Calculating disposable capital and disregards: are the resources the subject matter of dispute?

The definition of disposable capital in section 42 of the Act excludes the value of any capital which is the subject matter of the dispute. In practical terms, this generally means that some form of order, (for example, a crave or conclusion or prayer in a petition) is directed to that property or asset.

If the dispute concerns the ownership of a resource that will be determined in the proceedings for which legal aid is sought, that resource is likely to be the subject matter of the dispute. In the application, you should draw our attention to any resource which you regard as forming part of the dispute between the parties. However, your client should be advised that because an asset is disregarded on this basis does not mean that the value of the asset may not be considered to be available to cover the cost of legal services. Consideration will be given at the conclusion of the case to whether ownership of the asset has been recovered or preserved by the applicant at the conclusion of the case. This is usually referred to as “clawback”.

In deciding whether it is appropriate to exclude such resources from the financial assessment, we will consider whether the dispute concerns claims or counter-claims for transfer of money or property. It is not enough to show that a global crave for payment of a sum of money is being made, rather ownership of the property or asset must be at issue in the proceedings. Simply because an asset which could be used to satisfy the opponents claim exists, does not necessarily mean that an asset is in dispute. We will consider whether the opponent is disputing ownership of the assets, or that ownership will only be resolved by the court action.

Property can become the subject matter of the dispute at a later stage of the action if, for example, the opponent introduces a new claim specifically directed at the asset.  If so, the applicant’s capital will need to be reassessed either by way of a redetermination of the contribution if legal aid has been made available or in the context of a fresh application if legal aid was previously refused on the basis that his/her capital exceeded the upper limit and that we considered he/she could therefore proceed without legal aid.

An applicant may seek legal aid for divorce including orders for financial provision under sections 8 and 14 of the Family Law (Scotland) Act 1985.

We do not accept that, because of the court’s power to order fair sharing of matrimonial property, all an applicant’s assets must be disregarded as the subject matter of the dispute. We will take into account all the applicant’s capital assets and one half of those owned jointly with any other party, including the opponent.

If the opponent seeks transfer of property from the applicant, we will treat the applicant’s assets as the subject matter of the dispute to the extent of that claim. You should ensure that you include this in the information you send to us, either in the initial writ, statements and/or a schedule of the matrimonial assets. Often, where the assets are less than the upper capital limit, we will not need to consider this information any further.

You must tell us about the applicant’s capital at the time they applied, as some time may have passed since the parties separated – for example, the applicant may have opened a new savings account or bought shares following separation.

Property can become the subject matter of the dispute at a later stage of the action if, for example, the opponent introduces a new claim specifically directed at the asset.  If so, the applicant’s capital will need to be reassessed either by way of a redetermination of the contribution if legal aid has been made available or in the context of a fresh application if legal aid was previously refused on the basis that his/her capital exceeded the upper limit and we therefore considered he/she could afford to proceed without legal aid.

Property excluded as the subject matter of the dispute may amount to property recovered or preserved at the end of the case, and the applicant may have to pay us some or all of the costs of the case.

If it becomes apparent, at any stage in the proceedings, that property was never actually at issue, and therefore not the subject matter of dispute, you must tell us so that we can reassess the applicant’s capital.

Disregard for the matrimonial home

If the applicant continues to live in the matrimonial home, its value should be disregarded under rule 10(1) of schedule 3 of the regulations. If the opponent lives there, we have the discretion, under rule 17, to disregard the value of the property.

Funds held on joint deposit: when are these taken into account; and what if funds are inaccessible?

It is often the case, particularly in family cases, that jointly owned funds are held on joint deposit receipt pending the resolution of some ongoing or outstanding issue. The applicant’s share of any such funds are considered to be disposable capital and will be taken into account unless,  of course, the opponent is making a direct claim for transfer of the applicant’s share in whole or in part.

• If the applicant experiences difficulty in securing the release of funds held in this way then it is a matter for the applicant, not the Board to consider what steps should be taken to rectify the situation.
• If, however, the applicant can show that that they have taken all reasonable steps to secure release of the funds in question, including the use of court process, and the money remains inaccessible, then consideration can be given to granting legal aid subject to a condition, in terms of s.14(1F) of the Legal Aid (Scotland) Act 1986  that if an when the funds become  accessible they will be taken into account in a redetermination of the applicant’s financial circumstances in terms of Regulation 28, which could lead to a withdrawal of legal aid or the payment of a contribution.

Under rule 16, we must disregard any payments made either before or after the application for legal aid to the applicant in connection with the subject matter of dispute.  A common example would be an interim payment in a personal injuries action before resolution of the whole case, although it is not limited to personal injuries cases.  However, if the assisted person has, or gets, capital that is not disputed between the parties in the proceedings, we must include it in the assessment.