Introduction

The Judgment in Ian George Johnstone Hodge against Rachel Anne Hodge or Currie ([2025] CSOH 31) before the Scottish Court of Session addresses a complex matrimonial dispute that arose during divorce proceedings. Central to the dispute was the fate of a significant matrimonial asset: an interest in a heritable property at Hodges Farm, Pencaitland. The property, held in trust for a partnership formed between the parties, was acquired under peculiar circumstances that involved historical family ties, discounted purchase considerations, and an encumbrance arising from a secured loan provided by the Agricultural Mortgage Corporation plc (“AMC”).

At the heart of the case were conflicting proposals regarding the distribution of financial assets. While the pursuer advocated that unique “special circumstances” – notably the long-standing family connection and discounted acquisition – warranted an unequal division of matrimonial property, the defender pushed for an order for the sale of the property with an equitable distribution of the net proceeds. This commentary examines how the Judgment not only resolved these practical issues, but also established a precedent regarding the application of equal division principles under the Family Law (Scotland) Act 1985, even in situations where competing factors might initially favour an unequal award.

Summary of the Judgment

The Court, under the opinion of Lady Carmichael, determined that despite the special circumstances presented by the pursuer—such as the historical family involvement in the acquisition of the farm and the discounted purchase price—the overall equitable approach dictated by the Family Law (Scotland) Act 1985 required equal sharing of the matrimonial property. The decision effectively ordered the sale of the property, held as the principal asset of the former partnership, and mandated that the net proceeds be allocated in installments: an initial sum payable to the defender, thereafter followed by a division of any remaining balance equally between the defender and the pursuer's trustee.

In reaching this decision, the Court took into consideration not only the commercial and accounting aspects as demonstrated by evidence from expert witnesses (including chartered surveyors and accountants), but also practical difficulties such as ongoing arrears on the secured debt and the risk of repossession by AMC. Ultimately, the Court balanced the special familial and commercial factors against the overriding statutory purpose of the 1985 Act—to afford courts maximum flexibility in effecting a fair division of matrimonial property—and resolved that equal division, adjusted by appropriate instalments to account for prior use and income retention, was the most just outcome.

Analysis

Precedents Cited

The Judgment cites several important precedents and statutory provisions that have shaped its reasoning:

• Family Law (Scotland) Act 1985: This Act provided the framework within which the Court balanced the principles of equal sharing against any circumstances that might justify departure from a strict 50/50 split. Particularly relevant were sections 9 and 10 that address economic advantage and special circumstances.
• Jacques v Jacques 1997 SC (HL) 20: The Court referenced this decision in discussing the importance of a shared asset held by both parties. It served to underline that an agreed joint asset, even when acquired under unique circumstances, is not automatically subject to an unequal division unless compelling countervailing factors are proven.
• Murdoch v Murdoch 2012 SC 271: This case established principles regarding flexibility in court orders for subsidiary matters in matrimonial disputes. The Court indicated that its approach to ordering the sale—thereby circumventing a forced “count and division”—was consistent with the pragmatic and flexible approaches endorsed in Murdoch.
• Foster v Foster 2024 SC 99: Recent authority in Foster was used in the context of capital gains tax and transfers of property. The discussion pointed to the evolving interpretation of financial transfer provisions and the practical implications for avoiding immediate tax liabilities.

Legal Reasoning

The Court’s reasoning is multifaceted. It first acknowledged the complexity of the factual matrix – from the historical familial involvement in securing the property at a discount to the subsequent operation of the property as part of a joint business partnership. Despite these factors, the Court emphasized that the statutory objective of fair sharing, as set out in the 1985 Act, necessitated an equal division of assets unless an unequivocal economic advantage could be demonstrated.

Several key factors influenced the Court’s decision:

• The evidence indicated that while the pursuer’s family history and the discounted acquisition might justify an argument for unequal division, this was offset by the fact that the defender had contributed significantly—both in securing the financing and in managing the partnership’s affairs.
• The ongoing use of the property by the pursuer, including retaining all partnership income and failure to discharge the secured debt, was seen as conferring an economic advantage that detrimentally affected the defender’s position.
• The Court also noted practical and procedural concerns. The risk of AMC’s repossession and forced sale, compounded by the complexities of dissolving the partnership under the Partnership Act 1890, meant that the ideal of directly transferring interests was unfeasible.

Given these considerations, the Court opted for an order for sale combined with a structured allocation of net proceeds. This mechanism not only resolved the ambiguity concerning asset division but also provided an incentive for cooperation by both parties, thereby reflecting a judicially pragmatic approach.

Impact on Future Cases and Legal Landscape

This Judgment is likely to have significant impact in future matrimonial and partnership cases where the division of co-owned property is involved. The decision reinforces the principle that, notwithstanding any special circumstances or historical advantages, the guiding statutory objective remains the fair and equal division of matrimonial property in line with the 1985 Act.

Additionally, the structured order for sale with clearly defined instalments sets a useful precedent for addressing cases where a forced sale is necessary to resolve complex financial disputes. Future disputes involving secured assets, partnership dissolutions, and the allocation of jointly acquired property are expected to refer to the balanced approach adopted in this case.

Complex Concepts Simplified

Several complex legal and financial concepts were simplified within the Judgment:

• Special Circumstances: While the pursuer argued that the familial history and discount on acquisition constituted “special circumstances” that should justify unequal division, the Court clarified that such special circumstances must be weighed against broader statutory objectives. In essence, even if one party benefits from historical advantages, any economic benefit improperly retained (such as ongoing income from property use) can tip the balance back toward equal sharing.
• Partnership Dissolution and Its Effects: The concept that a partnership dissolves under the Partnership Act yet still leaves residual rights and obligations was explained in the Judgment. The ongoing business activity on the property by the pursuer was deemed to exceed what is justified post-dissolution, thereby affecting the fairness of asset distribution.
• Secured Loan and Transfer Restrictions: The restriction imposed by the standard security from AMC (which prevented the transfer of the property without written consent) was highlighted as a critical factor. This condition meant that direct transfer or partitioning of the property was administratively and legally unviable, thus necessitating an order for sale.

Conclusion

In summary, the Judgment in Hodge v Hodge/Currie [2025] CSOH 31 establishes a significant legal principle: the court’s overarching duty to effect a fair division of matrimonial property under the Family Law (Scotland) Act 1985 prevails—even in cases featuring complex family histories, discounted acquisitions, and disputed partnership arrangements. The Court’s pragmatic solution of ordering the sale of the property, with a structured allocation of the net proceeds, underscores its commitment to both fairness and the efficient resolution of intertwined financial disputes.

This decision not only clarifies how special circumstances are to be balanced against equal division but also sets a persuasive precedent for future cases where jointly held partnership assets in matrimonial disputes must be dissolved. By emphasizing equal division despite potential economic advantages obtained through family or historical factors, the Judgment reinforces the egalitarian underpinnings of matrimonial financial law, providing clear guidance for both practitioners and courts.