Bradley v Bradley
| Jurisdiction | Scotland |
| Judge | Sheriff Principal IR Abercrombie,Sheriff NA Ross,Sheriff Principal CAL Scott |
| Judgment Date | 21 September 2017 |
| Court | Sheriff Appeal Court |
| Docket Number | No 2 |
| Date | 21 September 2017 |
[2017] SAC (Civ) 29
Sheriff Principal IR Abercrombie QC, Sheriff NA Ross and Sheriff Principal CAL Scott QC
Gillon v Gillon (No 3) 1995 SLT 678; 1995 SCLR 405
Henderson v Foxworth Investments Ltd sub nom Liquidator of Letham Grange Development Co Ltd v Foxworth Investments Ltd[2014] UKSC 41; 2014 SC (UKSC) 203; 2014 SLT 775; 2014 SCLR 692; [2014] 1 WLR 2600; 158 (27) SJLB 37
Husband and wife — Financial provision on divorce — Separation agreement — Agreement relating to financial provision on divorce — Whether agreement fair and reasonable at time entered into — Whether party signing agreement without legal advice sufficient to render it unfair — Whether agreement to be set aside — Family Law (Scotland) Act 1985 (cap 37), sec 16(1)(b)
James Bradley raised divorce proceedings in the sheriffdom of South Strathclyde, Dumfries and Galloway at Ayr seeking, inter alia, reduction of an agreement entered into by the parties. The cause called before the sheriff (MS Mactaggart) for proof, on 18 to 21 January 2016, 10, 13 and 21 March 2016, and 21 and 22 June 2016. On 14 September 2016, the sheriff set aside the agreement in part and imposed substitute provisions. The defender appealed to the Sheriff Appeal Court.
Section 16(1)(b) of the Family Law (Scotland) Act 1985 (cap 37) (‘the 1985 Act’) provides that where the parties to a marriage have entered into an agreement as to financial provision to be made on divorce the court may make an order setting aside or varying the agreement or any term of it where the agreement was not fair and reasonable at the time it was entered into.
A husband and wife separated on 10 May 2007. They entered into an agreement dated December 2008 in relation to the distribution of assets between them. The parties agreed, inter alia, that: (1) the husband would retain his pension and that he would pay the wife a one-half share of his monthly pension payments until the death of one of the parties; (2) the husband would receive a capital sum payment of £120,000 from the wife in return for her retention of the matrimonial home; and (3) as security for the ongoing monthly payments, the husband, who used the £120,000 to buy a house, would grant a security over that house for all sums due to the wife.
In 2012 the husband raised a divorce action and as part of that action sought reduction of the agreement in terms of sec 16(1)(b) of the 1985 Act. He argued that the agreement was not fair and reasonable at the time it was entered into on the grounds that: (1) he had received no legal advice when he signed it; (2) he had been in poor mental health; (3) he had been dominated by his wife and was in fear of her; (4) his wife had withheld vital information from him; and (5) he had not read it before signing.
Following proof, the husband failed on the grounds argued, but the sheriff found that the husband chose not to take specific legal advice on the particular terms of the agreement. The sheriff was persuaded that, viewed objectively, the agreement was unfair in its terms relating to the monthly pension payments. The sheriff set aside the agreement so far as it related to provision for pension sharing and substituted that with an order for ongoing monthly payments by the husband to the wife payable when the wife reached 60 years of age. The wife appealed to the Sheriff Appeal Court.
Held that: (1) the sheriff misdirected herself in considering that fairness and reasonableness required a time-limited agreement (para 19); (2) the sheriff erred in finding that the relevant terms of the agreement were unfair and unreasonable because they “flew in the face of the 1985 Act principles”, for the purposes of sec 16(1)(b) there were no other principles other than fairness and reasonableness and what amounts to fairness and reasonableness depended on the facts and circumstances of a case (paras 20, 21); (3) there was no evidence that legal advice had not been available to the respondent and the sheriff had insufficient factual basis to conclude that the respondent had suffered unfair or unreasonable disadvantage as a result of lack of legal advice, he chose not to take legal advice and no causal connection had been shown (para 25); (4) the mere fact that an agreement might become inconvenient or a matter of later regret did not mean that it was unfair or unreasonable at the time it was entered into (para 26); and appeal allowed.
Observed that if a party sought to set aside or vary an agreement under sec 16(1)(b), that party must plead and prove: (i) the practical financial or other consequences of the existing agreement, within the context of the whole arrangements; (ii) why that consequence operated unfairly or unreasonably at the time the agreement was entered into; (iii) that such consequence is not offset by any comparable disadvantage to the other party; and (iv) what specifically would be the minimum practical solution required to alleviate such unfairness and unreasonableness as at the relevant date, having regard to the effects on both parties (para 36).
Gillon v Gillon (No 3) 1995 SLT 678 and Henderson v Foxworth Investments Ltd2004 SC (UKSC) 203discussed.
The cause called before the Sheriff Appeal Court, comprising Sheriff Principal IR Abercrombie QC, Sheriff NA Ross and Sheriff Principal CAL Scott QC, for a hearing on the summar roll, on 8 August 2017.
At advising, on 21 September 2017, the opinion of the Court was delivered by Sheriff NA Ross—
[1] Opinion of the Court— Section 16(1)(b) of the Family Law (Scotland) Act 1985 (cap 37) (‘the 1985 Act’) allows a court to set aside, in whole or in part, an agreement as to financial provision to be made on divorce ‘where the agreement was not fair and reasonable at the time it was entered into.’ In the present action the sheriff, having heard evidence, was persuaded that this test had been met, and set aside the parties’ pre-divorce agreement. The defender and appellant (hereafter ‘the defender’) appeals that judgment in that respect. Parties are otherwise agreed that divorce be granted.
[2] The pursuer and respondent (‘the pursuer) is a retired police officer, and in receipt of payments under the police pension scheme. The defender is a civil servant who is still in employment. The matrimonial assets are agreed, and in summary include the matrimonial home, a proportion of the pursuer's pension, a small pension of the defender, two investment policies, and motor vehicles. The date of separation was 10 May 2007. The parties’ ages are not given.
[3] By agreement dated 2 December 2008, subsequently registered, the parties agreed the distribution of assets between them. In summary, that distribution involved the following features:
[4] The pursuer retained assets including the police pension, a vehicle and shares of the investment policies. He also received a capital payment of £120,000 from the defender, who obtained a loan in that sum and for that purpose, in return for his agreement that she would retain the matrimonial home. He undertook to pay the defender a one-half share of his monthly pension payments, without limit of time, until the death of one of the parties. In order to give the defender a degree of security for this ongoing monthly payment, the pursuer (who used the £120,000 to purchase a house) was to grant a security over that house for all sums due to the defender.
[5] The defender retained the matrimonial home, her own modest pension entitlement, a share of the investment policies and a vehicle. She also assumed the burden of paying off the loan of £120,000. She was to receive a monthly income from the pursuer of approximately £1000, being one-half of his monthly pension payment.
[6] The parties thereafter operated that arrangement. The present action was raised in late 2012. The divorce proof was heard in 2016. As part of his pleadings, the pursuer sought reduction of the 2008 agreement.
[7] The pursuer argued that the agreement was unfair and unreasonable at the time it was entered into because: (i) he had received no legal advice when he signed it; (ii) he was in poor mental health; (iii) he was dominated by the appellant and was in fear of her; (iv) she withheld vital information from him; and (v) he did not read it before signing.
[8] After proof, the pursuer failed on all of these grounds. He was found to be a strong character who was overplaying his evidence. There was no undue pressure. The parties discussed the terms of the agreement frequently and in detail. He did read the agreement. He had negotiated with the aim of obtaining a mortgage-free property and not having to pay a lump sum (from his pension) to the appellant. The parties’ agreement achieved his aims.
[9] Notwithstanding this failure, the sheriff was persuaded that the agreement, viewed objectively, was unfair in its terms. The sheriff set aside two of the clauses of the agreement. One of these, cl 6, which among other matters required the respondent to create a standard security over his new house, is not a matter of dispute — the defender offered to make this concession prior to the proof. It is not part of the appeal.
[10] This appeal focuses on cl 4, which provides:
‘Mr Bradley, as a retired police officer, is in receipt of a police retirement pension which provides him with a net monthly income. With effect from the date of transfer of title of the matrimonial home … Mr Bradley will make payment to Mrs Bradley each month of a sum equivalent to one-half of the net pension income received by him. This payment is acknowledged to be made in lieu of the capital sum which would otherwise be due to Mrs Bradley on a fair division of matrimonial property. Mr Bradley undertakes to do nothing to adversely affect the pension income he receives … These provisions will prevail until the death of either party, unless varied by mutual agreement.’
[11]...
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