STUART HARROWER PARKER AGAINST ELAINE MARGARET NICHOLL OR PARKER
OUTER HOUSE, COURT OF SESSION
[2014] CSOH 159
F65/13
OPINION OF LORD BRAILSFORD
In the cause
STUART HARROWER PARKER
Pursuer;
against
ELAINE MARGARET NICHOLL OR PARKER
Defender:
Pursuer: Innes; Turcan Connell
Defender: Brabender; Simpson & Marwick
30 October 2014
[1] The pursuer in this action concludes for decree of divorce in respect of the irretrievable breakdown of the parties’ marriage as established by non-cohabitation for one year or more with the defender’s consent to such decree and for transfer to the pursuer of the defender’s interests in the firm of S & E Parker. The defender concludes for a capital sum of £800,000 with interest at the rate of 8% per annum from 1 December 2011; for payment of periodical allowance of £1,500 Sterling per month payable for three years from the date of decree and for payment of the sum of £1,500 per month as interim aliment.
[2] The parties were married in Northern Ireland on 26 September 1996. There are two children of the marriage under the age of 16, a boy born in 2000 and a girl born in 2003.
[3] The case has been the subject of a degree of case management. As a result of that process substantial agreement has been reached between the parties in relation to the factual background of the firm of S & E Parker, a farming partnership. This agreement is reflected in a joint minute number 17 of process. Given the importance of the matters agreed in that joint minute it is appropriate to record it in full at this juncture:
“1. The parties were married at Randalstown, Northern Ireland on 26th September 1996.
2. There are two children of the parties’ marriage under the age of 16, namely …, born … 2000 and …, born … 2003.
3. The relevant date for the purposes of section 10(3) of the Family Law (Scotland) Act 1985 is 1st December 2011.
4. As at the relevant date, the parties’ matrimonial property included the following:
a. The parties’ interest in the firm of S & E Parker. The parties commenced partnership in said firm on 1 December 2001 in terms of a Contract of Partnership signed by the parties on 17 March 2002, a true and accurate copy of which is lodged at 6/18 of process. The Pursuer’s capital account is referred to at paragraph 5 below. The Defender’s capital account had a surplus to the extent of £49,619 at the relevant date. Notwithstanding the parties’ capital accounts, the parties were jointly and severally liable for the deficit of the partnership at the relevant date. The partnership was in deficit of £175,599 at the relevant date.
b. The Pursuer’s interest in 34 Main Street, Kirkcolm which had a value of £85,000 as at the relevant date. It had a value of £75,000 as at December 2013.
c. The Pursuer’s interest in a pension plan with Scottish Widows, with a value of £10,288 attributable to the period of the marriage.
d. The Pursuer’s interest in a pension plan with NFU, with a value of £24,518 referable to the period of the marriage.
e. £147.00 held in account number 00108747 with HBOS plc in the name of the Pursuer.
f. £765.57 held in the Defender’s Royal Bank of Scotland account number 00135506.
g. The jointly owned contents at Balgown Farmhouse.
h. £6,454.82 held in the Defender’s Royal Bank of Scotland ISA account number 00624841 (7/18).
i. The Defender’s NFU Mutual stakeholder pension with a cash equivalent transfer value of £4,653.44 as at the relevant date. (7/13).
5. The pursuer’s capital account in the firm of S & E Parker referred to at paragraph 4(a) above was in deficit of £225,218 at the relevant date. Prior to the parties commencing a partnership on 1 December 2001, the Pursuer traded as a sole trader, trading as G & S Parker. As at 31 December 2000, the balance sheet of the said G & S Parker included the farm and lands of Balgown in the accounts at a value of £788,510 (6/23(5)). As at 31 December 2000, the Pursuer’s capital account was a surplus of £599,653 (6/23(3)). Clause Third of the Contract of Partnership hereinbefore referred to between the parties provided for the preparation of a balance sheet as at 31 December 2001 to be adopted by the parties as containing a correct statement of the assets and liabilities of the business and of the position of the partners’ accounts as at the commencement of the firm. Clause Eleventh of the said Contract provided that the title to the farm and lands of Balgown was in the name of the Pursuer as an individual and was not an asset of the partnership. In the said balance sheet as at 31 December 2001, the farms and lands of Balgown were treated as having been disposed of by the partnership with the disposal being attributed wholly to the Pursuer (6/24(7)). As at 31 December 2001, the Pursuer’s current account was in deficit of £130,530 and the Defender’s current account was in surplus of £25,660. Capital expenditure in the form of improvements to the farm and lands of Balgown was carried out by the firm of S & E Parker and is listed in the schedule prepared by Galbraith Pritchard, Chartered Accountants for the firm of S & E Parker at 7/7 of process and included in the firm’s accounts as additions to land and buildings as follows:
a. To the year end 31 December 2001, £16,757 (6/24(5));
b. To the year end 31 December 2002, £34,521 (6/25(12));
c. To the year end 31 December 2003, £5,163 (6/26(12));
d. To the year end 31 December 2007, £869 (6/30(11));
e. To the year end 31 December 2009, £62,772 (6/31(11);
f. To the year end 31 December 2010, £1,408 (6/33(11)): and
g. To the year end 31 December 2011, £4,256 (6/46(11)).
The capital expenditure was to the benefit of the Pursuer as owner of the farm and lands of Balgown. In arriving at the deficit on the Pursuer’s capital account of £225,218 as at the relevant date referred to above, the total additions of £125,746 have been deducted from his capital account.
6. As at 30 November 2013, the Defender’s capital account in the firm of S & E Parker had a surplus to the extent of £32,647.
7. The Pursuer’s father was a partner of the firm of Hugh Parker & Sons together with the Pursuer’s grandparents and uncle. The firm of Hugh Parker & Sons acquired title to Balgown Farm in 1964. A true and accurate copy of the relevant disposition is lodged at 6/4 of process.
8. The Pursuer’s parents commenced trading in partnership as G & S Parker with effect from 1st January 1978. They entered into a Contract of Co-Partnery on 21st April 1978, which Contract was registered in the Books of Council and Session on 25th May 1978. A true an accurate copy of the said Contract of Co-Partnery is lodged at 6/5 of process.
9. The firm of G & S Parker acquired the farm of High Ervie in 1981. A true and accurate copy of the relevant disposition is lodged at 6/7 of process.
10. The pursuer’s parents assumed their three sons, Robert, Ian and the Pursuer, as partners of the firm of G & S Parker with effect from 1st October 1987. A true and accurate copy of the Minute of Agreement in terms of which the Pursuer and his brothers were assumed into the partnership is lodged at 6/6 of process.
11. In 1988, the Pursuer and his brother acquired Drumdow Farm. A true and accurate copy of the relevant disposition is lodged at 6/8 of process. The farm was operated by the firm of G & S Parker. The search sheet relative to the said farm is lodged at 7/9 of process.
12. With effect from 30th November 1992, the Pursuer’s brother, Robert retired from the partnership of G & S Parker. His retiral from the partnership was regulated by a Minute of Agreement entered into between the partners of the firm dated 4th December 1992 and registered in the Books of Council and Session on 30th December 1992. That Minute of Agreement also varied the terms of the original Contract of Co-Partnery. Inter alia, it was agreed that Drumdow Farm would no longer be operated by the partnership. A true and accurate copy of the said Minute of Agreement is lodged at 6/9 of process. In 1995, the Pursuer and his brother, Ian, disponed their interest in Drumdow Farm to Robert with entry as at 31st December 1992. They did so in part implement of their agreement. A true and accurate copy of the relevant disposition is lodged at 6/11 of process.
13. The Pursuer’s parents gifted to Ian and the Pursuer a one quarter pro indiviso share each in Balgown Farm by disposition dated 18th November 1994 and recorded in the General Register of Sasines for the County of Wigtown on 27th March 1995 and gave entry as at 31st December 1992. A true and accurate copy of the said disposition is lodged at 6/10 of process. The effect of the disposition in favour of the Pursuer and Ian, was that the Pursuer’s parents, Ian and the Pursuer each held a ¼ pro indiviso share in Balgown Farm.
14. The Pursuer’s brother, Ian acquired Broadfield Farm in his sole name on 16th April 1996. A copy of the relevant disposition is lodged at 6/12 of process. A sum of £213,900 exclusive of VAT was paid for the property.
15. The Pursuer’s parents made capital transfers through the firm of Messrs G & S Parker to the Pursuer and Ian in the financial year ending 31 December 1996. The Pursuer and Ian each received capital transfers of £94,726. Personal drawings and the said capital transfers taken by the Pursuer’s parents reduced their capital accounts in the said firm to nil. As at 31 December 1995, the Pursuer’s capital account stood at £71,803. In the financial year ending 31 December 1996, his share of profit was £23,639 and his personal drawings were £15,990. Taking into account the capital transfer from his parents, the Pursuer’s capital account stood at £173,728 as at 31 December 1996. As at 31 December 1995, Ian’s capital account stood at £73,074. In the financial year ending 31 December 1996, his share of profit was £23,239 and his personal drawings were £241,402. Taking into account the capital transfer from his parents, the effect of same was to leave Ian’s capital account in deficit of £50,813 as at 31 December 1996. (7/5)
16. The Pursuer’s parents resigned from the partnership with effect from 31st December 1996.
17. By disposition dated 30th May 1997 and recorded in the General Register of Sasines for the County of Wigtown on 30th June 1997 and giving entry as at 31st December 1996, the Pursuer’s parents gifted their remaining interest in Balgown Farm equally between the Pursuer and Ian. Certain fields were excepted therefrom in terms of a disposition by the Pursuer’s parents in favour of his brother, Robert. A true and accurate copy of the said disposition is lodged at 6/14 of process. The effect of the disposition in favour of the Pursuer and Ian was that the Pursuer and Ian each held a one half pro indiviso share in the property. A true and accurate copy of the relevant disposition is lodged at 6/13 of process.
18. The Pursuer’s brother, Ian, retired from the partnership with effect from 31st October 1997, leaving the Pursuer the sole proprietor of the business of G & S Parker. The terms upon which he retired from the partnership and upon which Ian’s interest in Balgown Farm was transferred to the Pursuer are contained within a Minute of Agreement dated 18th December 1997. A true and accurate copy of the said Minute of Agreement is lodged at 6/15 of process.
19. In part implement of the said Minute of Agreement of 18 December 1997, by disposition dated 18th December 1997 and registered in the Land Register on 30th January 1998 Ian and the Pursuer, as heritable proprietors each to the extent of one half pro indiviso, conveyed the farm and lands of Balgown to the Pursuer alone. The date of entry was 31st October 1997. Stamp duty was paid on transfer of Ian’s interest. A true and accurate copy of the relevant disposition is lodged at 6/16. The land was registered under title number WGN497. A true and accurate copy of the land certificate is lodged at 6/17 of process.
20. In part implement of the said Minute of Agreement of 18 December 1997 and in particular Clause Two thereof, the Pursuer granted a Standard Security over the farm and lands of Balgown in favour of Ian on 2 June 2000. A copy of the Standard Security granted by the Pursuer is produced at 7/10 of process.
21. In part implement of the said Minute of Agreement of 18 December 1997, the Pursuer obtained an overdraft with Royal Bank of Scotland in his sole name to repay the overdraft of the firm of G & S Parker. On 26 January 1998, the Pursuer transferred £400,702.86 from account number 00151439 in the name of Stuart Harrower Parker T/A G & S Parker into account number 00236299 in the name of the firm of G & S Parker (6/53 (statement 5) and 6/52 (statement 503) of process). The Pursuer granted a new Standard Security over the farm and lands of Balgown in favour of the Royal Bank of Scotland on 30th January 1998. That Standard Security remained in place as at the relevant date and is in place as at January 2014.
22. True and accurate copies of accounts for the firm of G & S Parker for the financial years ending 31st December 1994-1997 (inclusive) are lodged at 7/3-6 of process.
23. True and accurate copies of accounts for the Pursuer’s sole trading business, Stuart H Parker, trading as G & S Parker for the financial years ending 31st December 1998 to 2001 (inclusive) are lodged at 6/21-6/24 of process.
24. True and accurate copies of accounts for the firm of Messrs S & E Parker for the financial years ending 31st December 2002 to 2012 (inclusive) are lodged at 6/25-6/33, 6/46 and 6/35 of process.
25. The Defender had a balance of approximately £15,000 on a Royal Bank of Scotland Bonus 30 annual account number 00680245 as at the relevant date and currently. These sums emanated from funds inherited by the defender following the death of her mother. (7/19-22)”
[4] In addition to agreement in relation to these factual matters, the pursuer and defender had each lodged prior to the proof a “Note of Dispute of Issues” in which they identified what they considered to be the matters which required determination by the court. There was broad agreement between the parties as to the issues in dispute between them. These may be summarised as follows:
(a) Whether one half of the pursuer’s interest as heritable proprietor in the farm and lands of Balgown falls within the definition of matrimonial property;
(b) The value of the pursuer’s interest and the value of one half of his interest at the relevant date;
(c) If one half of the pursuer’s interest forms matrimonial property, should the net value of the matrimonial property be divided equally or is unequal sharing justified by special circumstances as provided in sections 10(6)(a), (b) and (d) of the Family Law (Scotland) Act 1985 (the “1985 Act”), and if so to what extent;
(d) Do special circumstances exist justifying unequal sharing of the parties’ respective interests in the firm of S & E Parker and, if so, to what extent;
(e) Whether the defender has suffered economic disadvantage as a result of capital expenditure by the said firm on the farm and lands of Balgown;
(f) Whether the pursuer has sustained economic advantage as a result of the contributions of the defender in terms of her work on the farm and in terms of capital expenditure by the firm of S E Parker on the farm and lands of Balgown during the parties’ marriage;
(g) Whether the defender has suffered economic disadvantage in the interests of the pursuer and the parties’ children;
(h) Whether, and if so to what extent, the defender has supported herself and the parties’ children from capital held in her name at the relevant date. If so has she thereby suffered economic disadvantage in the interests of the pursuer and the parties’ children;
(i) In the event that an economic advantage or disadvantage has been sustained has that been balanced by any economic advantage or disadvantage sustained by the other person;
(j) Whether the defender will require a period to adjust to the loss of the defender’s support after divorce and, if so, the period over which she will require to adjust and the amount of any periodical allowance required; what level of financial provision would be reasonable having regard to the present and foreseeable resources of the pursuer to make payment and financial provision to the defender;
(k) Whether it is reasonable for the whole or part of the farm and lands of Balgown to be sold in order for the pursuer to make financial provision to the defender; and
(l) Whether interest should be payable on any capital sum awarded to the defender and, if so, from what date and at what rate of interest.
[5] The foregoing issues require to be determined having regard to the principles enunciated in the 1985 Act. The relevant provisions are as follows:
“8.(1) In an action for divorce, either party to the marriage…may apply to the court for one or more of the following orders-
(a) An order for the payment of a capital sum to him by the other party to the action;
(aa) An order for the transfer of property to him by the other party to the action;
(b) An order for the making of a periodical allowance to him by the other party to the action;
…
(2) Subject to sections 12 to 15 of this Act, where an application has been made under subsection (1) above, the court shall make such order, if any, as is –
(a) Justified by the principles set out in section 9 of this Act; and
(b) Reasonable having regard to the resources of the parties.
…
9.(1) The principles which the court shall apply in deciding what order financial provision, if any, to make are that –
(a) The net value of the matrimonial property should be shared fairly between the parties to the marriage…
(b) Fair account should be taken of any economic advantage derived by either person from contribution by the other, and of any economic disadvantage suffered by either person in the interests of the other person or of the family;
(c) Any economic burden of caring, should be shared fairly between the persons –
(i) After divorce, where a child of the marriage under the age of 16 years;
…
(d) A person who has been dependent to a substantial degree of the financial support of the other person should be awarded such financial provision as is reasonable to enable him to adjust, over a period of not more than 3 years from,
(i) The date of the decree of divorce, to the loss of that support on divorce;
…
(e) A person who at the time of the divorce … seems likely to suffer serious financial hardship as a result of the divorce … should be awarded such financial provision as is reasonable to relieve him of hardship over a reasonable period.
(2) In subsection (1)(b) above and section 11(2) of this Act –
“economic advantage” means advantage gained whether before or during the marriage … and includes gains in capital, in income and in earning capacity and “economic disadvantage” shall be construed accordingly;
“contributions” means contributions made whether before or during the marriage …; and includes indirect and non-financial contributions and, in particular, any such contribution made by looking after the family home or caring for the family.
10(1) In applying the principles set out in section 9(1)(a) of this Act, the net value of the matrimonial property … shall be taken to be shared fairly between the persons when it is shared equally or in such other proportions as are justified by special circumstances.
(2) Subject to subsection 3(A) below the net value of the person’s property shall be the value of the property at the relevant date after deduction of any debts incurred by one or both of the parties to the marriage …
(a) before the marriage so far as they relate to the matrimonial property … and
(b) during the marriage…which are standing at that date.
3. In this section “the relevant date” means whichever is the earlier of –
(a) subject to subsection (7) below, the date on which the persons ceased to cohabit;
(b) the date of the service of the summons in the action for divorce …
4. Subject to subsections (5) and (5A) below, in this section and in section 11 of this Act “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 done by way of gift or succession from a third party) –
(a) before a marriage for use by them as a family home or as furniture or plenishings for the family home; or
(b) during the marriage but before the relevant date.
…
6. In subsection (1) above “special circumstances”, without prejudice to the generality of the words, may include –
(a) the terms of any agreement between the persons on the ownership or division of any of the matrimonial property or partnership property;
(b) the source of the funds or assets used to acquire any of the matrimonial property or partnership property where those funds or assets were not derived from the income or efforts of the persons during the marriage;
(c) any destruction, dissipation or alienation of property by either person;
(d) the nature of the matrimonial property, the use made of it (including use for business purposes or as a family home) and the extent to which it is reasonable to expect it to be realised or divided or used as security;
(e) the actual or prospective liability for any expenses of valuation or transfer of property in connection with the divorce…
11(1) In applying the principles set out in section 9 of this Act, the following provisions of this section shall have effect.
(2) For the purposes of section 9(1)(b) of this Act, the court shall 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…
(3) For the purposes of section 9(1)(c) of this Act, the court shall have regard to –
(a) any decree or arrangement for aliment for the child;
(b) any expenditure or loss of earning capacity caused by the need to care for the child;
(c) the need to provide suitable accommodation for the child;
(d) the age and health of the child;
(e) the educational, financial and other circumstances of the child;
(f) the availability and cost of suitable childcare facilities or services;
(g) the needs and resources of the persons;
(h) all the other circumstances of the case.
(4) For the purposes of section 9(1)(d) of this Act, the court shall have regard to –
(a) the age, health and earning capacity of the person who is claiming the financial provision;
(b) the duration and extent of the dependence of that person prior to divorce…
(d) the need and resources of the persons; and
(e) all the other circumstances of the case.
(5) For the purposes of section 9(1)(e) of this Act, the court shall have regard to –
(a) the age, health and earning capacity of the person who is claiming the financial provision;
(b) the duration of the marriage…
(c) the standard of living of the persons during the marriage…
(d) the needs and resources of the person; and
(e) all the other circumstances of the case.”
[6] At the proof the pursuer gave evidence. His brother Ian Parker gave evidence in relation to the background of the farming partnership of S & E Parker. A chartered surveyor, Ms Claire Maxwell gave evidence and produced a valuation relative to the farm of Balgown on behalf of the pursuer. Additional evidence in relation to the value of that property was adduced by the pursuer from Alan Paterson, a senior land agent. Mr Seamus Donnelly, a consultant with the Scottish Agricultural College, gave evidence in relation to a whole term review of Balgown he had prepared. Lastly evidence was adduced by the pursuer from Mr Lyle Millar, CA, a partner in the firm of accountants who had acted for both the pursuer and the firm of S & E Parker for the entire period relative to this action. The defender gave evidence herself and adduced valuation evidence in relation to the farm at Balgown from Matthew Bell, chartered surveyor and Alistair McMillan, a property advisor. A further witness, Mr David Allen, a retired agricultural consultant, gave brief evidence in relation to the work undertaken by the defender during the currency of the marriage on the farm at Balgown.
[7] In relation to the marriage there was very brief evidence, and very little disagreement between the pursuer and the defender. There was agreement that the parties had ceased to cohabit on 1 December 2011. The pursuer had removed from the matrimonial home, which was the farmhouse at Balgown and taken up residence in a nearby cottage property that he owned, albeit that he continued to work full time on the farm and was present there on a daily basis. The defender remained with the two children in the farmhouse. That situation pertained at the date of the proof. The pursuer indicated that there was no formal arrangement for him to see the children but that he tried to see them about once a week. He said that he saw them around the farm when he was working there and indicated that this might be for as little as 5 or 10 minutes or as much as perhaps half an hour. He said that he made efforts to communicate with them but that they “didn’t respond to me”. He was not seeking any order in relation to contact with the children. All this was confirmed by the defender. She indicated, in evidence that was not challenged, that she had sole responsibility for the care and upbringing of the children. She attended to all their material needs, took them to and from school and the various social and sporting activities which they engaged in. The children were well looked after, content and were progressing well at school.
[8] The pursuer gave evidence as to his and his family’s history in relation to Balgown Farm, this evidence was not surprisingly unchallenged, but was in any event confirmed at least in part from material in the joint minute. The pursuer’s grandfather came to the farm in about 1926 as a tenant farmer. He had three sons, one of them the pursuer’s father. At some time after 1926 a farming partnership was created named “Hugh Parker & Sons” in which the partners were apparently both the pursuer’s grandparents, his father and an uncle. That farming partnership acquired title to Balgown Farm in 1964 (paragraph 7 of the joint minute). Hugh Parker & Sons appear to have continued to farm Balgown until by contract of co-partnery with a commencement date of 1 January 1978 the pursuer’s parents commenced trading in partnership with the firm name “G & S Parker” (paragraph 8 of the joint minute). In 1981 the firm of G & S Parker acquired the farm of High Ervie (paragraph 9 of the joint minute) which was about one and a half miles from Balgown. Thereafter the two farms appear to have been farmed as one farming unit.
[9] The pursuer left school in about 1982 and immediately began work on the farming unit of Balgown and High Ervie. At this time his parents were also involved in the farming operation as were his two elder brothers. The unit was worked very much as a family farm with all members of the family working thereon. With an effective date of 1 October 1987 the pursuer’s parents assumed their three sons as partners in the firm of G & S Parker (paragraph 10 of the joint minute). In 1988 the pursuer and his brothers acquired another local farm, Drumdow Farm (paragraph 11 of the joint minute). This farm neighboured Balgown Farm and, albeit owned by the brothers, was operated as part of the farming unit by G & S Parker.
[10] The next major change occurred with effect from 30 November 1992 when the pursuer’s brother, Robert Parker, retired from the partnership of G & S Parker (paragraph 11 of the joint minute). As part of the agreement regulating Robert’s retiral from the partnership it was agreed that Drumdow Farm would no longer be operated by the firm. Subsequently in 1995 the pursuer and his brother Ian Parker, disponed their interest in Drumdow Farm to Robert Parker, albeit with a deemed date of entry as at 31 December 1992. At the same time as Robert Parker went his way with Drumdow Farm the pursuer’s parents gifted to him and his brother Ian a one quarter pro indiviso share in Balgown Farm albeit this was formalised by a deed dated 18 November 1994 (paragraph 13 of the joint minute). The situation after 31 December 1992 therefore was that Balgown Farm continued to be run by the firm of G & S Parker, with the pursuer and his brother Ian having a one quarter interest in the firm property. At this stage the farm of High Ervie remained a part of the farming operation centred at Balgown Farm.
[11] The next major re-organisation of the business of G & S Parker occurred in 1996. The pursuer’s evidence was that in anticipation of his marriage Ian Parker wished to acquire a farm of his own. The pursuer and Ian Parker also spoke in this connection with the wishes and intention of their parents. That intention was that each of the three sons of Mr and Mrs Parker senior should acquire a farm of their own. The mechanics of how their wish was achieved so far as the pursuer and his brother Ian were concerned is set forth in paragraphs 14-21 of the joint minute. It has to be said that notwithstanding the terms of the joint minute in evidence neither the pursuer nor Ian Parker were able to explain how exactly their parents’ objective was to be achieved beyond a general intention that the farm at Balgown should in some way or another provide the vehicle to achieve that objective. Part of the objective of Mr and Mrs Parker senior had, by 1996, been achieved with the provision of Drumdow Farm as a property and business for Robert Parker. On 16 April 1996 the pursuer’s brother Ian Parker acquired for a consideration of £213,900 Broadfield Farm in Lanarkshire. The evidence was that Broadfield Farm was to provide both a business and residence for Ian Parker and his wife. At the time of acquisition Broadfield Farm lacked a suitable farmhouse and also lacked the necessary sheds and buildings required for the operation of a dairy farm. These were accordingly built, the cost of such works coming, on the evidence of the pursuer, from the account of the firm of G & S Parker. At about this time, in the spring of 1996, there was discussion between the partners of G & S Parker as to the future of the business. The tenor of that discussion appears on the evidence to have been in the nature of a family settlement. It also emerged from the evidence that as a matter of fact the person with the ultimate say in how any distribution of assets would be achieved was the pursuer’s father. The upshot of these discussions was that High Ervie Farm was sold. Mr and Mrs Parker resigned from the partnership of G & S Parker with effect from 31 December 1996. By disposition dated 30 May 1997, but with date of entry as at 31 December 1996, Mr and Mrs Parker senior gifted their remaining interest in Balgown Farm equally between the pursuer and Ian Parker. Thereafter the stock and farming equipment at Balgown were divided equally between the pursuer and Ian Parker. Ian Parker retired from the partnership with effect from 31 October 1997 leaving, at that stage, the pursuer as the sole proprietor of the business of G & S Parker.
[12] The pursuer’s evidence into the exact nature of the transactions involving himself, his parents and his brother Ian Parker relative to Balgown Farm in 1996 and 1997 was, regrettably, not precise. In so far as I could determine the nature of his evidence was that the transactions all formed part of an arrangement, the object of which was the furtherance of his parents’ desire and intention that each of their three sons should obtain a farm. The pursuer’s evidence was that in the Spring of 1996, after his brother Ian Parker had bought Broadfield Farm, the family discussed splitting up of the farms. The cattle and farm equipment was split down the middle. An outside valuation of the farm stock and equipment was obtained to use as a guide. A value was also obtained in relation to Balgown Farm, although no valuation was produced at proof and the pursuer was unable to give precise evidence as to its contents. The best he could remember was that Balgown Farm was valued at “about £800,000”. He also remembered that he required to obtain an overdraft and also “wrote a cheque for £450,000 on the G & S Parker account” as a means of effecting the transaction. He was aware that his brother Ian was “not very happy” with the transaction, presumably because he thought he was doing less well out of the arrangement. There was some delay, presumably as a result of his brother’s discontent with the arrangement, in a disposition transferring the farm to the name of the pursuer. The relevant disposition discloses that the transfer was “For certain good causes” without further specification. The pursuer was unaware as to why this language was used, the technicalities of the disposition were matters he left to “the lawyers”. He did state that the firm’s accountants and lawyers gave advice on the transaction. It was also clear that the ultimate arbiter of who got what was his father. The pursuer’s understanding ultimately resolved to the position that he ended up owning Balgown Farm, but also had the burden of a substantial overdraft. His brother, Ian, ended up with Broadfield Farm in Lanarkshire and in addition acquired half the stock and equipment from Balgown. Broadfield Farm was substantially smaller than Balgown, but his brother was not burdened with the overdraft which the pursuer had undertaken in order to give effect to these arrangements.
[13] The pursuer thereafter gave evidence about his relationship with his wife, the defender and her involvement in Balgown Farm. He indicated that his wife came from Northern Ireland and was a teacher. She moved to Scotland when they married. For a short period after the marriage, to be measured in months, she taught in Stranraer Academy. The pursuer’s position was that his wife did not enjoy teaching after the marriage and gave it up after perhaps two or three months. He stated that he neither encouraged her nor discouraged her with that course. The pursuer accepted that after she gave up teaching his wife assisted him on the farm, albeit his evidence was that her contribution was limited. He said that she helped him to feed the calves. He also said that she kept the books of the farm for a while, but did not do this job very well. He said that there came a time when the firm’s accountants complained that the books were not kept in an adequate fashion. He accepted that the accountants gave his wife some advice and instructions on the keeping of books, but that despite such intervention he ultimately required to employ a book-keeper. In relation to her assistance with the rearing of calves, he said this was not full time and involved no more than half an hour in the morning and a similar time in the evening. That task had, in any event, been made easier during the course of the marriage when he purchased an automatic feeder. The calf-rearing task did not involve the whole year, only the period September through May in each year. He also said that his wife’s involvement in the farm reduced after the birth of the children. He did accept that it was her responsibility to look after the family house, which was the farmhouse, and care for and look after the children.
[14] In terms of a Contract of Partnership dated 17 March 2002 with effective dates from 1 December 2001, the pursuer and defender entered into a Contract of Partnership in respect of the farming business of “S & E Parker” carried on at Balgown Farm. In terms of that partnership the parties agreed that the title to the farm of Balgown remained in the name of the pursuer as an individual and that the heritable property of the farm was not an asset of the partnership. The contract further agreed that the profits and losses of the firm shall be apportioned in favour of the pursuer to the extent of 55% and the defender to the extent of 45%. The pursuer explained that the partnership was entered into on the advice of “the accountants and lawyers” which was given, in so far as he understood it, for tax purposes.
[15] In relation to proposals for the future, the pursuer indicated that he proposed paying £525 per month for each child of the marriage. As at the date of proof, the defender remained a partner in the firm of S & E Parker and had up until that time continued to draw her share of the profits, which she used to maintain the farmhouse and pay for her own support and that of the children. The partnership is to be dissolved and it was the pursuer’s intention to continue to farm Balgown as an individual. He was currently residing in a cottage property adjacent to the farm which he owned. This property had a capital value in the order of £170,000. It was his intention that it should be available in the future for use by a dairyman. The pursuer accepted that the defender and the children required a place to live. He had been shown particulars of properties, produced by both his solicitors and the defender, which purported to show houses which would be suitable for the defender and the children. These properties had a span of value between about £190,000 and £270,000. His stated view in evidence was that there were properties in the area on sale for about £230,000, which would provide suitable accommodation for the defender and the children. He was prepared to provide the funding of such a property. He had had discussions with his bank and a letter was produced, which indicated that the bank would be prepared to advance him, by way of loan, the sum of £280,000. He did not consider that he should expend all of that money in purchasing the defender a house. His position was that some reserve had to be maintained because of work which was necessary on the farm. In that regard he had already had communication from SEPA indicating that the present slurry pond on the farm was inadequate and would require to be improved. The milking parlour, although adequate, was also in need of modernisation. In order to retain the productive capacity of the farm attention, and capital expenditure, would be required for these matters. The pursuer did not appear to have seriously considered a proposal made by the defender to split the farm. When asked about this, he indicated he did not consider it viable.
[16] The pursuer’s evidence in relation to the events surrounding the farm property at Balgown in 1996 and 1997 was broadly confirmed in evidence by his brother Ian Parker.
[17] The pursuer’s mother, Mrs Elaine Parker, swore an affidavit which was lodged in process. The defender did not challenge this affidavit by seeking to cross-examine the deponent. The affidavit was brief, the relevant paragraph being in the following terms:
“I give this affidavit to confirm to the court that Stuart’s late father, my husband, John Dunlop Parker, always said he did not wish his sons to be beholden to other people. It was his firm intention that each of his sons would own their own farm and be in charge of that. Throughout our marriage we worked extremely hard, not spending significant amounts of money, towards that goal. This was to ensure that we could give our sons this privilege.”
[18] The pursuer adduced evidence from Seamus Donnelly, a senior consultant and area manager with the Scottish Agricultural College in Stranraer. Mr Donnelly knew the pursuer and had prior to his involvement in the current case undertaken work on his behalf. For the purposes of this litigation he prepared a “Whole Farm Review” dated 18 December 2013 of Balgown Farm, the purpose of which report was to identify likely future capital expenditure requirements for the farm and to address any issues pertaining to farm management which he could identify as a result of his investigations.
[19] As a result of his investigation he identified problems in relation to the limited slurry storage capacity available on the farm, potential problems in relation to dated parlour facilities and consequent inefficiencies in farm operation and the desirability to invest in the machinery employed in the farm operation. He formed the view that with its current level of output based on the size of the dairy herd there were problems in generating sufficient income to address these capital requirements. He also expressed concern in relation to the overall debt burden accrued by the farming partnership and the risk ongoing caused by the level of debt particularly in the event of interest rates rising.
[20] Ms Claire Maxwell valued Balgown Farm on behalf of the pursuer. Ms Maxwell is a member of the RICS employed by John Neil, Rural Land Agents and Valuers, Castle Douglas. She inspected the farm premises on 18 March 2013 and prepared a report dated 3 April 2013 which was lodged as a production in the case (number 6/56 of process). The subjects were valued as at 4 December 2011 and as at the date of her inspection. The valuation of the farm was on a Market Value basis. The subjects were described as an agricultural unit with a single residential dwelling extending to 404.65 acres currently used as a working dairy farm. The farm was noted to be split into three areas by a public road and a private track with the house and the steading in the north of the subjects. The farm was said to be currently milking a 170 dairy cow herd with some silage production also undertaken. Ms Maxwell described the land as appearing “to be in generally good heart throughout” although on inspection she noted “wet areas” which “along with the presence of rushes” suggested to her potential drainage issues. In addition to her report Ms Maxwell produced four further documents (numbers 6/57-60 of process) being; a schedule of properties which she considered were appropriate comparables to assist in her valuation of Balgown Farm: a survey produced based on a map showing her breakdown of Balgown Farm into fields, with each field numbered; two tables, one dated as at 4 December 2011 the other at 18 March 2013 of the fields as identified on her map, acreages for each field and the land class she attributed to each field, and the value ascribed to each field. The method of valuation employed was to identify the various land types on the farm and then attribute each area to a class using the system and guidelines for land capability for agriculture employed by the Macaulay Institute. This form of land classification is the system widely used in Scotland by agriculturists, planners, estate agents and others as the basis of valuation of agricultural land. The classification of the farm lands by use of that method gave a base value per acre for each of the constituent land types of the farm and thereafter a base valuation of the farm premises. Ms Maxwell thereafter applied a “Comparable Valuation Method” to arrive at a final value. Applying the methodology I have described Ms Maxwell valued the property at the figure of £1,480,000 as at 4 December 2011 and £1,450,000 as at 18 March 2013.
[21] The pursuer produced and relied upon a further valuation of Balgown Farm. This second report was dated 11 December 2013 and was prepared by Mr Alan Paterson (No.6/43 of process). Mr Paterson was employed as a Senior Land Agent by Wallets Marts Castle Douglas Limited, he was not a member of the RICS but his report was stated to be “verified by” a Mr Atkinson of Wallets who was a Fellow of the RICS. In evidence Mr Paterson stated that he often valued farms and adopted the method of having his valuation verified by other employees of Wallets who were members or Fellows of the RICS. Mr Paterson had inspected Balgown Farm for the purposes of preparing his report. In common with Ms Maxwell Mr Paterson’s valuation was produced on a market value basis. His description of the farm was broadly similar to that given by Ms Maxwell, albeit with more detail. In relation to the agricultural land he expressed the view that this “ranges from arable land classified 32 within the Macaulay Scale for land capability up to wetland and moorland which classifies 51 within said scale. It is noted by the inspecting reporter that the wide range and the quality of land includes rocky outcrops, wetland and moorland which at present is not drained or farmed”. He described the land as appearing “…to be in reasonable heart adequately fenced and watered”. He noted that the farm steading buildings were a mixture of traditional and modern structures and that their condition was commensurate with their age. He considered that the slurry/waste and effluent system on the farm was limited and took note that SEPA had placed notification that the slurry tower should be renewed or refurbished. He himself considered that the milking parlour would require to be renewed or refurbished in what he described as the “medium term”. In relation to the farmhouse he observed that he was not granted access for valuation purposes. Mr Paterson also had regard to comparable evidence and to this end produced a schedule detailing ten properties which he considered provided guidance as to a valuation of Balgown Farm. Mr Paterson’s valuation as at 4 December 2011 was £1,600,000. As at 10 December 2013 his valuation was in the sum of £1,800,000.
[22] Mr Lyle Millar CA had been the accountant for the farming partnership in its various guises for many years. He had prepared the accounts of the partnership for many years. He remembered being involved in the rearrangement of the farming business when the pursuer’s parents retired and the pursuer’s brother set up his own farming business. In evidence he stated that having regard to the passage of time, it was difficult for him to throw too much light on the precise nature of the arrangements simply from the accounts and bank statements which he had had access to. He had no precise recollection of the details of the transactions. What he did have a reliable memory of was that the pursuer’s father, Mr George Parker, was very firmly in control of the process. The arrangements effected were designed to reflect the wishes of Mr George Parker that both his sons should be set up in their own farming businesses and that that then existing farming partnership and its property should be the vehicle to achieve this. In Mr Miller’s words “Mr George Parker was still calling the shots, very much so”.
[23] The defender’s evidence in relation to the marital background and factual matters relating to the children of the marriage did not vary substantially from the narrative given by the pursuer. The areas where there were differences in detail were confined to her account of her contribution, in terms of work input, to the farming partnership with her husband and to her ability to work in the future and the type of property which she and the children would require for their accommodation in the future.
[24] So far as her working history was concerned, she confirmed that she qualified as a teacher in Northern Ireland and on marriage came to Scotland where she registered as a teacher. She could not obtain full time employment and accordingly undertook supply teaching for a period, apparently in Stranraer Academy. She indicated that opportunities for work as a supply teacher were sporadic and, in any event, from the outset she had a lot of work to do on the farm. The combination of inconsistencies in opportunities to work as a supply teacher and her own unavailability due to farm commitments meant that it was impracticable to pursue this route. She accordingly devoted herself to farm work. So far as she was aware, she remained registered as a teacher in Scotland but had not worked in this capacity since before the birth of her first child in 2000.
[25] In relation to farm work, the principal difference between her evidence and that of the pursuer was, perhaps not unsurprisingly, in relation to the amount of work she actually undertook. The defender maintained that she was responsible for feeding the calves on the farm, a task which she said occupied approximately an hour and a half each morning and again for the same period of time in the evening. Beyond this she undertook what she described as general farm work of which, she said, there was a lot. In addition she did at one stage attempt to look after the farm’s books albeit, as she accepted, this was not something which was ultimately successful. In addition to these duties she stated, and this was not disputed by the pursuer, that the care and upbringing of the parties’ two children devolved almost entirely to her. She was responsible for all child rearing tasks and, when the children began to attend nursery and school, taking them to and from those venues. In addition she was responsible for organising and taking them to all sporting and extracurricular activities. This position pertained at the date of proof, I have already noted the pursuer’s own evidence where he accepted that his contact with the children was limited to when he encountered them on and around the farm.
[26] The defender accepted that she was not wholly familiar with the arrangements regarding the reorganisation of the farming business in 1996/7. She was able to give evidence to the effect that the relationship between the pursuer and his brother was strained at this time. Her understanding of the situation was that this arose from Ian Parker’s belief that he had fared less well than his brother, the pursuer had in the rearrangement of the farming business. She was aware that at a later date she had become a partner in a new farming partnership with her husband but did not dispute that this was on advice tendered by the accountants that it was beneficial for tax purposes to adopt this structure. She was also aware that the pursuer had incurred what she described as a “huge overdraft” to fund the new partnership. She stated in evidence that one of the reasons that she had given up teaching to devote more time to working on the farm was to help in the attempt to clear or reduce this liability.
[27] In relation to her accommodation needs she first of all stressed that the farm house where she and the children continued to reside had been thoroughly modernised at her instigation and under her direction. She did not appear to dispute that the farm house was either essential, or at least a desirable adjunct to the operation of the farm. She did not appear to object in principal to requiring to remove from these premises and obtain alternative accommodation. She wished accommodation in a rural setting but within easy travelling distance from Stranraer. Her reasons were that the children had been brought up in a rural environment on the farm and would be more used to this type of accommodation setting. She required to be close to Stranraer because that was where both children attended school. Both children were at an age where they had a lot of extracurricular activities and she therefore required to be in and out of Stranraer on a regular basis. She was also anxious that any accommodation purchased should be relatively close to the farm as she considered it desirable and in the best interests of the children that they maintained contact both with their father and with the place and home they had known throughout their lives.
[28] In relation to the value of the farm, the defender relied upon the evidence of Mr Mathew Bell, a chartered surveyor employed by H & H Land & Property. Mr Bell produced two reports, an initial report based upon an inspection of Balgown Farm on 25 April 2013 (number 7/1 of process) and a supplementary report dated 16 January 2014 (number 7/40 of process). Mr Bell’s evidence was supported by evidence from Mr Alistair McMillan, who although not a chartered surveyor, had worked as a property valuer and assessor in the south west of Scotland for many years, latterly with H & H Land & Property. He had very considerable experience and a long history and knowledge of land and farm sales transactions in the area. Mr McMillan did not produce a report but indicated that he had seen Mr Bell’s report (number 7/1 of process). Mr Bell had carried out a RICS red book valuation and was an RICS registered valuer. His valuation was one which would be relied upon by lenders. Mr Bell’s description of the extent of the farm lands coincided with that of Ms Maxwell. His description of the farmhouse was consistent with that of Ms Maxwell, albeit he had the advantage of internal inspection of the subjects. His description of the farm buildings was broadly consistent with that of Ms Maxwell. In relation to the farm land he expressed the view that “The soils on the holding comprise of the Macauley Institute for Soil Research Group 3.” He noted that “There are certain areas of land which had suffered from the recent poor weather but will easily recover with some minor drainage work.” In relation to market conditions he observed:
“The current market for large dairy farms, like Balgown Farm in this particular area is good. The number of people bidding to purchase large modern well equipped dairy farms is increasing. The property is such that it would be attractive to local, regional and even national buyers and would in the event of sale be best marketed as a whole. It would be possible to lot a couple of the outlying fields to provide some flexibility in marketing.”
His valuation of the property at 4 December 2011 was £2,200,000. His valuation as at 25 April 2013 was £2,250,000. Mr McMillan had conducted a similar exercise, albeit without adopting such a technical approach to land valuation. In essence he considered that Mr Bell’s valuation of £2.2 million at the relevant date was fair and accurate.
[29] As already noted the parties in advance of the proof identified a number of issues (see paragraph [4] hereof). I propose to deal with these issues in a different order from that set out by the parties. The first of these issues I address was whether one half of the pursuer’s interests as heritable proprietor in the farm of Balgown falls within the definition of matrimonial property. The pursuer’s submission based on the evidence was that it did not, by contrast the defender submitted that it did.
[30] The relevant statutory provision is section 10(4) of the 1985 Act which defines matrimonial property as:
“… all the property belonging to the parties or either of them at the relevant date which was acquired by them or him (otherwise then by way of gift or succession from a third party) - …
(b) during the marriage but before the relevant date.”
The pursuer is the owner of Balgown Farm. The way in which he acquired ownership of this property emerges clearly from the evidence and the joint minute. In 1994 the pursuer and his brother Ian were each gifted by their parents a one quarter share of the property (paragraph 13 of joint minute). By disposition dated 30 May and recorded in the General Register of Sasines on 30 June both days in 1997 but with a date of entry at 31 December 1996 the pursuer’s parents gifted their remaining interest in Balgown Farm to him and his brother Ian (paragraph 17 of the joint minute). The pursuer and his brother then entered into a Minute of Agreement dated 18 December but with an effective date of 31 October both days of 1997 whereby Ian agreed to transfer his one half share in the farm to the pursuer (paragraph 18 of the joint minute). This agreement was given effect to by a disposition dated 18 December 1997 recorded in the General Register of Sasines on 30 January 1998 (paragraph 19 of the joint minute). It is clear from this that the pursuer acquired a one half interest in the property by way of gift and subsequently acquired the remaining half interest in the property by means of disposition in 1997. The parties were married on 26 September 1996. The parties are agreed that the relevant date is 1 December 2011. At that latter date the pursuer continued to have an interest in the property. It follows that by application of the statutory test the pursuer acquired one half of the relevant property during the marriage but before the relevant date. The only qualification to be considered is whether that property was acquired “by way of gift or succession from a third party”. As the defender noted in submission the pursuer did not offer to prove that the property was acquired by either of these methods. It also seems clear from the evidence which I have narrated that the property was not acquired by either of these means. It follows that I am of the view that one half of the pursuer’s interest in Balgown Farm falls to be regarded as matrimonial property.
[31] The next question for determination is whether the net value of the matrimonial property should be divided equally or is an unequal sharing justified by special circumstances. The general principle is that the net value of the matrimonial property should be shared fairly between the parties to the marriage (section 9(1)(a) of the 1985 Act). This is amplified by section 10(1) of the 1985 Act which provides that the:
“… net value of the matrimonial property … shall be taken to be shared fairly between the persons when it is shared equally or in such other proportions as are justified by special circumstances.”
Section 10(6) of the 1985 Act identifies examples of “special circumstances”. The pursuer’s submission was that an unequal division was justified in the circumstances of the present case by reference to the source of funds used to acquire Balgown, that is by reliance on section 10(6)(b) of the 1985 Act. It was submitted that even if there was some kind of consideration for the transfer of the farm to the pursuer then it did not take account of the full value of the subjects. It was noted that stamp duty was paid upon the sum of £148,000 but how that sum was derived at was unclear from the evidence. The sum was said not to represent the value of a one half share of the land at the relevant time. It was also observed that on the evidence valuations of Balgown Farm and Broadfield Farm which were acquired by the pursuer’s brother were influenced by the views of the pursuer’s late father. Similarly the value to be put on the assets which were to be split was influenced by the pursuer’s late father in the same way. Reference is made to the evidence given by the pursuer, his brother and indeed by the defender that the pursuer’s brother felt hard done by the terms of the transaction. Reference was made to a number of authorities where unequal sharing had been allowed, albeit it was accepted that these were illustrative only (Whittome v Whittome 1994 SLT 114, Davidson v Davidson 1994 SLT 506, RVR 2000 Fam LR 43 and MacLean v MacLean 2001 Fam LR 118). The defender submitted that no special circumstances existed in Balgown Farm and that unequal sharing was not justified. It was submitted that there was a strong presumption in favour of equal sharing of matrimonial property. Even where special circumstances existed the court was not necessarily required to divide the matrimonial property in unequal proportions. The decision was discretionary having regard to the principles to divide the matrimonial property in a way which achieves fairness. It was accepted that the manner was essentially discretionary and aimed at achieving a fair and practicable result in accordance with common sense (Jacques v Jacques 1997 (SC HL) 20 at 22 approving the dictum of the LP (Hope) in Little v Little 1990 SLT at 781).
[32] In relation to this question I consider that it is necessary to have regard to the totality of the evidence relating to the pursuer’s acquisition of his interest in Balgown Farm. It seems clear on the evidence, and was in fact accepted by the defender in her evidence, that the arrangements regarding Balgown Farm were effectively determined by the pursuer’s late father. Strictly the property had once belonged to the pursuer’s father and his wife, the pursuer’s mother. As is clear from that lady’s affidavit it was the father’s wishes that were determinative in regard to the distribution of his property. The late Mr Parker’s intention appears to have been formed many years prior to the pursuer’s acquisition of Balgown Farm. A fairly clear picture of these intentions emerges from the evidence. That intention was that each one of his three sons should be established in a farm of their own. The whole tenor of the evidence of the pursuer, his brother, his mother and Mr Lyle the chartered accountant was that the asset represented by Balgown Farm was to be employed as a means of achieving this end. That objective insofar as the eldest of the late Mr Parker’s three sons was achieved a number of years before the pursuer’s acquisition of Balgown Farm and did not figure in the evidence in this case. The transactions whereby the pursuer acquired Balgown Farm and his brother acquired Broadfield Farm did however feature in the evidence. It is fair to say that no precise explanation of the transactions was established in evidence. What was however in my view clear was that the transactions were designed with a view to achieving the objective of both Stuart and Ian Parker owning their own farm. So far as Stuart was concerned that meant his having the ownership of Balgown Farm, albeit encumbered with a significant overdraft liability. That liability was incurred as a necessary part of the arrangements designed to achieve the late Mr Parker’s desired intention. The question is therefore whether this arrangement is capable of constituting “special circumstances” within the meaning of that term in section 10(6)(b) of the 1985 Act. It is accepted by the defender that whether or not special circumstances are established is an exercise of discretion on the part of the court albeit that the purpose of that discretionary exercise must be “achieving a fair and practicable result in accordance with common sense”. These principles are wide. Applying them to the present case it would seem to me to be a matter of common sense that a family arrangement, long planned and carefully thought out with the assistance of professional advisors and with the specific aim of establishing a family member as the proprietor of a farm could fall to be regarded as a special circumstance. It would also appear to me to be consonant with fairness that such arrangements be recognised and reflected in an unequal sharing of matrimonial property. It follows that I consider that the pursuer has established special circumstances in the present case and that an unequal sharing of matrimonial property could in principle be justified.
[33] The next issue is whether any special circumstances exist which would justify an unequal sharing of the parties’ respective interests in the firm of S & E Parker. I can deal with this matter briefly. The partnership was formed in 2000, apparently on advice from chartered accountants that it was advantageous for tax purposes. Since inception both partners, that is the pursuer and the defender, have worked in the business. The contribution in terms of work input to the partnership business by the pursuer was, on the evidence, greater than that of the defender but this was compensated for by the defender’s contribution by way of child care and homemaking tasks which fell exclusively to her. It accordingly appears to me that there are no special circumstances which would justify departure from the principle of equal sharing so far as interests in the partnership are concerned.
[34] The next issue to the be considered is that of economic advantage or disadvantage in terms of section 9(1)(b) of the 1985 Act. These issue are formulated in questions (e) – (i) of the issues for proof as recorded in paragraph [4] hereof.
[35] In relation to any issue of any economic disadvantage suffered by the defender as a result of capital expenditure by the firm of S & E Parker on the farm of Balgown it is accepted by the parties that over the course of the marriage, the sum of £125, 746 was expended on works to the farmhouse and farmland by the firm. I have already determined that one half of the farm forms part of matrimonial property. It accordingly follows that one half of that expendidture is represented in the value of that one half share. There accordingly remains the figure of £62,813 which would, in my view, fall to be regarded as expenditure which has been expended to the benefit of the pursuer’s personal interest in Balgown farm.
[36] I turn to the second aspect of this matter, that is whether the pursuer has sustained economic advantage as a result of contribution of the defender in terms of her work on the farm and, correspondingly, whether the defender has suffered economic disadvantage in the interest of the pursuer and the parties’ children. In relation to these matters, there was a conflict in the evidence of the pursuer and the defender. The pursuer gave evidence of a general nature to the effect that the defender’s work on the farm was relatively modest. By contrast the defender gave rather more detailed evidence as to the work she did in feeding calves, moving cattle and other general tasks about the farm. She also spoke to the work she did as a bookkeeper, albeit quite candidly accepting that this ultimately did not prove to be a task for which she was best suited. It is to be observed that the defender was able to give a much more detailed account of her work than was the position of the pursuer. The pursuer was no doubt, it was not disputed by the defender, a hardworking man who was busy around the farm more or less all the time. It is quite possible that he made no precise note as to the time the defender devoted to farm tasks. Nevertheless, the impression I obtained was that he sought to minimise the defender’s efforts on the farm. Even if I were incorrect in forming that view, there would still remain the consideration that the defender undertook valuable tasks, feeding calves on a dairy farm must fall into this category, which if she had not done them, would have required to have been done by someone else either the pursuer or a paid employee. There is a further consideration. The defender’s evidence was that she ceased to accept ad hoc employment as a supply teacher because it conflicted with her duties on the farm. This was not contradicted by the pursuer. The inference which I make is that the defender’s work on the farm occupied sufficient time to render it impracticable for her to work as a supply teacher. This, in my view, points to a significant contribution by the defender to the farm operation. A further implication of this fact is that by giving up supply teaching, the defender had as a matter of probability impaired her prospects of obtaining employment as a teacher in the future. It was not disputed by the pursuer that the defender has not worked as a teacher for 15 years or thereby. She spoke to her lack of familiarity with modern teaching methods and the requirement that would be placed upon her to undertake some form of retraining if she sought to obtain further teaching. I am of the view that these obstacles in returning to the teaching profession are a direct cause of the defender’s giving up teaching in order to devote more time to working on the farm.
[37] It follows from the foregoing that I am satisfied that the running of the farm was rendered easier by the defender’s work on the farm. I am also satisfied that there was a cost saving to the farming business by the defender’s contribution. It follows that I am satisfied that there has been an economic advantage accruing to the pursuer by the contributions of the defender in terms of her work on the farm. I am equally satisfied that by reason of giving up employment as a supply teacher and thereby prejudicing her ability to practice her chosen profession, the defender has suffered economic disadvantage by her work on the farm.
[38] This last finding raises the issue, focused in question (j) posed by the parties and narrated in paragraph [4] hereof as to whether the defender will require a period of time to adjust to the loss of the pursuer’s support after divorce. I am satisfied for the reasons addressed in the immediately preceding paragraph that the defender has established that she will require a period of time in order to adjust to the loss of support she derives from the pursuer and from her partnership in the farming partnership. Her evidence, which I have already alluded to, that she has not taught for many years and will therefore require time to become familiar with modern teaching practices and obtain employment is, in my view, fair and justified comment.
[39] I turn now to the issue of determination of the value of the farm subjects. Both sides produced evidence from suitably qualified chartered surveyors. The methodology employed by the valuers was essentially the same. The pursuer produced a second valuation provided by a land agent. That person was not a member of the RICS and therefore not in a position to produce a report of the sort I was informed was commonly required by banks and other lending institutions when advancing capital in relation to acquisitions or fund raising secured over farm property. The valuation had however been verified by a fellow of the RICS employed by the same firm as the valuer. Although the valuer appears to have been instructed late in the history of the litigation he appears to have arrived at his valuation independent of any report from Ms Maxwell. In the case of the defender, her surveyor’s evidence was supplemented by a rather more subjective analysis produced by a very experienced land valuer. I do not doubt that the land valuer applied his mind and used the benefit of his experience in attempting to value the land subjects. I do however note that this person was also an employee of the firm that employed the surveyor who carried out the valuation exercise for the defender. I also observe that this person was instructed late in the course of the litigation and had access to the report already prepared by the surveyor. Without in any sense intending to criticise the work carried out by this person, I formed the view that his evidence could be regarded as no more than an adjunct to the work already carried out by Mr Bell. In relation to the competing reports, criticisms were made either way in relation to the allocation of parts of the farm under the McAulay Land Institute Land Classes and to the comparables used. There was a degree of subjectivity in all aspects of these criticisms.
[40] I now turn to the issue of the value of the land at the Balgown. As already noted the methodology applied to valuation of these premises by the witness called by either party, Ms Maxwell and Mr Bell, was the same. This methodology involved two exercises, first arriving at a value per acre of the farmland and second comparison of prices achieved for the sale of comparable farmland.
[41] In relation to land values the two valuers were not in agreement. Mr Bell’s per acre valuations were higher than those adopted by Ms Maxwell. The pursuer’s submission in relation to this discrepancy was that Mr Bell had erred in considering that some of the land at Balgown would recover with minor drainage work. It was also submitted that Mr Bell had erred by considering that the price of land from tree planting provided a base, or lowest, level for the price of agricultural land. Both Ms Maxwell and Mr Patterson thought that there were areas where the land was properly to be regarded as unproductive due to permanent wetness on the presence of “rocky outcrops”. Moreover some of the land at Balgown was not suitable for planting trees thus negating the use of a base price per acre based on the value of land for that purpose. These errors had caused Mr Bell to place too much of the farmland at Balgown in a higher land classification category than it merited with consequent overstatement of land value. The defender maintained that Mr Bell’s approach was correct.
[42] The next stage in the valuation exercise was the application of comparables. It appeared to be common ground between the parties that the use and application of comparables is ultimately a matter of knowledge and experience of the part of the valuer. That said there was one difference in the approach taken by Ms Maxwell and Mr Bell. Mr Bell employed an “equipped acre average” in assessing comparables. The position of the pursuer was that this would be likely to result in a higher value because
“average price per equipped acre will inevitably be higher if the area of land is smaller as there will fewer acres over which to average the value of the land and buildings. The average will also depend on consistency of land quality.”
It was submitted that at Balgown the productive land was of a relatively modest acreage and there was a broad range of land quality. It followed that the use of the “equipped acre average” overstated the farm’s value.
[43] In relation to comparables Ms Maxwell noted in her valuation that:
“there is little comparable evidence in this specific location since the economic downturn and the Irish buyers influence disappeared. There are no direct farm comparables for Balgown due to its nature and its location on the Northern Rhines. “
She thereafter consider that it was appropriate to take into account farms in other locations and make appropriate adjustments. The comparable property which she relied on most heavily was High Ardwell Farm, Kirkcolm, Stranraer. This was an arable and stock rearing farm amounting to 179 or thereby acres with a detached traditional farmhouse and traditional and modern outbuildings which was sold in May 2010. The sale price was £910,000 an average of £5,070 per acre for the whole property. It was acknowledged that the farm was a former dairy unit, much smaller than Balgown and having an overall better land class. Ms Maxwell stripped out the value she attributed to the farm house to give a bare land average price per acre of £3,600. This was a higher bare land average than that she attributed to Balgown but she justified this by consideration of the slightly poorer land quality at Balgown and consideration of the requirement to upgrade the steading at that farm. Mr Patterson also relied upon this property as an appropriate comparable.
[44] Counsel for the pursuer criticised the comparables employed by Mr Bell because they were derived from a private database kept by his company and not by reference to prices recorded in the Land Register of Scotland. She also maintained that the comparables relied upon by Mr Bell were “weak”. Only one of Mr Bell’s comparables was of a whole farm and that related to a sale in July 2006 before the marked deterioration in market conditions in 2008. For this reasons it was not a good guide to land value at the relevant date in 2011. Another comparable relied upon by Mr Bell was in fact a property which was only marketed by Mr Bell’s employers and had not been sold. It was submitted that no reliance could be placed on an upset price which had not been vindicated by a sale. Three other comparables were blocks of land sold in 2009 and 2010. It was submitted that blocks of land were not appropriate comparables for whole farm sales. In relation to farm sales one of those relied upon by Mr Bell, Little Ervie farm was sold for market specific reasons at an inflated or exceptional price. Another comparable relied on by Mr Bell, Clash Farm was of a property with much higher quality land than that at Balgown.
[45] Counsel for the defender invited the court to accept the evidence of Mr Bell in its entirety. His valuation was completed as an RICS red book valuation. He was both a member of the RICS and a registered valuer by that institution. It was said that he gave his evidence in an authoritative manner, that his conclusions as to value were well reasoned and researched and that his use of comparables was focussed and directed to evidence of sales before the valuation date. The fact, commented upon by the pursuer that one property in his schedule of comparables had not in fact been sold was said not to undermine his conclusions. It was accepted that he had used as an approach to measuring comparables an “equipped acre average”. It was submitted that the use of “bare land averages” by Ms Maxwell was not reasonable as it was inaccurate to describe the land at Balgown as being of a broad range of land quality. Moreover it was submitted that Mr Bell’s valuation was supported by the evidence of Mr McMillan who was said to have been “hugely experienced” and having a “long history of sales transactions in the area”. His evidence in relation to the trend for increasing land prices in the area since the 1990s was described as “compelling”. His valuations should be preferred.
[46] It is clear that whilst the valuation witnesses in this case employed the same basic methodology there were within the approaches each of them took variations. This can clearly been seen in the use by Ms Maxwell of “bare land averages” in contrast to Mr Bell’s employment of “equipped acre averages”. The other area where there were discrepancies were failure to agree on land use classification for the various areas of Balgown farm and lack of unanimity in choice of comparable properties. These differences in approach, and the resultant quite significant disparity in valuations arrived at, present the court with a difficult exercise. Essentially I require to view the expert testimony of these witnesses and determine objectively if there is any basis for preferring one to the other. I feel bound to observe that it is regrettable that there were so many discrepancies in the valuation exercises. I have already observed that this case was subject to some case management. I was the judge who presided over the various case management hearings and therefore any criticism must rest with me. Having acknowledged that I consider that it was unfortunate that there was no effort to compel the expert witnesses to meet prior to the proof and determine where, if at all, it was possible for them to reach agreement in relation to areas of dispute in their reports. I consider it likely or at least possible that if such an exercise had been forced upon parties there would have been less disagreement between the surveyors. I observe that in England and Wales Practice Direction 35 of the Civil Procedure Rules provides for court directed discussion between experts. Paragraph 92 of the direction notes that the purpose of such meeting is not to settle cases but “to agree and narrow issues” and in particular to identify: “(i) the extent of the agreement between them; (ii) the points of and short reasons for any disagreement; (iii) action, if any, which may be taken to resolve outstanding points of disagreement….”. An exercise of that sort would in my view have been helpful and productive in the present case. I make it clear that in approaching case management in the future in cases where there is a significant divergence in expert opinion I consider that it will be desirable to compel valuers to have meetings of the sort envisaged in the English Practice Direction prior to proof in the hope that the problem which has emerged in this case is not repeated.
[47] In relation to the issue of which valuation is to be preferred I consider the first matter I have to determine is what weight, if any, I should attribute to what I categorise, I hope not unfairly, as the additional valuations produced by Mr Patterson and Mr McMillan. Mr McMillan can be dealt with more easily because his valuation was the same as Mr Bell’s and was not suggested to be anything more than support for the principal valuation of that person. Mr McMillan was clearly a very experienced land valuer with extensive knowledge of the market in farm and rural properties in south west Scotland. That experience when applied to his appraisal of the value of Balgown Farm is, in my view, of some value to the court. Against that however I have to bear in mind that Mr McMillan’s work was essentially an exercise, checking Mr Bell’s work against his own background knowledge of market conditions in the relevant area at the relevant time. Moreover I cannot ignore the fact that Mr McMillan is an employee of the same company who employ Mr Bell. I do not suggest that there was any intentional bias in favour of Mr Bell’s valuation on the part of Mr McMillan. I cannot however ignore the possibility of unconscious bias on his part to support the valuation already arrived at by his co-employee. Accordingly whilst I am prepared to accept that Mr McMillan provides some support for Mr Bell’s valuation I do not consider that I can regard his evidence as providing a separate, independent valuation of the property.
[48] The criticism levelled by the defender against Mr Patterson is of a different nature. It is stated that Mr Patterson not being a member of the RICS was not in a position to provide a valuation which could be relied upon by the court. As I understood it this was essentially because a valuation produced by Mr Patterson would not be relied upon by a bank or a lending institution considering funding for the purchase of a farm or funding of an agricultural enterprise. I am not persuaded that this objection is an absolute bar to the court having regard to the valuation exercise carried out by Mr Patterson. Plainly the possession of a professional qualification is a straightforward and easy means whereby a person can satisfy the court of professional expertise such as to qualify that person to express an opinion in court. It is not however the only method whereby such expertise can be proved to the court’s satisfaction. Proof of experience in a relevant field is another means whereby the court can be so satisfied. It was plain from the account of his expertise and working life given to the court that Mr Patterson had extensive and long standing knowledge of the market for farm and agricultural properties in south west Scotland. The same of course could be said for Mr McMillan, a fact that I have already acknowledged. The principal difference that I can see between Mr Patterson and Mr McMillan is that Mr Patterson carried out an independent exercise whereas, as already noted, Mr McMillan was a co-employee of Mr Bell and, on the evidence, appeared to consider his role to be in the nature of a cross check of Mr Bell’s work. Importantly Mr Patterson’s independent exercise did not arrive at the same valuation as Ms Maxwell had. However, and in my view significantly, his valuation was within 10% of the figure arrived at by Ms Maxwell. I consider that the fact that Mr Patterson conducted an independent valuation exercise and arrived at a valuation figure within 10% of that of Ms Maxwell to be significant support for the latter person’s valuation.
[49] So far as the valuations of Ms Maxwell and Mr Bell are concerned I have formed the view that certain of the criticisms made by the pursuer of Mr Bell’s valuation are objectively justifiable. First, I consider there is force in the criticism that he understated the extent and degree of bog and marsh on the farm. He considered that the wet areas he observed were temporary in nature whilst Ms Maxwell’s observation in relation to the presence of areas of reed growth being suggestive of longstanding bogginess appears to me to be justifiable. I also consider that he erred in regarding the land price achievable for tree planting land as a suitable base value for the farm land. I prefer the evidence of Ms Maxwell and Mr Patterson to the effect that areas of land on the farm were not suitable for tree planting, that again being associated with the extent of wet or boggy land on the farm. Second, having regard to the size of the holding and the nature and condition of the farm buildings Mr Bell erred in using an equipped acre average as a base, or lowest figure, for land value. Taking into account the size of the farm and the condition of the buildings I am of the view that a bare land average was a more appropriate method of valuation. The third area where I consider criticisms can be levelled at Mr Bell is in relation to the choice of comparables. I acknowledge that both valuers were hindered by the lack of directly comparable farms in the immediate area of Balgown Farm. Ms Maxwell addressed this problem by using as her strongest comparable a farming unit within relatively close proximity of the farm which had until relatively recently operated as a dairy farm. She acknowledged the differences in that farm, it had better land than the land at Balgown, but factored that into her evaluation. By contrast Mr Bell, and for that matter Mr McMillan, used a number of comparables at a considerable distance from Balgown. He used land which was sold without any buildings. He used subjects which were exposed for sale by the company that employed him but on which there was no satisfactory evidence that a sale had ever been achieved. I do not consider that an upset or asking price can form the basis for comparable evaluation of price. Lastly in this regard all the subjects he used as comparables were apparently derived from a private database kept by his company. Whilst the keeping of such information is entirely understandable and no doubt good commercial practice so far as firms of valuers are concerned it is in my view preferable that information in relation to price which is to be used for comparison purposes be derived from records available to the public such as those kept by the Land Register of Scotland.
[50] At a more subjective level I consider that Mr Bell’s evidence may be criticised for being unduly or overly optimistic about the price which Balgown was likely to achieve. Despite stating in his report that it would be preferable if the farm were sold as one unit, in his oral evidence he was more prepared to countenance the split up of the farm in order to achieve a sale. This approach was inconsistent with the evidence of Ms Maxwell and Mr Patterson who considered that the best price
would be achieved by selling the farm unit as a whole. It was, as already stated, also inconsistent with what appears to have been his approach when he first prepared his written report. It also appears to me that Mr Bell may have downplayed the need or extent for which capital expenditure would be required in the near future on Balgown Farm and the depressant effect that consideration might have on the achievable price for the farm.
[51] Taking all the foregoing factors into account I have reached the conclusion that Mr Bell’s valuation of the farm at the relevant date may be over optimistic. Applying as objective criterion as I can I accordingly prefer the valuation of Ms Maxwell and conclude that at the relevant date the value of the farm was £1,480,000.
[52] One further issue required to be determined in relation to Balgown Farm, that is whether its value would be optimized if sold as a unit or, in the alternative, whether there is scope for sub-division and sale of parts of the farm lands. Plainly sub-division would be physically possible, this was not disputed by the pursuer. His position was that it would not be economically sensible to sell of part of the farm in order to raise capital. In this he was supported by Ms Maxwell and Mr Patterson and most strongly by Mr Donnelly who considered that the farm’s continued viability required the use of all current farm land. Mr Bell considered that sale of part of the farm could be achieved at an attractive price. In suggesting this option he had not however factored in the ongoing viability of the farming enterprise. It is also the case, as already noted, that his stated preference in his report was that maximum price would be achieved by the sale of the whole farm. Taking all that into account I conclude that as a matter of value it would be preferable if Balgown Farm were presented as a whole entity.
[53] I now apply my foregoing conclusions to the conclusions in the action. I have indicated that I consider that the one half of Balgown Farm which the pursuer acquired after the date of marriage other than by way of gift falls to be regarded as matrimonial property. I have stated that I consider the value of Balgown Farm as stated by Ms Maxwell at £1,480,000 at the relevant date to be accurate. The effect is that the matrimonial property attributable to the farm at the relevant date falls to be assessed in the figure of £740,000. The other items of matrimonial property are agreed between the parties and set forth in paragraph 4 of the joint minute. On my calculation net matrimonial property, amounted to £696,228 at the relevant date. Equal division of that would therefore result in an entitlement to the defender of £348,114. As I have already observed the overriding presumption is for a fair division of the property between the parties to the marriage. I have already determined that an unequal sharing of the matrimonial property represented by the farm could be justified. I have also determined that the defender has suffered economic disadvantage as a result of her efforts on the farm during the course of the marriage and that the pursuer has suffered economic advantage for the same reason. It follows that there exists the possibility of departing from equal division of matrimonial property to allow for these factors. I do however have to bear in mind that the overriding principle and object is to achieve fairness. I consider that having regard to the totality of the evidence an equal division of matrimonial property would achieve that objective. I shall accordingly award the defender a capital sum of £348,114, with interest thereon at the rate of eight per cent per annum from 1 December 2011.
[54] In relation to the conclusions for aliment the farm income is vouched in the Financial Statements for the partnership which are lodged and agreed as accurate in paragraph 24 of the joint minute. Farm income is obviously and will on the evidence continue to be constrained. The pursuer is currently paying a total of £1050.00 per month towards the maintenance of his children. I consider that this level of payment should continue. For reasons explained in this Opinion I consider that the defender has established that she will experience difficulties in returning to her profession as a teacher. In these circumstances I consider that she is entitled to a payment of periodical allowance of £500 per month. For those years I will also order the transfer sought in conclusion 2 by the pursuer.