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Pension sharing and professional negligence

17 July 17

A cautionary tale for family law practitioners, about a client losing out due to bad advice despite an agreement over pension sharing

by Judith Higson

I recently acted for a woman who had been advised on her divorce without proper consideration being given to the first verbal and then written agreement she and her husband had entered into, whereby each was to receive 50% of the husband’s pension in monthly amounts for the remainder of the pension. She was not receiving the agreed sum each month, was now divorced and a pension sharing order could no longer be obtained. The facts may be of interest to other practitioners.

The wife had made a complaint about the professional services she had received from the firm of solicitors who had assisted her with her divorce and the SLCC had upheld that complaint. She had been awarded a relatively small sum in compensation. A judicial factor had been appointed to the firm.

A report from a family law expert was necessary in order to establish that the advice the woman had received at the point of divorce had fallen below that of a reasonably competent solicitor. An unqualified member of staff had consulted with the wife about her divorce and advised her that the appropriate means for the divorce would be a simplified divorce application. The wife maintained that the firm was aware of the agreement that she had entered into with her husband, had been provided with a copy of it and was aware that the agreement was not operating as intended. It was not likely that the agreement would meet the criteria for a “qualifying agreement” in terms of the regulations. Despite this, a simplified divorce application was submitted on her behalf and the divorce granted.

The woman maintained that she was not asked even basic questions about the matrimonial property and its extent. She was not advised on how the matrimonial property might be divided, nor was she advised in relation to what remedies might be available to her under the family law legislation. She was not advised that she could claim a capital payment or other orders, including an order for pension sharing, from her husband in terms of the Family Law (Scotland) Act 1985. She was not advised that once she was divorced she would be unable to avail herself of remedies under the 1985 Act.

In order to quantify the wife’s loss it was necessary to obtain the CETV of her husband’s pension. An action under s 1 of the Administration of Justice (Scotland) Act 1972 was required. Actuarial valuations of her loss were needed. This was valued at £108,000 to £213,000. In order to mitigate her loss, an action for payment was raised to try to enforce the terms of the agreement the wife had with the husband. Declarator was also sought regarding the correct interpretation of the agreement with a view to further clarifying the extent of her loss so far as this related to her entitlement to half of the gross or net monthly pension payments.

Although proceedings were raised in the Court of Session, with the indemnity insurers instructing their own firm of solicitors to act, this particular case settled extrajudicially. There are lessons to be learned for all practitioners consulting with clients about divorce. In particular, it is important to look behind what the client seeks to achieve and carefully consider any agreements that the parties have reached themselves.

Judith Higson is family law partner with Kerr Stirling LLP, Stirling

 

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