Financial provision on divorce where the principal asset was a family whisky company; the court orders a capital sum of £1,074,264 in instalments, property transfers and a pension sharing order of £500,000.
Background
The parties divorced after a long marriage. The financial dispute turned almost entirely on one asset: the defender’s shareholding in a company whose principal value lay in maturing whisky stock. The parties’ experts were a long way apart. Depending on whether the stock was valued using brokerage rates or market matrices, the figures ranged from roughly £5.9 million to £10.3 million.
The pursuer also advanced claims arising from economic disadvantage suffered in the interests of the family. The court heard evidence about substantial lifetime gifts made to the parties’ son, and about allegations of coercive control and financial abuse.
The legal framework
The court applied the Family Law (Scotland) Act 1985. Section 9(1)(a) provides for fair sharing of the net matrimonial property. Section 9(1)(b) addresses economic advantage derived and economic disadvantage suffered. Section 9(1)(d) allows for a period of financial adjustment. Section 10 governs what counts as net matrimonial property and when special circumstances justify departing from equal sharing, and section 27 defines the resources to which the court may look, both present and foreseeable.
The decision
Lady Tait granted decree of divorce and ordered payment of a capital sum of £1,074,264, payable in four instalments of £268,566. The first falls due on the earlier of the transfer of the Edinburgh property or three months from decree, and the remaining three at fifteen, twenty-seven and thirty-nine months. Interest runs at four per cent a year from decree until the payment date, and eight per cent on late payment.
The court also ordered the transfer of the defender’s interest in one property to the pursuer and of the pursuer’s interest in another to the defender, and made a pension sharing order in favour of the pursuer in the sum of £500,000. The case was put out By Order to deal with the mechanics of the pension sharing order and with expenses.
What it means in practice
Where the principal asset is a private company, valuation methodology is very often the whole case, and it is a question of expert evidence rather than of law. Two competent experts applying different approaches to the same stock produced a difference of several million pounds.
The structure of the award repays attention. Rather than order a lump sum the defender could not raise without dismantling the business, the court staged payment over more than three years and attached interest to it. That is a practical answer to the illiquidity problem which arises whenever the matrimonial property is tied up in a trading company, and it is worth understanding before either party adopts a fixed position on figures.
Our guides to pensions on divorce in Scotland and high net worth divorce explain how these issues are approached.