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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> McNaught v. Cullen [2005] ScotCS CSOH_39 (17 March 2005) URL: http://www.bailii.org/scot/cases/ScotCS/2005/CSOH_39.html Cite as: [2005] CSOH 39, [2005] ScotCS CSOH_39 |
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McNaught v. Cullen [2005] ScotCS CSOH_39 (17 March 2005)
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COURT OF SESSION [2005CSOH39] A2089/01 |
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REPORT TO THE INNER HOUSE by THE RIGHT HONOURABLE LORD CAMERON OF LOCHBROOM in the cause MRS JILL ELIZABETH McNAUGHT or CULLEN Pursuer and Reclaimer against ALAN CULLEN Defender and Respondent ________________ |
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Act: Wise; Digby Brown (for Pursuer and Reclaimer)
Act: Party (Defender)
17 March 2005
[1] In this action decree of divorce with related orders, including an order for expenses, was granted by my interlocutor dated 2 October 1996. Both parties were then legally assisted persons.. The defender's motion for modification of his liability for expenses in terms of section 18(2) of the Legal Aid (Scotland) Act 1986 ("the Act") was continued to a date to be assigned. Following a hearing on motions for expenses by both parties, amongst other things I modified the defender's liability as an assisted person for the expenses in which he was found liable by the interlocutor dated 2 October 1996 at the sum of £20,000. The reasons for that finding were set out at the conclusion of my Opinion dated 22 November 1996. [2] The pursuer thereafter sought review of the interlocutor dated 22 November 1996. In the course of the procedure which followed the pursuer lodged a supplementary ground of appeal and a minute based on res noviter. By interlocutor dated 26 June 2002 your Lordships allowed parties a proof of their averments on the minute for the pursuer and answers for the defender as adjusted. Your Lordships further directed the proof to take place before Lord Nimmo Smith and remitted to him for that purpose and to report. On 29 August 2003 Lord Nimmo Smith reported to your Lordships. Your Lordships thereafter appointed the cause to the Summar Roll for hearing in light of his report ("the report"). After further procedure, on 18 February 2004 your Lordships recalled the interlocutor pronounced on 22 November 1996 but only in so far as it dealt with modification of the defender's liability for expenses in which he was found liable by the interlocutor dated 2 October 1996. Quoad ultra your Lordships adhered to the interlocutor of 22 November 1996 and remitted the cause back to me to consider afresh the modification of the defender's liability for said expenses with a direction to deal with any other outstanding matter of expenses and thereafter to remit the cause back to your Lordships. [3] The matter came back to me for hearing on the By Order Roll. For reasons of time and otherwise, to which reference will be made later in this report, the hearing took place over three days namely, 18 June 2004, 22 September 2004 and 14 February 2005. The defender has appeared throughout in person. [4] Of consent of parties I heard submissions first from counsel for the pursuer to enable the defender to focus upon and answer the grounds upon which the pursuer resisted his motion for modification. At the start of the hearing I ascertained that the Scottish Legal Aid Board were aware of and did not intend to appear at the hearing and that in relation to the expenses in question the defender remained a legally assisted person. I further made clear to parties that I was bound by the findings of fact which were made in the report insofar as they bore upon the issue which has been remitted to me to determine anew. [5] For the pursuer counsel invited me to make no order for modification. She referred to the terms of section 18(2) of the Act. This provides that the liability of the legally assisted person under an award of expenses is not to exceed an amount which, in the opinion of the court, is "a reasonable one for him to pay, having regard to all the circumstances including the means of all parties and their conduct in connection with the dispute". In the light of the report the true position as regards the defender's assets at the date of the original hearing was that, contrary to the submission made on behalf of the defender, trust funds amounting to some £90,000 were available to the defender for the purpose of meeting any liability for the pursuer's legal fees. [6] Counsel accepted that for the purposes of the hearing before me it was necessary to look at the matter of modification afresh and that in particular the assessment of the parties' respective means required to be made under reference to their present means and not their means in November 1996. It would be artificial to attempt to do otherwise. I agree with that submission. I should add that the defender did not demur. It was clear that the documentary material lodged in court by him before the hearing took account of his present means amongst other things. [7] Counsel pointed out, under reference to the report, that the defender had ceased to pay aliment for the children of the marriage on 12 November 1996 though two of the children had stayed with him in the course of 1998 (see paras 33 and 38). The substance of the report was concerned with establishing the true position of funds amounting to £90,000 ("the trust funds") (see para 3). These funds were held by trustees based in Guernsey. In or about late 1996 the defender requested an interest bearing loan of £40,00 for vehicle stock (see para 33). This loan was approved and the sum of £40,00 was subsequently advanced to the defender (see paras 33 and 35). In February 1998 the trustees forgave the loan together with the accrued interest payable by the defender. At the same time they proposed to pay the remaining balance of the trust funds absolutely to the defender. With the defender's agreement, this was done and the remaining balance of the trust funds amounting to £55,447 was paid in to the defender's personal bank account (see para 38). As noted in the report, there was an attempt made by the defender to claim that this sum had been distributed into an account in the name of Elmtext Limited, a company which was said to be owned by trustees resident in Scotland on behalf of beneficiaries said to be "the four children of the marriage". The report makes clear that this was not the truth and that the existence of such a trust was a charade (see paras 39 to 41). In fact the remaining balance was paid into the defender's personal account. Two months later it was paid into an account in name of Elmtext Limited "trading as Alan Cullen Motors" where it appears to have been treated as a loan from the defender. Thereafter all the money appeared as having been "lent" to the defender by the "trustees", his two sisters, in tranches between October 1998 and March 1999 (see para 39). [8] Counsel then turned to the documentary material that had been lodged by parties for the present hearing. She directed her comments on the defender's assets under separate heads. [9] The trust funds.A bank statement for Elmtext Limited trading as Alan Cullen Motors showed that in November 1996 the defender had paid the sum of £40,000 in to the account. This represented the interest bearing loan referred to above. The sum representing the balance of the trust funds appeared in the statement for the defender's personal bank account in February 1998. Thereafter in April 1998 that sum, together with an additional sum for interest received, was transferred to an account in the name of Elmtext Limited under the name and address of the defender. Subsequent statements for that account showed that between November 1998 and January 1999 payments totalling £30,000 had been paid out to the defender or to Alan Cullen Motors. On 31 March 1999 the balance remaining in the account totalling £10,723.92, was transferred to an account in the name of Alan Cullen Motors. According to a letter from the defender's accountants dated 26 March 2001 ("the March 2001 letter"), which is referred to in the report, the sum of £40,000 was paid to Alan Cullen Motors in December 1996 on a narrative in the bank statement as being "from A. Cullen" and was originally treated as a loan by the defender. The letter went on to say that this loan was all repaid to Alan Cullen Motors by 7 July 1997. However, at the time of writing the accountants had been advised by the defender that the sums paid out to Alan Cullen Motors were loans repayable by him to Elmtext Limited, since the monies so paid over were "effectively trust money borrowed by him". It thus appeared that the defender was at that time attempting to represent that trust money which had originally been paid over ostensibly as a loan to Alan Cullen Motors, had been paid on by him to Elmtext. Counsel pointed out that there was no vouching of where or how the monies from the trust funds received by the defender or Alan Cullen Motors had been used.
[10] Windfall payment of £11,200.This payment was referred to in the March 2001 letter as a payment from Scottish Widows relating to a pension policy taken out some time before with a single premium. According to the March 2001 letter, most of that sum had been paid out for house and personal expenses. At the date of the March 2001 letter around £3,500 remained in a bank account. Counsel pointed out that the policy had never been declared by the defender as part of his assets in 1996.
[11] Property at St Mary's Street, Dumfries.In November 1996 this heritable property had been valued at £12,000 for the purposes of the original motion for modification. They were garage premises belonging to the defender. They were sold in about August 1999 for the sum of £220,000, at which time Alan Cullen Motors ceased business. A cash account demonstrated that from that sum the pursuer was paid the balance of the principal capital sum awarded to her on divorce amounting to £35,000 together with interest of £6,215.86. After accounting for his solicitors' fees and outlays the remaining balance of the purchase price, £175,669.56, was paid into the defender's personal account. That sum appeared in a bank statement for an account in the name of the defender as "St Mary's Motoring Services" in August 1999. According to the March 2001 letter, at the time of the sale the business current account of Alan Cullen Motors was overdrawn by £77,201. The foregoing bank statement confirmed that at the time of the payment Alan Cullen Motors was overdrawn to that extent. Following the payment in, the account stood in credit at the sum of £97,320. The March 2001 letter further stated that there had also been a business term loan with an outstanding balance of £57,711.61. This loan was paid off by a withdrawal from the same account on 10 August 1999. Bank statements for a business loan account in the name of Alan Cullen Motors with an address at St Marys Street, Dumfries for the period from January 1997 to its close on 10 August 1999 showed that in January 1997 the debit balance was some £69,115. It closed with a nil balance after a transfer to the account of the sum of £57,711.61 on 10 August 1999. Counsel submitted that there was no documentation to show that that it had been a term loan. The March 2001 letter also stated that disbursements of the sale proceeds had included a payment in August 1999 of £14,140 to clear an outstanding hire purchase agreement relating to the business and a payment of £12,000 to the defender's sister, Mrs Anderson, said to be part repayment of a loan. In the same letter reference was made to a sum of £14,100 paid in to Elmtext by Mrs Anderson in October 1997 as a loan. There was no vouching for such a loan. Counsel submitted that in the absence of such evidence, both the payment in and the withdrawal should be assumed to be payments made out of monies derived from the trust funds paid to the defender.
[12] Policies of insuranceThe bank statements for the period between June and September 1999 demonstrated that regular monthly payments were made from the account in the name of 'Alan Cullen - St Marys Motoring Services' to Commercial & General Union Company, the Refuge Assurance Company and Royal Scottish Assurance Company. In addition regular payments were also made to the Standard Life Assurance Company. In the list of his assets as at 3 October 1996 submitted by the defender at the time of the original motion for modification, the endowment policy with the Refuge Assurance Company was said to be worth £19,000 and the endowment policy with the Standard Life Assurance Company was said to be worth £3,200. A note appended to the list stated that these policies and a pension policy with Scottish Provident with a value of £39,250, had all been assigned to "bank for extensive O/D, Business & Domestic Morts". No mention was made in that list of assets of a policy taken out with either the Commercial and General Union Company or the Royal Scottish Assurance Company.
[13] Heritable property at Cargenholm, DumfriesCounsel stated that at the date of the proof before Lord Nimmo Smith the defender had conceded that he was then living at an address at 22B Craigbanzo Street, Faifley, together with his partner. In the list of assets as at 3 October 1996 the house known as Cargenview at Cargenholm, Dumfries, was valued at £85,000. In addition surrounding land at New Abbey Road was valued at £12,000. The pursuer had learned that outline planning permission for residential development of 17 plots had been applied for in 1999 and that on 16 June 2004 detailed planning permission had been granted for residential development on two of the plots. In a letter dated 17 June 2004 a firm of surveyors and valuers, who had carried out a drive-by valuation of Cargenview House and of the proposed development land adjacent to the house, placed a market value on the house as being in the region of £200,000 and assessed the current market value of each of the two plots as being in the region of £50,000. The opinion was also expressed that while it was unlikely that planning permission would be granted for 17 plots over the whole area, the market value of the whole area as it stood, including the two plots referred to above, was estimated to be £270,000. On an alternative assumption, namely 15 plots being available, serviced and with access, at a price of £40,000 for each plot, the market value, after deduction of the costs of servicing and access roads, was estimated to be £280,000. Counsel also referred to an application for outline planning permission for residential development of three further plots on ground referred to as "Cargenholm Development" published by the local planning authority in April 2002 and suggested that these plots lay within ground owned by the defender.
[14] Counsel accepted that the defender's bank held a standard security in the sum of £30, 000 over Cargenview and that the current value to be attributed to the house required to take the bank's interest into account. She submitted that on the basis that the defender's residence was not at Cargenview, the house then formed part of his assets for the purpose of section 18 of the Act. In that event, the defender's assets currently amounted to at least £440,000: alternatively, leaving the value of Cargenview out of account as being the defender's residence, the defender's assets amounted to £270,000. He was therefore well able to meet in full his liability to pay the pursuer's expenses arising out of the divorce proceedings. It was accepted that the pursuer's expenses of the appeal proceedings to date were approximately £90,000. Counsel stated that the pursuer herself had no partner and lived on her own. She was in employment earning £10,000 gross a year. Out of the capital sum paid to her, she had received £20,000 after clawback by the Scottish Legal Aid Board against her solicitor's account for the divorce proceedings at first instance of some £55,000. [15] In reply the defender made reference first to the documentary material referring to his conduct and his circumstances and those of his business at the time of the proceedings at first instance and thereafter prior to the course of the proceedings before Lord Nimmo Smith. All of the material, so far as it bore upon the matter of the extent and value of his current assets, had already been referred to by counsel and is set out above. The only additional matter of relevance was contained in a document dated 12 December 2003 prepared by the defender's accountants. This made clear that following the sale of garage at St Marys, Dumfries and cessation of the business of Alan Cullen Motors, due to earlier capital gains tax rollover relief claims there was a substantial capital gains tax liability of around £50,000. However this had been mitigated to nil by a claim on the defender's part for retirement relief on the grounds of ill health. [16] The defender went on to address the matter of his current means. He explained that he was running a business of professional construction services known as Cullen Associates, with a partner who worked part time. He had very recently established the business after completing his studies. As at 27 August 2004 the firm's bank account, opened in August 2004, had a credit balance of £583.76. He referred to documentary material which indicated that he was in receipt of a pension from Scottish Widows of £68.06 net monthly and that he had a personal student royalties account which as at 19 August 2004 was £1101 in debit. He had retained the bank account in his name as St Marys Motoring Services. As at 27 August 2004 it was £2091.78 in credit. He also maintained a personal deposit account out of which interest on the house purchase loan was paid. The house purchase loan had remained at £29,935.59 throughout the appeal proceedings and the prior divorce proceedings. In addition he had an account with the Dunfermline Building Society which currently was £350 in credit. The bank statements produced also demonstrated that he continued to make regular payments towards policies with the Refuge Assurance Company and Standard Life Assurance Company. These were endowment policies which were held against the standard security over Cargenview. He continued to make regular payments towards the life policy taken out in 1996 with Royal Scottish Assurance Company. This was a mortgage protection plan with a term of ten years and had no surrender or maturity value. The policy with Commercial and General Union was a motor trade policy taken out for the purposes of the business of Alan Cullen Motors. In March 2002 he had received a payment of one-half of the proceeds of the policy with Scottish Provident. The policy had been held in the joint names of the pursuer and himself. He had received some £22,000. This sum had subsequently been expended for the support of himself, his partner and the four children and on other necessary household expenses. [17] The defender stated that he was living at Cargenview with his partner together with four children aged 16, 14, 6 and 2 years old respectively. His partner was a full time student at Dumfries College, He himself had been a student at Glasgow Caledonian University between August 1999 and June 2004. He and his partner were currently in receipt of state benefit. [18] He confirmed that he had obtained planning permission for residential development on two plots on ground adjacent to Cargenview. He regarded the value given to them by the pursuer's valuer as fairly reasonable. The outline planning permission had been for 17 plots and the matter was still under discussion with the local planning authority. The defender made reference to the provisions of Nithsdale Finalised Local Plan in which Cargenholm was designated as one of a number of "small building groups" for which according to the general policy set out in the Plan there would be a presumption in favour of small scale housing development, normally of one to two dwellings. This represented a change of policy since the lodging of the outline planning application. In any event, there would be substantial infrastructure costs for any development and the economics of development would depend upon the number of plots for which approval was likely to be given. In relation to the publication of applications for outline planning permission for three plots at Cargenholm to which counsel had referred, these related to plots on ground which was not owned by the defender. [19] In reply to criticisms made by the defender of the information relating to the pursuer's means, counsel stated that the pursuer had terminated a relationship with another person some years ago and that she had since lived on her own. She was at the time indebted to the Halifax Building Society in the sum of £13,507.80. Like the defender she had received one half of the payment made by Scottish Provident in March 2002. Her share amounted to £22,058. In anticipation of this payment she had borrowed on the equity of her home. About one half of the payment had been used to repay her then indebtedness to the Halifax Building Society. The pursuer operated one bank account only, this being with the Bank of Scotland. Counsel confirmed that the pursuer was in employment and that she earned approximately £10,000 per annum. In addition she received tax credit and child benefit for the youngest child of the marriage. She also continued to assist two other children of the marriage financially. Counsel accepted that the defender now lived in Dumfries. However she renewed her motion that there should be no modification of the defender's liability for the pursuer's expenses in the divorce proceedings. Refusal would not lead to insolvency on the part of the defender, while the pursuer would become entitled to retain the whole capital sum awarded to her. [20] At the conclusion of the hearing on 22 September 2004 I pronounced avizandum. During the hearing reference had been made to an undertaking which inhibited any sale of the defender's heritable property. I was subsequently informed that the defender had applied to your Lordships by way of a motion seeking to review an undertaking given to the court on 9 July 2003 on a narrative which was appended to the motion. In the course of that narrative reference was made to the defender having reasonable expectations of securing a bargain to sell an extended building plot for £97,500 upon an exchange of missives. Furthermore the defender stated that if he were to be released from the undertaking to the extent of enabling the sale of the single extended plot to proceed, the undertaking would nevertheless continue to affect amongst other things "other building plot and land say £115,000". On 7 October 2004 your Lordships refused the motion in hoc statu but declared that the heritable property referred to in the undertaking to be the entire property at Cargenview House, Cargenholm, Dumfries, including the two plots of land which the defender intended to sell for development. No information about any specific prospective sale of either plot had been provided to me during the prior hearings before me. In the circumstances I arranged for a further hearing on the parties' present means to take place on 14 February 2005. [21] On 1 February 2005 I heard parties on the defender's motion seeking production of various documents. Apparently the defender had been notified by the Scottish Legal Aid Board that the pursuer's legal aid certificate had been terminated with effect from 9 December 2004. I was informed by counsel for the pursuer that the certificate had been terminated by reason that the pursuer had failed to advise her solicitors and hence the Board of the payment made to her by Scottish Provident in March 2002. However the pursuer remained entitled to legal aid up until 9 December 2005. I refused the defender's motion but ordained each party to exchange up to date lists of their assets and means prior to the hearing fixed for 14 February 2005. [22] At the hearing on 14 February 2005 I was addressed by each party on the documentary material produced by them, including statements of their assets and means. [23] For the pursuer counsel referred to a written statement produced together with vouchers, which set out the pursuer's current means and resources. This confirmed the earlier information that her income derived from her employment with Dumfries and Galloway Council, together with tax credit and other miscellaneous sources. In total this amounted to some £1,396 monthly. This was entirely expended in meeting normal household expenses and mortgage payments which presently exceed her monthly income. The current outstanding balance on the mortgage with Halifax plc was £30,876.82. By drawdown the mortgage had been increased by £15,000 in December 2004 and her monthly repayments were now £225.77 a month. Out of that sum the pursuer had paid out various debts, including a loan from the Cooperative Bank amounting to £7088.67, a payment of £2000 towards a debit balance with a credit card company and a further payment to clear a debit balance with another credit card company in the sum of £3572.59. In January 2005 she had drawn down a further sum of £2500 from her mortgage account. Her sole bank account with the Bank of Scotland is presently overdrawn to the extent of just under £1500. Her sole capital assets are a bonus bond with Halifax plc currently worth around £5640, an insurance policy, which matures in 2010 when it will be worth about £5000, together with a car presently valued at about £1500. [24] The defender, for his part, confirmed his income position. He remains resident at Cargenview with his partner and three children. The remaining child now attends a specialist boarding school at Camphill, Aberdeenshire. All four children are supported by him and his partner. Both he and his partner are currently seeking employment. The defender's income is derived from two pensions totalling £57 net weekly and from rent of £100 weekly for garage premises at Cargenview occupied by a commercial company on an informal basis. With benefit received for the household, his monthly income is expended fully in meeting the normal household outgoings. These outgoings were set out in the written statement of his income and current assets and liabilities and supporting vouchers produced by the defender. [25] Apart from his ownership of the heritable property at Cargenview, his capital assets presently consist of a sum of £33,403 in a savings account with the Royal Bank of Scotland, a sum of £303 with the Dunfermline Building Society together with a sum of £242.58 in credit in the business account for Cullen Associates. The sum of £33,403 represents the matured value of the endowment policy with Scottish Provident. The whole proceeds amounted to some £70,000. £30,000 was paid out to extinguish the mortgage over Cargenview. The remaining balance of £40,000 was paid out to the defender. From that sum the defender expended some £6,600 on the purchase of a car for the use of his partner for regular visits to Camphill School. [26] His present liabilities, excluding normal household expenses, his liability as an assisted person for the pursuer's expenses of the divorce action at first instance and his liability for the pursuer's expenses on appeal amounting to some £90,000, are indebtedness to the Student Loans Company in the sum of £16,503.06, to his bank for debit balances on both his personal and student royalties accounts in the sums of £1392 and £672 respectively and liability for outstanding legal and accountancy fees amounting to £3,522. [27] The defender produced further material relative to the ground adjacent to Cargenview and in particular the two plots, plots 1 and 2, for which planning permission has already been granted in June 2004. For one of the plots, plot 2, which was the plot specifically referred to during the hearing before your Lordships on 7 October 2004, negotiations had been proceeding with the interested parties. The defender has been prepared to entertain the offer made of £97,500 although no missives have been concluded. At present the interested parties occupy a caravan on the site. They had on 10 January 2005 submitted a planning application to the local planning authority for the building of a two storey house on an extended site which includes that for which planning permission exists for the erection of a single storey building. The other plot, plot 1, has been the subject of negotiation between the defender and other interested parties on the basis of a price of £75,000. Although planning permission for a single storey building on the plot exists, no building warrant has as yet been sought for a dwelling nor have missives been entered into. [28] The defender also produced two reports by a firm of chartered surveyors dated 3 February 2005. The first set out the surveyors' opinion as to the current market value of the two plots. They had assumed that planning permission had not yet been granted for the two plots but would be so for the erection of one detached dwellinghouse on each plot. They valued plot 1 at £50,000 and plot 2 at £48,000. They valued an enlarged plot 2, as delineated in the application dated 10 January 2005, at £58,000. The defender also referred to accountancy advice which he had received that the sale price of these two plots would fall under the principal private residence exemption detailed in capital gains tax legislation, although no guarantee could be given that the exemption would apply. The second report was concerned with the value the defender's house, Cargenview. In it the surveyors expressed their opinion that the current market value of Cargenview is £170,000. [29] In relation to the remaining ground at Cargenview, the defender explained that at present it was regarded as agricultural land. There had been a quarry on part of it which he himself had infilled. He made reference to documents relating to the outline planning application for the erection of 17 dwelling houses over the whole area owned by him. A separate application for an access road had been lodged at the same time. In June 2004 the principal road services officer had been consulted by the area planning manager about the two applications. In a memorandum dated 14 July 2004 addressed to the area planning manager, the road services officer indicated that because of restricted visibility at the junction between the proposed access road and the adjacent main road as well as the defender's apparent absence of control over land which would be required to be taken in to provide the necessary improvement for the junction, he would recommend refusal of the application. Subsequently in October 2004 the defender had met with an official of the planning authority and had discussed the possibility of a reduction in the number of plots to nine or less with changes in layout and revisal of the visibility areas at the junction. At the same time the defender had also suggested that approval be given to the erection of 3 or 4 further houses without making any improvements at the junction although making provision for an access road to an adoptable standard. By letter dated 29 October 2004 the defender was advised that the principal road services officer would require the full standards to be met, that he would not accept any further development prior to this being carried out, and that otherwise he would recommend refusal of the application on grounds of road safety. The writer of the letter, the area planning manager, confirmed his previous advice that as the applications currently stood, he would recommend the local planning committee that they be refused. The defender also referred to a letter dated 4 February 2005 from a planning officer. This related to the foregoing two applications and a further application seeking outline planning permission for the erection of a single dwelling house within the ground. He explained that this last application stood in his partner's name. It was intended to enable him, his partner and the children to occupy a house designed to suit the needs of the child who is presently at Camphill. In the letter the writer stated that she had been given to understand by the defender that he was considering withdrawal of the two earlier applications to allow him more time to address the issues and to re-design the schemes. At the same time she confirmed that as regards the further application, standing the response of the principal roads services officer about the existing access onto the main road, the application would be recommended for refusal as it currently stood. [30] In the foregoing circumstances the defender submitted that the valuation of the two plots contained in the surveyors' letter of 3 February 2005 be accepted. He estimated that while the remaining ground was capable of some residential development, in the absence of any planning permissions, outline or detailed, its present value was of the order of £12,000. He confirmed that his future intentions for the remaining ground were set out in the written statement produced by him for the hearing. The notion to sell the two plots had been originally based on "the desire to raise capital for generation of income" by way of establishing a new business in construction contracting, an idea that "was primarily based on the belief that relocation from Cargenview to a more suitable site within the larger area would always be possible." He had therefore abandoned the idea of setting up in business and was seeking other employment. He also explained that the sale of the plots had been complicated by reason of the legal effect of the undertaking given by him to your Lordships. However he was not intending presently to sell any part of the remaining ground notwithstanding that, to quote from the written statement, "the development of the larger area had significant legal and technical problems to overcome, particularly roads issues". He referred to the response to the recent application in the name of his partner for the development of a single site on the remaining ground. It was appropriate that his liability for the pursuer's expenses of the divorce action should be modified to a sum less than, or at least no greater than, the sum of £20,000 originally fixed upon in the interlocutor of 22 November 1996. [31] Having considered the whole documentary material lodged by and the submissions for each party, I am satisfied that the trust monies can no longer be traced to or identified in any of the assets now remaining to the defender and that they were almost wholly expended in connection with the defender's business as Alan Cullen Motors. While there may remain a question mark over the matter of the loan purported to have been made to that business by the defender's sister, Mrs Anderson, and hence of the propriety of the payment of the sum of £12,000 made to her in 1999, I do not consider that the matter is so free from doubt that that sum can be regarded as forming any part of the defender's present capital assets. [32] I am also satisfied that while a student at Glasgow Caledonian University the defender lived with his partner at her house in Faifley, he has since returned to live at Cargenview together with his partner and the four children as his permanent residence. Accordingly for the purposes of section 18 of the Act, the value of the house at Cargenview falls to be excluded from the assessment of the defender's means. While the defender embarked upon setting himself up in business again in August 2004, I am satisfied that the business has no value except the sum presently in its bank account and that the defender appears now to have given up the business so that no substantial income is presently or is likely in the foreseeable future to be derived from it. [33] As regards the pursuer's assets and means, I find no reason to doubt the figures presented on the pursuer's behalf. I did not find the defender's criticisms and suggestions that the pursuer had not made full disclosure of her current assets either at the dates of the earlier hearings before me or at the hearing on 14 February 2005 had any real merit. [34] It is plain that, leaving aside the value of the ground adjacent to Cargenholm owned by the defender, there is, broadly speaking, little substantial difference in the means of each party, albeit that the defender has bank accounts that are some £33,500 in credit at present. The pursuer is in employment but her income is barely sufficient to cover her outgoings. She has required to borrow on the equity of her home. Neither the defender nor his partner is presently in employment though they are attempting to find employment. Their joint income is hardly sufficient to meet their needs and those of the four children. While Cargenholm is now unencumbered, it, like the pursuer's house, is excluded from computation of each party's means for the purposes of section 18 of the Act. Again, each party has liabilities. In the pursuer's case it is comprised by her borrowings on the mortgage over her house. The defender's liabilities, leaving aside those for the pursuer's legal expenses, are in an amount of a similar order. [35] In valuing the ground adjacent to Cargenholm, there are two elements to be considered, firstly, the two plots for which planning permission has been granted and, secondly, the remaining ground. I am satisfied that the defender has, in the form of the two plots, an asset which can be valued on a demonstrable market value basis. Each plot has been the subject of negotiation and while a further planning application has been lodged with respect to plot 2, which may not be successful, that plot still retains a significant value and one which can be seen from the valuations produced by each party to be at least equivalent to that for the other plot. Furthermore the defender has been negotiating a price of £75,000 for plot 1 and a higher figure for the extended plot. On a broad view, while neither plot has yet been sold, I consider that it is reasonable to place a value of at least £140,000 on the two plots taken together. I am also satisfied that no discount requires to be applied to that figure against capital gains tax liability. [36] Clearly the value to be ascribed to the remaining land is more problematical. Difficulties have already been encountered in securing suitable road access to enable it to be developed. The likely density of any development on it has not yet been fixed upon, even if the problem of road access were to be resolved. For these reasons, I consider that the figure produced by the pursuer's surveyors is probably too high. On the other hand the defender, while placing a figure of about £12,000 on the area remaining, was at pains before me to indicate that he would not consider selling it as it stands for such a low price. Some guide to what might be a reasonable figure for it can, I consider, properly be gleaned from the memorandum appended to his motion before your Lordships in October 2004. There the defender gave a figure of £115,000 for the land together with plot 1, for which he has been negotiating a sale at the price of £75,000. I therefore consider it reasonable to place a value of £40,000 on the remaining land as it stands. This may at the end of the day be a substantial underestimate of its value when developed, even were the proceeds to become subject to a charge for capital gains tax. For that reason I do not consider that the figure of £40,000 requires to be discounted against that prospect. [37] Accordingly I consider that the capital asset represented by the two building plots and the remaining land at Cargenview adjacent to the defender's house is reasonably to be valued at a figure of £180,000 at least. [38] Although the defender is looking for other employment rather than continuing with the business he established in August 2004, it is clear to me that the defender has every intention, if he can, of himself capitalising on the prospective development value of the remaining land as well as selling plots 1 and 2 as he is able to do now. Sales of the two plots would be more than sufficient to meet his liability for the pursuer's expenses of the appeal amounting to around £90,000. Assuming a total price of £140,000 for the two plots with the defender's liability for the pursuer's expenses of the appeal paid out of it, the balance remaining would be at least £50,000. [39] In considering the defender's motion for modification of his liability for the pursuer's expenses of the divorce action and the recommendation that I would make to your Lordships, I begin by referring to the view which I expressed in my opinion of 22 November 1996 about the defender's conduct in connection with those proceedings. The view then expressed was that, looking at the matter broadly, the pursuer's account could have been reduced by at least one-half but for the defender's conduct. That view remains unchanged by any of the subsequent events and I adhere to it. Both parties were legally assisted persons and, as I have set out above, the defender remains an assisted person for the purposes of the present motion. In these circumstances my present recommendation must have regard to the above view. [40] The pursuer has no substantial means and no capital assets of any substance apart from her home, the value of which is excluded from the computation of her means for the purposes of the present motion. The capital sum which the defender agreed to pay to the pursuer, has been paid over by him together with over £5,000 of interest. But of that sum the pursuer has presently received only £20,000 since the balance has been withheld by the legal aid authorities to meet her own account of expenses totalling £55,000. The defender's means are now such that he has capital assets sufficient to meet at least one-half, if not the whole, of that sum, even after meeting his outstanding liability for the pursuer's expenses of the appeal. It is also pertinent that he presently has a substantial sum at credit in one of his bank accounts. With these matters and the terms of section 18 of the Act in mind, I recommend that the defender's liability as an assisted person for the pursuer's expenses of the divorce action at first instance be modified to and assessed at the sum of £35,000. [41] As regards the expenses of the hearings before me, including the motion heard on 1 February 2005, I was invited by counsel for the pursuer to find the defender liable for the whole of the pursuer's expenses. She submitted that in particular the hearings on 1 and 14 February 2005 arose from the defender's failure to disclose the fact that by 22 September 2004 he was already in negotiation for the sale of the two building plots for which planning permission had been granted. Counsel accepted that if at the end of the day the sum to which the defender's liability was to be modified was no greater than £20,000, the pursuer could not seek her expenses from the defender. The defender for his part was content that the parties should pay their own expenses whatever might be the final outcome of his motion for modification. [42] On the basis that your Lordships determine that the defender's liability as an assisted person for the pursuer's expenses of the divorce action be modified to £35,000 as I recommend, then I further recommend that the defender should be found liable to the pursuer for the whole expenses of the hearings before me. The pursuer has had success in persuading me to recommend to your Lordships that modification of the defender's liability as an assisted person for those expenses be assessed at a greater sum than £20,000. Furthermore the hearing was conducted over three rather than two days because the defender failed to provide full information about prospective sales of the two plots at Cargenholm. In addition the defender was unsuccessful in his motion heard on 1 February 2005.