Scottish Sheriff Court Decisions

KIRKCUDBRIGHT SHERIFF COURT
Sheriff Principal B A Lockhart	F52/12   JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART In Note of Appeal by AA Pursuer and Respondent   Against   BB Defender and Appellant

 

Act: Ms G Joughin, Advocate

 

Alt: Ms J Scott, QC

 

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KIRKCUDBRIGHT: 7 October 2013

The Sheriff Principal allows motion on behalf of the defender and appellant made at the bar to allow the Record to be amended in terms of Minute of Amendment No 16 of process; having heard counsel for both parties; allows the appeal and recalls the Sheriff's interlocutor of 5 September 2013 but only in respect of his refusal of paragraph 2 of the defenders motion 7/4 of process; grants interdict ad interim of the pursuer from selling, transferring or otherwise disposing of (a) CC and the DD sought to be transferred in crave 1 of the Defences. (b) The business known as "EE" including the pursuers entitlement to a Single Farm Payment and the whole crop, stock and implements and all other assets held by the pursuer trading as "EE" sought to be transferred in crave 2 of the Defences (other than in the ordinary course of trade); finds the defender and appellant liable to the pursuer and respondent in the expenses of the appeal; allows an account thereon to be given in and remits same when lodged to the auditor of court to tax and to report; certifies the appeal as suitable for the employment of Counsel.

 

NOTE:

[1] In this case the pursuer seeks decree of divorce on the grounds that the marriage has broken down irretrievably. The defender craves the court (1) to grant an order for the transfer of the pursuer's whole, right, title and interest in unto the heritable properties known as in farming (a) the CC, and (b) the DD,. (2) An order for the transfer of the pursuer's whole right, title and interest in unto the business known as "EE" including the pursuer's entitlement to a single farm payment, the whole crop, stock and implements and all other assets held by her trading as "EE". (3) Failing decree in terms of crave 1 and 2 to grant decree against the pursuer for payment to the defender of £2,000,000. The defender sixthly seeks interdict and interdict ad interim in the following terms:

"To grant interdict and interdict ad interim of the pursuant to section 18 of the Family Law (Scotland) Act 1985, from disposing of property, and from effecting any other transfer or transaction involving her property which has the effect of defeating in whole or in part the defender's claim for financial provision, including but without prejudice to the generality of the foregoing from selling, transfer or otherwise disposing of (a) the CC and the DD sought to be transferred in crave 1 on the defences and (b) the business known as "EE" including her entitlement to a single farm payment and the whole crop, stock and implements and all other assets held by her trading as "EE" sought to be transferred in crave 2 of the defences (other than in the ordinary course of trade)."

 

[2] The action was served on the defender and a notice of intention to defend was lodged on 18 October 2012. Thereafter the case was sisted on joint motion on 25 October 2012 "pending negotiation on financial matters". On 6 June 2013 the sist was recalled and the case re enrolled for further procedure. An order was made for defences and an options hearing was assigned for 22 August 2013. On that date, on joint motion the sheriff allowed parties a continuation of the options hearing and assigned 19 September 2013 as a diet to allow parties to adjust their pleadings further.

 

[3] Having heard parties on 29 August 2013 and 5 September 2013 the sheriff allowed a Minute of Amendment to be received on behalf of the defender. The defences were amended in terms thereof. The Sheriff refused to grant interim interdict in terms of crave 6 of the defences as amended. He refused to grant warrant for inhibition on the dependence of the action in terms of crave 7 of the defences as amended, he refused to remit the cause to the Court of Session.

 

[4] The defender lodged a Note of Appeal against the refusal of interim interdict on the following grounds:

"1.The sheriff failed to appreciate the nature of the case in relation to the issue of prima facie case.

2. The sheriff erred in law regarding the test in Burn Murdoch in relation to the granting of interim interdict."

The sheriff wrote a Note explaining his decision and I heard parties on this appeal in Airdrie Sheriff Court on 7 October 2013.

 

[5] The sheriff recorded the submissions of parties and in the section entitled "My Deliberations and Decision" he stated as follows:

"In considering this case at this interim stage I am entitled to take account of how long the parties have been at odds in the marriage and the time they have been engaged in litigation. They have been separated since September 2011. I am told they have been negotiating for over a year.

A prima facie case is required for both interdict ad interim and for warrant to inhibit on the dependence. This has to be a relevant case and of sufficient specification that the quality of it as a prima facie case can be measured.

If the matrimonial assets as identified in the pleadings and in submissions were divided equally each party would leave the marriage with £3.5 to £3.8 million, allowing for the variations in valuations. The defender's case for transfer of assets to him worth in excess of £5 million is grounded on "special circumstances". His averments in support of that case are set out at page 14 of the record. This refers to the ownership of FF being inherited from the defender's father and that he received 20% of the residue including 3 farms let on secured leases, an interest in a quarry and an old school building. It records that from his mother he received the proceeds of an insurance policy, a collection of glass and other moveable property.

The defender then states "The value of his inheritance is reflected in the net value of the matrimonial property." That is the extent of his averments tending to support special circumstances on source of funds. What does this mean? I accept that pleadings do not require to be in great detail but this averment is little more than a label. I agree with the contention for the pursuer. There is no specification to this aspect of the claim.

The defender also claims the use of assets for business purposes. However there a similar lack of specification on this part of his claim for special circumstances. On the point of devastation to his business I find the defender's claimed degree of loss of income not supported from what was before me. Rather it was consistent with the pursuer's submission.

It is difficult to imagine on what special circumstances the defender expects the court to award him assets from the matrimonial property valued in excess of £5 million in addition to what he now holds in his name. The result of that is that the pursuer would be left with 10 to 15 % of the total matrimonial property.

When seeking such an extreme division of the matrimonial property it is incumbent upon the defender to show some colour in his claim supporting this contention. As the pleadings stand the defender has not done so. He has had considerable time and opportunity to plead averments sufficient to support his claims. In the absence of him setting out a prima facie case it is not reasonable that the pursuer should be at this stage prevented from "moving on" with her life. Interdict and/or inhibition would freeze her situation until the pleadings are put in proper order and the matter taken to proof. Given the lack of specification that would be oppressive to her.

I am not satisfied that the defender has demonstrated a good prima facie case. I refuse the motion for interim interdict."

 

It is against that decision that this appeal is taken.

 

[6] Having considered the pleadings, the productions, the Sheriff's Note and the written submissions of parties in respect of this appeal, I was of the view that the Sheriff was correct to conclude that there had been no prima facie case put before him by the defender and appellant.

 

[7] In my opinion a prima facie case, in the context of this case, means that, in the whole circumstances set out, there is a good arguable case that the defender should, in the sharing of the matrimonial property, have the properties at DD and CC transferred to him (see Gillespie v Toondale 2006 SC 304). For such a case to be arguable, it behoves the defender to set out how he proposes the matrimonial property should be distributed to allow the transfer of the properties to him.

 

[8] At the appeal hearing before me, in a spread sheet submitted on behalf of the defender, it was conceded that, if the two properties were transferred to the defender, this would involve the defender in a balance payment to the pursuer in a sum of the order of £2.543M. I asked counsel for the pursuer how it was proposed this payment would be funded, she replied:-

a) "£1,000,000 by sale of portions of DD not required for farming.

b) £500,000 by way of a bank loan from Clydesdale Bank Plc, vouched by e mail from the Clydesdale Bank Plc dated 30 August 2013.

c) A further loan of £1,000,000 secured over DD."

 

It was said by senior counsel for the defender, who was not present at the hearing before the sheriff, that, according to her information, this had been explained to the sheriff by her junior. I note that the pleadings are silent in this proposal. The sheriff has not recorded any such computation being given to him. It seems strange to say the least, that if such a submission was made to the Sheriff, he would not have recorded it in his Note, particularly since his Note criticises the lack of specification which had been provided on behalf of the defender.

 

[9] Be that as it may, counsel for the pursuer and respondent at the appeal hearing before me submitted that, standing the length of time since separation, and the fact that this information had just been put before the court, there required to be some verification of these proposals. The defender had been heard to say loudly to his counsel during the hearing before me that he could get a loan of £3M. One might have thought that this information would have been placed by him before his counsel before then. Counsel for the pursuer maintained that it had not been demonstrated to the court how the transfer of the two properties to the defender would be funded. The pursuer should not be inconvenienced by having an interim interdict against her selling the properties on the basis that the defender could raise money to pay her for them if, in fact, he could not do so.

 

[10] I thought it right that counsel for the defender should be given an opportunity to consider her position and to produce any evidence which she thought necessary. She took advantage of the opportunity which I offered her.

 

[11] In the event she produced an e mail from the Clydesdale Bank Plc timed at 11.19 on 7 October 2013 (a short period after the court had adjourned) in which the Clydesdale Bank Plc confirmed they would "lend the above named customer up to £3M to take on the farming business in the name of EE and also to take over the ownership of DD and also CC." Counsel also produced a Minute of Amendment in which she sought leave to amend her pleadings inserting: "He is able to borrow a sum of up to £3M from Clydesdale Bank Plc."

 

[12] It was submitted that this should be seen against a situation where, for the year to 28 May 2012, the combined business of the pursuer and the defender made a total profit of £352,572. I was shown a report by Mr XX of YZ & Co, Chartered Surveyors, Valuers, Land & Estate Agents dated 14 August 2013 which described the result as "an outstanding performance by any standards". He further stated that the contribution to that profit of integrated management was in the region of £116,500 (33%).

 

[13] Having considered the evidence which has been produced and the Minute of Amendment which has been lodged, I now take the view that the defender has been able to demonstrate a prima facie case. Counsel for the pursuer and respondent accepted that these developments met her concerns. Whether at the end of the day, the court would be disposed to make an order for transfer of the two properties would of course depend on all the evidence which was led at any proof. However, a prima facie case having been demonstrated, in my opinion the balance of convenience lies with interim interdict being granted to allow the status quo to be maintained pending parties preparations for proof. The interim interdict, with the agreement of parties, has been restricted to the terms of my interlocutor.

 

[14] It was represented to me that there appears to have been some difficulty between the parties in respect of accounting by the defender in respect of the sale of crop, and stock in the ordinary course of trade. This is not a matter for the court at this stage. It is sufficient for the purposes of this hearing that I record that a strict accounting should be kept by the defender of any sales made on behalf of the pursuer (the current owner of CC and EE in the ordinary course of trade. These statements of accounts should be regularly submitted to her. Any failure on the defenders part in this respect will result in the pursuer taking such further action as she considers appropriate.

 

[15] As I said at the outset, in my view before the sheriff a prima facie case had not been demonstrated on the part of the defender. During the appeal the defender took the opportunity to lodge a production and amend the defences to enable me to conclude that a prima facie case had been established. In these circumstances I granted the motion on behalf of the pursuer that the expenses of the appeal should be awarded to the pursuer. I have certified the appeal as suitable for the employment of counsel.