Melvin v Christie [2016] ScotCS CSIH

FIRST DIVISION, INNER HOUSE, COURT OF SESSION

[2016] CSIH 43

XA132/15

Lord President

Lady Smith

Lord Brodie

OPINION OF THE COURT

delivered by LADY SMITH

in the Appeal

ALEXANDER MELVIN

Pursuer and Respondent:

against

FIONA CHRISTIE

Defender and Appellant;

Act: Malcolm; Morisons LLP

Alt: Cartwright; Aitken Nairn WS

14 June 2016

Introduction

[1] This is an appeal from an interlocutor of the Sheriff Principal dated 16 May 2014 allowing the pursuer’s appeal and awarding £29,515 as the capital sum due to him under and in terms of section 28(3)(a) of the Family Law (Scotland) Act 2006, following the breakdown of his relationship with the defender, his cohabitee. The Sheriff Principal also awarded interest at 8 per cent per year from the date of citation (2008). Parties were agreed that, in awarding interest from the date of citation, the Sheriff Principal erred to the extent that interest on any award ought not to run from any date earlier than the date of decree, in accordance with what was craved. However, the pursuer sought interest from the date of decree whereas the defender’s position was that it should be awarded only from the date this court affirmed the Sheriff Principal’s award, if that was the outcome of this appeal.

[2] The capital sum awarded represented one half of the value of the equity in the family home at the date of the proof before the sheriff. The house was owned by the defender. The parties had no other capital resources.

Family Law (Scotland) Act 2006 section 28

[3] The pursuer’s application was made under section 28 (2) of the 2006 Act. Section 28(1) of the 2006 Act provides that subsec (2) of that section applies where cohabitants cease to cohabit otherwise than by reason of the death of one (or both) of them.

[4] Subsections (2) to (6) are in these terms:

“(2) On the application of a cohabitant (the ‘‘applicant’’), the appropriate court

may, after having regard to the matters mentioned in subsection (3)–

(a) make an order requiring the other cohabitant (the ‘‘defender’’) to pay a capital sum of an amount specified in the order to the applicant;

(b) make an order requiring the defender to pay such amount as may be specified in the order in respect of any economic burden of caring, after the end of the cohabitation, for a child of whom the cohabitants are the parents;

(3) Those matters are–

(a) whether (and, if so, to what extent) the defender has derived economic advantage from contributions made by the applicant; and

(b) whether (and, if so, to what extent) the applicant has suffered economic disadvantage in the interests of–

(i) the defender; or

(ii) any relevant child.

(4) In considering whether to make an order under subsection (2)(a), the appropriate court shall have regard to the matters mentioned in subsections (5) and (6).

(5) The first matter is the extent to which any economic advantage derived by the defender from contributions made by the applicant is offset by any economic disadvantage suffered by the defender in the interests of–

(a) the applicant; or

(b) any relevant child.

(6) The second matter is the extent to which any economic disadvantage suffered by the applicant in the interests of–

(a) the defender; or

(b) any relevant child,

is offset by any economic advantage the applicant has derived from contributions

made by the defender.”

Background

[5] The parties cohabited from about 1991/2 until 27 November 2007. They have two children. They lived in a series of houses. The first was purchased in joint names and each contributed £10,000 towards the price. Subsequent houses were all purchased in the defender’s sole name with the assistance of mortgages taken out in her name. The last house, at Lochinch Drive, Cove Bay, Aberdeen, was bought as a family home in November 2005 for £192,951 and its purchase was wholly funded by a Northern Rock loan secured by mortgage.

[6] Despite the title to and mortgages secured over these houses being in the defender’s name, the defender could not have afforded the mortgage payments “without input of some kind” from the pursuer (finding in fact 19). The Sheriff Principal amended finding in fact 19 by deleting “input of some kind” and substituting “contribution”, an amendment which did not, we consider, make any material difference. The point was that as the defender was only earning £16,000 – 17,000 per year, she clearly could not fund the mortgage herself; somebody else must have been making a contribution or, to put it another way, providing an input. On the evidence, the only other available source of finance was the pursuer, who was working. The sheriff also found that parties made equal contributions to their general expenditure (finding in fact 17), found that the “pursuer must have contributed in some way” to the mortgage needed for the house at Lochinch Drive ( finding in fact and law 1) and observed that the pursuer “must have been involved in financing” that house (Judgment, p.13). The house increased in value over the years and even after a remortgaging exercise, there was equity in it at the time of proof. However, the title remained in the name of the defender and so the pursuer had no proprietary interest.

The Sheriff’s Decision

[7] The pursuer’s claim is pled solely under reference to section 28(3)(a) of the 2006 Act, namely that he should be awarded a capital sum in recognition of the defender having derived an economic advantage from contributions made by him. However, the sheriff also treated it as a claim under reference to section 28(3)(b) namely that he should be awarded a capital sum in recognition of economic disadvantage suffered in the interests of the defender. The claim was presented by the pursuer’s solicitor, in submission, under reference to both section 28(3)(a) and (b) and that is, no doubt, the reason why the sheriff departed from – or, at least, added to - the case pled, in her considerations. That proved, in the circumstances, to be unfortunate since it led to her conflating the two. Had she confined herself to the case pled and had regard only to the question of whether or not the defender had derived an economic advantage from contributions by the pursuer, it seems highly likely that the outcome would have been different; she would not have required to refuse the pursuer’s capital claim on account of his failure to bring himself within what was, at that time, understood to be the meaning of section 28(3)(b).

[8] In the event, although the sheriff recognised that the defender had derived a relevant economic advantage, she declined to make any award of capital essentially because, although the pursuer had clearly suffered economic disadvantage there was no evidence that he had intended, when making his contributions to the purchase of Lochinch Drive, to benefit the defender. That being so, she could not, on the authority Gow v Grant 2011 SC 618, make any award under section 28.

The Sheriff Principal’s Decision

[9] By the time the pursuer’s appeal was heard, the UK Supreme Court had overruled the Inner House decision in Gow v Grant (2013 SC (UKSC) 1); it was not necessary, for the purposes of section 28(3)(b), to find that the applicant’s economic disadvantage was suffered in a manner intended to benefit the other party. When applying section 28, what mattered was what amounted to fair compensation for contributions made or economic disadvantages suffered in the interests of the relationship on a broad rather than narrow assessment, bearing in mind that parties will not have kept a running tally and that it would disproportionate to demand that an accounting be worked out in detail: Lord Hope of Craighead, paras 32 and 33. Indeed, as both the sheriff and Sheriff Principal observed, the parties in the present case seemed determined to leave much about their relationship, including economic matters, shrouded in mystery.

[10] The Sheriff Principal was satisfied that, whatever those mysteries, since the findings in fact showed that, at the end of the relationship, there was a significant economic advantage held by the defender in the form of the equity in the house at Lochinch Drive and the parties had been making broadly equal contributions to general expenditure, he could conclude that that economic advantage was derived from contributions by the pursuer. On a broad axe basis, he awarded the pursuer a sum amounting to one half of the value of the equity in the house as at the date of proof.

The Appeal:

Interest

[11] The defender contended that since section 28 made no provision for interest, its award was regulated by the common law. That meant that it could only run from the date of final affirmation of any award on appeal, a proposition for which counsel relied on the case of James H Roger v J P Cochrane & Co. 1910 SC 1. The defender’s contention was to the contrary; whilst counsel did not take issue with the proposition that the common law applied, neither it nor the case of Roger v Cochrane required that the running of interest be postponed until the date of this court’s interlocutor. Interest was craved from the date of decree, as was the norm in a family case, and there was no good reason for using a different date in this case.

[12] We agree. Whilst the Sheriff Principal was wrong to order that interest should run from the date of citation, it is appropriate in this family case that it run from the date of his award, namely 16 May 2014. That is the norm and insofar as the passage in the opinion of the Lord President in the case of Roger v Cochrane relied on by the defender might be thought to suggest otherwise, it related to practice in reparation actions over a century ago and was, in any event, obiter.

Amendment of Finding in Fact 19
[13] The defender contended that the Sheriff Principal erred in law by amending finding in fact 19 without reference to the shorthand notes. That was not accepted by the pursuer; it reflected the entirety of the sheriff’s findings and was, accordingly, a reasonable exercise of his discretion. Further, it simply reflected the terms of section 28(3)(a).

[14] Whilst there are cases where an appellate court will not be entitled to alter a finding in fact without having identified a specific basis in the evidence either within the terms of a transcript or within the terms of parties’ agreement as to the terms of the relevant evidence, this is not one of them. The amendment did not effect any material alteration to the finding in fact; its meaning and import did not change. We refer to paragraph [6] above. We are not persuaded that there is any merit in this ground of appeal.

Whether the Sheriff Principal erred in the exercise of his discretion and reached a decision which was plainly wrong

[15] There were three parts to this ground of appeal. First, the defender contended that the Sheriff Principal required to evaluate the evidence but could not do so without the shorthand notes; the sheriff’s findings had been made in the light of the Inner House decision in Gow v Grant and not in a manner that had regard to the decision of the UK Supreme Court. Counsel for the defender accepted, however, that neither party had, during the appeal to the Sheriff Principal, sought to challenge any of the findings in fact.

[16] The pursuer’s position on this first aspect was that the Sheriff Principal was entitled to proceed on the basis of the sheriff’s findings in fact and, further, to draw inferences from them (Benmax v Austin Motor Co Ltd [1955] AC 370 at p 375 per Lord Reid). This was not a case where parties or the Sheriff Principal sought to interfere with the sheriff’s determination of what facts had been proved. Further, it was evident that the Sheriff Principal had analysed the evidence and that he had done so in the context of the relevant law as at the date of the appeal.

[17] Secondly, counsel for the defender submitted that the Sheriff Principal had erred in failing to carry out an “offsetting exercise” in terms of section 28(4) which provides that, in considering whether to make an order under section 28(2)(a), regard must be had to “the matters mentioned in subsections (5) and (6)”. His judgment was silent in that regard.

[18] Regarding this second aspect, counsel for the pursuer drew attention to the fact that no aspect of section 28(4), (5) or (6) was relied on in the pleadings, at proof or at the appeal before the Sheriff Principal. In these circumstances, the Sheriff Principal’s decision could not have been affected by having regard to the matters mentioned in section 28(5) and (6) and he did not err in failing to make mention of their provisions.

[19] Finally, the Sheriff Principal also, according to the defender’s contentions, erred in “refining” his own reasoning in the earlier case of Smith-Milne v Langler (2013) Fam LR 58 where he had said that section 28(3)(a) seemed to envisage proof of a causal connection between the contributions of the applicant and the economic advantage to the defender and that too much reliance on the broad approach of fairness ran the risk of doing violence to its meaning. Relying on that decision, the defender had contended, in this appeal, that the sheriff had not made a finding of the “necessary link” between the economic advantage to her and the pursuer’s contribution and that was fatal to the pursuer’s case. In his judgment, the Sheriff Principal said his comments in the earlier case were intended to highlight one end of the spectrum and added that there was an opposite end where a direct relationship cannot be proved but that is not to say that a link cannot be identified. That was, according to the defender, a refinement of his thinking and parties ought to have been given an opportunity to make further submissions in relation to it.

[20] Regarding Smith–Milne v Langler, counsel for the pursuer submitted that the remarks made by the Sheriff Principal about causation were but observations and not such as could be relied on for definitive support of any proposition. There was no requirement for further submissions.

[21] We are not persuaded that we should uphold any aspect of this ground of appeal. The issue for the Sheriff Principal was, essentially, whether, contrary to the sheriff’s decision, section 28 of the 2006 Act did entitle the court to make an award of capital in favour of the pursuer and, if so, to what extent. Findings in fact 17 and 19 – whether amended or not – provided a sound basis for concluding that section 28(3)(a) applied and that such an award should be made. The important facts inherent in those findings were not challenged so there was no need for a transcript.

[22] As regards the offsetting exercise we, of course, accept that the terms of section 28(4) are directory – the court “shall” have regard to the matters referred to in section 28(5) and (6) – but it is incumbent on a party who seeks the benefit of such offsetting to demonstrate through the written pleadings and in evidence and submission that they seek to have the court do so. Absent that, there is no need for the court to spell out in its judgment that it has had regard to these subsections but since no case for offsetting was before it, no offsetting is being effected. The task for the court is to resolve the issues raised not to embark on an inevitably sterile or academic exercise.

[23] Regarding the submissions in relation to the case of Smith–Milne v Langler, again there are cases where a judge ought, in the interests of justice, to give parties the opportunity to make further submissions, for example where a relevant authoritative decision is issued during the avizandum period or, perhaps, where the judge has revised her view on a substantive issue previously and authoritatively expressed. This case does not fall into that category. We do not read the Sheriff Principal’s judgment as indicating that he had altered his views. They continued to be that there needed to be “a causal link” between the contributions and the economic advantage and we agree that he was correct about that. All that he added was to the effect that some links are closer than others. Again, we would not demur. In short, we cannot find that there was any injustice in his refraining from issuing an invitation to parties to make further submissions. We would be surprised if he had done so.

[24] The only matter remaining is the amount of the award and we can deal with that briefly since the defender did not contend that if the Sheriff Principal was entitled to make an award of capital , he was not entitled to award the sum of £29,515.

Disposal
[25] We note that there is an obvious error in the Sheriff Principal’s interlocutor; it deletes the sheriff’s second finding in law (to the effect that the defender achieved an economic advantage as a result of the parties’ cohabitation) but to do that would not be consistent with his judgment. That finding requires to be reinstated. Also, that part of the Sheriff Principal’s interlocutor which provides for interest to run from the date of citation requires to be amended so as to provide for interest to run from the date of that interlocutor. Subject to those amendments, we will refuse this appeal and adhere to the Sheriff Principal’s interlocutor of 16 May 2014.