OUTER HOUSE, COURT OF SESSION [2008] CSOH 161
	OPINION OF LORD DRUMMOND YOUNG in the cause MRS MAXINE ANNE DAY or WILLSON Pursuer; against ANDREW WILLSON Defender: ­­­­­­­­­­­­­­­­­________________

Pursuer: Speir; Pagan Osborne

Defender: Loudon; A & WM Urquhart

21 November 2008

[1] The parties were married on 21 April 2001. They had met during the previous year. Both had been married previously and had children by their earlier marriages. There are no children of their marriage. At the time the pursuer lived at Bonjedward House, Jedburgh. She had acquired the house in December 1999, shortly after the death of her husband, the late Peter Day. The defender had lived in Stamford, Lincolnshire and the surrounding area; at the time he was living in Lincolnshire, near Stamford.

[2] The parties lived together until 11 October 2005, on which date they agreed to separate. Divorce proceedings were raised subsequently. The pursuer now seeks decree of divorce from the defender on the basis that the marriage has broken down irretrievably on account of the defender's behaviour. The defender did not defend the action on the merits. In relation to this aspect of the action, I am satisfied that the pursuer has been habitually resident in Scotland for a period exceeding one year immediately prior to the raising of the action, and that there are no other proceedings, in Scotland are elsewhere, in respect of the marriage of which are capable of affecting the validity or subsistence of the marriage. The court accordingly has jurisdiction. I heard evidence on the merits of the divorce from the pursuer, from her son, Cameron Donnelly, and from Mrs Mora Hoeder, who had worked for the pursuer. They gave evidence that the defender had behaved in a bullying and controlling manner towards the pursuer. On occasion he was verbally abusive towards her and belittled her. It was established that he took control of the pursuer's assets and resources and arranged for their transfer into his name or into joint names; moreover, he used the pursuer's assets and resources to fund a lifestyle that was in all the circumstances extravagant. On 11 October 2005 he agreed to move out of the matrimonial home in return for receiving certain property. The parties have not been cohabiting since then. With some hesitation I have concluded that the evidence is sufficient to justify decree of divorce on the ground that the marriage has broken down irretrievably because of the defender's behaviour. I will accordingly pronounce decree of divorce.

[3] The main dispute between the parties relates to their property. Following the marriage the pursuer transferred a one half pro indiviso share in Bonjedward House to the defender. The pursuer now seeks an order that the defender reconvey that share to her. In addition, she seeks payment from the defender of a capital sum; in the conclusions of the summons a sum of £600,000 is sought, but in his submissions counsel for the pursuer suggested that a sum of either £202,387 or £164,637 would be appropriate; the choice between these figures depended upon whether the defender's half share of Bonjedward was valued at the date of the separation or the date of the proof. The defender has also made financial claims against the pursuer. He seeks payment of a capital sum of £2 million, and an order for the sale of Bonjedward House and the division of the proceeds. Following the marriage the parties acquired a further house at 40 Warrenne Keep, Stamford; the house is in their joint names, and the defender has lived there following the separation. The defender seeks an order for the transfer of the pursuer's interest in that house. That order was not opposed by the pursuer.

The applicable legislation

[4] The statutory provisions that govern the parties' property dispute a found in sections 8, 9, 10, 11, 14 and 27 of the Family Law (Scotland) Act 1985, as amended. These are in the following terms:

"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;

...

(c) an incidental order within the meaning of section 14(2) of this Act".

(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.

(3) An order under subsection (2) above is in this Act referred to as an 'order for financial provision'.

9. -- (1) The principles which the court shall apply in deciding what order for financial provision, if any, to make are that --

(a) the 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 contributions by the other, and of any economic disadvantage suffered by either person in the interests of the other person or of 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 in shared equally or in such other proportions as unjustified by special circumstances.

(2) Subject to subsection (3A) below the net value of the 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..., and

(b) during the marriage..., which are outstanding 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 service of the summons in the action for divorce....

(3A) In its application to property transferred by virtue of an order under section 8(1)(aa) of this Act this section shall have effect as if --

(a) in subsection (2) above, for 'relevant date' there were substituted 'appropriate valuation date;

(b) after that subsection there were inserted --

'(2A) Subject to subsection (2B), in this section the "appropriate valuation date" means --

(a) where the parties to the marriage... agree on a date, that date;

(b) where there is no such agreement, the date of the making of the order under section 8(1)(aa).

(2B) If the court considers that, because of the exceptional circumstances of the case, subsection (2A)(b) should not apply, the appropriate valuation date shall be such other date (being a date as near as may be to the date referred to in subsection (2A)(b) as the court may determine); and

(c) subsection (3) did not apply.

(4)... 'the matrimonial property' means all the property belonging to the parties or either of them at the relevant date which was acquired by them or him (otherwise than by way of gift or succession from a third party) --

(a) before the marriage for use by them as a family home or as furniture or furnishings for such home; or

(b) during the marriage the before the relevant date.

...

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

...

(b) the source of the funds are assets is to acquire any of the matrimonial property... where those funds are assets were not derived from the income or reference 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 are as a family home) and the extent to which it is reasonable to expect it to be realized or divided or used as security;

...

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 advantage is orders advantages sustained by the other person, and

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

...

(7) In applying the principles set out in section 9 of this Act, the court shall not take account of the conduct of either party to the marriage... unless --

(a) the conduct has adversely affected the financial resources which are relevant to the decision of the court on a claim for financial provision.

14. --...

(2) In this Act, 'an incidental order' means one or more of the following orders --

(a) an order for the sale of property...

27. -- (1)...

'resources' means present and foreseeable resources".

[5] The central principles that underlie the following provisions are two in number. First, the net value of the matrimonial property should be shared fairly between the parties to the marriage (section 9(1)(a)); this requires that it should be shared either equally or in such other proportions as are justified by special circumstances (section 10(1)). Secondly, fair account should be taken of any economic advantage derived by either party from contributions by the other and of any economic disadvantage suffered by either party in the interests of the other (section 9(1)(b)). The valuation of property is normally carried out as at the date of the parties' separation (section 10(3)), that being referred to as the "relevant date" in the legislation.

[6] Matrimonial property (section 10(4)) comprises all the property belonging to the parties at the relevant date provided that it has been obtained either during the marriage or before the marriage for use as a family home or furniture and plenishings for such home; this is, however, subject to an exception for property obtained by way of gift or succession from a third party. Consequently property obtained by either party prior to the marriage is excluded, with the exception of any house obtained as a family home or any property obtained as the contents of such home. In sharing the value of matrimonial property, however, the existence of special circumstances must be taken into account. In terms of section 10(6)(b), special circumstances may include the source of the funds used to acquire matrimonial property, in cases where those funds were not derived from the income or efforts of the persons during the marriage. This is important in cases where one of the parties had significant property prior to the marriage; if that property, or its proceeds of sale, is used to acquire another asset during the marriage, the source of the funds used to acquire that asset constitutes a special circumstances that may be taken into account in dividing the matrimonial property. I was referred to a number of cases where the principles contained in sections 9 and 10 of the 1985 Act were applied. In Jesner v Jesner, 1992 SLT 999, account was taken of the fact that the principal assets of the parties comprised property in joint names that had been acquired using the husband's assets or money held on trust for him. In these circumstances unequal sharing of the matrimonial property was held to be justified, with the wife taking slightly under 30% of the total. In Davidson v Davidson, 1994 SLT 506, unequal sharing was again permitted where all of the matrimonial property had been derived from funds inherited by the wife. Similarly, in R v R, 2000 Fam LR 43, the fact that to a large extent the net value of matrimonial property derived from assets donated to or inherited by the defender amounted to a special circumstance that justified departing from the presumption in favour of equal division. Lord Eassie stated (at 47):

"In my opinion the fact that to a large extent the net value of the matrimonial property in this case derives from assets donated to or inherited by the defender does constitute a special circumstance which justifies departing from the presumption of an equal division of those assets. I consider that counsel for the defender is correct in saying that the broad policy underlying s 9(1)(a) and s 10 of the Act was that in principle an equal division should apply to the fruits of the economic efforts of the parties during the marriage".

I respectfully agree that that is the fundamental policy underlying sections 9 and 10. This is a factor of great importance in the present case.

[7] In MacLean v MacLean, 2001 Fam LR 118, the matrimonial property, most of which had come from the wife's family, was shared on an unequal basis. Lord Rodger considered that it was appropriate not to look at individual assets in isolation but to consider the matrimonial property as a whole. Reference was also made to Cunningham v Cunningham, 2001 Fam LR 12, another case where the court had regard to the extent to which matrimonial property was derived from the parties' pre-matrimonial assets. The parties were given full credit for their respective contributions from pre-matrimonial property except for the sums invested in the matrimonial home. A similar approach was followed in Houston v Houston, 20 December 2007, unreported. Finally, I should note that the legal principles relevant to the present case are admirably summarized by Professor J. M. Thomson in his textbook, Family Law in Scotland, fifth edition, at paragraphs 7.6-7.7, 7.13 and 7.17.

The evidence in general

[8] On a number of issues the evidence given by the parties conflicted. In such cases I prefer the evidence of the pursuer to that of the defender, for three reasons. In the first place, I formed a favourable impression of the pursuer as a witness; she appeared to me to the attempting to tell the truth and in general to be a fairly careful and reliable witness. In the second place, the pursuer's evidence was supported by a number of other witnesses. These included witnesses who were largely independent of the parties, notably Mora Hoeder, who had worked in the business carried on by the parties at the Border Hotel, Kirk Yetholm, and Alastair Cockburn, a painter and decorator who had carried out a considerable amount of work at Bonjedward for the pursuer. I found that both of these witnesses were conspicuously fair and honest in their evidence, and they clearly supported the pursuer's position. In addition her evidence was supported by her son, Cameron Donnelly. While he was clearly not an independent witness I formed the impression that he was in general both credible and reliable.

[9] In the third place, I formed a very unfavourable impression of the defender as a witness. I found him to be evasive in manner, failing to give straightforward answers. Even when his evidence was clearly shown to be wrong he refused to accept that possibility. His answers were frequently self-serving. On a significant number of occasions he gave answers that were quite frankly incredible. Three examples may serve to illustrate this. First, in chief (day 6, 11.28) he gave evidence that under his direction Cameron Donnelly and a handyman had carried out redecoration work at Bonjedward. This had involved redecorating the attic floor and the bottom floor, which consisted largely of cellars. The defender stated that the work of redecoration had continued from November 2000 to November 2005; the labour cost had been £300 per week from November 2000 to May 2004 and £450 per week from June 2004 to November 2005. While Bonjedward was quite a substantial house, I found it utterly incredible that the work of redecoration could take so long. Secondly, also in chief (day 6, 12.02) the defender was asked about the transfer of Bonjedward by the pursuer into the joint names of the parties. He gave evidence that this was the best way to aid the parties' finances, to reduce the burden of the pursuer's borrowing. It was not obvious to me why transferring the property into joint names would help to reduce borrowing, and I asked the defender why he thought that it would. His initial answers were evasive, and did not properly answer my question. He went on, however, to state that the plan was to obtain a further loan (of £450,000) on the security of Bonjedward. When, following the transfer into joint names, an application was made for a loan (no 6/150 of process), the defender had filled in the form, and had stated that the parties each had income of £70,000 per annum. He explained that this was based on an assumption that the value of their assets would increase annually by that amount in future years. I found it quite extraordinary that he would make such an assumption in filling in the form; it is obvious that anticipated capital gains are not income, and in any event the assumption about future increases in value appeared to have little or no factual basis and clearly could not be sustained indefinitely. The defender maintained the same position in cross-examination (day 6, 3.36 onwards). Thirdly, in cross (day 6, 3.09) the defender was asked about a summary of cheques drawn on certain accounts in the names of the parties (no 6/77 of process). This disclosed that cheques in favour of a business owned solely by the defender, Willsons Fireplaces, had been drawn on a bank account in the parties' joint names; these totalled £17,744.22, and extended over a period from September 2001 to June 2002. The defender stated that those cheques represented payment for materials that were required for renovation work at Bonjedward; the materials were obtained from builders merchants. Counsel for the pursuer suggested that it would have been simpler to send cheques drawn on the joint account directly to the builders merchants who supplied such materials; the defender replied that at the time he had been considering whether Willsons Fireplaces should trade in Scotland, and that is why the payments were made through the company. I found that answer to be wholly incredible, and made a note to that effect at the time. It seemed clear to me that the cheques were used by the defender to pay off a business loan that he had taken in the name of Willsons Fireplaces. Ultimately that position was accepted by the defender.

[10] My general impression of the evidence was as follows. Following the death of her husband the pursuer had inherited substantial property. This included a house in Kelso, which she sold when she acquired Bonjedward, and shares in a company known as Peter Day (Finedon) Ltd., which owned land in England. During the period of the parties' marriage the defender took control of the pursuer's assets, and directed transactions relating to her property. A significant amount of property was realized during the marriage, and most of that appears to have been spent on living expenses. The defender indulged in a fairly extravagant lifestyle. He acquired expensive cars, including a Bentley, a Range Rover and a Mercedes. He took part in country sports, notably shooting. He also spent a substantial sum on the installation at Bonjedward of a facility known as a hot tub and gazebo. I am satisfied that the defender's lifestyle was in large measure paid for out of the pursuer's resources, in particular by obtaining loans on the security of Bonjedward. I am further satisfied that the lifestyle enjoyed by the defender during the marriage was considerably more costly than anything that he had been able to afford previously.

Accounting evidence

[11] Both parties led evidence from accountants; Fiona Martin, of Tenon Ltd., gave evidence for the pursuer, and Judith Scott, of BDO Stoy Hayward, gave evidence for the defender. Both attempted to demonstrate the nature of the parties' property, including the matrimonial property, and to provide an approximate value for such property. The approach followed by each witness was similar, and on valuation issues each agreed with the other's figures subject only to minor adjustments. The main difference was that Miss Scott had been provided with certain additional information by the defender. As a result she identified a larger number of specific items of expenditure incurred during the parties' marriage. These are found in Appendix 5 to her report, which contains an analysis of cheques in excess of £1000 drawn on the various bank accounts operated by the parties during the marriage. By way of example, the first page refers to a cheque drawn in favour of Cameron Donnelly, the pursuer's son, on 30 August 2001. This was shown as of straightforward payment to Mr. Donnelly. Further cheques were shown as representing solicitors' fees paid by the pursuer on 7 September and 7 November 2001 and a payment to Willsons, the defender's business, in respect of renovation expenditure at Bonjedward. I have already commented on the payments made to Willsons (see paragraph [9] above). When counsel for the defender attempted to lead evidence about the foregoing payments an objection was taken for the pursuer, on the basis that no notice had been given in the pleadings or the primary documents to indicate the information that had been given to Miss Scott by the defender. Indeed, in Miss Scott's report, reference is made to notes supplied by the defender, but these were not reproduced in the report or its appendices. I allowed Miss Scott to be questioned on Appendix 5 under reservation of all questions of admissibility of the evidence. The objection was renewed by counsel for the pursuer in submission. In my opinion that objection is well-founded. It seems to me that the information provided by the defender to Miss Scott was in large measure controversial and in some cases, such as the payments to Willsons, was simply wrong. I consider that notice should have been given of the information that was relied on by Miss Scott to enable the pursuer to respond to it. That could have achieved by reproducing the note that the defender had provided to Miss Scott as an appendix to her report. Had that been done, the defender could have been cross-examined on its contents. In the event, however, information about what the defender disclosed to Miss Scott was not included in her report, and the defender's cross examination proceeded on rather more limited information.

[12] Nevertheless, I do not think that the availability or otherwise of the information provided by the defender to Miss Scott makes any significant difference to my ultimate decision on the allocation of matrimonial property. For the reasons stated above I have formed an unfavourable view of the defender's credibility and reliability as a witness, and consequently I would treat any information that he provided with great circumspection. Moreover, it seems to me that both parties enjoyed a relatively high standard of living during the marriage, and I do not think that any useful purpose is served by a minute examination of the expenditure that can properly be attributed to one or the other. Consequently, although I sustain the objection, I do not regard it as in any way critical to my decision on the merits of the action.

[13] As I have indicated, apart from the additional information provided by the defender, Miss Martin and Miss Scott were in substantial agreement as to the identification of the parties' property. They discussed their reports, and arrived at a list of assets that was largely similar. I have taken account of the evidence of the two witnesses in the discussion of the matrimonial property that follows.

[14] Against the foregoing background, I will now deal with the specific issues that arose in the present case.

The relevant date

[15] The expression "the relevant date" is defined by section 10(3) as the date on which the persons ceased to cohabit. In the present case I hold that that date was 11 October 2005. That is in accordance with the pursuer's case; the defender, by contrast, contended that the relevant date was 13 October. The evidence of the pursuer, which I accept on this matter, was that on 11 October the parties agreed to separate. The defender insisted on the division of sums standing at credit of the parties' bank accounts, and that was arranged over the following two days. That division of funds was clearly the result of the decision to separate. I accordingly consider it likely that cohabitation ceased, in any proper sense of the word, on 11 October.

Matrimonial property: Bonjedward House

Identification of matrimonial property

[16] Bonjedward House had been solely owned by the pursuer prior to the marriage. On 13 August 2001 she disponed a one half pro indiviso share in favour of the defender; the disposition is no 7/121 of process, and is in the standard form of such a deed, being expressed for love, favour and affection. There is a destination in favour of the survivor and the executors of the survivor. The critical question is whether as a result of that disposition the whole of Bonjedward House became matrimonial property or whether merely the one half share conveyed to the defender became such property. In my opinion only the defender's half share became matrimonial property. The practical effect of the disposition was to transfer a half share; the pursuer retained the other half share, which was hers already. For the defender it was submitted that the whole of Bonjedward House became matrimonial property; the disposition conveyed the whole subjects to the parties, and it created a survivorship destination that was not present in the original title. Counsel referred to Gardner's Executors v Raeburn, 1996 SL T. 745, and to section 19 of the Family Law (Scotland) Act 2006. In Gardner's Executors, the matrimonial home was held by the spouses in common, subject to a survivorship destination. Following separation the wife disponed her one half pro indiviso share to her husband. Nothing was done to evacuate the survivorship destination. The husband subsequently died. It was held that the survivorship destination had not been evacuated by the disposition; consequently the wife was entitled to take the property under that destination. The case turns, however, on the precise wording of the disposition; it was not in dispute that if the disposition had been properly framed, with both parties conveying their respective shares to the deceased, the destination would have been evacuated. The case identified a hazard for conveyancers dealing with the breakdown of a marriage. Section 19 of the 2006 Act has some extent dealt with that hazard. It provides that, where heritable property is held in the name of spouses and the survivor and the marriage is terminated by divorce, in matters of succession to one spouse the other shall be deemed to have failed to survive. That has the practical effect of evacuating the survivorship destination following divorce. That makes obvious practical sense, in that it enables the spouses to make a clean break in respect of their property rights. I do not think, however, that either Gardner's Executors or section 19 assists the defender's argument; the case affirms the rule that a survivorship destination, if it is not contractual, may be evacuated, and section 19 merely deals with the conveyancing problems of evacuation. In the present case the survivorship destination is not contractual; the disposition of 13 August 2001 was gratuitous. Consequently the pursuer may evacuate the destination at any time. For that reason I am of opinion that the existence of the survivorship destination in respect of the pursuer's one half share is manifestly not sufficient to convert that share into matrimonial property. Thus the disposition of 13 August 2001 had no practical effect on the share retained by the pursuer. For that reason I consider that it did not convert that share into matrimonial property.

Orders in respect of Bonjedward

[17] The pursuer acquired Bonjedward in December 1999 at a price of £465,000; it had been valued by her surveyor at £430,000. The property comprised Bonjedward House itself, which the pursuer made her home, and certain cottages and outbuildings. The purchase price was funded from two sources: £225,000 came from the sale of the pursuer's former home in Kelso and the balance was borrowed from the Royal Bank of Scotland by way of an unsecured bridging loan. Nothing had been done to pay off or reduce the bridging loan, and its amount had increased by the time of the parties' marriage; by that time it appears to have amounted to approximately £272,000. The increase had been caused by two factors: first, the relatively high rate of interest payable on a bridging loan, and secondly, further borrowings to finance renovation work at Bonjedward. The pursuer instructed substantial renovation works shortly after she had acquired Bonjedward. These included the installation of gas central heating and a gas boiler, refitting and restoring the kitchen and installing an Aga cooker, rewiring, and redecorating the ground and first floors of the house. The works were financed by borrowing from the Royal Bank, partly on the bridging loan account and partly on another account known as the royalties account, and also by means of a loan from the pursuer's son Cameron Donnelly. The works were completed by November 2000, which is when the defender began to live with the pursuer at Bonjedward. I should also record that in a loan application filled in by the defender in June 2001, no 6/150 of process, it was stated that the renovation works had been substantially completed and had cost £150,000.

[18] Bonjedward increased in value. By the time of the parties' marriage, in April 2001, it was valued at £490,000. By the time of the parties' separation, in October 2005, its value had increased to £920,000. By September 2007 the value had increased to approximately £1,149,000, and by the time of the proof in May 2008 the value was approximately £1,300,000. The other buildings were not in good condition when the pursuer acquired the property, but they were capable of renovation and could yield a rental income. In addition, one of the cottages, Colt Cottage, could not be sold without serious damage to the amenity of Bonjedward House itself owing to its location immediately adjacent to the house.

[19] As mentioned above, on 13 August 2001 the pursuer disponed Bonjedward into the joint names of the parties. At the same time the parties granted a standard security in favour of Halifax PLC (no 6/10 of process). It was clear on the evidence that the defender persuaded the pursuer to transfer title into joint names; the transfer was certainly not the spontaneous action of the pursuer. The transaction with Halifax yielded a loan of £450,000, which sum was released on about 30 August 2001. The bridging loan from the Royal Bank was repaid on 2 November 2001; £272,007 was repaid, leading £177,993 available for other purposes. I think it likely that the pursuer would have replaced the bridging loan with an ordinary house purchase loan in any event, because that would produce a significant saving in interest. In the event, the amount borrowed from Halifax was considerably more than was required to repay the bridging loan. The Halifax loan was repaid in January 2004, when a further loan was obtained from Alliance and Leicester PLC for £500,000. That loan was arranged by the defender. It released further funds of £51,583; that sum was paid into the parties' joint account with the Royal Bank. Interest on the foregoing loans was paid out of income from property owned by the pursuer prior to her marriage or from the realization of such property. After the parties separated payments due to Alliance and Leicester in respect of the loan were made by the pursuer out of her own resources. The pursuer has also paid for insurance on the property. The payments that she has made since separation in respect of the loan and insurance amount to slightly more than £73,000 (nos 6/206 and 6/262 of process). The pursuer has also paid the utility accounts and council tax for the property; these have amounted to more than £26,000. She has also maintained the property. The pursuer continues to reside at Bonjedward.

[20] Against the foregoing background I am of opinion that I should make an order under section 8(1)(aa) of the 1985 Act for the transfer of the defender's half share in Bonjedward to the pursuer. Bonjedward is the pursuer's home, and indeed it was her home prior to the parties' marriage. It was clear that she was very attached to the property. Her other resources have largely been depleted in the course of the marriage, as explained below. Consequently the cottages at Bonjedward are an important potential source of income for her if they are renovated and let. In these circumstances I consider that the transfer of the defender's interest in the house to the pursuer is justified by the principles set out in section 9 and reasonable having regard to the resources of the parties; it follows that the requirements of section 8(2) are satisfied. I should add that, in relation to any claim for economic advantage under section 9(1)(b), the payments that the pursuer has made in respect of the loan and insurance on the property would fall to be taken into account. The same is true of the payments that she has made in respect of maintenance of the house.

Valuation of Bonjedward

[21] It is accordingly necessary to determine the value of the defender's interest in Bonjedward, as that is matrimonial property. This matter is governed by section 10(3A) of the 1985 Act, which deals with the application of the Act to property transferred by virtue of an order under section 8(1)(aa). Under that provision, the concept of the relevant date is replaced by the "appropriate valuation date". This is defined by subsections (2A) and (2B), as inserted by section 10(3A)(b). Under those provisions, the appropriate valuation date will normally be the date of making of the order (if parties do not agree otherwise); nevertheless, under subsection (2B) the court may substitute another date because of the exceptional circumstances of the case, such date being a date as near as may be to the date of the making of the order. In my opinion exceptional circumstances sufficient to justify another date exist in the present case. The first proof in the present action was fixed for June 2007, but it was discharged because the defender had made extensive amendments to his pleadings. That is a matter for which the defender is clearly responsible. A further proof was fixed for October 2007, but that diet was discharged because of insufficient court time. During all this time the pursuer bore the burden of the loan and other expenses on the house. During the period between June 2007, when the first diet of proof was discharged, and the proof it is clear that the value of the house increased significantly. I would not consider it appropriate to allow the defender to obtain the benefit of the whole of that increase in value. Counsel for the pursuer submitted that I should value the house as at September 2007, a date when a valuation of £1,149,000 was available. In principle I would be willing to take that course, on the basis that September 2007 is reasonably close to the date of the original proof diet. It is clear, however, that since the proof property values have started to fall, perhaps to quite a significant degree. If that happens I think that it might be appropriate to apply the normal rule in subsection (2A) and to value the house as at the date of the order for transfer. Before I follow such a course, however, I would like to hear submissions from counsel, and possibly to obtain evidence as to the then current valuation of the house. Nevertheless, in the calculations carried out later in this opinion, I have assumed that a valuation date of September 2007 would be appropriate. In those calculations I therefore use the value of £1,149,000 that was spoken to by Roger Dodd, the surveyor who gave evidence on behalf of the pursuer. I accept that value as accurate at its date. That figure is provisional, however, and is open to revision in the manner that I have described.

[22] In relation to the valuation exercise itself, evidence was led from two surveyors, Roger Dodd on behalf of the pursuer and Robert Fairnie on behalf of the defender. As might be expected, Mr. Fairnie's valuations were consistently higher than Mr. Dodd's. In general I prefer the evidence of Mr. Dodd. I found him to be a fair and convincing witness. He had extensive experience as a valuer of residential property in the Borders. Moreover, he had valued the property at the time when it was purchased by the pursuer in 1999. That was an advantage that Mr. Fairnie did not possess. In general, it was clear from the evidence that Mr. Fairnie was less familiar with the property than Mr. Dodd; thus, for example, his knowledge of the drainage system was significantly less than Mr. Dodd's. In addition in his valuation (no 7/100 of process) Mr. Fairnie placed a value of £200,000 on the Walled Garden, which he thought had development potential. In his evidence, however, he accepted that that part of his valuation was essentially speculative. He also placed a value of £70,000 on Colt Cottage, which was very close to the main house and had been built as accommodation for a close relative of the previous owner. He accepted that in reality Colt Cottage had no value because it was so close to the main house that the owner would not want to sell it to anyone else. Finally, Mr. Fairnie appeared less familiar with the Borders residential property market than Mr. Dodd. He relied in particular on one comparative property, Rowchester House, which was clearly significantly superior to Bonjedward, and indeed he accepted that the comparison was inappropriate in cross-examination. Moreover, Mr. Fairnie's principal report (no 7/100 of process) was described as a "preliminary" report. It contained a statement: "This report is not yet in a form suitable for inclusion in any submissions to a judicial body". For that reason I do not think that the valuation in that report, £1,800,000, can be regarded as authoritative. Finally, in re-examination Mr. Fairnie indicated that, in the light of Mr. Dodd's report, there were issues that he would want to consider, and that might possibly change his value. He stated that if the property were placed on the market he would expect an asking price of £1,500,000, and that the price obtained might fall within the range between £1,500,000 and £2 million. He then stated that he thought that £1,500,000 was "mid-range" for the property. All of this evidence suggests a certain lack of familiarity and lack of a decisive view about the property.

[23] When Mr. Dodd examined the property in 1999 prior to the pursuer's purchase of it, he valued it at £430,000. The purchase price was £465,000, which is not very far from the price that was paid. He produced a valuation report dated 3 September 2007 (no 6/74 of process), in which he valued the property at £1,149,000 as at that date (see paragraph [21] above). In a supplementary report dated 12 September 2007 (no 6/91 of process) he expressed the opinion that the value of the property as at the date of the parties' marriage, on 21 April 2001, might reasonably be stated at a sum in the order of £490,000, and that the value at the date of separation, in October 2005, might reasonably be stated at a sum in the order of £920,000. In evidence, Mr. Dodd expressed the view that by the time of the proof the property might be worth approximately £1,300,000. I found Mr. Dodd's evidence convincing, and I accept his valuations.

Works carried out at Bonjedward

[24] The defender gave evidence that he had carried out very substantial work on renovating Bonjedward House and the cottages in its grounds. He stated that he worked continuously on renovations for five years. He had supervised the decoration of much of the house, in particular the attic and basement floors, and had been responsible for plumbing and rewiring work. Further major works, he said, had taken place on the exterior of the house, including repointing, the installation of new windows and the improvement of the basement level. He had obtained planning permission for substantial works on two of the cottages, and investigated possible planning permission for an area known as the Walled Garden. He had carried out extensive demolition works on the cottages, although he accepted that he had not started any rebuilding works.

[25] Evidence as to what the defender achieved was given by a number of other witnesses, notably Cameron Donnelly, Alastair Cockburn, the painter and decorator who was responsible for the redecoration work instructed by the pursuer, and Roger Dodd, the surveyor who gave evidence on behalf of the pursuer. In addition, Guy Campbell, who carried on practice as a building designer, gave evidence as to work that he had carried out in relation to planning permission for the cottages. Photographs of the buildings were available, and were referred to in the course of the evidence of Mr. Donnelly and Mr. Dodd. Those photographs fully supported the evidence of the pursuers' witnesses. On the basis of the evidence of these witnesses I am satisfied that the defender greatly exaggerated the work that he carried out, both in relation to the amount of such work and, in particular, to what was actually achieved by such work. I am satisfied that most of the work involved in obtaining planning permission was carried out by Mr. Campbell; the relevant drawings, in particular, were his responsibility. I am further satisfied that the work carried out by the defender on the cottages reduced rather than enhanced their value. Mr. Dodd described them as habitable but requiring some improvement at the time when the pursuer acquired Bonjedward. The defender carried out extensive stripping out and demolition works on the buildings; the result was that they were no longer habitable and required extensive works to put them into a habitable condition. Once the demolition and stripping out works had been carried out on the cottages the defender left them in that condition, and made no effort to begin, or even to instruct, the necessary works of reconstruction. Mr. Dodd stated that the defender's work on the cottages had had the effect of diminishing their value; in his supplementary report (no 6/91 of process) he stated that the dismantling works to the Gardener's Cottage and Stable Cottage had effectively rendered them uninhabitable and had diminished the market value of the whole property by a sum in the order of £100,000. Mr. Dodd had had the advantage of examining the cottages both before and after those works, and I have no hesitation in accepting his evidence on this matter. Moreover, the photographs were particularly eloquent; they revealed that the defender had turned habitable houses into mere shells.

[26] In relation to Bonjedward House itself, I am satisfied that the defender grossly exaggerated the amount of work that he did. In this connection I referred to my assessment of his evidence at paragraph [9] above; his suggestion that redecoration works occupied several years was manifestly incredible. While the defender carried out certain works on the property, I was satisfied in the evidence that they were performed to an incompetent standard. That relates in particular to the plumbing works, which gave rise to a number of significant problems, and the electrical works; further rewiring was necessary. Overall, I am satisfied that the pursuer obtained no economic advantage from such works as were carried out by the defender. Renovation works were carried out on Bonjedward House by tradesmen such as Mr. Cockburn, but those tradesmen were paid from the pursuer's resources, derived from her pre-matrimonial property.

Matrimonial property: bank accounts

[27] When the parties separated considerable sums were held in bank accounts in joint names with the Royal Bank of Scotland in Kelso. As at the date of separation these totalled £231,930. The parties divided the sums at credit of the accounts equally between them, thus treating those sums as matrimonial property. The sums in question, however, were predominantly derived from the pursuer's pre-matrimonial property, including the balance due to her in respect of her 80% shareholding in Peter Day (Finedon) Limited and land held in her own name known as The Wold; I discuss these properties below. The proceeds of those properties were paid into joint bank accounts on the instructions of the defender. In addition, the parties' joint accounts received the sums obtained from Halifax PLC and Alliance and Leicester PLC on the security of Boujedward, and the proceeds of sale of the Border Hotel, which was part of the pursuer's pre-matrimonial property. The relevant entries in the statement relating to the joint account are found at no 6/2 of process, pages 28 and 32.

[28] In my opinion the major part of the funds in the joint accounts as of the date of separation can be traced back to the pursuer's pre-matrimonial property. When funds that represent one party's pre-matrimonial property, or a gift or succession from a third party, are paid into a joint bank account, that does not mean that the funds are "acquired" by the parties during the marriage; the funds remain pre-matrimonial property or property acquired by gift or succession from a third party. Authority for such an approach is found in Davidson v Davidson, 1994 SLT 506, and in my opinion it accords with ordinary principles of tracing, which are of general application. I accordingly hold that the bulk of the funds held in the joint accounts with the Royal Bank of Scotland represented pre-matrimonial property of the pursuer, that the remainder of the funds in the account represented pre-matrimonial property of the defender, and that it is appropriate to trace the funds in the account into the parties' pre-matrimonial property. This exercise is performed at paragraph [48] below. I should also state that in tracing funds I have treated the whole proceeds of the shares in Peter Day (Finedon) Ltd as the pursuer's pre-matrimonial property, despite her gift of 20% of the shares to the defender (see paragraph [33] below); this reflects the source of the shareholding, which in my opinion justifies an unequal division of matrimonial property in this instance. Certain other accounts with the Royal Bank were in the pursuer's own name (the accounts numbered 00153208 and 00161464; the statements are at no 6/4 of process); these were never matrimonial property, because they represent the proceeds of or income from property that the pursuer had obtained by succession from Mr. Day.

Matrimonial property: 40 Warrenne Keep, Stamford

[29] During the course of the marriage the parties acquired a property at 40 Warrenne Keep, Stamford; title was taken in their joint names. The defender has lived there since the parties separated. It is a matter of agreement (joint minute, paragraph 190) that that property is matrimonial property, that it is unencumbered by a mortgage, and that it has a value as at the proof of £192,500.

Other matrimonial property

[30] Certain other items of property became matrimonial property. These comprised the following:

(i) A Bentley car retained by the defender; the agreed valuation is £10,000.

(ii) A Range Rover car, also retained by the defender; the agreed valuation is £38,750.

(iii) A Mercedes car which is wanted by neither party; the parties have agreed that the car should be sold and the proceeds divided equally, and that an incidental order to that effect should be pronounced.

(iv) A Rolex watch retained by the defender; the agreed value is £6,000.

(v) Other household goods. Parties have agreed that these should be sold and the proceeds divided. No order is required.

In addition, a loan was due by a business called Working 4U, which was run by one of the pursuer's stepsons. The loan was for £50,000. It was repaid to the pursuer after the date of separation (joint minute, paragraph 192). The source of the loan was the pursuer's pre-matrimonial property and other income derived from Peter Day's estate. In my opinion the source of those funds amounts to a special circumstances which justifies the loan being left out of account in determining the matrimonial property that is to be divided between the parties. As with the joint bank accounts, ordinary principles of tracing operate.

Property of pursuer: 1 Abbey Gardens

[31] The late Peter Day had owned a one half share of a property at 1 Abbey Gardens, London. This was sold at auction prior to the parties' marriage. The defender attempted to establish that he had played a part in achieving a higher price for the property than would otherwise have been obtained. I am nevertheless satisfied that he played no significant part in the sale and that nothing that he did resulted in an increase in the price; all significant advice was obtained from the English solicitors involved in the transaction. (see paragraph [39] below) The proceeds of that property represent pre-matrimonial property of the pursuer.

Property of pursuer: Peter Day (Finedon) Limited and land at The Wold

[32] The late Peter Day also owned a company known as Peter Day (Finedon) Limited. The main asset of the company was land situated in Northamptonshire. The pursuer was due to inherit those shares from Mr. Day's estate, but she transferred 20% of her holding to the defender. The pursuer owned adjacent land known as The Wold. The two properties were sold in January 2003. The defender was involved to some extent in events preceding the sale. He sought to suggest that he played a major part in increasing the price that was obtained for the land. In particular, he gave evidence that he had applied for planning permission to convert part of the land into a garden centre. That was done along with Cameron Donnelly. I am bound to say that I did not form the impression that there was any genuine intention to develop a garden centre on the land. In any event, the land was sold to a neighbouring proprietor as amenity ground, and it is clear that the price that he paid was not related to any proposal to permit a garden centre. On this aspect of the case, I am satisfied on the basis of the evidence of Cameron Donnelly, in particular, and the documentary evidence that the defender's actings did not result in a significantly higher price than was ultimately obtained.

[33] The pursuer made a gift of 20% of her shareholding in Peter Day (Finedon) Limited to the defender. Despite that, when the funds in the company were ultimately distributed to shareholders, the defender directed that the whole of the sums due to shareholders should be paid into a joint bank account in the names of both parties. The sum so paid was £673,873. No accounting took place to reflect the parties' differential shareholdings in the company. Furthermore, the sale proceeds from the land owned by the pursuer in her own name amounted to £34,866. Once again these were paid into the parties' joint account on the defender's instructions (no 6/67 of process).

Property of pursuer: Border Hotel

[34] Prior to the marriage the pursuer had acquired the Border Hotel in Kirk Yetholm, and she carried on the business there in her own name. It is clear that this business ran at a considerable loss. The defender suggested that the pursuer dismiss the manager, and he became involved in the business to some extent; nevertheless I thought it clear that he exaggerated his contribution. In reaching this conclusion I rely in particular on the evidence of Mona Hoeder, who was employed at the hotel. She stated that the defender when he visited the hotel did little and was frequently very rude to customers. He undertook to deal with the financial affairs of the business, but he failed to ensure that bills were paid promptly. The result was that suppliers refused credit, which caused serious problems for the business. There was evidence, however, that labour costs decreased by £10,000 in the year 2001/02, following the defender's involvement in the business. In the circumstances I do not think that I can hold that the defender made no contribution to the business, but I consider that such a contribution was substantially outweighed by the standard of living that the defender enjoyed during the marriage. The Border Hotel was sold in April 2004 for £420,000. In the course of the marriage the parties bought another nearby hotel, the Plough Hotel, and carried on business there for a relatively short time. The Plough Hotel was owned by the parties jointly. It did not make profits, and was ultimately sold at a loss. The losses sustained in the two businesses were absorbed into the proceeds of sale when the two hotels were sold. The result was to make those losses part of the parties' general expenses during the marriage. I think that this is fair, and indeed it is the only practicable way of treating those payments. No contrary submission was made.

Other property of pursuer

[35] Prior to the parties' marriage the pursuer held an endowment policy with HSBC. During the marriage she realized £152,677 from this policy. She had also, prior to the marriage, made a loan to a company, GRP Recruitment Limited, and during the marriage she received £37,437 from repayment of the loan. The sums were paid into the parties joint accounts with the Royal Bank of Scotland.

Property of defender

[36] Prior to the parties' marriage the defender owned a house in Bourne, Lincolnshire, and a further property known as the Fox Inn in Barnack, near Stamford. These properties were realized during the marriage for a total sum of £193,180.

Application of section 9(1)(b): economic advantages and disadvantages

[37] Section 9(1)(b) of the 95 Act provides that, in deciding what order for financial provision to make, the court should take their account of any economic advantage derived by either party to the marriage from contributions by the other and of any economic disadvantages suffered by either person in the interests of the other person or of the family. Professor Thomson states (at paragraph 7.17) that claims under this principle are particularly difficult to quantify. In terms of section 11(2), the court must balance the parties' economic advantages and disadvantages, and it is only when there is an economic imbalance that an award can be made. The court is also obliged to consider whether any resulting imbalance will be corrected by sharing of the value of the matrimonial property under the principle in section 9(1)(a). For that reason, in practice, the principles in paragraphs (a) and (b) of section 9(1) are usually considered together; Coyle v Coyle, 2004 Fam LR 2, provides an example of this.

[38] For the defender it was contended that the value of various properties owned by the pursuer or by the late Mr. Day's estate was enhanced by the defenders' activity. In that way, it was said, the pursuer had received an economic advantage, and that should be taken into account in any division of the matrimonial property. This argument was developed at some length in relation to Bonjedward. In this case, there was evidence that the defender had supervised the decoration and renovation of Bonjedward House, that he had applied for planning permission to develop cottages and the area known as the Walled Garden, and that he was responsible for considerable stripping out and demolition work in the cottages; I have discussed this evidence at paragraphs [24]-[26] above. I am satisfied that he seriously exaggerated the amount of work that he did. In addition, I am of opinion that the work that he carried out did not lead to any material increase in the value of Bonjedward taken as a whole. Indeed, much of the work carried out on the cottages had an adverse effect on the value. In this respect I accept the evidence of Mr. Dodd summarized at paragraph [25] above.

[39] A similar claim was made in relation to the property at 1 Abbey Gardens, London, owned by Mr. Day's estate and a Mr. Scrope's executors. The defender claimed that he was instrumental in increasing the value of that property by £125,000 through advice that he gave prior to the sale which stopped a sale at a price less than that ultimately achieved. In fact what he had done was to propose that the pursuer should acquire Mr. Scrope's interest in the property using a loan from the Royal Bank, but the bank had turned the proposal down; that was clear from a letter of 13 February 2001 (no 6/207 of process), which cause the defender considerable difficulty when it was put him in cross-examination (day 6, 2.39). The defender accepted that ultimately the sale was a matter for the two sets of executors. Mr. Scrope's executors had insisted on a sale by auction, as was their right, and that is how the property was ultimately sold. In these circumstances it is quite clear that the defender's claim that he increased the price obtained was simply wrong.

[40] Yet a further claim that the defender increased the value of the pursuer's assets related to the land owned by Peter Day (Finedon) Ltd. and the adjacent property known as The Wold owned by the pursuer. In this case the had been some activity by the defender; in particular he was responsible for making an application for planning permission for use of part of the land as a garden centre; the object of the exercise was an attempt, of dubious legality, to contrive a means of ejecting tenants from the land. In fact planning permission was not obtained, and the tenants (sons of the late Mr. Day) left voluntarily. Ultimately the land was bought by a near neighbour, who wanted it as amenity land for his own property. In these circumstances it is quite clear that the defender's activities had no bearing on the price ultimately obtained.

[41] Finally, the defender claimed that the pursuer had been benefited from his involvement with the Border Hotel. For the reasons stated above at paragraph [34] I am satisfied that the benefit to the pursuer was not great, and I am of opinion that it was substantially outweighed by the high, and indeed extravagant, standard of living that the defender enjoyed during the parties' marriage. That standard of living was financed by the pursuer's property.

Use of proceeds of realized assets

[42] In total, £1,128,429 was realized from the pursuer's assets during the marriage and £193,180 was realized from the defender's assets. In addition, a further £422,000 was realized from the Border Hotel. It is possible to identify how part of these sums was spent. The purchase of the house at 40 Warrenne Keep cost £100,267. The vehicles referred to in paragraph [30] above cost £135,010 in total. The purchase of jewellery and a Rolex watch accounted for £14,820. The net cost of operating the Border Hotel during the marriage was £43,192, and the net cost of operating the Plough Hotel was £36,718; in each case the costs of realizing the property are included. Payments on account of the loan secured over Bonjedward amounted to £85,810. A loan of £50,000 was made to Cameron Donnelly's business, Working 4U. Income tax amounted to £14,733. Finally, £40,969 represented the amount of the pursuer's bank overdraft at the time of the marriage, and £231,930 was at credit of the accounts with the Royal Bank of Scotland which were divided following the parties' separation.

[43] The foregoing items amount in total to £727,440. That leaves a further sum of £594,171 which is not specifically accounted for. That sum seems to have been used towards living expenses and general expenditure and works at Bonjedward. It is clear that the parties enjoyed a relatively high standard of living, with substantial holidays and involvement in racing by the pursuer and field sports and flying lessons by the defender. In addition, in excess of £17,000 was transferred by the defender to his own business, Willsons Fireplaces: see paragraph [9] above.

Order under section 8(1)(a)

[44] In deciding on appropriate order under section 8(1)(a), the first task is to identify the matrimonial property at the date of the parties' separation. In my opinion this was as follows:

(i) A one half share of Bonjedward. I have accepted Mr. Dodd's valuation figures (paragraph [21]-[23] above), and I have also decided to use the valuation of the property as at September 2007 for the purposes of this opinion; nevertheless, that decision is open to revisal if parties wish to make further submissions on the matter, for the reasons stated at paragraph [21]. Mr. Dodd expressed the view that the value of Bonjedward in September 2007 was £1,149,000. I accordingly value the half share that was matrimonial property at £574,500. The defender is entitled to half of that sum in exchange for a transfer of his one half share of the property. The result is that the defender is entitled to £297,250. In addition, Bonjedward was subject to a secured loan in favour of Alliance & Leicester PLC. I discuss the loan in the following paragraph.

(ii) 40 Warrenne Keep, Stamford. This property is in the joint names of the parties. The defender seeks the transfer of the pursuer's one half share, and that is not opposed, subject to the pursuer's receiving half of the present value of the property. The value as at the time of the proof is agreed at £192,500. I accordingly consider that the pursuer is entitled to payment of half of that sum, namely £96,250. Although I was not addressed on the issue, it occurs to me that this property is likely to have fallen in value in the same way as Bonjedward. I accordingly make use of the foregoing figure of £96,250 on provisional basis; the figure will be subject to revisal if parties wish to make submissions on the matter.

(iii) A Bentley car retained by the defender. The valuation is agreed at £10,000.

(iv) A Range Rover car retained by the defender. The valuation is agreed at £38,750.

(v) A Mercedes car which neither party wants. It is the agreed that the car will be sold and the proceeds divided equally. I accordingly leave this item of property out of account in the following calculation.

(vi) The defender's Rolex watch. The valuation is agreed at £6,000.

(vii) The loan of £50,000 made to Working 4U. This has been repaid following the parties' separation. The loan was made from funds that the pursuer had prior to the marriage. In my opinion that is a special circumstances that justifies leaving the property out of account in determining financial provision on divorce.

(viii) Other personal possessions. The parties have agreed that these are to be sold and the proceeds divided. I accordingly do not take them into account.

[45] The loan secured over Bonjedward was the result of a series of transactions during the course of the marriage. For present purposes it is sufficient to note that the purchase of Bonjedward had been funded by an unsecured bridging loan from the Royal Bank of Scotland. At the date of the marriage the liability to the Royal Bank had increased to some extent. A further secured loan was obtained from Halifax PLC and the proceeds were used to pay off the bridging loan from the Royal Bank; the advantage was a significantly lower rate of interest. In due course the loan from Halifax was repaid and a further secured loan was obtained from Alliance & Leicester PLC. At the date of the proof the liability to Alliance & Leicester amounted to £499,323. The loan was on an interest-only basis. It will be taken on by the pursuer, who has been paying the interest on the loan since the parties separated. Counsel for the pursuer submitted that, because the pursuer would take on the entire liability for the loan, the full amount of the loan should be deducted from the matrimonial property and from the benefit that the pursuer will obtain through transfer of the defender's one half share in Bonjedward. I do not think that matters are quite so straightforward. When the parties married the pursuer had substantial borrowings from the Royal Bank. Those borrowings took the form of a bridging loan which had been incurred to fund the purchase of Bonjedward. It is true that the loan was not secured over the property; nevertheless, I do not think that I can ignore the fact that its purpose was to fund the acquisition of the property. Apart from that consideration, two further factors seem to me to be relevant. First, the pursuer made over a half share in the house to the defender, and that half share has become matrimonial property. For that reason I think that only half of the original loan can be treated as relating to the pursuer's own property; the other half funded property that has become matrimonial property. In my opinion the latter half of the debt should be treated as essentially a "matrimonial" debt, and should be deducted from the benefit that the pursuer will obtain through transfer of the defender's half share in Bonjedward. Secondly, when the original bridging loan was replaced with a loan from Halifax PLC, the amount borrowed was substantially greater than the original bridging loan, and a further increase in the amount borrowed occurred when the Halifax loan was replaced by a loan from Alliance & Leicester PLC. (The relevant figures are accurately stated in Miss Martin's report, no 6/74 of process, as qualified by no 6/215 of process). At the time of the Halifax loan the bridging loan stood at £272,007. The new loan was for £450,000. In that way an additional sum of £177,993 was generated. That sum was use in funding the parties' somewhat extravagant living expenses. In my view the latter sum should be treated as an essentially "matrimonial" debt, and the amount that currently corresponds to that debt should be deducted from the benefit obtained by the pursuer through the transfer of the defender's half share of the house. When the Halifax loan was replaced by a loan of £500,000 from Alliance & Leicester an additional £51,583 was generated. Once again, that sum should be treated as an essentially "matrimonial" debt.

[46] The amount of the debt that should be treated as matrimonial can be calculated in the following manner. First, in relation to the Halifax loan, the percentage of "matrimonial" debt can be calculated by using the fraction whose numerator is £177,993 (the "matrimonial" debt) and whose denominator is £450,000 (the total amount of the new loan). That percentage is 39.554%, which I round up to 40%. A similar calculation is necessary in respect of the Alliance & Leicester loan. In this case the numerator is £51,583 and the denominator is £448,617 (£500,000 less £51,583). The resulting percentage is 11.498%, which I round up to 11.5%. It follows that 51.5% of the total debt must be treated as matrimonial in nature, as representing additional equity that was obtained from lenders to finance the parties' living expenses. The remainder of the debt, 48.5%, relates to the acquisition of Bonjedward. Of that, however, half (24.25%) relates to the share of Bonjedward that became matrimonial property and the other half relates to the share of Bonjedward that remains the property of the pursuer. On that basis, 24.25% of the loan is a debt that relates to the pursuer's non-matrimonial property and the other 75.75% must be taken into account in the calculation of matrimonial property, and also in calculation of the benefit that the pursuer will obtain through the transfer of the defender's one half share in Bonjedward. The amount of the loan as at 23 April 2008 was £499,323 (joint minute, paragraph 194). Consequently 75.75% of that, £378,237, should be deducted in the calculation of the matrimonial property, and a like amount should be deducted from the benefit that the pursuer obtains as a result of the transfer of the defender's half share of Bonjedward. The remaining 24.25%, or £121,086, should be treated as a debt of the pursuer that does not come into the calculation.

[47] In addition, following the parties' separation in October 2005 the pursuer has paid the whole of the interest on the outstanding loan. In the period between October 2005 and October 2007 that interest amounted to £56,432.22. In my opinion that interest should be treated in the same way as the amount of the loan itself. 75.75 % should be treated as "matrimonial" payments, and should be deductible in determining the benefit taken by the pursuer. The remaining 24.25 % should be treated as payments made for the pursuer's own purposes. Those amounts are respectively £42,747 and £13,684. These relate to the period down to October 2007, the time when the original proof was due to take place; similarly, the values of Bonjedward and 40 Warrenne Keep that I have used relate to a similar date. The whole of those figures may require revisal, but I will use them to illustrate the method of calculation that I have adopted.

[48] At the time when the parties separated funds amounting to £231,930 stood at credit of their accounts with the Royal Bank. Immediately following the parties' separation these were treated as matrimonial property and divided equally. The predominant source of the funds in the accounts was the pursuer's pre-matrimonial property, notably the amount paid to her in respect of her 80% shareholding in Peter Day (Finedon) Limited, the proceeds of sale of the Border Hotel and payments totalling £152,677 from HSBC Life in respect of policies that had been taken out prior to the marriage. In addition, a substantial part of the funds came from the use of Bonjedward as security for borrowing. Nevertheless, part of the money paid into those accounts had been provided by the defender. Prior to the marriage the defender owned a house at Bourne, in Lincolnshire, and also a development property, a public house known as the Fox Inn, in Barnack, Lincolnshire. The house was sold in about September 2001, and sale proceeds of £60,332 paid into the account. The Fox Inn was sold in about January 2002, and sale proceeds amounting to £132,848 were paid into the account. Thus a total of £193,180 was paid into the joint accounts by the defender. The total sums paid into the accounts in the course of the marriage amounted to £1,201,961; I take that figure from Miss Martin's summary of income and expenditure during the marriage as revised following discussions with Miss Scott (no 6/215 of process; Miss Martin did not produce exactly comparable figures, but to the extent that it is possible to make comparisons I do not think there is any difference between the two experts on this matter). On that basis, 16% of the funds paid into the account came from the defender's pre-matrimonial property, with the remainder of the funds coming from the pursuer's pre-matrimonial property. That represents a striking predominance of the pursuer's funds; indeed, it can be said that the parties' lifestyle during the marriage was funded essentially from the pursuer's pre-matrimonial property. In those circumstances I am of opinion that it is appropriate to trace the parties' respective contributions into the joint accounts; anything else would fail to reflect the clear predominance of funds coming from the pursuer's pre-matrimonial property. Very substantial sums were paid out of the joint accounts. Some of the expenditure is reflected in the present matrimonial property, including the motor vehicles and the house at 40 Warrenne Keep; other expenditure related to works at Bonjedward and the businesses at the Border and Plough Hotels; yet other expenditure (a substantial part) related to the parties' general expenditure, which was on a fairly lavish scale. Taking a broad view of that expenditure, I think that it can be said that it benefited the parties on an approximately equal basis; while the works at Bonjedward benefited the pursuer in the long run, the defender lived there during the marriage, and in addition he removed funds from the accounts for his own personal use (see paragraph [9] above). In tracing funds into the account, therefore, I consider it appropriate to divide the account in the same proportions as the parties' respective contributions from their pre-matrimonial property. On that basis I am of opinion that the pursuer should take funds amounting to £194,821 and that the defender should take funds amounting to £37,109.

[49] It follows that the total value of the matrimonial property, excluding the bank accounts, is £821,750 (£574,500 for Bonjedward, £192,500 for Warrenne Keep, £30,750 for the Range Rover, £10,000 for the Bentley and £6,000 for the Rolex watch). From that amount matrimonial debt of £420,984 (£378,237 in respect of the capital of the loan and £42,747 in respect of interest payments) should be deducted, leaving £400,766. That amount should be divided between the parties, giving them £200,383 each. The pursuer will take the half share of Bonjedward that is matrimonial property; the value of that share, net of the "matrimonial" part of the loan and a corresponding amount of interest paid since separation, is £153,516 (£574,500 less £378,237 capital and £42,747 by way of interest). The defender will take the property at 40 Warrenne Keep, the Range Rover, the Bentley and the Rolex watch; those had a total value of £247,250. On that basis an equalization payment of £46,867 is due by the defender to the pursuer; that represents the excess of the property taken by him over a one half share of the matrimonial property. In addition, in respect of the sums that stood at credit of the bank accounts with the Royal Bank at the date of separation, I have held that the pursuer was entitled to £194,821 and the defender to £37,109. In fact each took £115,965. Consequently a further equalization payment of £78,857 is due by the defender to the pursuer; that represents the excess of funds taken by the defender. I accordingly calculate that the defender is due to pay the pursuer a capital sum of £125,724. As indicated above, that figure is provisional, as it is based on valuations as at September 2007.

[50] Counsel for the defender submitted that Bonjedward was entirely matrimonial property, and that it should be sold and the proceeds divided between the parties. For the reasons stated above I reject both of those contentions. Counsel further submitted that Bonjedward should be valued at £2 million, on the basis of Mr. Fairnie's valuation and that if, contrary to her primary submission, the house were to be transferred to the pursuer, the pursuer should pay the defender a capital sum of £677,875; that is based on the assumption that the house was matrimonial property and that Mr. Fairnie's valuation was accurate. I have rejected both of those assumptions, and consequently I reject this submission. It was also submitted for the defender that there were no special circumstances such as to justify an unequal division of the matrimonial property. In my opinion an unequal division is justified in respect of the property in the bank accounts, for the reasons discussed above at paragraph [48]. I should also add that, if I had concluded that Bonjedward was entirely matrimonial property, I would have divided the matrimonial property unequally, with a substantial surplus in the pursuer's favour; that reflects the fact that Bonjedward was her home before the marriage and that the transfer of a half share to the defender was clearly made at his suggestion and indeed under some pressure from him. Regardless of the status of Bonjedward as matrimonial property, I do not think that a payment by the pursuer to the defender could possibly be justified. During the marriage the parties enjoyed a lavish, indeed extravagant, lifestyle; Miss Martin calculated that their annual expenditure amounted to £178,134. That expenditure was funded essentially from the capital that the pursuer inherited from her husband. In my opinion it would be grossly inequitable if the defender were to claim further sums at this stage.

[51] For the foregoing reasons I will pronounce decree of divorce; and will order the transfer of the defender's interest in Bonjedward to the pursuer; the transfer of the pursuer's interest in 40 Warrenne Keep to the defender; sale of the Mercedes car and division of the proceeds; and payment by the defender to the pursuer of a capital sum which I provisionally estimate at £125,724. The case will be put out by order so that counsel can make further representations on the exact size of the capital sum.