On divorce or dissolution of a civil partnership under Scots Law, in determining how the financial matters are to be resolved, the starting point is that the matrimonial 'pot' is to be divided equally or 'in such other proportions as are justified by special circumstances'.
But what constitutes a 'special circumstance'?
The legislation, that being the Family Law (Scotland) Act 1985, provides a non-exhaustive list at section 10 (6):
In subsection (1) above “special circumstances”, without prejudice to the generality of the words, may include —
(a) the terms of any agreement between the [persons] on the ownership or division of any of the matrimonial property [ or partnership property];
(b) the source of the funds or assets used to acquire any of the matrimonial property [ or partnership property] where those funds or assets were not derived from the income or efforts of the [persons] during the marriage [ or partnership];
(c) any destruction, dissipation or alienation of property by either [person];
(d) the nature of the [family] property [ or partnership property] , the use made of it (including use for business purposes or as a [family] home) and the extent to which it is reasonable to expect it to be realised or divided or used as security;
(e) the actual or prospective liability for any expenses of valuation or transfer of property in connection with the divorce [ or the dissolution of the civil partnership].
What is "destruction, dissipation or alienation"?
The Family Law (Scotland) Act 1985 does not specifically define "destruction, dissipation or alienation". In section 11 (7), however, the Act provides that conduct that has adversely affected the parties' financial resources can be taken into account. It seems clear from this (and some of the case law referred to below) that section 10 (6) (c) is intended to provide a remedy for spouses who find themselves in a situation where the family finances have been adversely impacted by the conduct of the other spouse, such that this impacts on the overall financial position. If there has been deliberate conduct, this argument tends to be more likely to succeed; however, each case does turn on its own facts and the court has a wide discretion in relation to this matter.
There are some themes that can be taken from the case law in this area.
The court has held that in a case where the parties had assets amounting to £1.5million, gifts made by the husband to his daughters of around £200,000 were not "dissipation" as this did not have a significant impact on the parties' living standards.
In that case, the judge commented that "excessive spending grossly out of proportion to the resources within the matrimonial commonwealth or monies lost by gambling might be examples of ‘dissipation’. To test this another way, the idea of dissipation carries with it an adverse impact on the resources or living standards of those dependent upon the resources said to have been dissipated.” The judge also confirmed that the "ordinary" meaning is to be given to the word" 'dissipation", namely "to squander" or "to waste".
In another case, the wife took out loans over the matrimonial home, forging her husband's signature in order to do so. That was held to be dissipation. Likewise, where a husband took out loans for his own benefit which reduced the matrimonial 'pot' to be divided on divorce, the court held that that was dissipation. By contrast, the court did not agree that a failure to make mortgage payments amounted to dissipation, notwithstanding that the family home in that case was ultimately repossessed. The judge did, however, make reference to the fact that the mortgage was in joint names and the requirement to repay the mortgage was therefore a joint obligation.
Whilst it is therefore open to parties to argue that they should receive more than a one half share of the matrimonial or partnership property if there are special circumstances, the court has a wide discretion in relation to this matter and it is difficult to advise with any certainty the weight that will be placed on these arguments.
If you require any further information in relation to this, please get in touch with our divorce lawyers.
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