SHERIFFDOM OF TAYSIDE
CENTRAL & FIFE F486/05
At Kirkcaldy
JUDGEMENT OF
SHERIFF AG MCCULLOCH
IN THE CAUSE
YOLANDA LUCIA
MARIA TURNER
PURSUER
Against
HUGH TURNER
DEFENDER
Act: Hughes, instructed by Campbell
Smith, Edinburgh
Alt: Coutts, instructed by
McKenzies, Kirkcaldy
Kirkcaldy, 6 August 2009
The Sheriff
having resumed consideration of the cause FINDS IN FACT:
1.
That the parties are spouses and were married on 21 May 1991, at Leslie, Fife.
2.
That there are two children of the marriage, namely Danielle Lauren
Turner, born 5 October 1993 and Charley Nicole Turner, born 5 September 1997.
3.
That the parties resided together until they separated on 3 March 2005 which is the relevant date.
4.
That prior to marriage, the pursuer had funds in a savings account with
Leeds Permanent Building Society, which funds had derived from savings and
matured bonds.
5.
That prior to the marriage the pursuer was gifted £10000 by her
grandmother, as were her two sisters, and she used this money to fund the
purchase of 39 Glenisla Road, Kirkcaldy, together with a mortgage of £20000,
and title was taken in joint names of the parties.
6.
That subsequently, this property was sold, and 40 Balnagowan Avenue
purchased, at a price about £20000 more than had been received, and the pursuer
provided the necessary funds from her resources, specifically utilizing a
maturing bond.
7.
That in 1999, Balnagowan was sold for £57000 and 12 Balgeddie Court
purchased for £76000, again in joint names, with the further funds coming from
an inheritance received by the pursuer from her grandmother; the mortgage was
increased to £26000 to facilitate the purchase of a car; the title to the property
remaining in joint names.
8.
That the pursuer used inherited funds, maturing bonds and savings to set
up policies with Prudential and Norwich Union, for the benefit of the children;
that on advice for tax reasons, the bonds were taken in joint names of the
parties, and that these bonds do not form part of the matrimonial property,
having regard to the source of the funds used in their purchase; that these
bonds have a current value of £39788.51 and £10969.22 respectively.
9.
That neither a Nationwide Account of £5713, nor a Standard life Bond of
£6454 are matrimonial property, and a Halifax account is held by the pursuer in
trust for the children.
10. That
the defender is employed as an engineer with a net monthly income of £1909,
that he resides with a partner in a jointly owned property, and he pays £309
per month to the pursuer as aliment as assessed by the Child Support Agency,
and that he has a pension entitlement with Novar valued at £46614, as at the
relevant date.
11. That
the pursuer is a dental nurse with an annual income of £11681.20 together with
family tax credit and child benefit, that she lives alone with the children,
and has a pension entitlement from SERPS and Standard Life totaling £16313.63,
as at the relevant date.
12. That
on 25 October 2007, at this court, the pursuer's solicitor Michelle Renton,
entered into discussions with the defender's agent Gordon Cooke, with a view to
settle matters without resorting to a judicial decision, and in doing so she
had the authority of the pursuer to settle the action.
13. That
an agreement was reached between the agents, and the proof discharged with a
view to implementation of the agreement.
14. That
the agreement was that the pursuer would retain the matrimonial home ar
Balgeddie Court with title being transferred to her sole name, that she would
assume responsibility for the mortgage, that the defender would receive the sum
of £75000 from the pursuer, made up of the assignation o a policy valued at
approximately £4500, with the balance in cash, and the defender would assign
all interests he may have in the Prudential and Norwich Union bonds; both
parties would retain their respective pension entitlements.
15. That
the pursuer has not implemented this agreement, believing it not to be fair and
reasonable, due to inadequate legal advice, and that it lacked her consent.
16. That
at the relevant date the matrimonial assets were the jointly owned house at 12
Balgeddie Court, Glenrothes, valued then at £155000 and at proof at £175000,
with a mortgage of £26000; the pensions referred to in findings 10 and 11; a
Norwich Union endowment policy valued then at £4563, now at £7309, and three
bank accounts of minor sums totaling £1669.54.
17. That
the total of the matrimonial assets, to include the jointly owned house and
Norwich Union endowment policy at current values, is £218160.17.
18. That
the pursuer has suffered an economic disadvantage in respect of the burden of
childcare, including the need to provide suitable accommodation, and lost
earning capacity.
FINDS IN FACT AND
IN LAW
1.
That this court has jurisdiction.
2.
That the marriage has broken down irretrievably as established by the
parties separation for a period in excess of two years.
3.
That the agreement reached on 25 October 2007 was fair and reasonable at
the time it was entered into, and that it contains no matters which are, or can
be considered to be, collateral to the action.
4.
That the pursuer's agent had implied, actual and ostensible authority to
enter into the agreement of 25 October 2007, and that the agreement is binding
upon the pursuer.
5.
That had there been no valid and binding agreement, there exist special
circumstances justifying an unequal sharing of matrimonial property, and that
an appropriate division would be 55% to the pursuer and 45% to the defender.
THEREFORE
Sustains
the Pursuers first plea in law and the defender's fifth plea in law in the
principal action and the defenders second plea in law in the conjoined action
and quoad ultra repels all pleas; in terms thereof having established that the
marriage has broken down irretrievably grants decree of divorce; ordains the
pursuer to implement her part in the agreement entered into between the parties
on 25 October 2007 whereby the parties agreed that the pursuer would pay to the
defender a sum equal to £75000, less the pursuers one half share of the value
of the Norwich Union Endowment Policy 01747469 as at the date of separation,
and assign her share of the said policy to the defender in exchange for the
defender assigning to the pursuer for no consideration his interest and title
to the former matrimonial home at 12 Balgeddie Court, Glenrothes, a Norwich
Union Bond 1636611UZ and Prudential Bond 608136P; of consent, Grants decree for
payment by the pursuer to the defender of the sum of Three thousand and eighty one
pounds 98 pence (£3081.98), with interest thereon at the rate of eight per cent
a year from the date of decree until payment;; Certifies the cause as suitable
for the employment of Counsel; Continues the cause for a hearing on expenses
on
NOTE :
[1]
I heard evidence over two days in April, and two further days in June,
2009. It is fair to say that the real issue between the parties was whether or
not an agreement had been reached at an earlier diet of proof, which agreement
had, or had not, settled matters financial. Thus the first issue to be decided
was whether or not there had been an agreement. Then, if there was such an
agreement, was it binding on the parties, particularly the pursuer? Thirdly, if
there was a binding agreement, was it fair and reasonable, having regard to the
provisions of the Family Law (Scotland) Act 1985? Lastly, if it was not fair
and reasonable, or if there was no binding agreement at all, what would be the
appropriate settlement on divorce?
[2]
Parties were initially agreed that residence of the two children should
be awarded to the pursuer, with whom they lived. They did not see their father
at all, and no contact order was sought. I was satisfied that the childrens'
interests lay in staying with their mother, although at the close of the proof,
the pursuer did not seek a residence order in terms of crave 2, and one has
therefore not been made, as it is unnecessary.
[3]
The defender had raised an action of division and sale in respect of the
matrimonial home, to which the title was in joint names. This action had been
raised on 1 August 2007, but had been conjoined with the divorce action by
interlocutor dated 14 September 2007, with the divorce being nominated as the
leading action. The history of the divorce action is quite complex. It was
raised in November 2005, and a notice of intention to defend lodged. The case
was sisted for negotiations in January 2006, but the sist was recalled on
defender's motion in June. But it was sisted again, on pursuer's motion in
July. Her agents then withdrew from acting in November, and new agents were
then instructed. After sundry procedure the case was again sisted, this time on
joint motion, in March 2007. This sist was recalled in June, and a proof set
down for 25 October 2007. The pursuer lodged a minute of amendment on 5
October, answered on 19 October. The next interlocutor, on 25 October
discharges "today's" diet of proof and continues the cause to 30 November in
order that a Joint Minute can be lodged. On that date, the case is sisted on
pursuer's motion, for settlement. The sist is recalled by the defender on 22
February, then on 7 March a new proof diet assigned for 23 May 2008. A further minute of amendment is lodged for the pursuer and answered. The proof was
again discharged, for further adjustment of the pleadings, and a new diet fixed
for 28 October 2008. The case called that day, only to be continued without
evidence being led, to the second day assigned, being 3 November. On that date,
agent and counsel for the pursuer withdrew from acting, the proof was
discharged and a new diet set for 19 January 2009. At a pre-proof hearing on 7
January, the proof was discharged until 27 April 2009. New agents lodged a
further minute of amendment for the pursuer, which was answered. The Record was
then amended, and the proof finally proceeded. Questions of expenses for the
various discharged proofs, and amendment procedures have been periodically
reserved. They await resolution. The pursuer has been represented by at least
three firms of solicitors, whilst the defender has been represented by the same
solicitor throughout.
[4]
At the proof, a Joint Minute of Agreement was lodged, no 30 of process,
and the grounds of divorce amended from adultery to separation for more than
two years. This was unopposed, and decree can be granted on that basis.
[5]
The first issue to be addressed is whether or not an agreement was
reached on 25 October 2007. The evidence for no agreement comes largely from
the pursuer, supported by her sister. On the other hand, the defender, and both
solicitors present at that proof suggest that an agreement was reached. The
pursuer's position throughout has been that she wanted to retain the
matrimonial home for herself and the children. Accordingly, her concern has
been how much she would have to pay to the defender to secure his half of the
house. There existed (and still exists) a mortgage with Royal Bank of Scotland
in the sum of £26000. The value of the house as at the date of separation was agreed
at £155000. There were other assets, such as pensions and bonds. She had been
prepared to offer £40000, going up to £50000 to the defender, and said that
when she was told by her agent, Michelle Renton that the defender sought
nothing less than £75000, she was speechless. The pursuer's parents had been
present at this point, but were asked to leave by Ms Renton, as the pursuer's
father became annoyed. Ms Renton left to get a coffee, the pursuer thought. On
her return the pursuer indicated to Ms Renton that she could not afford to
raise £75000. She was told words to the effect that it was too late, "I've
accepted". The pursuer indicated she was upset, and had not agreed to this,
whereupon she was advised to go home, and see if she could raise a further
£25000, then meet with Ms Renton next week. When she met her the following
week, and confirmed she could not raise the money, Ms Renton indicated that it
was alright as there was a loophole she could use to "get back in". Thus it was
the pursuer's position that she had given no instruction to settle at £75000;
in any event she could not afford it, given her desire to keep the house; she
could not raise sufficient funds; and if there was a way to "get back in" there
could not have been an agreement in any event. Her sister Adele gave evidence,
but in respect of whether there was an agreement, she could only confirm that
the whole family was shocked to be told that a deal had been done at £75000,
given the previous instructions to offer £40000, up to £50000.
[6]
Still dealing with this part of the case, the next relevant evidence
came from the defender. His position was that he had wanted matters finalized
for some time. An offer of £25000 had been received and rejected. Just before
the proof in October 2007, an offer of £40000, then £50000 had been made. He
agreed with his solicitor that further negotiations could take place at court.
He felt that if each party kept their own pensions, and thereafter everything
was split equally, that would be fair. If everything was "in the pot", as he
put it, he was entitled to £92000, but was prepared to compromise at £75000. He
was told by his solicitor, Gordon Cooke, that Ms Renton for the pursuer had
said £75000 was not possible. Accordingly, the defender indicated that if an
endowment policy worth about £5000 was signed over, he would accept the balance
in cash, to give a total of £75000. He said that a short time later, he was
told it was settled at that, and left court believing matters were agreed. He
was unaware what would happen next, but awaited documents to sign.
[7]
The defenders agent, Mr Cooke gave evidence. He referred to the
negotiations that had taken place prior to the proof. He was aware that it was
the pursuer's wish to remain in the house, and also her contention that some of
the bonds, whilst in joint names, should be excluded from consideration as
matrimonial property, as the source of the funds to purchase them had been
money inherited by the pursuer. He had written at length to the pursuer's agent
prior to the proof setting out the value of the matrimonial property as he
understood it (6/16 of process). There had been no written response. At the
proof, he spoke of having two or three discussions with Ms Renton, where he
explained his understanding of the sums involved. He indicated that his client
would settle at £75000, and no less. He would retain his pension, and would
transfer his interest in the house, and the bonds. The endowment policy was
discussed. No valuation of it had been obtained at the time, although it was
understood to be in the region of £5000. According to Cooke, Renton offered to
have the policy assigned, so that the cash amount to be paid over would be
reduced by one half of the policy's value. Cooke agreed to this proposal, and
to the suggestion that he draft a minute of agreement. He was clear that the
deal was done, and that it was in no way conditional on the pursuer being able
to raise funds. He was aware that she would have to raise funds, but not as a
condition. He was also aware that the existing mortgage would have to be transferred
into the pursuer's name, to relieve his client of any further obligation. He
then spoke of further attempts by Ms Renton to renegotiate the agreement in
2008, and I shall return to that part of his evidence later.
[8]
Finally, on this chapter, I heard from Ms Renton. She was relieved of
any question of client confidentiality by Counsel for the pursuer. She
confirmed that she had been instructed some time after the action had been
raised, and had started negotiating with Mr Cooke. She had received his letter
6/16, and believed that this had been discussed with her client at court on 27
October. She did not agree with the figures provided, and had no figure to put
on a holding of HBOS shares about which she had no information. She was unaware
whether they ought properly be described as matrimonial property, as they may
have been acquired pre marriage, or have been issued because of funds in
qualifying accounts, which funds were acquired pre marriage. In any event she
said that she had worked out the figures for matrimonial property and depending
on how the court might treat certain assets, the range that the pursuer had to
consider paying the defender was between £52000 - £90000, in order to retain
the house. She advised to settle at the mid-point, having regard to expenses.
She was instructed to settle at the mid-point. She confirmed that her concern
for her client was to retain the house, and to have regard to expenses, so she
took a "broad axe" approach to the assets. She confirmed that the pursuer's
parents had been present at the outset, but she had asked them to leave as the
pursuers father became agitated. After her final discussion with Mr Cooke, she
understood that the deal reached was for about £72000, plus the endowment
policy. A final valuation of that was needed, but there was an agreement in
principle, which involved the defender receiving £75000, with a proportion of
that coming from the pursuer's share of the Norwich Union endowment policy, and
the balance in cash She was quite satisfied that she had instructions to agree
this settlement.
[9]
My decision is that Mr Cooke and Ms Renton did reach an agreement which
purported to resolve matters. That agreement was subsequently set down in
writing as 6/13 of process, drafted by Mr Cooke. So there was an agreement. But
was that binding on the parties, particularly on the pursuer?
[10]
On this point, I heard submissions from Counsel for the parties. Ms
Coutts, for the defender argued that Ms Renton's evidence made it clear that
she had express instructions and authority to settle. Any doubts that the
pursuer might have had about raising the money were either raised after the
agreement had been reached, or had been discounted beforehand. In any event, Ms
Renton had ostensible authority to bind her client. Thus Mr Cooke was entitled
to assume that Ms Renton had instructions without having to satisfy himself on
the point. I was referred to Waugh & Ors v HB Clifford & Sons Ltd
[1982] 1 Ch 374, a decision of the Court of Appeal in England. There
Brightman LJ said, at p387:
The law thus became well established that the solicitor or counsel
retained in an action has an implied authority as between himself and
his client to compromise the suit without reference to the client, provided
that the compromise does not involve matter "collateral to the action"; and
ostensible authority, as between himself and the opposing litigant, to
compromise the suit without actual proof of authority, subject to the same
limitation.."
His Lordship went on to discuss collateral matters, and decided that they
would not be considered as such even if they contained terms which the court
could not have ordered by way of judgment. In his view, it was also possible
for a solicitor to have ostensible authority vis-a-vis his opponent where he
had no implied authority vis-à-vis his client. All the opposing solicitor had
to do would be to consider whether the compromise contained matters "collateral
to the suit". The magnitude of the compromise, or the burden which its terms
impose on the other party is irrelevant. The nearest Scottish authority on the
point, is Brodt v King 1991 SLT 272. There the Inner House
held that the terms of the settlement entered into by solicitors, on the
instructions of counsel, included matters collateral to and outwith the subject
matter of the actions, and that counsel had acted outwith the conduct of the
cause and accordingly not within his proper province. Accordingly, the
agreement was not binding on counsel's client. The pursuer's position was that
the agreement reached at court did not in fact lead anywhere, as there was no
Joint Minute lodged, as envisaged by the interlocutor of 27 October 2007. There were subsequent efforts by Ms Renton, and counsel instructed for the pursuer to
revisit the agreement, and to argue that there had not been full disclosure by
the defender of all bank accounts. This came to nothing. It was also argued for
the defender that there had not been full disclosure by the pursuer of HBOS
shares, and although it was briefly raised before me at the proof, I do not
consider that anything material was discovered. The pursuer's entitlement to
the shares predated the marriage.
[11]
It is clear to me that the agents had all the necessary authority,
implied and ostensible and actual to compromise the action. Thus, in my view Ms
Renton was able to reach the agreement that she did, and Mr Cooke was entitled
to rely upon Ms Renton's authority. I find that the agreement is binding on the
parties, but now requires to be considered in light of the evidence, and section
16(1)(b) of the 1985 Act. That section is in the following terms: "Where the
parties to a marriage or the
partners in a civil partnership have entered into an agreement as to financial provision
to be made on divorce or on dissolution of the civil partnership, the court may
make an order setting aside or varying...the agreement or any term of it where
the agreement was not fair and reasonable at the time it was entered into." The
pursuer was seeking an order (crave 6) setting aside the agreement, supported
by her 6th plea in law (and, by duplication, her 7th).
The thrust of the pursuer's argument was that the agreement should be set aside
firstly because it was not capable of implementation, and also because it was
not fair and reasonable by reference to the concept of unequal sharing,
justified due to the source of funds, economic disadvantage suffered by the
Pursuer in the interests of the children, and burden of child care which was
exclusively hers.
[12]
The first argument was based on the agreement not being capable of
implementation. Initially an argument was presented that as no intimation to
the heritable creditor had been made and no consent obtained by the time of the
second proof diet being fixed by interlocutor of 7 March 2008, the agreement was not capable of implementation, standing section 15(2). That argument fails, as
the court was not being asked, by the agreement, to make any order for transfer
of property, and thus the section did not apply. The next point was that it was
incapable of implementation because the pursuer was unable to raise the
necessary funds to pay the sum due to the defender. Both parties understood
that the house was not to be sold; thus in order to pay the defender, the
pursuer would have to obtain finance. She had the bonds, at £50000
approximately, but needed a further £20000 or so, as well as taking over
responsibility for the existing mortgage. This, according to the pursuer was
just not possible, and in any event, there had been no consent obtained from
the security holder. It had become clear, certainly by March 2008, that the
agreement was not going to be implemented, as the pursuer could not raise the
funds to do so. The defender countered this proposition by saying that any
inability to raise the funds was not an issue for consideration in an
application to set aside an agreement under section 16. I was referred to Gillon
v Gillon (No 3) 1995 SLT 678. In that case a minute of
agreement had been drawn up, in the knowledge of a pension, but not the value
of it. It turned out to be substantial. Lord Weir held that the mere fact that there
was proved to have been an unequal division of the assets between the parties
did not give rise to an inference of unfairness or unreasonableness, that the wife
by entering the agreement had obtained certainty and the benefit of an
appreciating asset at a discounted price in the full knowledge of the existence
of the claim based on the value of the pension rights even though those rights
had not been by then been valued; and accordingly the agreement was fair and
reasonable at the time it was entered into. He observed that courts should not
be unduly ready to overturn agreements validly entered into. I was also
referred to Clarkson v Clarkson 2008 SLT (Sh Ct)
2. In that case both sides had proceeded upon valuations which turned out
to be erroneous. By missing out a VAT liability, parties had proceeded to value
shares in a company, which turned out later to be worthless. The Sheriff in
that case took the view that the setting aside of the agreement would allow the
court to do substantial justice between the parties in light of the value which
should have been available at the time of the agreement had the full facts been
known at the material time, and it was not a case where there had been a change
in circumstances since the agreement was made as the shares had no value at any
material date.
[13]
I do not consider that the Pursuer has made out her argument that the
agreement should be set aside because it was not capable of implementation. On
the evidence, and as agreed in the Joint Minute, the pursuer had assets which
would go most of the way towards paying the defender. Her attempts to raise
further funs were limited to one, perhaps two, dealings with the mortgage
department of RBS. Mr Fair, a junior employee gave evidence to support her
contention that the maximum she could raise was £26000, based on her income.
That was sufficient to take over the existing mortgage only. Mr Cooke
understood from his experience that the pursuer would have been able to obtain
a considerably larger loan. However, I heard no other evidence of what funds
might have been available from other institutions, or from her family. I am not
persuaded that the agreement requires to fall as a result of frustration, what
in fact the pursuer was arguing. Turning to the "fair and reasonable" argument,
there were no errors in valuations such as occurred in Clarkson. The
pursuer's position before and during negotiations, was that she had to keep the
house. That was achieved for her. There was no undue influence placed on her by
the defender, or the pursuer's own solicitor. Perhaps the pursuer found the
court setting, and the imminent entry through the door of the court, to be
intimidating, but that does not mean that the agreement reached by her
solicitor on her behalf was not fair and reasonable. There is often a premium
paid for the certainty gained by resolution at the door of the court, and a
considerable saving in time and expense.
[14]
In reaching that view, I have not considered the various factors that
would normally be taken into account by a court in considering what awards for
financial provision could be made. I do not consider that the wording of section
16 requires me to do so. Parliament has not added the words "and having regard
to the principles set down in section 9" and I therefore I consider that I am
constrained in how section 16 applications are to be approached. It seems to me
that the pursuer requires to prove by a variety of possible factors, not
necessarily those contained in section 9, that the agreement is not fair and
reasonable. Such factors might be error, bad faith, or undue influence. No
doubt there are others, as each will be considered on its own facts and
circumstances. However, in this case, there are no such factors, and
accordingly, the pursuer's bid to set aside the agreement fails. Lest I am
wrong in this approach, I will now consider the assets of the parties, apply section
9 principles and reach a view on what, but for the agreement, might have been
awarded.
[15]
The matrimonial assets are set out in finding in fact 16. The bonds are
not included as matrimonial assets. What is of major relevance is the source of
the funds. The pursuer gave evidence, which I accept, that all the funds
provided for the purchase of the various houses in which the parties resided,
came from her, either as savings, inheritance or gift. The defender worked full
time throughout the marriage, and his earnings paid for all household expenses.
The pursuer also worked, part-time, as childcare came first. It would be fair
to say that the defender has benefited to a considerable extent by the
generosity of the pursuer's family towards her. But having regard to the fact
that parliament has recognized that the matrimonial home is a "special" asset,
when compared to other matrimonial assets, it has to be treated differently. I
was referred to Cunningham v Cunningham 2001 Fam LR 12. There Lord
MacFadyen, having held that the majority of funds to purchase the matrimonial
home had come from an inheritance of one party, said "Money used to purchase
the matrimonial home is, in my view, devoted in a particularly clear way to
matrimonial purposes, and the source of the funds so used is in my view less
important than it would be in the case of other types of matrimonial property.
In my view the whole value of the matrimonial home ought to be treated as
equally divisible, notwithstanding the fact that its purchase was financed in
part from funds derived by inheritance." In my view, in the present case,
the matrimonial home should be considered as an equal asset. It is in joint
names, which reinforces my view that it was intended by parties to be a joint
asset, despite the pursuer having provided the bulk, if not all, of the
relevant funds for all of the purchases of houses leading to the current
matrimonial home, additional of course to the mortgage and inflationary rises
in values. The present case, having been raised in 2005, is not subject to the
provisions of the Family Law (Scotland) Act 2006, particularly the amendments
made by that Act to the 1985 Act, which provisions are sometimes referred to as
"the anti Wallis" provisions.
[16]
The other major assets were the two bonds (5/36) from Prudential and Norwich
Union. Again I accept the evidence for the pursuer that the source of money to
purchase these bonds came directly from the pursuer, from gift and inheritance.
The defender accepted as much, although he did suggest that he had done quite a
lot of odd jobs for the pursuer's grandmother, and therefore anything given to
the pursuer by her grandmother might be considered as a joint gift. I reject
that contention. I am prepared to hold that these bonds were purchased as a
nest egg for the children, and were only placed in joint names as a result of advice
given at the time, namely in the interests of flexibility, and tax advantage.
The pursuer did not gift the bonds, nor the money used to purchase the bonds,
to the defender. I did not accept the defender's contention that the bonds were
for "the future" of the parties rather than the children. The bonds can be
readily identified as assets derived from the pursuer's own funds, and as a
result, I do not consider that they should be taken as matrimonial assets. They
are a resource for the pursuer only. In this respect I was referred to the
decisions in Willson v Willson 2009 Fam LR 18, and Cunningham (supra)
[17]
I therefore calculate the total matrimonial assets to be as follows:-
a)
Matrimonial home valued at separation at £155000, and now at £175000,
less £26000 mortgage
b)
Defender's Novar pension valued at £46614
c)
Pursuer's Standard Life and SERPS pensions valued at £16313.63
d)
Norwich Union policy £4563
e)
3 bank accounts £1669.54
These total £218160.17, taking the matrimonial home at its present value.
Thus on an equal division, each party is entitled to £109080. Allowing the
defender to retain the interest in his pension, would mean him receiving a further
£62466, some £12500 less than achieved in the agreement reached on 25 October 2007. The pursuer, however, sought unequal division of the matrimonial assets,
and relied upon several factors in so doing. She accepted that the Act required
fair sharing of matrimonial property, and as per section 10(1) that meant equal
sharing unless special circumstances justified a variation. Section 10(6) dealt
with special circumstances, and the pursuer sought support in subsections (b)
and (d). The first, (b), indicated that the source of funds or assets used to
acquire any of the matrimonial property, where those funds or assets were not
derived from the income or efforts of the parties during the marriage could be
considered a special circumstance. The second, (d) referred to the nature of
the matrimonial property, the use made of it (including.... as a family home) and
the extent to which it is reasonably expected to be realized or divided or used
as security. I was also urged to consider sections 9(2) and 11(2), dealing with
the economic advantages or disadvantages sustained by either party, and any
resulting imbalances. Section 9(2) indicates that "economic advantage" means
advantage gained whether before or during the marriage and includes gains in
capital, in income and in earning capacity, and "economic disadvantage" shall
be construed accordingly; and "contributions" means contributions made whether
before or during the marriage and included indirect and non-financial
contributions and, in particular, any such contribution made by looking after
the family home or caring for the family. In summary, the pursuer requested
that the court should have regard to the principles of section 9(1)(b) and (c)
, and take account of the special circumstances in section 10(6)(b) and (d),
and on balance find a case for unequal sharing. It was argued that 70/30, in
favour of the pursuer, would be appropriate. Regard had to be had to the source
of the funds, namely almost all from the pursuer, by saving, inheritance, or
gift to her. Regard also had to be had to the economic advantage that the
defender had derived from the increase in value of the matrimonial homes over
time, which had only been possible because the pursuer had provided funds, and
also to the economic disadvantage to the pursuer in needing a suitable property
for herself and the girls, together with the general burden of childcare. The
defender's contribution to childcare had, for a while, been generous, but had
been cut back to the minimum assessed by the Child Support Agency. In the case
of Davidson v Davidson 1994 SLT 506, Lord McLean
considered the various factors relevant to that case and made an award which
amounted to only 34% of the matrimonial assets. That case, however, is
exceptional not least because the marriage only lasted for five years, and
there were no children to consider. In any event, I consider that unequal
sharing to that extent, is not justified in this case. I am prepared to accept
that there are special circumstances justifying a departure from equal sharing,
but only to the extent of 55/45. Having concluded that the bonds are not
matrimonial assets, I have effectively dealt with the source of funds argument
under section 10(6)(b), holding also that the Cunningham decision
confirms that the matrimonial home should be dealt with differently. The
pursuer however has had, and will continue to have, the substantial burden of
childcare, and the requirement to house them. In itself, standing the limited
contribution made by the defender towards this burden, this justifies an
unequal sharing. She has also had the economic disadvantage of childcare
affecting her income and ability to earn, whereas the defender has continued to
work, and earn, throughout the marriage, which clearly was to his advantage. He
will also benefit from the pursuer's decision to use her funds to purchase
property in joint names. Thus I accept that unequal sharing is made out, to
this extent, and that 10% extra to the pursuer is justified. On that basis the
defender would be entitled to £98172. Allowing him to retain his pension
interest, would mean that the pursuer would pay him £51558, and retain the
house. Such a figure would be achievable for her, having regard to available
resources. At the very least, she can borrow an amount equivalent to the current
joint mortgage, and she has the bonds to encash to pay the defender, thus
retaining her desired principal issue, namely the house.
[18]
It can be seen therefore that I would have awarded the defender a
substantially smaller figure than the pursuer agreed to pay in terms of the
agreement reached on her behalf by her solicitor on 25 October 2007. Does that mean that the Agreement remains fair and reasonable? In my view it does,
as the issue of whether the agreement was fair and reasonable has to be looked
at broadly, and having regard to the factors and circumstances prevailing at
the time. The pursuer may well have received poor quality or inadequate legal
advice at the time, and her interests may not have been fully protected by her
solicitor, but that does not, in my view, mean that the agreement becomes
unfair and/or unreasonable. The advice and actings of her agent may lead to
other proceedings, but in this process, I can only consider the facts before
me. The pursuer's counsel urged me to infer that the quality of legal advice
was called in to question, given that Ms Renton indicated in her evidence that
the pursuer appeared not to understand the basis and rationale of settlement,
and so had invited her in to her office the following week to discuss. Thus if
bad advice was given, it was obvious that the agreement could not be fair and
reasonable. I reject that approach. It is not for this court in this process to
determine whether the quality of advice was or was not bad. The pursuer has to
accept the result achieved by her solicitor, given that I have held that the agreement
was struck with authority, and is binding.
[19]
It follows therefore the agreement of 25 October 2007 falls to be implemented by the granting of the defender's 2nd crave. The defender's
1st crave is refused, as are the 3rd ,4th ,5th
and 6th craves for the pursuer, the 3rd and 4th
being redundant given the effect of the grant of the defender's 2nd
crave. I was asked to certify the cause as suitable for Counsel, which was not
opposed by counsel, and I do so certify. It was agreed that expenses should be reserved
meantime.
[20]
Finally, in the husband's action for division and sale, the first crave
falls to be refused as unnecessary, but the second crave remains live. The
husband seeks re-imbursement for one half of the costs of maintaining the
mortgage, and endowment policy thereon. The wife's counsel accepted in her
submissions that the husband should be refunded half the costs paid by him in
respect of the mortgage and endowment. I have granted decree for the sum of
£3081.98, which unusually featured in the first plea in law for the defender in
the divorce action, but which I understand was meant to be a crave in that
action.
