfer the title of 3 Callanish, Isle of
Lewis to the pursuer and for the pursuer to make a payment to the defender of
£1,519.73. In other words he favoured
the pursuer's position. In paragraph 14
of his Note he states:-
"In this case it appears, prima facie, that either a transfer of title or a capital sum order
would achieve a fair division of value of the matrimonial property. However in fact a capital sum order, once
legal aid "claw back" takes effect would leave on the one hand the
pursuer with substantially less than £9,400 and on the other the defender with
title to both of the houses which were the matrimonial properties. A title transfer order avoids that imbalance
and results in a fair and practicable result in accordance with common sense,
as required by law. For the foregoing
reasons I have concluded that a transfer of title order should be made. Nothing said by the defender persuaded me
that his attachment or proposed use of the property should influence that
decision."
[5] In addressing me Mr Lynch, for the
defender, acknowledged that the learned Sheriff was exercising a
discretion. He further recognised that
this presented the appellant with an uphill task. He had to show that the exercise of that
discretion had been unreasonable. Having
heard parties' submissions I have come to the view that the defender's
submission has to be favoured.
[6] One way of testing whether the exercise
of a discretion has been reasonable or otherwise is to ask whether the learned
Sheriff has taken into account an irrelevant factor or whether the learned
Sheriff has left a relevant factor out of account. In this case the learned Sheriff, as can be
seen from the paragraph quoted supra,
was persuaded that the claw back provisions of the legal aid rules directed him
to favour the pursuer's submissions over those of the defender. He was persuaded that if the pursuer received
a payment of £9,400 the Scottish Legal Aid Board would take a substantial part
of that and that would give rise to inequity.
I was informed that the pursuer's solicitor's account of expenses for
the action up to the proof was in the order of £4,000. The pursuer's solicitor would in the normal
course render that account to the Legal Aid Board who would settle with the
solicitor. If the pursuer had recovered
a capital sum the Board would then look to the pursuer for payment. In other words, the learned Sheriff
considered that because the pursuer would have to make payment of her own
account of expenses he should decide the case in a particular way. That appears to me to be putting the cart
before the horse. In our system the
court normally considers what should be the outcome of the case based on evidence
and submissions. Thereafter the question
of expenses falls to be determined. To
allow the issue of expenses to dictate the merits of the case is in my view
inappropriate.
[7] However even if I am wrong in that
respect and the question of expenses is a relevant consideration in the
exercise of a Sheriff's discretion in deciding the substance of the case, the
question of expenses of both parties falls to be considered. The learned Sheriff did not have regard to
the position of the defender, probably because he was not addressed on this
point. In this case the defender was
also legally aided. His solicitor
thought that his account of expenses would be broadly similar to that of the
pursuer's solicitor. That is what one
would expect. I was told that the Legal Aid
Board will almost certainly consider that the defender has succeeded in using
the litigation to preserve property. In
such circumstances the defender will also be subject to the claw back
provisions. In the event that the
defender is unable to make payment of his solicitor's account of expenses as
that has been taxed and settled by the Legal Aid Board, the Legal Aid Board
will take a standard security over the property. Thus it can be said that if the issue of
expenses and the legal aid provisions is a relevant consideration, the learned
Sheriff failed to take account of the defender's position. Furthermore when effect is given to the
learned Sheriff's judgment and property is transferred to the pursuer, the
Legal Aid Board will probably deem there to have been a recovery of property by
the pursuer. Thus whether the pursuer
receives a capital payment or a transfer of property, she will still in all
probability, be subject to the claw back provisions. I have come to the view that the exercise of
discretion in this case albeit well intentioned was an unreasonable
exercise. The position is at large for
me.
[8] In the course of the hearing I was
referred to a number of authorities including Jacques v Jacques 1997 SC (HL) 20; Little v Little 1990 SLT 785; McDonald
v McDonald 1993 SCLR 132; Christie v
Christie 2004 SLT (Sh Ct) 95; Adams v
Adams (No 1) 1997 SLT 144; McAskill v
McAskill, unreported, Sheriff Principal Macphail, Edinburgh Sheriff Court,
22 September 2004; Wallis v Wallis
1993 SC (HL) 49 and McDonald v McDonald
1993 SCLR 132. In the report of the
Inner House proceedings in Wallis v
Wallis (1992 SC 455 at 460) Lord President Hope said:-
"Various kinds of financial provision may be made to
achieve that object (equal sharing of the
net value of the matrimonial property), whether by means of an order for
payment of a capital sum or an order for the transfer of property or a
combination of the two. There is a
choice of method by which the financial provision may be made, but whichever
method is chosen the only legitimate object is to achieve a fair division of
the net value of the matrimonial property at the relevant date."
[9] In his submission Mr Lynch, for the
defender, said that there was essentially a hierarchy when the court had to
consider whether to make an order for payment of a capital sum or an order for
the transfer of property. An order for
payment of a capital sum should be the first choice of the court. He relied upon what was said by
Lord Caplan in McDonald at 136C
where Lord Caplan said:-
"...I have decided that the normal and orthodox
approach is the appropriate one and to order the defender to make a capital
payment of a fixed sum to the pursuer."
Mr Lynch also
drew my attention to what was said by Sheriff Principal Kerr in Christie. At page 100 H-K, Sheriff Principal Kerr
states:-
"I am willing to add in the context of a discussion
about choosing among available methods of making financial provision that I was
not favourably impressed by the appellant's submission that a capital payment
of a fixed sum should be taken to be the "normal and orthodox
approach" of the court to the making of a financial provision, at least not
in 2003 or 2004. Those words were used
by Lord Caplan in the case of McDonald
1992 SCLR 132 in a judgment issued in July 1992 in which he decided to order a
capital payment in preference to a sale of the matrimonial home with an unequal
division of the net proceeds of sale.
The Act of 1985 had been in force for seven years. As time goes on however and the variety of
orders for financial provision available to the court is increased by amendment
from time to time of the Act it seems to me less and less correct to think of
any one type of order for financial provision as being any more or less normal
or orthodox than any of the others available.
Until 1985 awards of periodical allowance or capital sum were the only
types of order for financial provision commonly available and their currency
had lasted for over twenty years.
Against that background it is perhaps not too surprising that Lord
Caplan in 1992 should have viewed a capital payment as more
"orthodox" than a sale of the matrimonial property with an unequal
division of the proceeds but twelve years further on I think such a
characterisation to be of doubtful validity or even outworn."
[10] I prefer the view expressed by Sheriff
Principal Kerr. One has to look at what
was said by Lord Caplan in its context. In
my opinion no one method by which financial provision might be made has a
preference over another. It will depend
on the facts of each case. On occasion a
property transfer order will be appropriate. For example there might require to be a
transfer of the matrimonial home to the spouse who has the care of any
children. Furthermore, there is nothing
in the statute which suggests that one form of financial provision takes
precedence over another. If Parliament
intended that there should be a hierarchy, one might have expected the statute
to provide for that.
[11] Having decided (a) that the basis upon
which the learned Sheriff exercised his discretion cannot stand and (b) that I agree
with the learned Sheriff that there is no hierarchy in the orders available to
the court putting the payment of a capital sum ahead of a property transfer
order, I am left with having to decide which of the two competing submissions I
should adopt. That presents a real
difficulty. On the basis of the findings-in-fact
which the learned Sheriff felt able to make on the evidence, it is impossible
to decide which of the two alternatives which the parties put to the court
should prevail. The parties chose to
fight this case on the battleground of who had the greater affinity for and
connection with 3 Callanish, Isle of Lewis.
That was the only evidence which was placed before the learned Sheriff
which may have entitled him to decide the case one way or the other. That evidence was inconclusive. One cannot but have sympathy for the position
in which the learned Sheriff found himself.
[12] The pursuer craves either a property
transfer order in respect of 3 Callanish, Isle of Lewis (crave 2(i)) and
payment of a capital sum (crave 3). The
defender is prepared to make payment of a capital sum. It was not said before either the learned
Sheriff or myself that in pure financial terms one alternative was a fairer
distribution of the matrimonial than the other.
The court must therefore assume that in pure financial terms either one
of the two options represents a fair distribution of the matrimonial property. The 1985 Act requires that there must be a
fair division of the net value of the matrimonial property. On the basis of the submissions made before
me, that has been achieved. Therefore it
seems to me that there is no basis upon which I should interfere with the
learned Sheriff's interlocutor.
Furthermore it might be said that there is a symmetry in the approach
adopted by the learned Sheriff. Each of
the two parties emerges from the marriage with ownership of heritable
property. If the submission of the
defender was preferred then he would acquire all of the heritable assets of the
marriage. Although I was not addressed
on the issue I did wonder whether I could decide which of the two routes to
follow by considering where the onus lay.
However I came to the view that it would be unfortunate if one was to
introduce the concept of onus of proof to the division of matrimonial property.
[13] Parties were agreed that the expenses of
the appeal should follow success and accordingly I have found the defender
liable to the pursuer therefor.
