ANDREW JACK AGAINST ISOBEL MARGARET MARSHALL OR JACK
OUTER HOUSE, COURT OF SESSION
[2015] CSOH 91
F83/14
OPINION OF LORD BRAILSFORD
In the cause
ANDREW JACK
Pursuer;
against
ISOBEL MARGARET MARSHALL or JACK
Defender:
Pursuer: Innes; Morton Fraser LLP
Defender: Halley; T C Young LLP
14 July 2015
[1] In this action the pursuer sought decree of divorce from the defender in respect that the parties’ marriage had broken down irretrievably as a result of non-cohabitation for two years or more and for transfer to him by the defender of her interest in the firm of Andrew Jack Farmers. The defender did not oppose granting of decree of divorce but sought a capital sum of £1,164,285 and periodical allowance of £2,000 per month for a period of three years from the date of decree of divorce or for such other period as the court considered appropriate. On record the defender also sought an order transferring the pursuer’s whole heritable title to and interest in subjects known as and forming the farmhouse and surrounding garden ground extending to one acre or thereby at Torbanehill Mains Farm, Bathgate to her. This conclusion was expressly departed from by counsel for the defender in his submissions following proof.
[2] The parties were married on 22 January 1972. There are four children of the marriage but they are all over the age of 16 years. The parties lived together until 9 November 2011 when they separated. They have not lived together as husband and wife since that date. It was clear that the marriage had broken down irretrievably.
[3] Turning to the evidence there were, helpfully, a Joint Minute of Admissions and Supplementary Joint Minute of Admissions agreed by parties. For convenience and clarity I simply record these agreements in this opinion.
Joint Minute of Admissions
“1 The parties were married at Bathgate on 22nd January 1972. There are no children of their marriage under the age of 16 years.
2. The relevant date for the purposes of section 10(3) of the Family Law (Scotland) Act 1985 is 9th November 2011.
Matrimonial property
3. As at the relevant date, the parties’ matrimonial property included:
a. The Defender’s interest in the firm of Andrew Jack.
b. An area of land extending to 6.1 hectares at Torebanehill Mains Farm registered at Title Number WLN 4450 in the name of the Pursuer. It was acquired by him for the sum of £15 from Ibstock Bricks (1996) Limited on 5th April 2002. A copy of the disposition is lodged at 6/24. A copy of the land certificate is lodged at 6/23. It had a value of £37,000 as at the relevant date (6/25).
c. The minerals registered under Title Number WLN 42659 in the name of the Pursuer with a value of £500 as at the relevant date (6/25). A copy of the land certificate is lodged at 6/22.
d. Standard Life policies in the joint names of the parties, namely (i) plan number . . . . . . , with a surrender value of £7,181.90 and (ii) plan number . . . . . . with a surrender value of £11,992.35 (6/36).
e. The parties’ bank accounts, namely:
i. The Defender’s Royal Bank of Scotland account numbers . . . . and Santander savings account number . . . . . with a balance of £1,484.16 as at the relevant date (7/40).
ii. The parties’ joint Royal Bank of Scotland account number . . . . . with a balance of £263.82. (6/35)
f. Investments in the name of the Pursuer, namely:
i. M & S cash ISA, reference number . . . . . . . . , with a value of £9,319.88 (6/37).
ii. NPI endowment with profit policy number . . . . , with a value of £6,587.60 (6/38).
iii. NS &I Direct ISA, account number . . . . . , with a value of £3,471.89 (6/44).
g. The Pursuer’s pensions, namely:
i. NPI personal pension plan number . . . . . . . . , with a cash equivalent transfer value of £10,561.78 (6/39).
ii. Aviva PPP Vista 1988 (Individual) policy number . . . . . . . , with a cash equivalent transfer value of £11,074.86 (6/40).
iii. Aviva PPP Vista 1988 (Contracted Out DWP) policy . . . . . , with a cash equivalent transfer value of £7,241.27 (6/41).
Disputed assets held by the parties as at the relevant date
4. The Pursuer’s interest in the firm of Andrew Jack.
5. As at the relevant date, the Pursuer owned land at Torbanehill in addition to the land and minerals referred to at paragraph 3(b) and (c) above. That land consisted of:
a. 200 hectares at Torebanehill referred to in the disposition by the Pursuer’s father to the Pursuer dated 2nd October 1997 and registered in the General Register of Sasines for the County of West Lothian. A copy of the said disposition is lodged at 6/27 of process.
b 6.8 hectares transferred to the Pursuer by his father in October 1997 and held under title number WLN 5035. A copy of the land certificate is lodged at 6/33 of process.
c. 22.26 hectares referred to in the disposition by the Pursuer’s father to the Pursuer dated 17th October 2001 and registered in the General Register of Sasines for the County of West Lothian. A copy of the said disposition is lodged at 6/30 of process.
6. As at the relevant date, the Defender held the following investments:
a. M & S Cash ISAs, namely a Fixed Rate Savings Issue 9 3 year of £5,517.90 as at 5th March 2012 and a Fixed Rate Savings Issue 11 3 year of £11,562.31 as at 28th March 2012.
b. NS & I ISA with a balance of £464.90 as at the relevant date.
c. CIS ISA with a value of £8,318.74 as at 5th October 2011.
d. Shares in a portfolio managed by Brewin Dolphin with a value of £118,183 as at 1st February 2012.
e. National Savings certificates with a value of £3,555 as at the relevant date.
f. Premium bonds of at least £300.
The Defender’s inheritance
7. During the course of the marriage, on 13th February 1989, the Defender inherited a sum of £30,000 in cash from the estate of her late great uncle. (7/20 and 21).
Valuation of livestock, machinery and single farm payment
8. The valuations of livestock, machinery and the single farm payment prepared by Primrose Beaton, Auctioneer and Valuer, United Auctions (number 2 on the Pursuer’s list of witnesses) as at 30th November 2011 lodged at 6/20 of process and as at 4th April 2014 lodged at 6/49 of process shall be taken as the evidence of its author.
Boghall Farm
9. Boghall Farm is owned by the Pursuer’s mother, Jemima Jamieson Dunbar or Jack. It was conveyed to her by her husband, the Pursuer’s father by virtue of disposition dated 11th November 1997 and recorded in the General Register of Sasines for the County of West Lothian on 24th November 1997. A copy of the search sheet relative to the said title is lodged a 6/34.
Resources
10. The Standard Life policies in the joint names of the parties, namely (i) plan number . . . . . . , had a value of £9,306.70 as at 10th December 2014 (7/13) and (ii) plan number . . . . . . . had a surrender value of £16,060.15 as at 1st February 2014 (7/15).
11. The Defender’s resources include:
a. £40,913.85 in her Royal Bank of Scotland account number . . . . . as at 2nd February 2015 (7/39).
b. £202.18 in her Royal Bank of Scotland account number . . . . . as at 2nd February 2015 (7/37).
c. £1,507.75 in her Santander account as at 2nd April 2014.
d. M & S Cash ISAs with a total value of £18,230.45 as at 7th April 2014 (7/25(2)).
e. NS & I ISA with a balance of £512.46 as at 18th February 2015 (7/27)
f. CIS ISA with a value of £13,418.39 as at 5th October 2014 (7/33).
g. Shares in a portfolio managed by Brewin Dolphin with a value of £141,934 as at 1st January 2015 (7/35)
h. National Savings certificates with a value of £1,324.93 as at 18th February 2015.
j. Premium bonds of at least £300.”
Supplementary Joint Minute of Admissions
“1. Matrimonial property
With reference to paragraph 3(e) of the Joint Minute of Admissions number 15 of process, the balance in the Defender’s bank accounts with the Royal Bank of Scotland at the relevant date were £1,530.89 on account number 00184369 and a balance of £14,323.47 on account number . . . . .
2. Inheritance
During the course of the marriage, the Defender received an inheritance of £103,554.92 from her father, William Marshall, as detailed at page 12 of the final executry account at 7/45 of process. The sum due to her was settled as set out on page 12 aforesaid and in appendices III, IV and V to the said account.
3. Valuation of farmland at Torebanehill
Without prejudice to the parties’ respective arguments in relation to whether the land owned by the Pursuer referred to at paragraph 5 of the said Joint Minute of Admissions constitutes matrimonial property or partnership property, that land had a value of £1.5million as at the relevant date and has a value as at March 2015 of £1.75million.
4. Valuation of farmhouse at Torebanehill
Without prejudice to the parties’ respective arguments in relation to the transfer of the farmhouse at Torebanehill in terms of the Defender’s third conclusion, the property referred to in that conclusion, being the farmhouse and surrounding garden ground extending to one acre or thereby, has a value at March 2015 of £260,000.
5. Productions
All copy documents lodged in the parties’ inventories are what they bear to be, shall be taken as true and accurate copies and shall be regarded as principals.
Securities granted by the Pursuer’s father over Torebanehill Mains
Farm
6. Andrew Jack, Senior, the Pursuer’s father, acquired land at Torbanehill Mains Farm, referred to at paragraph 5(a) of the said Joint Minute of Admissions, by disposition recorded in his favour in the General Register of Sasines on 22 April 1969. The Pursuer’s father granted a Standard Security over Torbanehill Mains Farm in favour of the Royal Bank of Scotland, recorded in the General Register of Sasines on 31 October 1980. A copy of the said standard security is lodged at 6/31 of process. A discharge of that Standard Security was recorded in the General Register of Sasines on 17 December 2001. A copy of that discharge is lodged at 6/32 of process. The relevant search sheet is at 6/26 of process.
7. Andrew Jack, Senior, the Pursuer’s father granted a Standard Security in favour of the Royal Bank of Scotland over land purchased by him which was formerly part of Drum Farm. This land is referred to at paragraph 5(c) of the said Joint Minute of Admissions. The Standard Security was recorded in the General Register of Sasines on 28 March 1991. A copy of the said standard is lodged at 6/29 of process. A Discharge of this Standard Security was recorded in the General Register of Sasines on 5 December 2001. A copy of that discharge is lodged at 6/28 of process. The relevant search sheet is at 6/26 of process.
8. Security granted by the Pursuer’s father over Boghall Farm
As set out at paragraph 9 of the said Joint Minute of Admissions, the Pursuer’s father conveyed the lands and farm of Boghall, extending to 270 acres under exceptions, to his wife, Mrs Jemima Jack, by Disposition recorded in the General Register of Sasines on 24th November 1997. A Standard Security had been granted by the Pursuer’s father in favour of the Royal Bank of Scotland in respect of those subjects, recorded in the General Register of Sasines on 22nd October 1991. A discharge of this Standard Security was recorded in the General Register of Sasines on the 15th June 2012. The relevant search sheet is at 6/34 of process. “
[4] The pursuer has worked on a farm, either in the capacity of an employee of his father or on his own account, since he left school at the age of 16. The pursuer’s father was also a farmer. He carried on business as a sole trader from two farms, Torbanehill Mains Farm and Boghall Farm from, on the evidence, about 1954. The lands and buildings comprising those farms were owned until 1997 by the pursuer’s father. The farms have throughout all periods which are relevant for the purposes of this action been farmed as a single unit.
[5] As already mentioned the pursuer left school at the age of 16 and began to work on his father’s said farming business. He remained an employee of his father in that business without interruption until events in 1997 which I will deal with more fully later in this opinion. Following his marriage to the defender in 1972 the parties resided together in properties situated on the farm lands owned by the pursuer’s father. For many years prior to their separation in 2011 the parties resided together at the farm house at Torbanehill Mains Farm. It was not disputed that the pursuer worked hard throughout this period on the farm. Beyond the pursuer there appears to have been only one other employee to assist the pursuer’s father in the running of the business. From the period of their marriage until events hereinafter narrated in 2006 the defender had no formal employment capacity in the farming business. There was however unchallenged evidence that throughout this long period she supported the pursuer in his efforts on the farm. Not only did the defender look after and care for the four children of the marriage but she appears to have, as one might expect, fulfilled the duties normally associated with a farmer’s wife on a busy farming enterprise. The specific example given in evidence was that she always prepared meals for the pursuer and the farmhand at lunch.
[6] The foregoing state of affairs changed in 1997. As already mentioned prior to that date the pursuer’s father had operated the farming business as a sole trader. By 1997 he was in his mid-60s. There was also evidence that in 1997 he sold lands at Boghall Farm to a developer. The date of the sale was not determined in evidence however there was unchallenged evidence that as a consequence of the sale the pursuer’s father obtained the title to a new house which was part of a residential development on the former farm lands and, in addition, a sum of capital, which on the basis of an entry in his financial accounts for the period 29 November 1996 to 6 April 1997 amounted to £292,651. There was further unchallenged evidence that part of this capital was used to discharge a debt due by the pursuer’s father to the Royal Bank of Scotland. Following discharge of this debt there was a capital balance available to the pursuer’s father which was introduced as capital into his business. Subsequent to these developments, and at least as a matter of inference as a consequence thereof, the pursuer’s father retired from his farming business which thereafter continued under the name of “Andrew Jack, Farmers” as a partnership with the pursuer and his mother Mrs Jemima Jack as partners. This partnership commenced trading on 7 April 1997. The new firm of Andrew Jack, Farmers took over the whole assets of the farming business formerly operated by the pursuer’s father. The capital proceeds derived from the sale of land introduced to the business by the pursuer’s father was shown in the final accounts of the firm in the sum of £172,971.37 as a loan from the pursuer’s father.
[7] By disposition dated 2 October 1997 and recorded on 18 December 1997 the pursuer’s father disponed for love, favour and affection all and whole the farming lands of Torbanehill Mains to the pursuer. It subsequently transpired that there was a defect in the said disposition and a correcting disposition was granted, on the same terms, in favour of the pursuer on 17 October 2001. It was not suggested at proof that there was any materiality or significance in the need for a correcting disposition. At about the same time as the pursuer’s father disponed the farm and lands of Torbanehill Mains to the pursuer he also disponed the farm and lands of Boghall to his wife, the pursuer’s mother. At the time when the pursuer’s father disposed of his lands at Torbanehill Mains and Boghall in the manner narrated there remained undischarged standard securities in favour of the Royal Bank of Scotland over these subjects. No explanation was forthcoming at proof to explain why these standard securities were not discharged at the time the pursuer’s father’s debt to the said bank was discharged in 1997. It is clear from the firm accounts that there was no indebtedness to the bank after this date. The standard security in favour of the bank over Torbanehill Mains was in fact discharged on 17 December 2001 after its existence had apparently been drawn to the attention of the pursuer by the firm’s accountants.
[8] Notwithstanding the change in constitution of the farming business after 1997 and the change in the ownership of the properties farmed by the business the pursuer’s father continued to work on the farm. On the evidence of the defender she could see no change in the way the pursuer’s father worked after 1997. She thought he remained fully involved in the farming business. He continued to look after the regular banking transactions of the business. He appeared to be wholly responsible for the administration of the business. He attended livestock auction marts to deal on behalf of the business. In substance this evidence was largely unchallenged by the pursuer. He confirmed that after 1997 his father continued to deal with the banking transactions of the partnership, these were never matters with which he involved himself. He confirmed that he took little part in the administration of the business which, as was suggested by the defender, was conducted by the pursuer’s father. He confirmed that his father attended livestock auction marts, albeit he said he also attended such marts with his father. The only discrepancy between the evidence of the defender and the pursuer in regard to these matters was that the pursuer considered that the amount of work on the farm carried out by his father diminished over time. The impression suggested by the pursuer was that, no doubt as a factor of advancing age, his father gradually took a lesser role in the farming business.
[9] This state of affairs changed materially in 2004 when the pursuer’s father suffered a stroke. After this time (the precise date of the stroke was not established in evidence) the pursuer’s father had no active involvement in any aspect of the running of the farm business. After this time all aspects of the farming side of the business appeared to have been undertaken by the pursuer. The administration of the farming business after this time was conducted by the defender. The nature of the work undertaken by the defender at this stage appeared to have been responsibility for the banking transactions of the firm, administration of registration details of the cattle livestock of the business, and all administration concerned with applications for Single Farm subsidy and other grants available to the business. There was no dispute between the parties that the defender undertook this work from this time. The only dispute was in relation to how much time this work involved. The defender indicated it was a considerable amount of work involving spending some time each day on these matters. By contrast the pursuer thought that the work involved no more than two or three hours effort each week.
[10] For a period of about two years or thereby following the defender assuming these duties there was no change in the constitution of the firm of Andrew Jack, Farmers which operated the farming business. In 2006 however the defender was assumed as a partner of the business. The circumstances surrounding the assumption of the defender as a partner are, on the basis of the evidence, opaque. The defender’s evidence, which was unchallenged, was that she was not aware she had been made a partner in 2006 and only became aware of this fact sometime later when, having obtained part-time work in the local post office, she was surprised and queried with her employer why she was paying so much income tax. In making this enquiry she was informed it was because of the level of the income she was deriving as a partner in the business of Andrew Jack, Farmers. Notwithstanding this somewhat unusual set of affairs when questioned by myself the defender very frankly conceded that if she had been asked to consent to becoming a partner in 2006 she would have so consented. Moreover she also frankly conceded that she was unconcerned about her lack of knowledge of her assumption as a partner. In 2007 the pursuer’s mother resigned as a partner in the firm of Andrew Jack, Farmers. Thereafter the partnership of Andrew Jack, Farmers was between the pursuer and the defender. There was no partnership agreement. There was no agreement as to the sharing of the profits of the firm. In the circumstances the defender became, and was treated in subsequent accounts, as being entitled to 50% of the profits of the said firm. That position remained until the date of the proof.
[11] One further matter in relation to the partnership of Andrew Jack, Farmers arises from the evidence. As previously narrated following the disposal for development of lands at Boghall Farm in 1997 the pursuer’s father discharged outstanding obligations to the Royal Bank of Scotland and introduced a sum as capital to his farming business. That sum remained in the business following his retiral and on his resignation as a partner was represented in the accounts as a loan outstanding to him. By letter dated 18 October 2005 the pursuer’s father wrote to the accountants acting on behalf of Andrew Jack, Farmers confirming verbal instructions he had apparently given “… in the matter of my Loan Account to the firm of Andrew Jack”. The letter confirmed that the pursuer’s father’s instructions were as follows:
“The sum of £215,156.80 owed to me, as detailed in the firms Balance Sheet, as at 5th April 2004, was gifted to my son Andrew Jack, residing at Torbanehill Mains Farm, Bathgate as of that date. Please make an entry in the firm’s records to that effect”.
This instruction was acted upon and the said sum thereafter credited in the firm accounts to the capital account of the pursuer. The letter of 18 October 2005 was spoken to in evidence by Mr Gordon Stevenson, the accountant responsible for preparation of the accounts who had both dealt with the instruction and thereafter prepared the firm’s accounts. The method of treatment of this instruction in the accounts, that is by crediting the sum in the pursuer’s father’s loan account to the capital account of the pursuer, was challenged by counsel for the defender at cross-examination. Mr Stevenson maintained that his treatment of the matter was appropriate and in accordance with normal and good accounting practice. This position was confirmed by Euan Fernie, chartered accountant, a partner in Geoghegans Chartered Accountants, who gave evidence on various accounting matters. Whilst Mr Fernie was also challenged in cross-examination about this way of dealing with this instruction he was not shaken in his view that the method adopted by Mr Stevenson was appropriate. No contrary evidence was adduced on behalf of the defender.
[12] In relation to property valuation there remained up until the first morning of the proof dispute between the parties as to certain land values. These matters were however resolved by the outset of the proof as is reflected in the joint minute and supplementary joint minute. The value of the farmland at Torbanehill Mains was agreed at £1.5 million at the relevant date in 2011 with a value of £1.75 million as at March 2015. There was no valuation of the land at Boghall Farm. The value of the farmhouse at Torbanehill Mains, if separated from the remainder of the farm, was agreed as being at March 2015 £260,000.
[13] Against the foregoing factual background the submission for the pursuer was that the land at Torbanehill Farm was transferred to him as an individual in 1997. It was not and has never become partnership property. Similarly, at or around the same time as the transfer of Torbanehill to the pursuer the title to Boghall Farm was transferred to his mother. That land never became a partnership asset and remains the sole property of the pursuer’s mother. It was submitted that this situation was clear from the terms of the disposition in favour of the pursuer. That proposition was supported by consideration of the partnership accounts. Neither the land at Torbanehill or Boghall have ever been shown in the firm accounts, which were productions in the case. This was a clear indication that the farmlands where not part of the partnership assets. This understanding was confirmed by the accountant who had throughout the relevant period dealt with the firm accounts, Mr Stevenson. Moreover this position was confirmed by the expert chartered accountant Mr Fernie. If the contrary position, that is that these assets were partnership property, were to be established it was submitted there would require to be evidence of intention that this was the case. It was submitted that insofar as intention can be ascertained, the pursuer’s father’s intention as evidenced by the titles was to gift Torbanehill to the pursuer. Other than the titles there was simply no evidence of an intention to contribute the land to the partnership. It was recognised by counsel for the pursuer that the partnership used the lands and buildings at Torbanehill Farm, that the partnership insured the land and the buildings, that repairs, works and other costs relative to the farm have been paid by the firm, that VAT has been paid and reclaimed by the farming partnership, that wayleaves and payments for communication masts situated on the farm premises were claimed by and paid to the farming partnership and that Single Farm subsidy was claimed in respect of Torbanehill. None of this was said to be of any relevance to the position in relation to ownership of the land. The partnership clearly had an insurable interest in the land and buildings as the farming business operated on and over the land. Repair works and other costs were met by the firm because these were caused by and occasioned by the operation of the farm and therefore they were a liability of the firm. In any event the firm had a plain interest in ensuring such repairs were carried out. That arose solely in connection with the farming business and was clearly a firm liability. So far as payments for wayleaves were concerned it was plain that the firm was the vehicle for which all income was received and accounted for. Similar consideration applied in relation to Single Farm Payment. In any event there is no legal requirement for the claimant of such payments to be the owner of the land to which they are attributed. All of these were merely incidents of the use of land by a farming partnership and had no connection or relevance in seeking to establish ownership of heritable property by the farming partnership.
[14] Moreover there was no contract of lease between the partnership and the heritable proprietor. No rent was paid by the partnership to the pursuer, or in respect of Boghall Farm, to his mother.
[15] Having regard to all these considerations there is no evidence of any intention other than that the pursuer’s father intended to transfer heritable title to the subjects at Torbanehill Mains Farm to the pursuer. All of the evidence is supportive of the proposition that the partnership simply occupied the land and made use of it for farming purposes.
[16] The next matter addressed by counsel for the pursuer was whether the pursuer’s interest in the partnership of Andrew Jack, Farmers constituted matrimonial property. It was submitted that the pursuer’s capital account was overdrawn at the time of the gift from his father. This situation pertained until the gift by the pursuer’s father to the pursuer of his loan account in the business effective from 5 April 2004 (number 6/21 of process). In these circumstances it was submitted that the pursuer obtained his interest in the business by virtue of the said gift and the whole value of that interest should be excluded from sharing between the parties.
[17] Having regard to the foregoing it was further submitted that the value of the pursuer’s interests in the partnership at the relevant date was as stated in a valuation produced by Mr Fernie, chartered accountant in his report number 6/50 of process. It was submitted that no other evidence of the pursuer’s interest in the partnership was in fact available. In terms of Mr Fernie’s said report the value of the pursuer’s interest in the partnership at that date was £411,299.
[18] Counsel for the pursuer then addressed the issue of whether if the land at Torbanehill was not, as she contended, partnership property was it nonetheless matrimonial property. In relation to that argument counsel submitted that section 10(4) of the Family Law (Scotland) Act 1985 provides that:
“’The matrimonial property’ means all the property belonging to the parties or either of them at the relevant date which was acquired by them or him (otherwise than by way of gift or succession from a third party)…”
It was then submitted that the pursuer obtained the land at Torbanehill by way of gift from his father. The disposition of that property in favour of the pursuer was for love, favour and affection. No stamp duty was paid. The pursuer stated in evidence that he understood it was his father’s intention to transfer the land to him for love, favour and affection. The pursuer paid nothing for the transfer, a fact of which the defender was aware. The continued existence of the standard security over the land at Torbanehill was submitted to be irrelevant and did not negate a gift. It was noted that the borrowing due to the bank had been repaid by the time of the transfer notwithstanding the continued existence of the standard security. The existence of the security had in fact to be drawn to the attention of the pursuer some years later when it was discharged. It was noted that the existence of the security, which in any event remained in the pursuer’s father’s name, did not negate the ability to apply for stamp duty exemption at the time of transfer in 1997. Overall there was simply no relevance to the existence of this standard security for a number of years after the transfer of the land. Having regard to all these factors the land at Torbanehill Mains Farm clearly falls within the exemption provided for by section 10(4) of the 1985 Act and does not constitute matrimonial property. In relation to the issues arising under sections 10(6)(b) and (d) of the 1985 Act counsel submitted that given that the land utilised by the farm and from the use of which it derived its profits all derived from assets inherited by the pursuer there were circumstances operating in favour of the pursuer justifying a unequal distribution of matrimonial property.
[19] In relation to the issue of support following divorce and the considerations provided for by section 9(1)(d) of the 1985 Act it was not conceded by counsel for the pursuer that there were any special circumstances which would justify the making of such an award. The defender was at the time of the proof 58 years of age. There was no evidence of any health issues which would preclude her from working. It was accepted that she had been dependent on the pursuer and on the income generated from the farming business over the course of the marriage. It was however submitted that she had marketable skills in that she had experience of the administration and operation of a farm. It was submitted that she had potential to obtain employment in the capacity of administrator or secretary for a farming business. Furthermore it was submitted that the defender had capital and income of her own and having regard to these considerations would be in a position to support herself.
[20] Notwithstanding the foregoing submissions in relation to the defender’s financial circumstances counsel for the pursuer recognised that the defender had lived on the farm throughout her married life, apparently most if not all of it at the farmhouse at Torbanehill Mains. At the outset of the proof the defender had sought a transfer of the farmhouse and garden grounds to her name, albeit this was ultimately departed from in the defender’s counsel’s submissions on the evidence. In her submissions counsel for the pursuer pointed out that there was no separate title to the farmhouse at Torbanehill Mains. Moreover there was evidence that the farm at Torbanehill Mains required a farmhouse and, further, that there was no determinative evidence that planning permission for an alternative farmhouse would be obtained. Moreover the defender in her evidence recognised that her continued residence at Torbanehill Mains farmhouse was inconsistent with the operation of the farm and was therefore not viable. In these circumstances counsel recognised that the defender was entitled to be provided with sufficient funds to purchase an alternative dwelling house. There was, perhaps unusually, some evidence of negotiations in the period before the action concerning offers of payment to the defender which it was said would have enabled the defender to buy an alternative dwelling house. There was evidence, unchallenged, that the pursuer had made available the sum of £150,000 to the defender for this purpose. This offer had not apparently proved acceptable to the defender. Not surprisingly no details of the exact nature of the offer and the terms and conditions attached thereto were produced at proof. However against all that background counsel for the pursuer invited the court to make a capital award of £175,000 in favour of the defender.
[21] The defender’s submission proceeded very substantially on the proposition that the farm and lands at Torbanehill Mains, and for that matter Boghall Farm, were partnership property. A series of 30 propositions said to arise from the evidence in the case were submitted as facts which supported that proposition. I need not repeat the 30 propositions. It is sufficient to state that they are essentially all derived from the narrative of the evidence which I have already desiderated.
[22] The argument propounded by counsel for the defender was that having regard to a consideration of the decision in Sim v Howat and McLaren [2011] CSIH 115 the farm of Torbanehill Mains constituted partnership property of the firm of Andrew Jack Farmers. This opinion was said to be highly persuasive authority for the principle that where a new partnership takes over the assets of a prior business (sole trader or prior partnership) and maintains that business as a going concern without giving value therefore, it is regarded by the law to have taken over the earlier business’s liabilities as well.
[23] Beyond that submission counsel for the defender submitted that the handling of the loan account of the pursuer’s father had been incorrectly treated in 2005. He maintained that, on the authority of Bank of Scotland Cash Flow Finance v Heritage International Transport Limited 2003 SLT (S H C T) 107, an assignation was required to effectuate a transfer of the sort anticipated in the letter dated 18 October 2005 (number 6/21 of process). There was no assignation and accordingly, as I understood the argument, there was no evidence that such a transfer had ever taken place. In the absence of an assignation it could not be said that there was a gift of that sum in favour of the pursuer.
[24] In relation to the issues arising out of section 9 of the 1985 Act counsel for the defender submitted that his client had suffered economic disadvantage as a result of her efforts working for the farming partnership and, correspondingly, there had been benefit to the pursuer as a partner arising from such efforts. This consideration justified an unequal distribution of matrimonial property in favour of the defender. Moreover it was submitted that the defender would suffer serious financial hardship following divorce. She was 58 years of age, had no qualifications and her prospects of obtaining paid employment were very limited.
[25] In determining the issues between the parties the starting point must be consideration of whether or not the lands at Torbanehill Farm, and for that matter Boghall Farm, constitute partnership property. There is to me what appears to be conclusive evidence that the transfer of Torbanehill Mains Farm to the pursuer was a gift from his father. The evidence of this is, quite simply, the love, favour and affection disposition number 6/27 of process. On the basis of the evidence there was no impediment to the pursuer’s father effecting this transfer. The disposition is under certification that the transaction is exempt from stamp duty under category (L) of the schedule to the Stamp Duty (Exempt Instruments) Regulations 1987. The disposition must have been subject to submission to the Inland Revenue who did not challenge the transaction. There is no evidence that the business operated by the pursuer’s father as an individual was other than solvent at the time of this transfer. The final accounts of the business, which were not challenged by the defender at proof, demonstrate that the business was solvent. Whilst it is true that there remained an undischarged standard security over both the subjects at Torbanehill Mains and Boghall following the transfer effected by this disposition in favour of the pursuer the underlying indebtedness of the pursuer’s father to the bank had been discharged by this date. The standard security over Torbanehill Mains was in fact discharged by the bank in 2001. Whilst there is no direct evidence as to the reasons for this it appears to be a reasonable inference from the evidence that the matter of the standard security was simply overlooked in 1997 and, on the matter coming to light some years later, the situation was rectified by discharge of the security. I cannot accept counsel for the defender’s proposition that the case of Sim v Howat and McLaren (supra) provides authority for the proposition he advances. In my view the ratio of that case is to be found in paragraphs [26] – [31] of the opinion of Lord Hodge. The ratio is, in my opinion, of more limited scope than that advanced by counsel for the defender. It seems to me that the decision arose in circumstances where the mischief which Lord Hodge was seeking to address were circumstances where an existing partnership transfers assets to a new firm in an attempt to prejudice a creditor of the existing firm. In those circumstances, as I understand it, Lord Hodge, after a careful review of the authorities, concluded that there would be a presumption against gift. I do not find that surprising. In paragraph [31] of the opinion Lord Hodge is careful to stress that the presumption which he identified “… does not arise unless there are facts and circumstances which bring it into play”. This appears to me to be unexceptionable. In the present case there are, in my view, simply no facts or circumstances which would support the contention that any presumption of the sort desiderated by Lord Hodge exists. The established facts in the present case are in my view clear. The outgoing business operated by the pursuer’s father was solvent, he was the sole owner of Torbanehill Mains Farm and his intention to dispone that property to his son, the pursuer, for love, favour and affection were made clear by the terms of the disposition itself. Having regard to these considerations I am of the view that the lands at Torbanehill Mains Farm were, and remain to the present time, the sole property of the pursuer as an individual. For completeness I should indicate that exactly the same considerations apply in relation to the farming lands at Boghall Farm, which are the property of the pursuer’s mother. In relation to the issue of the treatment of the gift of the pursuer’s father’s loan account to the pursuer effective from 5 April 2004 I again have difficulties with the argument advanced by the defender. In my view the transaction which the gift comprised is not one which as a matter of law requires an assignation. On the evidence of both Mr Stevenson and, perhaps even more tellingly, Mr Fernie, I can find nothing wrong with the way in which this gift was handled in the partnership accounts. I would observe in relation to this finding that there was no alternative accounting evidence offered by the defender to rebut the evidence of Mr Stevenson or Mr Fernie in this regard. It follows that I consider that this element of capital was introduced as a gift and that fact requires to be taken into account when determining the value of matrimonial property.
[26] In relation to the issues arising out of section 9 of the 1985 Act I accept that the defender has contributed throughout her married life to the operation of the farming business. I have no doubts that these efforts were of value to that business. I cannot however ignore the consideration that from 2006, albeit she was not aware of it at that time, the pursuer was given an interest in that partnership for which she did not require to pay. She has shared in the partnership profits since her assumption as a partner to the extent of 50/50. At the date of proof she remained a partner and therefore entitled to a 50% share in the profits. On a dissolution of the firm, which appears to be the likely consequence of these proceedings, she will be entitled to a share in the capital of the business. It follows that the defender has acquired at no cost to herself an asset from such she has derived not insubstantial income and which moreover is of significant capital value. Having regard to these considerations I consider that equal sharing of matrimonial property would not be inappropriate.
[27] In relation to the calculation of matrimonial property the majority of the assets comprising this element were the subject of agreement as detailed in the joint minute and supplementary joint minute. The only significant difference between the valuation of matrimonial property advanced by the pursuer and the defender arose out of the different contentions in relation to the issues arising out of the ownership of Torbanehill Mains Farm. I have already determined first that Torbanehill Mains Farm is the sole property of the pursuer and does not constitute matrimonial property. I have, second, determined that the capital of the pursuer’s father in the farm business was gifted to the pursuer in the circumstances hereinbefore narrated and discussed. The result is that a calculation of matrimonial property presented by the pursuer on the basis of the evidence of Mr Fernie is, in my opinion, an accurate statement of the position in relation to matrimonial property. That calculation arrives at a sum due by the pursuer to the defender of £174,392. As I understood counsel for the defender’s submissions, whilst, as I have already discussed, he proceeded upon a different approach as to the issue of what constituted matrimonial property he did not dispute in submissions that, if the arguments advanced by the pursuer were accepted, Mr Fernie’s arithmetical calculation of matrimonial property was accurate.
I have already indicated that I accept the pursuer’s submissions as to what constitutes matrimonial property. I have also indicated that I consider that a 50/50 distribution of matrimonial property is appropriate in the circumstances in this case. Having regard to these considerations I shall, as invited to by counsel for the pursuer, round the foregoing figure upwards and awarded the defender a capital sum of £175,000.
[28] There remains the issue of continuing financial support. The defender is a lady now 58 years of age, nearing the conventional age of retirement. Almost her only experience is of life on, and the running of, a farm. I discount the short period of employment in the local post office. On the evidence this was of relatively short duration and was, moreover some years before the proof. I do not consider that this limited experience would be likely to materially assist the defender in finding employment. Counsel for the pursuer suggested that the defender had marketable skills arising from her experience of farm administration. Whilst the submission has, in my view, some merit it has to be weighed against other, powerful, considerations. The defender’s relatively advanced age, in employment terms, is likely to reduce her attractiveness to potential employers. On the evidence she intends to remain in the locality of Torbanehill Mains, hopefully acquiring a house in one of the local villages. This is, in my view, entirely understandable and reasonable. She has lived all her adult life on the farm. Her family connections, daughters and grandchildren, live in the vicinity. There are however on the unchallenged evidence likely to be few, if any, openings in farm administration in the area where she is likely to reside. Having regard to these, in my view powerful, factors I do not consider it likely that the defender will be able to find employment.
[29] It is true that the defender has capital assets of her own. The income that she derives from these assets is however relatively modest, some £4,000 per annum. Her share of the assets of the business will provide her with some further income, albeit this too will be relatively modest. In all the circumstances I consider that a case has been established for a continuing payment to be made. I will order the payment of a periodical allowance for a period of three years in the sum of £1400 per month.
[30] I will grant decree of divorce in terms of the pursuer’s first conclusion, grant an order for transfer to the pursuer of the defender’s interest in the firm of Andrew Jack Farmers in terms of the pursuer’s second conclusion, find the pursuer libel to pay the defender a capital sum of £175,000 and dismiss the defender’s third conclusion. As aforesaid order the payment of periodical allowance for a period of three years from the date of decree at the sum of £1400 per month. Having regard to the terms of these orders I put the case out by order to determine if parties wished to make submissions regarding the time required to implement payment of the capital sum. Having heard the submissions on their behalf I order payment of the capital sum within six weeks of the date of decree.