A step back from compensation?

The recent case Lindsay v Murphy, Jedburgh Sheriff Court, 30 June 2010, unreported, adds to the steadily increasing volume of decisions under s 28 of the Family Law (Scotland) Act 2006.

The case law, thus far, has not been in agreement about exactly what the court is seeking to achieve in making an award under s 28. For example, in M v S [2008] CSOH 125, Lord Matthews considered that parallels could be drawn with s 9 of the Family Law (Scotland) Act 1985 and that in making any award the advantages and disadvantages were to be balanced fairly; whereas in Gow v Grant, Edinburgh Sheriff Court, 15 December 2009, Sheriff Mackie held that compensation was the aim of the award.

Capital project

In Lindsay v Murphy the parties had cohabited for almost six years and had three children. They planned to build a house on land belonging to the defender's brother and the land was eventually sold to the parties when planning permission was granted. The pursuer provided substantial funds from the sale of her property owned prior to cohabitation, and gifts by her mother, towards the building of the property. Both parties argued they had contributed in a non-financial way by progressing planning permission, labouring and obtaining cheaper labour from contacts.

The pursuer argued for a capital payment of £275,000 under s 28(2)(a) of the 2006 Act. She also sought a capital payment of £20,000 under s 28(2)(b). The pursuer's agent had quantified the claim, based on her financial and non-financial contributions, as being worth around one half of the value of the family home and a further £100,000 for her perceived loss of employment opportunities. It appears the pursuer was seeking something more in the nature of compensation.

Contributions calculated

Sheriff Miller in Lindsay did not follow Lord Matthews' approach in M v S, that the person who suffered the loss ought to bear a share of it themselves. Instead, Sheriff Miller said he found considerable assistance from Sheriff Mackie's analysis in Gow v Grant, although he did not go so far as to characterise any award as "compensation". In calculating the award, the sheriff held that the non-financial contributions of each party were mutually interdependent and generally cancelled each other out. The pursuer's averments in relation to lost employment opportunities were dismissed as being speculative. Neither party was in employment during the cohabitation, their main asset being their jointly owned property. There was no real analysis of their contribution from income.

The claim therefore boiled down to the financial contributions to the property. In the judgment, the sheriff gives a clear, detailed outline of his calculations, eventually concluding that the pursuer had contributed £79,500 more than the defender, thereby recognising pound for pound the pursuer's significant capital input. In making the award, the sheriff concluded that the defender had been economically advantaged by half this sum and therefore awarded this sum, being £39,750, to the pursuer.

Distinct scheme

Sheriff Miller's judgment supports the view that there is not the parallel between claims under the 2006 Act and s 9(1)(b) of the 1985 Act that was perhaps first thought. As he observes, the 1985 Act is based on entitlement, whereas the 2006 Act is a scheme of discretion. Moreover, even the apparently identical concepts of economic advantage and economic disadvantage are applied differently in the 2006 Act.

Turning to the valuation of the claim under s 28(2)(b), it was undisputed that the pursuer had borne the primary economic and care responsibilities in respect of the children. Sheriff Miller followed M v S so far as agreeing with the approach that assessments are to be made on the assumption that the status quo in relation to childcare arrangements would continue to prevail and that the defender's contributions in financial or personal terms would continue to be limited. Thereafter he departed from the reasoning in M v S and instead calculated childcare on what he described as a somewhat "rough and ready" basis: allowing for care up to each child's 12th birthday and then deducting 25% to allow for holidays, family input and time with friends. The sum of £8,230 was awarded to the pursuer under s 28(2) (b). Beyond those facts, this aspect of the decision is not explained.

As in previous cases under the 2006 Act, the award here is quite modest and substantially less than that sought by the pursuer. While the circumstances are somewhat unusual, the judgment offers further guidance regarding how such a claim might be calculated and how the statutory tests should be applied. The overall case law position, however, remains confused. This case will no doubt further encourage practitioners to manage the expectations of claimants under the 2006 Act.

Karen Wylie, Family Law Team, Morton Fraser