United Kingdom House of Lords Decisions

Lightbody or Jacques v. Jacques (Scotland) [1996] UKHL 2; [1997] 1 FLR 748; [1997] Fam Law 395 (21st November, 1996)

LORD MUSTILL

My Lords,

      I have had the advantage of reading in draft the speech of my noble and learned friend Lord Clyde. For the reasons he gives I would dismiss the appeal.

LORD JAUNCEY OF TULLICHETTLE

My Lords,

      I have had the advantage of reading in draft the speech of my noble and learned friend Lord Clyde with which I agree. I wish only to add a few general words of my own.

      In making an order for financial provision on divorce under section 8(2) of the Family Law (Scotland) Act 1985 the court is required by section 9(1)(a) to apply the principle that the net value of the matrimonial property should be shared fairly between the parties. Subsection 10(1) provides that such a result is achieved when it "is shared equally or in such other proportions as are justified by special circumstances." Section 10(6) provides that "special circumstances . . . may include" certain specified matters and events.

      The only point of principle argued by the appellant was to the effect that once the court of first instance had found to exist matters falling within the description of special circumstances in section 10(6) it was obliged to make an order under section 8(2) whereby the matrimonial property was, in terms of section 10(1), shared in proportions other than equally. The practical result of this submission would be that in the present case any transaction ordered to take place in relation to the matrimonial home would have to proceed upon the basis that the appellant was entitled to more than one half of the net value thereof.

      My lords this construction of section 10 cannot stand up to close analysis. Subsection (1) presupposes that only in the event of there being special circumstances justifying an unequal division should the matrimonial property be divided other than equally. The presumption is thus for equality. Subsection (6) by its use of the words "may include" rather than some such words as "must or shall include" recognises that the existence of one or more of the events specified in paragraph (a)--(e) does not automatically constitute special circumstances. It must be for the court of first instance in each case to determine whether an event specified in subsection (6) amounts to special circumstances in the case in question and if so whether it justifies a division in proportions other than equal. The provisions of subsection (6) give guidance to the court of first instance but they do not fetter its discretion in applying the principle set out in section (9)(1)(a). This is the approach which one would expect Parliament to have adopted in a field where individual cases vary so greatly, where legislation cannot reasonably provide for so many different eventualities and where the court which has heard the evidence is best equipped to deal with each situation as it arises.

      I find support for this view in Little v. Little 1990 S.L.T. 785 where the Lord President (Hope) after referring to the large amount of detail introduced by the Act of 1985 continued at 787B:

 "But despite all the detail much is still left to the discretion of the court. This is clear from an examination of section 8(2), which provides that the court shall make such order, if any, as is justified by the principles set out in section 9 and reasonable having regard to the resources of the parties. The concept of sharing the net value of the matrimonial property fairly, the flexibility which is given by the expression 'special circumstances' in section 10(6) and the repeated references in section 11 to all the other circumstances of the case serve to emphasise that, despite the detail, the matter is essentially one of discretion, aimed at achieving a fair and practicable result in accordance with common sense. It remains as important as it always has been that the details should be left in the hands of the court of first instance and not opened up for reconsideration on appeal."

In the opinion of the court in the present case the First Division once again emphasised that "the sharing of the matrimonial property between the parties on divorce is essentially a matter for the discretion of the court at first instance" (1995 S.L.T. 963 at 965G). I have no doubt that the foregoing dicta correctly state the law and that the appellant's argument runs directly counter thereto. I would accordingly dismiss the appeal.

LORD LLOYD OF BERWICK

My Lords,

      I have read the speech prepared by my noble and learned friend Lord Clyde and for the reasons he gives I, too, would dismiss the appeal.

LORD STEYN

My Lords,

      I have had the advantage of reading in draft the speech of my noble and learned friend Lord Clyde. For the reasons he gives I would dismiss the appeal.

LORD CLYDE

My Lords,

      In this action for divorce a dispute arose regarding what order if any for financial provision should be made under section 8 of the Family Law (Scotland) Act 1985. Section 8(1) of that Act provides for an application being made for one or more of certain orders. Section 8(2) provides that subject to certain later sections

 "the court shall make such order, if any, as is -

 (a) justified by the principles set out in section 9 of this Act; and

 (b) reasonable having regard to the resources of the parties."

      Section 9 sets out the principles to be applied by the court in deciding what order for financial provision, if any, to make. The first of these is "(a) the net value of the matrimonial property should be shared fairly between the parties to the marriage". Section 10 (1) states that:

 "In applying the principle set out in section 9(1)(a) of this Act, the net value of the matrimonial property shall be taken to be shared fairly between the parties to the marriage when it is shared equally or in such other proportions as are justified by special circumstances."

Subsection (2) provides that the net value of the matrimonial property is to be the value of the property at the relevant date after deduction of certain debts. Subsection (3) defines the expression "the relevant date" and subsection (4) provides that the expression "the matrimonial property" means "all the property belonging to the parties or either of them at the relevant date" subject to certain further qualifications which are not relevant to the present case. Subsection (6) provides:

 "In subsection (1) above 'special circumstances,' without prejudice to the generality of the words, may include--. . .

 (b) the source of the funds or assets used to acquire any of the matrimonial property where those funds or assets were not derived from the income or efforts of the parties during the marriage . . .

 (d) the nature of the matrimonial property, the use made of it (including use for business purposes or as a matrimonial home) and the extent to which it is reasonable to expect it to be realised or divided or used as security . . . "

      The major item of matrimonial property was a house at Millbank, Main Street, Glenluce, Wigtownshire, which had been the matrimonial home. It was purchased by the parties for £30,000. The source of the funds was the sale proceeds of a house which the parties had occupied together in Surbiton before their marriage on 10 January 1987 and for a short while thereafter. The title to that house had been solely in the husband's name. By agreement between the parties the title to the house at Millbank was taken in their joint names. The house at Millbank required certain repairs. These were financed from the balance of the Surbiton funds and by a loan from the Clydesdale Bank. The relevant date for the purposes of the statute is 10 September 1990 when the wife left the husband. The value of Millbank at that date was £55,000. There was £5,000 still outstanding of the loan. There were various items of matrimonial property other than the matrimonial home but not all of these were valued. The parties and the lower courts have concentrated solely on that major item, namely the matrimonial home. It is to be noted that section 10(4) defines "the matrimonial property" as "all the property" which satisfies the terms of that subsection but no question arises in the present case regarding the restriction of the dispute to the principal item alone.

      The sheriff refused to make any order. He considered that as the parties jointly owned the matrimonial home they could proceed to realise it on their own initiative in accordance with the normal law of property. Both parties appealed to the Court of Session. The husband principally argued that there were special circumstances to justify a departure from an equal sharing of the net value of the matrimonial property. The wife argued that the sheriff should have granted the order she sought, namely a declarator of the ownership of Millbank by the parties in equal shares, an order for the sale of that property and for any necessary ancillary orders. The First Division of the Court of Session, 1995 S.L.T. 963 refused the appeal by the husband and allowed the appeal by the wife granting her the declarator and the order for sale and remitting the case to the sheriff. That the sale price would carry with it any increase in value of the property between the relevant date and the date of sale is not a point of difficulty on the approach taken by the Court of Session. That problem arose in Wallis v. Wallis 1993 S.C.(H.L.) 49 but in that case a transfer order had been made and the question then arose regarding the quantification of the proper capital sum to be paid in return for the transfer.

      The husband has now appealed to this House claiming that because of the existence of special circumstances the division of the net value of the matrimonial home should not be in equal shares. As a matter of a construction of the statute his counsel argued that where there were special circumstances it was contrary to the Act of 1985 to divide the net value equally. If special circumstances were found to exist then an unequal division fell to be made and it was for the court then to decide what unequal proportions were justified.

      This argument does not appear to have been clearly focused in the earlier stages of this case and did not evidently feature with sufficient precision in the presentation there as to require the lower courts to discuss it. Having heard it I am not persuaded that it is sound. Section 10(1) of the Act gives direction on the meaning of fairness for the application of the principle set out in section 9(1)(a). It is not disputed that where there are no special circumstances an equal sharing of the net value will secure compliance with the principle of fairness. The words "special circumstances" do not have any technical meaning but refer to any circumstances which are special to the case. Section 10(6) gives illustrations of what may be included. But that subsection states expressly that the illustrations are given without prejudice to the generality of the words. Moreover in stating that the words "may" include the stated illustrations it is indicating that there is no necessary conclusion that any of the illustrations must require some unequal sharing. The final part of section 10(1) requires the court to consider if there are any circumstances special to the case which justify a departure from the general course of an equal division. If the matter is approached by a consideration of evidence it could be analysed in terms of a presumption for equality in the absence of any special circumstances justifying otherwise. As matter of construction it is sufficient to understand that in the ordinary course an equal division will be fair but that where there are special circumstances some unequal division may be justified. I find nothing in section 10 which requires an unequal division whenever special circumstances are found to exist. Counsel for the appellant suggested that an equal division might be held to be a justified conclusion where the special circumstances were of a minimal or negligible significance or where opposing special circumstances were found exactly to counter balance each other. But on a proper construction of the subsection it is not enough simply to identify some special circumstance in order to depart from an equal division. An unequal division must be justified by those circumstances. The court has the task of determining the proper apportionment where an unequal division is justified and that apportionment will be determined by what is justified by the special circumstances. But the earlier step of deciding whether any departure from equality should be made also involves the test of justification by the special circumstances. It is particularly in that respect that the appellant's construction is erroneous.

      Counsel for the appellant rehearsed before us the particular facts on which he founded as special circumstances, essentially the extent of the husband's contribution both to the purchase and the renovation of the matrimonial home, a matter falling under section 10(6)(b), and the use made and continuing to be made by the husband of the matrimonial home for a bed and breakfast business, a matter falling under section 10(6)(d). In so far as these matters relate to the argument that the existence of these special circumstances necessitate an unequal division they fall foul of the error in construction which I have already considered. Counsel argued that it was mistaken to have regard to the fact that by agreement the title to the property had been taken in joint names since an agreement was only relevant where it was an agreement to an unequal division and the illustration given at head (a) was given as a special circumstance requiring a departure from equality. I am not persuaded that head (a) is necessarily so limited since it refers to an agreement relating to "any" of the matrimonial property, but in any event it is plainly proper to have regard to all the circumstances in deciding whether there are circumstances special to the case which justify an unequal division of the net value of the matrimonial property. It was also argued that the sheriff had not dealt with the submission regarding the use of the property by the husband. Certainly while the sheriff records the making of that submission he does not express his conclusion with particular regard to it. But in these circumstances the First Division were in my view quite entitled to explore the point as they did and conclude that the matter was of little importance.

      It is not disputed that the Act of 1985 innovated on the earlier law in the field of financial provisions on divorce by imposing some restraints on what had been an unfettered discretion in the court. The statement of principles in section 9 by which under section 8(2)(a) any order must be justified together with the sections which follow upon those sections certainly impose some constraints on the court's discretion but some areas remain in the application of the principles for the court to exercise its own judgment on the facts of the particular case so as to achieve a fair result. But in the task of applying the Act and in the working out of the detail the matter must essentially be one for the judge who first hears the case. As the Lord President (Hope) said in Little v. Little, 1990 S.L.T. 785, 787:

 "It remains as important as it always has been that the details should be left in the hands of the court of first instance and not opened up for reconsideration on appeal."

      The appellant argued before us that even if he was mistaken in his construction of the Act the result which had been reached in the present case was manifestly inequitable. Looking at the circumstances as they have been presented to us I am not persuaded that there are any grounds sufficient to justify any interference with the view taken by the First Division. On this branch of the case the matters raised are points of detail and not of principle and it cannot be held that any error has been made so gross as to warrant any alteration being made. The order which has been pronounced by the First Division should be allowed to stand and the appeal should be dismissed.