G AGAINST G
SHERIFFDOM OF GRAMPIAN, HIGHLAND AND ISLANDS AT ABERDEEN
[2017] SC ABE 37
F17/15
JUDGMENT OF SHERIFF J BROWN
In the cause
G
(Residing in Aberdeen)
Pursuer
Against
G
(Residing by Stonehaven)
Defender
Pursuer: Heaney, Advocate
Defender: Ennis, Advocate
ABERDEEN, 23 May 2017
The Sheriff having resumed consideration of the cause; repels the plea in law for the pursuer; sustains the second plea in law for the defender; dismisses the pursuer’s Minute simpliciter; finds the pursuer liable to the defender in expenses; allows an account thereof to be lodged and remits same, when lodged, to the auditor of court to tax and report; certifies the cause as suitable for the instruction of junior Counsel and decerns.
NOTE
[1] Following five days of proof my colleague, now retired, Sheriff Drummond issued a judgment on 12 December 2016. He sustained the pursuer’s first plea-in-law and granted decree of divorce. He also sustained the pursuer’s second and eighth pleas-in-law and
(1) granted decree for payment by the defender to the pursuer of a capital sum of £159,126 with interest thereon at the rate of eight per centum per annum from the date of decree until payment and
(2) made a Pension Sharing Order in terms of Sections 8(1)(baa) and Section 8A of the Family Law (Scotland) Act 1985 providing that the defender’s shareable pension rights in the Hornbuckle Mitchell Self-Invested Personal Pension be subject to a pension sharing order for the benefit of the pursuer in the sum of £120,000, with interest at the rate of eight per centum per annum from one month after the date of decree until the date of transfer of the appropriate pension credit into a qualifying scheme for the pursuer takes place and ordains that the charges for implementing the order shall be apportioned equally between the pursuer and the defender.
The learned sheriff made other ancilliary orders which are not relevant for the purposes of this decision.
[2] Having made the Pension Sharing Order, both the pursuer and the defender took the necessary steps to complete the relevant and requisite documentation which, following the granting of decree of divorce, was intimated to the trustees of Hornbuckle Mitchell by the pursuer’s agents. Subsequently the pursuer’s agents received correspondence from the pension trustees in March 2017 intimating that the trustees were meantime unable to implement the Pension Sharing Order made in favour of the pursuer because of the nature of the pension scheme which was a SIPP. The asset was illiquid and there was currently insufficient liquid cash within the trustee bank account to facilitate payment of the £120,000 from the pursuer’s fund to the defender’s pension scheme. As a result the prospective transfer is now “queued” until June 2018.
[3] In light of this correspondence the pursuer lodged a Minute seeking an incidental order in terms of Section 14(2)(f) of the Family Law (Scotland) Act 1985 (“the Act”). Within that order the pursuer sought to have the court make an order
“Requiring the defender forthwith to provide security to the pursuer for timeous implementation of the Pension Sharing Order made against the defender under Section 8(1)(baa) of the Act by interlocutor of 12 December 2016; and that by requiring the defender to grant, execute and deliver to the pursuer valid and effective standard securities over those heritable subjects belonging to him and forming [Property X] and [Property Y] all in terms acceptable to the pursuer; and in the event of the defender failing to grant, execute and deliver said standard securities to the pursuer within five days of the date of the order to follow hereon to authorise and ordain the Sheriff Clerk, Aberdeen Sheriff Court, to subscribe standard securities on his behalf in respect of said properties, all as same may be adjusted at his sight together with such other deeds as may be necessary to give the pursuer valid security over said properties; and for such an order ad interim.”
[4] The defender opposed the Minute and the matter called as a hearing before me on 26 April 2017. Mr Heaney, Advocate, represented the pursuer and Mrs Ennis, Advocate, represented the defender.
[5] Before hearing submissions in full from the parties I canvassed with them whether I would require to hear evidence in respect of any issues pertaining to the Minute. Both Counsel confirmed that evidence would not require to be heard and they were content to proceed on the basis of submissions only.
Pursuer’s submissions
[6] Mr Heaney set out the background of the case and the circumstances in which the Minute came to be lodged by the pursuer. He took me to Section 14 of the Family Law (Scotland) Act and specifically Section 14(2)(f), whereby an incidental order can be made by the court ordering that security should be given for any financial provision. Mr Heaney explained that was what was being sought in terms of the Minute. He submitted the test to be applied could be found in Subsection 2(k) whereby any ancilliary order could be granted which is expedient to give effect to the principles set out in Section 9 of the Act or to any order made under Section 8(2) of the Act. He submitted the ‘or’ used in Subsection (k) was disjunctive meaning that I did not require to consider the provisions of Section 9 in making an ancilliary order in respect of any order under Section 8(2). He submitted that Subsection 14(2)(k) was concerned only with putting in place an order which was expedient. I need not be concerned with the principles of Section 9 because these had been considered by my colleague Sheriff Drummond following proof.
[7] Mr Heaney submitted the defender was under an obligation to procure transfer of the value of £120,000 from his pension account into the pursuer’s pension account. He could do that in various ways and it was against him that the decree for such an order had been made. Given the issue is the absence of liquidity meantime in the pension fund, it was within the pursuer’s power to put funds into his pension fund. Mr Heaney submitted the test was one of expediency. I had broad powers and if I considered it suitable or appropriate I could exercise my discretion and grant the order. The order was fair and reasonable in the circumstances. It was in the interests of justice to grant the order.
[8] Mr Heaney reiterated some of the history of the case and the series of events which would lead up to a pension transfer taking place. Such a transfer ought to take place within four months of intimation. He referred to the pension trustees’ correspondence relating to the illiquidity of the pension fund. Prior to the correspondence it had never been mentioned that the fund was an illiquid fund. He referred to the agreement of the parties regarding the value of the pension transfer of £120,000 and he referred to the terms of the fund itself being a self-invested pension fund. He submitted the defender was personally in control of the fund, albeit he would take advice in respect of investments. He submitted that the defender was a sophisticated individual whose conduct had been commented upon by Sheriff Drummond in his judgment. He submitted that the defender knew, or ought to have known, the position regarding liquidity of the pension fund. He submitted that the defender had essentially entered into the pension sharing agreement knowing that there would be a difficulty in implementation thereof thereby frustrating the pursuer’s claim and more importantly frustrating the order made by Sheriff Drummond.
[9] Mr Heaney submitted that it was expedient to make the order sought in the Minute in terms of Section 8(2). It was justified by the principles. It was necessary to procure implementation of the order made by Sheriff Drummond. The granting of securities by the defender to the pursuer gives effect to the order made by Sheriff Drummond. The pursuer could remedy the liquidity difficulty with the pension fund by paying money into it. Any security granted would be postponed to other heritable creditors. There would be no prejudice to such creditors. He referred me to Section 13 of the Conveyancing and Feudal Reform (Scotland) Act 1970. Counsel submitted that it was competent to order such security to be granted. He referred me to Cusine and Rennie paragraph 305 for authority that security over a heritable property could be made to secure a debt of any kind including a debt ad factum praestandum. The defender was the obligant in terms of the Pension Sharing Order. If the order was not implemented and the security was called up payment was an alternative or substitute for the order made. He referred to Trotter v Trotter 2001 SLT (Sheriff Court) 42. He submitted the analysis therein by the Sheriff Principal was wrong. The case was not on all fours with the current situation. He submitted that the definition of debt was wide enough to cover the obligation to grant a Pension Sharing Order and thus sufficient to constitute the granting of a standard security. In referring to MacDonald v MacDonald 1995 SLT 72, he submitted MacDonald could be distinguished from the current situation. In this case there was an obligation created by Sheriff Drummond’s interlocutor granting the Pension Sharing Order and the Minute sought an incidental order for the purposes of securing that obligation. If the standard security granted under the order was called up the pursuer’s claim would be restricted to what is necessary to credit her account with the appropriate sum under the Pension Sharing Order i.e. £120,000 with requisite interest.
[10] Counsel invited me to sustain the plea-in-law for the pursuer and repel the defender’s pleas-in-law.
Defender’s submissions
[11] Mrs Ennis helpfully provided me with draft written submissions which she expanded upon with further oral submissions.
[12] She invited me to dismiss the pursuer’s Minute with expenses in favour of the defender and to sanction the cause as suitable for the instruction of junior Counsel. Mrs Ennis briefly rehearsed the history of the case from the defender’s point of view before turning to her submissions in law. She took me to the Act. She submitted that the pursuer’s reliance upon Section 14(2)(k) was in error. Expediency was not a legal test. Each individual incidental order sought required to be supported by appropriate averments. In terms of Article 6 of the Minute, the pursuer was specifically seeking a standard security to secure the Pension Sharing Order provision. In terms of the pursuer’s decree, she was awarded a capital sum which has now been paid and she was awarded the Pension Sharing Order. The Pension Sharing Order is a creature of statute. It is not an order for a payment of capital into her pension fund but an order for transfer of funds from the defender’s pension fund to the pursuer. The sum of £120,000 was a fixed sum. The Pension Sharing Order was an administrative order and the implementation of such order was beyond the defender’s control. His only obligation was to complete all of the necessary documentation to allow the pension trustees to implement the order. That is what the defender had done. He can do no more. She then referred me to a set of productions which had been lodged in respect of the proof relating to the defender’s interest in the SIPP. She submitted that the pursuer was aware that the defender’s pension fund was a SIPP and the pursuer could have taken steps to investigate the position regarding the defender’s interest in the fund and the risks connected therewith prior to agreeing the terms of the Pension Sharing Order. That being said, it was the pursuer who had sought the Pension Sharing Order and craved the same in her action. The defender had received information about the pension fund in May 2017. He was not aware of the terms of the memo received by the pursuer dated November 2016. The defender had not acted in bad faith.
[13] Turning to the competency of the pursuer’s Minute Mrs Ennis referred me to the Conveyancing and Feudal Reform (Scotland) Act 1970, Section 9 Subsection 3. She also referred me to Cusine and Rennie at paragraph 305. She submitted that the obligation to make a Pension Transfer Order for £120,000 was not a debt in the pecuniary sense. It was not a payment. It was an obligation ad factum praestandum and an obligation ad factum praestandum cannot be for money. She referred to the Law of Civil Remedies in Scotland by Professor Walker, pages 269 to 273. The obligation to implement the Pension Sharing Order does not fall on the defender. It falls on the trustees of the pension fund. She referred to Sections 28 and 29 of the Welfare Reform and Pensions Act 1999. Part 4 of this Act made no definition of the obligant but in terms of Section 26, and for the purposes of the 1985 Act, the person responsible for implementing a Pension Sharing Order is defined as being the trustees or managers of the scheme. Accordingly Mrs Ennis submitted it is clear that the obligation in this case to implement the Pension Sharing Order falls upon the pension trustees and not the defender.
[14] Mrs Ennis touched upon the position regarding the granting of a standard security by a third party. However, she submitted, all parties require to consent to such a security. Given the obligation, in her submission, is on the trustees of the pension fund as an obligation ad factum praestandum she questioned how the defender could have any right of relief against the pension trustees in the event of non-performance. She queried how such an obligation could be formulated and how any standard security could be framed. What would the obligation cover and how would the defender have any control over the fulfilment of that obligation. She referred to Macphail 3rd Edition, paragraph 21.
[15] Turning to specification of the pursuer’s claim, she submitted that an incidental order is an order for financial provision and accordingly must be justified by the principles of Section 9 and be reasonable having regard to the resources of the parties. Here, Mrs Ennis submitted, the pursuer was relying on a test of expediency. She submitted that was not the appropriate test. She referred to the Law of Husband and Wife in Scotland, 4th Edition, by Professor Clive, paragraph 24.113 – 24.127.
[16] In terms of paragraph 24.114, Mrs Ennis submitted the position was straightforward. For the pursuer’s Minute to be relevant it required to have averments that met the test as to why it was justified under Section 9 and why it was reasonable having regard to the resources of the parties. The pursuer made no reference to the principle of Section 9 in the Minute. The pursuer made no reference to the parties’ present and future resources. Absent of relevant averments the pursuer’s Minute was lacking in specification, it failed to meet the legal test of relevancy.
[17] Mrs Ennis made a further submission that the pursuer’s Minute was, in essence, raising matters which were res judicata. The pursuer was seeking a solution to a difficulty in the Pension Sharing Order being implemented. The pursuer was seeking the grant of standard securities over the defender’s property pending resolution of that problem. Alternatively the pursuer was suggesting that the defender make a payment of £120,000 into his SIPP. Mrs Ennis’ submission was that if the ancilliary order was truly an order for payment then the pursuer was seeking an additional capital sum. That was incompetent post-decree. All orders for financial provision had been dealt with by Sheriff Drummond following proof. Sheriff Drummond had already ordered payment of a capital sum. If, in essence, an order for a further capital payment was made in the context of this Minute then that was res judicata. In support of that submission Mrs Ennis referred to Macphail (supra) paragraph 9, 10 and 21.75 to 21.77 and the Practice of the Court of Session; Maxwell page 196 to 197 and Section 12 of the Act. Mrs Ennis went on to say that if she was wrong in that submission and the matter raised by way of the incidental order sought is a new matter then such an order required to be justified and reasonable having regard to the resources of the parties. Circumstances had changed. The defender’s pension is a resource but the capital sum paid by the defender to the pursuer had altered the pursuer’s resources. It was not just a case of my exercising discretion to grant or not grant the order. The granting of a standard security over the defender’s property was not conducive to the position of a clean break between the parties. It created a continuing obligation. Mrs Ennis submitted there would be prejudice to any first ranked security holder in that it would be difficult to see that there was no financial prejudice in circumstances where the pursuer sought to call up the standard security. The pursuer already had an inhibition over the defender’s properties and the defender had granted an undertaking in the context of this case not to interfere with the properties pending conclusion of these proceedings. I should dismiss the Minute simpliciter.
[18] In response, Mr Heaney reiterated that the order sought under the Minute was to enable the order granted by Sheriff Drummond to be put into effect. The principles of Section 9 were already satisfied. The pursuer is the obligee in terms of the Pension Sharing Order and the obligation was on the defender to implement the order. If the security was granted in terms of this Minute the obligation would be on the defender to do what he required to do to enable it to be discharged. The obligation under the Pension Sharing Order was a different nature to an obligation to make capital payment. In terms of the pleadings Mr Heaney submitted this was summary procedure proceeding by way of Minute and Answers and he submitted the pleadings more than satisfy orders required to advance the pursuer’s case.
Decision
[19] The pursuer has lodged a Minute post-decree seeking an incidental order in terms of Section 14(2)(f) of the Act requiring the defender forthwith to provide security to the pursuer for timeous implementation of the Pension Sharing Order made against the defender under Section 8(1)(baa) of the Act by interlocutor of 12 December 2016.
[20] Section 14(1) is in the following terms:
Subject to Section 3 below an incidental order may be made under Section 8(2) of this Act before, on or after the granting or refusal of decree of divorce or dissolution of a civil partnership…
Section 14(2) reads:
“In this Act an incidental order” means one or more of the following orders…
[21] Section 14(2)(k) reads:
“Any ancilliary order which is expedient to give effect to the principles set out in Section 9 of this Act or to any order made under Section 8(2) of this Act”
[22] Section 8(2) of the Act reads:
“Subsections 12 to 15 of this Act where an application has been made under Section (1) above the court shall make such order, if any, as is
(a) justified by the principles set out in Section 9 of the Act and
(b) reasonable having regard to the resources of the parties.
[23] Section 8(1) deals with orders for financial provision and 8(1)(baa) makes reference to a Pension Sharing Order. Reading those Sections together therefore if, under Section 8(1)(baa), a Pension Sharing Order is applied for and in terms of Section 8(2) it is justified by the principles set out in Section 9 and it is reasonable having regard to the resources of the parties to make such an order I may, in terms of Section 14(k) make any ancilliary order which is expedient to give effect to such an order. That, I think, was the essence of the pursuer’s argument and insofar as that aspect of the pursuer’s argument goes, I agree that that is the position. However, I have come to the view that beyond that position the pursuer’s Minute is fundamentally flawed for the following reasons:
1. Expediency
I do not understand how the granting of an order for standard securities over the defender’s property would be expedient to the implementation of the Pension Sharing Order awarded in favour of the pursuer. It is not the defender who has failed to implement the Pension Sharing Order. From what was an agreed position between Counsel for both parties, everything that needed to be done has been done to intimate all of the relevant documents to the pension trustees. It is the pension trustees who have intimated they are not in a position to make the appropriate pension transfer. I agree with the submission made by Mrs Ennis that the defender has done all that he can do to seek to ensure implementation of the order. I say that because I do not accept Mr Heaney’s submission that it would be within the pursuer’s hands to pay sufficient funds into his pension fund to enable the Pension Sharing Order to be implemented now. Such a step may well expedite the pension transfer order but there is, in my view, no obligation upon the defender to take such a step. The imposition of securities over his property may cause him to feel compelled to make such a payment to effect the discharge of such securities but the granting of such an order, in my view, is draconian and also incompetent for reasons which I shall come to.
[24] I am satisfied that the defender is not the party upon whom the obligation rests to implement the Pension Sharing Order. The orders made against the defender in Sheriff Drummond’s judgment are twofold. The first is the payment of the capital sum. In respect of that required payment, the decree is for “the payment by the defender to the pursuer of a capital sum of…” That is a clear and direct obligation upon the defender to make the requisite payment. In terms of the Pension Sharing Order, Sheriff Drummond “makes a Pension Sharing Order in terms of Section 8(1)(baa) and Section 8A of the Family Law (Scotland) Act 1985 providing that the defender’s shareable pension rights in the Hornbuckle Mitchell Self-Invested Personal Pension be subject to a Pension Sharing Order for the benefit of the pursuer…” There is no direct obligation imposed upon the defender in terms of the learned Sheriff’s direction. Turning then to the Welfare Reform and Pensions Act 1999, Section 29(1) is in the following terms:
1. On the application of this Section –
(a) the transferor’s shareable rights under the relevant arrangement become subject to a debit of the appropriate amount and
(b) the transferee becomes entitled to a credit of that amount against the person responsible for that arrangement.
[25] In short, therefore, the defender’s shareable rights under the Hornbuckle pension scheme become subject to a debit of £120,000 and the pursuer becomes entitled to a credit of that amount (£120,000) as against the person responsible for that arrangement. In terms of the definition of ‘the person responsible for that arrangement’, that can be found in Section 26 which is the interpretation section of Part 3 of the 1999 Act. In terms of Section 26(2) that reads:
“(2) References to the person responsible for a pension arrangement are –
(a) in the case of an occupational pension scheme or a personal pension scheme to the trustees or managers of the scheme.“
Accordingly, in my view, the pursuer, under the Pension Sharing Order, becomes entitled to a credit of the £120,000 against the trustees or managers of the scheme and not the defender. I reject Mr Heaney’s submissions contrary to that regard.
Competency of Standard Security
[26] In the Minute before me, the pursuer sets out that what she seeks are a standard security over the defender’s heritable property. Such heritable securities may only be granted for the purposes of securing any debt (Conveyancing and Feudal Reform (Scotland) Act 1970, Section 9(3)). The definition of debt for the purposes of the Act can be found at Section 9(8)(c), which is in the following terms:
(c) “Debt” means any obligation due, or which will or may become due, to repay or pay money including any such obligation arising from a transaction or part of a transaction in the course of any trade, business or profession, and any obligation to pay an annuity or ad factum praestandum…
[27] An obligation ad factum praestandum is an obligation for the performance of a certain act. In the context of this case what is outstanding to the pursuer is the act of implementation of the Pension Sharing Order. Accordingly the standard security being sought by the pursuer is for the purposes of securing the defender performing the act of implementing the Pension Sharing Order. Given my previous analysis that it is in fact the pension trustees who are the parties who require to perform that act, it seems to me that there is no obligation ad factum praestandum resting against the defender and accordingly it would be incompetent to make an order for the granting of a heritable security over his properties for an obligation which does not, in my view, exist. Accordingly I consider that the pursuer’s Minute is incompetent and falls to be dismissed.
[28] Standing my decision above, I will make only brief comment regarding the other matters raised with me in submissions.
Res judicata
[29] I agree with Mrs Ennis’ submissions that in the event that the defender made any form of capital payment into his pension fund or in the event that securities were granted to the pursuer and subsequently called up and monies received, such payments would effectively be the equivalent of further capital payments to the pursuer which are not competent post-decree. More importantly the question of the granting of a capital sum to the pursuer was dealt with by Sheriff Drummond at proof and was based upon the parties’ financial positions at that time and on the principles of section 9 of the Act. Such matters are Res judicata.
Relevancy and specification
[30] I agree with Mr Heaney that in Minute procedures pleadings are often not as fulsome as they might otherwise be on the basis that the purpose is to draw the Minute proceedings to as early a conclusion as possible. Equally I agree with Mrs Ennis that in respect of an application for an incidental order there requires to be sufficient justification set out in the pleadings to allow the court to make the necessary determination. It should be noted that an incidental order may be made under Section 8(2) and Section 8(2) refers to applications under Section 8(1) and the court shall only make such an order under Section 8(2) as is:
“(a) justified by the principles set out in Section 9 of this Act and
(b) reasonable having regard to the resources of the parties”.
Accordingly, any incidental application requires, in my view, to have sufficient averments to allow the principles of Section 9 to be considered. The position with the pleadings in this particular application do not fall to be considered standing my view on the question of competency. However had I found the Minute competent I would have come to the view that in the absence of appropriate pleadings relating to the principles of Section 9, the Minute would have fallen on grounds of relevancy and specification.
[31] In short, I have concluded that the pursuer’s Minute is misconceived. It seems to me that the pursuer is simply seeking to overcome a difficulty which has arisen in the course of seeking to have her Pension Sharing Order implemented. I do not consider this is the appropriate avenue to cure that problem
[32] I am grateful to both Counsel for their submissions. This was not a straightforward matter and I agree with Mr Heaney’s opening remark that it was an unusual application post-decree. Having regard to the provisions of section 108 of the Courts Reform (Scotland) Act 2014 I am satisfied the matter merits sanction being granted for the instruction of junior Counsel. I shall find the pursuer liable to the defender in the expenses of the action.