Airdrie sheriff finds liferent interest should be included in divorcing couple’s matrimonial property

Andrew Kelly, who initiated a divorce action against his wife Linda Kelly, argued that he had lost the ability to exercise his liferent right and ought to be compensated for it. The parties were married in 2005 and first separated in 2010.

The case was heard by Sheriff Mungo Bovey (part-time). The pursuer was represented by Monaghan and Brown, and the defender by Smart, solicitor.

Could not return

The parties had cohabited in what became the matrimonial home for several years before they married. When they began to cohabit, the defender sold her flat and purchased the property in her sole name before later moving it to a joint title. The parties then granted a disposition of the property to the defender’s children in 2007 and reserved to themselves a liferent interest in the property.

It was averred that the property would have a value of around £190,000 without the liferent, and around £75,000 less with it. In 2010, when the parties first separated, the defender demanded that the pursuer leave the property, which he could not return to due to a conviction for domestic violence. His position was that this caused him to lose the ability to utilise the liferent. As such, he sought to include it in the value of the matrimonial property when calculating how to divide the couple’s assets.

Counsel for the defender adopted the position that the pursuer had not in fact ‘lost’ anything. Were the defender to leave the property voluntarily or indeed die, the pursuer would be free to return and live there in terms of the liferent. It was noted that the defender had no specific crave relating to the liferent, and that if she did seek its transfer, only then would the pursuer have lost something.

In response to the defender’s argument, the pursuer’s counsel further submitted that the exercise of the liferent in this cause ought to be regulated on the principles of administration of common property. The approach of the defender was unsound and did not recognise the value of the liferent or accord with the principles of the Family Law (Scotland) Act 1985.

Ill-advised scheme

In his opinion, Sheriff Bovey noted: “It seems that the defender seeks to retain enjoyment of the liferent by virtue of the likely exclusion of the pursuer on the grounds of domestic violence. By virtue of not claiming a transfer of the liferent, the [defender] seeks to avoid having to account for the pursuer’s share on divorce. This will not work.”

Explaining why this was the case, he continued: “The financial claim by the pursuer proceeds on the basis that the liferent is matrimonial property which will remain with the defender after divorce. I accept the submission for the pursuer that such a liferent is property for the purposes of the 1985 Act. In principle it falls to be dealt with in like manner as a matrimonial home.”

Addressing the defender’s argument that the pursuer had voluntarily left the property, Sheriff Bovey said: “I cannot imagine attaching any significance to such an assertion. In the great generality of divorces, the parties do not continue to live in the same house after decree. Someone has to leave and for the party who remains to seek to have any advantage from that fact more than exclusive occupation seems wholly unrealistic.”

He continued: “As the matrimonial property means all the property belonging to the parties or either of them at the date of separation, it follows that the Court must take into account the liferent in adjudicating the pursuer’s financial claim. The defender cannot change this by not claiming.”

Sheriff Bovey said of the defender’s general approach: “The result of the defender’s ill-advised scheme would be to leave the parties as joint owners of the liferent after divorce. Not being a matrimonial home, the defender would have no answer to an action of division and sale.”

He concluded: “The defender seeks to make a mockery of the clean-break philosophy of the 1985 Act. A major function of contemporary family law is to provide and enforce a system of rules whereby a couple’s capital and income can be redistributed in a just way when their marriage ends in divorce.”

For these reasons, the defender’s motion to dismiss the pursuer’s financial crave was dismissed. A proof before answer was appointed on the parties’ respective averments.