Scottish Sheriff Court Decisions

SHERIFFDOM OF LOTHIAN AND BORDERS AT LIVINGSTON

 

Judgement on Expenses

 

by

 

Sheriff Douglas A Kinloch,

Advocate

 

In causa

 

S

PURSUER

 

against

 

S

DEFENDER

 

_______________________________________

 

 

 

 

 

 

 

Livingston 15 March 2012

The Sheriff, having resumed consideration of the cause, finds no expenses due to or by any party to the cause.

 

 

 

 

 

NOTE:

 

 

NOTE:

In this divorce case, in which I issued judgement on 29 December 2011, both parties argue for an award of expenses in their favour. A hearing on expenses took place before me on 24 January 2012, and occupied the better part of a day. The parties were represented as before.

 

The submissions

At the risk of oversimplification, the parties' submissions can be summarised as follows.

 

Pursuer's submissions

The pursuer's solicitor argued that the pursuer was entitled to a finding of expenses in her favour (or, more accurately, to the extent of 80% of her expenses) for a number of reasons.

 

First, shortly before the proof began the pursuer had made proposals to settle the action, and although the defender had been awarded slightly more than the pursuer had offered in these proposals, the offer was very much in line with the outcome of the case. The offer made by the pursuer was that (to use approximately accurate figures for simplicity) she would pay to the defender £70,000 as a capital sum, and in addition he would receive £11,400 by way of a deferred pension share order. She had therefore offered to pay to him £81,000 (plus half the shares), and this was very close to the capital sum of £89,000 which was actually awarded. The defender had been holding out for a much larger sum, but his expectations were unreasonably high, and had not been achieved. He should have been able to anticipate that the court would make an award at the level being offered by the pursuer, and had he accepted the proposals the proof could have been avoided.

 

Secondly, the defender had been difficult and obstructive in relation to providing information to the pursuer which information was necessary for the pursuer to formulate her offer. In particular, the defender had delayed unreasonably in providing his own valuation of the former matrimonial home. He had not been fully co-operative in seeking to agree valuations of matrimonial property, and this should be counted against him.

 

Thirdly, one of the main issues at the proof was whether the matrimonial house should be sold and the proceeds divided equally, or whether it should be transferred into the pursuer's sole name, with a compensatory capital sum being payable to the defender. The pursuer had been successful in relation to this fundamental issue, had achieved the transfer of the house to her, and that success should be reflected in expenses.

 

Fourthly, the pursuer had had substantial success also in relation to the question of the shares. This was one of the main issues at the proof. The court had reached a result which was similar to that being argued for by the pursuer, albeit the result was reached by a different route.

 

Fifthly, the pursuer had similarly had substantial success in relation to the question of how the disparity in the parties' pension rights should be dealt with. The defender had wanted immediate payment of a half share of the difference, which he did not receive, and so the pursuer's arguments had largely been accepted. The valuation of the car was one of the other main issues and the pursuer's arguments in relation to that had been entirely successful. While the pursuer had not been successful in relation to the questions of damages, tax liability, the credit cards, or the ring, these matters were of relatively low value.

 

Defender's submissions

The defender's solicitor argued that it was very difficult indeed to compare the proposals put forward by the pursuer to settle the case, and the eventual outcome of the case. It was misleading to look simply at figures. The pursuer had put forward settlement proposals which involved various assets being dealt with in particular ways, and the outcome of the case had involved the assets being dealt with in other ways to that which had been suggested.

 

He argued that the outcome of the case had been remarkably similar to the defender's position both in negotiation and at the proof. It was therefore entirely reasonable for the defender to have rejected the pursuer's offer. The only reason the outcome of the case had not been closer to his position was that there had been a reduction to reflect the resources of the parties'. This particular mechanism had not been specifically argued for by the pursuer. It could not reasonably have been anticipated as a likely outcome. There was nothing in the pleadings about it.

 

In any event, the defender had beaten the offer made by the pursuer. He had beaten it by about £9,000, which was a significantly large enough amount to justify the stance which he took.

 

The defender's agent submitted that the defender had been as keen as the pursuer to agree the value of the matrimonial assets. If it was necessary for him to supply a valuation of the house, and it was not accepted that it was, then he had supplied 3 valuations, even if they were not full and detailed valuations. The figures in these valuations had proved to remarkably accurate. It was not therefore the case that the defender had in any way prevented the pursuer putting forward offers and proposals to settle the case.

 

In any event, full agreement as to the value of all the matrimonial assets had been reached by the start of the proof. A Joint Minute was lodged. That agreement, it was submitted, did not affect the question of whether the proof took place, in that there was thereafter no settlement of the case despite the fact the proof lasted for 9 days and had continued over a period of a number of months. The reason why the case did not settle was that the parties' were too far apart in relation to their valuations of the case, and the defender's conduct had not affected matters at all.

 

The pursuer's arguments had been accepted in the majority of controversial issues. His arguments had been accepted in relation to the valuation of the shares, which was an important issue at the proof. His arguments had been accepted in relation to the treatment of the parties' pensions (leaving aside the reduction for resources and the early payment). It was clear from the defender's pleadings that he had always been agreeable to the house being transferred to the pursuer. This lessened the degree of success which the pursuer had in relation to the house. The stumbling block was the amount of the compensatory sum.

 

 

 

Law

The pursuer's agent helpfully lodged a number of authorities to which she referred in her submissions. These were Little v Little 1990 SLT 785; De Winton v De Winton 1997 SLT 118; Adams v Adams 1997 SLT 150; and Sweeney v Sweeney 2007 396. From these cases it emerges that the traditional rule that expenses should follow success is not applied in its full rigour in divorce cases (see Little v Little). Perhaps the most helpful summary of the type of factors which may be relevant in assessing the appropriate finding regarding expenses is given by Lord Gill, sitting as an Outer house judge, in Adams, where he said as follows:-

 

"Section 22 of the Family Law (Scotland) Act 1985 abolished the rule that a husband was liable for his wife's expenses in a consistorial action. It does not follow that in such an action expenses must now follow success. The provisions of the 1985 Act are complex. They set out numerous guiding principles and relevant factors which the court must take into account; but in applying these provisions the court has a wide discretion. In cases under the 1985 Act success may not always be a straightforward matter; but even if one party is clearly successful the court may nevertheless take other considerations into account. In such cases the court's approach to expenses must be more flexible than that would be in a simple petitory action (cf Little v Little, per Lord President Hope at 1990 SLT, p 790). In exercising its discretion as to expenses the court may take into account such matters as the reasonableness of the parties' claims, the extent to which they have cooperated in disclosing, and agreeing on the value of, their respective assets, the offers they have made to settle, the extent to which proof could have been avoided and, of course, the final outcome)."

 

Relevant factors

Although the question of success is not paramount, in the present case I prefer to start with the final outcome of the case, in order to see whether it can be said that either party has been "successful", as this is still a relevant, and indeed important, factor in relation to the question of expenses.

 

 

 

Success

In relation to the house, I granted the pursuer's crave for a property transfer order, in terms of which the house was transferred to her, and in that respect she was successful, but the weight to be given to that "success" is lessened by the fact that the defender's position in his pleadings is as follows: "The defender is and always has been prepared to permit the pursuer to purchase his share in the matrimonial home for value, taking into account and having regard to a fair reasonable and equitable division of matrimonial property." So the defender did not oppose the property transfer order in principle, his position as I understood his evidence, being that he felt the pursuer could not afford to buy out his share. The success which the pursuer achieved was therefore not as significant a result as it might at first sight appear.

 

In relation to the capital sum, the total sum found by me to be due to be paid by the pursuer was £89,486. The defender had a crave seeking payment of £150,000, and, as might be expected, the capital sum was well below that figure, but I think it is far more relevant to compare the sum awarded with the sum sought on his behalf in submissions which was £105,001. The capital sum awarded was less than the defender sought, but as was pointed out by the defender's solicitor, the sum which I found due before reducing it to take account of the pursuer's resources was £104,578, which is very close indeed to the sum sought by the defender. It was also suggested on behalf of the defender that the reduction in the capital sum made by me to reflect the pursuer's resources was not something which could readily have been anticipated by the defender or his advisers. That may be correct. So although it could be said that the pursuer had success of a sort in that the sum awarded was close to her offer, that success is less relevant that it may seem, in my view, as the defender had "success" in relation to the capital sum found due before reduction to allow for the parties' resources.

 

In relation to the question of pension rights, the defender has been successful in obtaining an award which gives him an immediate payment of a share of the pursuer's pension rights, but on the other hand that share has been reduced to reflect the pursuer's resources. In relation to the shares, the defender's argument that they must be valued as at the relevant date was successful, but as with the pension rights his share of that value has been reduced to reflect the pursuer's resources.

 

In relation to the other main contentious issues at the proof, the pursuer's arguments were successful in relation to the car and the bonus, and the defender's arguments were accepted in relation to the damages, the tax liability, and the mortgage and credit card payments. The valuation of the ring produced by the defender was accepted by me. So more of the defender's arguments were accepted by me than the pursuer's arguments, although the amounts involved were not greatly significant.

 

To summarise in relation to success, the pursuer obtained the transfer of the house to her, but that was never opposed in principle. The capital sum awarded to the defender was some way below that which he sought in submissions, but the sum found due before the reduction for resources was very similar indeed. The defender obtained an immediate award in respect of pension rights, but at a much lesser level than he argued for. Much the same outcome applied in relation to the shares. The pursuer's arguments were accepted in relation to two of the "ancillary" matters, and the defender's arguments were accepted in relation to four. In these circumstances, which are not entirely straightforward, it seems to me that it is difficult to say that either party has been successful, or even largely successful.

 

Offer to settle

The next question is whether the pursuer's offer to settle the case ought to affect expenses.

 

It is clear from Walker and Walker on Evidence (10.7.1) and the cases referred to therein that: "negotiating communications can be produced without consent or waiver to compare a judicial outcome with the parties' negotiating positions in order to determine judicial expenses" (see also Critchley v Campbell (1884) 11r 475; O'Donnell V Robertson (1965) SLT 155). However, as I understand it, the test in a case like this is not whether the defender "beat the tender", but it is whether in all the circumstances the party to whom the offer was made acted unreasonably in refusing it, and whether as a result the refusal unnecessary judicial expense was caused: see Macphail 14.72; Calder v Rush 1970 SLT (Sh Ct) 51.

 

In relation to this the pursuer's agent lodged a copy of a letter which she had written to the defender's agent very shortly before the proof commenced, dated 29 October 2010. Having read the letter, it contains suggestions as to the way in which various matters ought to be dealt with, and at what value. Probably of most importance in relation to the letter as I see it, is that the pursuer suggested that she pay the defender a capital sum of £70,000, and in addition would give him a postponed pension share entitlement of £11,400. It was suggested to me by the pursuer's solicitor that the total of these two figures, that is £81,400, could be seen as being relatively close to the capital sum actually found due.

 

The first point I would make regarding this letter is that I think there is something in the argument put forward by the defender's solicitor that it simply represents one particular stage in an evolving negotiation process, and ought therefore to have less importance than a simple straightforward, one off, settlement figure being put forward to resolve a case, such as might be found in an action for payment or similar.

 

The letter to some extent contained argument, and seemed to conclude by inviting further discussion in the hope that an agreement could be reached. It clearly represents an effort made by the pursuer to settle the case, and therefore I think I can and should have regard to it, but the defender in fact achieved more in the award that I made than was suggested in the pursuer's letter, and that alone quite strongly suggests that it was reasonable enough for him to reject the proposals put forward in the letter. Nor does this appear to be a case where the defender was holding out for figures way above those which were actually awarded by me with the effect that although he achieved more than was being offered he should be penalised in expenses because his negotiating stance had been entirely unreasonable. In this connection the defender's solicitor lodged a letter sent by him to the pursuer's solicitor dated 13 August 2010. It shows that the defender was putting forward proposals in settlement which are not too far removed from the outcome in the case.

 

In short, I do not see that the letter produced by the pursuer's solicitor at the hearing on expenses can be seen as being in any way decisive as to the outcome on expenses. In the whole circumstances I do not think it can be said that it was unreasonable for the defender to refuse to accept the proposals put forward by the pursuer. That being the case, it must follow that the pursuer's "offer" can have little weight in relation to the question of expenses.

 

Co-operation

Next there is the question of whether the defender can be seen as having been obstructive in relation to negotiations. It is suggested that he refused unreasonably to provide information which was necessary for the pursuer to be able to formulate properly her settlement proposals. In particular it is said that he refused to instruct surveyors to undertake the full valuation of the former matrimonial house.

 

In relation to this the defender's solicitor said that the defender had supplied more than one valuation of the house, albeit these valuations were not full survey valuations, one of them being for example a "drive by" valuation. Nevertheless, these valuations had turned out to be remarkably accurate, and closer to the eventual agreed valuation than the pursuer's own valuation. It was also argued that it was not necessary for the defender to provide his valuation of the house in order to allow the pursuer to put forward an offer in settlement based on her valuation.

 

I find the defender's submissions on the question of co-operation to be persuasive. While it is well established that each side must provide full and frank disclosure of their assets, and while it might perhaps be helpful for each side to provide an equivalent valuation of a house so that an agreed value can be reached, it is clearly possible for settlement proposals regarding a house to be put forward on the basis of one side's valuation alone. Such proposals may be less useful, and carry less weight, than a proposal based on a mutual valuation, but I do not think it can be said that the defender was being very obstructive in failing to provide a full valuation at an early stage. The letter which was produced by the defender's solicitor, to which I referred above, also persuades me that there were reasonable efforts made by the defender as well as the pursuer to settle this case.

 

I am therefore not persuaded from the information which I have been given that there was a failure to disclose assets, or that the defender was obstructive in relation to a crucial issue, such as to penalise him in expenses. Rather, the impression I get is that the proposals put forward on each side for settlement were reasonable, and both sides were making efforts to settle the case. Moreover, and I think importantly, once the defender did produce a valuation, which was at the start of the case and resulted in a Joint Minute of Agreement being entered into, the case did not thereafter settle even though it did not conclude until many months later. Whatever the reason for the parties being unable to achieve a settlement, it does not appear to me that it was the failure to produce information by the defender at an early stage.

 

Children

The final issue which needs to be considered in relation to expenses is the position regarding the orders sought in respect of the children.

 

The pursuer's solicitor suggested to me that a proportion of the expenses ought to be dealt with separately, and that was because the question of the arrangements for the children had been settled by Joint Minute during the course of the proof. It was said that about 20% of the time at the proof had been taken up by evidence relating to the question of who should look after the children, and that as this matter had settled by agreement, there should be a finding of no expenses due to or by either party in relation to 20% of their expenses.

 

The defender's solicitor argued that such an outcome was not justified in that the evidence which was heard at the proof regarding care of the children had only been necessary because the pursuer at the start of the case was seeking to have a residence order made in her favour, and had led evidence in support of that position. Twenty per cent of the time at the proof had been wasted in that after one and a half days of evidence the pursuer eventually conceded the shared care arrangements which had been put forward by the defender at an early stage.

 

The first observation I would make in relation to this matter is that I think it is probably unhelpful to think in terms of success or failure in relation to orders sought in respect of children. Orders are pronounced in accordance with what the Court sees as being in the best interests of the children, and this is not really a question of wining or losing. Next, there can be no doubt that in seeking a residence order for the children the pursuer was acting in what she thought was in their best interests. It was only after the child A made it clear in giving evidence that he had not been influenced in any way by any parent, and that he wished a shared care arrangement to continue that the pursuer was persuaded to agree this. These are difficult issues for any parent, and I do not think it can be said that the pursuer's stance, which did indeed lead to time being used up at the proof, can be seen as unreasonable.

 

The formal position in terms of the parties' craves, is that each sought a residence order in respect of the children. However, the defender's solicitor directed me to answer 6 for the defender where it is said as follows: "The current arrangement of shared residence is clear and unambiguous, provides the children with certainty and stability, and is welcomed by the children who wish to continue with this arrangement. We are happy and settled with this arrangement in the circumstances." It was submitted to me that despite the formal crave seeking a residence order the defender was in reality, as his pleadings made clear, entirely content for a "shared care" arrangement.

 

The fact that the matter of the residence orders ended in agreement is of relevance, but not in my view of great significance in relation to expenses. Neither party was being unreasonable in relation to these difficult issues. I therefore find that the outcome of the action in relation to the children is not to be regarded as a significant issue in determining liability for expenses, nor is the fact that one and a half days were spent on evidence relating to the children before there was an agreement.

 

Conclusion

The conclusion to which I come is that the only fair finding in this case regarding expenses is that each party should bear their own expenses. That is not, as I hope I have set out above, simply the adoption of a very broad brush approach to expenses. It is the result of a consideration of a large number of issues, each of which can be looked at from different standpoints and angles, but none of which taken separately or together suggests sufficiently strongly to my mind that the fair result would be for one party to pay the other's expenses. Regardless of which way matters are looked at, I find it very difficult to say that there is a compelling reason for making an award of any sort in favour of either party.

 

In relation to A, who entered the process, there was no suggestion that he ought to be found liable in expenses, and of course he is without resources which also effectively precludes any finding of expenses against him. I think it is appropriate that in relation to A a finding of no expenses due to or by him to any other party is also appropriate. The effect of this is that A's expenses will be met by the legal aid board.

 

Accordingly, there will be a finding of no expenses due to or by any party to the cause.