Sarah Louise Gunn or Foster v Ross Stewart Foster [2023] CSIH 35 (Extra Division, Inner House, Court of Session; Lord Pentland, Lord Tyre and Lady Wise; opinion of the court delivered by Lady Wise, 29 September 2023). This reclaiming motion concerned the financial provision for divorce under the Family Law (Scotland) Act 1985, focusing on the valuation and division of business assets, specifically Sarah Gunn or Foster’s 30% shareholding in RRR Holdings Limited, and whether she could receive a capital sum payable by instalments in exchange for transferring those shares.
Background
Sarah Gunn or Foster and Ross Foster married in 2004 and separated on 31 October 2019, a date accepted as the relevant date for the identification and initial valuation of their matrimonial property under the Family Law (Scotland) Act 1985. The primary matrimonial asset was Sarah’s 30% shareholding in RRR Holdings Limited, a private limited company controlled by Ross, who owned the remaining 70%. At the relevant date Sarah had a shareholding worth £858,547 and Ross one worth £2,003,275.
The couple’s dispute centred on the valuation method for the shares, the payment structure, and whether Sarah was entitled to recover her legal expenses.
Key Issues
- Valuation of Business Shares:
Section 10(2) of the Family Law (Scotland) Act 1985 provides that the net value of the matrimonial property is its value at the relevant date, while Section 10(4) defines what counts as matrimonial property. The contentious area on valuation was the net asset basis and the treatment of work in progress. - Payment Mechanism and Liquidity:
Section 8(1)(a) of the Act allows for orders of payment in respect of matrimonial property. The court allowed the capital sum to be paid in instalments. - Legal Costs:
Expenses were dealt with separately. The court reserved all questions of expenses for later determination on written submissions.
Court’s Findings
The Inner House allowed the reclaiming motion. The Lord Ordinary had erred in failing to consider whether Sarah could receive a capital sum in exchange for transferring her shareholding to Ross, payable by instalments under Section 12 of the Act. The court determined:
- Sarah was entitled to a capital sum of £1,100,000 in exchange for transferring her 30% shareholding to Ross.
- Payment was to be made in four annual instalments of £275,000, the first on 31 January 2024, with an ancillary order for transfer of the shares within 28 days of decree of divorce.
- The court also ordered a further capital sum of £132,500, and a periodical allowance of £3,750 a month until the later of 31st January 2025 or payment of the second instalment of the £1,100,000 capital sum.
- All questions of expenses were reserved.
The court highlighted that Section 9(1)(a) of the Act—promoting fair sharing of matrimonial property—was central to its reasoning. In framing the order the court had regard to Sections 9, 11(7) and 12 of the Act, Section 12 permitting a capital sum to be made payable by instalments.
Significance for Family Law
This judgment demonstrates how Scottish courts address disputes involving business assets, balancing the principles of fair sharing under Section 9(1)(a) with practical considerations, such as liquidity. It reinforces the importance of robust expert evidence in valuing business interests and the strategic use of legal mechanisms to secure equitable outcomes.
For tailored advice on financial provision and matrimonial property disputes, contact Rooney Family Law.