Wallis v Wallis

The court held that for the purposes of the Family Law (Scotland) Act 1985 the net value of matrimonial property is to be assessed as at the relevant date (the date of separation or service of summons) and, absent special circumstances under section 10(1), is to be divided equally under section 9(1)(a). Subsequent changes in the value of matrimonial property are generally irrelevant to that division and cannot be separately appropriated when effecting the division by transfer of property rather than by payment of a capital sum. Section 8(2)(b) requires orders to be reasonable having regard to parties' resources at the date of the hearing, which may address some cases of post-relevant-date change in value, but the Act contains no general rule allowing the court to include increases in value after the relevant date when implementing an equal division. The sheriff's addition of one-half of the increase in the house's value between the relevant date and the proof was therefore wrong.

Background and facts:

• The parties married in March 1986 and separated in March 1987; there were no children. The matrimonial home was at 10 Rosebank Avenue, Falkirk, held in joint names. After separation the husband remained living and conducting business there. The husband raised divorce proceedings and the defender consented to decree; the proof dealt only with financial provision.
• At the relevant date (March 1987) the house had a net value of £17,400 and furnishings/plenishings were valued at £13,500; the sheriff found net matrimonial property values and, by an interlocutor of 28 September 1990, ordered the husband to pay £31,450 to the defender and for her to transfer to him her one-half share of the house and furnishings. The sheriff’s capital sum included one half of the increase in the house’s value between the relevant date and the proof (£12,000).

Procedural history:

• The husband appealed to the sheriff principal who refused the appeal on 21 February 1991. The husband then appealed to the Court of Session (First Division), which on 27 May 1992 allowed the appeal and substituted a capital sum of £19,450 (1992 S.C. 455). The defender appealed to the House of Lords.

Nature of the claim and issues:

• (i) Nature of relief sought: determination of financial provision on divorce under the Family Law (Scotland) Act 1985 by way of capital sum and transfer of the defender’s one-half share of the former matrimonial home.
• (ii) Issues framed: whether the net value to be divided is to be ascertained at the relevant date; whether, when effecting an equal division by ordering transfer of a party’s share in property, the court may require additional payment to reflect increases in value that occurred after the relevant date; and the interplay of sections 8, 9 and 10 of the Act, and the reasonableness requirement in section 8(2)(b).

Court’s reasoning:

• The House of Lords affirmed that section 9(1)(a) combined with section 10 requires valuation and sharing of the net value of matrimonial property as at the relevant date and, absent special circumstances under section 10(1), that value is to be shared equally. The form of relief (payment of a capital sum, transfer of property or combination) is a matter of method; the statutory objective is to achieve a fair division of the net value at the relevant date, and subsequent changes in value must be left out of account for that division.
• The sheriff erred in adding one-half of the post-relevant-date increase in the house’s value when ordering transfer of the defender’s half-share; there is nothing in the Act to justify paying more than one-half of the net value at the relevant date on an equal division. Section 8(2)(b) may in some situations allow the court to address consequences of post-relevant-date depreciation or destruction, but it does not permit general inclusion of post-relevant-date appreciation in value for the purposes of section 9(1)(a) and section 10.
• The court noted subsidiary observations about potential problematic cases where post-relevant-date changes make an equal division impractical or unreasonable and commented that amendment of the statute might be considered to deal with such situations.

Appeal dismissed. The House of Lords concluded that the net value of the matrimonial property for division under the Family Law (Scotland) Act 1985 is the value at the relevant date and that the sheriff was wrong to require an additional payment reflecting one half of the increase in the house's value after that date; the First Division’s substitution of £19,450 was correct.

Sheriff at Falkirk (interlocutor including financial provision pronounced 28 September 1990) ordered husband to pay £31,450. Sheriff principal refused the husband's appeal (21 February 1991). Court of Session, First Division allowed the husband's appeal and substituted a capital sum of £19,450 (27 May 1992; 1992 S.C. 455). Defender appealed to the House of Lords, which dismissed the appeal on 22 July 1993 ([1993] UKHL 16).