Inner House refuses appeal against decision that divorced former finance director retained some liability for children’s school fees

Reclaimer Mr Z argued that the Lord Ordinary had erred in relying on his resources up until his resignation in considering whether he had sufficient resources to pay school fees. The respondent, Ms X

The appeal was heard by Lord Malcolm, Lord Tyre, and Lady Wise. Smith KC appeared for the reclaimer and Brabender KC for the respondent.

Practically bankrupt

The parties separated in 2018 and divorced in 2020. Having commenced litigation, they agreed that the reclaimer should pay for the school fees of his youngest three children, anonymised as “James”, “Diana” and “Euan”, who attended three different boarding schools. The issue of fees was revisited in October 2022 after Mr Z resigned from a senior partner position in a finance firm following a criminal conviction for assaulting Ms X and breach of the peace.

It was the decision of the lord ordinary that Mr Z would be liable for 100 per cent of the school fees for the children up until 4 July 2022, the date of his resignation, and thereafter for one-sixth of those fees. In giving effect to those findings, he was ordered to reimburse Ms X for school fees she had paid for two of the children up to that point.

Counsel for the reclaimer submitted that the Lord Ordinary had failed to take into account the fact that Mr Z was “practically bankrupt” by the time of the proof, instead erroneously relying on his resources up until 4 July 2022. She had therefore made a backdated award for educational expenses that was not justified.

In relation to the one-sixth contribution going forward, the Lord Ordinary had taken account of potential proceeds from the sale of a reservoir the reclaimer had purchased in March 2022 over which no standard security existed. It was submitted that the evidence provided by Mr Gourlay, a director of the private bank used by Mr Z, was not sufficient to justify a finding that proceeds from the sale of the reservoir could be available to fund payment of school fees.

Holistic decision

Lady Wise, delivering the opinion of the court, noted of the approach to aliment: “A party’s ability to pay aliment in the form of school fees is not restricted to an income based analysis. In the circumstances of the present case, the Lord Ordinary required to consider the needs of the parties and their children and both income and capital resources before concluding how the liability for school fees could reasonably be met.”

Assessing the reservoir issue, she said: “We conclude that the Lord Ordinary was entirely justified in identifying the reservoir as a realisable resource. It had been purchased only a few months previously, which indicated that it was a marketable asset. More importantly, its purchase represented one of the many examples of Mr Z electing to prioritise acquisition of assets for his own use over meeting his alimentary obligations to his children. That tendency was a circumstance of the case that the Lord Ordinary was fully entitled to take into account.”

She continued: “A decision that Mr Z be liable for only one sixth of each child’s fees took ample account of his presently reduced circumstances. The burden will be far greater on Ms X, whose capital settlement has already been depleted by meeting James and Diana’s school fees during the period that Mr Z refused to pay.”

On the Lord Ordinary’s approach to foreseeable resources, Lady Wise said: “We consider that the conclusion reached by the Lord Ordinary was easily justified by the circumstances of the case. Accordingly, even when the focus on past resources is regarded as erroneous, the overall result was entirely fair.”

She concluded: “In any event, the decision that Mr Z should pay all of the children’s school fees until the point at which he had to resign from his employment must be regarded as one part of a holistic decision. While the court must be satisfied that any order it makes can be met from present and foreseeable resources, the liability for all fees prior to July 2022 is one component of a decision that requires Mr Z to pay only a small fraction of the total school fees bill thereafter.”

The reclaiming motion was therefore refused.