MARGARET MARY McGEE OR SUDJIC OR CAMPBELL v. , 11 July 2008, Lord Carloway

[2] As the financial arrangements feature prominently, the background to these is usefully set out in limine. The pursuer, who had been struggling with her finances at the time of the marriage, moved, with at least two of her three sons, to live in the defender's house in Aberdeen. The defender gave the pursuer £5,000 to deal with her then current financial problems. She also, at the defender's request, kept the proceeds of sale (£23,000) from her house in Newport. Each party kept his and her own income and accounts. The defender paid for a housekeeper and a gardener. He paid all of the household expenses, apart from food. The pursuer usually paid for the food shopping, unless the defender happened to be with her. The defender, having consulted a friend on the appropriate amount, gave the pursuer £200 per week to pay for the food and related household items. This sum remained static for sixteen years of the marriage until it was increased to £300, when the pursuer stopped working altogether. She worked throughout most of the marriage and contributed her earnings from that and her capital to the general support of the family, including her three boys. At one point the pursuer had paid for a cleaner, but the defender took that expense on when she began to find that difficult. The pursuer had done some gardening but admitted to having become "scunnered" with it and stopped. She did do the cooking and was otherwise generally in supervisory charge of household matters.

[3] The defender took on the burden of paying the school fees for two of the children, although this did not last for very long given their ages. He assisted the older son to buy a flat at King Street, Aberdeen, by giving him £5,000 and paying the conveyancing fees. He helped with the children's finances, paying the accumulated debts of one son, and assisting to some extent when they became students (although the bulk of the support was through student loans). He contributed to the costs of two weddings. He stood in as guarantor to enable the younger son to buy a flat in Dundee. He bought another flat at 16 Panmure Place, Edinburgh, for the same son. This was shared by the son and the pursuer's nephew, who paid the defender rent.

(b) THE PURSUER'S ACCOUNT

[4] According to the pursuer, the marriage was initially a happy one. But the defender was not open with her about his finances. She described the move to Aberdeen as an uprooting, although it did not last long. Her youngest son experienced problems at the two schools to which he had been transferred (Robert Gordon's College and Cults Academy). The pursuer was acutely sensitive to this and decided that his request to return to the school where he had been prior to the marriage (Madras College, St Andrews) should be granted. The parties began to look for a home from which the son could travel to school and the defender could continue to operate his business in Aberdeen. This exercise culminated in the defender buying the house of friends of the parties (the Duffins) in Coupar Angus. The story behind that was that the parties were buying a lawnmower from the Duffins and had gone to collect it. When they did so, the defender and Mr Duffin reached an agreement for the purchase of the house whilst loading the lawnmower into the parties' car. The defender had not previously discussed the purchase with the pursuer. This house was Abbotsville, which remained the family home thereafter. The parties had lived in Aberdeen for only about a year and a half.

[5] The defender declined to operate a joint bank account with the pursuer, which caused her hurt because she felt that he did not trust her. He did not respect her opinions, except in relation to the refurbishment of properties, which the parties bought from time to time. All of these properties were put into the defender's sole name. Again, the pursuer took this as meaning that the defender did not trust her. The pursuer now, but not at the time, understood that the defender wanted his estate to go to his niece and nephew and not to her children. She knew that he had made two wills. The first had left her his estate in liferent with the fee to his heirs. The second (7/31), at her prompting, left her Abbotsville and its contents as well. Eventually, in August 2006, she asked the defender to put Abbotsville into joint names. He rebuffed this suggestion by swearing at the pursuer. The pursuer went for a drive to cool her temper. When she returned, she asked the defender to put at least one property into joint names. She suggested that the flat at Panmure Place might be a candidate for this. That property was put in joint names.

[6] In 2003, the defender announced that he was going to India with a friend, Hamish Shepherd. He told the pursuer that she was not going with him as the trip was not going to be a comfortable one. He told her that they were going to "rough it". The pursuer was upset at this, because she felt devalued. She explained that she could have roughed it too, having been a hippy in her youth. The defender left her with three cheques to deal with any problems which might have arisen during his absence. The defender and his friend had not roughed it in any event. The pursuer did not go on a second India trip, as she had not felt well enough to do so. She did go on a third trip.

[7] The pursuer attempted to resolve what she perceived to be the parties' difficulties by going to marriage counselling, but the defender would not go with her. She began to have panic attacks when driving, which she attributed to the defender's conduct. Her blood pressure increased. By the time of the separation, the parties had not been sleeping together for several months, yet the defender, according to the pursuer, appeared to think he was in a happy marriage, oblivious to its problems. In November 2006, the pursuer went away to Edinburgh for a long weekend. She decided to seek a divorce and instructed a summons, which was served on the defender on 13 November 2006.

[8] The pursuer said that she has struggled financially since the separation, having to sell assets to support herself. But she does have pensions from her former employment and interim aliment from the defender. She is presently renting accommodation in Perthshire but wishes to buy a house in central Edinburgh, where she has close relatives. She has been paid £100,000 as an interim capital payment, which is intact apart from legal fees.

[9] Margaret Gee, aged 55, a university lecturer and friend of the pursuer for thirty five years, gave evidence. Most of it seemed to be hearsay. She spoke of the pursuer as a strong and clever woman. Mrs Gee was in touch with the pursuer every fortnight or so during the marriage. She detected a change in the marriage coincident with a shift in the defender's attitude to the pursuer's sons (something not mentioned by the pursuer). She was able to speak to the pursuer's surprise at the way in which the family finances were regulated. The pursuer thought that the defender did not trust her because of the lack of sharing of a bank account and financial information. Mrs Gee regarded the pursuer as the person who organised the household and other aspects of making married life comfortable. The pursuer had been distressed over the defender deciding to go to India without her and over the decision to buy Abbotsville without consultation. She became stressed, depressed and her blood pressure increased. She had not been in that kind of state after her previous divorce.

[10] There was an Affidavit from Dorothy Duffin, who had known the pursuer for thirty five years. Most of this appears also to be hearsay, but it does reflect the pursuer's disillusionment with the marriage from an early stage. It states that the pursuer was finding it difficult to make ends meet during the marriage and that she was having to use some of her own money to support her children. She felt insecure in the absence of property being in her own name. Mrs Duffin confirmed the sale of her house to the defender without the pursuer being consulted. She supported the pursuer's evidence of the India trip being a blow to her self esteem and of the defender's conduct affecting her health, in the form of panic attacks. Mrs Duffin also confirmed that the defender had declined to attend marriage counselling.

(d) THE DEFENDER'S ACCOUNT

[11] The breakdown of the marriage came as a "total shock" to the defender, and had "astonished" his best man, David Dalgarno, a fellow pharmacist, who gave evidence. The defender had been awaiting the return of his wife from her weekend away in Edinburgh, when messengers-at-arms arrived to serve the divorce summons upon him. He described how he had supported the family over the years. He had paid the household expenses and paid the pursuer an allowance, which was increased when she had asked for that. He paid for a housekeeper and a gardener. He had moved to Coupar Angus to "save" the pursuer's son's education. He described family life at Abbotsville as "luxurious". He had even installed a swimming pool at the house, which is set in over an acre of garden. The pursuer had no household tasks to perform other than cooking.

[12] The defender said that he had trusted the pursuer. He had assisted her and her sons during the marriage, as outlined above, including the purchase of Panmure Place. This was put into the joint names of the parties when the pursuer agreed not to go on at the defender about putting other property into joint names. He had not put Abbotsville into joint names because, he thought, if anything happened to his wife, she would have left her share to her sons. He was a "name" at Lloyds until 1997 and any transfer of title might have been viewed suspiciously by Lloyds, were they to go against him for insured losses. The defender maintained that he had told the pursuer this. Furthermore, he wanted the bulk of his estate to go to his nephew and niece, although he had made provision for his wife in his will. He did not tell the pursuer that he did not plan to leave her children anything in his will, for fear of upsetting her.

[13] The defender had planned to go to India and "rough it" with Mr Shepherd, who had friends in Naipur. The pursuer had been upset when he had told her that she would not be accompanying him. The defender accepted that he had phrased matters badly. The defender said that the pursuer had never recovered her nervous health, which had been adversely affected by her previous divorce.

(e) CONCLUSIONS ON THE MERITS

[14] This was the pursuer's second marriage. She had a family moving rapidly towards adulthood. She expected the defender to take on the role of the major provider for herself and, at least to a significant extent, for her three sons. This was so even although she too would, and did, contribute to the family finances from her own earnings. Her former husband's role in the upbringing of the children was not explored at the proof. The pursuer no doubt also expected a degree of mutual co-operation and warmth in the relationship. Ultimately the pursuer's expectations were not achieved.

[15] The pursuer's attitude to money was perhaps more cavalier than the defender's more conservative and canny approach. The pursuer was in error in considering that there was anything insecure in the financial aspects of her relationship. Her desire to have the defender place funds into a joint account or put the title to property into joint names may have stemmed from a sense of insecurity, but the defender always had funds to provide for her and such evidence as there was to the effect that he was unwilling to do so was not convincing. He undoubtedly did provide for the defender. He gave her capital to meet her indebtedness at the time of the marriage and took her and her sons, or at least two of them, into his household. He spent considerable sums assisting at least two of the boys to set themselves up in flats. He provided them with some additional support. In purely financial terms, with one exception, the defender was not ungenerous. He paid all the household bills and employed a housekeeper and gardener.

[16] The problem does not seem to have stemmed from the net contribution made by the defender to the support of the pursuer and her sons in his household. Rather it was the way in which he provided that support. The defender had been a bachelor for many years and was, no doubt, used to spending his own money on his own expenses in his own way, without the need to consult with anyone else, especially a wife. Although there is no reason to question his motives, he appears to have proceeded along the same track after the marriage. He did not consult the pursuer on financial matters and approached the housekeeping allowance in a rather cold accounting or businesslike manner, rather than adopting a more flexible approach which the parties' finances were more than capable of supporting and which happy married relations may sometimes demand. His failure to increase the housekeeping allowance for sixteen years or so is the one area where his generosity did let him down, given the increase in the cost of living, which he had presumably noticed, over that period and the commensurate increase in the family wealth.

[17] Similar considerations apply to the issue of joint accounts and joint titles. There was no need for the parties to operate a joint account. The lack of a joint account in a marriage is hardly an unusual feature and cannot of itself be taken as an indicator of mistrust or lack of confidence. Parties to a marriage may arrange their finances in many satisfactory different ways without a joint account. The same applies to joint title. The reality in this marriage was that the pursuer's financial position was always going to be secure, without the pursuer having a joint title to any property. The defender is hardly the type of person who might have been expected to desert his wife and flee with his assets converted into untraceable cash. He was a respectable pharmacist of many years standing with a portfolio of heritable and moveable assets not immediately convertible into liquid funds. It is slightly surprising, with the pursuer's obvious intelligence, that she appears not to have had a reasonable grasp of this.

[18] Once again, the problem between the parties stemmed from the defender's somewhat hard headed or isolationist approach to his finances. He undoubtedly saw no need to consult the pursuer on such issues. The sudden purchase of Abbotsville was an extreme example of this. It must be unusual, although no doubt not unique, for one party to a marriage to buy a matrimonial home without prior consultation. The decision to go on holiday to India without the pursuer was another aspect of the defender's insensitivity. He might have justified his actions to the pursuer, but the sudden announcement of his solo departure on a foreign holiday was bound to cause the pursuer to feel devalued and unwanted.

[19] The defender's approach, although not intended to cause the pursuer distress, was one which, looked at objectively, was calculated to do so. It did so and the pursuer's health did deteriorate accordingly. Relations reached the stage when she could not reasonably have been expected to continue married life with the defender. The pursuer's position in this regard is supported by Mrs Gee and the affidavit from Mrs Duffin, both of whom appeared to have painted an accurate picture of the pursuer's married life and its effect upon her. Decree of divorce will accordingly be granted.

2. Financial Provision

(a) LEGISLATIVE FRAMEWORK

[20] Section 9 of the Family Law (Scotland) Act 1985 (c 37) sets out the principles to be applied when the Court is asked to make an order for financial provision on divorce. These include that:

"(a) the net value of the matrimonial property should be shared fairly...

(b) fair account should be taken of any economic advantage derived by either person from contributions by the other, and of any economic disadvantage suffered by either person in the interests of the other person or of the family".

"Economic advantage" is defined as including "gains in capital, in income and in earning capacity", and disadvantage is to be "construed accordingly". "Contributions" includes indirect and non-financial contributions and, in particular, any such contribution made by looking after the family home or caring for the family" (s 9(2)).

[21] Section 10 provides that sharing fairly means "equally or in such other proportions as are justified by special circumstances". The "matrimonial property" means all the property belonging to the parties at the relevant date which was acquired by them "(otherwise than by way of gift or succession from a third party)...during the marriage" (s 10(4)). "Special circumstances" may include:

"(6)(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 persons during the marriage".

There is then a presumption in favour of equal sharing unless special circumstances are found to exist. But even if they do, that does not mean that an unequal sharing ought to follow. As the pursuer submitted, the court has a discretion in that regard (Jacques v Jacques 1997 SC (HL) 20, Lord Clyde at 24; see eg Sweeney v Sweeney 2003 SLT 892 (successfully reclaimed on another matter), Lord Kingarth at paras 31-33). In applying 10(6)(b), there is a limit to how far it is appropriate to trace the sources of the matrimonial property (McCormick v McCormick 1994 SCLR 958, unreported on this point, Lord Marnoch at p 12).

[22] Section 11 provides that, in applying the principles in section 9, the court must have regard to the extent to which:

"(a) the economic advantages or disadvantages sustained by either person have been balanced by the economic advantages or disadvantages sustained by the other person, and

(b) any resulting imbalance has been or will be corrected by a sharing of the value of the matrimonial property".

(b) MATRIMONIAL PROPERTY

[23] It was agreed that the "relevant date" for the purposes of section 10(3) was 13 November 2006. It was also agreed that, at that date, the matrimonial property included the following:

	Defender	Pursuer	Joint
Heritage
(3F2) 16 Panmure Place, Edinburgh			170,000
Abbotsville, Coupar Angus	450,000
Ellenslea, Balbeggie	250,000
4 Grampian Road, Rosyth	80,000
2 Grampian Road, Rosyth (garage)	5,000
Red Cross Hall, Coupar Angus	33,000
Westwood, Lamlash	300,000
Crawford Back Cottage, Lamlash	90,000
St Anne's, Blairgowrie	350,000
Barochan Resevoir, Houston	5,000
1 Blairgowrie Road, Coupar Angus (half share)	50,000

Furnishings
Panmure Place			1,000
Abbotsville	47,250	2580
Westwood	2,000
St Annes	2,000

Pensions
Standard Life Policy 8087661	14,235
Standard Life Policy 8087662	14,235
Standard Life Policy 8087663	14,235
Standard Life Policy 8087664A-V	201,380
Abbey Life Policy 002038974	20,372
SPPA Pension		21,492
Standard Life Policy X23684278		20,733
Additional State Pension		15,250

Bank Accounts
Royal Bank of Scotland Account 00730565	28,678
Royal Bank of Scotland Account 00125696	5,085
Royal Bank of Scotland Treasury Reserve Account 50020080/30	952,983
Bradford & Bingley Account 044XA600007B		1,145
Halifax Instant Saver Account 01909102		2,361
Bank of Scotland Account 00305473		4,209

Shareholdings
Royal Dutch Shell plc @ £19.14	57
Marks & Spencer plc @ £7.015	70
Shell T & T plc 1713 shares @ £19.14	32,787
Axis-Shield plc -	20,800
MacFarlane Group plc - @ £0.31	69,750
Standard Life plc - 29,670 shares @ £2.575	85,301
RBS plc - 6,077 shares @ £18.74	113,883
Standard Life plc - 3832 shares @ £2.575		11,017
Axis-Shield - 3,500 shares @ £2.60		9,100

Rensburg Sheppards General PEP		15,110
BA 1250 ordinary 25p shares @ £4.6275	5,784
M & S - 1245 ordinary 25p shares @ £7.015	8,734
Cash	3,099
Further Sums		6980
Rensburg Sheppards ISA		16,208
Axis-Shield - 1950 shares @ £2.60	5,070
Cable & Wireless - 1500 shares @ £1.5875	2,381
Cash	225
Further cash	33

Other
Mercedes 230	20,000
Personalised number plate DC55	5,000
Range Rover - SP04VOD	25,000
Wine cellar	1,500
Jewellery		9315

Totals	3,314,927	135,500	171,000

The parties have a jointly owned timeshare at Cancun, Mexico, but it was agreed that this was to be sold and the proceeds divided without it being included as matrimonial property. There was a £106,500 loan to North Latch Developments Ltd by the defender, but the parties were agreed that this should be left out of account on the basis that any dividend payable from the liquidation of that company would be divided equally between the parties. The defender's business partner in this venture was one Kenny Hampton who, the pursuer thought, had ended up disappearing and being "bumped off" in London or Dublin! The defender ended up as a creditor to the company to the extent of about £106,000 with little prospect of recovery (6/126).

[24] There were a number of, relatively minor, areas of dispute to be resolved in relation to the valuation of matrimonial property as follows:

(i) Barochan Reservoir

[25] This is an interesting property at Houston, Renfrewshire, consisting primarily of a plot of ground on which there is a disused concrete water tank (6/51). The defender bought it at a contested auction in about July 2006 for £74,000. He said that he had discussed its development potential with an architect, although not with local planning officials. The defender applied for planning permission to build holiday chalets on it in October 2006. That was the status of the property at the "relevant date". The plot is in the green belt. Permission was refused by the local planning authority in March 2007 and again on appeal in August 2007 (6/118; 7/10). It is agreed, somewhat pessimistically, that the property is now worth only £5,000 because of the planning decisions. Alexander Carmichael, a surveyor with Allied Surveyors, Paisley, who had been instructed for the pursuer, nevertheless valued it at £74,000 (6/117) at the relevant date, having regard to the "hope value" of the plot at that time. He had regard to the fact that this is the price which the defender had paid for it a few months before. Mr Carmichael had valued a number of properties in the vicinity. Donald Yellowley, a surveyor with DM Hall, Bridge of Allan, instructed by the pursuer, considered the value to be £5,000 then, as well as now (6/52). Knowing the limited potential for development in the green belt, he did not consider that in November 2006 the plot had any "hope value". In reaching his view he accepted that he had ignored the price paid by the defender.

[26] The Barochan plot is reasonably valued at the relevant date at the price paid at auction by the defender only a few months before. He had been pushed to offer the £74,000 by other bidders and that sum represents the true open market value, being the price paid in just such a market. In this respect the approach of Mr Carmichael is to be preferred over that of Mr Yellowley, who ignored the actual price paid.

(ii) 1 Blairgowrie Road

[27] This house was worth £150,000 (6/54), but the defender only owned a one half share. He had paid for that share in order to assist Mr and Mrs Cameron, his housekeeper and gardener, to buy a house. There is a somewhat intricate Minute of Agreement regulating ownership (7/16). This stipulates that the defender can realise his interest only: (i) when the survivor of Mr and Mrs Cameron dies (they are in their fifties); (ii) if the Camerons cease to occupy it; or (iii) in ten years time (from 2006). Because of these restrictions, Richard Lennon, a surveyor with DM Hall, Perth, instructed by the pursuer, valued the defender's share at £50,000. This seems to be a reasonable estimate of the value given that the defender has tied up his half share (£75,000) for a period of ten years without the benefit of any rent or interest. There must be some discount applied, unless it were demonstrated (which it was not) that the capital value of the share would appreciate beyond the rate of inflation. There was no competing level of discount and, even if Mr Lennon was, as he said he was, taking a stab in the dark, his aim was an experienced and qualified one.

(iii) Shares

[28] The pursuer valued these at £325,322 in total. Ultimately the dispute centred upon the number of Macfarlane Group shares. These had been partly bought by the defender and partly inherited from his mother. The correct figure for the shares bought by the defender is the defender's one of 225,000 shares; the total holding being 297,375 of which 72,375 were inherited (6/76). The correct value is then £69,750, bringing the total of the defender's shares to £322,648.

(iv) East Redstone Antiques

[29] After the sale of the pharmacy, the parties became involved in an antiques business along with Mr Shepherd, whom the defender had met by chance in the context of furniture renovation. Mr Shepherd purported to have a degree of expertise in the antiques trade. The operation involved the conversion of an old farm steading or barn, belonging to the local farmer (Mr Morrison), into a shop from which the antiques could be sold. The defender's interest in the business was valued for the pursuer by Greig Rowand CA of Messrs Henderson Loggie (report 6/130). The steading had been renovated over a period of about a year from September 2005 at considerable expense, with the defender introducing £178,000 into the business to allow this to take place. Trading commenced in about August 2006. Thereafter the business made a small loss over the next eighteen months (accounts 6/124) before Mr Shepherd resigned from the firm in March 2007. He had a disagreement with the defender and appears effectively to have walked out of the business to travel in Spain and France. There does not seem to be any prospect of recovering any money from him. Mr Shepherd left several bills unpaid and the defender thought that he was now sequestrated. The antiques business generally is not at all buoyant.

[30] Mr Rowand considered, no doubt correctly, that only an assets valuation was appropriate, given the absence of profit. There were essentially two potentially significant assets to be valued. The first was the stock and the second was the firm's interest in the steading. The accounts, which were signed by the defender in January 2008, show the stock in March 2006 as worth £68,000 and at March 2007 as £85,000. The defender contended that these had been overestimates and that the figures must have been created by the accountants from receipts. He would have discussed the figures with the accountants but would not himself have estimated the value of stock. The defender produced a valuation by Lindsay Burns & Co., auctioneers, as at January 2008 of only about £43,000. It was agreed that, as at 8 January 2008, the stock in the business of East Redstone Antiques was worth £42,808. The relevant date is, of course, in November 2006.

[31] As at the date of the proof, there was no executed written lease in existence in respect of the shop. Were no lease to exist at all, the firm's interest in the heritable property would be valued at very little, if anything. However, as Mr Rowand commented in his report (para 3.5):

"It seems odd...that an experienced businessman such as [the defender] who has operated a pharmacy business from leased premises for a number of years would commit expenditure of £178,000 which appears to be irrecoverable from the point of expenditure. This does not seem to make commercial sense. I also note that both [the defender] and the accountants to the Business appear to have considered that there was no need to write off the costs of this expenditure (as irrecoverable) in the 2007 accounts".

The defender said that he had an oral arrangement with the farmer whereby he was to receive the first two years of occupation rent free, being from either the date of entry to renovate or that of the commencement of trading. Thereafter the firm was to occupy the premises at a "peppercorn" rent for a number of years. The peppercorn turned out to be about £1,500 per annum and the period to be at least five years. There was now a draft lease in existence but a dispute remained over the defender obtaining a right of pre-emption over the shop in the event of the farmer wishing to sell his farm.

[32] Mr Rowand valued the defender's interest in the business on two bases; one with a lease being in place and one without. Although the terms of the hypothetical lease were not explored, he proceeded on the basis that the whole cost of the renovations could be regarded as an asset or as representing the value of the leasehold interest. The second scenario was on the assumption that the renovation costs would have to be written off, but Mr Rowand took into account that Mr Shepherd would have to bear his share of the write-off in capital terms. That will not happen. In each scenario, Mr Rowand took as his starting point the capital value of the defender's interest as expressed in the capital accounts as at April 2006. This was largely stock (£68,000 out of £73,172). To this he added the renovation costs, although accepting that the cost did not necessarily translate into value. The range of the two bases was £187,940 to £277,142.

[33] John Gellatly CA of Miller, McIntyre & Gellatly was instructed on behalf of the defender to comment on the entry of the renovation figure in the accounts. He stressed the absence of a written lease in valuing the renovation as "fairly close to zero" (7/4). Even if there were a lease, the cost did not equate to value. He had not been asked to value the business or its stock, nor was he an expert in property valuation.

[34] When valuing the defender's interest in the business, it is reasonable to proceed on the basis that the only potentially significant assets were its stock and its interest in the heritage. The defender was content to sign the stock figures as accurate and, in these circumstances, they ought to be accepted as such rather than a figure calculated over a year after the relevant date. The approach of Mr Rowand, in taking the March 2006 stock figure, is therefore adopted as a starting point. The defender appears to have an agreement with the farmer to lease the steading for a period of at least five years beyond an initial two year period. The rent is far less than might be expected for such a renovated property. This is no doubt why the defender elected to invest such a large sum in the renovations. The lease must be worth a substantial amount, but there is a great deal of force in the submission that it is unlikely to equate to the full cost of the renovations. There was no evidence of just what the value of the lease might be. Taking a broad axe, a value of £100,000 will be taken as a reasonable estimate. This, plus the stock and the other bits and pieces in the accounts, would add up to an asset value of perhaps £175,000 or thereby. Since the whole of the capital appears to have been introduced by the defender, as distinct from Mr Shepherd, it seems reasonable to take the whole of this figure as representing the defender's interest in the firm at the relevant date. Mr Shepherd does not appear to have thought that he was entitled to a share of the capital, when he deserted the firm a few months after the relevant date.

(v) Debts

[35] There were three debts which the defender said existed at the relevant date. The first is in the form of a credit card indebtedness of about £500 (6/103). The second is the alleged negative value of a yacht "Snoopy" which sits in the defender's garden. The defender paid over £6,000 for the boat but, he claimed, it was worthless and would require expenditure of £3,000 to dispose of it (7/38). The pursuer objected to the evidence on these matters in the absence of either being put to the pursuer in cross-examination. However, there was no need to do so in the absence of any indication that the pursuer would have had any input into their existence. There were averments on record about them and, if the pursuer had wished to contradict these averments, she could have done so in her evidence-in-chief. The objection is accordingly repelled. The credit card amount has been vouched. However, given the price paid by the defender for the yacht, I do not accept that it has a negative value. It could be disposed of for at least a "nil" value.

[36] The third debt is a loss said to have been made on the construction of four houses at the Beehive, Wormit. The defender said that he had made a loss on this project, in which each house has been sold for about £175,000. The defender said that the arrangement had been to share the profits with the architect, although he seemed unclear on what the shares were to be. The architect had not done a competent job and had walked away from the project leaving the defender to pay the builders, who had proceeded to two successful adjudications. He had been required to pay out over £100,000 to make good defects in the houses, of which about £25,000 was outstanding as at the relevant date (see 7/25 and 42). He was pressed on whether he could sue the architect and/or builder in respect of the defects, but said that he had been advised that success would be hard to achieve. He did not want to lose again and be liable for further legal fees.

[37] Thomas Taylor, a quantity surveyor trading as Burns & Taylor, construction consultants, Dunfermline, had been engaged by the defender after the unsuccessful adjudications to extract him from the project's problems. He confirmed the exposure figures noted above. The defender's liability existed in terms of an agreement with the Zurich insurance group, which is in similar terms to new build guarantees from the National House Builders Council. Mr Taylor considered that, having regard to the nature of the defects, any litigation with the architect or the builders would be "very long" and the prospect of recovery "very limited".

[38] The defender has vouched liabilities of about £25,000 existing at the relevant date and these ought to be taken into account in assessing the matrimonial property. The view taken by the defender, that it would be too risky from a financial point of view to attempt to recover these by court action, seems entirely reasonable, given the amount involved, his past adjudication experience and the vagaries of litigation.

[39] The matrimonial property agreed by the parties should accordingly be: (i) increased by £69,000 in respect of the Barochan reservoir; and (ii) £175,000 for Redstone Antiques. It should be decreased by (i) the £500 credit card indebtedness and (ii) the £25,000 Beehive liability. The agreed minimum total of £3,621,427 is increased to, in broad terms, £3,840,000. I determine that to be the matrimonial property at the relevant date.

[40] The defender produced a schedule of his assets at the time of the marriage (7/39). This was broadly as follows:

1. Pharmacy Business Goodwill - per valuation	650,000
Net assets - per accounts	256,596
7 Lintmill Terrace - per accounts	17,000
Fixtures and fittings at 7 Lintmill Terrace- per accounts	1,900
Motor vehicles - per accounts	5,250
2. Standard Life Endowment Policies	26,700
3. Properties (a) 11 Queens Gardens, Aberdeen - purchased 1972 £5,600 - sold 1998	100,000
(b) 689 George Street, Aberdeen - purchased 1980 £15,750 - sold 1991	55,000
(c) 5A Rubislaw Den North, Aberdeen - purchased 1978 £33,005 - sold 1992	225,000
(d) 5B Rubislaw Den North, Aberdeen - gift by mother 1972 - sold 1992	140,000
4. Shares in FHHCP (Forrester Hill Health Centre Pharmacy) Limited	33,000
5. Range Rover Vogue - purchased 1985	5,000
6. Maserati Biturbo Coupe - purchased 1989	23,500
7. Lloyds Interest	250,197

TOTAL	1,789,143

[41] The valuation of the goodwill of the pharmacy at £650,000 in 1990 came from Duncan Heap, a specialist in that field (7/5). His method was to assess the "super net profit" of the business by looking at the relevant accounts and building in an additional cost for the employment of a manager or locum, if that were necessary. In the defender's case, there was already a sufficiently high wage bill to take care of such a cost. He then took the net profit of the business (£46,411, per accounts to 31 March 1990, 7/7) and added back the bank interest charges (£34,524), the depreciation figure (£7,498) and the sum of the FHHCP dividends (£2,568). Mr Heap also erroneously added in the "Lloyd's Syndicate" income mentioned in the accounts (£17,279), having misunderstood its nature. He arrived at a super net profit figure of £108,280. This he multiplied by six to find the correct estimated valuation of the goodwill in 1990. The correct figure ought to have been £91,001, which can be multiplied by six to produce £546,000. "Six" was appropriate at the time, although in 2004 the pursuer's business would have justified a higher multiplier because of the increase in the number of outlets sold. The shares in FHHCP Ltd were sold in February 2002 for cash and loan notes totalling about £41,000 (7/46). The valuation in the schedule seems not unreasonable. On the other hand, the Lloyd's figure is double counting as it includes the defender's other property.

[42] Adjusting the schedule, which was not disputed to any other material degree by the pursuer, to take into account the errors in the valuation of the goodwill and the inclusion of the Lloyd's figure, a sum of about £1,435,000 is brought out as the defender's capital at the time of the marriage. In order to determine how that compares with the matrimonial property, this sum ought to be adjusted for inflation (using, for example, the Retail Price Index over time as a measure). If that exercise were carried out, to produce its relative value at the relevant date, a figure of at least £2,325,000 is reached. In short, at the time of the parties' marriage, the defender already had very substantial funds constituting well over one half of what ultimately became matrimonial property. Notably, there were the properties in Aberdeen which, in due course, would, in part, be converted into the matrimonial home in Coupar Angus, and, of greatest significance, the pharmacy business.

[43] One point of debate was whether the business sold in 2004 could be regarded as the same as the business which the defender had at the start of the marriage. The business was sold in 2004 for £3,209,770 (although £250,000 was paid thereafter in capital transfer tax) (7/40). The sale price of the pharmacy business was made up almost entirely of goodwill (over £3M of the total). There is no doubt that the business had grown significantly over the years of the marriage, as it had prior thereto. The defender had started from modest beginnings at 7 Lintmill Terrace in 1972. Three years later, he doubled the size of the premises by acquiring 3 Lintmill Terrace. He enjoyed his work. He was a hard worker, being in the shop seven days a week. He later acquired 689 George Street, upgrading it in 1986 to the larger 695 George Street, which he operated under management. The businesses were particularly successful because the defender secured the Domiciliary Oxygen Service contract and looked after the pharmacy requirements of several Old Folks and Nursing Homes. At the time of the marriage, the defender was trading from George Street and Lintmill Terrace, turning over almost £716,000 per annum to produce a net profit of over £46,000. The pursuer reduced his working hours after the marriage; ceasing to work on Sundays. After the move to Coupar Angus, he reduced his hours to four days per week; hiring a locum for the other two. But the driving, coupled with the hours, became too much for him. He twice fell asleep on his way home and eventually decided to put all the pharmacies under management. By then, he had acquired a third pharmacy. He had bought a small shop in King Street but its ultimate value was in the transfer of its licence in 1999 to premises at the City Hospital. By the time of the sale, the defender was trading from all three pharmacies: George Street; Byron Square (a direct substitute for Lintmill); and the City Hospital. He was turning over £4.2M producing a net profit of over £333,000. The City Hospital pharmacy accounted for £1.3M of the sales. Its value must have accounted for slightly less than one third of the final sale price.

[44] The pharmacy business sold in 2004 was the same business which the defender had at the time of the marriage. He had added a further shop, which he had spotted as a sound business opportunity, but he would have done this whether or not he had been married. After the sale of the pharmacy, the defender re-invested the proceeds in much of what became matrimonial property, including as follows (7/40):

Investment in RBS Treasury Reserve a/c	952,993.00
Price and costs of 16 Panmure Place	157,537.25
Price and costs of Ellenslea, Balbeggie	143,500.38
Price and costs of Red Cross Hall	31,219.59
Price and costs of Westwood	296,883.35
Price and costs of Crawford Back Cottage	80,734.12
Price and costs of Barochan Reservoir	67,622.58
Price and costs of 1 Blairgowrie Road	76,453.31
Price and costs of St Anne's	336,122.50
Share Purchases 6000 RBS Ord Shares	100,883.34
East Redstone Antiques	213,095.00
	2,457,044.42

Having regard to the source of the matrimonial property having been, in very large measure, assets which the defender had at the date of the marriage, there are "special circumstances" which justify a departure from the principle of sharing fairly being an equal division of the matrimonial property.

(d) CONTRIBUTIONS AND ADVANTAGES

[45] It is perhaps stating the obvious that this was not a marriage where one of the parties was able to develop a lucrative career at the expense of the other, who either looked after the home or the children or both. Both parties entered upon the marriage when they both had well developed careers. They both continued with these careers. The pursuer was not disadvantaged in any way in that regard. As has already been noted, she was considerably advantaged by the marriage in financial terms, as were her sons (although I do not regard the latter as relevant or material) in relation to her increased standard of living and extraction from her pre-marriage financial difficulties.

[46] The defender's friend, Mr Dalgarno, described the defender as having been a highly motivated businessman who would have spent more time developing the pharmacies had he not married. This is undoubtedly correct. The defender was a very hard working pharmacist. However, having married the pursuer, he did make substantial sacrifices in relation to the development of his business, principally because of the move to Coupar Angus for the sake of the pursuer's youngest child's education. The defender had planned to continue work until aged 70 and he would have done so. Not surprisingly, he found the effort of operating from Coupar Angus too strenuous and tiring and eventually retired prematurely at the age of 60. If there were a financial disadvantage arising from the marriage it was to the defender, who ultimately sold his business (possibly at undervalue, according to Mr Heap) and retired early. However, this disadvantage has not been deemed sufficiently material as to require an adjustment in the eventual division of the matrimonial property, although it certainly more than balances any contribution (infra) by the pursuer to the business or the family finances.

[47] The pursuer did assist in hosting three parties for the pharmacy staff. Otherwise, she had no direct involvement in the running of the defender's pharmacy business. However, she did have some input into the defender's attempts to obtain a consent on appeal for a transfer of the pharmacy at King Street. This had not succeeded. She also prepared the brochure for the transfer of the pharmacy to the City Hospital. The defender described this as producing half a dozen brochures in a situation where the transfer was a "certainty". The pursuer's contribution to the success of the defender's business was minimal. He would have obtained the transfer to the City Hospital without the pursuer's input.

[48] The pursuer maintained that she had assisted in the design of the converted steading for East Redstone Antiques and on antiques to buy at auction (which the defender denied). She was offered a partnership in this business, the defender leaving a partnership agreement on the kitchen table for her consideration. She declined as she "could not be bothered" as she had formed the view (probably correctly) that her husband did not want her to be a partner. The pursuer was retired by the time of this whole venture. She did make some contribution to it but, of course, whether any profit will ever derive from her efforts is unknown. It seems unlikely.

[49] The parties acquired properties for development. One was Beechhill House. The pursuer said that she had been involved in the decision to buy it and organised and assisted in it being cleared. Another was the Rectory, bought in 1992. The pursuer said that she had been involved in its refurbishment and in the preparation of the sale brochure. The defender accepted that the pursuer did have some involvement with these properties. He said he paid her £2,000 for her work on the Rectory, although she disputed this. There was also the Beehive. The pursuer again had an input into the house designs and the sale brochures. Mrs Gee was able to confirm the latter. The defender did not dispute that she had some involvement but, as already noted, the Beehive has been a problematic development.

[50] It is accepted that the pursuer had some involvement in assisting with the property development. Again, in relative terms, her contributions in this regard were minimal in so far as adding to the parties' finances. Any contributions which the pursuer made either in her efforts to assist the defender or financially through her earnings were more than set off by the defender's contributions to her support during the marriage.

(e) RESOURCES

[51] The defender produced a schedule of his current resources (7/51) showing: heritable property at £1,770,500; contents at £50,000; pensions worth £264,907; cash in the bank at £185,087; miscellaneous items including Redstone stock and motor vehicles at £100,308; and shares valued at £860,000. The total was £3,230,802, much of which constitutes the current state of the re-investment of the pharmacy sale proceeds.

(f) GENERAL SUBMISSIONS

[52] The pursuer sought a capital sum of amounting to one half of the matrimonial property, including a transfer of the defender's one half share in the flat at Panmure Place, but under deduction of the interim payment of £100,000 and the property she already had. This was notwithstanding the capital which the defender had at the commencement of the marriage. It was maintained that the pursuer had made a significant contribution to the pharmacy and the development of the properties. It was also maintained that the defender had not suffered any economic disadvantage in moving to Coupar Angus and had made no significant contribution to the pursuer's sons. Taking all matters into account, equal sharing was the appropriate result.

[53] The defender maintained that, having regard to the source of the funds or assets, special circumstances existed to justify an unequal sharing of the matrimonial property. He submitted that any contributions made by the pursuer were heavily outweighed by those of the defender, especially in terms of the pharmacy business existing at the time of the marriage and built up by the defender since then. The pursuer had gained substantially in economic terms through the efforts of the defender in paying for the household expenses and contributing towards her sons' finances. The pursuer had not contributed to the wealth of the matrimonial property nor had she been the homemaker, permitting the defender to go out and earn money from a sound home base. In relation to apportionment, he suggested that at least two thirds of the value of the business ought to be deducted prior to calculating the matrimonial property for division. Alternatively, the value of the business at the commencement of the marriage ought to be deducted. He accepted that apportionment was not a strict accounting exercise. Ultimately by a series of permutations, he submitted that somewhere between £800,000 and £1,000,000 might be appropriate, assuming that no transfer of Panmure Place took place.

(g) CAPITAL SUM

[54] The special circumstances set out above lead to the conclusion that equal sharing of the matrimonial property would not be fair. Having regard to the value of the defender's pre-marriage assets, which provided a significant source of the funds for what became matrimonial property, the defender appears to be being excessively generous in his assessment of fairness. In all the circumstances, but notably having regard the defender's pre-marriage capital, a fair apportionment of the matrimonial property is: one quarter to the pursuer and three quarters to the defender. The effect of this is that the pursuer should obtain £960,000 of the total property. She already has £135,500 of this in her own name. She has the interim payment of £100,000. She has one half of the flat and the contents at Panmure Place at a value (at the relevant date) of £85,500. She is to have transferred to her (this not being opposed) the value of the other half of the flat and contents, being worth £93,000 at the date of transfer (see s 10(3A) of the 1985 Act). These sums will be deducted from the total to produce a balance for capital payment of £546,000.

[55] I will accordingly sustain the pursuer's first plea-in-law, repel the defender's first plea-in-law and grant decree of divorce. I will sustain the pursuer's second plea-in-law to the extent of granting decree for the transfer of Panmure Place to the pursuer in terms of the fifth conclusion and for payment of a capital sum of £546,000. I will refuse the third conclusion, which was not insisted upon. There will also be certification of the persons in the appendix as skilled persons reasonably instructed in the cause.

SKILLED WITNESS :

Pursuer : Richard Lennon

Greig Rowand

Alexander Carmichael

Neil Bennie

Ruby Ashworth

Iain Swayne

Mr McHugh

Lindsay Burns

Timothy Hardie

Defender:

John Gellatly

Duncan Heap

Donald Yellowley

Tom Taylor

Kevin Williams