There are no special rules for assessing recovery or preservation of property in matrimonial proceedings.
The principles in the Family Law (Scotland) Act 1985 concerning cases where the property recovered or preserved is less than one-half of the pool of matrimonial property, do not apply in legal aid cases.
It is irrelevant whether the property got, or kept, is greater or lesser than one-half of the pool of matrimonial assets. Provisions in other legislation cannot be read across into section 17(2B) or section 12(3) in respect of advice and assistance. We must look objectively at what a party actually got or kept under a settlement or order of court.
In other words, we must consider whether a party got, or kept, something which they would not have succeeded in getting, or keeping, were it not for the proceedings in which they had the benefit of legal aid.
In some settlements (mostly, but not exclusively, matrimonial cases), other property may be substituted for that which was originally at issue. In Morgan -v- Legal Aid Board  3All ER 974, the court held that property which is either directly or indirectly substituted, in whole or in part, under a settlement, for property which was at issue in the proceedings is property recovered or preserved in those proceedings.
It is irrelevant, when we are assessing whether an assisted person recovered or preserved property, that the assets were substituted within an overall fair sharing of matrimonial property. Substituting assets in a settlement is a separate issue from the assisted person dropping, or not pursuing, a particular claim.
The following examples may be helpful:
An assisted person wants the defender to pay her £200,000, but settles the action by agreeing that the defender should transfer a house to her. Although the house was not itself at issue in the proceedings, it represents, or replaces, the property which was at issue. Thus, the assisted person has recovered property.
An assisted person seeks a share of the defender’s business. The defender has several policies in his own name which the assisted person is not claiming. On settlement, the pursuer agrees to drop her claim against the business in exchange for the defender transferring his policies to her. The pursuer has recovered the policies.
These usually involve a claim for the transfer of the other spouse’s half share of the heritable title to the matrimonial home, although occasionally the opponent holds sole title to the house. In either case, questions of recovery or preservation of property will arise:
In Hanlon -v- The Law Society, the wife got an order transferring title in the matrimonial home from the husband, who was the sole owner of the house. The court was satisfied that the house was at issue in the proceedings and she had recovered property.
If a claim for transfer of property is successfully defended, the property is preserved, whether that claim is made by a pursuer or a defender (as a counterclaim in the defences). While the matrimonial home will form part of the pool of matrimonial assets, the heritable title is in issue in the proceedings.
In the same way, if someone agrees to give up their interest in the matrimonial home in return for some other property or money, they will have preserved property to the value of that other property or money.
An assisted person who both makes and resists a claim for transfer of property may not only recover, but also preserve, property within the same process.
The following examples illustrate recovery and preservation:
The pursuer, an assisted person, owns a one-half pro indiviso share of the matrimonial home. There is no outstanding mortgage. She gets an order for transfer of the opponent’s share, worth £60,000 – this means she has recovered property to that value.
A defender opposes the pursuer’s claim for transfer of property. Ultimately, he agrees to transfer his right, title and interest in the matrimonial home in exchange for £3,000. He has preserved his interest to the extent of £3,000.
A pursuer is claiming a capital sum to the value of one-half of the matrimonial property. Her opponent is resisting this, and also claiming a share of her pension rights. If the pursuer succeeds in her capital sum claim and defeats the opponent’s claim for a pension share, she will have recovered property in respect of her capital sum claim and preserved property by defeating the attack on her pension.
In some cases an assisted person may be resisting an overstated or spurious claim by their opponent, or one which apparently has no prospect of success. This fact is, however, irrelevant when assessing whether property has been recovered or preserved. Making a claim for transfer of property places heritable property at issue in the proceedings.
A pursuer who gets an order for pension sharing in divorce proceedings recovers property, while a defender who successfully resists a claim will preserve property.
You must tell an assisted person about their obligation to pay this money to us, even though it may be many years before the pension matures. Your client may find it easier to settle the debt over the period between the order being made and the pension maturing. We need to know:
Staff in our Treasury Department will be happy to discuss the options with your client.
The relevant date, as defined for family law, is not the date used for valuing property recovered or preserved. Property recovered or preserved is valued at the date of transfer or decree, whichever is earlier.
We therefore need to know:
We must see:
Where we have granted sanction for valuations of the property, you should send us the reports with your account. We may sanction further reports in particular circumstances, but you must ensure the applicant is aware that any further work will add to any amount they have to pay from property recovered or preserved. If you do not have a valuation, we will accept information about the selling price of similar property, at the date of transfer or decree, obtained from your conveyancing department or a Solicitors’ Property Centre.
In some settlements, one party agrees to pay any outstanding matrimonial debt, in exchange for transferring property to the opponent.
Where it is clear that one party has taken on liability for unsecured debts directly in exchange for the transfer of other property, we will deduct the value of the unsecured debts (with any outstanding secured debts) from the market value of the property recovered or preserved in the proceedings.
You should clearly demonstrate in the joint minute, minute of agreement or supporting correspondence that any acquisition of debt is clearly and unambiguously directly related to the transfer of property to the opponent.
Where it is clear that one party has taken on liability for unsecured debts directly in exchange for the transfer of other property, we will deduct the value of the unsecured debts. However, we cannot take into account the full balance of any joint debts as each party will have had responsibility for their own half share to begin with. Nor can we take into account the balance of any debts in the sole name of one party as, again, they clearly have sole responsibility for these.
The assisted person keeps the matrimonial home and, in turn, agrees to pay joint matrimonial debts in full. In assessing the value of the home, we will deduct the value of the debts as this is, in effect, a payment the applicant is making in turn for getting the home.”
An assisted person may continue to pay, for example, mortgage or insurance premiums after they have separated from a spouse but before the date of decree. We cannot deduct these sums from the value of the property recovered or preserved – we can only take into account any payments that relate directly to the transfer of property.
An assisted person may originally claim an asset from their opponent, but decide to drop the claim. This decision does not affect the value of the assets they have got or kept. Unlike the situation where we would deduct the value of debts directly taken on as part of a settlement, we cannot offset the value of a dropped claim against the property recovered or preserved.
In Hanlon -v- The Law Society, Lord Lowry explained that Mrs Hanlon could not offset the value of alimentary claims against the total value of the property recovered and preserved by her. The payments she had sought were never her property to give away or have taken from her, but merely claims. The same principle applies to decisions by applicants not to pursue or insist upon claims to particular items of matrimonial property owned by the opponent, such as a claim for payment from the opponent’s pension. Whilst these items may fall within the pool of matrimonial assets, the applicant only has a claim in respect of that property, not a right of ownership.