Scottish Sheriff Court Decisions

2014 SCDUND4

Sheriffdom of Tayside, Central and Fife at Dundee

F397/10

Interlocutor

and Note by

Sheriff George Alexander Way

In Causa

GARY JOHN HARPER

Pursuer

Against

SALLY ANN CAMERON or HARPER

Defender

Dundee 31^st January 2014

ACT: Hunter                                   ALT: Logan, Advocate

The Sheriff having resumed consideration of the Pursuers Minute number 37 of Process and the Defender’s Answers thereto number 38 of Process (Record no.41 of Process); sustains the defender and respondent’s Plea in Law number 1 and refuses the Minute; certifies the said Minute and Answers procedure to be suitable for the employment of junior counsel; finds the pursuer and minuter liable to the defender and respondent in expenses of the Minute and Answers and the hearing on preliminary pleas, as taxed; and remits any account of expenses given in, to the Auditor of Court to tax and report.

GAWay

Sheriff

NOTE

 Introduction

1. This is an action of divorce in which Decree was granted on 24^th June 2013. The decree granted divorce and a substantial capital sum of £861,000.00 to the Pursuer. This sum was to be paid within two years with interest accruing until payment at 3% per annum and at 8% per annum thereafter if the two year period were exceeded. The financial provision for the pursuer was fortified by incidental orders relating to property in terms of section 14 of the Family Law (Scotland) Act 1985 (as amended); one of these orders was for the sale of a house in Broughty Ferry Dundee. In addition the parties entered into a detailed written Minute of Agreement (also dated 24^th June 2013) setting out, amongst other things, amplified provisions relating to the sale of property, the transfer of proceeds of sale to the pursuer and when an interim payment of a sum equivalent to interest might fall due.The Minute of Agreement is produced in the Defender’s Tenth Inventory of Productions (39 of Process).

    

2. The pursuer has lodged a Minute (38 of Process) seeking a further ancillary order, in terms of s.14 of the said Act of 1995, in the following terms:

   “ to grant an incidental order granting warrant to such person as the Court shall think proper to dispose of the heritable property known as ….. Broughty Ferry Dundee, heritably and irredeemably by public roup or private bargain in such manner and under such conditions as the court shall direct”.

    

   The defender lodged answers opposing the minute and challenging, inter alia the competence and relevance of the application.

    

3. A full hearing, on the Minute and Answers, called before me on 6^th December 2013.The Court was, regrettably, over-programmed and it soon became clear that an evidential hearing could not be accommodated. Witnesses were, thankfully, largely on stand-by and could stand down. The representatives for the parties, however, identified that there was a discrete question of competence that might be debated in the hour or so that was available.I am grateful to Mr.Hunter, solicitor and Mr.Logan advocate for their forbearance and adaptability, as the over- programming was no fault of theirs.Mr. Logan then addressed me in support of his Plea in Law challenging the competency of the pursuers Minute.

    

4. I think it will aid comprehension of the submissions if I set out briefly, what I understand to be the factual issues which have caused contention between the parties.This case was to call before me in June 2013 as a Proof on financial provision.I was informed that agreement had been reached. A Joint Minute was prepared and I agreed to hear a traditional undefended proof. Decree was accordingly granted on 24^th June 2013 divorcing the parties and making an order for payment of a capital sum of £ 861,000.00 payable within two years with interest at 3% rising to 8% on any sum still unpaid after 24^th June 2015. There were also incidental orders ( in terms of s14 of the 1995 Act) ordaining the defender to sell the heritable property owned by her at Broughty Ferry and another in Dundee. The sale of the Dundee Property was deferred until 24^th June 2014. There was to be heritable security granted in favour of the pursuer and Interdict against disposal of funds.

    

5. The parties also entered into a Minute of Agreement, which, I assume, was intended to fortify the Joint Minute and put flesh upon its bones. The Agreement required the Broughty Ferry property to be marketed as soon as practicable but no later than four weeks after the Minute was signed by the parties. The defenders agents were to act as selling agents. The defender bound herself to accept any reasonable offer, subject to the pursuers consent which would not be unreasonably withheld.There were provisions touching on fees and a secured debt, with any net sale proceeds to be applied towards discharge of the capital sum due to the pursuer.In the event that the Broughty Ferry property was not sold within one year then other property was to be marketed or an interim cash payment made by the defender to the pursuer of £21,018.00, which by my calculation represents a year’s interest at 3%.

    

6. This is very much the type of Minute of Agreement one might expect in a high value divorce if valuable assets must be realised over time. The bone of contention relates to the Broughty Ferry property, not as the informed bystander might have expected, because the defender has failed to attract interest in it but rather because she has purported to find a buyer. The pursuer would not accept the offer obtained and exercised his right of veto under the Minute of Agreement, He had two principal concerns: firstly, the price offered was not verifiably the open market value as the subjects had not been exposed to that market and secondly, the date of entry was postponed until 5^th September 2014.The pursuer also doubts the credit worthiness of the purported purchaser.

    

7. In short, the pursuer suspects that the offer is merely a sham; a device which will enable the defender to assert that the property is sold so that the ancillary clauses in the Minute of Agreement, that provide for interim payment or disposal of other property, cannot be invoked. The defender denies this and asserts that she, as a professional herself in the property field, marketed the property through private sources and attracted appropriate interest. She did not advertise the property for sale, in a public forum, as this would incur unnecessary costs. A Homebuyers Report would cost around £2,000.00 and estate agency fees and outlays could be as much as £12,000.00. The pursuer’s decree entitled him to a cash payment of £861,000.00 with interest accruing thereon. This sum had to be paid no later than two years from the 24^th June 2013. The decree, itself, made no provision for interim payments.The defender had a legitimate interest in selling the property at the best net price and outlays were an integral part of that equation. The pursuer, on the other hand, could afford to be bullish about sale of the Broughty Ferry property, as he must be paid his principal sum and accrued interest. Any diminution of the net realisable proceeds of the property fell upon the defender not the pursuer.

    

8. The Pursuer now wishes the sale of the property at Broughty Ferry taken out of the defender’s hands and sold under the direction of the court akin to the procedure of division or sale of joint property. This is the thrust of his Minute seeking another s.14 Order.

    

9. Counsel had two interrelated challenges to the competence of the Pursuer’s Minute. . Firstly, the court was functus and secondly, that the doctrine ofres iudicata applies.Decree of divorce had been granted with financial provision and incidental orders in support thereof. An order, in terms of section 14, had already been granted ordering the sale of the Broughty Ferry property and directing that the Clerk of Court could sign conveyancing documents if so directed. The pursuer was, in effect asking for the same s.14 order i.e. the sale of the Broughty Ferry property.The addition of a court supervised sales mechanism was not directed at the judicial process but at the Minute of Agreement between the parties.There was, therefore, no live issue in the judicial process to which the purported new s.14 order could be said to be incidental.

    

10. Counsel referred me to the decision of Sheriff Principal Bowen in Amin v Amin 2000 SLT(ShCt) 115 and Sheriff McSherry in Williams v Williams 2008 SLT (ShCt) 134.In Amin a wife pursuer had been granted decree of divorce and a capital sum of £70,300.00.No incidental orders were sought. The defender subsequently failed to pay the capital sum.The pursuer then applied to the court for an incidental order, in terms of s14 of the 1985 Act, for sale of certain heritable property owned by the defender. The Sheriff, at first instance, refused the order.He held that the court was functus: the pursuer had been granted divorce and a capital sum as she had craved. There was simply no proper basis for making any incidental order to an unqualified decree for payment. The pursuer appealed. The Sheriff Principal refused the appeal.He observed, firstly, that the pursuers application did not proceed under any identifiable rule of court, which raised a procedural hurdle and at least an inference that what the pursuer sought was not thought possible within the statute.He also noted that what the pursuer wanted was enforcement of her existing order for payment and she was arguably, seeking to trespass upon the proper province of the established rules for diligence upon a decree.He goes on to state (at 116 G-I):

          “ I agree with counsel for the appellant that the provisions of s14 have a  procedural  character but in my view they are procedural in the sense of existing to facilitate the making of the main orders of capital payment, transfer of property and pension sharing. For that reason the orders are described as “incidental”.

    …. In short, I do not consider that the application made in the present situation can be regarded as seeking an order under s8(2) of the Act.”

     

11. The case of Williams concerned, for the purposes of this case, an application for an s14 incidental order relating to pension sharing.The parties had, apparently, agreed a pension share in negotiations and had enshrined this in a Joint Minute.There was, however, no crave for a pension share and the parties overlooked this.A Minute for decree was lodged that sought decree as craved and not as per the Joint Minute. Divorce was granted and decree extracted. The error was detected and the pursuer attempted to recover her position.There were technical issues peculiar to pensions that need not concern us here but in relation to the s14 application the Sheriff held that the court was functus and followed Amin. Sheriff McSherry observed at page 6 paragraph 15:

    “ I would agree with counsel that the purpose of this section [s14] was not to correct omissions in the decree itself.”

     

12. Counsel for the defender submitted that the pursuers Minute fell squarely within the ambit of both Amin and Williams. The pursuer had an order under s8 of the Act for payment of a lump sum capital payment. Payment was postponed but interest would accrue. The existing incidental orders dealt with, amongst other things, the sale of the Broughty Ferry property. The s14 order did not link the sale of the Broughty Ferry property to payment of the capital sum. It simply ordered its sale and made provision for practical conveyancing matters.The Minute of Agreement, which did have provisions linking the sale of property to payment of the capital sum, was a contract between the parties and it falls to be enforced according to the remedies provided by the law of obligations. The court interponed authority to the Joint Minute not the Minute of Agreement.As in Amin where the wife sought a way to enforce a payment decree, the pursuer seeks here to invoke s14 of the 1985 Act to invite the court to interpret and enforce a discrete contract: not make an order expedient to give effect to an order made under the 1985 Act.

     

13. Counsel linked this submission with the general concept of res iudicata.The pursuer and the defender had been in dispute (in foro contentioso) in the divorce and certain property had been the subject matter of that dispute. The parties had reached an agreement on that dispute. The court had been invited to interpone authority to a Joint Minute and had granted orders which evacuated all the craves and pleas of the parties. The present Minute did not seek any order that was incidental to the courts existing orders; it was reopening the property dispute by taking the sale of the defenders property out of her hands and substituting a court directed and supervised sale as if it were still a disputed matrimonial asset. This was clearly res iudicata and should be refused.Finally, he drew my attention to the Rules of Court as they apply to this case and in particular OCR 33.51. The position was, as in Amin, that the pursuer’s Minute was not one of those listed in the Rule. Counsel invited me to draw the same conclusion, on the intention of the legislators, as that drawn by Sheriff Principal Bowen quoted above.

     

14. 14. Mr. Hunter, for the Pursuer, invited me to repel the defenders preliminary plea. In his submission the Minute sought an incidental order that was clearly ancillary to the order for financial provision under s.8 of the 1985 Act already pronounced. He referred to s.14 (k) which enables the court to make : “ an ancillary order which is expedient to give effect to the principles set out in section 9 of this Act or to any order made under section 8(2) of this Act”. He conceded that the Rules of Court, at OCR 33.51 did not make provision for his Minute but submitted that the rules did not override primary legislation. S.14 existed to provide certain incidental remedies and empowered the Court to do what was expedient to give effect to sections 8 and 9 of the Act. He sought to distinguish the decisions in Amin and Williams.In each of those cases the pursuer had omitted to seek any orders directed at the subject matter of their subsequent s14 applications. In Amin there was a simple payment order with no reference to property sale.In Williams the pension share was omitted by ordinary human error. In those cases there was nothing to link the s14 orders sought to any justiciable issue that had been live at the point of decree. In this case the parties had hotly disputed property rights. They had reached an agreement and entered into a Joint Minute. The decree recorded that, in addition to payment of a Capital Sum, there were to be various incidental or ancillary matters addressed including sale of property; conveyancing formalities; protective measures such as heritable securities and interdict against disposal of proceeds. These were all matters, which kept the issues between the parties alive, and the court was not functus.

     

15. The pursuer was entitled to bring the question of the sale of the property at Broughty Ferry before the court by way of Minute in terms of s.14.The matter was not res iudicata.S.14 provided a discrete mechanism for returning to the court after decree of divorce to resolve just such issues as the pursuers raises in his Minute. The pursuer accepted that the court must have a basis upon which to exercise discretion and a further hearing would be necessary but the Minute should not be dismissed as incompetent. Mr. Hunter referred me to the well-known decision of Jacques v Jacques 1995 SC 327.In that case the parties were at loggerheads as to the fate of the matrimonial home. The wife-pursuer sought the sale of the property to realise it’s full net value in cash whilst the husband -defender sought a transfer to him of the property (he ran a bed and breakfast business from it) in return for a balancing payment to the pursuer of £10,000.00.

     

16. The Sheriff was not persuaded by the defenders arguments and determined that no order for financial provision should be made in favour of either party. He declined to make any ancillary orders to direct or facilitate the sale. This, the learned sheriff opined, would leave them to sell the property in terms of the title deeds at common law. They would realise the full open market value of the property, whatever that might be, and share it equally. The parties lodged cross appeals.The full decision of the Inner House is not relevant here but Mr.Hunter noted that the Lord President (Hope) in delivering the Opinion of the Court observed that the learned Sheriff had erred in failing to consider and correctly apply s.14.Lord Hope states (at 331 F-I):

    “ We consider, however, that the Sheriff can reasonably be criticised for not granting decree.. [for ancillary orders under s14] to give effect to his decision that the net value of the matrimonial property be shared equally.........In our opinion it would have been competent for the sheriff to make the orders which were sought by the pursuer as incidental orders in terms of sec.14 (2)(a),(c) and (k) as an order for financial provision under s8 (2).”

     

    Lord Hope expands his reasoning (at 332 B-C) as follows:

    “We see no advantage, in that situation, in the Sheriff’s decision to leave it to the parties to resort to separate proceedings for a division or sale of the property if an agreed solution could not be worked out between them. It would be preferable for him to give effect to the pursuer’s crave for the necessary orders to be made in these proceedings to avoid further expense and delay in the working out of his decision that the property should be shared between the parties equally.”

     

     

17. 17. Mr. Hunter urged me to follow the Inner House’s reasoning in Jacques. The court was not functus nor was the dispute between the parties res iudicata. There was a dispute between the parties on incidental or ancillary matters arising from the courts existing orders. It was expedient to give effect to those orders by this court hearing and resolving that dispute. This was likely to avoid unnecessary expense and delay as approved of in Jacques.

     

    DISCUSSION AND OPINION

     

18. I echo the sentiments of Sheriff Principal Bowen in Amin, and regret that I am forced to rule in this matter at all.The dispute between the parties has been protracted, bitter and remains acrimonious. I can only express my dismay that individuals with such obvious business acumen seem determined to invest in litigation at every turn. However, that said, I prefer the submissions of counsel for the defender. In my opinion the Court is functus in this matter. I, therefore, do not, strictly, require to rule upon the question of res iudicata but as I am inclined to the view that the defenders submissions would equally prevail on that point I will indicate my view.

 19. I will deal first with counsel’s submission, following from Amin, that the Minute does not proceed under any relevant rule of Court. This is true. I would, however, not have been persuaded by that submission.  The Rules of Court are designed to facilitate and serve the ends of justice. They do not form part of our substantive law. This was amply demonstrated in the recent case of Murdoch v Murdoch 2012 SC 271 where the Inner House sanctioned a counterbalancing payment relating to heritable property in a divorce despite the lack of craves for ancillary orders.  Lord Bonomy, delivering the Opinion of the Court observes at paragraph 21:

“ It is also necessary to construe the Ordinary Cause Rules in accordance with the provisions of the 1985 Act. In our opinion the plain terms of primary legislation cannot be materially modified by rules of procedure drawn up to give effect to that primary legislation.”

The Rules of Court have also been amended, since the inception of this action, to provide for an application by Minute such as the pursuer has lodged here (see OCR 33.51(1)(v). There have been no amendments to the substantive law in this field to provoke such an amendment and it seems reasonable to deduce that the drafters were addressing a lacuna or at least a mismatch between the Rules of Court and the substantive law.  In any event, the absence of a facilitating rule does not seem to me to be determinative in any way.

20. I turn now to counsel’s primary submissions. The pursuer has an order for financial provision, in terms of s.8 of the 1995 Act, which takes the form of a single capital sum. It is not payable in instalments; it is deferred to a date. In light of the deferral the pursuer cannot enforce his decree until 2015. Until then, in terms of this court’s decree, the defender can choose to allow interest to accrue at the rate of 3% a year. In the event that she defaults after the date of deferral then the capital sum attracts interest at the full court rate of 8 % a year. In order to protect the pursuer’s position the decree orders the sale of certain property owned by the defender together with heritable securities and an interdict against disposal of funds. There is no mechanism, in terms of the decree, for either interim payments or for the transfer of any of the proceeds of the sale of the defender’s property to the pursuer. The financial provision that he sought and was granted was a capital sum payable no later than two years after the date of decree. The compensation that he sought and was granted for the consideration of deferral of payment is interest at 3%. The protective measures he sought and was granted were in the form of certain conveyancing formalities, heritable security and interdict.

21. The dispute between the parties does not arise from the decree of divorce: its terms are clear and un-impeached. The parties are at loggerheads over the proper interpretation of the terms of a separate Minute of Agreement they entered into as part of the negotiations that, no doubt, led to the Joint Minute, which forms the basis for decree. The detail of the dispute is set out in paragraphs 6 and 7 above.  I cannot see how that dispute can be said to be in any way incidental or ancillary to the courts orders in this case.  The capital sum does not fall due for payment until the deferral expires. There is no provision for interim payment either of capital or interest. The court was asked to provide some protective measures and these were granted and are in place. There was no suggestion that these measures were being breached.  This case does, to some degree, differ from both Amin and Williams but the underlying principles to be gleaned from those judgments still hit home here. In Amin the court was being asked to stray into the proper province of the law of enforcement of orders, which lawyers call diligence.  In this case , in my opinion, the pursuer invites the court to trespass on the law of obligations . In Williams the order sought was to rectify a mistake, whilst in this case the parties may have intended a certain result when negotiating their Minute of Agreement but perhaps that is not reflected in the deed by error?   These are not, in my view, matters incidental to the orders made by this court. The court is truly functus in this matter.

22. I come to same conclusion, if only as a cross check, if I approach this as a question of res iudicata. The classic test is set out in the decision of Sheriff (later Lord) MacPhail in McPhee v Heatherwick 1977 SLT (shct) 46 in these terms:

“The elements which are essential for a successful plea of res iudicata are these: there must have been an antecedent judicial decree of a competent tribunal, pronounced in foro contentioso between the same parties (or their authors) relative to the same subject-matter and proceeding on the same grounds”

The original justiciable issue between the parties here concerned what was matrimonial property, how it would be valued and how any such value should be shared?  The pursuer asked for s.14 incidental orders to deal with ancillary matters incidental to financial provision such as the sale of the property at Broughty Ferry and these were granted.

23. The defender was ordered to sell the property at Broughty Ferry. She says she has done so.  This is, in my view, the dispute that was resolved by the final decree. The pursuer does not allege that the defender has not sold the property per se. He challenges the underlying reality of the purported transaction and whether it will realise a fair market price or indeed, on one view, any cash at all. The pursuers present Minute seeks to address the fundamental issue of sale again but this time with a mechanism for regulating and enforcing that sale.  In my judgment it should be obvious to all that the nub of this dispute revolves around the correct interpretation of the Minute of Agreement. If the property at Broughty Ferry is, indeed, sold, within the meaning of that document, then that has consequences for the pursuer. He will, for example, be unable to trigger his claim for a payment of an interim sum, which is roughly equivalent to 12th months interest at three per cent on the capital sum, or force the sale of other property owned by the defender.

24. Equally, if the property at Broughty Ferry is sold for less than it might achieve, if marketed differently, then this may impact upon the defenders ability to pay the full capital sum and any accrued interest when it falls due for payment. However, it was no part of the divorce decree that the sale proceeds be paid to the pursuer at all. The financial provision, sought and ordered, is a capital payment with interest. The other orders are all incidental to that order. On the face of it the incidental orders all have the character of protective orders. It is, therefore, a matter for the defender whether she chooses to pay the capital sum (in full or part) before the due date or suffer interest at 3% per year. One might readily postulate a scenario where bank rates rise and she could invest the proceeds of sale of the property at say a couple of percent more than she is to pay the pursuer and make a modest gain. This was, surely, implicit in the settlement that the parties reached.

25. This, in my judgment, distinguishes the situation here with that addressed by the court in Jacques.  In that case the court considered that determining and regulating the sale of property would be likely to avoid unnecessary expense and delay. In my analysis of the actual dispute here there are no such attractive outcomes. In my view the facts demonstrate that the dispute between the parties here is one of contract and must be determined by application of the principles and jurisprudence of that subset of our legal system.  The purpose of incidental orders under s14 and particular s.14 (k) of the 1995 Act is: to give effect to the principles set out in section 9 of this Act or to any order made under section 8(2) of this Act. This dispute is about the interpretation and implementation of the terms of a private contract and will require examination of such discrete issues as the formation of the contract and whether it reflects the intention of the parties: was there a true meeting of minds? Do the words of the contract prevail or are there other documents which may shed light if relevant and admissible?  These are not concepts that sit comfortably within the jurisprudence of Family Law nor, in my opinion, should they.

26.  I, therefore, for the reasons set out above, hold that the Pursuers Minute is not competent and falls to be dismissed. The parties’ representatives were agreed that expenses should follow success and therefore these will fall to the defender who will be allowed to give in an account to be taxed by the Auditor of Court in due course.

    GA Way

   Sheriff of Tayside Central and Fife at Dundee