SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT ABERDEEN

F440/07

JUDGEMENT   of   SHERIFF PRINCIPAL SIR STEPHEN S T YOUNG Bt QC   in the cause   ROBERT ALEXANDER PORTER   Pursuer and Appellant   against   JILL DAWN TAYLOR or PORTER   Defender and Respondent

 

 

 

Act: Miss Morag Wise QC instructed by Thorntons, solicitors, Dundee

Alt: Miss Isabella Ennis, advocate, instructed by Adam Cochran, solicitors, Aberdeen

 

 

 

Aberdeen: 14 May 2010

The sheriff principal, having resumed consideration of the cause, appoints parties to be heard on all questions of expenses on Monday 24 May 2010 at 2.15 pm in chambers at Aberdeen Sheriff Court under reference to the ensuing note.

 

 

 

 

 

Note

 

[1] In this action of divorce the pursuer and appellant is the husband and the defender and respondent is the wife. In addition to decree of divorce and various orders in relation to the parties' children, the pursuer sought an order for the transfer to him of the defender's interest in the matrimonial home, the title to which was in the joint names of the parties. The defender in turn sought an order for the sale of this property and decree for payment by the pursuer to her of a capital sum of £550,000. By interlocutor dated 30 January 2009 the sheriff, in addition to granting decree of divorce, granted an order for the sale of the matrimonial home, appointed a firm of solicitors in Aberdeen to act in the sale, ordained them to lodge the free proceeds of sale in the hands of the sheriff clerk within seven days of the date of settlement of the sale and granted decree for payment by the pursuer to the defender of a capital sum of £539,640.05 with interest thereon at the rate of 8% per annum from the date of citation until the date of lodgement of the free proceeds of sale of the property. It is this interlocutor which is the subject of the present appeal. It will be observed that the sheriff gave no direction in this interlocutor as to what the sheriff clerk was to do with the free proceeds of sale. I shall have more to say about this in due course.

 

[2] The sum of £539,640.05 was made up of two separate sums, namely £462,240.05 and £77,400. The sheriff awarded the first of these to the defender having regard to the principle set out in section 9(1)(a) of the Family Law (Scotland) Act 1985 ("the Act") which provides that the net value of the matrimonial property should be shared fairly between the parties to the marriage. Section 10(1) of the Act provides that in applying the principle set out in section 9(1)(a) of the Act the net value of the matrimonial property shall be taken to be shared fairly between the parties when it is shared equally or in such other proportions as are justified by special circumstances. Subject to those adjustments (if any) which require to be made to give effect to the principle set out in section 9(1)(b) - as to which see below - it was not suggested in the appeal that anything other than an equal division of the net value of the matrimonial property would be appropriate in this case. Section 10(2) provides in short that the net value of the matrimonial property shall be its value at the relevant date after deduction of any relevant debts, and section 10(3) defines what is meant by the relevant date. It is accepted that in this case it was 2 April 2007. Section 10(4) provides that 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 for use by them as a family home or as furniture or plenishings for such home; or (b) during the marriage but before the relevant date".

 

[3] There was a substantial measure of agreement between the parties at the proof as to their respective assets and liabilities as at the relevant date or, in the case of the matrimonial home, in March 2008. Why this later date was selected for the valuation of the matrimonial home and the building society loan secured over it is not clear. But for present purposes nothing turns on this. As at 6 March 2008 the property was valued at £930,000 and as at 3 March 2008 the balance of the loan outstanding was £161,542.65. In calculating the capital sum to be awarded to the defender in light of section 9(1)(a) the sheriff used these figures but he made no provision in his interlocutor for what should be done in the event (which happened) that either or both of the proceeds of sale or the outstanding balance of the loan differed from these figures when the property was eventually sold in accordance with the order incorporated in his interlocutor.

 

[4] One item of property which was in dispute, and which was the subject of the first ground of appeal, was the sum of £80,000 which was paid on 31 March 2007 to Harewood Ridge Professional Services Ltd ("Harewood Ridge") by a company named Westerton Ltd "(Westerton") of which the sheriff found the pursuer to have been the sole shareholder and controlling mind. The question before the sheriff and in the appeal was whether this sum of £80,000 belonged to the pursuer at the relevant date and hence was matrimonial property within the meaning of section 10(4) of the Act. If it did, then it was not in dispute that the capital sum to be awarded to the defender in light of section 9(1)(a) fell to be increased by the sum of £40,000 (that is, one half of £80,000) beyond what it would have been if the £80,000 was not matrimonial property. It was accepted that this sum did not belong to Harewood Ridge at the relevant date, so it must then have belonged either to Westerton, as the pursuer maintained, or to the pursuer himself, as the defender maintained.

 

[5] The sheriff found in fact that as at 2 April 2007 Westerton had two employees, namely the pursuer and one John Barrie. The financial director (not apparently an employee of the company) was one Fred Small. Finding in fact 11 reads as follows:

 

There were some discussions between the pursuer and the then financial director of Westerton, Fred Small, about creating a pension fund for the pursuer through Harewood Ridge Pension Scheme. The sum of £80,000 was paid on the pursuer's instructions to Harewood Ridge on 31 March 2007 but repaid on 12 July 2007. Between 31 March and 12 July 2007, this sum was held by Harewood Ridge for the pursuer's benefit.

 

In light of this finding in fact the sheriff found in fact and law that as at the relevant date "the £80,000 deposited with Harewood Ridge on behalf of the pursuer was matrimonial property".

 

[6] The sheriff dealt with the issue whether this sum of £80,000 was matrimonial property at pages 41/2 of his note where he wrote:

 

This sum was paid out of the company's bank account on 31 March and returned to that account on 12 July, both 2007. The pursuer's evidence on this matter was inconsistent. On the first day of the proof, his position was that the £80,000 was transferred from Westerton's bank account "to create" a pension for him. (Transcript p. 28). That was stated just prior to the adjournment for lunch. By the afternoon, his position was that the £80,000 had been transferred "on the possibility" that a pension might be created. (Transcript p. 39). The pursuer's submission was that there never was a policy, that the sum was not in the name of either of the parties, and its source was the company, rather than the marriage. Accordingly it ought to be left out of account on the basis that it was not a matrimonial asset at the relevant date, and further that regard had to be had to the source of the funds as mentioned in section 10(6) of the 1985 Act.

 

In my opinion, it is of no consequence that a pension was never created. The funds were transferred from the company on the pursuer's instructions and the funds remained subject to his instructions, (albeit as "Westerton,") as is evidenced by the transfer back to the company on his instructions so that, if the pursuer is to be believed, the company could purchase equipment. The sum of £80,000 was under his control and at his disposal between the two dates mentioned. That being so, it is matrimonial property.

 

[7] In the course of the appeal counsel for the pursuer submitted that the £80,000 was part of the assets of Westerton as at the relevant date. The fact that this sum was under the control and at the disposal of the pursuer did not mean that he had a proprietorial interest in it for the purposes of section 10(4). It was accepted that as at the relevant date the intention had been to transfer the money to Harewood Ridge in order to create a pension scheme at some future date in which the pursuer would have an interest. But in the event this had not been done. The sheriff had referred to the sun remaining subject to the pursuer's instructions (albeit as "Westerton"). This could only have been as a director of the company rather than as an individual who owned the £80,000. There was nothing on the face of the material before the sheriff to show that the sum belonged to the pursuer. Indisputably it was not in his possession at the relevant date and the question was whether Harewood Ridge could have been holding it for the pursuer. This required a consideration of the question whether a company could make this sort of distribution except as a dividend and whether, if the company had been wound up on the relevant date, it could be said that the £80,000 was not owned by the company. The sum remained the property of the company unless and until it was transmuted into something else. The sheriff had not referred to section 10(4) and had spoken of control rather than ownership of the sum and had so fallen into error. The evidence went no further than to demonstrate an intention to do something with the money. But this did not create a right in the person who would benefit on the execution of that intention. There was a clear distinction to be drawn between the members of a limited company and the company itself. The property of the company was quite separate from the property of its members. The £80,000 belonged to the company at the relevant date and it followed that the sheriff had erred in finding in fact and in law that it was matrimonial property.

 

[8] In response, counsel for the defender submitted that it was clear on the evidence that the sum had been drawn down by the company and paid to Harewood Ridge for the benefit of the pursuer as an individual to set up a personal pension fund for him. There had been no evidence to suggest that it had been paid out in order to set up a company pension scheme. The sheriff had not erred in making his findings in relation to this issue and so they should not be disturbed on appeal. Counsel proceeded to examine the evidence and submitted that there was no evidence upon which the sheriff could have relied to make any other finding in relation to the issue. The sum of £80,000 was in the hands of Harewood Ridge on behalf of the pursuer just as if a dividend had been paid for him into a bank account. What had happened subsequently, namely the transfer of the £80,000 back to the company, was of no moment in determining who owned it as the relevant date. There was no evidence to suggest that the sum was then being held by Harewood Ridge on behalf of the company. The sheriff had therefore been correct to find that it was matrimonial property as at the relevant date.

 

[9] In my opinion it is instructive here to consider upon what basis the £80,000 could have been transferred, as it undoubtedly was, on the pursuer's instructions from the company's bank account to the bank account of Harewood Ridge very shortly before the relevant date. There is no suggestion that it was transferred unlawfully by the company, or that it was paid out in settlement of a debt due by the company or as remuneration for either of the other director Mr Small or the other employee Mr Barrie or for some other undisclosed purpose. So it appears to me that it must have been paid out by the company either as a component part of the pursuer's overall remuneration as a director and employee of the company or as a dividend. A cursory glance at the company's approved accounts for the year ended 31 March 2007 (see no. 6/6/12 of process) suggests that it was the latter. I am not sure that these accounts were actually spoken to during the proof. In truth it does not seem to me to matter which of these interpretations is correct. If the £80,000 was paid out as part of the pursuer's remuneration, then it was indisputably his on the relevant date. Likewise, if it was paid out by the company as a dividend, then again it must have been his at the relevant date since he was the only shareholder in the company. It follows in my opinion that as at that date Harewood Ridge were holding the £80,000 on behalf, not of the company, but of the pursuer as an individual. He alone had a beneficial interest in this sum and accordingly it belonged to him at the relevant date within the meaning of section 10(4) of the Act, and it was nothing to the point that as an individual he subsequently consented to the sum being repaid to the company. Accordingly, while I do not altogether agree with the sheriff's reasoning as expressed at pages 41/2 of his note, I am entirely satisfied that he was correct to conclude that the £80,000 was matrimonial property at the relevant date.

 

[10] The sheriff awarded the sum of £77,400 to the defender having regard to the principle set out in section 9(1)(b) of the Act. This provides that fair account should be taken of any economic advantage derived by either party from contributions by the other, and of any economic disadvantage suffered by either party in the interests of the other party or of the family. Section 11(2) provides that for the purposes of section 9(1)(b) the court shall have regard to the extent to which - (a) the economic advantages or disadvantages sustained by either party have been balanced by the economic advantages or disadvantages sustained by the other party, and (b) any resulting imbalance has been or will be corrected by a sharing of the value of the matrimonial property or otherwise. Section 9(2) provides inter alia:

 

(2) In subsection (1)(b) above and section 11(2) of this Act -

"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;

"contributions" means contributions made whether before or during the marriage .......; and includes indirect and non-financial contributions and, in particular, any such contribution made by looking after the family home or caring for the family.

 

[11] The sum of £77,400 was made up of five elements as follows:

 

(i) salary 9,800

(ii) one half of the increased mortgage arrears 1,600

(iii) the amount borrowed by the defender from her parents

to buy a car and to pay legal fees 50,000

(iv) the loan to pay off the credit card 6,000

(v) limited employment prospects 10,000

£77,400

 

[12] In his grounds of appeal the pursuer challenged only the sheriff's decision to include the third and fifth of these elements (see grounds of appeal 3 and 4). But at the appeal hearing counsel for the pursuer, without opposition from counsel for the defender, challenged the sheriff's decision in regard to all five elements, and I shall accordingly consider each in turn. It was accepted for the pursuer that in principle it was competent to make an award of a separate capital sum under section 9(1)(b) over and above any award made under section 9(1)(a). But it was submitted under reference to Coyle v Coyle 2004 FamLR 2 that in approaching section 9(1)(b) the sheriff had erred in two respects in particular. Firstly, he had failed to take account of whether any economic disadvantage suffered by the defender had been in the interests of the pursuer or of the family. And secondly, in calculating the award to be made under section 9(1)(b), the sheriff had approached the matter as a step-by-step calculation of compensation and not, as the Act required, by carrying out the necessary balancing exercise that took into account the extent to which the economic disadvantages suffered by the defender had been balanced by any economic advantages or disadvantages sustained by the pursuer.

 

[13] In his finding in fact 10 the sheriff found that the defender "was credited with a salary from the company of £4,800 for the year to 31 March 2005, and was given a P60 in respect of remuneration of £4,800 for the year to 31 March 2006, but she was not paid anything by Westerton which retained these sums. At some point, the P60 was on the pursuer's desk, but is now missing". In finding in fact 9 the sheriff found that "during the course of the parties' marriage, the registered office of Westerton was at the former matrimonial home, and the company's telephone number was the same number as that of the matrimonial home", and in finding in fact 22 he found that the defender "dealt with any telephone calls and e-mail messages which came to the home but related to Westerton. She would fax material to the pursuer if he requested it. She also helped him man a store on one occasion at the Offshore Europe exhibition". In his finding in fact and in law 3 the sheriff found that the defender had "suffered economic disadvantage during the marriage", but he did not at that point proffer any further specification in support of this finding. He dealt with the matter of the salary at pages 44/5 of his note where he wrote:

 

It is not in dispute that the defender was awarded by the company a salary of £9,600 (£4,800 per year for 2 years) and that it has not been paid. The defender submitted that the pursuer, through his company, secured an economic advantage by retaining that sum. The pursuer submitted that the remuneration was for 2/3 days' work at an offshore oil exhibition in 2005, and for dealing with e-mails and telephone calls. Furthermore, the defender had benefited from the pursuers' industry throughout the marriage and should not benefit twice. Lastly, the entry in the company accounts may be "creative accounting" and the defender rather than benefit from that ought to distance herself. The claim was not therefore a claim under section 9(1)(b), but was rather of a contractual nature.

 

I do not accept the pursuer's position. Whether or not the defender benefited from the pursuer's industry throughout the marriage may be a matter of debate, but even if it is correct, that is not a good reason for not paying the defender what she was given to believe she would be paid, no matter how little she may have done for the money. She was not a party to any "creative accounting" which the company may have indulged in would not therefore be sullied by taking the salary. The pursuer has had the benefit of the sum, to the defender's detriment.

 

[14] Counsel for the pursuer submitted that the defender had not suffered any economic disadvantage in relation to the sum of £9,600 since she had had a contractual claim against the company for payment of this sum, and in any event, if she had suffered any economic disadvantage, she had not done so in the interests of the pursuer or of the family.

 

[15] Counsel for the defender submitted in short that the sheriff had been correct to include this sum in the award made under section 9(1)(b). I agree. The plain fact is that, having been credited by the company with sums totalling £9,600 as remuneration for the years to 31 March 2005 and 2006, the defender was entitled to be paid these sums and she suffered an economic disadvantage when this did not happen. In theory she might have sued the company for payment of these sums, but in practice I think that it was wholly unrealistic to propose that she could or should have done so given that the controlling mind of the company was that of the pursuer with whom she was then living as husband and wife. Moreover, she suffered this economic disadvantage in the interests of the pursuer inasmuch as, being the sole shareholder of the company, he clearly benefited by the retention in the company of these sums which ought to have been paid to the defender.

 

[16] I turn now to the sum of £1,600 awarded in respect of the increase in arrears of mortgage. The sheriff's findings in fact 13, 14 and 25 were in the following terms:

 

13. In an interlocutor dated 16 April 2008, it is narrated that the pursuer agreed to pay the mortgage and the amenities in respect of the matrimonial home, and aliment at the rate of £500 a month. As at 19 September 2008, the date of submissions, and since then, he had not done any of these things.

 

14. At 18 September 2008 the increase in the arrears of mortgage amounted to £1,600 and the arrears of council tax £1,007.

 

25. After the parties separated, the pursuer did not pay the mortgage or the amenity bills for the matrimonial home, despite undertaking to do so. He transferred the telephone to the defender's name without her knowledge and blocked outgoing calls. He induced a female to pretend to be the defender agreeing to this.

 

In the event the sheriff did not make any award in respect of the increase in the arrears of council tax. But in relation to this he did observe at age 45 of his note: "It is not in dispute that the pursuer used to pay the council tax, but, without advising the defender, ceased to do so; hence the arrears. One half of the arrears is due by the defender". He went on at pages 45/6 to consider the increase in the arrears of mortgage as follows:

 

The defender's position here is exactly the same as that in relation to the arrears of council tax, except that the sum identified (which was not challenged) is the increase in the arrears. Again, the pursuer ceased paying, without advising the defender. It was indicated that by the end of 2008, the arrears would had (sic) increased by about £3,200, of which one half would be due by the defender. The pursuer's response was that the amount was insignificant, and that the arrears will be deducted once the property is sold, he had not benefited from the arrears, and that it was a claim for aliment disguised as a claim under section 9(1)(b).

 

Again, I am of the opinion that the pursuer has benefited from having the use of the funds which he has not paid to the lender, and to the defender's detriment. Here the pursuer has benefited in having the interest which he would have earned on the retained sum and there was no evidence which would allow me to calculate that. However the detriment to the defender is that the amount to be deducted in respect of the Halifax loan has been increased by £3,200 of which her share would be £1,600. The defender ought to be compensated for that, in that it would be unfair if the total arrears were deducted in determining the free proceeds without taking account of the conduct on the part of the pursuer which increased the amount of the arrears.

 

[17] Referring to this sum of £1,600 counsel for the pursuer submitted that the sheriff had failed to balance the economic disadvantages suffered by both parties in this context since both had incurred a liability for the sum of £1,600. But I did not understand her to challenge the proposition upon which the sheriff evidently relied, namely that by the end of 2008 the arrears in respect of the mortgage had been increased by about £3,200, of which one half is £1,600.

 

[18] For the sake of completeness here I should mention that at a subsequent hearing on 23 March 2010 (to which I refer in more detail at paragraphs [41] and [42] below) the pursuer's solicitor explained that in the three years beginning 3 August 2007, 2008 and 2009 the pursuer had arranged to insure the matrimonial home and had paid premiums in respect of this insurance of £1,249.61, £1,289.45 and £1,380.60 respectively. Unknown to him the building society had at the same time arranged insurance for the property and had been adding the annual premiums to the outstanding amount due under the standard security over the property. In effect therefore the property had been insured twice over.

 

[19] I can accept that there may have been a misunderstanding on the part of the pursuer as to the arrangements to be made to insure the matrimonial home. But this does not undermine the basic proposition that he ought to have been paying the monthly amount due in respect of the loan secured over the property, and to some extent at least he admittedly did not do so. Whether or not the sheriff was correct to have proceeded on the basis that the arrears would have increased by about £3,200 by the end of December 2008, the sum of £1,600 to which he referred in his finding in fact 14 was not challenged before him, and at the hearing on 23 March 2010 the pursuer's solicitor acknowledged that the fact that arrears in respect of the loan had increased from £165,402.03 due at 30 June 2009 to £167,737.88 when the property was eventually sold in February 2010 was attributable to the pursuer not having made any payments to the building society between November 2009 and February 2010. This represents an increase of £2,335.85 which when added to the £1,600 of arrears which had admittedly accrued in 2008 comes to £3,935.85, one half of which is £1,967.92. Plainly the defender suffered an economic disadvantage on account of the pursuer's failure to meet the monthly mortgage payments in full in as much as the amount required to discharge the standard security when the property was eventually sold was greater than it would otherwise have been and the defender's share of the free proceeds of sale has been correspondingly reduced. This economic disadvantage was also suffered by her in the interests of the pursuer in that his failure to make the monthly payments in full meant that he had more money to spend for his own benefit than he would otherwise have had. It was not suggested by the defender's solicitor at the hearing on 23 March 2010 that I ought to increase the sum of £1,600 awarded by the sheriff in this context to reflect the admitted increase in mortgage arrears between June 2009 and February 2010, and in the circumstances I am content to adhere to the sum of £1,600 proposed by the sheriff.

 

[20] The sum of £50,000 awarded in respect of the defender's indebtedness to her parents comprised two elements, namely a loan to purchase a new car and a further loan to pay her solicitors' fees and outlays. In relation to these the sheriff made three findings in fact in particular, namely those numbered 15, 16 and 27. These read:

 

15. The parties had two cars, a BMW X5 and a Range Rover. The BMW had car child seats and the defender usually used that car to drive the children around. When the pursuer left the matrimonial home, he took the Range Rover, leaving the defender with the BMW.

 

16. On one occasion in April 2007, shortly after the parties separated, the pursuer returned to the matrimonial home during the night and removed the BMW. The next day, which was a school day, the defender found a note from the pursuer indicating that the car was being returned to John Clark, who are the Aberdeen dealers in BMW's (no. 6/1/7 of process). The car was not returned to John Clark, but was seen in Aberdeen, being driven by a female friend of the pursuer's.

 

27. The defender received a loan of £15,000 from her father in order to purchase a car to replace the one which had been removed by the pursuer. In addition, he paid for her solicitor's fees and outlays. The solicitor's fees and outlays amounted to £32,999.99 as at February 2008, and at the date of the proof the total due by the defender to her father was around £70,000.

 

The sheriff dealt with these loans at page 46 of his note as follows:

 

Defender's indebtedness to her parents. She is obliged to repay £15,000 which was lent to her for the purchase of a replacement car. Her parents have also been paying the defender's solicitors' fees and outlays. At February 2008, the figure was £32,999.99 (no. 6/6/6 of process) and at the date of the proof, the total sum was in excess of £70,000. These figures were not challenged. The defender's submission was that she incurred that expense solely because of the pursuer's failure to pay aliment. She accepted that she had not applied for aliment until April 2008, and had not been awarded Legal Aid until sometime between July and September 2008. The pursuer's response was that she could have applied for both earlier, but the claim was one for legal expenses under the guise of a claim for aliment, under the guise of economic disadvantage.

 

There cannot be any dispute that the defender could have applied to the court at an earlier stage for aliment and could have applied earlier for Legal Aid. That said, it would, in my view, be harsh to penalize her for entertaining the hope (forlorn as it was) that the pursuer might agree to an amicable settlement, if only in the interests of the children. I believe the defender's mother when she said that the sums lent to the defender would have to be repaid. The defender was at an economic disadvantage by not receiving the aliment which the pursuer undertook to pay. He has had the benefit of the retained funds. He knew or ought to have known enough about the defender's finances to appreciate the effect that his failure to pay would have. This was no oversight on the pursuer's part, but a deliberate attempt to inconvenience the defender. In the letter dated 15 July 2008 (no. 6/10/1 of process) it is said that the defender was willing to accept £50,000 in respect of these debts which is not an unreasonable claim, and I shall award that amount to her.

 

[21] Counsel for the pursuer suggested that this part of the sheriff's judgement best illustrated the proposition that he had not properly understood the concept of economic disadvantage in section 9(1)(b) at all. She submitted that there was a clear distinction between a right to aliment pendente lite under sections 1 to 6 of the Act and an economic disadvantage under section 9(1)(b). The defender could not be said to have suffered an economic disadvantage by reason of the pursuer's failure to pay aliment so long as she could have enforced the award of aliment made on 16 April 2008 against the pursuer. Besides, said counsel, a party who obtained an interest-free loan to fund a litigation was no more disadvantaged than if she had spent her own savings for this purpose. In this case the quid pro quo of the defender's having borrowed money from her parents was that she had been able to carry on the present litigation against the pursuer. So the effect of her having borrowed this money was neutral, and in any event, if she had suffered an economic disadvantage in this respect, this had not been in the interests of the pursuer or of the family. Moreover, the sheriff had gone on to find the pursuer liable to the defender in the expenses of the action, so by finding that she had suffered an economic disadvantage in this context he had effectively awarded expenses to her twice over. As for the loan to purchase a new car, there had been no disadvantage to the defender as the result of this transaction had been that she had acquired an asset, namely the car, to balance the amount of the loan.

 

[22] In response, counsel for the defender submitted, rightly in my opinion, that there had been a clear economic disadvantage to the defender in having to borrow £15,000 from her parents to buy a car. The fact of the matter was that, when she went to bed on the night in question in April 2007, there was a car parked at the matrimonial home fitted with child seats of which she had the use free of any capital costs. (She had of course to pay the running costs). The following morning the car was gone. She evidently considered (and I did not understand this to be disputed by the pursuer) that she needed a car to drive the children around. So she borrowed £15,000 from her parents to buy a car to replace the one which had been taken by the pursuer. It was true that the result of her having borrowed this sum was that she had an asset, namely the car, but it was not one that she could realise given the purpose for which she required it and in any event, as counsel for the defender pointed out, it was a depreciating asset. So in substance what happened was that before the pursuer's nocturnal visit she had the use of a car to drive the children around free of capital costs and after this visit she had another car for the same purpose, the value of which she could not realise in practice, and a liability to her parents of £15,000. In my opinion therefore she manifestly suffered an economic disadvantage in this context, and she did so moreover in the interests of the family given the purpose for which she purchased the replacement car.

 

[23] Turning to the loan to the defender to pay her solicitors' fees and outlays, as counsel for the defender developed her submissions in this context, it appeared that her real complaint was, not that defender had had to borrow from her parents to pay her legal fees and outlays, but that these had been much higher than they might otherwise have been by reason of the manner in which the pursuer had conducted his part of the current litigation which had unnecessarily protracted the proceedings, and by reason also of the fact that an award of judicial expenses would not be sufficient to cover the full amount of the fees and outlays incurred by the defender to her solicitors.

 

[24] In my opinion there are several difficulties with the sheriff's approach to this particular aspect of the matter. In the first place, in borrowing money from her parents to pay her legal fees and outlays it seems to me that the defender was simply substituting one debt (to her solicitors) for another (to her parents) so that there was no economic disadvantage to her as a result of the transaction. In the second place, inasmuch as the sheriff considered it appropriate to make an award under section 9(1)(b) in respect of this particular sum to reflect the pursuer's failure to pay aliment to her, it should be borne in mind that, even if he had paid aliment for the whole period between the date of the parties' separation and the date of issue of the sheriff's judgement (a total of twenty two months) at the rate eventually ordered by the interlocutor of 16 April 2008, namely £500 per month, the defender would at best have received £11,000 from the pursuer. She would presumably have required to spend some of this money on, for example, food and clothing for herself so it is very hard to see how the pursuer's failure to pay aliment could be said to have accounted for anything more than a small proportion of her indebtedness in respect of her solicitors' fees and outlays. And in the third place, it was in my opinion plainly wrong to propose that the defender had suffered an economic disadvantage as a result of incurring this indebtedness and to award her a capital sum in respect of this and at the same time to award the expenses of the action (which may, if appropriate, be the subject of an uplift in fees) against the pursuer. As was rightly pointed out for the pursuer, in so doing the sheriff effectively awarded expenses to the defender twice over and for this reason alone this particular element in the award of a capital sum to the defender cannot be allowed to stand.

 

[25] In relation to the defender's credit card debt the sheriff made one finding in fact numbered 28. This reads:

 

28. The defender had to borrow money from Lloyds TSB to pay her credit card bill, which is in excess of £6,000. The loan is over three years and she repays it at the rate of £185 a month.

 

The sheriff dealt with this particular issue at age 47 of his note where he wrote:

 

The defender's credit card indebtedness. This amounts to over £6,000 as at 3 March 2008 (no. 6/7/10, 11 and 12 of process). The defender says that this was incurred, again, because of the pursuer's failure to pay aliment etc. His response was that there was no evidence of the amount due at the relevant date and in any event it is a claim of an alimentary nature. I accept the defender's submission and reject that of the pursuer for the reason given in the foregoing paragraph.

 

(The foregoing paragraph referred to here by the sheriff was the final paragraph quoted in paragraph [20] above).

 

[26] Counsel for the pursuer submitted that this sum of £6,000 did not fall to be categorised as a claim under section 9(1)(b). It was not known when or in whose interests this particular debt had been incurred. The sheriff's approach had been flawed since he had failed to identify whether the defender had suffered an economic disadvantage in relation to this particular debt and whether, if she had, this had been in the interests of the pursuer or of the family, and further he had failed to carry out the balancing exercise desiderated by section 11(2).

 

[27] In response, counsel for the defender submitted that the defender's credit card indebtedness had been incurred inter alia as a consequence of the pursuer's failure to meet his alimentary obligations to her. This could be seen most clearly in light of the interlocutor dated 16 April 2008 in terms of which the pursuer had been ordered to pay interim aliment to the defender at the rate of £500 per month. In the event she had not seen one penny of this. The pursuer's attitude to this in his evidence had been one of contempt and smugness at his apparent ability to flout the authority of the court and disregard his alimentary obligations to the defender in the pleasurable knowledge, so it had seemed from his demeanour, that this would cause inconvenience and distress to the defender. She had suffered the economic disadvantage of being without this money with the result that her debts had increased while the pursuer had enjoyed the benefit of retaining this sum.

 

[28] The sheriff referred here to nos. 6/7/10, 11 and 12 of process. In fact I think he must have meant nos. 6/7/9, 10 and 11 which are copies of three statements issued at the beginning of January, February and March 2008 in respect of a Lloyds TSB Platinum MasterCard account. The opening debit balance at the beginning of December 2007 is shown as £5,382.96 and the closing debit balance at the end of February 2008 is shown as £6,299.78. Curiously there is no name on the statements, but it appears to have been accepted that the account was that of the defender. It appears too that it was this credit card account to which the sheriff referred in his finding in fact 28. It will be observed that the three statements all refer to periods before the interlocutor of 16 April 2008 was pronounced, so it is difficult to see how the indebtedness shown in them could be said to have been attributable to the pursuer's failure to pay interim aliment as he was ordered to do in terms of this interlocutor. Nor is it entirely clear over what period this indebtedness arose, or what its relationship was, if any, to the defender's indebtedness of £3,898.71 as at the relevant date in respect of her Marks & Spencer MasterCard - see finding in fact 6(i) which lists this as one of the matrimonial debts. If, as appears to have been the case in light of what the defender said in the course of her evidence (see page 139 on day 2), the indebtedness in respect of the Lloyds TSB MasterCard account had its origin in the Marks & Spencer MasterCard account, then the defender's indebtedness in this context would appear to have grown by £1,484.25 (£5,382.96 minus £3,898.71) between the relevant date and the beginning of December 2007 and by a further £916.82 (£6,299.78 minus £5,382.96) between the end of December 2007 and the end of February 2008. So the total increase between the relevant date and the end of February 2008 appears to have been £2,401.07. On any view therefore it seems to me to be difficult to sustain an argument that the defender suffered an economic disadvantage in this context to any great extent than this last sum. The three statements disclose what appears to be a typical pattern of domestic expenditure, and it appears from what the defender said (at page 37 on day 2) that the indebtedness of £916.82 was incurred for the benefit of the family. It is I think a reasonable inference that the additional indebtedness of £1,484.25 was incurred for the same purpose. So at best it seems to be that the defender has demonstrated an economic disadvantage here of £2,401.07 which, if I understand correctly what the sheriff said, was suffered by her as the result of the pursuer's not having paid aliment to her as he ought before the interlocutor of 16 April 2008 was pronounced. In the circumstances it seems to me to be appropriate therefore to substitute in this particular context the sum of £2,401.07 for the sum of £6,000 awarded by the sheriff.

 

[29] There remains the sum of £10,000 which the sheriff awarded the defender in respect of her limited employment prospects. So far as I can see from his recording of the parties' submissions at the conclusion of the proof, the only reference to this (if indeed it was a reference at all) is at the top of page 34 of his note where he recorded that counsel for the defender had commented that the defender had been a housewife and mother and had not had the opportunity to establish a pension nor build upon her career, it having been a joint decision to run the marriage on what might be described as traditional lines. Counsel submitted that, taking all of these factors together and balancing them against one another, there was clearly a justification for the defender to have a claim under section 9(1)(b). No attempt appears to have been made by either party to quantify the extent, if any, of the economic disadvantage suffered by the defender in the form of limited employment prospects.

 

[30] The sheriff made a number of findings in fact which might be thought to have a bearing on this issue. These are numbered 4, 21, 23, 32 and 33 and read as follows:

 

4. Prior to the marriage, the defender worked for tourist agencies, including Munros, Aberdeen, from about the age of 20, until just before the eldest child was born. She had a good salary and contributed to a pension. She enjoyed foreign travel through her employment. She resided in Aberdeen in a flat gifted to her by her father, which was mortgage-free .......

 

21. After the eldest child was born, the defender did not seek employment. The defender looked after the matrimonial home. She did some cleaning, she did all of the domestic tasks, like ironing and shopping, and did not receive much assistance from the pursuer .......

 

23. While they lived together, the defender was kept in ignorance of the family finances. However, the pursuer gave the defender £750 per month, out of which she had to pay for clothes and shoes for herself and the children and food for the family. The defender also had a credit card which she used if she was short of money ...... On occasion, the pursuer would give her more money if she was short.

 

32. The pursuer, through his company, purchased a motor cruiser which was used for holidays. In 2008 the company also purchased a property in Kippford for the pursuer. The price was £227,000, and there was no mortgage.

 

33. The defender's former employers Munro's (a travel agency) are cutting down on part-time working. The defender is 43 years of age, with young children, and her prospects of obtaining employment are not good, particularly at a salary which would be sufficient to cover any payments made to carers for the children.

 

In the section of his note in which he explained his decision the sheriff made only passing references to the defender's employment prospects. Thus at pages 43/4 he said:

 

There is no doubt that the defender did not require to seek employment, and was able to look after the children which she was happy to do. However, she may, at some point, require to seek employment and her age and lack of formal qualifications will be a factor in determining how easy it will be for her to be re-employed. That is economic disadvantage within the meaning of section 9(1)(b).

 

Then at age 47 in the final paragraph of his discussion of the defender's claim under section 9(1)(b) the sheriff wrote:

 

I am of the opinion that the defender has suffered an economic disadvantage within the meaning of section 9(1)(b) in respect of these items and that although the pursuer has had the economic advantage of retaining sums which he ought to have paid, there is a considerable imbalance. For the reasons given below, I have decided not to award the periodic allowance which the defender seeks, but, in my view, given her age and the age of the children, and her limited employment prospects not least in the current economic climate, the defender ought to be compensated under section 9(1)(b), rather than under section 9(1)(c) or (d).

 

The sheriff then set out the various elements of his award under section 9(1)(b) including £10,000 for limited employment prospects. But he gives no explanation why he selected this figure rather than, for example, £1,000 or £100,000.

 

[31] Counsel for the pursuer understandably founded upon the absence in the sheriff's note of any attempt at evaluation or quantification of the amount (if any) to be awarded to the defender in this context. She submitted too that having limited employment prospects was not of itself sufficient to bring a party within the scope of section 9(1)(b), and that any resulting economic disadvantage still had to be shown to have been suffered in the interests of the other party or of the family.

 

[32] In response, counsel for the defender pointed out that the defender was a housewife and mother and had not had the opportunity to establish a pension or build upon her career. Counsel submitted under reference to Loudon v Loudon 1994 SLT 381, Wilson v Wilson 1999 SLT 249 and Coyle v Coyle (supra) that the sheriff had been entitled to find that an economic disadvantage had been suffered by the defender in this context to the economic advantage of the pursuer and that his decision to award £10,000 to the defender here had been a reasonable exercise of his discretion so that it ought not to be disturbed on appeal.

 

[33] It is not easy to support the sheriff's decision to award the sum of £10,000 to the defender in this context as a reasonable exercise of his discretion when he has said so little to explain why he made an award in this context, and in particular why he selected this particular sum. Nonetheless I am persuaded that this element in his award ought to be allowed to stand. It is well established in principle that a court may find that a wife has sustained an economic disadvantage within the meaning of section 9(1)(b) by giving up her employment on marriage and concentrating on looking after the family home and caring for the family. Thus in Loudon the parties were married at the age of 26 and lived together for seventeen years. The wife pursuer (aged 45 by the time of the proof) had been employed as a secretary at the time of the parties' marriage but had not worked since the birth of their child who was aged 17 at the time of the proof. At pages 384K/385D Lord Milligan stated:

 

I have considered carefully counsel's submissions on the question of the appropriate allocation of the matrimonial property. I am left in no doubt whatsoever that this should be an allocation in which, in the whole circumstances, the pursuer receives more than 50% of the matrimonial property. I accept the submissions by counsel for the pursuer in preference to those of counsel for the defender on this matter. I find that on the question of economic disadvantage the pursuer is left economically disadvantaged to a material extent. It is said by counsel for the defender that any economic disadvantage which the pursuer may have is balanced by the advantage she has in having been married to so successful a businessman. I do not accept counsel's approach on this matter. As already mentioned, it is clear that the defender was a successful businessman throughout the parties' married life together. While he was carving out a successful career, and indeed supporting the pursuer and their daughter well, the pursuer was looking after the house and their daughter over and above the parties' respective care of each other. The pursuer worked before the marriage but did not do so during the marriage. That she did not do so was not, I accept, due to any absolute insistence on the part of the defender that she should not work, but I interpret the evidence as indicating that he was content for her not to work. The defender is now well launched on a business career where he can command a high salary, currently apparently some £58,000 after tax per annum. The pursuer, on the other hand, requires to retrain in order to get back, as she put it, on the employment ladder. This she requires to do at the age of 45 years, which may well be problematical, at least so far as ending up with a well-paid job is concerned. The difference between her earning potential now and what she would probably have been earning but for her marriage to the defender cannot be calculated with any accuracy but I think it reasonable to conclude that the pursuer has suffered a material economic disadvantage in this connection.

 

In these whole circumstances, I do not agree with counsel for the defender that allocation of the matrimonial property should be slanted in favour of the defender on the grounds that he was a successful businessman throughout the parties' marriage. On the other hand, it is very clear to me that the pursuer is at a material economic disadvantage within the meaning of the 1985 Act. Not only is she not well placed by way of earning capacity but she has no personal pension fund at all as matters stand.

 

Then at page 385J his Lordship continued:

 

I have sought to consider and determine the question of appropriate allocation of the matrimonial property with particular regard to the guidance given in the case of Little v Little (1990 SLT 785), on application of the relevant provisions of the 1985 Act and in light of the evidence led and the submissions of counsel. I have come to the conclusion, in the whole circumstances of this case, that the appropriate allocation is to award 55% to the pursuer and 45% to the defender.

 

Although he referred here to the whole circumstances of the case it appears to me that Lord Milligan's decision to award the pursuer 55% rested more or less entirely on the fact of her having suffered the material economic disadvantage identified in the first passage from his judgement quoted above. In that case the net value of the matrimonial property was assessed at £834,119 (compared with £914,791 in the present case based on the valuation of the matrimonial home in March 2008) so that in effect the award made to the pursuer to reflect this economic disadvantage appears to have amounted to £41,706 (that is, 5% of £834,119).

 

[32] In Coyle the wife pursuer was aged 54 when Lady Smith granted decree of divorce on 25 April 2003. The parties had been married on 8 February 1975 and they separated on 5 February 1995. There were three children of the marriage, the youngest being 19 when decree of divorce was granted. The pursuer gave up her career with British Caledonian Airways to marry the defender and stopped work shortly after their marriage, the defender not wanting her to work. She had no qualifications. She ran the family home and cared for the children. At paragraph [40] of her judgement, addressing the question whether the pursuer had sustained an economic disadvantage in the interests of the defender or of the children of the marriage, Lady Smith commented: "Wisely, in the circumstances, counsel for the defender did not dispute that such a disadvantage had been sustained. It would have been difficult for her to do otherwise given the compelling evidence to the effect that the pursuer was disadvantaged by giving up what was likely to have been a very successful career, to marry the defender". Her Ladyship went on to consider the evidence of what the pursuer might have been able to earn had she not given up work on her marriage, and at paragraph [43] she stated:

 

It is, accordingly, clear that had the pursuer followed the career path upon which she had embarked prior to marrying the defender, she would have had significant earnings - at least £34,500 per annum gross - and would be looking forward to a comfortable pension income of at least £28-30,000 gross per annum. If, as seemed likely, she had moved into the field of public relations, these earnings and pension figures would have been higher. Thus, on any view, by refraining, at the defender's request, from pursuing her career, in the interests of the home and the children, she sustained a very significant economic disadvantage.

 

Her Ladyship went on to reject the proposition that the pursuer's economic disadvantage could be quantified by means of a calculation which simply sought to compensate her as if she were pursuing a claim for future loss of earnings and pension in an action for damages for personal injuries. But she recognised at paragraph [51] that, depending upon the facts of a particular case, where one of the other principles fell to be taken into account under section 9(1) apart from the principle in section 9(1)(a), the court might make an order for financial provision the amount of which went beyond whatever was considered to be a fair share of the net value of the matrimonial property. At paragraph [70] she indicated that the pursuer was entitled to receive a one half share of the net value of the matrimonial property in light of the principle set out in section 9(1)(a) and, allowing for the value of an asset retained by the pursuer following the parties' separation, she found that it would "be appropriate in all the circumstances to regard fair sharing as allocating the sum of £565,000 to the pursuer". At paragraph [71] she continued:

 

The question then arises as to whether she should receive any further payment in recognition of the application in this case of the principle enshrined in section 9(1)(b) of the 1985 Act. Whilst recognising that the principle enshrined in section 9(1)(b) of the 1985 Act clearly applies in this case I have reached the view that no further award should be made but only because of the way in which I propose to order that the defender make payment to the pursuer of the sum due to equalise sharing of the matrimonial property.

 

The emphasis here is mine. One of the items included in the assessment of the value of the matrimonial property was a house in Glasgow which had a value at the date of the parties' separation of £270,000. This was the value included in the assessment, but as at February 2002 the property was agreed to be worth £500,000. Lady Smith acceded to the pursuer's submission that she should grant an order transferring this property to the pursuer and in light of this she ordered the defender to pay to the pursuer a capital sum of £295,000 (that is, £565,000 less £270,000). At paragraph [72] Lady Smith continued in reference to the award which she had made to the pursuer:

 

I am, however, well aware of the fact that the real value of such an award will be significantly in excess of £565,000, given the increase in value of the house, a surplus which will be available for her to call on by way of realisation or secured lending, if she requires it, but it is precisely for that reason that I propose to make no specific award under reference to section 9(1)(b) of the 1985 Act. Because of the way in which I propose to order that equalisation of the net value of the matrimonial property be achieved, I am satisfied that the clear imbalance arising from the economic disadvantage sustained by the pursuer will be corrected by an award of the sum which is produced as a result of the equalisation process. Had it been that equalisation could only have been achieved by the awarding of a cash payment, then I would certainly have provided for payment by the defender of a further substantial cash sum as I would not have regarded the sharing of the matrimonial property as adequately recognising the extent of the economic imbalance in this case, where the defender has not been disadvantaged and has, as a result of his working life, an interest in a company and pension scheme which are clearly of substantial value, with the option of carrying on in business for a number of years into the future, all in addition to his share of the matrimonial property, some of which he has converted into valuable investments in heritable property and the pursuer has no qualifications, no job, no pension and, on the evidence, no realistic prospect of earning her living, although matters would have been rather different had she been able to pursue her airline career.

 

In practice therefore it will be seen that since the former matrimonial home was valued at £270,000 at the date of separation and £500,000 in February 2002 (and was no doubt continuing to rise in value at that time) Lady Smith in effect awarded the pursuer not less than £230,000 in light of the principle set out in section 9(1)(b) of the Act.

 

[33] In Wilson the parties were married on 1 February 1979 and finally separated on 27 February 1996. There were two children of the marriage aged 18 and 16 respectively by the time of the proof. The husband defender was a farmer and the wife pursuer had been a receptionist before the marriage. She evidently gave up employment at or about the time of the marriage and devoted herself to looking after the family home and caring for the two children. At page 254D/H Lord Marnoch stated:

 

In the present case it seems to me self evident that the defender could not have run his farming enterprise as successfully as he did had the pursuer, for her part, not throughout looked after the family home and the two children of the marriage. No attempt was made, even had it been possible, to place a value on the pursuer's services as housekeeper and nanny but it cannot be doubted that, even in stark financial terms, the contribution made by the pursuer in these respects was very considerable indeed. And, although the pursuer made no complaint anent the adequacy of the financial support which she received from the defender during the 17 years of marriage, there was no evidence to suggest that the parties' lifestyle was in any way affluent. But, therefore, for the defender's decision to retain or plough back in the company the profits in question I do not doubt that that lifestyle could have been substantially improved. In any event, and for whatever reason, the pursuer has been denied, up to now, any share in the profits in question. In saying all this I realise, of course, that profits which are being invested in the purchase of land will in turn have produced further profits and that that is a consideration which must be taken into account. I also bear in mind that if the profits in question had been distributed they would have been subject to income tax at a rate of up to 40%. Nonetheless, so far as this branch of the case is concerned, I am quite satisfied that, to use the wording of section 11(2)(a) of the Act, the "economic advantages" of the defender have not throughout the marriage been balanced by the "economic advantages" of the pursuer and that, in order to redress this balance, it is proper to award the pursuer a sum over and above that derived from an equal sharing of the parties' "matrimonial property". Doing the best I can on the somewhat limited information available, but having regard to all the factors mentioned above, I assess that additional sum at a figure of £100,000, thus bringing out a total capital sum payable to the pursuer of £408,609.

 

(Earlier at page 253J Lord Marnoch had found that the net value of the matrimonial property as at the relevant date was £804,122 and that in order to achieve an equal division of this net value there should be a transfer from the defender to the pursuer of £308,609 after allowing for property valued at £93,452 already in the possession of the pursuer).

 

[34] It can be seen that in Loudon and Coyle the court dealt with section 9(1)(b) by addressing the economic disadvantage suffered by the wife pursuer as a result of giving up work to look after the family whereas in Wilson the court approached the matter by assessing the imbalance between the economic advantages respectively enjoyed by the parties as a result of the wife pursuer looking after the family full time. In all three cases the marriage had been of some duration, whereas in the present case the parties were together as husband and wife for a little less than six years having been married on 29 June 2001 and separated on 2 April 2007. Although counsel for the defender referred to Wilson I understood her to be looking more to the economic disadvantage suffered by the defender in this case than to the economic advantages respectively enjoyed by her and the pursuer. The wife's circumstances in Coyle were readily distinguishable from those of the defender in the present case, but in Coyle one at least sees a clear acceptance of the principle that a wife may suffer an economic disadvantage by giving up work on marriage to look after the family which merits an award being made under section 9(1)(b) over and above whatever is awarded under section 9(1)(a). Of the three cases cited, it seems to me that Loudon is closest in its facts to the present case, and it is interesting to notice that in that case as in the present case (see the sheriff's finding in fact 39) the husband had failed to make a full disclosure to the court of his assets. As already indicated, the effect of Lord Milligan's decision was to award the wife a sum of the order of £41,706 in light of section 9(1)(b). That award was made in 1993 after the parties had lived together for seventeen years. It is true that in that case there does not appear to have been any suggestion that the wife had received any income from her husband's business, whereas in the present case account is being taken under section 9(1)(b) of the two years salary worth £9,600 which ought to have been, but was not, paid to the defender out of the pursuer's business. It is important here not to lose sight of the fact that this is not a case in which an award is being sought by the defender under section 9(1)(c) to assist with the economic burden of caring for the parties' three children. The court has to assess the economic disadvantage suffered by the defender (which was patently in the interests of the family) as a result of giving up work following her marriage to look after the home and children. It was not suggested that an award of more than £10,000 should be made and in all the circumstances, and having regard in particular to the size of the award made by Lord Milligan in Loudon, I am persuaded that the sum of £10,000 is none too much to allocate to the defender in this context.

 

[35] In summary I think that it has been established that the defender suffered economic disadvantages within the meaning of section 9(1)(b) to the extent of £38,601 made up as follows:

 

Unpaid salary 9,600

Increase in mortgage arrears 1,600

Loan to buy a car 15,000

Loan to pay off credit card 2,401

Loss on giving up work 10,000

£38,601

 

It is necessary then to consider section 11(2) to see whether these economic disadvantages have been balanced either by economic advantages enjoyed by the defender or by economic advantages or disadvantages sustained by the pursuer and whether any resulting imbalance has been or will be corrected by a sharing of the value of the matrimonial property. It was not suggested here that there had been any such additional economic advantages or disadvantages on either side, so the result is an imbalance against the defender of £38,601. This will not be corrected by an equal sharing of the net value of the matrimonial property in pursuance of section 9(1)(a), and it follows in my opinion that it would be appropriate under reference to section 9(1)(b) to award the defender a further £38,601 over and above what is due to her in light of section 9(1)(a).

 

[36] Before parting from section 9(1)(b), I should mention that counsel for the pursuer suggested that this subsection and section 9(2) applied only to contributions made by a party before the relevant date and likewise only to economic disadvantages which had been suffered before that date. The effects of these might continue after that date, but this did not matter so long as they had been made or first suffered, as the case might be, before then. In the context of these provisions the relevant period was the period of the parties' marriage, and the question was when this period should be taken to have ended. Counsel indicated that this question was undecided and that it did not matter for the main purpose of her argument in the context of section 9(1)(b. She referred here to Cahill v Cahill 1998 SLT (Sh Ct) 96.

 

[37] In Cahill the issue was whether the sheriff had erred in law in taking into account a benefit which the defender continued to enjoy following the termination of the marriage and which had originally come about as a result of the pursuer's efforts during the marriage. The question whether in the context of section 9(1)(b) and (2) the marriage should be taken to end at the date of separation rather than divorce did not arise, and accordingly I do not think that Cahill is of any assistance in the present case. But in any event the question posed by counsel for the pursuer is in my opinion easily resolved. The expression used in section 9(2) is "before or during the marriage". It is not qualified by words such as "up until the relevant date" as it could easily have been if it had been intended that only those contributions made and economic disadvantages suffered before that date should be taken into account. In my opinion it is clear that the end date here is the date of termination of the marriage and not the relevant date.

 

[38] I have already drawn attention to the fact that in his interlocutor of 30 January 2009 the sheriff gave no direction to the sheriff clerk as to what she was to do with the free proceeds of sale of the matrimonial home after these had been lodged in her hands. It did not surprise me to hear counsel for the pursuer criticise the sheriff's interlocutor as inept on the basis that he had failed to recognise that the defender already owned a one half share of the matrimonial home. Moreover, said counsel, he had failed to take into account what would happen if the free proceeds of sale were more or less than those anticipated in light of the valuation of the property and the outstanding balance on the mortgage as at March 2008.

 

[39] If, as the sheriff appears to have intended, the defender was to receive the sum of £539,640.05 out of the free proceeds of sale of the matrimonial home with the balance being paid to the pursuer, it would have been a simple matter for him to have directed the sheriff clerk to distribute these proceeds accordingly after they had been lodged in her hands. But he did not do so. Instead he ordered the pursuer to pay a capital sum of £539,640.05 to the defender and gave no direction to the sheriff clerk as to what she was to do with the free proceeds. In the absence of any such direction, and given that the property was held in joint names of the parties, I think that the only safe course for the sheriff clerk would have been to distribute the free proceeds of sale equally between the parties with the result that the defender would in consequence of the sheriff's interlocutor have received half these proceeds plus the sum of £539,640.05 from the pursuer in pursuance of the order for payment by him to her of a capital sum of this amount. This is plainly wrong, and on this ground alone I think that I am entitled to treat the question what capital sum should be paid to the defender, and how, as being at large on appeal - albeit that it will be seen that I have in fact agreed with the majority of the sheriff's conclusions in relation to the individual elements in the assessment of the capital sum to be paid by the pursuer.

 

[40] It was indicated on the second day of the appeal hearing that the matrimonial home had been sold and that the transaction was about to be completed. Shortly afterwards, I received a letter from the solicitors instructed to sell the property to the effect that it had been sold for £880,000 and that the redemption sum for the building society loan was £167,737.88. These figures are to be contrasted with the sums of £930,000 and £161,542.65 respectively stated in the sheriff's finding in fact 5(i) for the valuation of the property and the outstanding amount of the loan in March 2008. I wrote a note drawing the parties' attention to this and offering to hear them further on the matter if they so wished. Both parties' agents responded by letter saying in short that they did not seek a further hearing. The state for settlement submitted by the selling solicitors indicated that out of the free proceeds of sale a sum of £200,000 had been paid to each of the parties by agreement between them and that, after payment of various other fees and outlays, the balance which had been forwarded to the sheriff clerk had been to £299,909.90.

 

[41] On 23 February 2010 a motion, no. 8/6 of process, was lodged on behalf of the defender in which she moved that the sheriff clerk be authorised to pay a further sum of £200,000 to her out of these proceeds. I heard parties' solicitors on this motion on 23 March 2010. I did not understand them to dispute at that stage that the free proceeds of sale of the matrimonial home should be divided equally between the parties, and in my opinion this is plainly a fair and reasonable outcome now that the amount of these proceeds is known. In assessing the net value of the matrimonial property the sheriff left out of account debts due by the pursuer and the defender respectively of £5,781.71 and £3,898.71 (the latter being the debt in respect of the defender's Marks & Spencer MasterCard to which reference has already been made). It was accepted that this was a reasonable exercise of his discretion, but since the matter is now at large on appeal I think that it is fair to take these particular debts into account. On this basis and given that the pursuer's assets at the relevant date substantially exceeded in value those of the defender, it was not in dispute that the balancing payment that required to be made by the pursuer to the defender to secure an equal sharing of the net value of the matrimonial property was £75,350.44, or £35,350.44 if the £80,000 paid to Harewood Ridge fell to be excluded. One half of £299,909.90 is £149,954.95 which when added to £35,350.44 comes to £185,305.39. Since on any view it appeared that the defender would be entitled at the end of the day to payment of this amount I might have authorised the sheriff clerk to pay it to her without further ado. But I decided to err on the side of caution and I therefore granted the defender's motion, but only to the extent of authorising the sheriff clerk to pay the sum of £175,000 to her out of the free proceeds of sale. This has now been done.

 

[42] Shortly after 18 March 2010 a further letter was received from the selling solicitors in which they stated that the amount due to the building society had been understated and that a further sum of £54.08 was due. I drew this to the attention of the parties' solicitors at the hearing on 23 March 2010. Neither objected to this sum being paid out by the sheriff clerk and I authorised her to do so accordingly. It follows from all this that the free proceeds of sale of the matrimonial home excluding payments already made to the parties have amounted to £699,855.82 (that is, £699,909.90 less £54.08) and the sum now remaining in the hands of the sheriff clerk amounts to £124,855.82, namely £699,909.90 less £575,054.08 (of which £375,000 has been paid to the defender, £200,000 to the pursuer and £54.08 to the building society).

 

[43] The sheriff awarded interest on the capital sum of £539,640.05 which he had awarded to the defender at the rate of 8% per annum from the date of citation until the date of lodgement of the free proceeds of sale of the matrimonial home. It was accepted that the question what interest, if any, to award on the capital sum to be paid to the defender had not been the subject of discussion before the sheriff, and in his note he offers no explanation for his decision in this respect. In these circumstances counsel for the pursuer submitted under reference to Geddes v Geddes 1993 SLT 494 and Watt v Watt 2009 SLT 931 that the sheriff had fallen into error in awarding interest on a sum of money a substantial part of which, namely her share of the value of the matrimonial home, already belonged to the defender and was not in the control of the pursuer. Counsel submitted further that, if interest was to be awarded from a date earlier than the date of decree, then as a matter of fair notice some indication of the argument to this effect should have been given to the pursuer. She submitted too that there was nothing in the present case to suggest that there was any justification for a departure from the usual rule that interest should run from the date of decree.

 

[44] Counsel for the defender accepted that, in awarding interest on the total sums decerned for, the sheriff had effectively awarded interest on sums of money attributable to assets held by the defender and that on the face of it this had been an error. But she submitted in short that the sheriff had been quite entitled to award interest on the total sums due from the date of citation until payment at the judicial rate and that it had been a reasonable exercise of his discretion to put the defender in the position in which she would have been but for the lag of time consequent upon the present litigation. Whilst unusual, the sheriff's decision was not one which no reasonable sheriff, properly directing himself, could have made in all the circumstances of the case and in the exercise of his discretion. Counsel further submitted that, if I were going to consider the whole matter de novo, I should award interest at the judicial rate on the sums to be awarded to the defender under subsections 9(1)(a) and (b) respectively from the date of my interlocutor disposing of the appeal.

 

[45] Once again, in the absence of any reasons given by the sheriff, it is very difficult to see that his decision on the matter of interest was a reasonable exercise of his discretion. Besides, I think that he was clearly wrong to have awarded interest on a sum of money, namely the £462,240.05 which he awarded under section 9(1)(a), a very substantial part of which was accounted for by the value of the defender's half share in the matrimonial home. As it is, interest rates in the last year or so have been very low and in the absence of a full discussion of the issues I do not think that it would have been right to award interest on any amount due by the pursuer to the defender from a date earlier than the date of the interlocutor disposing of the appeal. In practice, once I have dealt with the question of expenses, I shall pronounce an order directing the sheriff clerk as to how she is to dispose of the balance remaining in her hands of the free proceeds of sale (including interest accumulated since these were lodged in her hands). There should be no further delay at that stage in the defender receiving what is due to her and accordingly I see no need to award interest on that sum at all.

 

[46] I could of course have ordered the sheriff clerk to dispose of the balance of these free proceeds now and if I had done this, and bearing in mind section 8(2)(b) of the Act (and leaving aside the allocation of accumulated interest), I should have ordered her to pay £35,976.47 to the pursuer and £88,879.35 to the defender. These two sums total £124,855.82 as brought out in paragraph [42] above. They are calculated on the basis that each party should receive a half share of the free proceeds of the sale of the matrimonial home subject to the qualification that there should be deducted from the pursuer's share and added to the defender's share the sum of £113,951.44, namely the £75,350.44 due under section 9(1)(a) plus the £38,601 due under section 9(1)(b). In other words, the pursuer would receive out of these proceeds £235,976.47 of which £200,000 has already been received by him leaving a balance due of £35,976.47, and the defender would receive £463,879.35 of which £375,000 has already been received by her leaving a balance due of £88,879.35. .

 

[47] The reason that I have not granted an order to this effect at this stage is that I am mindful of the sheriff's comment at page 37 of his note that he would have little confidence that the pursuer would comply with any order of the court without being obstructive. It was agreed that a further hearing should be assigned to allow parties to address me on the question of expenses, both before the sheriff and on appeal. If these are to be awarded in whole or in part to the defender, it would seem sensible in light of the sheriff's comment that payment of the amount of expenses found due by the pursuer after taxation should be made to the defender out of his share of the sum currently in the hands of the sheriff clerk. In the circumstances I have gone no further at this stage than to fix a hearing on expenses. If these are awarded in whole or in part to the defender, an account thereof can be given in and taxed in the usual way and then I shall be in a position to vary the sheriff's interlocutor to reflect the conclusions expressed in this note, and in particular to substitute a new finding in fact and in law setting out the defender's revised entitlement to a capital sum, and to direct the sheriff clerk as to how much of the sum remaining in her hands is to be paid to the pursuer and how much to the defender. The starting point here will be the sums brought out in the preceding paragraph and there will be deducted from the pursuer's share and paid to the defender whatever amount is found due to her in expenses (and here of course it is possible that, by reason of the protracted nature of this litigation, the pursuer's share may not be sufficient to satisfy in full his liability in expenses). In the event that no award of expenses is made to either party, then I shall order the sheriff clerk to make payment as outlined in the preceding paragraph, and of course in the event that an award of expenses is made in the pursuer's favour then a deduction can be made from the defender's share.

 

[48] For the sake of completeness I should mention briefly that on the second day of the appeal hearing counsel for the pursuer moved that a fresh ground of appeal should be allowed to be added to the grounds stated in the original note of appeal to reflect the fact that the defender had failed to disclose during the proof that on 15 April 2008 she had bought a property at Cults for £395,000 with the assistance of her parents. It was said that the defender had deliberately misled the court and had been in breach of her obligation to make a full disclosure to the court of her financial position - a criticism which I thought came ill from the pursuer given the terms of the sheriff's finding in fact 39 to which I have already referred and which was not challenged by the pursuer.

 

[49] Counsel for the defender opposed the introduction of this additional ground of appeal, but I decided to allow this for what it was worth. I heard extensive submissions from both counsel on the significance of this new ground of appeal and what should happen in light of it. I intend no discourtesy to counsel when I say that the whole matter appeared to me to be a proverbial storm in a teacup. I say this since my assessment of what should be paid to the defender in light of sections 8(2) and 9(1)(a) and (b) of the Act, as I hope will be apparent from what I have already said in this note, has depended upon my understanding of the objective facts of the case and of the relevant law and has not turned to any extent upon any impression which I might have derived from the record of the evidence or what the sheriff had to say in his note as to the character, credibility or reliability of either party.

 

[50] In addition to the authorities which I have already mentioned, I was referred to Macphail's Sheriff Court Practice (3^rd Edn) at paragraph 2.110, Ross v Ross 1928 SC 600, Jacques v Jacques 1995 SLT 963 (in the Court of Session), Little v Little 1990 SLT 785, Cunniff v Cunniff 1999 SLT 992 and Welsh v Welsh 1994 SLT 828.