SHERIFFDOM OF GRAMPIAN, HIGHLAND and ISLANDS AT ABERDEEN

 

F140/12

 

 

JUDGMENT

 

by

 

SHERIFF PRINCIPAL DEREK C W PYLE

 

in causa

 

 

HILARY SMITH-MILNE, residing at 2 Nigg Way, Aberdeen

Respondent

 

against

 

JOHN LEWIS LANGLER, residing at 8 Nigg Way, Aberdeen

 

Appellant

 

 

 

 

Aberdeen, 12 March 2013

 

The Sheriff Principal, having resumed consideration of the cause, Allows the appeal in respect of the joint motion of the parties to exclude from probation the averments contained in article 3 of condescendence and answer 3 and so Excludes said averments; quoad ultra Refuses the appeal; Finds the appellant liable in the expenses of the appeal and Remits an account thereof to the auditor of court to tax and to report; Certifies the appeal as suitable for the employment of junior counsel.

 

 

 

 

 

 

Introduction

 

 

This appeal follows the decision of the sheriff to repel the appellant's preliminary plea-in-law after a debate in which the appellant sought to exclude from probation certain of the respondent's averments. The appeal concerns the construction of the Family Law (Scotland) Act 2006 in respect of the rights of cohabitants.

 

In 1995 the parties met and began to live together as if they were husband and wife. The relationship lasted until 2011. For that period they were "cohabitants" within the meaning of Section 25 of the Act. The respondent now seeks a capital sum in terms of Section 28(2)(a) of the Act.

 

 

The Pleadings

 

In article 4 of condescendence, the respondent makes certain averments about the period of the cohabitation. I do not find it necessary to repeat them here ad longum. Suffice it to say, the respondent avers that the appellant had little by way of capital when the parties first met. He did however have his interest in a business which he was running at that time. The respondent makes detailed averments about the various contributions, both financial and otherwise, she made to the relationship between the parties. In particular, she avers that (a) on the parties jointly purchasing a home, she paid for its decoration and supplied or paid for the furniture and some other contents, as well as half of the monthly mortgage instalments; (b) she kept the parties' home and garden and cooked, washed, cleaned and shopped for the appellant, as well as carrying out DIY and maintenance of the property; (c) she looked after her son who was assumed by the appellant as a child of the relationship and alone paid for childcare; (d) she paid for the entire cost of food and most of the utilities; and (e) she sold her own house and applied the net proceeds to supporting the parties' family life. The respondent then goes on to aver that when the parties commenced cohabitation she was employed as a chartered quality professional and for three years from 1996 she was employed as a stakeholder manager in an oil company. In 1999, she was persuaded by the appellant to work for his company. In doing so, she took a drop in salary. She avers that her contribution to the appellant's business greatly enhanced its value and that her efforts greatly exceeded the level of her salary. The appellant eventually sold the business for £6 million. The respondent was made redundant and received £10,000 as compensation. Thereafter she continued to pay half of the mortgage and met the whole cost of food and utilities, with the result that she soon exhausted her compensation and also incurred credit card debts, this being despite the appellant now being a multi-millionaire. The respondent also avers that she advanced the appellant's career by attending functions with him in his role as Deputy Lord Lieutenant of Aberdeen, by attending social events as his partner and by visiting Kazakhstan to support him in his role as honorary consul. Moreover, she visited there on one occasion on her own to develop a proposed vocational training model for industry. Finally, she avers that the appellant is a diabetic and she had to nurse him from time to time.

 

In article 5 of condescendence the respondent avers that by reason of the above contributions the appellant was able to concentrate on developing his career and business interests and has substantially increased his wealth and earning capacity over the cohabitation period. She then goes on to aver in detail the respondent's assets as at the date of cessation of the relationship. She estimates that his personal wealth is in excess of £11 million. She seeks payment of a capital sum of £600,000.

 

Finally, the respondent avers in article 7 of condescendence that in the foregoing circumstances the appellant has derived economic advantage from her contributions and that she, in turn, has suffered economic disadvantage in the interests of the appellant.

 

 

Section 28 - Discussion

 

Section 28 of the Family Law (Scotland) Act 2006 provides:

"(1) Subsection (2) applies where cohabitants cease to cohabit otherwise than by reason of

the death of one (or both) of them.

(2) On the application of a cohabitant (the "applicant"), the appropriate court may, after

having regard to the matters mentioned in subsection (3)-

(a) make an order requiring the other cohabitant (the "defender") to pay a capital sum

of an amount specified in the order to the applicant...

(3) Those matters are-

(a) whether (and, if so, to what extent) the defender has derived economic advantage

from contributions made by the applicant; and

(b) whether (and, if so, to what extent) the applicant has suffered economic

disadvantage in the interests of-

(i) the defender...

(4) In considering whether to make an order under subsection (2)(a), the appropriate court

shall have regard to the matters mentioned in subsections (5) and (6).

(5) The first matter is the extent to which any economic advantage derived by the defender from contributions made by the applicant is offset by any economic disadvantage

suffered by the defender in the interests of-

(a) the applicant...

(6) The second matter is the extent to which any economic disadvantage suffered by the

applicant in the interests of-

(a) the defender...

is offset by any economic advantage the applicant has derived from contributions made by the defender...

(9) In this section-

"contributions" includes indirect and non-financial contributions (and, in

particular, any such contribution made by looking after... any

house in which they cohabited); and

"economic advantage" includes gains in-

(a) capital;

(b) income; and

(c) earning capacity;

and "economic disadvantage" shall be construed accordingly..."

 

This provision has been the subject of scrutiny by the Supreme Court in Gow v Grant 2012 SLT 829 and indeed more recently by Lord Drummond Young in Whigham v Owen [2013] CSOH 29. (Counsel had advised me that Lord Drummond Young's opinion was very imminent. Its publication occurred after I had made avisandum. I invited parties to address me further if they so wished in the light of the decision. Both declined to do so.)

 

Before considering the approach taken by the Supreme Court, I observe at this point that the right to a capital sum on cessation of cohabitation is triggered only when either the defender has derived economic advantage from contributions made by the applicant or when the applicant has suffered economic disadvantage in the interests of the defender (Sec 28(3)). In an economic advantage case, therefore, the normal sequence will be, first, proof of economic advantage and, secondly, proof that it has arisen from the applicant's contributions. Counsel for the appellant referred to this as a causal link. That is of course a well known concept in our law of delict. Whether or not it accurately explains the word, "from", in this context, what is certainly true is the mere fact that a couple are in a loving relationship for a period of time during which they help each other as normal couples do and at the end one party is considerably better off than he/she was at the start is not on its own sufficient to warrant a capital sum being awarded to the other.

 

In the instant case, the respondent avers both economic advantage and disadvantage. But Gow v Grant is on the facts only an economic disadvantage case. The Supreme Court endorsed the approach taken by the sheriff at first instance. That was because the evidence was available to prove that the disadvantage was in the interest of the defender. The sheriff also had to consider sub-sec 28(6), namely the extent to which the proved disadvantage was offset by any economic advantage derived from the contributions made by the defender, but in the event decided that there was none. Nevertheless, that did mean that the Supreme Court was engaged in considering both economic advantage and economic disadvantage - and of course the same wording is employed for the type of economic advantage which qualifies to be offset per sub-sec 28(6) as is employed in the entitlement arising under sub-sec 28(3)(a).

 

In discussing the background to the 2006 Act and in particular regard to the discretion which Section 28 gives to the court whether to make an award at all (sub-sec 28(2)), Lord Hope of Craighead concluded (at para [31]) that the principle of fairness lies at the heart of the award that the court is able to make, that is fairness between both parties to the relationship. He then went on to deal with the detailed approach of the sheriff on the facts. He added this (at para [39]):

" But... it would be an unusual relationship if parties, from the commencement, proceeded to keep full and detailed accounts of their respective finances so that upon termination a mathematical calculation might be made of any contributions made, economic advantage derived [my italics] or disadvantage suffered."

 

That is, in my opinion, a clear indication that in a case of economic advantage to the defender, which on the facts Gow v Grant was not, the Supreme Court is contemplating that a broad approach, based on the underlying principle of fairness, should also be adopted.

 

As Lord Drummond Young relates in Whigham v Owen, Section 28 has caused some consternation for sheriffs in deciding what awards should be made. Perhaps more critically given that only a small percentage of disputes require a judicial decision, it has also caused difficulties for family law practitioners in advising their clients what awards the court is likely to make. It seems to me that such uncertainty remains, although the Supreme Court appears to regard that as a necessary consequence of a broad brush approach which is required to give effect to the provisions of Section 28 in the context of relationships where mathematical calculation will not be made during its course. It may of course be that over time there will be enough decisions of the higher courts upon which sheriffs and practitioners can draw so that much of the uncertainty will be dissipated. Nevertheless, I am left with some unease that too much reliance on the broad approach of fairness runs the risk of doing violence to the terms of sub-sec 28(3)(a) which, as I have already said, seems to envisage an exercise of proving the advantage to the defender and then proving the causal connection between the advantage and the contributions of the applicant. For aught yet seen, experience over time may show that it is easier to prove economic disadvantage than economic advantage if the courts decide that the fairness principle does not mean that the causal connection required for economic advantage can simply be subsumed into that principle.

 

 

Appellant's Plea to the Relevancy

 

Before the sheriff, the appellant submitted that virtually all of the averments in article 5 of condescendence should not be admitted to probation. These were the averments which described in detail the appellant's resources as at the date of cessation of the relationship. The sheriff rejected this argument on the basis that it required a narrow and technical approach to the legislation, which had not been accepted in Gow v Grant. The sheriff thought that the averments simply sought to give as much information as possible about the appellant's financial position at the end of the period of cohabitation.

 

It is, in my view, significant that counsel for the appellant before me and before the sheriff did not seek to exclude the first sentence of article 5: "By reason of the pursuer's contributions the defender was able to concentrate on developing his career and business interests." While he argued the need for a causal connection between the economic advantage to the appellant and the respondent's contributions (and indeed at one point in his submissions a causal connection between the contributions and particular assets), he did not move to exclude from probation the averments in article 4 which set out those contributions. In other words, he was accepting that a proof was required on these averments, which must inevitably mean that his true complaint can only be that the appellant's resources at the end of the cohabitation are irrelevant in assessing what, if any, capital sum should be awarded. Like the sheriff, I do not understand why such averments are not to the point. It seems to me that evidence of the appellant's financial position at the date of cessation of the relationship would be an essential starting point to enable the court to decide what, if any, capital sum should be awarded. That was the approach Lord Drummond Young took in Whigham v Owen (para [26] et seq). It is also consistent with the point made by Lady Hale in Gow v Grant (para [54]) where she referred to the comparison to be done between where the parties were at the beginning of their cohabitation and where they are at the end, an approach expressly approved by Lord Hope (para[40]).

 

 

Decision

 

Whatever reservations I have expressed about the correct manner in which Section 28 should be construed in cases of economic advantage, I am entirely satisfied that the sheriff was correct to repel the appellant's preliminary plea. Accordingly, the appeal must fail.

 

Parties were agreed that I should allow the appeal for the restricted purpose of excluding from probation the averments in article 3 and the answer thereto. This had been so moved before the sheriff but he had failed to include it in his interlocutor.