LWT OR T AGAINST GPT [2021] ScotCS CSOH_6 (04 February 2021)

LWT OR T AGAINST GPT [2021] ScotCS CSOH_6 (04 February 2021)

The court held that the value of the TF companies and the property company should not be reduced by the value of the TH liabilities or inter-company loans for the purposes of matrimonial property division. The appropriate commercial approach is to place a suitable amount of the sale price in escrow to cover contingent liabilities, rather than deducting them from the headline value. This approach aligns with general commercial valuation principles and the statutory framework for financial provision on divorce. The subsequent sale of TF (TH) Limited confirmed that the contingent liabilities did not crystallise and thus did not affect the valuation as at the relevant date.

Citation
[2021] ScotCS CSOH_6
Parties
Pursuer: LWT or T; Defender: GPT
Jurisdiction
Scotland
Judgment Date
04 February 2021
Procedural Posture
Divorce and Financial Provision / Final Judgment After Proof and Written Submissions
Outcome
Decree of divorce granted; determination in principle of financial provision; further hearing required to confirm specific orders and timescale for payment.
Legal Topics
Divorce, Financial Provision on Divorce, Matrimonial Property, Company Valuation, Contingent Liabilities, Division of Assets
Family Law Company Law Divorce Financial Provision on Divorce Matrimonial Property Company Valuation Contingent Liabilities Division of Assets

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Parties

LWT or T

Pursuer

GPT

Defender

Procedural Posture

Divorce and Financial Provision / Final Judgment After Proof and Written Submissions

Legal Issues

  1. 1 How should contingent liabilities and inter-company loans relating to a jointly owned business be treated in the valuation of matrimonial property for division on divorce?
  2. 2 Should the value of the TF companies and property company be reduced by the value of the TH liabilities?
  3. 3 What is the fair division of matrimonial property in light of the sale of TF (TH) Limited and the outstanding inter-company loans?

Ratio Decidendi

The court held that the value of the TF companies and the property company should not be reduced by the value of the TH liabilities or inter-company loans for the purposes of matrimonial property division. The appropriate commercial approach is to place a suitable amount of the sale price in escrow to cover contingent liabilities, rather than deducting them from the headline value. This approach aligns with general commercial valuation principles and the statutory framework for financial provision on divorce. The subsequent sale of TF (TH) Limited confirmed that the contingent liabilities did not crystallise and thus did not affect the valuation as at the relevant date.

Court Disposition

Decree of divorce granted; determination in principle of financial provision; further hearing required to confirm specific orders and timescale for payment.

Orders

  • Decree of divorce to be pronounced when orders for financial provision are made.
  • Further hearing to confirm specific orders, including timescale for payment, after determination in principle.