Gow v Grant (Scotland)

Under section 28 of the Family Law (Scotland) Act 2006, fairness governs compensation for economic advantages and disadvantages arising from cohabitation. The provision is not confined to clear and precisely quantifiable imbalances.

Economic disadvantage suffered “in the interests of” the defender is assessed by its effect. The applicant need not intend solely to benefit the defender, and the transaction may also benefit the applicant or the relationship. A corresponding economic gain to the defender is unnecessary.

The court may adopt a broad, practical assessment of the parties’ positions at the beginning and end of cohabitation. Both the decision to award a capital sum and its amount are discretionary. Appellate interference is therefore confined to established grounds for reviewing a judicial discretion.

The appellant and respondent cohabited from 2003 until 2008. At the respondent’s encouragement, the appellant sold her home, ceased seeking employment and used part of her capital for their joint life. When the relationship ended, the respondent retained his home, while the appellant required rented accommodation.

The sheriff awarded the appellant £39,500 under section 28 of the Family Law (Scotland) Act 2006: 2010 Fam LR 21. The Inner House allowed the respondent’s appeal and refused an award, holding that the disadvantage had not been incurred with the necessary intention to benefit him: [2011] CSIH 25, 2011 SC 618.

The Supreme Court considered whether section 28 requires an intention to benefit the defender, a corresponding economic benefit to the defender, an exclusively beneficial transaction, and a precisely calculated award.

1. Appeal allowed unanimously. Lord Hope delivered the principal judgment, with which every member of the court agreed. The Inner House’s interlocutor was recalled and the sheriff’s finding that the appellant had suffered economic disadvantage of £39,500 in the respondent’s interests was affirmed.

2. Section 28 of the Family Law (Scotland) Act 2006 does not reproduce the financial regime governing divorce. Cohabitants presumptively retain their own property. Nevertheless, the provision adopts the compensatory principle underlying section 9(1)(b) of the Family Law (Scotland) Act 1985. Its purpose is to achieve fairness by correcting economic imbalances arising from contributions and sacrifices made within a non-commercial relationship. The Inner House’s restriction of the remedy to clear and quantifiable imbalances was too narrow. Claims may require a rough and ready valuation because intimate partners ordinarily neither bargain for a return nor keep detailed accounts.

3. The words “in the interests of the defender” in sections 28(3)(b) and 28(6) are directed principally to the effect of the relevant transaction, rather than the applicant’s subjective intention. The disadvantage need only have been suffered to some extent in the defender’s interests. It may also have served the applicant’s interests or the interests of their relationship. “Interests” are not confined to economic advantage, and the applicant need not prove a corresponding economic benefit to the defender.

4. The sheriff was therefore entitled to consider the appellant’s loss of the increase in value of her former home. She had accounted for the appellant’s use of the sale proceeds but could also consider that, at separation, the appellant had no home while the respondent retained an appreciating home. Lady Hale’s practical comparison of the parties’ economic positions at the beginning and end of cohabitation was consistent with the statutory scheme.

5. Section 28 entrusts both the making and amount of an award to judicial discretion. An appellate court may interfere only where the judge misdirected herself in law, omitted a material factor, or reached a manifestly inequitable or plainly wrong result. The Inner House had identified no proper basis for disturbing the sheriff’s carefully reasoned award concerning either the home or the timeshares.

1. United Kingdom Supreme Court: The appeal was allowed unanimously. The Inner House’s interlocutor was recalled and the sheriff’s award of £39,500 was affirmed: [2012] UKSC 29.
2. Inner House of the Court of Session: The respondent’s appeal was allowed and the application for a capital sum was refused: [2011] CSIH 25, 2011 SC 618.
3. Sheriff Court at Edinburgh: The sheriff held that the appellant had suffered net economic disadvantage in the respondent’s interests and awarded £39,500 under section 28 of the Family Law (Scotland) Act 2006: 2010 Fam LR 21.