SHERIFFDOM OF SOUTH STRATHCLYDE DUMFRIES AND GALLOWAY

 

F467/07

	JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART
	in the cause
	JOHN McCUSKER KELLY CORBETT
	Pursuer and Appellant
	against
	JANET WALLACE SCOTT or CROMBIE or CORBETT
	Defender and Respondent

 

Act: Mr Doohan, Advocate, instructed by The McKinstry Company

Alt: Fraser, of Wallace Hodge & Co

AYR: 22 July 2009

 

The Sheriff Principal, having resumed consideration of the cause refuses the appeal and adheres to the Sheriff's interlocutor of 27 November 2008 complained of; finds the pursuer and appellant liable to the defender and respondent in the expenses of the appeal; allows an account thereof to be given in and remits same when lodged to the Auditor of Court to tax and to report; refuses to sanction the appeal as suitable for the employment of counsel.

 

NOTE:

 

Background to the appeal

 

1.             In this case the parties were married on 31 January 1998. In 1987 the defender became the sole tenant of the property at 66 Dalmilling Road. She lived there with her daughter. From the point of taking tenancy of the property from the local authority the defender intended to purchase it as an investment for herself and her daughter. As a consequence she made various attempts to obtain a mortgage to enable her to purchase the property from 1987. She was finally able to do so in 1995. She then purchased the property. She made all the payments on the mortgage from her own resources. She carried out a number of improvements to the property following the purchase including new windows, a new bathroom, a new kitchen and installing central heating. She financed these improvements by bank loans, which she set up and serviced personally, and by using an inheritance from her mother.

 

2.             At a date after she had become the sole tenant of 66 Dalmilling Road, Ayr in 1987, but before she purchased the property in 1995, the defender began to co-habit with the pursuer. The defender's daughter continued to reside with them. The parties were married on 31 January 1998. The sheriff found that the marriage of the parties has now broken down irretrievably as a result of non-cohabitation from 25 December 2003.

 

3.             Finding in fact 14 is in the following terms:

"The property at 66 Dalmilling Road was purchased by the defender as an investment at a time when it was already being used as a family home. The intention to purchase was as an investment. The property was not purchased or acquired for use as a family home and as such does not fall to be considered as matrimonial property in terms of the Family Law (Scotland) Act 1985. The property at 66 Dalmilling Road, Ayr not being matrimonial property no order in respect of a capital sum is justified."

In the "discussion and decision" section of his note the sheriff states:

"I accepted the evidence of the defender and her daughter that the intention to purchase the property at Dalmilling Road was as an investment for her and her daughter and that this intention had been formed immediately upon acquiring the tenancy of the property and prior to cohabiting with the pursuer. The pursuer himself accepted that there was no need for the property to be purchased to allow them to live together either before or after marriage and the purchase of a property as a sitting tenant was a good investment and he encouraged the defender to go ahead with her wish to purchase in these circumstances. I have concluded therefore that this house was not acquired to enable the parties to cohabit nor as a family home but it was acquired for the sole purpose of an investment.

Accordingly I do not consider that it constitutes matrimonial property ..."

 

4.             It is against that decision by the sheriff that the defender now appeals.

 

Submissions for the defender and appellant

 

5.             Counsel for the appellant took issue with finding in fact 14 which I have set out about. He submitted that the finding "the intention to purchase was an investment" was incomplete. The completed finding ought to have been "the intention to purchase was an investment and for use as a family home". It was submitted that the sheriff erred in law in finding that (i) the property was not purchased or acquired for use as a family home and as such did not fall to be considered as matrimonial property in terms of the Family law (Scotland) Act 1985, and (ii) the property at 66 Dalmilling Road, Ayr, not being matrimonial property, no order in respect of a capital sum was justified.

 

6.             It was further submitted that the sheriff erred in setting out the law. At para 4, page 3 of his note the sheriff outlined the "statutory framework". He stated "... matrimonial property is taken to be shared fairly when it is shared equally and in such proportions as are justified by special circumstances". It was submitted that was not correct. Section 10(1) of the 1985 provided:

"Matrimonial property ... shall be taken to be shared fairly ... when it is shared equally or in such other proportions as are justified by special circumstances."

 

7.             I was referred to section 10(4)(a) of the 1985 Act as amended which provides:

"... "the matrimonial property" means all the property belonging to the parties or either of them at the relevant date which was acquired by them or him (otherwise than by way of gift or succession from a third party)-

(a) before the marriage by use by them as a family home or as furniture or plenishings for such home ..."

The section dealt with property belonging to the parties or either of them at the relevant date. Before any property could belong to them at the relevant date, there was a requirement for the property to have been acquired by both or one of the parties before the marriage for use by them as a family home. It was submitted that section 10(4)(a) is a statutory exception to the general rule that matrimonial property means all the property acquired during the marriage but before the relevant date. It was submitted that if property was acquired before the marriage for use by the parties as a family home, the conditions of the statutory exception were fulfilled. The property then became matrimonial property and was therefore available for distribution.

 

8.             I was referred to Clive, third edition, Husband and Wife page 475:

""Matrimonial property" means all the property belonging to the parties at the relevant date which was acquired (otherwise than by way of gift or succession from a third party) by them during the marriage but before that date. It does not include property acquired by either party after they separated. Nor does it, in general, include property acquired before the marriage, but the exclusion of pre-marital property is subject to one exception. Property acquired (other than by gift or succession from a third party) before the marriage by either of the parties "for use by them as a family home or as furniture or plenishings for such a home" is included within the definition of matrimonial property if it is still owned at the time of separation. The idea behind this exception is that such property is so closely associated with the intended marriage that it should be regarded as matrimonial property by destination. The exception is quite limited. It would not cover, for example, a house owned by either party before he or she met the other party - or a house acquired by either of them for his or her own use. The property must have been acquired for use by them - that is by both parties - as a family home, or as furniture or plenishings for such a home."

 

9.             I was also referred to Clive, fourth edition page 447:

"The broad idea behind the provision is that such property is so closely associated with the parties' joint family life that it can be regarded as matrimonial property even although acquired before the marriage.

 

10.         The sheriff reached the decision that the property at 66 Dalmilling Road, (hereinafter referred to as "the property") was acquired by the respondent as an investment and was not acquired by her before the marriage for use by the parties as a family home. It was submitted it was open to the sheriff to find that the property was acquired as an investment before the marriage and was acquired by the parties before marriage for use as a family home. A finding that the property was acquired by the defender before the marriage as an investment and a finding that the property was acquired before the marriage for use as a family home were not mutually exclusive findings. Persons could have more than one reason to do something. It was submitted that in this case there were dual reasons in the mind of the parties at the time of purchase in 1995. One reason behind the purchase was to secure an investment. Another reason was to use the property as a family home. It was correct that the respondent did not need to purchase the property. However, she did so. When she did so both reasons operated. It was submitted that a proper construction of section 10(4)(a) of the Act allowed the conclusion that a property acquired as an investment before the marriage could also be regarded as property acquired before marriage for use as a family home. The sheriff had imputed the parties' one reason at the time of acquisition. It was submitted he had erred in so doing.

 

11.         It was accepted that the respondent initially became the tenant of the property and it was after she became the tenant that the appellant started to live with her. The evidence on this was somewhat vague, but it was accepted there was sufficient for a finding that the appellant cohabited with the respondent only after she became tenant of the property. The property was purchased in 1995 by the respondent. It was submitted that the reasons for purchase by the respondent were (a) as an investment and (b) for use as a family home. It was accepted that the respondent did not need to purchase the property as she was already living in it. However, when she did purchase the property, both reasons operated. A construction of the provisions allowed a property acquired as an investment before marriage also to be a property acquired before marriage for use as a family home. The parties had been residing together when the property was purchased. It was submitted that the provisions of section 10(4)(a) were capable of the interpretation that it was the intention of Parliament to accommodate and to acknowledge the fact that parties could have more than one reason for a purchase at the time of acquisition. It was not uncommon for couples to acquire a property both as an investment and for use as a family home.

 

12.         It was referred to para 5, page 3 of the sheriff's note when in the final sentence he stated:

"The question then is to determine what the intention was, whether it was purchased with the intention of being the family home or for another purpose".

It was submitted the last four words of that sentence indicated that the sheriff considered the parties' intention at the time of acquisition of the property was a unitary one and not a dual one. The appellant accepted that the property was purchased as an investment. This was not in dispute. However the appellant's position was that it was purchased both as an investment and as a family home. Support for this submission, it was said, was found in the plain fact that the parties continued to live in the property after it was purchased. They continued to live there until they were married three years after the date of acquisition and thereafter continued to live there until separation in December 2003.

 

13.         I was referred to the following cases:

(a)           McLennan v McLennan 1998 SCLR 399 where the sheriff stated at 401:

"In order that matrimonial property may become within the ambit of the Act and be the subject of an order for financial provision, when it is acquired before the marriage, it must be so acquired for use as a family home."

It was submitted from the facts of this case that it was clear that, while the respondent may well have purchased the property as an investment, she also purchased the property for use as a family home.

 

(b)          Mitchell v Mitchell 1995 SLT 426 where Lord Justice Clerk Ross, giving the opinion of the court said at:

428F: "We agree with what Professor Meston says in the passages which we have cited (a reference to his article on "Matrimonial Property and The Family Home" 1993 SLT (News 62). So far as section 10(4)(a) is concerned in relation to 19 Rockfield Crescent, there are three requirements (1) 19 Rockfield Crescent must be shown to belong to one or both of the parties at the relevant date which is 2 August 1991 (2) it must be shown to have been acquired by the defender and (3) it must have been acquired by him before the marriage for use by the parties as a family home.

428I: "As already observed the definition will be satisfied even if the property was initially acquired to enable the parties to cohabit in it as a family home before any marriage took place; indeed the statute does not provide that marriage requires to have been in contemplation at the time when one of the parties acquires the property for use by the parties as a family home.

(c)           KW v DW - Lord Brodie February 12, 2003 - Family Law Bulletin, Issue 63 May 2003:

"In 1993 the husband bought a house at Craigmount View, Edinburgh for himself and his then girlfriend to live in. They married about a year later and continued living there ... Lord Brodie held that the first Edinburgh house (at Craigmount View) was matrimonial property (and a matrimonial home) since it had been bought by the husband for the couple to live in together."

 

14.         I was referred to various sections of the appellant's evidence to the effect that he continued to live in the property as a family home. It was submitted that, taking the sheriff's judgment at a whole, it appeared that he had closed his mind to the fact that there could be more than one reason for acquisition of the property. It was submitted that the reality of the matter was that there were two purposes for the purchase, namely as an investment and for use as a family home. It was submitted that it was enough for the appellant's purpose if one of the purposes was as a family home.

 

15.         I was asked to allow the appeal and award a capital sum to the appellant of half the net value of the property at the date of separation, which amounted to £30,000. It was agreed that expenses in respect of the appeal would follow success. I was asked to certify the cause as suitable for the employment of counsel.

 

Submissions for the defender and respondent

 

16.         Solicitor for the respondent submitted that it appeared to be the appellant's case that, having regard to the selected pieces of evidence to which counsel had referred, because it was implicit in the minds of both the parties at the time of the purchase that the property would be used as a family home, that was sufficient to satisfy the test of section 10(4)(a). It was submitted that what was in the mind of the appellant was not relevant. He was not purchasing the property. This case involved property belonging to the respondent at the relevant date which was acquired by her before the marriage. The issue was whether the purchase was for use by both parties as a family home. It was submitted that what was relevant was the purpose or use in the mind of the purchaser at the time. It was submitted that, while the appellant gave evidence on the lines set out by his counsel, when cross-examined and questioned by the sheriff it appeared he really did not know what the respondent's purpose was in purchasing the property. I was referred to page 12:

"Q. Mr Fraser wanted to know why it is your wife wanted to buy the property?

A. So that we could stay together.

Q. Am I right in thinking that you were staying together at the time?

A. Yes.

Q. But Mr Fraser pointed out that you were already living there so that can't be the reason.

A. Probably for security."

and at 14.6:

"Q. What difference would purchasing the property make?

A. I actually don't know."

 

17.         It was accepted on behalf of the respondent that before the property was purchased, it was used as a family home and after the purchase it continued to be used as a family home. The question was whether these facts satisfied the test in section 10(4)(a), namely whether the property was acquired by the respondent before the marriage for use by her and the appellant as a family home. It was submitted that the relevant test was "Why did the party in question buy the property?". The appellant, to succeed, would require to establish that the property was acquired to enable the parties to cohabit. They required to be necessity. In this case the property already was a family home. There was no requirement to acquire it for use by the parties as a family home. I was referred to the dicta of Lord Morton of Shuna in the case of Buczynska v Buczynska 1999 SLT 560 where he stated at 560F:

"In considering the house at Wilton Road, counsel for the defender submitted that as the house had been bought by the defender prior to marriage, according to the defender for the purpose of being an investment, it was not matrimonial property, not having been "used as a family home". This contention I reject. I consider that the purpose of the acquisition of Wilton Road, was for use by the pursuer and defender as a family home ..."

In that case the purchase was made and the purpose of the acquisition was for use as a family home. It was submitted, if the appellant's position had been - "let us buy this house so that we may live there together" - that would satisfy the test. However that was not the position here. The parties already lived in this property as a family home. It was submitted the sheriff had correctly decided that the respondent's purpose in buying the house was not for the use of the parties as a family home but as an investment for herself. It was submitted the sheriff had correctly summarised the law and concluded:

"The question then is to determine what the intention was, whether it was purchased with the intention of being the family home or for another purpose".

It was submitted that what the sheriff was doing was quite legitimately setting out as a minimal test that there must be some purpose for acquiring a property. He was being asked to find that the purpose of acquiring the property was for use as a family home. It was submitted that the sheriff was not excluding the possibility of more than one reason, but he was excluding the possibility of there being no reason. It was suggested that was a perfectly proper approach.

 

18.         I was referred to the evidence of the respondent as follows:

25.10 to 23:

"Q. As far as you were concerned from the Council's point of view you were invited to purchaser the property?

A. Yes.

Q. But at the time you moved in you were not able to do that?

A. I couldn't get a mortgage.

Q. But that had been your clear intention, that you were aware you had a right to buy?

A. Ug-huh.

Q. And that you got the tenancy to this house but you would be keen to buy it if you could overcome the difficulties to get a loan?

A. Yes."

26.12:

"Q. But Alliance & Leicester said they would give you a mortgage?

A. Yes."

26.17:

Q. Did you speak to Mr Corbett about this?

A. He knew I was wanting to buy the house yes.

26.24:

"Q. Did you talk to him about whether he would like to joint you in purchasing the property?

A. I made him aware of it but he wasn't interested in wanting any part of the financial side of it."

29.6:

"Q. What did he say?

A. If you want to buy it, go ahead."

The respondent purchased the property with a loan from the Alliance & Leicester Building Society and carried out improvement to the property with bank loans and a legacy from her mother. It was clear that the appellant took no part in these transactions.

 

19.         It was submitted that the sheriff was correct in reaching the decision which he did. The appeal should be refused.

 

Decision

 

20.         In my opinion a consideration of the respondent's evidence allowed the sheriff to take the view that the property was purchased by her as an investment. She acquired originally the lease of the property where she lived with her daughter. At that time she formed the intention to accept the favourable terms which were being offered by the local authority to purchase the property as an investment for herself. She immediately put in hand steps to enable her to obtain a building society loan to purchase the property. After some two years the appellant came to live with her and her daughter while the property was still the subject of lease. While they were living together, but before they were married, the respondent was finally able to obtain a building society loan and purchased the property. The sheriff was entitled to accept the respondent's evidence that, from the time she originally took possession of the property as a tenant, her intention had been to purchase it if she could obtain financial assistance. When an improvement in her employment position finally allowed her to obtain a loan, she did purchase the property. At that time she and the appellant were using the property as a family home. There was no requirement, in terms of section 10(4)(a) for the respondent to acquire (in the sense of purchase) the property for use by her and the appellant as a family home. They already had a family home which they leased from the local authority. That situation could continue.

 

21.         The principal submission on behalf of the appellant was that the sheriff erred in not finding that the purpose of the acquisition by means of purchase of the property by the appellant was (a) as an investment and (b) as a family home. It was said this was the course which the sheriff ought to have taken. In deciding what was the purpose of the purchase of the property, in my view the sheriff is entitled to look at all the evidence. In my opinion, a consideration of all the evidence in this case, and in particular the evidence of the respondent who was the person purchasing the property, allowed the sheriff to reach the conclusion that the purpose of the purchase was as an investment. There was no necessity to buy it to provide a family home. She and the appellant already had a family home.

 

22.         Had the appellant shown any interest in the transaction, or indeed contributed financially to it, the situation might have been different. However the fact of the matter is that the respondent purchased property with a loan which she obtained herself from a building society and which she paid up herself. She herself financed loans to carry out substantial improvements to the property. She used a legacy from her mother of £4,000 to renovate the kitchen. These pieces of evidence all point to the conclusion that the purpose of the purchase of the property by the respondent was an investment for herself - something she and her daughter had discussed from the very start of her tenancy of the property when the appellant was not residing there.

 

23.         From the evidence, the appellant did no more than contribute to the household expenses. He evinced no interest and took no part in the financial arrangements for the purchase of the property and the steps taken to increase the value of it. It would be an unfortunate conclusion, in these circumstances, if the law allowed him, when the parties divorced, to receive one half of the value of the property at the date of separation.

 

24.         For the reasons I have given, in my opinion the law does not permit the appellant to benefit from the position in which he found himself. I am satisfied that the sheriff, in considering the evidence and the provisions of section 10(4)(a) of the 1985, acted properly and I adhere to his decision.

 

25.         Parties agreed that expenses would follow success. I have accordingly awarded the expenses of the appeal to the respondent. I was asked on behalf of the appellant to certify the cause as suitable for the employment of counsel. The appellant had the benefit of legal aid, whereas the respondent was funding her own defence in this action. The respondent was very competently represented by a solicitor at the appeal before me. I am not prepared to certify the cause as suitable for the employment of counsel.