Agreements by Spouses
Cases
A. (W.) v. A. (M.)
[2004] IEHC 387
JUDGMENT of Mr. Justice Hardiman delivered on the 9th day of December, 2004.
In these proceedings the applicant (hereafter called the husband) sought a decree of divorce. The wife counterclaimed for divorce and sought extensive ancillary orders including a property adjustment order in relation to all the husband’s property, an order for maintenance, a pension adjustment order, a financial compensation order, an order for sale of such property as the Court considered appropriate, an exclusion order and certain further orders. By order of the Circuit Court of January, 2004, a decree of divorce was granted to the parties, mutual orders under s.18(10) of the Act of 1996 were made, the periodic maintenance order in favour of the wife in the sum of €150 per week was made and the application for a property adjustment order was refused. The wife appealed against the whole of the order. At the hearing, however, it became clear that the wife did not object to the granting of a decree of divorce but sought ancillary orders.
Background.
The factual background to the case is essential to the resolution of the present dispute. Fortunately, there is a very large measure of agreement.
The husband and wife are both from comfortable agricultural backgrounds. The husband is now aged 54 years and the wife 50. They married in 1978 and the matrimonial relationship collapsed by 1988 and probably sometime earlier. In 1993 the parties entered into a deed of separation and a side agreement the terms of which are of considerable importance. There are no children of the marriage.
The husband and wife were each born into substantial farming families residing close to, but on different sides of, Cork City. In 1974 the husband received from his father a farm some 78 acres and in the following year he bought another farm of 136 acres, jointly with his mother.
About 1978 the wife acquired, by inheritance from an uncle, an 80 acre farm near her home place.
The respective farms of the husband and wife, and the husband’s half interest in the third farm constituted the parties assets on or shortly after marriage in 1978. Thereafter, the husband sold his farms and purchased instead three farms near the wife’s home place. One of these, of 67 acres, he acquired in his own name and the other two of 206 acres in total were acquired in the joint names of husband and wife. Accordingly, by the mid 1980s the husband possessed 67 acres in his own name and the wife retained her 80 acre farm in her name. The parties jointly owned a further 204 acres, making a total of just over 350 acres. They lived in a house on one of these farms which might be regarded as the home farm and in the mid or late 80s changed the nature of their enterprise from dairying to dry stock. In 1988 the husband bought a further farm of 95 acres a considerable distance away in his own name for the sum of £160,000 all of which was borrowed. Later he acquired a smaller adjacent farm. In 1988 the husband’s father died. The marital relationship definitively collapsed in the same year and the parties were in effect living separate and apart but in the same house. The husband, however, spent considerable time in his mother’s family home on a valuable holding some distance away. The wife’s parents, a brother-in-law and a cousin were all engaged in fairly extensive farming near the family home.
In the course of the year 1989 the husband carried out significant upgrading in the home farm including the acquisition of a milk quota, the purchase of a pedigree Frisian herd of 150 head and other matters.
In 1991 the husband moved out of the family home. For a long period throughout 1992 and early 1993 there were intensive negotiations between the husband and the wife, who was assisted by her father and the cousin referred to above. The parties had the benefit of legal and accountancy advice from very reputable sources including in particular an accountant, Mr. Cullinane. This gentleman is an accountant with a specialty in agricultural accounting and business planning and was called on behalf of the wife in the hearing of the appeal.
The separation agreement.
This agreement is dated the 8th April, 1993. It is generally in a usual common form, but the following provisions require particular notice:
(2) “The terms of this agreement are intended to be a full and final settlement between the parties of any legal or moral obligations which they have to each other, whether arising out of legislation based on a matrimonial relationship, or otherwise, and in particular but without prejudice to the generality of the foregoing the husband and wife agree that neither party shall institute or maintain or attempt to institute or maintain proceedings against the other seeking a decree of judicial separation or any ancillary relief thereto pursuant to the provisions of the Judicial Separation and Family Law Reform Act, 1989 or any similar or amending legislation.
(3) The husband and the wife agree that any property of any nature acquired by either party in the future shall be the sole property of the person acquiring same. Furthermore, the husband and wife, each as the spouse of the other, hereby respectively acknowledge to the other that any other house or premises which might subsequently be purchased by either of them at either time in the future will not constitute a family home…
(4) It is agreed that the husband or the wife shall be entitled to carry on any business without any interference from the other and all profits therefrom and any property purchased or money saved by the husband or by the wife shall be their own property.
(14) The wife acknowledges that she has no right or claim to and will not seek to establish or maintain any right or claim to [the lands separately acquired by the husband as set out above] or [a suburban house in Cork purchased by the husband in 1992].
The separation agreement generally is a detailed one covering all the matters which it might be expected to cover and several contingent matters.
On the same day that the separation agreement was executed the parties entered into a “side agreement”. Insofar as relevant this provided:
“… Neither of us will obstruct the other in seeking and/or obtaining a divorce a vinculo in the event of such other being entitled to seek and obtain a divorce a vinculo without infringing the constitutional rights of the party not so seeking such divorce and provided further that such of the financial and property terms contained in the [separation agreement] as remained to be performed at the date of application for such divorce a vinculo shall be incorporated on the application and by the consent of the moving party in such application into any decree which may be granted on foot of such application and provided further that any of the said financial terms or property terms that shall have been performed as of the date of such application for divorce a vinculo shall be excluded from the consideration of the court by and on the consent of the moving party in such application.
It is further agreed … that this letter is not intended by the parties and shall not in fact approbate their alleged marriage and is intended solely to facilitate the parties in regulating their financial and property affairs and their marriage status insofar as such status be deemed invalid.”
Under the terms of the separation agreement the wife acquired in her own name some 178 acres together with the milk quota attaching to part of it, farm equipment and buildings, a residence and a fully working farm. The husband received into his own name approximately 174 acres without buildings or equipment. Quite complex arrangements were made for the liquidation of a bank debt for which the parties were jointly responsible by the sale of stock and for the choice by or on behalf of the wife of stock for her retention. The husband retained the lands which he had bought remote from the wife’s home and the debt incurred to buy them. The husband retained the dry stock on the farm. Sixty three head of cattle were sold by agreement for the wife in respect of the bulk of her part of the bank liability. The balance of the herd was retained by her, this being a milking herd.
After the separation agreement had been carried out, neither party had more than a small and manageable level of debt on the land each received in the settlement.
Effect of the separation agreement.
On the hearing of this appeal the only real evidence given about the separation agreement was that of the accountant, Mr. Cullinane, who is referred to above. He said that over a long period in 1992 and 1993 his firm had acted as mediator between the parties in arriving at a settlement. He said he believed that they mediated a fair settlement and he personally drew up the heads of the agreement. He said his firm were the farm accountants to both Mr. and Mrs. A. He said that his object had been to seek a fair solution based on his accountancy expertise and his extensive knowledge of farming. He said he believed the agreement secured the position of both Mr. and Mrs. A. He said that at the date of the agreement the perception of all parties was that a fair resolution had been reached. The advantages and drawbacks of the lands and the quota attached to part of them were known to all parties. He believed that each party was given by the agreement the means to carry on their lives and thrive, independently from then on: he was satisfied of this. This evidence was unchallenged.
After the agreement.
In the period immediately after the agreement, before the end of 1993, the husband sold his lands near the wife’s home place. With the proceeds he reduced or liquidated the debt on the more remote farm he had acquired and on the suburban house. He acquired another 100 acres near his existing holding. Later, he entered into a new relationship, since ended, and became the father of two children who live with their mother in the suburban house. They are now eight and eleven years old.
Since the separation, the husband has prospered exceedingly. This is substantially as a result of the shrewd acquisition and sale of property near the expanding City of Cork, and later further afield. The most significant part of this business was conducted in partnership with his mother who, although now in her middle eighties, was stated to be a shrewd and formidable business woman. In late 2002 and early 2003 he and other members of his family as beneficiaries of a trust established by his mother benefited from an advantageous sale of certain lands, of which the husband received a sum of €3.3 million. This enabled him to clear certain debts and retain some €750,000. In January, 2004, he and his mother made a further very substantial acquisition in a neighbouring county, involving him in borrowings for about €7.4 million. The husband’s net worth is difficult to establish precisely depending as it does on shifting land values, borrowing rates, the valuation of his mother’s interest and its effect on his own interest, but is probably about €7 million.
The wife’s post separation fortunes are in sad contrast. At first she farmed her holding of 170 acres with the milk quota and stock. Unfortunately, she seems to have done this in what two separate experts called on her behalf regard it as the most inefficient and expensive manner possible: she employed a company called “Farm Relief Services” throughout the years 1994 and 1995. This company was basically a supplier of labour services, usually used by farmers in holiday periods, periods of illness or periods of very intense work. Her accountant stated, with moderation, that her decision to do this meant that her cost base was very high. It would appear that, taking one month with another, she paid about £1,000 per month for this service. Although she was from an agricultural background and was, in the experts’ view, an efficient farmer, she very rapidly reached a position of which her farm enterprise was no longer viable. She then embarked on a number of sales. In 1996 she sold the former family home, farmyard and 3 acres. In 1998 she sold a site and, in a separate transaction, a further 30 acres. In 1999 she sold 43 acres. From these sales she received about £420,000. It is not clear precisely what happened to this money except that with part of it she built a four bedroomed house on part of the land. This was described by her accountant as “fabulous” but he said that he was not consulted about the project and would not have advised it from a financial point of view. It was agreed by the wife herself and by her two experts that the house was built and fitted out to the highest standard. Her accountant said that she could certainly have built or bought a smaller or cheaper house but that “she wouldn’t live in a smaller house”. It appears that the wife’s decision to build this house may have been connected with an ambition she had to develop sites for sale or to develop as a small estate, which foundered when her application for planning permission was rejected. In recent times the wife has sold the milk quota and her remaining animals for a sum estimated by her accountant at €70,000 or €80,000. It would thus appear that, as a result of sales of various sorts since the separation agreement the wife has realised a sum of about £500,000. She has a bank debt of about €160,000, secured by equitable deposit of the deeds to the land. The new dwellinghouse appears to be unencumbered and is valued at about €400,000. The only income declared by the wife was in respect of rental income for about half of the remaining lands. In the course of cross-examination, however, it transpired that she had further cash income from the sale of silage on the balance of the lands and in respect of certain work performed by her for her now very elderly parents. Neither of these were declared in the affidavit of means, she said, because “that was cash, it did not appear in my account: that was cash I used privately myself”.
Accordingly, the difficulty of estimating the wife’s current net worth, or indeed her income, is compounded by her reticence. It seems clear enough that she will not declare anything she thinks she can avoid declaring. It appears however that the value of the lands is about €900,000 and that of the house about €400,000, suggesting a net worth of about €1.25 million. By no means all the approximate £500,000 received from sales has been accounted for. The balance might, if retained, increase the net worth by about €150,000. I think it probable, however, that this sum or most of it has been spent in ways not now traceable.
Equally, it is very difficult to form a precise estimate of the wife’s income but taking her rental income to be as she declares it, the income from her family at not less than the €5,000 p.a. she mentioned and attributing a modest sum only for the sale of silage to date and attributing, for the future, a rental income to the presently unlet lands, an income of something over €25,000 per year seems indicated. But the rental income, according to the wife’s expert, is likely to decline.
Reasons for developments since separation.
The reasons for the husband’s post separation prosperity are pretty apparent. It is due to shrewd investment in land involving at times very substantial borrowing and an element of risk but to date very successful, due to the skill and judgment of the husband and his mother.
The reason for the much less happy picture of the wife’s affairs is more complex and was the subject of contradictory evidence, remarkably, from the wife’s own expert. There is no doubt, on the evidence, that the separation agreement was a fair one and provided ample and approximately equal opportunities for the parties to thrive in its aftermath. Its validity was expressly conceded by counsel for the wife. She also conceded that the agreement envisaged a “clean break” insofar as that is possible in Irish law. The expert called by the wife, Mr. Cullinane, substantially attributed the failure to the very high cost base caused by the employment of Farm Relief Services and another factor relating to milk quota, which will be discussed below. The wife he said needed to employ farm relief services because, as a female, she was physically incapable of certain of the necessary farm tasks. He stated that these tasks were the need to work long hours, the milking and the seasonal calving. The wife herself, however, did not make this case. Moreover, Mr. Cullinane was strongly challenged in cross-examination on this claim. He conceded that it was not unusual to have a woman taking a full part in a dairy enterprise, alone or jointly with a partner; that dairying was a relatively light form of farming work and (in total contradiction to his initial view) that the wife was physically able to run the farm. Her difficulties, he now said, came from emotional factors: she was not emotionally able to run the farm. He agreed that he had seen her only a few times after the separation agreement, and generally in his office. He said that basically she was a failure as a farmer (he had previously said that she was an “efficient farmer”) and that she had employed Farm Relief Services “to run the farm for her”. He said that she was proud and concerned with “keeping up appearances”, or “putting on a good show”. This he said was an aspect of her character which may have made life difficult for her after the separation. Marital separations, he said, were not that common in 1993.
Mr. Martin, an agricultural consultant also called on behalf of the wife stated in cross-examination that there was no reason a healthy 40 year old woman should not run a dairy enterprise on her own, especially if she were from an agricultural background. His practice had several such clients and he knew of others.
The wife herself, when she gave evidence, stated that she could not make “a go of it because I was too proud and too emotional to carry on… I never expected a break up to happen to me. It shattered my confidence… I was totally ostracised by the general public in a small rural community… I felt people were looking at me behind my back, I don’t think that I was wished good luck.” As a result of this, she said, she felt drained and “maybe I was not thinking properly… no-one offered me any advice”. She estimated the cost of building a new house at £200,000 or £240,000. She said that she had borrowed to make ends meet and “I haven’t thought about any means to reduce my debt because I am too emotional”.
It will be thus be seen that the prime reason put forward by the wife for the failure of her farming enterprise was a form of emotional incapacity to do the farm work. I am, however, satisfied that this is an afterthought. She was cross-examined strongly on the basis that no such claim had been made in the Circuit Court and I accept that this is so.
I must unfortunately record that the wife was not a satisfactory witness. In certain respects her evidence was false. On other aspects she simply adopted a very truculent attitude: she repeated her evidence parrot-like and simply refused to answer questions put by way of challenge to it.
Specifically and importantly, the wife alleged that she only employed Farm Relief Services to do a few things she could not do herself such as general repairs, fencing, or ploughing. She stated her belief that this service was cheaper than employing a labourer. Most of the work, she said, she did herself. This is simply inconsistent with the amounts paid to Farm Relief Services. It is also inconsistent with the evidence of her own accountant that the company “ran the farm for her”. I am satisfied that no reasonable person with farming experience, or even without it, could consider that it was cheaper to employ this company than to employ a labourer. Again, her own expert put the additional cost at about 30 or 35%. Moreover, the wife gave evidence that she was unaware of the husband’s ownership of the lands at the location remote from her home: but these lands are specifically mentioned in the separation agreement.
On a number of occasions, the wife simply refused to answer questions either in express terms or by continually repeating her previous answer. This arose first, for example, in relation to the number of cattle she had when she was running the dairy farm after the separation agreement. I am quite satisfied that her reason for refusing to answer was a reluctance to commit herself to a version of the facts which, she feared, might be open to irrefutable contradiction.
A conflict.
The husband was challenged on one only point by counsel for the wife. Counsel cross-examined him with a view to establishing that the failure of his wife’s enterprise was due, at least in part, to its having insufficient milk quota. The husband said that, in his view, the milk quota attached to the farm was insufficient to keep the operation going at the level it had previously attained. This level had been achieved by renting some quota. The husband said that, during the negotiations, he had pointed this out to those advising the wife and pointed out also where additional quota might be available. He was told however, by the wife’s father, that “they’d have enough without [the new quota] and that they didn’t want to make the operation too big.”
The wife’s credibility and reliability as a witness is suspect for the reasons given above. The husband struck me as being a perfectly reliable witness during the very short period he was in the witness box. I would therefore prefer the husband’s version on this matter. Fortunately, it is almost the sole relevant conflict of fact.
Preliminary findings.
On the basis of the evidence and documents provided, I would make the following preliminary findings:
(1) The separation agreement, at the time it was entered into, undoubtedly represented proper provision for both parties. Both were professionally advised and, at least in the wife’s case supported by persons who are both related to her and skilled in farming matters. The evidence of the applicant’s own expert was that the agreement represented the provision to each party of the means to be, and to remain, financially independent. Furthermore, the agreement was an instrument which brought about a position of rough equality at the time it was entered into. The lands which they found were divided almost exactly equally: the wife had the benefit of a going concern at or near her home place; the husband was enabled to retain the lands he had bought at another place but, of course, was also solely responsible for the 100% borrowing to acquire these lands.
(2) The level of provision in the separation agreement for each party was objectively substantial. While their assets at that time did not approach the very large values seen in more recent ample resources cases, each party’s worth at the time of the agreement was very substantial relative to that found in the general run of matrimonial cases or to the asset value of the average member of society. Moreover the bulk of these values were in a form particularly suited to the parties. Though they lacked formal academic qualifications each was from an agricultural background and each had experience of working their own lands. I believe their respective net worth in 1993 was about €2,000, 000 each in today’s money.
(3) There is no doubt that since the agreement, the husband has prospered very greatly and the wife’s position has worsened. I must unfortunately record that the evidence establishes that the principal reason for the wife’s worsened position is the fact that she did not work her substantial holding in an assiduous manner. In particular, the employment of Messrs. Farm Relief Services to run the farm for a significant period was fatal to any prospect of its sufficient working and the generation of a reasonable income. This, indeed, was the view of both the experts called on behalf of the wife on the appeal.
(4) I do not accept that this skewing of the cost base of the wife’s enterprise was due to her physical incapacity to do the work herself. At the time of the separation agreement she was a healthy 40 year old woman. She did not herself claim physical incapacity to run the enterprise. This claim was made by her accountant who resiled from it virtually as soon as he was challenged and claimed instead an emotional inability on her part to work the land. There is no doubt, and it was expressly confirmed by Mr. Martin, that there are many examples of women of the age and background experience of the wife running similar enterprises alone.
(5) Equally, I cannot accept that the wife suffered any form of emotional inhibition which precluded her running the farm enterprise in a sufficient manner or made it unreasonably difficult to do so. No doubt the end of the marriage was a grief and a disappointment to both parties. At the time of the agreement the marital relationship had been effectively over for a period of some five years and the husband had wholly ceased to live in the family home for two years and she had farmed the lands. She was fortunate in having ample sources of advice and moral support close at hand. No evidence of a medical or psychological sort was called to support the proposition of great emotional difficulty, and no evidence at all, other than the opinion of an accountant who saw her only seldom to suggest that she suffered any nervous or emotional disability in running the farm. That gentleman’s evidence is severely discounted by the fact that he had, earlier in his own evidence, about twenty minutes before he mentioned emotional inability, attributed her difficulties to a quite different cause.
In saying this I am not in any way blaming or criticising the wife but simply rejecting particular explanation advanced on her behalf. I am satisfied that no suggestion of emotional inability to conduct the farm enterprise was made in the Circuit Court. In fairness to the wife, it was made only half heartedly on the hearing of the appeal.
(6) Although the wife has suffered the loss of a considerable portion of her holding, she has, apart from her income from the farm or other sources, spent some £500,000 between 1996 and the present day. I express this sum in pounds because the bulk of it was realised in that unit. She devoted herself with considerable energy to the building of a house which, in her accountant’s view, is “fabulous” but also “extravagant” having regard to her means and liabilities.
(7) The wife’s asset value, allowing for her substantial liabilities to the bank, is not less than £1.25 million. Having regard to the poor prospects for agricultural rental, but the strong sale prices which still subsist, according to Mr. Martin, his advice to her would be to sell the lands. In her evidence she gave no indication of what she proposed to do in the future.
(8) On the evidence, the wife had made no approach, formal or informal, for financial support from the husband up to the time he issued his proceedings seeking a decree of divorce.
Legal issues.
The legal considerations governing the circumstances in which a court will make a decree of divorce are well known. They have been thoroughly discussed in a number of recent cases. During the course of argument references made in particular to DT v. CT (Divorce: ample resources [2002] 3 IR 334) and K v. K (2) [2003] 1 IR 326.
By virtue of s.5 of the Family Law Act, 1996, before granting a divorce the Court must be satisfied that “such provision as the Court considers proper having regard to the circumstances exists or will be made for the spouses or any dependent members of the family”. Section 20 refers to the various ancillary orders the Court can make in pursuit of the object of a proper provision. It requires the Court to ensure that “such provision as the Court considers proper having regard to the circumstances exist or will be made for the spouses…”. The following subsection sets out a list of twelve matters to which the Court must “in particular, have regard…”. These are too familiar to require to be set out here.
The next following subsection provides that:
“In deciding whether to make an order under a provision referred to in subsection (1) and in determining the provision of such an order, the Court shall have regard to the terms of any separation agreement which has been entered into by the spouses and is still in force.”
Subsection (5) provides:
“The Court shall not make an order under a provision referred to in subsection (1) unless it would be in the interests of justice to do so.”
I have had the great benefit of reading and being influenced by the judgment of O’Neill J. in K. v. K. It analyses the statutory provisions, and indeed the constitutional provisions which underline them in a thorough and persuasive fashion. I have paid particular attention to the observations of the learned judge about the significance of the presence of a separation agreement.
O’Neill J. distinguishes between a separation agreement which is relatively recent and one which is of more distant origin. The agreement in that case had been entered into in 1982. In my view, the significance of the date of the separation agreement depends entirely on the general circumstances of the case, at least in the case of an agreement made after the enactment of the Judicial Separation and Family Law Reform Act, 1989.
There are, of course, obvious differences between the circumstances in K, and of those in this case. Firstly, there are no children in the present case: there were six in K. The wife in K had been for many years a full time homemaker: the wife here was at all material times engaged in an agricultural enterprise, firstly on her own account, then jointly with the husband and latterly on her own account again. In K, the learned judge held that the wife’s work in the home “was an integral part of the process which initially built [the husband’s] career and ultimately led to his great success”. In this case, the husband’s great financial success, so sharply distinguished from the wife’s position, did not begin to take shape until after the collapse of the marital relationship. On the facts of this case it cannot be said that the wife made any direct or indirect contribution to the great commercial success which the husband has enjoyed in recent times. The contrary was not contended.
I have already made relevant findings in relation to the separation agreement of 1993. I am also conscious of the fact that s.20(1) of the Act obliges the Court to consider whether such provision as it considers proper “exists” or will be made for the spouses. This phrase appears to direct the attention of the Court to the time at which the decree of divorce is granted. Into this exercise there must be factored firstly the twelve matters set out in the following subsection as well as other matters which the Court considers relevant and the terms of the separation agreement. While the events of the period since the separation agreement was entered into requires to be considered so too must be what O’Neill J. called “the length of disconnection [of the spouses] from one another. In my view they have been “disconnected” for about 17 years and formally separated for 11 ½ years. A marital relationship existed for something short of a decade at the most.
Finality provisions.
It is clear that the separation agreement was intended to be, as far as possible, a final agreement. Moreover, the parties specifically envisaged the possibility that divorce a vinculo would become available in the future and desired that the arrangements set out in the Deed of Separation would govern their mutual relations in that event. The agreement fairly envisaged that each party would live a personally and economically independent and self sufficient life with no further claims on each other. These terms, together with the financial arrangements set out in the agreement are plainly matters to which the Court must have regard at this juncture.
For the reasons extensively discussed in DT the concept of absolute finality, or a “clean break” as it is expressed in the neighbouring jurisdiction, is not available in Irish law. However, Keane C.J. said:
“It seems to me that, unless the Courts are precluded from so holding by the express terms of the constitution of the relevant statutes, Irish law should be capable of accommodating those aspects of the ‘clean break’ approach which are clearly beneficial. As Denham J. observed in
F. v. F. (judicial separation) [1995] 2 IR 354, certainty and finality can be as important in this as in other areas of the law. Undoubtedly, in some cases finality is not possible and thus the legislation expressly provides for the variation of custody and access orders and of the level of maintenance payments. I do not believe that the Oireachtas in declining to adopt the ‘clean break’ approach to the extent favoured in England, intended that the Court should be obliged to abandon any possibility of achieving certainty and finality and of encouraging the avoidance of future litigation between the parties.”
Having expressed his respectful disagreement with another decision on the topic, Keane C.J. continued, at page 365:
“… It is not correct to say that the legislation goes so far as virtually to prevent financial finality. On no view could such an outcome be regarded as desirable and I am satisfied that it is most emphatically not mandated by the legislation under consideration.”
In the same case, Murray J. (as he then was) said at page 411:
“I also agree that when making proper provisions for the spouses a court may, in appropriate circumstances, seek to achieve certainty and finality in the continuing obligations of the divorced spouses to one another. That is not to say that legal finality can be achieved in all cases and any provision made may be subject to review pursuant to s.22 of the Act of 1996 where that provisions applies. However, the objective of seeking to achieve certainty and stability in the obligations between the parties is a desirable one where the circumstances of the case permit.”
It appears, therefore, that the desideratum of certainty and finality, where that is attainable, has been fully recognised by the Courts. It is, perhaps, particularly obtainable in cases where the parties resources are relatively substantial. The fact that this is so under the current statutory regime must colour the manner in which the Court “has regard to” the terms of a separation agreement which, in the context of certain financial and property provisions, sought finality.
“Proper”
This term is not defined in the statute and counsel did not refer me to any particular preferred meaning of it. I therefore interpret the word in its natural and ordinary meaning. This in itself is not an entirely straightforward exercise since the term has many meanings: the Oxford English Dictionary identifies some fourteen meanings with a number of subgroups. It is in fact a word of peculiar difficulty since, as the editors of the dictionary say:
“The sense had already undergone great development in Latin, Romantic, and French, before the word was taken into English, where the chronological appearance of the census does not correspond with the logical development.”
With that caution in mind, the relevant meanings of the term appear to me to be as follows:
(a) “In conformity with rule; strict, accurate, exact…”,
(b) “Such as a thing of the kind should be…”,
(c) “Adapted to some purpose or requirement expressed or implied; fit, apt, suitable; fitting, befitting; what it should be or what is required…”,
(d) “In conformity with social ethics or with the demands or usages of polite society…”.
It will be seen that the dictionary definition leaves a good deal of scope for discretion in the interpretation of the word.
That discretion is trenched upon by the need to consider the various matters set out in s.20 subsection (2) and to “have regard to the terms of any separation agreement…”.
I now turn to a consideration of the matters specified in s.20(2) of the Act of 1996.
I have already set out in my findings, insofar as possible, to assess the means of the parties. The wife’s financial needs are limited to her own support and I am satisfied that the husband’s need not be further considered since he is well able to attend to them.
The standard of living enjoyed by the parties before separation seems to me to have been one of comfortable but unostentatious sufficiency on a farm of approximately 350 acres. The parties, as found above, are 54 and 50 years old respectively. I find that they lived together in the matrimonial sense of the term for something under ten years. Neither has any physical or mental disability. I am satisfied that, subsequent to the separation agreement, neither party made any contribution to the welfare of the other in any shape or form. Prior to the separation, too, I believe on the evidence that neither party made any contribution over and above the other to the joint enterprise and that the division of assets between them in 1993 reflected the contributions each had made. I do not believe that the earning capacity of either party was impaired or foregone by virtue of any marital responsibility. Neither party, on the evidence, is entitled to any income or benefit under statute. The accommodation needs of each of the parties is amply met. I have no evidence that either party will forfeit any benefit or potential benefit by reason of the granting of a decree of divorce. Finally, I do not believe that the rights of any person other than the spouses will be at all affected by the making of a decree of divorce or of any imaginable ancillary order.
The foregoing findings cover all but one matter set out in s.20 subsection (2) as applied to the circumstances of this case. The remaining statutory matter is “the conduct of each of the spouses, if that conduct is such that in the opinion of the Court it would all in the circumstances of the case be unjust to disregard it”. I do not propose to consider the conduct of the parties during the currency of the marital relationship: neither has suggested that I should. This criterion may have some significance in relation to the justice of the case that will be referred to below.
In relation to the separation agreement, I have already set out my findings on that topic. I believe it was a fair and approximately equal one. Finally, I must bear in mind the statutory prohibition contained in s.20 subsection (5):
“The court shall not make an order under a provision referred to in subsection (1) unless it would be in the interests of justice to do so.”
Authorities.
As already noted, I was referred in the course of argument to the very well known authorities cited above. However, I was told by counsel on behalf of the wife that there is no Irish authority relating to circumstances such as those in question here: a fair and valid separation order entered into about 11 ½ years ago and since the making of which the parties fortunes have widely diverged. I have, accordingly, considered a number of cases from the neighbouring jurisdiction. I undertake this exercise simply to explore such guidance as may be available from those sources. I am fully aware of the difference of the statutory provisions and judicial emphasis between the two jurisdictions, in particular in relation to the notion of a “clean break”.
The case of Wright v. Wright [1970] 1 WLR 1219 was one where, in the course of a settlement of divorce proceedings, a wife agreed to withdraw her claim for maintenance. The case has been widely cited since in cases where it is desired to revise an agreement previously made between divorce or separated spouses. Sir Gordon Willmer said:
“I think… that the existence of this agreement, having regard to the circumstances in which it was arrived at, at least makes it necessary for the wife, if she wants to justify an award of maintenance, to offer prima facie proof that there have been unforeseen circumstances in the true sense, which make it impossible for her to work or otherwise maintain herself. If that be right, I think it is quite plain that the wife here did not give such prima facie proof”.
That case was cited in the course of the more elaborate discussion which took place in Edgar v. Edgar [1981] 2 FLR 19. Here, the husband was an immensely wealthy man and the wife had reached an agreement with him specifying that she would not seek any further capital provision in the event of a divorce. It has, of course, been well established for many decades in the United Kingdom that the existence of such a covenant does not preclude a party from making a relevant application to court. It has however been established since
Hyman v. Hyman [1929] AC 601 that:
“… This by no means implies that, when this application is made, the existence of the deed or its terms are not the most relevant factors for consideration by the Court in reaching a decision”.
In Edgar, Ormrod L.J. agreed with the passage cited above from Sir Gordon Willmer, referred to the separation agreement and to the English statutes and continued:
“To decide what weight should be given in order to reach a just result, to a prior agreement not to claim a lump sum, regard must be had to the conduct of both parties, leading up to the prior agreement, and to their subsequent conduct, in consequence of it. It is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel, all the circumstances as they affect each of the two human beings must be considered in the complex relationship of marriage. So, the circumstances surrounding the making of the agreement are relevant. Undue pressure by one side, exploitation of dominant position to secure an unreasonable advantage, inadequate knowledge, possibly bad legal advice, an important change of circumstances, unforeseen or overlooked at the time of making the agreement, are all relevant to the question of justice between the parties. Important too is the general proposition that, formal agreements properly and fairly arrived at with competent legal advice should not be displaced unless there are good and substantial grounds for concluding that an injustice will be done by holding the parties to the terms of their agreement. There may well be other considerations which affect the justice of this case; the above list is not to be considered as an exhaustive catalogue.”
In the same case, Oliver L.J. referred to the English statutory provisions and to the overarching consideration “of what is just having regard to their conduct”. He continued:
“In that consideration the existence of a negotiated bargain entered into at the instance of one of the parties and affording him or her everything for which he or she has stipulated must be a most important element of conduct which cannot lightly be ignored. Essentially therefore what is an issue in the instant case is whether in exercising the jurisdiction which the statute required him to exercise, the learned judge was right to decline to hold the wife to the particular term of the agreement into which she had entered four years earlier”.
The Court held the wife bound by the term of the agreement.
Although most of the applications for provisions under matrimonial statutes are by wives, some are by husbands as well.
Beech v. Beech [1995] 2 FLR 160 was such a case, and the principal family asset was a dairy farm. However, it was heavily encumbered, an attempt to settle the parties differences by agreement had been unsuccessful and the argument concerned provision for the parties out of the balance, over and above the encumbrances, received on a forced sale. In those circumstances the High Court in England considered the husband’s contribution to the financial embarrassment to be a consideration relevant to the determination of what payment should be made to him. First, the Court posed the question:
“So the crux of the case is really the responsibility for the present near destitution of the husband. How has this come about? Who is responsible for this state of affairs? Is the product of the husband’s misconduct?”
The Court found that the husband:
“… has proved over the course of the last twenty years to been a bad, even a disastrous, businessman. He had considerable talent as a stock man but could not harness that talent to financial controls… he obstinately, unrealistically and selfishly trailed on to eventual disaster, dissipating in the process not only his money but his family’s money, his friends money, the money of commercial creditors unsecured and eventually his wife’s money, insofar as the disaster that eventually developed did not even pay for her specified agreed sum. The responsibility is, in my judgment, not shared, not hers, but his”.
I therefore conclude that the position in the neighbouring jurisdiction is that an agreement not to seek further provision is not binding on a court but should be given great weight when it was entered into in a considered manner and with advice. Furthermore, the conduct of a party in himself (or, of course, herself) bringing about the circumstances giving rise to the alleged need for (further) provision is itself of relevance to considering whether such provision should be made, and in what amount.
Decision.
Firstly, I stress again that I do not regard the English cases just discussed as determinative of the matter.
Secondly, I regard as important the fact that the agreement in this case was made subsequent to the provisions of the Judicial Separation and Family Law Reform Act, 1989. Although, of course, there has been a good deal of further family law reform since that time, notably in 1995 and 1996, I am satisfied that the main outline of the current jurisprudential approach to applications of this kind was in place at the time of the conclusion of the agreement.
I must in justice record my view that any difficulties which the wife now experiences are wholly of her own making and that the husband has contributed to them in no way whatever. Equally, the wife contributed to the husband’s present state of prosperity in no way whatever.
Particularly having regard to the terms of s.20(3) of the Act of 1996, I cannot approach the question of what is “proper” in the circumstances of this case without giving very significant weight to the terms of the separation agreement. I must also construe the word “proper” having regard to its context as part of a statutory provision.
In all the circumstances, I do not consider it proper, that is “fit, apt or suitable”, much less “correct or in conformity with rule”, to make any ancillary order against the husband in the circumstances of this case. Still more fundamentally, I do not consider it just to do so and therefore I am precluded from doing so by the terms of s.20(5). I will accordingly grant a decree of divorce and make no further or ancillary order under s.12, 13, 14, 15, 16, 17 or 22 of the Act of 1996. I will make an order under s.18(10) that neither spouse shall, on the death of the other, be entitled to apply for an order under any other of the provisions of s.18.
P.J. v. J.J.
[1993] IR 150
Barr J.
31st July 1991
The parties were married on the 5th June, 1952. There are four children of the marriage, all daughters, the youngest of whom is twenty five years of age. All are married and have long since lett home. The wife resides in a three-bedroomed house in Dublin, which was purchased by the husband, subject to mortgage, in the 1970’s. The marriage finally broke down in or about 1978. At that time the husband entered into a relationship with another lady and took up residence with her. That relationship is continuing. A separation agreement, dated 14th May, 1980, was entered into between the parties and was duly made a rule of court under the provisions of s. 8 of the Family Law (Maintenance of Spouses and Children) Act, 1976. It provides, inter alia, that
(1) The wife shall remain in possession of the family home at R. for her lifetime. In the event that she wishes to vacate the dwelling house, it shall be sold and the proceeds divided equally between the parties.
H.C.
(2) The husband shall pay to the wife a sum per month, free of all deductions, which sum is adjustable annually according to the consumer price index. The amount of maintenance so adjusted now payable amounts to £527.00 per month.
There is no provision for a reduction in maintenance in the light of changed circumstances which may occur.
(3) In addition to maintenance, the husband shall pay the following disbursements in relation to the family home and the personal requirements of the wife
(a) the mortgage;
(b) the E.S.B. account;
(c) the telephone account;
(d) household insurance;
(e) a sum for household maintenance;
(f) the wife’s V.H.I.;
(g) the provision of a car for the wife.
Up to October, 1990, the husband owned 75% of the shares in a company. He was also managing director of the company which owned and operated four newsagent cum stationery shops situated in shopping centres in C. and in C. At one time the company operated seven shops, but the business, like many other similar enterprises, has been in decline in recent years. About eight months ago the husband sold his interest in the business for £110,000.00. He subscribed £50,000.00 thereof towards the purchase price of a house in K. which cost £135,000.00. His lady partner subscribed the balance of the purchase price.
Another reason why the husband has sold his interest in the business is that he is now in poor health and has found it difficult to carry on. The evidence of his general practitioner, Dr. N., bears that out. The husband and his partner have embarked upon a plan to extend the recently purchased house in K. so that it will have eight bedrooms and will be suitable for use as a guest house. It will not be ready for occupation until the 1992 season and it is not possible presently to estimate what his earnings from that business will be. The husband is endeavouring to sell his present home in K., but there is a glut of properties on the market there presently due to recessionary pressures affecting second homes. If he cannot sell that house, he will run it as a guest house also. It has a present market value of approximately £80,000.
Until about two years ago the husband not only honoured all the financial terms of the separation agreement, but also made a substantial additional payments for the benefit of his wife and more particularly his daughters, including gifts of £5,000 to each child on marriage and also the cost of their weddings. I am satisfied that the arrears under the separation agreement which have accrued since then arose out or the decline of the husband’s business, leading to an inability on his part to meet his financial obligations to the wife as previously.
The wife sued for arrears of maintenance and other payments due under the separation agreement, and that claim was compromised in November, 1990, upon payment of £10,000 by the husband out of the proceeds of sale of his interest in the retailing company. The wife is sixty five years of age and she also has health problems. She is employed as a records clerk in a hospital in Dublin and her net income is about £700 per month, including interest on £7,000 being the balance remaining out of the arrears of maintenance paid by the husband in November, 1990. The retirement age for her job is sixty five years and no pension is payable. However, her employers are not yet aware of her actual age.
Evidence was given as to the wife’s overheads. I am satisfied that, excluding social expenditure and the cost of holidays, they amount to about £750.00 per month on average net of tax and that that is fair and reasonable in all the circumstances. The latter sum includes E.S.B. and telephone accounts which ought to be paid by the husband under the terms of the maintenance agreement. I have no doubt that when the wife’s employement at the hospital comes to an end, which it must do in the next three or four years at the latest, she will be in serious financial difficulties, having only the state contributory old age pension to substitute for her hospital salary. Apart from this potential difficulty, the wife is presently suffering financial hardship due to the non-payment by the husband of maintenance and other disbursements under the terms of the separation agreement. Arrears presently amount to £4,895.00.
In the light of the foregoing facts, the husband is seeking an order varying downwards the maintenance provisions of the separation agreement because of change in his financial circumstances and other related factors. The wife has resisted that application and has herself claimed arrears of maintenance.
The husband’s application raises a net point of law, i.e., whether the maintenance provisions of a separation agreement, which has been made a rule of court pursuant to an application under s. 8 of the Family Law (Maintenance of Spouses and Children) Act, 1976, are reviewable under s. 6 of that Act, and may be adjusted downwards by the court if it is satisfied that by reason of changed circumstances the maintenance debtor is unable to meet his obligations on foot of the agreement and justice requires that adjustment should be made in the amount of maintenance payable.
This issue has been the subject of two conflicting judgments in the High Court. The first is that of Carroll J. in the J.D. v. B.D. [1985] I.L.R.M. 688, and the other is that of Barron J. in D. v. D. [1990] 2 I.R. 361. I have considered both judgments and, with respect, I support the conclusion arrived at by Carroll J. that s. 6 of the Act of 1976 is not available as a vehicle for the review of maintenance provisions in a separation agreement which itself contains no such machinery.
The broad objective of ss. 5 to 7 of the Act of 1976 is to provide machinery to enable spouses and/or children to obtain periodic maintenance payments from the other spouse in an amount that is fair and reasonable in all the circumstances. A maintenance order having been made under s. 5, it may be discharged or varied subsequently in the light of changed circumstances on application to the court by either spouse under section 6. Section 7 provides for the making of interim orders. Section 8 of the Act allows the court to make orders in respect of marital agreements (as in the present case) and such orders are deemed to be maintenance orders for certain limited purposes in the transmission of maintenance payments through the District Court as provided by s. 9 and attachment of earnings proceedings under Part III of the Act. In making an order under s. 8 the court must be satisfied that the payment is a fair and reasonable one which in all the circumstances adequately protects the interests of both spouses and the dependant children, if any, in the family. Whether in the instant case the separation agreement ought to have been made a rule of court in the absence of an appropriate provision for review in the event of changed circumstances of either party, is not a matter which is before me.
The rationale of s. 8 of the Act appears to be that the legislature recognises the right of spouses to enter into maintenance contracts and it will not interfere with the terms agreed between the parties, but where such contracts have been approved by the court as being fair and reasonable, the contract is deemed to be a maintenance order in certain specific circumstances provided for in the Act of 1976 relating to mode of payment and enforcement. The specified limited circumstances in which a maintenance agreement duly approved by the court under s. 8 shall be regarded as being a maintenance order does not include the right to review provided for in section 6. The relevant sections to which I have referred are clear in their terms. A court is entitled to interpret legislation so as to resolve any ambiguity or obvious error therein. However, where the statute is clear in its terms, the court has no power to extend its provisions to make good what is perceived to be a significant
omission. If the court took that course it would entail going beyond statutory interpretation and into the realm of law-making, a function which under the Constitution is reserved to the Oireachtas. Occasionally circumstances arise where the court is powerless to avoid injustice and, sadly, this case is one of them. I am obliged to hold that the husband is not entitled to a review of the maintenance provisions of the separation agreement under s. 6 of the Act.
The alternative claims which he makes are patently devices in effect to secure indirectly the benefit of a review under section 6. He is bound by the terms of the maintenance agreement and I am satisfied that he is not entitled to either of the alternative orders which he seeks.
As for the wife’s claim for payment of outstanding maintenance and other related benefits under the terms of the separation agreement, it follows in the light of the foregoing that she is entitled to orders for payment of the amount due to date which is £4,895.00.
In the hope that it may be of some assistance to the parties, both of whom I am satisfied are fair-minded people, I think I should indicate what my attitude would have been if I had held that I had power to review the maintenance provisions in the separation agreement. Both parties are now reaching an area of health problems which in varying degrees are often part and parcel of late middle age. It seems that the husband’s health difficulties have been aggravated by the decline in his retail business since in or about 1988 and the pressures which that gave rise to. I am satisfied that he has been obliged to sell his interest in the business for health reasons and because of its decline in recent times. He is embarking upon an alternative business which is within his restricted health capacity and I have no doubt that he will be hard pressed financially to bring about the metamorphosis he has put in train. It is common case that when times were better for him he honoured the terms of the agreement with his wife and that he did substantially more for her and for their daughters than was required of him under the agreement.
As already stated herein, I am satisfied that since 1988 the husband has been in difficult financial circumstances and that he has not had the resources to honour his financial obligations to his wife in full, bearing in mind that capital is required to set up the new guest house business to replace that which he has sold. Hopefully this new enterprise will prosper and after it gets under way he will be able to revert to his full obligations under the terms of the separation agreement. I would have reduced his liability to £300.00 per month from the 1st January this year,without prejudice, along these lines.
K. v. K.
[1988] IR 162
MacKenzie J.
MacKenzie J.
12th February 1988
By a deed of separation made the 11th September, 1980, the parties, having recited the unhappy differences that had arisen between them, agreed to sell the family home and live separately and further:
“The husband and wife shall at all times hereafter live separately and apart from each other and free from his or her marital control (if any) and authority.”
Provision was made for the sale of the family home and the division, after certain deductions, of the proceeds of sale and for the custody of the children. Nether party in the deed renounced their rights under the Succession Act, 1965.
From the evidence I concluded that the marriage at the time of the making of the separation deed had reached a disastrous stage. I am satisfied that at that time the wife was consorting with a Mr. C. and the husband, in my opinion, was a man to quote the wife “who is never without his lady friends” and was a man active sexually with more than one partner.
He told me in evidence that since the year 1980, he had not had sexual intercourse with any person, which I frankly disbelieved. Evidence was given by one of the children of the marriage of a situation which leads to no other conclusion than that he had formed an intimate relationship with a woman whom he described as a business associate. I am satisfied that adultery was committed with her.
Obviously the husband is indifferent to the fact that the wife now lives with somebody else, but what concerns him is that he needs to remedy what he omitted to do at the time of the deed of 1980. He wants to deprive his wife of her rights (if any in the circumstances) under the Succession Act, 1965.
By virtue of s. 120, sub-s. 2 of the Act, on the grant of a divorce a mensa et thoro,the guilty party (if such party may so be described) loses rights to inheritance. What is argued here on behalf of the wife is that once the parties have set the terms which they have agreed upon at the break up of the marriage in writing in a deed, that should mean an end to proceedings. There should be nothing more to litigate, and the agreement should be a bar and estoppel to this action. It would not however be a bar to proceedings pursuant to the Family Law (Maintenance of Spouses and Children) Act, 1976.
The point is taken that these present proceedings are an attempt to put an additional clause into the agreement. The husband in evidence said that he did not see why he should have to pay maintenance to his wife or why she should have any rights under the Succession Act since she had received a sum of £30,000 out of the proceeds of the sale of the family home. He claimed that the marriage broke up because of the wife’s adultery with Mr. C. A number of authorities were cited to me which I list hereinafter but only two are relevant to the present proceedings.
In Courtney v. Courtney [1923] 2 I.R. 31 a contract between spouses to live separate and apart, without an express covenant not to sue, was held to be a bar to subsequent proceedings for divorce if that could be shown to have been the real character of the agreement entered into by the parties.
It is my opinion that when the wife in the present case entered into the agreement of September, 1980, she was entitled to consider that subsequent proceedings such as an action for divorce would not be contemplated, nor should she have to go through the indignity and humiliation of hearing her teenage son at the request of his father giving testimony against her to prove her adultery with Mr. C.
Courtney v. Courtney [1923] 2 I.R. 31 was decided by the Court of Appeal and extensively reviewed previous authorities. At p. 40 Dodd J. said:
“It is said there is no express covenant not to sue, no agreement not to sue to be implied. But if parties who are free to contract do, in fact, contract for the settlement of an action or for the abandonment of claims which might terminate in legal proceedings, can it be contended that settlement having been entered into and completed by one party complying with it, the other party can keep the money and go on with the action? . . . But when all this is said and the tribunal is satisfied that the transaction is a binding contract, parties to it who agree so to settle a matrimonial controversy must be taken to contract that they will not go behind the settlement, and cannot be listened to saying that they did not make an express stipulation not to sue.”
All that a divorce a mensa et thoro can do is to give the parties a right to live separately and this they had already under the deed of September, 1980. The husband relied on Lewis v. Lewis [1940] I.R. 42 as overruling Courtney v. Courtney. In that case, under the separation deed, which had no dum casta clause, the husband failed to pay a monthly sum to his wife which he had covenanted to do. He had paid for several years but alleged in defence to her claim that she was living in adultery and that he should not therefore be liable to her any further. Before her claim was heard the husband filed a petition for divorce a mensa et thoro on the grounds of adultery. The wife’s hearing was adjourned pending the divorce proceedings. In the divorce proceedings the husband obtained a decree. It was held however, in the absence of a dum casta clause in a separation deed, the wife was entitled to a decree for arrears claimed.
The argument for the husband in the present case is that as the divorce was granted in Lewis v. Lewis [1940] I.R. 42 the rule in Courtney v. Courtney [1923] 2 I.R. 31 should no longer apply. However, on reading the decision in Lewis v. Lewis in the arguments before Hanna J. (who, incidentally, was one of the counsel in Courtney v. Courtney ) the judge was not referred to the latter case. In fact the divorce a mensa et thoro was not opposed, there being no appearance for the wife. I do not consider that Lewis v. Lewis in any way affected the decision in Courtney v. Courtney .
In my opinion, the fact that the parties entered into the deed of September, 1980, whereby they agreed to separate and live apart, separate and free from all marital control and authority, is a bar to the present proceedings.
A.Y. -v- B.Y.
[2018] IEHC 411
[2007 No. 48 M]
IN THE MATTER OF THE JUDICIAL SEPARATION AND FAMILY LAW REFORM ACT 1989
AND IN THE MATTER OF THE FAMILY LAW ACT 1995
AND IN THE MATTER OF THE FAMILY LAW (DIVORCE) ACT 1996
BETWEEN
A.Y.
APPLICANT
AND
B.Y.
RESPONDENT
JUDGMENT of Mr Justice Binchy delivered on the 12th day of March, 2018
1. On 14th January, 2011, the parties entered into written terms of settlement of these proceedings (the “terms of settlement”). This was following upon the commencement of the trial of the proceedings which by that time had been at hearing for three days on 11th, 12th and 13th January, 2011. The terms of settlement were detailed and comprehensive, and were set out in a document running to some thirteen pages. They were made an order of this Court on 17th January, 2011 (the “Order”).
2. On 19th September, 2014, the applicant issued a motion seeking reliefs in the following terms:-
“(i) an order pursuant to O. 44, r. 1 of the Rules of the Superior Courts, 1986 (As Amended) directing that the respondent be brought before this Honourable Court at a time and date to be specified to answer his contempt of court arising from his wilful failure to comply with the terms of the Order of this Honourable Court (Mr. Justice Abbott) dated 17th January, 2011.
(ii) An order committing the respondent to prison arising from his failure to comply with the terms of the Order of this Honourable Court (Mr Justice Abbott) dated 17th January, 2011.
(iii) An order directing the respondent to make further and better disclosure, on oath, concerning any security entered into by him during the period in which this Honourable Court was seized of the proceedings and, in particular, a purported security dated 22nd October, 2010 between the Bank A, the respondent and his brother.
(iv) An order determining whether or not the respondent has occasioned an information deficit in respect of his financial disclosure to this Honourable Court in respect of the within proceedings and the order of 17th January, 2011.
(v) An order directing the respondent to disclose to this Honourable Court and the applicant any sums or amounts due and owing to his creditors that he had discharged in part or in full since 17th January, 2011, the identity of such creditors and the dates upon which such was made.
(vi) If necessary and further to the orders sought herein, an order pursuant to para. 34 of the Order of this Honourable Court dated 17th January, 2011 re-entering the proceedings and providing pursuant to s. 22 of the Act of 1996, for such variation of the terms of the said order or such other orders as will make proper provision for the applicant.
(vii) The directions of this Honourable Court as to the nature and extent of the matters arising herein that may be disclosed to NAMA or NALM Ltd and whether or not any of the aforesaid parties ought to be joined as notice parties herein and to such extent and in respect of such matters as may be deemed necessary.
(viii) Further or other relief;
(ix) Costs.”
3. This judgment is concerned with the motion described above (the “applicant’s motion”) and also with a motion subsequently issued on behalf of the respondent (the “respondent’s motion”) on 10th April, 2015. Before dealing with those motions any further, it is useful to set out some background information concerning the parties, and their relationship. The parties were married on 12th February, 1986. The applicant, who at the time the hearing of these motions commenced, was in her 72nd year, had previously been married and there are three children of that marriage, T., aged 50, U., and V.. I was not informed as to the ages of U. and V. but they are mature adults.
4. The parties themselves have two children, D1. is twenty years of age and D2. will shortly be seventeen years of age. The Court has heard evidence and concerns expressed in the course of the hearing herein, relating to D1. and D2., which it is neither necessary nor appropriate to set out in detail, as to the legal status of and inheritance rights of D1. and D2..
5. The respondent has been a very successful businessman, with extensive interests both in the State and in two other jurisdictions. His main business activities outside Ireland have been in a country which I will refer to as X.. In the other jurisdiction outside Ireland, which I will refer to as H., he owns, together with his brother, valuable lands (the “H.” lands). According to a memorandum from Bank A exhibited in the proceedings and dated 14th December, 2009, the respondent had submitted a statement of affairs to that bank indicating that he had assets of €128 million at that time, but that this was down from €240 million in 2007. While I cannot be certain from this document, it is very likely that this is a reference to the net worth of the respondent and not simply a reference to his assets without any regard to his liabilities.
6. At the commencement of the hearing of these motions the respondent was aged 64 years. He remarried in 2016, and has a child from that relationship who will be eleven years of age this year. Both of the parties live in Ireland. While I will be dealing in more detail with the assets of the parties, suffice to say for now that the applicant resides in a substantial period residence, surrounded by substantial grounds some twelve and a half acres of which have significant development potential and are zoned for residential development. There are also four high quality modern residences within the grounds of the family home which yield the applicant a rental income. I will refer to this entire property as the “Family Home”, but where the context requires it, I may refer to individual parts of that property, such as the development lands, by which I mean the lands within the Family Home that are zoned for development. The Family Home is subject to a security originally given to Bank A, but which was taken over by NAMA. The loan related to the security is of the order of €5.9 million, having reduced from €6.9 million at the time of the settlement of these proceedings in 2011. The respondent lives with his wife and their child in rented accommodation.
7. The applicant’s motion was grounded upon her affidavit of 19th September, 2014. In general terms the applicant complains firstly, that the respondent had not, as of the date of the affidavit, honoured specific financial obligations undertaken by him to the applicant in the terms of settlement and, secondly, that the respondent caused a serious and material non disclosure of relevant financial information in the course of the proceedings leading up to terms of settlement and the making of the Order. The non-disclosure alleged concerns a facility letter dated 28th October, 2010 issued by Bank A to the respondent’s brother and about which the applicant says she knew nothing at the time that she entered into the terms of settlement. There was some confusion about this letter, because NAMA initially informed the applicant that a facility had issued to the respondent on 22nd October, 2010, which does not appear to have been the case. In any case, the applicant says that she only became aware of this facility letter when it was referred to in a letter sent to the applicant by NALM dated 8th September, 2014. The applicant’s concern is that NAMA/NALM are relying upon this facility letter to support an argument that the mortgage granted by the applicant and the respondent to that bank over the Family Home secures not just liabilities of the applicant and the respondent relating to the Family Home, but also all other liabilities of the respondent to that bank that were acquired by NAMA. The applicant asserts that the failure by the respondent to disclose this letter before the completion of the terms of settlement amounts to a serious and material non-disclosure of relevant financial information, and she asserts that “accordingly, a pertinent information deficit may arise in the making of the Order and terms settlement of 17th January, 2011.”
The terms of Settlement
8. I set out below a summary of the key provisions of the terms of settlement, as well as the specific complaints of the applicant as regards non compliance by the respondent with the same. The paragraph numbers referred to the corresponding paragraph numbers in the terms of settlement:-
(1) A decree of divorce pursuant to the provisions of s. 5(1) of the Family Law (Divorce) Act, 1996;
(2) An order pursuant to the provisions of s. 13(1)(a)(i) of the Family Law (Divorce) Act, 1996 directing the respondent to pay to the applicant the sum of €12,916 per month for her ongoing maintenance and support. The respondent has complied with this obligation to date.
(3) An order pursuant to the provisions of s. 13(1)(a)(ii) of the Family Law (Divorce) Act, 1996 directing the respondent to pay to the applicant the sum of €5,000 per month for the support of the dependant children, D1. and D2., the said sum to be apportioned equally between them. The respondent has complied with this obligation to date.
(4) In addition to the maintenance payable under paras. 2 and 3 above, the respondent agrees to be responsible for the discharge of the school fees and expenses of the dependant children…in addition, he shall maintain private health insurance for the applicant and the dependant children….and….to be responsible for the medical, dental and orthodontic expenses of the children not covered by private health insurance. The respondent has complied with this obligation to date.
(5) An order pursuant to the provisions of s. 13(2) of the Family Law (Divorce) Act, 1996, directing the respondent to pay to the applicant the sum of €250,000 no later than the 1st May, 2011. The respondent complied with this obligation.
(6) An order pursuant to the provisions of s. 13(2) of the Family Law (Divorce) Act, 1996, directing the respondent to pay to the applicant the sum of €750,000 no later than 1st August, 2012. The respondent did not comply with this obligation.
(7) In the event that the payments as set out in paras. 6 and 7 hereof are not paid by him in the manner and at the time specified therein, the same shall constitute a debt of the respondent payable to the applicant which shall attract interest at the rate of Courts Act interest then applying.
9. Paragraph 9 item 12 of the terms of settlement deal with custody and access arrangements and are not germaine to the motions before the Court.
13. An order pursuant to the provisions of s. 15(1)(a)(i) of the Family Law (Divorce) Act, 1996 granting the applicant the right to reside in the Family Home of the parties known as [Family Home] ….and surrounding lands as more particularly set out in folios …..to the exclusion of the respondent.
14. An order under s. 15(1)(b) of the Family Law (Divorce) Act, 1996 and under s. 36 of the Family Law Act, 1995 declaring the applicant to be the sole legal and beneficial owner (as against the respondent) in the Family Home of the parties known as ….. and surrounding lands ….
15. The applicant agrees not to voluntarily dispose of [the Family Home] and its eight acre cartilage prior to D2. attaining 21 years of age.
16. The applicant agrees that in the event of a disposal by her of [the Family Home] or any part of the surrounding lands …..she will pay to D1. and D2. 15% of the net proceeds of sale after deduction of any charges, expenses and/or taxes….
17. An order pursuant to s. 13(2) of the Family Law (Divorce) Act, 1996 directing the respondent to pay the capital sum of €2,000,000 against the mortgages secured to Bank A on [the Family Home] and surrounding lands….the same shall be discharged on or by 1st February, 2014. The applicant complains that there the respondent did not meet this obligation.
18. An order pursuant to s. 13(2) of the Family Law (Divorce) Act, 1996 directing the respondent to discharge in full the entire balance then remaining in respect of those mortgages on or by the 1st February, 2018. The parties agree and declare that the current indebtedness secured by the mortgages aforesaid is in the approximate amount of €6.9 million.
19. Pending the full discharge of the mortgages by the respondent in the manner aforesaid, the applicant agrees to service the mortgages both as to capital and interest in respect of mortgages with Bank A bearing account numbers ….. and ….. and as to interest only in respect of mortgages with that bank bearing account numbers ….. [four accounts are mentioned]. The applicant will service the mortgages on that basis from her own resources (including rental income from the residential properties [adjacent to the Family Home] and from the maintenance payable to her under this agreement by the respondent. The parties agree that alteration of repayments in respect of the said mortgages from interest to interest and capital, or vice versa, shall constitute a change of circumstances such that either party may apply to court for a variation of periodic payment.
20. In the event that the lump sums or either of them payable by the respondent to the applicant under this agreement are not paid on or by the dates specified herein, the requirement under para. 16 for the applicant to pay to D1. and D2. 15% each of the net proceeds of any disposal of [the Family Home] or its surrounding lands shall lapse in its entirety.
21. In the event that the payments in respect of the mortgages as set out in paras. 17 and 18 hereof are not paid by him in the manner and in the time specified therein, the same shall constitute a debt of the respondent payable to the applicant which shall attract interest at the rate of Courts Act interest then applying.
22. In the event that the respondent is deceased prior to the 1st of February, 2018, and in the event that some or all of the lump sums payable by the respondent to the applicant, whether by way of direct payment or under paras. 6 and 7 or in discharge of the mortgage of [the Family Home] under paras. 17 and 18 hereof remain fully or partially unpaid, then the liability to fully discharge those sums and any interest outstanding thereon shall be a debt of the respondent’s estate to be satisfied from the estate.
23. …
24. The applicant warrants that she has made full financial disclosure of her circumstances to the respondent and his advisers….
25. The respondent warrants that he has made full material financial disclosure of his circumstances to the applicant and her advisers…..
26. /27. The parties agree, subject to compliance with specified provisions in the terms of settlement, that neither shall be entitled, on the death of the other, to make an application to court for provision out of the estate of the other.
28. The applicant agrees that D1. and D2. will be entitled to not less than 20% each of her net estate upon her death, subject to the applicant being entitled to make an appropriate adjustment to take account of any benefit that may already have accrued to them pursuant to clause 16 above.
29. A declaration pursuant to the provisions of s. 15(1)(b) of the Family Law (Divorce) Act, 1996 and s.36 of the Family Law Act, 1995 that aside from the provisions of this agreement, the applicant shall be entitled to retain for herself, without further claim by the respondent, the entirety of her assets, both legal and beneficial, as more particularly described and set out in the first schedule to her affidavit of means of the 7th day of January, 2011.
30. This is a mirror image of 29 dealing with the assets of the respondent as more particularly referred to in his affidavit of means of 12th December, 2010.
31. ….
32. Each party should bear their own costs.
33. Liberty to apply.
34. In the event of an inability of the parties or either of them to perform this agreement and to abide by the orders of this Honourable Court due to circumstances beyond their control and which are not reasonably foreseeable as of the date of the execution of this agreement, the parties or either of them shall be at a liberty to re-enter the proceedings for a variation of the terms of this agreement, whether pursuant to s. 22 of the Family Law (Divorce) Act, 1996 or otherwise.
35. The within agreement is accepted by the parties in full and final settlement of all matters arising upon the breakdown of their marriage to one another…..
10. The applicant’s key financial concerns at the time of the issue of her motion were that she had not received the payment referred to in para. 7 of the terms of settlement in the sum of €750,000 and that at the time of the swearing of her grounding affidavit, she was owed an additional €129,665.95 by way of interest on this payment. In addition, the respondent had not made the payment referred to in para. 17 of the terms of settlement being the payment of €2 million in reduction of the mortgage over the Family Home and adjacent lands. It is not in dispute that these payments were not made by the respondent. In simple terms, the respondent pleads that he does not have the money to do so – I deal with this in greater detail below.
11. In her grounding affidavit, the applicant explains that the Family Home is her home where she lives with her partner and the children of the marriage to the respondent, D1. and D2., and who, at the date of swearing of the applicant’s grounding affidavit (19th September, 2014) were aged sixteen and thirteen respectively. The applicant avers that:-
“it is clear that the said premises has been mutually agreed as intended to form part of my children’s inheritance and that these obligations agreed to by the respondent were to secure that provision. Pursuant to the order of this Court and the terms of settlement, the respondent agreed to clear the entire mortgage by 2018”.
12. The applicant goes on to explain that in the terms of settlement, the respondent “agreed and acknowledged that I am the sole and beneficial owner of the [Family Home] and the surrounding lands, the respondent having previously transferred to me the entirety of his legal and beneficial interest in the said premises in or about 2003 in consideration of monies advanced by me to him at that time”.
13. She continues to explain how at the date of the terms of settlement there was a mortgage over the Family Home securing a loan in the approximate sum of €6.8 million relating directly to the purchase of the property and the development of the four houses referred to above on the lands. Those borrowings were not related to other business interests of either party.
14. The applicant then goes on to explain that the loan and related mortgage over the Family Home was subsequently acquired by NAMA and that she has had correspondence with NAMA/NALM in regard to the same. However, to her surprise, NAMA/NALM then subsequently asserted that it/they is/are entitled to rely on the security over the Family Home not just in relation to sums advanced (by Bank A originally) specifically in relation to that property, but also in relation to other liabilities of the respondent in relation to loans originally advanced to him by Bank A. The applicant strenuously denied this claim of NAMA/NALM and was supported in this regard by the respondent. The Court was informed on the opening day of the hearing of these motions that proceedings had been issued by the applicant in relation to this claim of NAMA/NALM, and that those proceedings are ongoing.
15. In the course of correspondence with NAMA/NALM, the applicant was informed that NAMA/NALM was relying upon a facility letter of 22nd October, 2010 issued by Bank A to the respondent and his brother. It subsequently transpired that this was inaccurate, and that that bank had issued a facility letter to the respondent’s brother only and that was on 26th October 2010. In any case, the applicant said that that was the first that she had ever heard of such a facility letter. She then avers:-
“I say that, if the said facility is genuine, the respondent failed to disclose it to this Honourable Court or your deponent prior to the commencement of the hearing of this case on 11th January, 2011, some two and a half months later. In this regard, I say and believe that I have been advised by my solicitor and counsel that any such non-disclosure, if arising, amounts to a serious and material non-disclosure of relevant financial information and, accordingly, a pertinent information deficit may arise in the making of the order and terms of 17th January, 2011. I have, therefore, sought in the notice of motion herein that the respondent be compelled to disclose such matters on oath.”
16. Finally, in her grounding affidavit, the applicant also complains that the respondent has, since conclusion of the terms of settlement, behaved in a cavalier manner towards her, ignoring her ownership and exclusive right of residence in the Family Home. She says that the respondent does not respect the court order, or her entitlement to insist and rely upon the same. In particular, she says that the respondent has made no effort to meet the payments that are overdue for payment under the terms of settlement nor does he show any concern to assure her when and how those payments will be made. She concludes by averring that the behaviour of the applicant as regards his non-compliance with the terms of settlement and the court order made pursuant to the same, disclose a prima facie wilful contempt on the part of the respondent for his obligations under the court order.
17. During the course of the hearing, the applicant acknowledged, as did one of her financial advisers, Mr Desmond Peelo, of Peelo and partners, that prior to the 2011 settlement, the facility letter of October, 2010 had in fact been made available to Mr Peelo, so that it had been disclosed to the applicant. Moreover, the respondent gave evidence to the effect that he had also handed a copy of this letter directly to the applicant, although she had no specific recall that he did so. In any case, the only document upon which the applicant relies in her grounding affidavit as constituting a material non disclosure on the part of the respondent, was in fact disclosed by the respondent to the applicant prior to the conclusion of the settlement between the parties.
Respondent’s replying Affidavit
18. The respondent delivered a replying affidavit dated 24th October, 2014. At the outset, he avers, or perhaps more accurately submits, that the effect of the applicant’s motion is to re-enter the proceedings pursuant to para. 34 of the terms of settlement, for the purposes set out in that paragraph. The respondent then goes on to deal with the allegations made by the applicant that he ignores the court order in the context of the manner in which he relates to the applicant and when he visits the Family Home. He avers that since their separation, the parties have had amicable relations and that when calling to the Family Home for the purpose of maintaining contact with the parties’ daughters, he also has conversations with the applicant about other matters and, in particular, financial matters. He says that he kept the “applicant continually informed about the financial extremes both in the company and the property business”. He goes on to say that the applicant is fully aware of the efforts of the respondent to procure refinancing of two properties in particular to which he refers.
19. The respondent says that he has always been willing to honour the terms of settlement, and had he been able to fulfil his obligations he would have done so. He avers that the applicant was always aware of the Bank A letter of October, 2010, or at least was always aware of it in substance. He further avers that he provided the applicant with a copy of a statement of affairs that he gave to NAMA in May, 2013, without being requested to do so, and he exhibits the same.
20. He then goes on to explain why he has been unable to comply with the terms of settlement and he avers that “there have been a number of factors which have led to my financial demise and in particular there have been a number of devastating occurrences between January 2011 and now.” These are as follows:-
(1) The respondent and his brother had a substantial indebtedness to Bank B, of the order of €22 million, in connection with the development of a service centre (hereinafter the “service centre”). Prior to the liquidation of Bank B, they had succeeded in concluding a “standstill agreement” with Bank B which would have deferred the liability for repayment of the loan and to allow the borrowings to be discharged out of the principal trading entity of the respondent and his brother, a company which I shall refer to as “Z.”, over a period of time. However, following the liquidation of Bank B in February 2013, the respondent’s loan in relation to this development was sold to Investor A which demanded immediate repayment of the loan of €22 million as well as the repayment of a further €9.8 million owing in connection with other business ventures.
(2) A very significant business venture in which the respondent was involved in X. collapsed owing to a decision of the government of X not to proceed with a particular project, the “project”. This project had been undertaken by a special purpose vehicle, the “SPV”, owned by the respondent and his brother, which had invested very significant funds in the project. The cancellation of the project caused the SPV to lose not only the value of its investment, but also the opportunity to reap the potential rewards of that project, which were very significant, and upon which the respondent had placed some considerable reliance when entering into the terms of settlement.
(3) Z. lost one of its most significant assets (the “Z.” asset) in an accident in X.. This caused it to suffer a very significant loss in revenues. While the Z. asset was insured, Bank B exercised its entitlement to appoint a receiver over the insurance proceeds of the asset of 15 million (currency of country X.). The accident also exposed Z. to the possibility a very significant environmental claim, which could yet materialise.
(4) Z. had agreed to purchase certain assets from the government of country Y., using funding to be provided by Bank B. In the event Bank B was unable to provide the finance for the purchase of these assets, but was then unable to do so, exposing Z. to a risk of litigation. However, Z. managed to borrow the money elsewhere to pay the amount due and to purchase the assets.
(5) However, in 2013 there were further cutbacks implemented by the government of X. which had a dramatic impact upon the business of Z., reducing its income opportunity by half, while its cost base could not be reduced.
(6) The service centre referred to above lost very heavily following upon its opening, leaving the respondent and his brother exposed to a loan in connection with that development in the sum of €22 million and a further €2 million in respect of equipment leasing.
(7) NAMA demanded that the respondent and his brother sell all their property and pay back over €30 million in loans owing to NAMA.
The Respondent’s Motion
21. The respondent’s motion issued on 10th April, 2015. In this motion the respondent seeks inter alia the following reliefs:-
(1) If necessary, an order re-entering the proceedings;
(2) An order pursuant to s. 22 of the Family Law (Divorce) Act, 1996 for such variation of the terms of the order of this court dated 17th January, 2011 as will make a proper provision for the respondent;
(3) In particular an order for an immediate variation downwards of the maintenance payable to the applicant and the dependant children pursuant to paras. 2, 3, 4 and 5 of the order of this court dated 17th January, 2011.
22. This motion was grounded on a supplemental affidavit of the respondent dated 9th April, 2015. In this affidavit he avers that at the time of the swearing of his affidavit of 24th October, 2014, he could not set out his position in full because he was awaiting relevant information and documentation from NAMA in relation to data protection requests from Bank A. Having received the documentation requested, the respondent avers that “there is no contradiction between what this deponent believed to be the situation at the time of the divorce proceedings and the facts outlined in the said documents.” He then goes on to refer to a letter of the solicitors for the applicant dated 23rd January, 2015 which, referring to the documentation concerned states:-
“As advised, the information contained therein would appear to give rise to significant and material issues of financial non disclosure on the part of the respondent in the context of the above divorce proceedings and settlement.”
The respondent deprecates this allegation in the strongest possible terms. He then proceeds to aver that his financial circumstances are dire and continuing to deteriorate. He commissioned BDO Corporate Finance to prepare a report in relation to his financial situation, which he exhibits. This report however is principally directed at the business of Z., and the possible sale of that business in the light of its very vulnerable financial situation. The respondent avers that he had deferred issuing this motion until he, his brother and their management team had an opportunity to rescue the position of Z.. He then goes on to aver:-
“I have complied with the divorce terms as best I can and for as long as I can but cannot do so any further. I say in short my situation is as follows: all of my salary from Z. has been diverted to the applicant. I have been surviving at the discretion of my brother, [ ], who is paying outgoings on my behalf, including rent on the home which I rent and in which I reside, together with drawing down director’s loans owed to me, from Z., which are now depleted in full. I fully understand the need to put before this Honourable Court an updated affidavit as to means for the purposes of the notice of motion. I have instructed the issued [sic] on my behalf.”
Respondent’s Proposals
23. During the course of the hearing of these motions, the respondent put forward the following proposals to the Court by way of variation to the Order:-
(i) that the maintenance payable by the respondent to the applicant pursuant to the Order, for the sole benefit of the applicant, should immediately be reduced by two thirds;
(ii) that the Family Home be put in a trust to be held as to one half thereof for the joint children of the parties and one half thereof for either the applicant or her children;
(iii) that upon the applicant herself, or with assistance, developing the development lands, that the maintenance payable to the applicant by the respondent for her own benefit be terminated in its entirety;
(iv) that all lump sums payable by the respondent to the applicant be discharged.
Respondent’s Affidavit of Means
24. The respondent swore an affidavit of means on 14th May, 2015. He swore a further affidavit of means on 12th April, 2017. The latter indicates that the respondent has an exposure to total borrowings of almost €58 million (the vast majority of which is shared with his brother, and some of which is shared with the applicant) and that he has assets of €12.43 million. He claims his outgoings come to some €30,458 per month (this includes the monthly maintenance payable to the applicant in the sum of €17,916 and rent in the sum of €4,750). There is obviously a great deal more detail in the respondent’s affidavit of means, which I will set out and address as appropriate later in this judgment.
25. As to his assets, the respondent deposes that he jointly owns five properties, which all together have a value of €12.434 million. These properties are:-
(i) The H. lands, which are located outside the jurisdiction. The applicant has a 50% interest in this property. His brother owns the other 50%. He currently values his interest in this property at €3 million. NAMA currently has security over this property, but that security is likely to be replaced pursuant to an investment agreement (the “investment agreement”) which the respondent and his brother entered into with an investor (the ”Investor B”) during the hearing of these proceedings. I summarise the main features of the investment agreement at paras. 36 and following below.
(ii) A property comprising 56 acres, also jointly owned by the applicant and his brother, which he values at €5.46 million. This valuation is based upon a value placed on the property for the purpose of the investment agreement. The property is currently secured to NAMA, but, pursuant to the investment agreement, the liabilities to NAMA will be discharged and the property will be transferred into a new company in which the respondent and his brother will each have an 8.5% shareholding.
(iii) A 33% shareholding in a property adjacent to Property No. (ii) which he values at €0.76 million. The property is currently secured to NAMA, but, pursuant to the investment agreement, the liabilities to NAMA will be discharged and the property will be transferred into a new company in which the respondent and his brother will each have an 8.5% shareholding.
(iv) A 37.5% interest in 62 acres of lands, also adjacent to Properties (ii) and (iii) above, which he values at €4.534 million, and which valuation is again calculated on the basis of the investment agreement referred to above. The property is currently secured to NAMA, but, pursuant to the investment agreement, the liabilities to NAMA will be discharged and the property will be transferred into a new company in which the respondent and his brother will each have an 8.5% shareholding.
(v) A farm (the “farm”) which the applicant jointly owns with his brother, valued at €0.2 million. This property is currently the subject of security taken by NAMA. Although it is not entirely clear, and was not the subject of any evidence, it appears from the short form of the investment agreement handed in to the court during these proceedings (entitled “binding term sheet”) that this property will be secured to Investor B, subject to the terms of the investment agreement..
26. As to his shareholdings in various companies, there are five companies identified by the respondent and he attributes a nil valuation to each one, including the Z group, which it may be said is the respondent’s core business.
27. In his affidavit of means he refers to a legal interest in a 50% of shareholding in a company which owns a holiday property in an EU member state (the “Holiday Property”). The other 50% shareholding in this company belongs to the applicant. The respondent avers that he holds his shareholding in this company upon trust for the children of the parties, and accordingly he ascribes a nil value to this shareholding.
Applicant’s Affidavit of Means
28. The applicant swore an affidavit of means on 5th April, 2017. She describes her assets as being:-
(1) The Family Home. She does not place a value on this or any of the other properties she owns because at the time of swearing her affidavit up to date valuations were awaited. However, she says that the Family Home was at the time subject to loans totalling €5,962,811, for which the respondent has a joint responsibility;
(2) The four houses developed by the parties within the grounds of the Family Home, and from which the applicant receives a rental income;
(3) A 50% shareholding in a company in an EU member state, the sole asset of which is the Holiday Property, valued at €1.2 million;
(4) A house and mews in Dublin all of which are let and providing the applicant with a rental income, but which are subject to a loan in the sole name of the applicant in the sum of €1,758,812;
(5) Bank accounts having balances as of the date of swearing of the affidavit totalling €50,274;
(6) Jewellery valued at €59,100.
29. The applicant avers that she receives a gross rental income from the properties referred to above in the sum of €372,864 which, after deduction of expenses, yields a net rental income of €219,843 subject to tax. She also refers to the income received from the respondent pursuant to the terms of settlement and calculates her gross income per month at €36,316 and her net income per month at €29,316. However, she says that her total monthly expenditure is €34,984.
30. In addition to the loans already referred to above, the applicant says that there is a loan due to Bank A with a current balance of €697,597 (for which she is jointly liable with the respondent) in respect a further holiday property which was sold in 2010, and there is also a loan over the commercial property in Dublin city centre with a current balance of €1,758,812. She also has other debts comprising a debt relating to an investment described as investment BSD estimated at approximately €70,000, credit card loans (at the time of swearing her affidavit) coming to a little over €14,000 and a debt owing to a third party in respect of a loan in the sum of €60,000.
31. In addition to the foregoing, the applicant avers that she owes fees arising out of the 2011 divorce proceedings and these proceedings of the order of €500,000. She avers that she owes her accountants €50,500, has tax arrears for 2016 and 2017 of €150,000 and that she owes a property consultant €50,000. She also claims to have a contingent liability in respect of a guarantee given for her daughter amounting to €70,000 and that there were pending orthodontic expenses for the parties’ daughter, D2, in the sum of €5,000. She also holds deposits in respect of rented properties, which will probably have to be returned, in the sum of €42,100.
Applicant’s further motion
32. During the course of the hearing the applicant decided not to pursue the reliefs sought in her motion in respect of the attachment and committal of the respondent, and instead elected to apply to the court for judgment in a monetary amount reflecting the payments due to have been made by the respondent up to the date on which that decision was taken and notified to the solicitors for the respondent, i.e. 7th July, 2017. Thereafter, the applicant caused to issue a motion dated 12th July, 2017 seeking the following reliefs:-
“(1) An order permitting short service of the notice of motion and any necessary abridgment of time;
(2) Such amendment to the notice of motion dated 19th September, 2014 as may be required to allow the applicant to seek judgment as follows;
(3) An order for judgment as against the respondent, B.Y., in the sum three million five hundred thousand euro (€3,500,000.00) being:
a. The sum of seven hundred and fifty thousand euro (€750,000.00) and interest accrued thereon at the rate of the Courts Act interest from 1st August, 2012 to 30th April, 2017 in the further sum of two hundred and seventy thousand euro (€270,000.00).
b. The sum of two million euro (€2,000,0000.00) and interest accrued thereto at the rate of Courts Act interest from 1st February, 2014 to 30th April, 2017 in the further sum of four hundred and eighty thousand (€480,000.00).
(4) Interest on the sum specified at para. 3 above or part thereof from judgment to the date of payment.
In the letter of 7th July, 2017, it is stated that the primary purpose of the applicant’s motion is to require the respondent to comply with his financial and related obligations arising from the terms of settlement.
33. This motion was grounded upon the affidavit of the applicant dated 12th July, 2017. In this affidavit she simply deposes as to the amount due to her, together with interest thereon, pursuant to the terms of settlement. She avers that the computation of interest was the subject of evidence given by an accountant, Mr Paul Wyse, called on behalf of the applicant to give evidence in the proceedings, and was not disputed. She exhibits a computation sheet of the interest claimed. By letter of 14th July, 2017, the solicitors for the respondent agreed to the amendments of the motion as proposed by the applicant, but without prejudice to their right to make arguments as to the appropriateness of such amendment and as to the cost consequences of same. They also said that this agreement was subject to an amendment being agreed to the respondent’s motion to include reference to the “discharge and/or suspension of the terms of settlement”.
Payments to NAMA
34. It is common case that the respondent and his brother made significant payments to NAMA in reduction of their liabilities to NAMA following upon the execution by the parties of the terms of settlement. These payments were funded through a combination of the sale of assets by the respondent and his brother, and also from funds made available through the principal business of the respondent and his brother, i.e. by Z. While the exact amount of these payments was not agreed, it is agreed that they came to a total of between €7.2 million and €7,990,409. The applicant, in the course of the proceedings, sought to explore whether or these payments were indicative of the respondent preferring one creditor (NAMA) over another (the applicant).
The Resondent’s Proposal to Bank A
35. Subsequent to the issue of the applicant’s first motion, and because of the enlarged claim of NAMA/NALM over the Family Home (i.e. to the extent that NAMA/NALM claims that business debts of the respondent are also secured over the Family Home) the respondent made a Data Protection request of NAMA/NALM. This Data Protection Act request resulted in the delivery of documents to the respondent, which he shared with the applicant. These documents included a proposal made by the respondent to the Bank A (prior to the respondent’s loans being taken over by NAMA/NALM) dated 12th May, 2010. In this proposal, the respondent gave detailed particulars of his assets and liabilities, and his net worth was stated to be €18,421,000. However, for the purpose of these proceedings, the respondent had sworn an affidavit of means on 21st April, 2010 indicating a negative net worth of €13,546,242. The difference between these two positions is €31,967,242. Although this disparity only came to light following the issue of the applicant’s motion, unsurprisingly it was very much centre stage at the hearing of these motions. Included in the assets of the respondent was a loan due to him by a company called “M.” in the sum of €6.5 million to which no reference at all had been made by the respondent in any of the affidavits of means sworn by him in these proceedings.
Investor B and the Investment
36. Before considering the evidence, it is appropriate at this juncture to provide more detail about the investment agreement. At the outset of the hearing of these motions, the Court was informed that the respondent and his brother had reached heads of agreement with Investor B as set out in a document entitled “binding term sheet”, which was handed in to Court, and which is the same document that I have referred to earlier as the “investment agreement”. Negotiations with Investor B were ongoing during these proceedings, although the binding term sheet/investment agreement is stated to be legally binding; however, that document also states that it was the intention of the parties to enter into more detailed definitive agreements in due course. The negotiations with Investor B came to fruition in or about September, 2017. I was not informed as to the exact date, but it is not material.
37. The effect of the investment agreement, when implemented, will be to enable the respondent and his brother to discharge fully the amount owing by them to NAMA in the sum of €31,000,000. These funds will be provided by Investor B. This does not include the amount owing by the respondent and the applicant jointly in connection with the Family Home. In exchange for the investment of Investor B (the “Investment”), the applicant and his brother agreed to divest themselves of most of their most significant assets, which are to be transferred to a company in which each of the applicant and his brother will initially be allocated an 8.5% share. Since there are likely to be obligations to invest in the new company to enable it develop the lands to be transferred to it, there is every possibility that the shareholding of the respondent and his brother in this new company will be diluted in the future, unless they can raise funds to contribute pro rata to such investment.
38. The investment agreement contemplates that if the assets transferred are developed and thereafter sold, and the sale price realises a return for Investor B of not less than the amount of the Investment, together with any additional development costs, then the respondent and his brother will be entitled to retain for their own benefit another significant asset, the H. lands, which are to be secured to the Investor in the meantime, and they will have no obligation to reimburse the Investor any of the monies invested by it in the project. They will also participate in any profits from the venture, in whatever percentages they then hold shares in the new company.
39. However, if there is a shortfall to Investor B arising out of any sums invested by it, then the respondent and his brother remain liable to indemnify Investor B against that shortfall, up to the amount of the €31 million. The value of the respondent’s interest in the lands in H. is significant. His own expert values it at €3 million, while the applicant’s expert values it at €5.2 million. While it is somewhat unclear from the terms of the investment agreement, it appears to contemplate that the farm will be released from security in respect of debts due to NAMA, but that it will then be secured again in favour of the Investor, by way of additional security in respect of any possible liability of the respondent and his brother to the Investor. The timetable under the terms of the investment agreement for all of this to play out is 24 months from the date of completion as defined in the agreement, which is a moveable date but it seems very likely that much will be known within a period of two to three years.
40. Finally, the parties are agreed that the discharge of the liabilities of the respondent and his brother of their liabilities to NAMA will resolve any claim of NAMA/NALM over the Family Home in respect of these liabilities, though not in respect of the amount owing by the applicant and the respondent to NAMA.
The Evidence
Evidence of the Applicant
41. The applicant was first called in evidence. Her evidence was entirely consistent with each of her affidavits referred to above. Importantly, she acknowledged that the Bank A facility letter of October, 2010, had been made available to her, or at least to her advisors prior to entering into the terms of settlement. In the course of her evidence, she expressed some frustration about what she clearly considers to be interference by the respondent with her efforts to live her own life. She does not protest about this to the respondent, in order to avoid confrontation, but she denies providing hospitality to the applicant any more than it is civil to provide when he is visiting their children.
42. The applicant expressed some upset that the respondent had exchanged text messages with their children suggesting that she might leave the Family Home to one of the children of her first marriage. Their daughter, D1., was very upset by this and the applicant stressed that the Family Home is not just the home of the applicant but also that of her daughters. In response to concerns of the respondent that the applicant might in some way seek to prefer the children of her first marriage, and in particular that she might disadvantage D2., on the basis that her legal obligations to D2. by reason of not her not being adopted, may be less than those owed to D1., the applicant stressed that she loved all her children equally and she would never contemplate favouring any one child over and above the others. She acknowledged that the respondent has concerns that she would not “do the right thing” but said that these concerns are unfounded.
43. The applicant expressed some concern about her future from the point of view that she has no pension provisions. She is, therefore, dependent upon her assets, and, at least for the time being, upon the maintenance received from the respondent, not just to meet her current outgoings but to plan for her future. She said that she needs the current levels of maintenance from the respondent until the NAMA issue has been resolved. She said, however, if that issue is dealt with satisfactorily, she will be able to sell the development lands which would have a very positive effect on her finances. At that point, she acknowledged that she could possibly manage on reduced levels of maintenance because she would no longer have to make mortgage repayments in respect of the Family Home, but she had not given serious consideration to this possibility just yet. She confirmed her income and outgoings as per her affidavit of means. In cross-examination, it was put to her that if the mortgage over the Family Home was eliminated, her outgoings would be reduced to €18,836 per month, as against a rental income (before tax) of €18,320 per month. Assuming she lost as much as half of her rental income in tax, that would leave her with €9,000 per month. And if the income that she received from the respondent in respect of maintenance of the children is added (€5,000 per month) that would mean that she would be receiving €14,000 per month having paid all taxes. It was then suggested to the applicant that whatever maintenance is paid by the respondent should be reduced to cover the difference between the €14,000 income per month and her expenditure of €18,320 per month.
44. In reply, the applicant said that in the event that the “cloud is lifted over” the Family Home, it would allow her the possibility to contemplate a reduction in maintenance, but in the meantime she could not survive financially without the maintenance payments received from the respondent. She also referred to the difficulty of maintaining the Family Home and the cost of maintenance of the same. It was put to her that she might contemplate selling the Family Home and she did not object to this in principle but referred to the provision in the terms of settlement that she would not dispose of the same until D2. had reached the age of 21.
45. She said she would not contemplate an arrangement whereby ownership of the Family Home would be divided to the intent that she would own one half and the other half would be held in trust for D1. and D2.. She said that she would ensure that D1. and D2. get their fair share of her estate in due course and she never had any agreement or indeed, any discussion to the effect that, if the respondent discharged the debt due in respect of the Family Home that it would be divided on this basis.
46. In relation to the Holiday Property, she agreed that, although there had never been a trust in relation to this property, it had been agreed that in due course this property would be applied for the benefit of both her own children by her first marriage (as to one half share) and the children of the parties D1. and D2., as to the other half share. Accordingly, she had no objection to the respondent placing his interest in the French Property into a trust on behalf of D1. and D2., but she was not agreeable to her share being placed into such a trust. This property is encumbered, and the respondent agreed to assume responsibility for the mortgage repayments. The amount of the loan due in respect of the Holiday Property is unclear, as it was not referred to either in the affidavits of means of the parties or in their oral testimony.
47. The applicant was questioned in cross-examination about a statement in a letter from her solicitors to the solicitors for the respondent dated 5th August, 2016, which it is stated:-
“To be clear at the time our client was induced by your client to settle the divorce proceedings in 2011, he was aware of the facility letter dated 22nd October, 2010 and she was not. Your client failed to disclose this important fact to our client and to her advisors and to the court. If our client had known of a facility letter which purports to hold/pledge [the Family Home] as security against the wider liabilities of the respondent and his brother P. she would have insisted that this matter was attended to her satisfaction before entering in the settlement.”
48. As I have already mentioned, the applicant acknowledged that a copy of the Bank A loan facility letter of October, 2010, had in fact been made available to her advisors prior to entering into the terms of settlement. But she said that if she had known that perhaps the respondent’s financial position was stronger than she believed at the time, she might not have agreed to the settlement. At the same time, she acknowledged that she freely entered into the settlement. The applicant said that what she wants now is for the respondent to honour the terms of settlement. She acknowledged that the respondent had from time to time, in discussion with her described some of the difficulties that he had encountered since the terms of settlement and that he had said to her that he did not have any money.
49. As regards the possibility of developing and selling the development lands adjacent to the Family Home, she confirmed that she had had discussions with a planning team engaged by the respondent, but that she wished to engage her own planning team and to make her own decisions as to how best maximise the potential of these lands. For the time being, however, she felt that nothing could be done for as long as NAMA was claiming an interest in the Family Home that related to any liabilities other than just the loan relating to the same. There is also a difficulty with access to the development lands, which has to be resolved.
Evidence of the Respondent
50. The respondent confirmed that at the time of entering into the terms of settlement, he read the agreement, fully understood it and always intended to comply with the same. More than that, he was optimistic that he would be able to comply with the terms of settlement. He explained that he would have been able to do so, had the project been successful. Had that project been successful, over a period of three or four years, he would have eliminated his indebtedness and had sufficient funds to discharge his obligations to the applicant. He explained in considerable detail the “devastating” events that in effect conspired to prevent his ability to comply with the terms of settlement (those referred to at para. 20 above).
51. He explained that when dealing with these proceedings originally, he did not claim any interest in the Family Home (as he would have been entitled to do at that time because he did not remarry until 2016) because he was concerned that if he succeeded in contending for an interest in the Family Home, NAMA might have attempted to recover the value of that interest and apply it towards his indebtedness. He stressed (time and again) that he was very exercised at the time about keeping the Family Home safe from his creditors and particularly so that it would available in due course as an asset to pass on to his children. In that context, he asserted that he agreed with the applicant at the time that he would not pursue any claim as against the Family Home provided that the applicant agreed to hold 50% of her interest in the property upon trust for their children, D1. and D2.. He said the applicant reneged on this promise. He added that this agreement went back as far as 2003, when he originally transferred the property to the applicant. He was asked why he had not put any of this on affidavit, to which he replied that he thought his oral testimony in this regard would be sufficient.
52. He also claimed that the applicant had reneged on her promise to continue with the adoption process for D2.. This, he said, left D2. in a legal limbo. At first he said that the applicant had abandoned that process in 2007, when his son by his current wife was born. However, he said he was not aware that the applicant would not continue this process until she told him so in 2011. He said that he has begged the applicant to regularise the position. He denied that the adoption process came to an end because of a legal impasse involving the natural mother. He agreed, however, that all of these matters were known to him in 2011 at the time that he entered into the terms of settlement, and that they were not referred to in the terms of settlement.
53. In relation to the affidavit of means that he completed in April, 2010, he said that he believed that he completed it himself, having been given a template. He confirmed that he fully understood that he was obliged to be as accurate and comprehensive as possible in completing the affidavit. He acknowledged that that affidavit included all of his debts and liabilities, but did not include the amount due to him by way of loan from a business partner company, M.. He could not explain this omission even though the amount due to him by M. was referred to in the proposal made to Bank A just a few weeks later and he confirmed that when he was preparing his affidavit of means for these proceedings, he would also have been working on the proposal to Bank A.
54. He clarified, however, that the proposal to Bank A was inaccurate insofar as it indicated that M. owed him (the respondent) €6.5 million – the correct amount was in fact €4.5m, the difference of €2 million related to monies owing by M. to his brother alone. He explained that the amount due to him by M. had been written off in 2013, because by that time the project had been cancelled and there was no longer any prospect of recovering these monies from M.. This is because the monies that he and his brother had lent to M., had been lent onwards by M. to the SPV for the project. So, too, were the monies lent to M. by Bank B, the liability of M. to repay which the respondent and his brother had guaranteed to Bank B. He was asked what efforts he made to recover the amount due from M. and he said none, because there was no point. He said that everybody involved in M. had invested money in the project and had lost their investment. In summary, the financial viability of M. was directly linked to the project; when it failed, so too did M., and it could not repay the loan due to the respondent.
55. He said that he was not, and never had been a shareholder in M.. He was asked why, therefore, did he give a guarantee of M.’s liabilities to Bank B, in the amount of €21.3m? He said that he and his brother did so because Bank B had expressed a preference that funds being lent for use in the project should be lent to an entity without other indebtedness. M. met this requirement, but the Bank insisted that the respondent and his brother underwrite the loan to M.. He explained that the funds advanced by Bank B were lent onwards by M. to the SPV, the special purpose entity undertaking the project. The applicant and his brother, had originally owned 80% of the SPV but had eventually acquired the other 20%. The shareholders of M. had also advanced monies to the SPV, through M.. The respondent said that they had suffered a loss of the order of €6 million by reason of the cancellation of the project.
56. It was put to the respondent that it was strange that he should provide a guarantee for such substantial sum of money to a company in which he had no shareholding or interest and his reply to this was that had he not done so, Bank B would have appointed a receiver to Z., and caused the collapse of the project, with the loss of all the monies invested up to that point in time, as well as the loss of opportunity from the project. The respondent was unwilling to divulge the names of the shareholders of M. with whom he had worked for more than 30 years and to whom he had promised that under no circumstances would he reveal their identities. The persons concerned were senior security personnel in another country. He said that the applicant was aware of the identity of some of these personnel and had met several of them. Upon being pursued on the issue, he identified some of them by reference to their initials and identified one by name.
57. He explained that in the course of providing funding to the SPV, some assets were secured by the SPV in favour of M. as security for the loans advanced by M. to the SPV. He also said that significant assets belonging to Z. were secured in favour of M., on behalf of SPV, in exchange for the loan advanced by M to the SPV, and also in order to protect those assets from creditors of Z.. Also, M. itself provided security over certain assets to Bank B. The latter has some relevance because counsel for the applicant made the point that, assuming that the funds advanced by Investor B clear the indebtedness due by M. to NAMA (it is understood the Bank B loan was eventually taken over by NAMA), those assets may be available for the creditors of M., including the respondent. This follows from an answer given by the respondent to his own counsel, as to the impact of the Investment upon his overall indebtedness. He was asked: “Just to confirm, …..the position of the [Investment] is that it would replace your borrowings with Bank B, Bank A, whatever, that all went into NAMA and NAMA would be taken out of the equation as the lender, the [Investor] would be the lender. Is that correct?” The respondent confirmed that this is correct.
58. The respondent confirmed that at the time he entered the terms of settlement, he was optimistic that he could comply with his obligations pursuant to the same. This optimism was based on the project. He acknowledged that there were already some problems with that project at the time, but nothing that he felt could not be overcome.
59. Sometime towards the end of 2009, Bank A began to put some pressure on the respondent and his brother, both to reduce their borrowings – with a view to avoiding their debts being taken over by NAMA, and also to provide additional security for the same. The objective was to reduce borrowings to a level below €20 million and they disposed of assets in order to achieve this objective. Notwithstanding that they did so, however, their debts were subsequently taken over by NAMA. In the meantime, however, they had been required by Bank A to restructure their loan facilities which necessitated the applicant preparing a statement of affairs for the Bank. This was provided in the proposal to the Bank of April, 2010. In preparing this document, Bank A required the respondent and his brother to “put the best foot forward”. However, he acknowledged that the statement of affairs was “gilding the lily”. More than that, he acknowledged that the document was not truthful in its content, but he said that Bank A insisted that it be put forward as it was.
60. It was put to the respondent in cross-examination that he did not disclose the Bank A proposal document and accompanying statement of means at all in these proceedings, and in particular that he did not disclose the loan due to him by M.. He said that he did not know about or recall this documentation until it was received back from the bank in response to the Data Protection request in January, 2015. However, he said that he had given information to his own accountants, which openly disclosed the existence of a debt due by M. to the respondent, when dealing with queries raised by the applicant’s accountants in the course of the preparation of the original trial in 2011.
61. The accountant dealing with the matter at the time on behalf of the respondent, a Ms McShane gave evidence and confirmed that this was so. She confirmed that through oversight, she had not passed this information on to the accountants acting on behalf of the applicant. She explained that most probably this happened because she had taken the view that the debt owing by M. would never be repaid having regard to the very significantly larger sum owing by M. to Bank B, which in turn was underwritten by the guarantee provided by the respondent and his brother to that Bank. The respondent said that far from gaining any advantage from the non disclosure of the loan due to him by M., the failure, on the part of his accountant, to disclose the loan due to him and the much greater amount due by the respondent and his brother to Bank B was a disservice to him, insofar as it would have shown his net worth to be even less than that disclosed at the time.
62. The respondent said that he gave the applicant, in person, a copy of the facility letter that issued from Bank A in October, 2010. He said that Bank A, in providing this restructuring facility, forced his brother to provide his home as security for €4.5 million. At that time, his brother’s home was almost debt free and this was the source of some considerable annoyance to his brother, not least because the Family Home was kept out of this additional security because it is in the name of the applicant.
63. The respondent was questioned at some length about the value of his assets as set out in the proposal to Bank A. The value of many of these assets is now somewhat academic in view of the fact that they have been the subject of the agreement with Investor A and so there is no need to summarise his evidence in this regard, save insofar as it relates to the value attributed to Z. and the SPV. At the time, a value of €750,000 was attributed to his 50% shareholding in Z. and €12 million was attributed to the value of the SPV, though in regard to the latter, it is not clear if it refers just to the shareholding of the respondent, or to the total value of that company. In any case, the respondent says that the valuation was totally unrealistic and was a valuation of those entities that the bank insisted upon at the time.
64. As far as the service centre is concerned, the respondent and his brother between them owed €21 million to Bank B which is reflected in the statement of affairs given to Bank A. On the other hand, in the same statement of affairs, a value of €12,100,000 is attributed to that asset. The respondent gave evidence that he and his brother entered into an agreement with Investor A to which I have referred above in relation to this project. There is a balance due on this loan now of €17 million, but Investor A have agreed to write off this balance provided that they receive two payments, by October 2018, one of €3 million and one of $3 million. The respondent said that these are the next most significant liabilities that he and his brother must next address, and, as matters stand, he does not know how these payments will be funded.
65. The respondent said that when it became apparent that the project was cancelled and after the other devastating events, he came to the conclusion that it would be necessary to maximise the value of the development lands adjacent to the Family Home. He said he had already previously invested a significant sum of money in having those lands rezoned. He said he put a planning team in place with a view to obtaining planning permission to develop the lands zoned for development, but after a period of about nine months engagement, the applicant cancelled these arrangements because she insisted that he pay all the expenses associated with the planning application. He said he was unwilling to do this unless the applicant put a trust in place for the benefit of D1. and D2., which he claimed he and the applicant had previously agreed. The respondent says that at the time he estimated the value of the Family Home and adjacent lands to be at the order of €20m, and he estimates that that could have increased to as much as €30 million now.
66. The respondent said that since January, 2011, his entire salary has been paid to the applicant in order to meet the maintenance obligations that he agreed to in the terms of settlement. However, in order to be able to do this he has had to borrow money from his brother for his own upkeep and living expenses. At the time, he told his brother that this would last for about two years but it has gone on for five years and his brother now wants to stop the payments. The respondent says that the payments are being made from his brother’s directors account in Z. which is in credit. The respondent confirmed that the business of Z. has improved again in the last year, and that the business is profitable even though it is carrying debt. He agreed that his salary has not been increased during the period since the terms of settlement, even though the business of Z. has improved.
67. The respondent confirmed that, following upon the terms of settlement, substantial payments were made to NAMA amounting to €7,244,795. Some of these payments were made from the proceeds of the sale of assets solely owned by his brother, some of the payments were made from the proceeds of sale of assets owned jointly by the respondent and his brother and the remainder were paid on behalf of both the respondent and his brother by Z.. The respondent confirmed that Z. was under no obligation to pay NAMA, and when asked why Z. could not have paid , on his behalf, what is due to the applicant under the terms of settlement (instead of making payments to NAMA or by reducing the payments made to NAMA), he said that if he and his brother had not cooperated with NAMA, they would have been put into receivership. Also, since both the applicant and his brother were jointly liable to NAMA, his brother wanted to make payments to NAMA in reduction of their liabilities.
68. The respondent said that, while he was expecting the applicant to re-enter these proceedings by reason of his failure to make the payments due to her, and while he went so far as to arrange to meet a summons server, it came as a great shock to him to realise that the applicant had issued a motion for his attachment and committal by reason of non-disclosure. He said that if anything he had “over disclosed” to the applicant. His brother too was very upset, having been required to give security over his house to Bank A, while the Family Home remained out of reach of creditors.
69. In relation to the Holiday Property, the respondent said that it was always his understanding with the applicant that this property would be held as to his one half share for the benefit of D1. and D2., and as to the applicant’s one half share for the benefit of her adult children. He wants to stand over this arrangement. The respondent said that he believed that he had completed a transfer of his shares in this entity in favour of D. and D2.. In his latest affidavit of means, the respondent says that he holds the shares in this company in trust for and for the benefit of D1. and D2.. Consistent with this, during the course of the hearing the applicant produced a copy of a declaration of trust of the shares in favour of D1. and D2., dated 2nd September, 2011.
70. The respondent said that he is quite simply unable to meet the terms of the settlement now. While things could improve in the future, that cannot be assured and if it does happen it is some years away. He says that he is not looking for anything from the applicant and acknowledges that he is prevented by law from doing so, in any event. By way of resolution to these proceedings, the respondent proposes that he should be relieved form all lumps sum payments which he agreed to make to the applicant in the terms of settlement. He proposes that maintenance to the applicant should be reduced by two thirds immediately; that the development lands should be developed and sold as soon as possible, and all debts pertaining to the Family Home paid. This will , in the opinion of the respondent, generate a surplus of between €20 million and €30 million. From that point onwards, he should be relived of any further maintenance obligations to the respondent. He will, however, continue to meet the maintenance payments and other expenses due in respect of D1. and D2., with the assistance of his brother.
71. The respondent expressed concern that the applicant would not treat fairly with D1. and D2., and in particular expressed concern that it was her intention to benefit one of her own children with the Family Home. At the same time, however, he acknowledged that the applicant has a very good relationship with D1. and D2.. He said that it has always been understood as between the applicant and the respondent that once the issue of indebtedness to NAMA was resolved, the Family Home would in due course be placed in a trust for the benefit of D1. and D2. as to 50%, and the applicant as to 50%. He said that the applicant is now reneging on that commitment.
72. The respondent acknowledged that in the future, there is a possibility that one of his significant assets overseas, the H. lands, could become free of the security given to Investor B, and thereafter become available to the respondent and his brother at their full value. This, however, is speculative; it is also possible and he and his brother could end up owing Investor A a significant sum of money, with the H. lands being applied in reduction of the debt, pursuant to the agreement reached with Investor A.
73. As matters stand, the respondent informed the Court that he did not know how he and his brother would fund the payments that are due to Investor B in October of this year. Those payments are the next big liabilities that the respondent and his brother are facing. Aside from that the respondent said that there is the possibility of an environmental suit in X. arising out of the clean up from the accident involving the Z. asset as well as a potential net liability of €2.5 million in respect of a project involving a marine development. The respondent and his brother originally owed €3.2 million to Bank B arising out of this project, but this has been reduced to €2.5 million.
74. No vouching documentation or other evidence was produced or led at all in relation to any of these matters by or on behalf of the respondent. The only evidence placed before the Court in relation to these matters and in relation to the “devastating events” post the Order was the oral evidence of the respondent himself, and to a lesser extent that of his brother who also gave evidence.
The Expert Evidence and the Assets of the Parties
75. Seven affidavits of means were exchanged between the parties between 8th February, 2010 and 12th April, 2017, three on behalf of the applicant and four on behalf of the respondent. The applicant instructed Mr Paul Wyse of Smith and Williamson, Chartered Accountants, to prepare a report on the affidavit of means of the respondent of 12th April, 2017, which report was put into evidence. Mr Wyse was instructed just two and a half weeks prior to the commencement of the hearing.
76. The respondent instructed a Mr Tim O’Keeffe of Copsey Murray, Chartered Accountants, who prepared a report addressing the current assets and liabilities of the respondent, and who gave evidence in regard to the same. Mr O’Keeffe said that his firm had a working relationship with the respondent going back to 2012, although as the evidence went on, it appeared that it may have gone back further, to 2010, because he had some familiarity with the proposal made to Bank A by the respondent in May 2010, although neither he nor his firm prepared that proposal.
77. Helpfully, Mr Wyse and Mr O’Keeffe agreed upon a schedule of differences of their respective conclusions in relation to the net worth of the parties. On Mr Wyse’s conclusion, the respondent had a negative worth of €7,402,000, with additional possible contingent liabilities of €8,409,000. In the opinion of Mr O’Keeffe, the respondent has a negative net worth of €10,427,000 with contingent liabilities of €8,409,000. However, it is important to note that these figures assume, in relation to the liabilities of the respondent which he shares with his brother, one half of the liability for debts for which he is legally jointly and severally responsible. If the full exposure of these debts were to be attributed to the respondent, they would increase very substantially, up to an amount in excess of €40 million. In the view of Mr Wyse, the financial standing of the respondent is not very different now to his financial standing at the time he entered into the terms of settlement with the applicant.
78. Mr Wyse compared the affidavit of means of the respondent of 12th April, 2017, with his affidavit of means of 12th December, 2010, sworn just weeks prior to the conclusion of the terms of settlement. He noted that on 12th December, 2010, the respondent averred that he had a negative net worth of €13,000,546, which increased to €45,000,689 in his affidavit of 12th April, 2017. Mr Wyse said that the difference between the two positions is explained by reason of the difference in position adopted by the respondent as regards his liability for debts in the two affidavits. In his affidavit of means of December, 2010, the respondent attributed to himself only such portion of the debts as he might be obliged to bear if all parties to the debt concerned discharged their responsibilities; in the affidavit of April, 2017, the respondent attributed to himself one hundred percent responsibility in respect of all debts. According to Mr Wyse, when the figures are adjusted so that the loans are treated with on the same basis, there is not much difference between the respondent’s financial position in 2010 and 2017.
79. Mr Wyse has valued the interest of the respondent in the H. lands at €5,221,000. However, Mr O’Keeffe has valued the same interest at €3 million, on the basis that the interest of the respondent is held through a company in which he has only a minority interest. Mr Wyse, however, makes the point that the value of interests in property holding companies are usually only realised on a disposal of the asset, and therefore the question of discounting the value of a shareholding on the basis that it is a minority shareholding only does not arise. As against that, he agreed that he was not aware of any agreement between the parties to the company owning these lands as to when the lands may be sold, or any provision whereby any of the parties could unilaterally bring about a sale of the lands; so to that extent the value of the respondent’s interest in these lands appears to be locked in until such time as there is an agreement amongst the majority of the shareholders in the holding company to dispose of the same. In any case, for the time being, the H. lands are secured to the Investor.
Assets and Liabilities of the Applicant
80. The accountants of the parties also prepared a schedule of differences of the assets and liabilities of the applicant. Her liabilities, which include the loan secured originally to Bank A and now to NAMA, over the Family Home, amount to an agreed sum of €8,733,000. Of that, €5,963,000 relates to the loan secured over the Family Home, for which the respondent is jointly liable.
81. The value of the offices owned by the applicant are agreed at €2,625,000. Her 50% share in the French Property is agreed at €0.6 million. The main area of difference between the parties as regards the value of the applicant’s assets is around the value of the Family Home and adjacent lands. The applicant maintains that the Family Home, excluding the adjacent houses and the development lands, has a value of €5m, whereas the respondent maintains is has a value of €5,500,000. The four houses around the Family Home from which the applicant derives an income are valued by the applicant in the sum of €4,175,000, and by the respondent in the sum of €3,950,000, a difference of €225,000.
82. The biggest single area of disagreement as regards the value of the applicant’s assets was in relation to the value of the lands within the Family Home that are zoned for development (the “development lands”). The applicant, at the beginning of this hearing, had placed a value of €6,100,000, on the value of the development lands. The respondent had placed a value of €11,500,000 on the same lands, a difference of €5,400,000. Before the hearing concluded, the parties had reached a measure of agreement in regard to the value of these lands. In this regard, the applicant agreed that the value of the development lands is €7,250,000, taking full account of the development potential of the lands. The respondent is prepared to accept that the current value of the development lands is €7,250,000, but that that value may increase in the event of a successful planning application for the development of the lands.
83. On the basis of her own figures, therefore, the applicant has a net worth of €11,626,000, although it may fairly be pointed out that no account is taken in these figures of capital gains tax that would be payable in the event of the sale of the development lands. Somewhat ironically, given that the respondent has valued the four houses around the Family Home, at €225,000 less than the value placed on those houses by the applicant, the respondent’s estimate of the net worth of the applicant is €11,401,000. But that is subject to the caveat that the respondent considers that the development lands may have a higher value in €7,250,000 in the event of successful planning application.
Applicat’s application to amend her motion
84. The respondent opposes the application of the applicant to amend the reliefs sought in her notice of motion. Counsel for the respondent submitted that on the authority of Thwaite v. Thwaite [1981] 3 WLR 96, the terms of settlement take their validity from the Order once they had been made an order of the court, rather than from any contractual status. This is undoubtedly correct, but is that a reason to refuse the applicant the reliefs sought by her in her motion of 12th July, 2017?
85. It must be remembered that there were, in effect, two limbs to the applicant’s original motion of 19th September, 2014. The first limb involved an application to have the respondent attached and committed arising out of his failure to comply with the Order. That failure related specifically to the non-payment by the respondent of €750,000 to the applicant and €2000,000 to Bank A (in reduction of the loan secured over the Family Home) pursuant to paras. 6 and 17 of the terms of settlement. The second limb of the applicant’s motion of 19th September, 2014, related to allegations of material non-disclosure on the part of the respondent in these proceedings in the lead up to and at the time of completion of the terms of settlement.
86. The applicant has effectively abandoned any reliefs claimed under the second limb of her motion, but as to the first limb of her motion, instead of seeking the attachment and committal of the respondent, she seeks judgment against him for the amounts already due under the terms of settlement and, importantly, the Order. This is entirely consistent with Thwaite v. Thwaite.
87. The applicant relies upon O. 28, r. 1 of the Rules of the Superior Courts in support of her application to amend her motion. This Order states:-
“The Court may, at any stage of the proceedings, allow either party to alter or amend his indorsement or pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties.”
88. Counsel for the applicant expressed concern that the amendment sought is required because the Order in its current form is not an adjudication of a debt, but rather a direction by the Court to the respondent to make certain payments to the applicant. Therefore, in order to be certain that she has an order of the court that is capable of being enforced as a debt, the applicant requires judgment in the sums directed to be paid by the respondent to the applicant pursuant to the Order.
89. As against that, counsel for the respondent submits that the purpose of O. 28 is to permit a party to correct a defect or error on the face of the pleadings, and there is no error or defect in this instance. The applicant is simply engaging in a “change of tack” and there is no basis upon which the court should permit the applicant to do so.
90. I do not agree with the submissions of the respondent in this regard. The Order directs payment of specified sums by the respondent to the applicant. There are only two ways in which this part of the Order may be enforced: either by applying to have the respondent committed on account of his failure to comply with the Order, or alternatively by taking up the judgment and enforcing it in whatever way is appropriate or possible. The applicant is quite entitled to chose whichever remedy she pleases and the respondent is in no way prejudiced if she decides to abandon her application for the committal of the respondent and instead to pursue enforcement of the Order in other ways.
91. That said, the question arises as to whether or not it is necessary for the applicant to have any further order of the court having regard to the terms of the Order, which are very clear. Counsel for the applicant addressed this in his submissions and expressed concern that there is authority for the proposition that arrears of maintenance are not due as a debt in the ordinary way, and do not constitute a final judgment. He referred to the decision of Abbott J. in F.(N) v. F.(E) [2007] IEHC 317 in which Abbott J. found that accumulated arrears of maintenance in the sum of €59,000 were “…in strictly legal terms… not due as a debt…”. He also referred to the 4th Ed. of Shatter’s Family Law in which the author states at para. 14.111 that a “maintenance order is not a final judgment”. It is submitted that in this context, there is no distinction to be made between a periodical payments order and a lump sum order.
92. I have to say that I have difficulty with the proposition that an order by a court directing a party to pay a liquidated sum to another is in any way different to the granting of a judgment, save only insofar as the former, if not complied with, may give rise to an application for attachment and committal, as occurred in this case. To require a party to come back to court in order to obtain a judgment in an amount already ordered by a court to be paid by one party to another seems to me to heap an unnecessary layer of process upon the party in whose favour the order has been made, together with the attendant expense. What is the point of the court making the order in the first place, if the beneficiary of the order has to come back to the court to ask it to make the same order again? Unless and until such time as the order is set aside or varied by the Court, in my view, a court order directing a party to pay a sum of money to another is no different to a judgment in the same amount and is capable of being enforced through the same procedures as a judgment. Provided that the order is clear, unambiguous and unconditional, a beneficiary of such an order should be able to take up the order, when perfected and enforce it through the court processes in the usual way, whether that be by way of applying for an instalment order, referring the order to the sheriff for execution or through the registration of a judgment mortgage on any property of the debtor and thereafter obtaining a well charging order and forcing a sale of property of the debtor to satisfy the order. In engaging in any such enforcement processes, however, the applicant for the relief claimed should ensure to redact any provisions of the order that do not relate to the payment of the amount due, so as to protect the in camera nature of the proceedings.
93. Having thus decided, the applicant will be entitled to enforce the Order insofar as it relates to amounts to be paid to the respondent, unless the Order is varied pursuant to the application of the respondent. However, there is a slight complication in this insofar as para. 17 of the Order directs a payment to be made to Bank A, and not to the respondent, in reduction of the loan secured over the Family Home. Whether or not there is a need to resolve that complication, however, depends upon whether or not I am persuaded to accede the respondent’s motion to vary the Order.
Principles Applicable on Applications to Vary under s. 22
94. I was referred to a range of authorities, substantially the same authorities, by each of the parties in relation to the interpretation and application of s. 22. These include: the decision of Abbott J. in A.K. v. J.K. (2009) 1 I.R. the decision of Dunne J. in O’C(C) v. O’C(D) [2009] IEHC 248, the decision of Abbott J. in N.F. v. E.F. [2011] 2 IR 100 and the decision of the Supreme Court in D. v. D. [2015] IESC 16. From these decisions, the following principles as regards the interpretation and application of s. 22 may be discerned:-
1. Where a change of circumstances occurs between the date of a court order and the execution of that order such as to make it impossible for a party to comply with the same or to make it inequitable to require that party to comply with the same, the courts may alter the obligation or relieve the party under that obligation altogether from compliance with the same. So for example, where there has been a dramatic and unforeseen drop in property values such as to undermine the fabric of a judgment or settlement or render the judgment or settlement incapable of performance, such as occurred in D. v. D., the court may intervene;
2. When applying s. 22, the court should, so far as possible, maintain the original intent, balance, and symmetry of the original order, while at the same time adopting whatever changes and adjustments in provision as are necessary to ensure fairness and justice – per Abbott J. in A.K. v. J.K. Similarly, in D. v. D., the Supreme Court agreed to permit the introduction of new evidence regarding a significant drop in land values, so that account of those values could be taken in the application to vary, but at the same time stated that the principles applied by the High Court in that case in the division of the assets could still be applied.
3. In considering whether or not to make an order under s. 22, the court must have regard, systematically, to the factors set out in s. 20(2)(a) to (l) of the Act of 1996. It is not enough for the trial judge to simply to refer to those factors in a general way. (The Supreme Court in T.v.T. [2002] 3 IR 334).
4. When invoking s. 22, an applicant must invoke new events and not simply what Dunne J. described in O’C. v. O’C. as “… the continuation of an existing trend.”
95. The applicant also submitted that misconduct on the part of an applicant is a matter that should be taken into account when considering an application under s. 22. The applicant referred to the recent decision of the Court of Appeal in Q.R. v. S.T. [2016] IECA 421. In that case Irvine J. stated:-
“It is very clear from the authorities that in certain circumstances it would be unjust for a court, when determining proper provision under s. 16(2)(i), to fail to reflect the financial misconduct of one of the parties. This makes particular sense if that conduct led to the depletion or diminution of the assets available for consideration …
… Likewise efforts on the part of a spouse to hide money or dispose of assets to frustrate the court’s ability to make proper provision are but a few examples of the types of conduct it might be unjust to ignore. However, as the section clearly provides, the decision to take conduct into account ultimately depends on all of the circumstances of the case. …”.
96. The applicant makes this submission in the context of what the applicant claims is the inadequacy of information provided by the respondent as regards: M. generally; the loan due by M. to the respondent in particular; the write down of that loan by the respondent; the apparent writing off of the liabilities of the respondent to Bank B/NAMA in connection with his guarantee of the liabilities of M. (consequent upon the agreement with Investor B) and the possibility that there may be assets within M. which could be realised to repay the loan due to the respondent. The general thrust of the applicant’s argument is that there has been an insufficiency of candour on the part of the respondent in the disclosure of his assets, which, at a minimum, creates an uncertainty as to his true worth. On the authority of Q.R. v S.T., that is misconduct which the court should take into account in considering the respondent’s motion.
97. As against that, the respondent submits that the decision of Irvine J. makes it clear that there must be an intent on the part of the spouse against whom wrongdoing is alleged to impair the ability of the court to make proper provision for the other party, and the financial misconduct alleged must affect the capacity of the spouse to make proper provision for the other spouse. Counsel for the respondent cited the following passage from the decision of Irvine J in Q.R.v S.T.:-
“This helpful passage from the decision of Ryan J. [in K.C. v T. C. (Unreported, Court of Appeal, 12th February, 2016)] would suggest that when determining the manner and amount of the provision to be made for the parties it would be unjust to rely upon litigation misconduct, unless, having considered carefully all of the evidence which might favour a finding of mistake or innocence, the court was convinced that the party concerned had deliberately told lies, had sought to mislead the court and/or had still not made full disclosure.”
Respondent’s Application to vary Order
98. Counsel for the applicant submits that the application to vary the Order should be rejected on six grounds which may be summarised as follows:-
(i) There has been a lack of candour on the part of the respondent as regards the disclosure of his assets.
(ii) This lack of candour has given rise to uncertainties as regards the respondent’s net worth and financial standing, and the Court should not engage in any guess work to try and resolve those uncertainties which arise from the respondent’s own conduct.
(iii) Since the Order, the respondent has preferred other creditors over the applicant to the tune of some €7,244,795, and possibly more. The respondent made no effort to engage with these other creditors to the benefit of the applicant by, for example, pointing out that he had responsibilities to the applicant under the Order and seeking agreement from them to make payments to the applicant. In particular, it may have been open to the respondent to submit to NAMA that at least some of the payments made to it should have been credited not as against the liabilities of the respondent and his brother, but as against the joint liabilities of the respondent and the applicant in respect of the loan secured over the Family Home.
(iv) There has been no material change in the financial circumstances of the respondent since the date of the Order, such as to warrant an order under s. 22.
(v) The “devastating events” relied upon by the respondent were either not devastating at all, but merely part of the ebb and flow of ordinary business and/or were anticipated by the respondent at the time settlement was concluded. In this regard, the applicant places particular reliance upon the admission of the respondent that he entered into the terms of settlement more in hope than in confidence and that he was aware of problems with the project at the time settlement was concluded.
(vi) There was no corroborative evidence of any kind put forward by the respondent in relation to any of the events relied upon him to support the application to vary the Order.
99. In reply to these arguments, the respondent submits as follows:-
(i) There was no information deficit on the part of the respondent and no lack of candour in relation to the provision of information. The only ground relied upon by the applicant in this regard was an allegation that the respondent had not provided the applicant with the Bank A facility letter of October 2010, which allegation the applicant was obliged to withdraw. In relation to the complaint that the respondent did not disclose the loan due to him by M., this was not the fault of the applicant, but arose due to an oversight on the part of his accountant, to whom he had provided the relevant information.
(ii) Insofar as there was any information deficit, it was unintentional and was not material. The applicant put the matter no further than to say that she might have considered the terms of settlement differently.
(iii) As regards the proposal to Bank A, the evidence of the respondent was that the content was directed by Bank A and that the figures were intended to put the best possible gloss on the circumstances of the respondent (and his brother) at the time. Moreover, the proposal form itself is ambiguous in a number of respects in relation to the ownership and value of a number of assets, and it overstated the financial circumstances of the respondent.
(iv) As regards payments to third parties, it was the evidence of the respondent supported by the evidence of his accountant, Mr O’Keeffe, and to an extent by Mr Peelo and Mr Wyse, that if the respondent and his brother had not complied with the demands of NAMA, then NAMA would have appointed a receiver over the assets secured. Moreover, a significant proportion of the payments to NAMA was funded through the sale of assets owned exclusively by the respondent’s brother.
100. In their submissions, counsel for the respondent did not address the point made on behalf of the applicant that his circumstances today are not very much different from his circumstances in January, 2011. However, it is submitted that the respondent entered into the terms of settlement believing that he could comply and that he was optimistic he could overcome any obstacles. He did so on the basis that the project was still subsisting and was poised to yield a dividend. He believed that the service centre would become profitable and he had a standstill agreement as regards his liabilities to Bank B. The rug was pulled from under that project when his debts were transferred to Investor B and it demanded repayment of the loan relating to the service centre in particular, but also other loans. Then there was the loss of the Z. asset in an accident, and the cut backs by the government of X. which impacted significantly upon the business of Z.. It is submitted that there no evidence put forward to suggest that these occurrences, individually or taken together, did not have the devastating consequences claimed by the respondent. These were all events that occurred subsequent to January 2011. They have had the effect of altering, fundamentally, the basis upon which the respondent entered into the terms of settlement. It is further submitted that the applicant was aware, at least in a general way, of the respondent’s circumstances and expectations at the time of settlement.
Conclusions on application to vary the Order
101. I should first deal with the submission made on behalf of the applicant as regards the lack of candour of the respondent, and specifically insofar as this submission is advanced in relation to M.. It is submitted on behalf of the applicant that there has been a material lack of candour on the part of the respondent, which the Court should take into account in considering the application to vary the Order. Firstly, I think it is clear from the evidence of Ms McShane (to which I referred at para. 61 above) that the respondent did provide her with information regarding the loan due by M. to the respondent and his brother (even if the loan amount did not exactly correspond to the amount referred to in the Bank A proposal) and that Ms McShane overlooked to pass this information on to the applicant’s advisors. Furthermore, it is clear from the documentation placed before the court by Ms McShane that a copy of the guarantee given by the respondent and his brother to Bank B in respect of the liabilities of M. to that bank was made available for inspection and that Messrs Peelo reviewed the same. Moreover, the replies from the respondent to his accountant at the time indicate that documentation concerning the loan advanced by the respondent to M. was available for inspection, and this was relayed by the respondent’s accountant to Mr Peelo. A copy of the loan statement was attached with the reply.
102. Although the commercial rationale for the respondent giving a guarantee of the liabilities of M. is still somewhat unclear, an explanation was given by accountants acting on behalf of the respondent in a reply to queries raised by the applicant’s accountants, which explanation was repeated by the respondent himself in his evidence. Undoubtedly there are still gaps as regards the information concerning M.. For example it would have been particularly useful if the accounts of M. could have been made available, but the respondent indicated that these could not be made available because he is a not a shareholder or director of that entity. The respondent expressly refused to reveal the identity of the shareholders of that company on the grounds that he always promised them that he would never do so. While on the one hand this is not satisfactory, on the other hand it is difficult to see how the mere identification of the shareholders of M. would of itself lend much assistance to these proceedings.
103. Overall my conclusion on this aspect of the matter is that the problem with M. arises not so much from a failure on the part of the respondent to give information, but rather that it is difficult to understand the commercial rationale behind the relationship between the respondent and M.. But the fundamental information appears to have been provided and verified i.e. a guarantee was given by the respondent and his brother to Bank B as regards the liabilities of M. (which according to Peelo and Partners is actually unlimited and not capped at all, even at the amount of €21.3 million as the respondent indicated) and there is a loan owing by M. to the respondent and his brother in the sum of €13 million, of which €4.5 million is owing to the respondent. What has not been proven, however, or vouched in any way is how much is owing by M. to Bank B. Nor has the Court been given any information as to the value of assets secured by M. to Bank B which could become available to repay the loan due by M. to the respondent and his brother, notwithstanding that, according to the respondent, this loan was written off in 2013.
104. However, it seems to me to be highly unlikely that there is available to the respondent and his brother some hidden reserve in M.. The loan owing to the respondent by M. was disclosed to Bank A and it is not unreasonable to assume that either that bank, or subsequently NAMA, would have required the respondent and his brother to recover the amounts payable to them by M., and thereafter required payments of those funds to the bank or NAMA, if there was a reasonable prospect of securing repayment of the loan.
105. Moreover, it is hardly insignificant that the respondent’s brother was required, in 2010, to provide additional security to Bank A in the form of a charge over his Family Home, which, from its address, may reasonably be assumed to be a very valuable and prestigious property. It hardly needs to be said that it is highly unlikely he would have done this if it could have been avoided. The evidence of both the respondent and his brother was that the latter was very upset about being required to provide this security. Since it is clear, on the evidence, that the financial affairs of the two brothers are very much intertwined it is reasonable to draw the inference that the financial circumstances of both were stretched to the limit at that point in time. Furthermore, it is only as a result of the introduction of funds by the Investor B, in the course of these proceedings, that the respondent’s brother will be able to secure the release of his Family Home from that security.
106. For these reasons, I consider it highly unlikely that M. has any funds available to pay the loan due by it to the respondent and his brother. Insofar as the respondent has been reluctant to give certain information about M., I do not believe that that information is any way material to a proper consideration of the true state of the respondent’s financial affairs, though it would have been helpful to have had more information provided to arrive at this conclusion more swiftly and with more certainty. However, I do not believe that the evidence of the respondent as regards M. has been so cavalier as to justify the rejection by the Court of other important evidence given by the respondent. Nor do I believe that the respondent has told lies or attempted to mislead the Court
107. I turn next to the submissions made on behalf of the applicant regarding the alleged preference of other creditors – specifically NAMA – by the respondent, over his obligations to the applicant. It is submitted than in considering the respondent’s motion, the Court should take into account the payments made by the respondent and his brother to NAMA, after the making of the Order. In other words some of these monies could and should have been used to discharge some or all of the respondent’s obligations to the applicant under the Order.
108. It can hardly be doubted but that NAMA was putting the respondent and his brother under very significant pressure to reduce their liabilities. The respondent’s brother had to sell a number a number of his assets in order to meet the demands of NAMA, and he was clearly very anxious to reduce his exposure to NAMA, not least on account of the security he had been required to provide over his own home. It is not surprising therefore that the respondent’s brother would not agree to payments from Z. to NAMA being credited against any liabilities to which he was not a party, or, more specifically, to be applied in reduction of the loan owing by the applicant and the respondent to NAMA relating to the Family Home. While the respondent could have made efforts to have some of the payments diverted to reducing his and the applicant’s indebtedness to NAMA, rather than that of the respondent and his brother, I doubt very much if, in the circumstances, any efforts of this kind would have borne fruit.
109. The respondent was under pressure from two sources: NAMA and his brother to reduce their joint indebtedness to NAMA arriving out of their business activities. The furthest that Mr Wyse was able to put it was that he had seen NAMA take account of obligations of parties pursuant to matrimonial proceedings, and sometimes make concessions, but he did not venture to suggest that in this case NAMA would have agreed, if requested, to allocating payments received from Z., the respondent and his brother in reduction of the liabilities of the applicant and the respondent. I think it very unlikely it would have made any difference if the respondent had requested NAMA or his brother to agree to allocate any of the payments made to NAMA as suggested by the applicant. Moreover, it was the evidence of the respondent that had he and his brother not reduced their liabilities to NAMA as they did, the likelihood is that NAMA would have appointed a receiver over their assets, and thereafter taken steps to wind up the business of the respondent and his brother. While Z. may not have had any liabilities to NAMA, it is not difficult to see how the taking of enforcement action against the respondent and his brother by NAMA could ultimately have an impact on Z. also. In my view the allegations of an inappropriate preference by the respondent of his banking creditors over the applicant, are not made out.
110. I turn then to the application to vary itself. The jurisdiction to vary orders previously made in matrimonial matters is well established and is set out in s. 22 of the Act of 1996. It is has been the subject of considerable amount of judicial discussion and interpretation and I have already summarised above the key principles to be applied when considering applications of this kind. I am conscious of the requirement to address the factors set out in s. 20 of the Act of 1996, seriatim, and I have done so at the end of this judgment. The first question to be determined is whether or not there has been a change of circumstances, since January, 2011 such as to make it impossible for the respondent to discharge the lump sum provisions of the Order or to make it inequitable to require him to do so?
111. It is submitted on behalf of the applicant that the circumstances of the respondent are not very different to those obtaining in January, 2011, and, therefore, if he felt able to comply with the Order at that time, he should be able to do so now. However, that simply doesn’t follow. A person may enter into a settlement in the reasonable expectation that certain events will occur or alternatively that surrounding circumstances – such as property values – will remain the same, or even improve. If external forces, through no fault of that person, conspire to render those expectations nugatory, then that person, again through no fault of his or her own, may be unable to comply with the terms of settlement.
112. In this case, the respondent claims that a number of events occurred, over which he had no control, and which he had no reason or expectation to believe would occur. As counsel for the applicant has pointed out, the court has only the evidence of the respondent himself in relation to these events, and he produced no vouching documentation nor called any witnesses in regard to same. Moreover, counsel for the applicant has submitted that having regard to what he submitted was the lack of candour on the part of the respondent in making disclosure and in particular in refusing to give information in relation to M., it would be inappropriate for the Court to make any order in favour of the respondent on foot of his application for variation of the Order.
113. There is no denying that the failure of the respondent to produce any corroborative evidence as to the occurrence and effect of the events relied upon him in support of his motion is unsatisfactory. Each of these events must have generated a certain amount of documentation. It should also have been possible to call some supporting testimony. But unsatisfactory and all as all of this may be, it falls to the Court now to decide whether or not the evidence put forward by the respondent in relation to these events should be accepted as being sufficient proof of their occurrence and effect.
114. Firstly, it should be observed that, while not produced in Court, some documentary evidence appears to have been produced to the applicant’s solicitors and/or her accountants in relation to the settlement entered into between the respondent, his brother and Investor A. This is clear from the report of Mr Wyse. I accept the evidence of the respondent that the respondent and his brother will have to make payments of €3 million and $3 million to conclude the settlement with Investor A in October next, and to obtain the benefit of the write down agreed with Investor A, although the report of Mr Wyse refers only to the requirement to pay €3 million.
115. Secondly, in cross-examination, the applicant accepted that she had no reason not to believe the respondent in relation to the occurrence of these events. Now of course she had no more evidence to vouch these occurrences than I have available to me now, but the applicant knows the respondent better than anybody else involved in these proceedings and if she had reservations or felt that he was fabricating stories to avoid his liabilities to her, I would expect her to have said so.
116. Thirdly, uncorroborated evidence is not the same thing as no evidence at all; it may be frail for want of corroboration, but it is nonetheless evidence. Having had the benefit of observing the respondent in the witness box over a number of days, and also having had the benefit of evidence from his brother, on the balance of probabilities I think the events described by the respondent did indeed occur, and that they had the consequences which he described in his evidence.
117. It is my view also that these events are events which the respondent could not have anticipated. On the contrary, he expected that the project was finally going to start yielding a return in the years following the conclusion of the terms of settlement which would have enabled him to discharge his liabilities to the applicant as they arose. Indeed, he gave evidence that the timing of the payments provided for in the terms of settlement was structured as it was to reflect anticipated income from the project, resulting in the reduction of debt in Z. and the SPV and thereby further resulting in the availability of funds (to the respondent) by 2014 to make the payment referred to para. 17 of the terms of settlement.
118. Not only was the project cancelled, but the other events relied upon by the respondent, which occurred in close succession to each other either had the effect of depriving Z. of essential income, or alternatively caused it to suffer a significant loss.
119. I do not believe that the events relied upon by the respondent in support of this application could be regarded as part of a “continuing trend” of the kind that occurred and was referred to by Dunne J. in the case of O’C v. O’C. And while it might have been possible to foresee some of the financial difficulties encountered by the respondent, nobody could have foreseen the cascade of misfortune that occurred which, taken together, must surely constitute a change in circumstances sufficient to invoke the jurisdiction of s. 22.
120. The financial circumstances of the respondent are both uncertain and precarious. It may be that he will yet reap a dividend and quite possibly a good dividend, as a result of the Investment, not just arising from profits made from the obtaining of consents to enable the lands to which the Investment relates to be developed, but also, should that occur, from the release of the H. lands and possibly also the farm from security provided to the Investor. It is also possible that the respondent will receive a reasonable income from the activities of Z.
121. As against all of that, it must at least be equally plausible at this point in time to say that, not only will the respondent not reap the dividend as a result of the Investment, but he may yet be required to stump up funds to Investor B, and quite possibly very significant funds (up to the maximum of its investment of €31 million) to reimburse it any losses on the Investment. As far as Z. is concerned, while its finances have, according to the both the respondent and his brother, improved within the last year or two, it appears from the evidence of Mr Wyse that there is significant indebtedness within the Z. group of companies. While he found it hard to arrive at any conclusion as regards the overall financial strength of Z. (because of the absence of a consolidated balance sheet) the very fact that there is a significant indebtedness within the group must be a cause for concern.
122. Right now, it would appear that the only certainty that the respondent has as regards his finances is that there is a commitment to pay Investor B €3 million and $3 million in October of this year, and neither the respondent nor his brother at this point in time know where those funds will be found. If they fail to make those payments, the consequences are quite likely to be ruinous, resulting in the reinstatement of the debt due to Investor A of €17 million, and, according to the respondent, an additional liability to pay €3 million.
123. As against all of that, the financial circumstances of the applicant appear to be as certain as any market permits. She has net assets of €11,626,000, on her own case. This assumes a value for the development lands, with planning permission, of €7,250,000. That, it would appear, is likely to be the minimum value of those lands, although there will obviously be a cost associated with obtaining planning permission. There will also be capital gains tax to be deducted from the sale of the development lands. The loan attaching to the Family Home, for which both parties are jointly liable, currently stands at about €5.9 million, and the applicant has additional loans relating to her other properties of €1,759,000 and other loans totalling €1,011,000. So her total liabilities, as per the agreed schedule of differences, come to €8,733,000. Putting aside the costs of obtaining planning permission and capital gains tax, if she were to sell the development lands for the value that she has agreed in respect of those lands, and apply the proceeds of sale in reduction of both the loans to which she is a party with the respondent, and the loans she holds in her sole name, she would be left with an indebtedness of €1,483,000, as against assets of approximately €13,109,000 (having sold the development lands).
124. This would have the effect of reducing very substantially the monthly repayments that the applicant has been making in respect of loans which according to her statement of means of 5th April, 2017 amount, in round terms, to €21,000 per month. Taking a very simplistic view of things, if her indebtedness was reduced as described above (which amounts to a reduction in indebtedness of some 84%) and her repayments are reduced correspondingly, her repayments per month would be reduced to €3,360. This would reduce the monthly expenditure referred to in her affidavit of means of 5th April, 2017 to €17,344 per month, compared with a net income per month of €29,316. However, her net income per month includes payments currently being received from the respondent of €17,996 per month.
125. The applicant would also have available to her the option of clearing her indebtedness altogether, by selling some of her other assets. While that would obviously reduce her income, it seems certain to me that it is possible for the applicant, now that the shadow of NAMA/NALM has been removed, through proper management of her finances, to strike the right balance between retaining such assets as are sufficient to generate an income for her needs, and disposing of assets to reduce or eliminate debt.
126. It should be noted that at the time the Order was made, the applicant had sworn an affidavit of means dated 9th January, 2011 in which she averred that the value of the Family Home (which it must be remembered I have defined as including the development lands) was €6.9 million, and the value of her other properties (excluding the Holiday Property) was €1.5 million. In the intervening period, the value of the former has increased to €16,425,000, and the latter to €2,625,000.
127. While it goes without saying that a party who receives assets pursuant to terms of settlement or a court order in matrimonial proceedings is entitled to the full benefit of any subsequent increase in those assets, it is highly unlikely that anybody could have foreseen, in January 2011, that there would be such an increase in the value of the properties owned by the applicant.
128. In addition to the assets mentioned above, both applicant and respondent own a half share in the Holiday Property the net current value of which is estimated to be €1,200,000. The respondent has said that he considers his share of this property to be held upon trust for D1. and D2., and the applicant has no objection to that.
The Respondent’s trust proposal
129. The respondent has made a proposal that the Family Home should be placed into a trust for the benefit as to 50% thereof for the applicant, and the other 50% thereof for the children of the parties. Such a proposal cannot be countenanced for several reasons. Firstly, it would be highly unusual, if not unprecedented, to make such an order in matrimonial proceedings. The courts do not normally make capital provision for the children of a marriage. The children are usually provided for through the distribution of assets to their parents and, as to their ongoing maintenance, with specific orders for periodic payments in relation to the children. Other than by agreement of the parties, proceedings such as this are not an opportunity for succession planning to be made at the request of one party, but at the expense of the other. While the applicant did agree, at clause 28 of the terms of settlement, that D1. and D2. will be entitled to not less than 20% each of her net estate upon her death, there is a distinction to be drawn between a party to matrimonial proceedings agreeing to such an order as part of a settlement with the other party, and asking the court for such an order.
130. Secondly, while the respondent has argued that the creation of such a trust was at all times agreed by the applicant, the applicant has strenuously denied this. Moreover, the terms of settlement reflect no such intention, and if that was the intention of the parties, there is no reason at all why it could not have been reflected in the terms of settlement – it would not have exposed the Family Home to the grasp of creditors; on the contrary. Not only that, the contention that the parties had an agreement to place the Family Home in a trust is entirely at odds with clauses 16 and 28 of the terms of settlement. There would be no necessity for such provisions if it had been agreed that the Family Home was to be placed in a trust in which the children of the parties were to be beneficiaries of 50% of the Family Home. In contrast, the applicant has accepted the proposition put forward by the respondent, in relation to the Holiday Property, that it was agreed between them that in due course the applicant would be free to leave 50% of that property to her children, and the respondent would be free to leave his 50% share thereof to the children of the parties. I reject entirely the evidence of the respondent in relation to the agreement that he claims as regards the creation of such a trust. The evidence of the applicant in this regard is to be preferred.
131. Furthermore, it should be observed that one of the children of the parties is now, and the other is almost, an adult. Their needs are clearly very different to those of dependant young children. Their ongoing needs, to the conclusion of their education, and if necessary beyond, can be met from the income of the parties, and the respondent has indicated a willingness to continue funding the cost of their education, and, where necessary, their healthcare costs in accordance with the terms of the Order.
132. Finally, in the interests of completeness, I should say that I agree with the submissions made by counsel on behalf of the applicant that the creation of such a trust would give rise to unthinkable complications and leave parties in respect of whom a decree of divorce has been granted and who it may be assumed wish to live lives freely and independently of each other, joined at the hip indefinitely.
Decision on application to vary the Order
133. I return now to the application to vary the terms of settlement. I am satisfied that the respondent has no means to discharge his outstanding financial obligations to the applicant. As I have outlined above, his financial circumstances are precarious and uncertain. He has no pension provision and is almost 65 years of age. He has remarried and has ten year old child. In my view there is every risk that if the respondent is required to meet his outstanding financial obligations under the terms of settlement, he could be reduced to penury. As against that, I think it is clear from what I have outlined above that, owing to the very substantial increases in property values that have occurred since the Order, the position of the applicant is comfortable to the point of affluence. While it is true that the applicant does not have any specific pension provision either, even if the respondent is released from his lump sum obligations under the terms of settlement, and the applicant has to discharge all of their joint liabilities to NAMA, the applicant should have available to her far more resources than she could ever need for the remainder of her days. This is so notwithstanding that, like the respondent, the applicant does not have a specific pension provision. Her assets are her pension, and more. In my view she could, if required, also make proper provision for the needs of the children out of these resources
134. For all of these reasons, I believe that it is appropriate that I should make an order varying the Order that has the effect of vacating the obligation of the respondent to pay the applicant lump sum payments required of him pursuant to the terms of the Order, and specifically vacating the orders reflected in paras. 6, 17 and 18 of the terms of settlement. Additionally, I direct that, as between applicant and respondent, the liabilities to NAMA secured over the Family Home shall the responsibility of the applicant, but in any case shall be discharged by the applicant within two years. I will leave it to the applicant herself to decide how best to meet that obligation; suffice to say it is very clear she will have more than sufficient assets at her disposal to do so.
135. In making these orders I have had regard to the requirement to preserve, as closely as possible, the balance and symmetry of the terms of settlement. As at the date of the terms of settlement, the applicant would have envisaged receiving the Family Home, then valued at €6.9 million, free of charge by 1st February, 2018. She would also have received an additional payment (over and above that already paid by the respondent) of €750,000. Taking just those two items together and ignoring other assets, this would have given the applicant cash and assets having a value of €7,650,000. As it is, the effect of the orders that I am now making will result in the applicant receiving an asset now valued at €16,425,000 (this is a combination of a current valuation of the Family Home to which the applicant has agreed in the sum of €15,275,000, to which I have added the sum of €1,150,000 to reflect the now agreed minimum value of the development lands in the sum of €7,250,000), from which should be deducted (for comparison purposes) the amount due in respect of the loan over the Family Home in the sum of €5.9 million, leaving the applicant with an asset, free of charge or encumbrance, valued at €10,525,000, when the liabilities to NAMA have been discharged.
136. The applicant has also seen the value of her commercial premises grow by some €1.1 million since the making of the Order. It is clear, therefore, that the applicant will, even after the orders that I propose to make, be significantly better off than she would have been in January, 2011, after the making of the Order, because of the significant improvement in the property market in the meantime.
137. As regards maintenance, the terms of settlement provided that the respondent was to pay the applicant the sum of €12,916 per month for her ongoing maintenance and support (para. 2) and the sum of €5,000 per month for the support of the dependant children, D1. and D2., to be apportioned equally between them (para. 3). It was the evidence of the respondent that he has only been able to meet these payments through the support of his brother, because the respondent’s entire salary from Z. has been required to meet his maintenance obligations under the Order. His brother has been meeting the respondent’s living expense from his director’s balance in Z.. His brother gave evidence to the effect that he anticipated that he would only have to give this assistance for a limited period after the Order, and certainly not as long as has transpired, and he wants to bring it to an end. While he is willing to continue the payment of maintenance in respect of the children, he is not willing to do it in respect of the maintenance payable to the applicant herself. The respondent has proposed that there should be an immediate reduction by two thirds of the maintenance payable to the applicant for her benefit.
138. The evidence of both the respondent and his brother was that the trading circumstances of Z. have improved over the last year or two. Unfortunately, no figures at all were available to give any indication as to that improvement, or as to the kind of salary that could be paid to the respondent. However, I think it is clear that, on the basis of their respective financial circumstances as I have found them to be, it would be unjust and indeed unnecessary, to require the respondent to continue paying maintenance for the applicant and the children of the parties at the same level as was provided for in the terms of settlement.
139. Dealing with the children first, the respondent has not proposed any reduction in the payment, which appears to be a very generous level of payment, in respect of their maintenance. It is desirable however that some end should be put on that obligation and accordingly I will order that para. no. 3 of the terms of settlement should be amended by the addition of the words:-
“such payments to cease in respect of each child attaining the age of 24 years i.e. when D1. reaches the age of 24 years, the payment shall be reduced to €2,500 per month, and upon D2. reaching the age of 24 years, the obligation to make this payment shall cease altogether.”
140. Similarly, the obligation to discharge medical and healthcare expenses in respect of the children as described in para. 4 of the terms of settlement should cease upon each child attaining the age of 24 years.
141. As to the maintenance obligations to the applicant as provided for in para. 2 of the terms of settlement, at the moment the applicant has a net deficit of income over expenditure. It is going to take her some time to reorganise her affairs and to arrange to obtain planning permission for the development lands and dispose of the same. Having regard to this, and the improved trading circumstances of Z., I will direct that this payment is to continue for a period of twelve months from the date of perfection of the order herein, but thereafter shall cease altogether.
142. The Holiday Property was not the subject of any order, and I do not propose to make any order in respect of the same now. It appears the parties are agreed as to the future treatment of this property. However, in the event that there should be, at any time in the future, disagreement in relation to the upkeep, management or sale of this property, I will give the parties liberty to apply, to the intent that if one party shall so require it the Court will order that that property shall be sold (or alternatively the company through which it is held be sold) and the proceeds of sale divided equally between the parties.
The Factors Set out in Section 20(2)(a)(ii)(l) of the Act of 1996
143. As I have mentioned above, it is a requirement for the Court to consider the factors set out in s. 20 seriatim, when considering, under s. 22, an application to vary orders previously made. In considering the orders that I consider appropriate in this matter, I have taken those factors into account as follows:-
(a) The income, earning capacity, property and other financial resources which each of the spouses concerned has or is likely to have in the foreseeable future.
I have set out in as much detail as I can particulars of the earning capacity, property and other financial resources now available or likely to be available in the foreseeable future, and reflected the same in the orders that I intend to make, as set out above. I consider those orders to be the fairest and most just allocation of the resources of the parties in all of the circumstances.
(b) The financial needs, obligations and responsibilities which each of the spouses has or is likely to have in the foreseeable future (whether in the case of the remarriage of the spouse or otherwise).
All of these factors have been set out above in as much detail as is available to the Court, and have been taken into account in my conclusions as set out above.
(c) The standard of living enjoyed by the family concerned before the proceedings were instituted or before the spouses commenced to live apart from one another, as the case may be.
Neither party advanced any case as to any particular standard of living enjoyed by the parties prior to the institution of proceedings.
(d) The age of each of the spouses, the duration of their marriage and the length of time during which the spouses lived with one another.
The parties were married on 12th February, 1986. It is not clear precisely when the marriage broke down but from the evidence and the pleadings it would appear that this was at latest 2006. The applicant is in her 72nd year, and the respondent is in his 65th year.
(e) Any physical or mental disability of either of the spouses.
None was indicated to the Court.
(f) The contributions which each of the spouses has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution made by each of them to the income, earning capacity, property and financial resources of the other spouse and any contribution made by either of them by looking after the home or caring for the family.
The wealth of the family would appear to have originated from the businesses of the respondent. However, the most valuable asset of the family is beyond any doubt at the moment the Family Home which is in the sole name of the applicant. Although this was not explored in detail at the hearing, it appears that it was previously in the joint names of the parties and the applicant gave evidence that she purchased the interest of the respondent in the Family Home. No indication was given as to where she obtained the funds to do so. Neither party invited the Court to attribute any significance as to the respective contributions of the parties to the welfare of the family.
(g) The effect on the earning capacity of each of the spouses of the marital responsibilities assumed by each during the period when they lived with one another and, in particular, the degree to which the future earning capacity of a spouse is impaired by reason of that spouse having relinquished or foregone the opportunity of remunerative activity in order to look after the home or care for the family.
No case was made by either party under this heading.
(h) Any income or benefits to which either of the spouses is entitled by or under statute.
No evidence was advanced under this heading.
(i) The conduct of each of the spouses, if that conduct is such that in the opinion of the Court it would in all the circumstances of the case be unjust to disregard it.
The applicant did complain about the conduct of the respondent in two respects. Firstly, she clearly resented what she considered to be an ongoing intrusion by the respondent into her everyday life and in particular the manner in which he attempted to influence how the applicant should maximise the development potential of the development lands. For his part, the respondent countered that he had expended a lot of money in having the development lands zoned for development and that he was doing no more than putting a planning team in place to maximise the development of the lands in a timely manner. He had a somewhat patronising attitude to the applicant in relation to these matters. The orders that I am making as regards the Family Home affirm the absolute entitlement of the applicant to ownership thereof and give her complete control over the future development of the development lands.
The applicant also had complaints as regards communications between the respondent and the children of the parties. However, these complaints are not such as to require any orders.
It is also apparent from this judgment that the applicant also had complaints about the disclosure made by the respondent in the course of the proceedings, and I have already dealt with this in detail above.
(j) The accommodation needs of either of the spouses.
The accommodation needs of the applicant are more than adequately satisfied. The respondent is residing in rented accommodation, the rent for which is being provided for by his brother. This is one of the reasons that I have decided that it is appropriate to relieve the respondent of his lump sum obligations under the Order and to provide for the termination of maintenance payments by the respondent to the applicant in twelve months time.
(k) The value to each of the spouses of any benefit (for example, a benefit under a pension scheme) which by reason of the decree of divorce concerned, that spouse will forfeit the opportunity or possibility of acquiring.
This did not arise in these proceedings.
(l) The rights of any person other than the spouses but including a person to whom either spouse is remarried.
The applicant has not remarried, and she does not have a partner. The respondent has remarried and has a child aged ten years by his new spouse. Neither party asked the Court to take into account any rights that those parties may enjoy.
However, the respondent expressed concern that the applicant might prefer the children of her first marriage over and above the children of the parties, and in particular expressed concern regarding D2., whose legal situation is uncertain. He said that it had previously been agreed between the parties that the Family Home should be placed in a trust in which the children of the parties would enjoy a 50% beneficial ownership. This was denied by the applicant, and on the evidence I have preferred the evidence of the applicant in this regard.
The respondent has acknowledged that the applicant has a very good relationship with the children of the parties, but is obviously concerned that the applicant will not make fair provision for them in the future. For her part, the applicant has vehemently denied this and has said that she will not prefer any of her children over any other of her children in the management of her affairs in the future.
In considering this issue, I have taken account of the ages of D1 and D2.. D1. will be twenty-one this year and D2. will soon be seventeen years of age. The respondent has agreed to continue paying the applicant the sum of €5,000.00 per month for the support of the children, to discharge school fees and to maintain private health care for the children, and to pay for any uninsured medical and dental costs. The question of school fees, it is presumed, will soon become academic, but the children may require assistance with third level fees and I propose to amend the Order to require the respondent to discharge such fees as may be required to provide the children of the parties with a university education in Ireland. Thereafter, it is a matter for the parties to decide for themselves how they wish to benefit the children of the marriage whether on an inter vivos basis or by way of succession.
L. O’M. v N. O’M.
(otherwise N. McC.) [2002] 3 I.R. 237; [2003] 1 I.L.R.M. 401
Murphy J
ue
This is an application by the husband who has initiated proceedings under the above mentioned Act for a declaration that the sale or mortgage or a disposal by him of any properties by him are not reviewable dispositions within the meaning of s. 37 of the Act.
Previous proceedings
The motion comes in these proceedings after judicial separation proceedings, guardianship of infant proceedings, liquidation proceedings in 1997 and further commercial proceedings in 1999. These proceedings were compromised as follows:
26 February 1999 25M 1997, O’M. v. McC. settlement matrimonial matters;
2 March 1999 settlement of 1997 No. 3885P, McC. v. O’M.,
1997 No. 71 COS, Oakleaf Construction Ltd and 1999 No. 864
P O’M., Oakleaf Construction Ltd, Hainault Properties (Tara) Ltd and KPL Developments v. McC.
On 5 March 1999 a deed of waiver O’M. and McC. was executed.
As the purpose of the application is in relation to the declaratory relief sought it is unnecessary to go into the full terms of the settlements. Relief under s. 14 originally claimed in the respondent’s counterclaim and, more recently the subject of the notice of motion herein, is not being pursued in this application.
One of the elements of the settlement is, however, of relevance. That is the entitlement of the respondent herein under the commercial proceedings in relation to the KPL Partnership in the Tallaght Development.
The parties agreed, in full and final settlement, of the claims in those proceedings as follows:
[The respondent] is entitled to 28% of the net post tax profit of KPL Partnership in the Tallaght Development in these proceedings to be rendered from the 70% share of the applicant in KPL who shall be liable therefore; and
The respondent guarantees the value of such 28% share shall not be less than £1.5 million, or such other consideration in shares for moneys worth as may be agreed between the parties.
The said Tallaght Development should be managed for the best interest of KPL Partnership Provided Always that the (respondent) shall be entitled to full disclosure, uberrimae fides , in a timely manner of all documents and financial records (in confidence to [the respondent] and her advisors) of the partnership and shall further be entitled through her representative to communicate with the accountant of the partnership and to summon a meeting on reasonable notice of the partnership to be attended by her representative for the purpose of inquiry and supply of information relating to the Tallaght Development.
The settlement also provided for a put and call option to be exercised within a certain option period. The value was to be agreed. In default of agreement it was to be determined by an arbitrator agreed or, in default, to be appointed by the president for the time being of the IAVI. The basis of valuation is stated to be the value of the development as a going concern over the previous 12 month period.
In consideration for that settlement the respondent transferred her shares and resigned her directorships in Oakleaf Ltd and Hainault Ltd and released all claims therein. The respondent also waived all challenges to the title of KPL, acknowledged the rights of Hainault Ltd to assign the same to KPL and the registration of KPL as the owner of the folio. She further consented to the removal of the caution on the said folio.
Current proceedings
By a special summons dated 12 July 2001 the applicant commenced divorce proceedings seeking a decree of divorce pursuant to s. 5; an order excluding the respondent’s entitlement to apply for relief under s. 18 and, if necessary, an order pursuant to s. 5(2) of the Act and pursuant to s. 11 of the Guardianship of Infants Act 1964 providing for joint guardianship, custody by the respondent and access in terms already agreed.
The respondent, by replying affidavit of 22 January 2002 counterclaimed seeking orders under ss. 13, 14, 16, 17 and 18 of the Act.
By notice of motion dated 7 March 2002, already referred to above, the applicant also sought orders pursuant to Order 19, rules 27 and 28 striking out the respondent’s counterclaim and also for a property adjustment order under s. 14. While this matter was opened to the court it was, eventually, not proceeded with on the third and final day of the hearing. The alternative application for a declaration that the sale or mortgage or disposal by the applicant of any properties are not reviewable dispositions within the meaning of s. 37 of the Act was proceeded with.
Reviewable dispositions
S. 37 of the Act outlines the powers of the court in relation to transactions intended to prevent or reduce relief. It relates to reviewable dispositions, that is, any disposition of property howsoever made other than a disposition made by a will or codicil made by the other spouse concerned or any other person. It is clearly a very broad definition. It does not include a disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition, was acting in good faith and without notice of an intention on the part of the respondent to defeat the claim for relief. Not surprisingly, it is of concern to a purchaser if any spouse is subject to proceedings under the Act for the grant of relief brought by the other spouse. The court, on being satisfied that the other spouse concerned or any other person, with the intention of defeating the claim for relief, proposes to make any disposition of or to transfer out of the jurisdiction or otherwise deal with any property, may make such order as the court thinks fit for the purpose of restraining the disposition. Where the court is satisfied that a reviewable disposition has been made and that, if the disposition were to be set aside, relief or different relief would be granted to the applicant, the court may make an order setting aside the disposition (s. 37(2)).
The property concerned consists of a certain development in Tallaght already referred to in the settlement agreements and shareholding in a number of building companies owned by the applicant which is in the process of developing and selling housing units.
Grounding affidavit
The grounding affidavit of J.B. O’Connor, the applicant’s solicitor, was sworn on 7 March 2002. That affidavit referred to the full and final settlement as being proper provision.
The affidavit outlined the extent of the development of the applicant both in his own name and in joint name with his business partner. The affidavit referred to and exhibited a deed of waiver dated 5 March 1999 and exhibited correspondence in relation thereto. Clause 13.2 of that agreement provides that the parties shall each execute the mutual deeds of waiver in relation to future sales of property for the purposes of the Family Home Protection Act 1976.
The deed of 5 March 1999 referred to recites that it is made for the purpose of dispelling any doubts which may arise in virtue of the provisions of that Act and of the Judicial Separation and Family Reform Act 1989, the Family Law Act 1995 or the Family Law (Divorce) Act 1996 in relation to all interests in any property which either of the parties then had or might thereafter acquire. Though executed before divorce proceedings were commenced it referred to that Act in its recital.
Clause 2.2 provides as follows:
The wife in consideration of the said waiver, renunciation and surrender by the husband hereby waives renounces and surrenders any rights whatsoever which she may have or be deemed to have or require under the provisions of the Acts in any premises or part or parts thereof which the husband may now own or hereafter require and hereby consents to the husband conveying (whether by sale, lease, mortgage or otherwise) or disposing within the meaning of the definition of ‘conveyance’ contained in the Family Home Protection Act 1976 any such premises or part or parts thereof without any further consent being required from her.
Replying affidavit
The replying affidavit of the respondent’s solicitor, Muriel Walls, dated 11 April 2002 first dealt with matters raised by Mr O’Connor’s affidavit in relation to the first two applications contained in the notice of motion which, as already stated, were adjourned.
She refers to the applicant’s special summons seeking a decree of divorce and an order and cross order pursuant to s. 18(10).
In relation to the declaration sought by the applicant that the sale or mortgage or disposal by him of any properties are not reviewable dispositions, the draft declaration which he exhibits is the standard precedent to be used. This provides, inter alia, as follows:
… under any of the provisions of the Judicial Separation and Family Reform Act 1989 or of the Family Law Act 1995 or the Family Law (Divorce) Act 1996 the assurance of the property to the party or parties mentioned in paragraph 9 hereof is not a disposal for the purposes of defeating a claim for financial review (as defined in s. 29 of the Act of 1989) or relief (as defined in s. 35 of the Act of 1995).
This declaration, the deponent avers, is crucial in any conveyancing transaction and is good practice for any solicitor representing a purchaser.
Ms Walls says that the respondent seeks a variety of financial relief orders to ensure that proper provision exists for herself and the dependent children in the light of the circumstances that exist at the present time. She does so in light of present circumstances and in the context of the failure to honour commitments made by the applicant in previous proceedings. Very clear instructions were given that it is not the intention of the respondent to embarrass, damage and/or frustrate the applicant’s business dealings.
Submissions on behalf of the applicant
Mr Allen SC submitted that that agreement is in place. No approach was made to the auditors or valuers. There is in his submission a hint that the settlement already made was not enough.
S. 37(4) of the Family Law (Divorce) Act relates to recent dispositions which had the consequence of defeating an applicant’s claim for relief. In such case it is presumed, unless the contrary is shown, that the other spouse or other person disposed of or otherwise dealt with the property concerned, or, as the case may be, proposes to do so, with the intention of defeating the applicant’s claim for relief. The court must be satisfied that the disposition has that consequence before such an intention is imputed. It is also clear that the provision relates to proposed dispositions which would have that consequence.
S. 37(1) defines reviewable disposition. That term means the disposition made by the other spouse concerned or any other person but does not include such disposition made for valuable consideration (other than marriage) to a person who, at the time of the disposition acted in good faith and without notice of an intention on the part of the respondent to defeat the claim for relief. It arises in the context of proceedings for the grant of relief pursuant to subs. (2).
It is clear that the key provision which avoids a disposition being reviewable is that it is made for valuable consideration to a person, who at the time of the disposition, acted in good faith and without notice of an intention to defeat the claim for relief.
In relation to the usual orders under ss. 12 to 18 including a property adjustment order under s. 14 or their variation under s. 22 every court should not make an order unless it would be in the interests of justice to do so (s. 20(5)).
Submissions on case law
The applicant submitted that Tesco Ireland Ltd v. McGrath High Court 1998 No. 526Sp (Morris P) 14 June 1999 applies. In that case proceedings under the Family Law Reform Act 1998 between the first named defendant, as part vendor and his wife were in existence (s. 35 of the Family Law Act 1995 is equivalent to s. 35 of the Family Law (Divorce) Act 1996). The purchaser’s solicitor had been informed that an interim maintenance order had been made. In those circumstances Morris P held at pp. 13–14:
In these circumstances in my view it is clear beyond doubt that claims under the Family Law legislation were being actively pursued by the first named vendor’s wife and the purchasers would have been aware that under the provisions of s. 35 of the 1995 Act there was a realistic danger that the court would presume, unless the contrary were shown, that the disposition was for the purpose of defeating this matrimonial claim.
…
I am satisfied that if the purchasers were to rely upon the statutory declaration … they could not establish that they had acted in good faith and without notice on the part of the vendor to defeat the potential claim.
Respondent’s submissions
Ms Clissman SC submitted that the court had no jurisdiction to make the order required under paragraph 3 of the notice of motion. The section safeguards the other spouse. There is a presumption that any alienation in the circumstances of proceedings under the Act is reviewable. The onus of proof shifts to the applicant: there is no case made by the respondent that there is a wrongful disposition.
S. 35 of the 1995 Act is equivalent to s. 37 of the Family Law (Divorce) Act 1996.
The Tesco v. McGrath case referred to applies to a particular disposition and not a general declaration that future dispositions would not be reviewable.
In M.K. v. J.P. (otherwise S.K.) [2001] 3 IR 371 it was held that s. 20(1) of the 1996 Act does not allow an applicant the relief sought under paragraph 3 of the notice of motion. Subs. (5) of that section is limited to the financial provisions of ss. 13 to 18 and amendments thereto.
Under the terms of the settlement once the Tallaght agreement is implemented maintenance will cease. In any event the valuation as per the agreement of 2 March 2002 relates to a put and call in relation to valuation where there has been no development to part of the site.
In any event it is not possible to have such a claim as is sought. The provisions do not allow a clean break (see M.K. v. J.P., p. 383):
The concept of a single capital payment to the wife to meet her ‘reasonable requirements’ for the remainder of her life have never in fact formed a part of Irish family law. There are two main reasons for this. Firstly, such a capital payment is inevitably a part of a ‘clean break’ settlement in divorce proceedings. In this jurisdiction the legislature has, in the Family Law (Divorce) Act 1996, laid down a system of law where a ‘clean break’ solution is neither permissible nor possible. Secondly, the approach of the Irish courts, in accordance with both Articles 41.2 of the Constitution and the statutory guidelines, has been to give full credit to a wife’s contribution to her work in the home and as a mother of her children. (See, for example, J.D. v. D.D. [1997] 3 IR 64). In this jurisdiction the overriding requirement of a fair outcome is governed by s. 20(5) of the 1996 Act: ‘The court shall not make an order under a provision referred to in subs. (1) unless it would be in the interests of justice to do so’.
In relation to the implementation of the commercial agreement, counsel submits, the information given is not up to date. There is no point in having a meeting with the applicant’s accountants before the accounts were prepared as these are the basic tools for such a meeting.
The application for the declaration sought cannot apply to the business transactions of companies in which he has an interest. The company has no personal obligation.
In relation to the respondent’s counterclaim the assets of KPL are not included. However, there is an obligation to fund the settlement made under ss. 13–18 and, accordingly, all assets are relevant.
Moreover, the determination of this motion as a preliminary issue will not shorten the substantive hearing. Rather it could undermine the respondent’s position.
Difficult questions of law are involved arising out of the construction of the legislation and should not be dealt with by way of preliminary motion — see Blythe v. Attorney General [1934] IR 266 where the court struck out a motion that the plaintiff’s statement of claim be struck out on the grounds that it disclosed no cause of action and was frivolous and vexatious. That case related to the plaintiff’s application for directions that, as members of the political organisation known as ‘United Ireland’ (otherwise Fine Gael) that they had a right to form a subordinate association known as the ‘League of Youth’.
While the applicant has said that it is not pursuing the first and second claim in the notice of motion the respondent submits that Blythe applies to the seeking of a declaration that the disposal by the applicant of any properties were not renewable dispositions.
Applicant’s reply
The relief sought is not a preliminary issue. The applicant has absolute entitlement to come to the court to seek its inherent jurisdiction. He conceded that any order would exclude all assets of the KPL Partnership.
Decision
The net issue which remains for the court relates to the disposal of the applicant’s assets, excluding the assets of KPL Partnership. It does not relate to the disposal of assets by the several companies in which the applicant has an interest. It is conceded that the companies and their assets as distinct from the ownership and valuation of the shares in those companies are not amenable to family legislation. The shares in those companies clearly constitute personal property of the applicant, the disposition of which are encompassed by s. 37(1) of the Family Law (Divorce) Act 1996.
Indeed, the applicant’s case was based on the necessity to dispose of properties which have been developed by the companies in which he has an interest. It is clear that these cannot be reviewable dispositions within the meaning of the Act.
In so far as the relief sought applies to personal assets (other than the applicant’s personal share in the KPL Partnership) it does not seem to the court appropriate to make such a declaration where no disposition in relation thereto is in contemplation.
Moreover, in so far as the declaration sought applies to any properties it seems to the court that such a declaration is too general in nature. The applicant applied for relief under the Act. It is clear that s. 37 limits the rights of spouses in so far as the disposition of their property is concerned once proceedings have issued in relation to the Act.
In any event, where problems do arise with regard to the disposition of land, which are caught by requisition numbers 24 to 26 of the current (2001 edition) of the Law Society Objections and Requisitions, these are dealt with from a conveyancing point of view by way of declaration similar to that referred to and exhibited in the replying affidavit.
Such a declaration refers to family proceedings which are still extant and then refers to the full advice and solicitors’ explanation regarding the disposal which is followed by an acknowledgement that the disposal is not a disposal for the purpose of defeating a claim for relief as defined by s. 35 of the Family Law Act 1995 or s. 30 of the Family Law (Divorce) Act 1996. This would appear to be standard conveyancing practice.
In the circumstances the application stands dismissed.
A(W) v A(M)
[2004] I.E.H.C. 387
JUDGMENT of Mr. Justice Hardiman delivered on the 9th day of December, 2004.
In these proceedings the applicant (hereafter called the husband) sought a decree of divorce. The wife counterclaimed for divorce and sought extensive ancillary orders including a property adjustment order in relation to all the husband’s property, an order for maintenance, a pension adjustment order, a financial compensation order, an order for sale of such property as the Court considered appropriate, an exclusion order and certain further orders. By order of the Circuit Court of January, 2004, a decree of divorce was granted to the parties, mutual orders under s.18(10) of the Act of 1996 were made, the periodic maintenance order in favour of the wife in the sum of €150 per week was made and the application for a property adjustment order was refused. The wife appealed against the whole of the order. At the hearing, however, it became clear that the wife did not object to the granting of a decree of divorce but sought ancillary orders.
Background.
The factual background to the case is essential to the resolution of the present dispute. Fortunately, there is a very large measure of agreement.
The husband and wife are both from comfortable agricultural backgrounds. The husband is now aged 54 years and the wife 50. They married in 1978 and the matrimonial relationship collapsed by 1988 and probably sometime earlier. In 1993 the parties entered into a deed of separation and a side agreement the terms of which are of considerable importance. There are no children of the marriage.
The husband and wife were each born into substantial farming families residing close to, but on different sides of, Cork City. In 1974 the husband received from his father a farm some 78 acres and in the following year he bought another farm of 136 acres, jointly with his mother.
About 1978 the wife acquired, by inheritance from an uncle, an 80 acre farm near her home place.
The respective farms of the husband and wife, and the husband’s half interest in the third farm constituted the parties assets on or shortly after marriage in 1978. Thereafter, the husband sold his farms and purchased instead three farms near the wife’s home place. One of these, of 67 acres, he acquired in his own name and the other two of 206 acres in total were acquired in the joint names of husband and wife. Accordingly, by the mid 1980s the husband possessed 67 acres in his own name and the wife retained her 80 acre farm in her name. The parties jointly owned a further 204 acres, making a total of just over 350 acres. They lived in a house on one of these farms which might be regarded as the home farm and in the mid or late 80s changed the nature of their enterprise from dairying to dry stock. In 1988 the husband bought a further farm of 95 acres a considerable distance away in his own name for the sum of £160,000 all of which was borrowed. Later he acquired a smaller adjacent farm. In 1988 the husband’s father died. The marital relationship definitively collapsed in the same year and the parties were in effect living separate and apart but in the same house. The husband, however, spent considerable time in his mother’s family home on a valuable holding some distance away. The wife’s parents, a brother-in-law and a cousin were all engaged in fairly extensive farming near the family home.
In the course of the year 1989 the husband carried out significant upgrading in the home farm including the acquisition of a milk quota, the purchase of a pedigree Frisian herd of 150 head and other matters.
In 1991 the husband moved out of the family home. For a long period throughout 1992 and early 1993 there were intensive negotiations between the husband and the wife, who was assisted by her father and the cousin referred to above. The parties had the benefit of legal and accountancy advice from very reputable sources including in particular an accountant, Mr. Cullinane. This gentleman is an accountant with a specialty in agricultural accounting and business planning and was called on behalf of the wife in the hearing of the appeal.
The separation agreement.
This agreement is dated the 8th April, 1993. It is generally in a usual common form, but the following provisions require particular notice:
(2) “The terms of this agreement are intended to be a full and final settlement between the parties of any legal or moral obligations which they have to each other, whether arising out of legislation based on a matrimonial relationship, or otherwise, and in particular but without prejudice to the generality of the foregoing the husband and wife agree that neither party shall institute or maintain or attempt to institute or maintain proceedings against the other seeking a decree of judicial separation or any ancillary relief thereto pursuant to the provisions of the Judicial Separation and Family Law Reform Act, 1989 or any similar or amending legislation.
(3) The husband and the wife agree that any property of any nature acquired by either party in the future shall be the sole property of the person acquiring same. Furthermore, the husband and wife, each as the spouse of the other, hereby respectively acknowledge to the other that any other house or premises which might subsequently be purchased by either of them at either time in the future will not constitute a family home…
(4) It is agreed that the husband or the wife shall be entitled to carry on any business without any interference from the other and all profits therefrom and any property purchased or money saved by the husband or by the wife shall be their own property.
(14) The wife acknowledges that she has no right or claim to and will not seek to establish or maintain any right or claim to [the lands separately acquired by the husband as set out above] or [a suburban house in Cork purchased by the husband in 1992].
The separation agreement generally is a detailed one covering all the matters which it might be expected to cover and several contingent matters.
On the same day that the separation agreement was executed the parties entered into a “side agreement”. Insofar as relevant this provided:
“… Neither of us will obstruct the other in seeking and/or obtaining a divorce a vinculo in the event of such other being entitled to seek and obtain a divorce a vinculo without infringing the constitutional rights of the party not so seeking such divorce and provided further that such of the financial and property terms contained in the [separation agreement] as remained to be performed at the date of application for such divorce a vinculo shall be incorporated on the application and by the consent of the moving party in such application into any decree which may be granted on foot of such application and provided further that any of the said financial terms or property terms that shall have been performed as of the date of such application for divorce a vinculo shall be excluded from the consideration of the court by and on the consent of the moving party in such application.
It is further agreed … that this letter is not intended by the parties and shall not in fact approbate their alleged marriage and is intended solely to facilitate the parties in regulating their financial and property affairs and their marriage status insofar as such status be deemed invalid.”
Under the terms of the separation agreement the wife acquired in her own name some 178 acres together with the milk quota attaching to part of it, farm equipment and buildings, a residence and a fully working farm. The husband received into his own name approximately 174 acres without buildings or equipment. Quite complex arrangements were made for the liquidation of a bank debt for which the parties were jointly responsible by the sale of stock and for the choice by or on behalf of the wife of stock for her retention. The husband retained the lands which he had bought remote from the wife’s home and the debt incurred to buy them. The husband retained the dry stock on the farm. Sixty three head of cattle were sold by agreement for the wife in respect of the bulk of her part of the bank liability. The balance of the herd was retained by her, this being a milking herd.
After the separation agreement had been carried out, neither party had more than a small and manageable level of debt on the land each received in the settlement.
Effect of the separation agreement.
On the hearing of this appeal the only real evidence given about the separation agreement was that of the accountant, Mr. Cullinane, who is referred to above. He said that over a long period in 1992 and 1993 his firm had acted as mediator between the parties in arriving at a settlement. He said he believed that they mediated a fair settlement and he personally drew up the heads of the agreement. He said his firm were the farm accountants to both Mr. and Mrs. A. He said that his object had been to seek a fair solution based on his accountancy expertise and his extensive knowledge of farming. He said he believed the agreement secured the position of both Mr. and Mrs. A. He said that at the date of the agreement the perception of all parties was that a fair resolution had been reached. The advantages and drawbacks of the lands and the quota attached to part of them were known to all parties. He believed that each party was given by the agreement the means to carry on their lives and thrive, independently from then on: he was satisfied of this. This evidence was unchallenged.
After the agreement.
In the period immediately after the agreement, before the end of 1993, the husband sold his lands near the wife’s home place. With the proceeds he reduced or liquidated the debt on the more remote farm he had acquired and on the suburban house. He acquired another 100 acres near his existing holding. Later, he entered into a new relationship, since ended, and became the father of two children who live with their mother in the suburban house. They are now eight and eleven years old.
Since the separation, the husband has prospered exceedingly. This is substantially as a result of the shrewd acquisition and sale of property near the expanding City of Cork, and later further afield. The most significant part of this business was conducted in partnership with his mother who, although now in her middle eighties, was stated to be a shrewd and formidable business woman. In late 2002 and early 2003 he and other members of his family as beneficiaries of a trust established by his mother benefited from an advantageous sale of certain lands, of which the husband received a sum of €3.3 million. This enabled him to clear certain debts and retain some €750,000. In January, 2004, he and his mother made a further very substantial acquisition in a neighbouring county, involving him in borrowings for about €7.4 million. The husband’s net worth is difficult to establish precisely depending as it does on shifting land values, borrowing rates, the valuation of his mother’s interest and its effect on his own interest, but is probably about €7 million.
The wife’s post separation fortunes are in sad contrast. At first she farmed her holding of 170 acres with the milk quota and stock. Unfortunately, she seems to have done this in what two separate experts called on her behalf regard it as the most inefficient and expensive manner possible: she employed a company called “Farm Relief Services” throughout the years 1994 and 1995. This company was basically a supplier of labour services, usually used by farmers in holiday periods, periods of illness or periods of very intense work. Her accountant stated, with moderation, that her decision to do this meant that her cost base was very high. It would appear that, taking one month with another, she paid about £1,000 per month for this service. Although she was from an agricultural background and was, in the experts’ view, an efficient farmer, she very rapidly reached a position of which her farm enterprise was no longer viable. She then embarked on a number of sales. In 1996 she sold the former family home, farmyard and 3 acres. In 1998 she sold a site and, in a separate transaction, a further 30 acres. In 1999 she sold 43 acres. From these sales she received about £420,000. It is not clear precisely what happened to this money except that with part of it she built a four bedroomed house on part of the land. This was described by her accountant as “fabulous” but he said that he was not consulted about the project and would not have advised it from a financial point of view. It was agreed by the wife herself and by her two experts that the house was built and fitted out to the highest standard. Her accountant said that she could certainly have built or bought a smaller or cheaper house but that “she wouldn’t live in a smaller house”. It appears that the wife’s decision to build this house may have been connected with an ambition she had to develop sites for sale or to develop as a small estate, which foundered when her application for planning permission was rejected. In recent times the wife has sold the milk quota and her remaining animals for a sum estimated by her accountant at €70,000 or €80,000. It would thus appear that, as a result of sales of various sorts since the separation agreement the wife has realised a sum of about £500,000. She has a bank debt of about €160,000, secured by equitable deposit of the deeds to the land. The new dwellinghouse appears to be unencumbered and is valued at about €400,000. The only income declared by the wife was in respect of rental income for about half of the remaining lands. In the course of cross-examination, however, it transpired that she had further cash income from the sale of silage on the balance of the lands and in respect of certain work performed by her for her now very elderly parents. Neither of these were declared in the affidavit of means, she said, because “that was cash, it did not appear in my account: that was cash I used privately myself”.
Accordingly, the difficulty of estimating the wife’s current net worth, or indeed her income, is compounded by her reticence. It seems clear enough that she will not declare anything she thinks she can avoid declaring. It appears however that the value of the lands is about €900,000 and that of the house about €400,000, suggesting a net worth of about €1.25 million. By no means all the approximate £500,000 received from sales has been accounted for. The balance might, if retained, increase the net worth by about €150,000. I think it probable, however, that this sum or most of it has been spent in ways not now traceable.
Equally, it is very difficult to form a precise estimate of the wife’s income but taking her rental income to be as she declares it, the income from her family at not less than the €5,000 p.a. she mentioned and attributing a modest sum only for the sale of silage to date and attributing, for the future, a rental income to the presently unlet lands, an income of something over €25,000 per year seems indicated. But the rental income, according to the wife’s expert, is likely to decline.
Reasons for developments since separation.
The reasons for the husband’s post separation prosperity are pretty apparent. It is due to shrewd investment in land involving at times very substantial borrowing and an element of risk but to date very successful, due to the skill and judgment of the husband and his mother.
The reason for the much less happy picture of the wife’s affairs is more complex and was the subject of contradictory evidence, remarkably, from the wife’s own expert. There is no doubt, on the evidence, that the separation agreement was a fair one and provided ample and approximately equal opportunities for the parties to thrive in its aftermath. Its validity was expressly conceded by counsel for the wife. She also conceded that the agreement envisaged a “clean break” insofar as that is possible in Irish law. The expert called by the wife, Mr. Cullinane, substantially attributed the failure to the very high cost base caused by the employment of Farm Relief Services and another factor relating to milk quota, which will be discussed below. The wife he said needed to employ farm relief services because, as a female, she was physically incapable of certain of the necessary farm tasks. He stated that these tasks were the need to work long hours, the milking and the seasonal calving. The wife herself, however, did not make this case. Moreover, Mr. Cullinane was strongly challenged in cross-examination on this claim. He conceded that it was not unusual to have a woman taking a full part in a dairy enterprise, alone or jointly with a partner; that dairying was a relatively light form of farming work and (in total contradiction to his initial view) that the wife was physically able to run the farm. Her difficulties, he now said, came from emotional factors: she was not emotionally able to run the farm. He agreed that he had seen her only a few times after the separation agreement, and generally in his office. He said that basically she was a failure as a farmer (he had previously said that she was an “efficient farmer”) and that she had employed Farm Relief Services “to run the farm for her”. He said that she was proud and concerned with “keeping up appearances”, or “putting on a good show”. This he said was an aspect of her character which may have made life difficult for her after the separation. Marital separations, he said, were not that common in 1993.
Mr. Martin, an agricultural consultant also called on behalf of the wife stated in cross-examination that there was no reason a healthy 40 year old woman should not run a dairy enterprise on her own, especially if she were from an agricultural background. His practice had several such clients and he knew of others.
The wife herself, when she gave evidence, stated that she could not make “a go of it because I was too proud and too emotional to carry on… I never expected a break up to happen to me. It shattered my confidence… I was totally ostracised by the general public in a small rural community… I felt people were looking at me behind my back, I don’t think that I was wished good luck.” As a result of this, she said, she felt drained and “maybe I was not thinking properly… no-one offered me any advice”. She estimated the cost of building a new house at £200,000 or £240,000. She said that she had borrowed to make ends meet and “I haven’t thought about any means to reduce my debt because I am too emotional”.
It will be thus be seen that the prime reason put forward by the wife for the failure of her farming enterprise was a form of emotional incapacity to do the farm work. I am, however, satisfied that this is an afterthought. She was cross-examined strongly on the basis that no such claim had been made in the Circuit Court and I accept that this is so.
I must unfortunately record that the wife was not a satisfactory witness. In certain respects her evidence was false. On other aspects she simply adopted a very truculent attitude: she repeated her evidence parrot-like and simply refused to answer questions put by way of challenge to it.
Specifically and importantly, the wife alleged that she only employed Farm Relief Services to do a few things she could not do herself such as general repairs, fencing, or ploughing. She stated her belief that this service was cheaper than employing a labourer. Most of the work, she said, she did herself. This is simply inconsistent with the amounts paid to Farm Relief Services. It is also inconsistent with the evidence of her own accountant that the company “ran the farm for her”. I am satisfied that no reasonable person with farming experience, or even without it, could consider that it was cheaper to employ this company than to employ a labourer. Again, her own expert put the additional cost at about 30 or 35%. Moreover, the wife gave evidence that she was unaware of the husband’s ownership of the lands at the location remote from her home: but these lands are specifically mentioned in the separation agreement.
On a number of occasions, the wife simply refused to answer questions either in express terms or by continually repeating her previous answer. This arose first, for example, in relation to the number of cattle she had when she was running the dairy farm after the separation agreement. I am quite satisfied that her reason for refusing to answer was a reluctance to commit herself to a version of the facts which, she feared, might be open to irrefutable contradiction.
A conflict.
The husband was challenged on one only point by counsel for the wife. Counsel cross-examined him with a view to establishing that the failure of his wife’s enterprise was due, at least in part, to its having insufficient milk quota. The husband said that, in his view, the milk quota attached to the farm was insufficient to keep the operation going at the level it had previously attained. This level had been achieved by renting some quota. The husband said that, during the negotiations, he had pointed this out to those advising the wife and pointed out also where additional quota might be available. He was told however, by the wife’s father, that “they’d have enough without [the new quota] and that they didn’t want to make the operation too big.”
The wife’s credibility and reliability as a witness is suspect for the reasons given above. The husband struck me as being a perfectly reliable witness during the very short period he was in the witness box. I would therefore prefer the husband’s version on this matter. Fortunately, it is almost the sole relevant conflict of fact.
Preliminary findings.
On the basis of the evidence and documents provided, I would make the following preliminary findings:
(1) The separation agreement, at the time it was entered into, undoubtedly represented proper provision for both parties. Both were professionally advised and, at least in the wife’s case supported by persons who are both related to her and skilled in farming matters. The evidence of the applicant’s own expert was that the agreement represented the provision to each party of the means to be, and to remain, financially independent. Furthermore, the agreement was an instrument which brought about a position of rough equality at the time it was entered into. The lands which they found were divided almost exactly equally: the wife had the benefit of a going concern at or near her home place; the husband was enabled to retain the lands he had bought at another place but, of course, was also solely responsible for the 100% borrowing to acquire these lands.
(2) The level of provision in the separation agreement for each party was objectively substantial. While their assets at that time did not approach the very large values seen in more recent ample resources cases, each party’s worth at the time of the agreement was very substantial relative to that found in the general run of matrimonial cases or to the asset value of the average member of society. Moreover the bulk of these values were in a form particularly suited to the parties. Though they lacked formal academic qualifications each was from an agricultural background and each had experience of working their own lands. I believe their respective net worth in 1993 was about €2,000, 000 each in today’s money.
(3) There is no doubt that since the agreement, the husband has prospered very greatly and the wife’s position has worsened. I must unfortunately record that the evidence establishes that the principal reason for the wife’s worsened position is the fact that she did not work her substantial holding in an assiduous manner. In particular, the employment of Messrs. Farm Relief Services to run the farm for a significant period was fatal to any prospect of its sufficient working and the generation of a reasonable income. This, indeed, was the view of both the experts called on behalf of the wife on the appeal.
(4) I do not accept that this skewing of the cost base of the wife’s enterprise was due to her physical incapacity to do the work herself. At the time of the separation agreement she was a healthy 40 year old woman. She did not herself claim physical incapacity to run the enterprise. This claim was made by her accountant who resiled from it virtually as soon as he was challenged and claimed instead an emotional inability on her part to work the land. There is no doubt, and it was expressly confirmed by Mr. Martin, that there are many examples of women of the age and background experience of the wife running similar enterprises alone.
(5) Equally, I cannot accept that the wife suffered any form of emotional inhibition which precluded her running the farm enterprise in a sufficient manner or made it unreasonably difficult to do so. No doubt the end of the marriage was a grief and a disappointment to both parties. At the time of the agreement the marital relationship had been effectively over for a period of some five years and the husband had wholly ceased to live in the family home for two years and she had farmed the lands. She was fortunate in having ample sources of advice and moral support close at hand. No evidence of a medical or psychological sort was called to support the proposition of great emotional difficulty, and no evidence at all, other than the opinion of an accountant who saw her only seldom to suggest that she suffered any nervous or emotional disability in running the farm. That gentleman’s evidence is severely discounted by the fact that he had, earlier in his own evidence, about twenty minutes before he mentioned emotional inability, attributed her difficulties to a quite different cause.
In saying this I am not in any way blaming or criticising the wife but simply rejecting particular explanation advanced on her behalf. I am satisfied that no suggestion of emotional inability to conduct the farm enterprise was made in the Circuit Court. In fairness to the wife, it was made only half heartedly on the hearing of the appeal.
(6) Although the wife has suffered the loss of a considerable portion of her holding, she has, apart from her income from the farm or other sources, spent some £500,000 between 1996 and the present day. I express this sum in pounds because the bulk of it was realised in that unit. She devoted herself with considerable energy to the building of a house which, in her accountant’s view, is “fabulous” but also “extravagant” having regard to her means and liabilities.
(7) The wife’s asset value, allowing for her substantial liabilities to the bank, is not less than £1.25 million. Having regard to the poor prospects for agricultural rental, but the strong sale prices which still subsist, according to Mr. Martin, his advice to her would be to sell the lands. In her evidence she gave no indication of what she proposed to do in the future.
(8) On the evidence, the wife had made no approach, formal or informal, for financial support from the husband up to the time he issued his proceedings seeking a decree of divorce.
Legal issues.
The legal considerations governing the circumstances in which a court will make a decree of divorce are well known. They have been thoroughly discussed in a number of recent cases. During the course of argument references made in particular to DT v. CT (Divorce: ample resources [2002] 3 IR 334) and K v. K (2) [2003] 1 IR 326.
By virtue of s.5 of the Family Law Act, 1996, before granting a divorce the Court must be satisfied that “such provision as the Court considers proper having regard to the circumstances exists or will be made for the spouses or any dependent members of the family”. Section 20 refers to the various ancillary orders the Court can make in pursuit of the object of a proper provision. It requires the Court to ensure that “such provision as the Court considers proper having regard to the circumstances exist or will be made for the spouses…”. The following subsection sets out a list of twelve matters to which the Court must “in particular, have regard…”. These are too familiar to require to be set out here.
The next following subsection provides that:
“In deciding whether to make an order under a provision referred to in subsection (1) and in determining the provision of such an order, the Court shall have regard to the terms of any separation agreement which has been entered into by the spouses and is still in force.”
Subsection (5) provides:
“The Court shall not make an order under a provision referred to in subsection (1) unless it would be in the interests of justice to do so.”
I have had the great benefit of reading and being influenced by the judgment of O’Neill J. in K. v. K. It analyses the statutory provisions, and indeed the constitutional provisions which underline them in a thorough and persuasive fashion. I have paid particular attention to the observations of the learned judge about the significance of the presence of a separation agreement.
O’Neill J. distinguishes between a separation agreement which is relatively recent and one which is of more distant origin. The agreement in that case had been entered into in 1982. In my view, the significance of the date of the separation agreement depends entirely on the general circumstances of the case, at least in the case of an agreement made after the enactment of the Judicial Separation and Family Law Reform Act, 1989.
There are, of course, obvious differences between the circumstances in K, and of those in this case. Firstly, there are no children in the present case: there were six in K. The wife in K had been for many years a full time homemaker: the wife here was at all material times engaged in an agricultural enterprise, firstly on her own account, then jointly with the husband and latterly on her own account again. In K, the learned judge held that the wife’s work in the home “was an integral part of the process which initially built [the husband’s] career and ultimately led to his great success”. In this case, the husband’s great financial success, so sharply distinguished from the wife’s position, did not begin to take shape until after the collapse of the marital relationship. On the facts of this case it cannot be said that the wife made any direct or indirect contribution to the great commercial success which the husband has enjoyed in recent times. The contrary was not contended.
I have already made relevant findings in relation to the separation agreement of 1993. I am also conscious of the fact that s.20(1) of the Act obliges the Court to consider whether such provision as it considers proper “exists” or will be made for the spouses. This phrase appears to direct the attention of the Court to the time at which the decree of divorce is granted. Into this exercise there must be factored firstly the twelve matters set out in the following subsection as well as other matters which the Court considers relevant and the terms of the separation agreement. While the events of the period since the separation agreement was entered into requires to be considered so too must be what O’Neill J. called “the length of disconnection [of the spouses] from one another. In my view they have been “disconnected” for about 17 years and formally separated for 11 ½ years. A marital relationship existed for something short of a decade at the most.
Finality provisions.
It is clear that the separation agreement was intended to be, as far as possible, a final agreement. Moreover, the parties specifically envisaged the possibility that divorce a vinculo would become available in the future and desired that the arrangements set out in the Deed of Separation would govern their mutual relations in that event. The agreement fairly envisaged that each party would live a personally and economically independent and self sufficient life with no further claims on each other. These terms, together with the financial arrangements set out in the agreement are plainly matters to which the Court must have regard at this juncture.
For the reasons extensively discussed in DT the concept of absolute finality, or a “clean break” as it is expressed in the neighbouring jurisdiction, is not available in Irish law. However, Keane C.J. said:
“It seems to me that, unless the Courts are precluded from so holding by the express terms of the constitution of the relevant statutes, Irish law should be capable of accommodating those aspects of the ‘clean break’ approach which are clearly beneficial. As Denham J. observed in
F. v. F. (judicial separation) [1995] 2 IR 354, certainty and finality can be as important in this as in other areas of the law. Undoubtedly, in some cases finality is not possible and thus the legislation expressly provides for the variation of custody and access orders and of the level of maintenance payments. I do not believe that the Oireachtas in declining to adopt the ‘clean break’ approach to the extent favoured in England, intended that the Court should be obliged to abandon any possibility of achieving certainty and finality and of encouraging the avoidance of future litigation between the parties.”
Having expressed his respectful disagreement with another decision on the topic, Keane C.J. continued, at page 365:
“… It is not correct to say that the legislation goes so far as virtually to prevent financial finality. On no view could such an outcome be regarded as desirable and I am satisfied that it is most emphatically not mandated by the legislation under consideration.”
In the same case, Murray J. (as he then was) said at page 411:
“I also agree that when making proper provisions for the spouses a court may, in appropriate circumstances, seek to achieve certainty and finality in the continuing obligations of the divorced spouses to one another. That is not to say that legal finality can be achieved in all cases and any provision made may be subject to review pursuant to s.22 of the Act of 1996 where that provisions applies. However, the objective of seeking to achieve certainty and stability in the obligations between the parties is a desirable one where the circumstances of the case permit.”
It appears, therefore, that the desideratum of certainty and finality, where that is attainable, has been fully recognised by the Courts. It is, perhaps, particularly obtainable in cases where the parties resources are relatively substantial. The fact that this is so under the current statutory regime must colour the manner in which the Court “has regard to” the terms of a separation agreement which, in the context of certain financial and property provisions, sought finality.
“Proper”
This term is not defined in the statute and counsel did not refer me to any particular preferred meaning of it. I therefore interpret the word in its natural and ordinary meaning. This in itself is not an entirely straightforward exercise since the term has many meanings: the Oxford English Dictionary identifies some fourteen meanings with a number of subgroups. It is in fact a word of peculiar difficulty since, as the editors of the dictionary say:
“The sense had already undergone great development in Latin, Romantic, and French, before the word was taken into English, where the chronological appearance of the census does not correspond with the logical development.”
With that caution in mind, the relevant meanings of the term appear to me to be as follows:
(a) “In conformity with rule; strict, accurate, exact…”,
(b) “Such as a thing of the kind should be…”,
(c) “Adapted to some purpose or requirement expressed or implied; fit, apt, suitable; fitting, befitting; what it should be or what is required…”,
(d) “In conformity with social ethics or with the demands or usages of polite society…”.
It will be seen that the dictionary definition leaves a good deal of scope for discretion in the interpretation of the word.
That discretion is trenched upon by the need to consider the various matters set out in s.20 subsection (2) and to “have regard to the terms of any separation agreement…”.
I now turn to a consideration of the matters specified in s.20(2) of the Act of 1996.
I have already set out in my findings, insofar as possible, to assess the means of the parties. The wife’s financial needs are limited to her own support and I am satisfied that the husband’s need not be further considered since he is well able to attend to them.
The standard of living enjoyed by the parties before separation seems to me to have been one of comfortable but unostentatious sufficiency on a farm of approximately 350 acres. The parties, as found above, are 54 and 50 years old respectively. I find that they lived together in the matrimonial sense of the term for something under ten years. Neither has any physical or mental disability. I am satisfied that, subsequent to the separation agreement, neither party made any contribution to the welfare of the other in any shape or form. Prior to the separation, too, I believe on the evidence that neither party made any contribution over and above the other to the joint enterprise and that the division of assets between them in 1993 reflected the contributions each had made. I do not believe that the earning capacity of either party was impaired or foregone by virtue of any marital responsibility. Neither party, on the evidence, is entitled to any income or benefit under statute. The accommodation needs of each of the parties is amply met. I have no evidence that either party will forfeit any benefit or potential benefit by reason of the granting of a decree of divorce. Finally, I do not believe that the rights of any person other than the spouses will be at all affected by the making of a decree of divorce or of any imaginable ancillary order.
The foregoing findings cover all but one matter set out in s.20 subsection (2) as applied to the circumstances of this case. The remaining statutory matter is “the conduct of each of the spouses, if that conduct is such that in the opinion of the Court it would all in the circumstances of the case be unjust to disregard it”. I do not propose to consider the conduct of the parties during the currency of the marital relationship: neither has suggested that I should. This criterion may have some significance in relation to the justice of the case that will be referred to below.
In relation to the separation agreement, I have already set out my findings on that topic. I believe it was a fair and approximately equal one. Finally, I must bear in mind the statutory prohibition contained in s.20 subsection (5):
“The court shall not make an order under a provision referred to in subsection (1) unless it would be in the interests of justice to do so.”
Authorities.
As already noted, I was referred in the course of argument to the very well known authorities cited above. However, I was told by counsel on behalf of the wife that there is no Irish authority relating to circumstances such as those in question here: a fair and valid separation order entered into about 11 ½ years ago and since the making of which the parties fortunes have widely diverged. I have, accordingly, considered a number of cases from the neighbouring jurisdiction. I undertake this exercise simply to explore such guidance as may be available from those sources. I am fully aware of the difference of the statutory provisions and judicial emphasis between the two jurisdictions, in particular in relation to the notion of a “clean break”.
The case of Wright v. Wright [1970] 1 WLR 1219 was one where, in the course of a settlement of divorce proceedings, a wife agreed to withdraw her claim for maintenance. The case has been widely cited since in cases where it is desired to revise an agreement previously made between divorce or separated spouses. Sir Gordon Willmer said:
“I think… that the existence of this agreement, having regard to the circumstances in which it was arrived at, at least makes it necessary for the wife, if she wants to justify an award of maintenance, to offer prima facie proof that there have been unforeseen circumstances in the true sense, which make it impossible for her to work or otherwise maintain herself. If that be right, I think it is quite plain that the wife here did not give such prima facie proof”.
That case was cited in the course of the more elaborate discussion which took place in Edgar v. Edgar [1981] 2 FLR 19. Here, the husband was an immensely wealthy man and the wife had reached an agreement with him specifying that she would not seek any further capital provision in the event of a divorce. It has, of course, been well established for many decades in the United Kingdom that the existence of such a covenant does not preclude a party from making a relevant application to court. It has however been established since
Hyman v. Hyman [1929] AC 601 that:
“… This by no means implies that, when this application is made, the existence of the deed or its terms are not the most relevant factors for consideration by the Court in reaching a decision”.
In Edgar, Ormrod L.J. agreed with the passage cited above from Sir Gordon Willmer, referred to the separation agreement and to the English statutes and continued:
“To decide what weight should be given in order to reach a just result, to a prior agreement not to claim a lump sum, regard must be had to the conduct of both parties, leading up to the prior agreement, and to their subsequent conduct, in consequence of it. It is not necessary in this connection to think in formal legal terms, such as misrepresentation or estoppel, all the circumstances as they affect each of the two human beings must be considered in the complex relationship of marriage. So, the circumstances surrounding the making of the agreement are relevant. Undue pressure by one side, exploitation of dominant position to secure an unreasonable advantage, inadequate knowledge, possibly bad legal advice, an important change of circumstances, unforeseen or overlooked at the time of making the agreement, are all relevant to the question of justice between the parties. Important too is the general proposition that, formal agreements properly and fairly arrived at with competent legal advice should not be displaced unless there are good and substantial grounds for concluding that an injustice will be done by holding the parties to the terms of their agreement. There may well be other considerations which affect the justice of this case; the above list is not to be considered as an exhaustive catalogue.”
In the same case, Oliver L.J. referred to the English statutory provisions and to the overarching consideration “of what is just having regard to their conduct”. He continued:
“In that consideration the existence of a negotiated bargain entered into at the instance of one of the parties and affording him or her everything for which he or she has stipulated must be a most important element of conduct which cannot lightly be ignored. Essentially therefore what is an issue in the instant case is whether in exercising the jurisdiction which the statute required him to exercise, the learned judge was right to decline to hold the wife to the particular term of the agreement into which she had entered four years earlier”.
The Court held the wife bound by the term of the agreement.
Although most of the applications for provisions under matrimonial statutes are by wives, some are by husbands as well.
Beech v. Beech [1995] 2 FLR 160 was such a case, and the principal family asset was a dairy farm. However, it was heavily encumbered, an attempt to settle the parties differences by agreement had been unsuccessful and the argument concerned provision for the parties out of the balance, over and above the encumbrances, received on a forced sale. In those circumstances the High Court in England considered the husband’s contribution to the financial embarrassment to be a consideration relevant to the determination of what payment should be made to him. First, the Court posed the question:
“So the crux of the case is really the responsibility for the present near destitution of the husband. How has this come about? Who is responsible for this state of affairs? Is the product of the husband’s misconduct?”
The Court found that the husband:
“… has proved over the course of the last twenty years to been a bad, even a disastrous, businessman. He had considerable talent as a stock man but could not harness that talent to financial controls… he obstinately, unrealistically and selfishly trailed on to eventual disaster, dissipating in the process not only his money but his family’s money, his friends money, the money of commercial creditors unsecured and eventually his wife’s money, insofar as the disaster that eventually developed did not even pay for her specified agreed sum. The responsibility is, in my judgment, not shared, not hers, but his”.
I therefore conclude that the position in the neighbouring jurisdiction is that an agreement not to seek further provision is not binding on a court but should be given great weight when it was entered into in a considered manner and with advice. Furthermore, the conduct of a party in himself (or, of course, herself) bringing about the circumstances giving rise to the alleged need for (further) provision is itself of relevance to considering whether such provision should be made, and in what amount.
Decision.
Firstly, I stress again that I do not regard the English cases just discussed as determinative of the matter.
Secondly, I regard as important the fact that the agreement in this case was made subsequent to the provisions of the Judicial Separation and Family Law Reform Act, 1989. Although, of course, there has been a good deal of further family law reform since that time, notably in 1995 and 1996, I am satisfied that the main outline of the current jurisprudential approach to applications of this kind was in place at the time of the conclusion of the agreement.
I must in justice record my view that any difficulties which the wife now experiences are wholly of her own making and that the husband has contributed to them in no way whatever. Equally, the wife contributed to the husband’s present state of prosperity in no way whatever.
Particularly having regard to the terms of s.20(3) of the Act of 1996, I cannot approach the question of what is “proper” in the circumstances of this case without giving very significant weight to the terms of the separation agreement. I must also construe the word “proper” having regard to its context as part of a statutory provision.
In all the circumstances, I do not consider it proper, that is “fit, apt or suitable”, much less “correct or in conformity with rule”, to make any ancillary order against the husband in the circumstances of this case. Still more fundamentally, I do not consider it just to do so and therefore I am precluded from doing so by the terms of s.20(5). I will accordingly grant a decree of divorce and make no further or ancillary order under s.12, 13, 14, 15, 16, 17 or 22 of the Act of 1996. I will make an order under s.18(10) that neither spouse shall, on the death of the other, be entitled to apply for an order under any other of the provisions of s.18.
R.G. v. C.G.
[2005] IR 419
Finlay Geoghegan J.
8th February, 2005
The applicant and the respondent whom I will hereafter refer to as the husband and the wife were married on the 20th March, 1982.
The husband and wife have three children of the marriage: M.C., a daughter born on the 24th August, 1983; W., a son born on the 15th January, 1986; and I., a daughter born on the 14th September, 1989.
The husband and wife separated in December, 1998 due to irreconcilable differences. In 1998, the wife, as applicant seeking a decree of judicial separation and ancillary relief, commenced proceedings in the High Court. On the 24th October, 2000, a decree of judicial separation was granted to the husband and wife pursuant to s. 2(1)(f) of the Judicial Separation and Family Law Reform Act 1989. A hearing took place before the High Court in relation to the claims for ancillary relief. After seven or
eight days, following negotiations, the husband and wife agreed to compromise their respective claims for ancillary relief upon the terms set out in a written agreement dated the 7th November, 2000, (“the consent”) and signed by each and witnessed by their respective solicitors.
On the following day, the 8th November, 2000, an order on consent was made by the High Court (“the consent order”) which records that counsel for the husband and wife informed the court that “a settlement has been reached on the terms of a consent now reduced to writing” and then by consent the court made the following orders:-
“1. in the terms of the said consent; and
2. that the said consent be received and be filed with and derived to be part of this order.
And the court doth note the undertaking set forth in the said consent and by consent the court doth make no order as to costs.”
It is unnecessary at this stage to recite in full the consent. It is sufficient to record that it provides for the making of orders pursuant to specific sections of the Family Law Act 1995, the Guardianship of Infants Act 1964 and records several agreements and undertakings of the parties. Paragraph (F) provides:-
“The parties hereto acknowledge that the within terms constitute a full and final settlement of all matters arising pursuant to the Judicial Separation and Family Law Reform Act 1989, the Family Law Act 1995 and any amending legislation, and further acknowledge that neither party shall be entitled to issue proceedings one against the other save for a decree of divorce pursuant to the Family Law (Divorce) Act 1996. The parties in particular acknowledge that the within terms constitute ‘proper provision’ within the meaning of the Family Law (Divorce) Act 1996 and that neither party shall be entitled to make a claim one against the other save for periodic maintenance.”
On the 20th May, 2003, the husband issued a family law civil bill seeking a decree of divorce pursuant to s. 5 of the Family Law (Divorce) Act 1996. The ground relied upon is that the parties have separated for in excess of four out of the five years preceding the issue of the family law civil bill and that there is no reasonable prospect of reconciliation between them. The only other relief sought is an order pursuant to s. 18(10) of the Act of 1996. Express reference is made to the consent order and it is expressly pleaded that such order deals with all matters at issue between the parties and provides for the security of the wife and children of the marriage and pleads that there are no further or other orders which need to be made in respect of the said matters.
The wife in her defence and counterclaim denies the entitlement to a decree of divorce on the grounds that proper provision does not exist for her and the children of the marriage. It is also denied that the consent order deals with all matters at issue between the parties or provides security for the wife and children. Specific claims were also made on behalf of the wife for ancillary orders.
The circuit proceedings were heard and determined by the Circuit Judge on the 28th September, 2004. He granted a decree of divorce and made certain ancillary orders, primarily in favour of the wife. Both parties served notices of appeal. Each of the notices of appeal purports to appeal against the whole of the judgment of the Circuit Court given on the 28th September, 2004, “save and except that part of the judgment which granted the parties herein a decree of divorce under s. 5(1) of the Family Law (Divorce) Act 1996”. Each of the parties contends, albeit for completely different reasons, that the ancillary orders made by the Circuit Judge do not constitute proper provision for the husband and wife and children of the marriage. Counsel for both parties were in agreement at the commencement of the hearing before me that the logic of their respective positions was that as each contended that proper provision did not exist for the parties and the children of the marriage within the meaning of s. 5(1)(c) of the Act of 1996, that the Circuit Judge did not have jurisdiction to grant the decree of divorce. Accordingly, it necessarily followed that the substance of the appeal of each was against the entire of the judgment and order of the Circuit Judge. I permitted the appeals to proceed on that basis.
The appeal to the High Court is a full rehearing of the husband’s claim for a decree of divorce and ancillary order claimed and the wife’s counterclaim for ancillary orders.
Jurisdiction of the courts
The jurisdiction of the court to grant a decree of divorce is conferred by Article 41.3.2 of the Constitution, which provides:-
“A Court designated by law may grant a dissolution of marriage where, but only where, it is satisfied that:-
i. at the date of the institution of the proceedings, the spouses have lived apart from one another for a period of, or periods amounting to, at least four years during the previous five years;
ii. there is no reasonable prospect of a reconciliation between the spouses;
iii. such provision as the Court considers proper having regard to the circumstances exists or will be made for the spouses, any children of either or both of them and any other person prescribed by law; andiv. any further conditions prescribed by law are complied with.”
Further statutory provision is made by s. 5 of the Family Law (Divorce) Act 1996 which provides:-
“(1) Subject to the provisions of this Act, where, on application to it in that behalf by either of the spouses concerned, the court is satisfied that:-
(a) at the date of the institution of the proceedings, the spouses have lived apart from one another for a period of, or periods amounting to, at least four years during the previous five years;
(b) there is no reasonable prospect of a reconciliation between the spouses; and
(c) such provision as the court considers proper having regard to the circumstances exists or will be made for the spouses and any dependent members of the family;
the court may, in exercise of the jurisdiction conferred by Article 41.3.2 of the Constitution, grant a decree of divorce in respect of the marriage concerned.
(2) Upon the grant of a decree of divorce, the court may, where appropriate, give such directions under section 11 of the Act of 1964 as it considers proper regarding the welfare (within the meaning of that Act), custody of, or right of access to, any dependent member of the family concerned who is an infant (within the meaning of that Act) as if an application had been made to it in that behalf under that section.”
No issue arises in these proceedings in relation to the welfare, custody or right of access in relation to the children of the marriage. An order pursuant to s. 11 of the Act of 1964 forms part of the consent order made on the 8th November, 2000, and no variation of it is sought.
On the evidence given on the appeal I find that the parties have lived apart for at least four years during the five years preceding the commencement of the Circuit Court proceedings and that there is no reasonable prospect of a reconciliation between them. The only issue is what, if any, ancillary orders should now be made in order that the court is satisfied that proper provision exists or will be made for the husband, wife, and children of the marriage.
The existence of the consent and the consent order gives rise to a preliminary issue as to the jurisdiction of this court now to make ancillary orders pursuant to the provisions of Part III of the Act of 1996 and the extent, if any, to which the court should have regard to the consent order and consent and in particular para. (F) thereof in determining what is proper provision for the husband and wife and children of the marriage.
The primary contention made on behalf of the husband was that the wife should not now be permitted to depart from the agreement reached in 2000 as reflected in the consent and that the court should not now make any additional provision for the wife by way of ancillary order or otherwise unless the court forms the view that there is a manifest want of proper provision for the wife under the terms of the consent order or other good reason, such as the non-implementation of same by the husband, can be shown.
The primary submission on behalf of the wife was that the court should have no regard to the consent or the consent order.
In addition, counsel for each of the parties made in the alternative more nuanced submissions for what might be termed intermediate positions, which I have considered, and which are reflected in the conclusions which I have reached. Counsel also referred me to a number of authorities, which I have considered and to some of which I refer below.
Conclusions
The jurisdiction of the court to grant a decree of divorce only arises, inter alia, where the court considers that proper provision exists or will be made for the spouses and children of either. This follows from the express wording of Article 41.3.2 and in particular “where, but only where it is satisfied” in the opening phrase of that Article and s. 5(1) of the Act of 1996. These provisions require the court to exercise its judgment as to what constitutes proper provision. The obligation on the court to make such determination cannot be removed either by an acknowledgement or agreement, such as that contained in para. (F) set out above of the consent between the parties herein.
The time for the assessment of the assets of the husband and wife for the purpose of exercising such judgment is the date of the divorce hearing (in this case the current appeal hearing) as determined by the Supreme Court in D.T. v. C.T. (Divorce: Ample resources) [2002] IESC 68; [2002] 3 I.R. 334. This also appears to be the date at which the court must be satisfied that proper provision exists or will be made for the spouses and children.
I reject the submission made on behalf of the wife that the court should have no regard to the consent. For the reasons already stated, the court only has jurisdiction to grant a decree of divorce if it is satisfied that proper provision exists or will be made for the spouses and children. The Act of 1996 gives the court the express power to make ancillary orders in order that it be satisfied such proper provision exist. Section 20(1) of the Act of 1996 obliges the court in deciding whether to make an ancillary order or orders or in determining the provisions of such orders to “ensure that such provision as the court considers proper having regard to the circumstances exists or will be made for the spouses”.
The principal argument of counsel for the wife was that s. 20(3) of the Act of 1996 obliges a court in deciding whether to make ancillary orders or in determining their provisions to have regard to the terms of any separation agreement which is still in force. It is common case that the consent is not a separation agreement. Counsel submitted that the court should construe the intention of the Oireachtas in expressly referring to separation agreements in s. 20(3) as implicitly precluding the court from having regard to a previous order, such as the consent order of the 8th November, 2000, i.e. an order providing for ancillary reliefs in judicial separation proceedings made upon the basis of and incorporating a written consent of the parties.
I have concluded that s. 20 of the Act of 1996 does not contain any such implicit prohibition. On the contrary, the court is obliged to have regard to all the circumstances of the parties and their children. Such circumstances on the facts of this case include the consent which was received and filed and incorporated into the consent order and I am satisfied that s. 20 of the Act of 1996 requires this court to have regard to it.
The submissions made on behalf of the husband relied firstly upon the principle of certainty and finality in litigation as applied to family and divorce proceedings by the Supreme Court in D.T. v. C.T. (Divorce: Ample resources) [2002] IESC 68; [2002] 3 I.R. 334 following the earlier observation of Denham J. in F. v. F. (Judicial Separation) [1995] 2 I.R. 354. In D.T. v. C.T. (Divorce: Ample Resources) , Keane C.J. at p. 364 stated:-
“It seems to me, that, unless the courts are precluded from so holding by the express terms of the Constitution and the relevant statutes, Irish law should be capable of accommodating those aspects of the ‘clean break’ approach which are clearly beneficial. As Denham J. observed in F. v. F. (Judicial Separation) [1995] 2 I.R. 354, certainty and finality can be as important in this as in other areas of the law. Undoubtedly, in some cases finality is not possible and thus the legislation expressly provides for the variation of custody and access orders and of the level of maintenance payments. I do not believe that the Oireachtas, in declining to adopt the ‘clean break’ approach to the extent favoured in England, intended that the courts should be obliged to abandon any possibility of achieving certainty and finality and of encouraging the avoidance of further litigation between the parties.”
It appears that in accordance with the above, save as precluded from doing so by the Constitution and the relevant statutes, that the court should in family proceedings seek to uphold the principle of certainty and finality of litigation and the avoidance of further litigation.
Counsel for the husband also submitted that the court should not permit parties to an agreement such as that in the consent to depart from it and that such an agreement properly and fairly arrived at with the benefit of competent legal advice should be upheld by the court unless there are good and substantial grounds for concluding that some injustice would be done by holding the parties to it. He referred me to the decision of Munby J. in X. v. X. [2002] 1 F.L.R. 508 and the cases referred to therein.
I have carefully considered the decision of Munby J. in X. v. X. [2002] 1 F.L.R. 508, which is helpful and a thorough analysis of the approach of the English courts to agreements reached between parties to divorce proceedings in the context of ss. 23 and 25 of the Matrimonial Causes Act 1973.
Prior to considering the principles referred to by Munby J., it is necessary to consider the nature of the consent and how it should now be regarded by the court. Counsel for the wife submitted that while the consent was an agreement in writing between the parties once it was received and filed and incorporated into a court order, it thereafter drives its legal status from the court order. This appears to be correct. However, that does not preclude the court from having regard to the fact that the terms of the consent order derive from an agreement negotiated between the parties with the benefit of legal advice.
It is necessary next to consider what was to be covered by the agreement. The terms of the consent, and in particular para. (F) set out above and the consent order into which it is incorporated suggest that they were intended firstly in full and final settlement of all matters arising in the then extant judicial separation proceedings pursuant to the Judicial Separation and Family Law Reform Act 1989 and the Family Law Act 1995. Secondly, there is what is termed “an acknowledgment” that neither party should issue proceedings against each other save for a decree of divorce pursuant to the Family Law (Divorce) Act 1996. Thirdly, there is then a further “acknowledgment” that the terms of the consent constitute “proper provision” within the meaning of the Family Law (Divorce) Act 1996, and fourthly, what appears to be a related agreement in relation to any proceedings under the Act of 1996 that neither party is to be entitled to make a claim against the other save for periodic maintenance.
The principles of certainty and finality of litigation contended for and the principles as explained and applied by Munby J. in X. v. X. [2002] 1 F.L.R. 508 in relation to the upholding of agreements made between parties and properly and fairly arrived at with competent legal advice are such that I am satisfied that this court should have regard to the consent order and consent as a full and final settlement (subject to any applications for variations permitted) of the then extant judicial separation proceedings under the Acts of 1989 and 1995.
It is unnecessary for this court now to consider what I have described as the second part of para. (F), namely the preclusion against issuing proceedings other than a degree for divorce.
It is the last part of para. (F) which gives rise to most difficulty in the present proceedings. It provides:-
“the parties in particular acknowledge that the within terms constitute ‘proper provision’ within the meaning of the Family Law (Divorce) Act 1996 and that neither party shall be entitled to make a claim one against the other save for periodic maintenance.”
I have concluded that this court in having regard to the consent and consent order in this appeal should ignore both the acknowledgment and restriction on bringing claims in the above sentence.
Counsel for the husband properly did not contend that para. (F) of the consent should be construed as precluding the wife from making a claim for ancillary orders in the divorce proceedings. As stated by Munby J. in X. v. X. [2002] 1 F.L.R. 508 at para. [81]:-
“A contract which purports to deprive the court of a jurisdiction which it would otherwise have is contrary to public policy. Thus, a spouse cannot validly agree, whether expressly or impliedly, not to apply to the court for maintenance or other forms of ancillary relief. Such a stipulation is contrary to public policy and unenforceable: Hyman v. Hyman [1929] A.C. 601; Sutton v. Sutton [1984] Ch. 184 and N. v. N. (Jurisdiction: Pre-nuptial agreement) [1999] 2 F.L.R. 745. This rule remains, but can have no application in the present case where the agreement expressly contemplates the obtaining of the court’s approval.”
Insofar as the wife purported to agree not to apply for ancillary orders in any divorce proceedings, it is unenforceable in accordance with the above principles.
Counsel for the husband does however seek to rely on the acknowledgment of “proper provision”. I have concluded that it would not be appropriate for this court to take such acknowledgment into account on the facts of this case. This was an agreement negotiated in November, 2000. At that time, whilst it can be said that divorce proceedings were contemplated, they do not appear to have been imminent. This may have been because of the four year requirement in s. 5(1)(a) of the Act of 1996. On the evidence, the parties had only been living apart at that stage for a period of approximately two years.
The proper provision for the parties must exist at the date of the hearing of the application for the decree of divorce. Further, it must be based upon the value of the assets of the parties at that date and the circumstances as they then exist. The acknowledgment included in the consent of the 7th November, 2000, if it is to relate to a proper construction of the Act of 1996, must be considered to be an acknowledgment of potential proper provision at a future unknown date. What if divorce proceedings had not been brought for a period of ten years? When so properly construed it appears too uncertain to be a matter which this court should take into account.
In so concluding on the facts of this case, it is necessary to point out that the consent of the 7th November, 2000, appears to me to be quite different in nature and in character to an agreement that is entered into between parties with appropriate legal advice either during divorce proceedings already commenced or in contemplation of proximate divorce proceedings. Section 8(2) of the Act of 1996 expressly enables a court to adjourn proceedings to enable attempts be made by spouses to reach agreement on some or all of the terms of the proposed divorce. Many if not all of the principles set out by Munby J. in X. v. X. [2002] 1 F.L.R. 508 in relation to upholding agreements between parties may well properly apply in relation to the proper approach of a court in the making of financial ancillary orders under the Act of 1996 following an agreement reached between parties either in the course of or in contemplation of proximate divorce proceedings. For the reasons already stated on the facts of this case insofar as the consent order includes the acknowledgement of proper provision for the purposes of the Act of 1996, it is not an agreement either reached in the course of or in contemplation of proximate divorce proceedings.
In summary therefore it appears appropriate that the court should have regard to the consent order of the 8th November, 2000, as an order made by consent of the parties pursuant to an agreement entered into by them on the 7th November, 2000, (each with the benefit of appropriate legal advice) in full and final settlement of their respective claims for ancillary relief under the Acts of 1989 and 1995 in the judicial separation proceedings. However, the court must also have regard to the fact that it was an agreement based upon the then assets of the parties (including in respect of certain assets envisaged potential development and increase in value). The court should also have regard to the similarity of the provisions in s. 20 of the Act of 1989 and s. 16 of the Act of 1995 with that of s. 20 of the Act of 1996.
It also appears proper that the court should have regard as part of the circumstances which now exist to the implementation by the parties of the provisions of the consent order of the 8th November, 2000, and the liabilities incurred by the husband to make the payments and transfers of properties provided therein.
Finally, it is also important to note that the consent order does not reflect an intention by the parties in 2000 to achieve a “clean break” financially even in so far as permitted under Irish law. On the contrary, it indicates an intention that the husband should continue indefinitely to support the wife with periodical payments for her benefit and separate payments in respect of the dependent children. In addition, the house in which the wife was to live was to be purchased in the name of the husband and held in trust for the wife with other consequential provisions.
The court must however now assess whether proper provision exists for the parties and the three dependant children of the marriage at the date of the hearing of the appeal, and the necessity of any ancillary orders and, if so, the terms of same in accordance with s. 20 of the Act of 1996 when construed in accordance with the caselaw of these courts and in particular the decisions of the Supreme Court to which I have been referred. The court should only make an ancillary order if it considers it would be in the interests of justice to do so.
It follows from the above that insofar as the submissions made on behalf of the husband were to the effect that by reason of the consent of the 8th November, 2000, as incorporated into the consent order that the wife has to establish a material change of circumstances since 2000 to obtain ancillary financial orders under the Act of 1996, that I reject same.
Findings of fact
On the evidence given, I have reached the following conclusions on the facts. The husband has a professional qualification and has practised in his profession since the time of his marriage in 1982. He has established a firm and a limited company through which he conducts his professional practice. The practice is largely dependent on his personal skills. There are also extraneous factors relating to changes, in particular in litigation that may to some extent affect the nature of his practice. For the year ended 2002 the income available to him from his practice before tax was in the order of €138,000. For the year ended 2003 it was €230,000.
The husband for a number of years now has also been involved in property development. He appears to have been successful and acquired considerable knowledge and skills in relation to the identification of and carrying through of successful property development. One major development at X has been particularly successful. This was at an early stage in November, 2000. I have concluded that it has been significantly more profitable than anticipated by either party in November, 2000. I have also concluded that in general the property owned by both the husband and the wife has increased in value between November, 2000 and December, 2004 to a greater extent than was in contemplation of the parties in 2000.
At the date of her marriage, the wife had a degree that permitted her to work in a professional area. A statutory authority employed her. She continued to work after her marriage and after the birth of her children.
In 1989, the husband, wife, and children moved to a country area. The wife agreed to help to look after an uncle of the husband from whom he later inherited what was the family home at the time of the break up of the marriage. During this period, the couple were not in a strong financial position. The husband appears to have been working a three day week. The wife gave up her permanent employment to look after the three children of the marriage who were then six, four and one and a half and also supported the husband in the build up of his professional practice and assisted in looking after the uncle. The wife received a lump sum of approximately IR£3,000 on leaving employment that she contributed to the joint expenses.
Subsequently the wife opened a craft shop in a local town. She came from a family who were involved in both manufacturing and retail. She worked part-time in this and had a flexibility to look after the children. The income was low.
The wife subsequently sold shares she held in her own family’s business and realised approximately IR£130,000. She used this partly to provide a deposit on one of the centre city properties with development potential. She transferred her interest in this property to the husband under the consent order.
Since the separation of the husband and wife, the three children have lived with the wife and spent some holidays and weekends with the husband. The elder two are at college and the third is in her second last year at school.
After the birth of the third child, the wife suffered from what she describes as a stress related illness. She suffered from depression for a period but happily is not now suffering from depression. She says she has to get some help from time to time and sees a counsellor periodically. The wife has done some work with both a brother and a sister over the past few years. The wife states she would like to work and I have concluded that as a matter of probability she will obtain work and will be able to create an income for herself in the near future. However I also find on the facts that by reason of the fact that she left employment in 1989 for the purposes of looking after the children of the marriage and contributing to the joint family life that she has been significantly reduced in her present earning capacity. She is not likely to return to her previous profession and more likely to work in a business environment
The husband is now 51 and the wife is 46.
The wife’s current expenses including those associated with the three children living with her are in the order of €60,000per annum. Her income, including the maintenance currently paid is in the order of €46,000per annum. This includes deposit interest on sums received under the consent order of the 8th November, 2000 of €8,000, rent from a seaside apartment owned of €4,000 and children’s allowances of €1,500. The maintenance currently payable in respect of herself is €14,871 per annum and in respect of the children €18,284.
There is no dispute about the property owned by each party. The only dispute relates to the current value of it. Much of the property now owned by the husband has development potential. The planning position in relation to certain of the properties is uncertain. I appreciate the valuation of such properties is difficult but the evidence of the respective valuers is only of limited assistance as both I consider to have given valuations at the extreme of the probable range as suitable to their client. The conclusions that I have reached on the value of the properties are only intended as a mid-position of a probable range of values to assist in an overall conclusion as to what constitutes proper provision.
I find the husband’s assets (excluding the house in which the wife is now living) to be the following (with the present probable approximate values):-
1. The house in which he is living on 35 acres with some limited development potential near the road frontage
€800,000
2. Two adjoining centre city properties with development potential
€1.25m
3. A one-third interest in 5.3 acres adjacent to a town with a difficult planning history but with development potential
€600,000
4. A one third interest in approximately 7 acres adjacent to an existing development. This is zoned residential but unlikely to obtain planning permission until a certain road has been constructed
€1m
In addition to the above property, the husband has an interest in a large development, which is nearing completion. The evidence given on behalf of the husband, without the production of precise figures, was to the effect that the probable distribution to the husband on completion of the development in approximately twelve months time would, net of capital gains tax, aggregate €3.6m. The evidence given on behalf of the wife, based upon a general approach to probable margins in comparable developments was that distribution to the husband (prior to capital gains tax) should be in the order of €7.4m. On this issue, the evidence given by and on behalf of the husband appears to me more convincing. However, I have concluded that the estimate is probably on the conservative side. The likely distribution to the husband will be in approximately twelve months time. I understood from the evidence that some of the money would become available to him at an earlier date. Against this, he has liabilities to the bank that were estimated at €2.11m. This sum includes the outstanding balance on a mortgage taken out on the house in which the wife now lives which was purchased by the husband pursuant to the consent order.
It is accepted on behalf of the husband that any proper provision should include a direction that the husband transfer to the wife the house in which she now lives free of encumbrances within approximately nine months from the date of the hearing of the appeal. Hence, I propose considering that house as an asset of the wife for the purposes of considering additional ancillary orders.
I find the wife’s assets to include the following:-
1. A sea-side three bedroom apartment
€400,000
2. The house in which she is now living (upon completion of a transfer pursuant to an order which I propose making)
€1.1m
3. A deposit account in a bank
€310,000
Pursuant to the consent and consent order, the husband paid to the wife in total €890,000. Out of that sum, the wife gave evidence that she paid approximately €247,000 in costs in connection with the first set of proceedings. In addition, that she spent approximately €80,000 on the house in which she now lives. Taking into account the €310,000 now in the bank this leaves a sum of €253,000 that she received and which is not directly accounted for. Her evidence was to the effect that the maintenance payments under the consent order were not meeting her expenses and that she was eating into the lump sum at a rate of approximately €20,000 – €23,000 per annum. In addition, she bought a car at approximately €20,000 per annum. Even taking into account those payments her evidence still leaves a sum of approximately €150,000 unaccounted for. She gave evidence of some trading in shares on cross-examination but without any particulars of the shares now held. On balance I have concluded that whilst there may be some additional expenditure over the four year period which she did not recall, she has or ought to have as a result of the payments made to her by the husband pursuant to the consent order additional assets of approximately €120,000.
I have concluded that in considering the capital assets of the parties I should not attribute any value to the business of the husband. Undoubtedly, it is relevant to his earning potential but I have concluded that its capital value is significantly dependent upon the earning ability of the husband and better to have regard to it in considering the appropriate maintenance payable rather than any transfer of capital assets.
Conclusions
I have concluded that it is necessary to make certain ancillary orders to ensure that proper provision exists for the parties and the three dependant children and further that it is in the interests of justice to make the orders set out below. In reaching this conclusion, I have had regard to the above legal principles, the matters as set out in s. 20 of the Act of 1996 and all the circumstances in relation to this family.
In concluding that a lump sum should now be payable by the husband and the amount of same I have had regard, inter alia, to the fact that this appears to be a case in the category of what the courts have described as “ample resources”; the terms of settlement of the judicial separation proceedings; the implementation of the consent order made pursuant to that agreement; the increase in property values since 2000 and the success of the husband’s development at X in each instance beyond what I have concluded to have been in the contemplation of either party in 2000.
The submissions of both parties were to the effect that continuing maintenance payments were appropriate on the facts of this case and I have concluded that such payments should have a bearing on the division of the capital assets. This distinguishes this case on the facts from the decision of the Supreme Court in D.T. v. C.T. (Divorce: Ample resources) [2002] IESC 68; [2002] 3 I.R. 334 and to warrant a different approach to any suggested division therein which would give the wife approximately 30% to 40% of the total assets of the husband and wife.
In relation to the amount of maintenance I have had particular regard to the amounts agreed between the parties in settlement of the judicial separation proceedings in 2000; the absence of any indexation thereto; the increase in the consumer price index of nearly 14% since that date; the significant increase in the husband’s earnings in 2003 over 2002; the wife’s current expenses and income and potential though diminished future earning capacity.
In relation to the children, the husband has undertaken certain financial obligations in respect of their education under the consent order. In addition, the husband accepts that for so long as each is a dependent child within the meaning of the Act of 1996 and is living with the wife he should continue to make a periodical payment to the wife in respect of that child to be increased in accordance with consumer price index. The wife in evidence suggested that the payments might be made directly to the eldest. It should be a matter for the wife as to whether such payment is made to her or to any child directly.
It now appears appropriate that the husband should cease to be responsible for maintaining a V.H.I. policy for the wife.
Accordingly, I will grant the decree of divorce and make the following orders:-
1. an order pursuant to s. 13(1)(a)(i) of the Act of 1996 that the husband pay to the wife a monthly sum for her own benefit of €2000 to be increased hereafter in accordance with the consumer price index;
2. an order pursuant to s. 13(1)(a)(ii) of the Act of 1996 that the husband shall make to the wife each month the payment of a sum of €600 in respect of each of the three children for so long as s/he remains a dependent child within the meaning of the Act and is living at home unless the wife consents in writing that such payment should be made directly to the relevant child. Such payments to be increased hereafter in accordance with consumer price index;
3. the husband shall cease to be responsible for V.H.I. insurance in respect of the wife. The husband shall continue to be responsible for maintaining V.H.I. insurance in respect of the three dependent children;
4. an order pursuant to s. 14(1)(a) that the husband transfer to the wife, free of encumbrances, on or before the 1st October, 2005, the full legal and beneficial interest in the house in which she is living (to be identified by name and address in the order herein);
5. an order pursuant to s. 14(1)(a) that the husband transfer to the wife on or before the 1st December, 2005, the sum of €400,000;
6. an order pursuant to s. 14(6) of the Act of 1996 that each party bear their own costs in connection with the transfer of the house in which the wife is now living;
7. an order pursuant to s. 26(1)(c) of the Act of 1996 discharging the order made on the 8th November, 2000, pursuant to s. 8 of the Act of 1995 for the payment by the husband of periodic sums to the wife in respect of herself and the three children and the payment of annual V.H.I. premium in respect of the wife;
8. an order pursuant to s. 26(1) (c) of the Act of 1996 discharging so much of the order made on the 8th November, 2000, pursuant to s. 9(1)(b) of the Act of 1995 as requires the husband to continue to hold in trust for the wife the house in which she is now living. Such discharge to take effect from the date upon which the husband transfers the said property to the wife pursuant to the orders now made in these proceedings.
It is my intention that in addition the wife be provided with security for the continuation of the periodical payments referred to above (or any variation thereof) after the death of the husband or a lump sum at that time in lieu thereof. I raised this issue in the course of the hearing. The parties are aware that I am considering making an order under s. 16(1)(i) of the Act of 1995 in relation to the taking out of a life policy by the husband and the assigning of the benefit thereof to the wife. I have indicated that I will give the parties an opportunity after the delivery of this judgment to consider the appropriate form of security, including the possibility of securing such payments against the estate of the husband and will accordingly defer any decision on the application for an order under s. 18(10) of the Act of 1996 until this issue is determined.
In the light of the above lump sum to be paid by the husband I do not propose making any order for costs in either the Circuit Court or in the High Court.
Addendum of the 9th March, 2005
Having regard to the submissions by counsel of behalf of the parties as to the appropriate security to be given by the husband for the payments ordered herein I determine that the orders set out at paras. 1 and 2, above, should be made pursuant to s. 13(1)(b) of the Act of 1996 rather than s. 13(1)(a). Further, that such payments should be secured by the husband creating a first registered charge over certain properties identified by him as potentially available unencumbered and that subject to the completion and registration of such charge that an order be made pursuant to s. 18(10) of the Act of 1996 that neither spouse be entitled on the death of the other to apply for an order under that provision.
McM. v McM.
[2006] IEHC 451
JUDGMENT of Mr. Justice Henry Abbott delivered on the 29th day of November. 2006.
The applicant and the respondent (to whom I shall refer to as the wife and the husband) were married to each other on the 4th day of February, 1967. Three children were born to the marriage, L. on the 24th August, 1967, J. on the 11th April, 1969 and T. born on the 15th April, 1974.
The wife had been a secretary and gave up her employment for her marriage. The husband worked in the family firm which shall be referred to as the “Group” which term includes the additional associated or subsidiary firms accumulated since that time. They lived in what was described by the wife in evidence, and I accept, was “cautious comfort”.
Unhappy differences arose between the husband and wife as a result of which they separated on the 3rd July, 1991. Different reasons were advanced for the cause of the separation. The wife on the one hand stated in evidence that they arose from the lack of attention and intimacy afforded to her by the husband after the birth of their last child in the mid 1970’s. The husband on the other hand asserted that they were a number of (3) affairs, the final of which caused the break-up.
A deed of separation was executed by the husband and wife on the 3rd July, 1991, which acknowledged that the wife had purchased a house with the proceeds of the sale of the family home and I should say from the outset that the deed of separation does not refer to the conduct of either of the spouses and it has been conceded in evidence by the husband that conduct had nothing to do with the terms of the separation agreement. I can say then that conduct is not a matter to which the court shall have regard in relation to the deliberations which follow.
These proceedings were initiated by the wife on the 8th May, 2002, in which she claims divorce and ancillary relief by way of proper provision under the Family Law (Divorce) Act, 1996. The separation agreement is admitted by husband and wife to have been made by them having taken legal advice and on the basis of a full and frank disclosure of the assets of the parties. The husband paid the wife £83,000 which represented approximately 60% of the proceeds of the sale of the family home and payment of £25,000 gross per annum by monthly instalments to be varied annually in accordance with the CPI. In the event of fundamental change in the circumstances of either husband or wife, either party should be at liberty to apply to the other for an increase or decrease in the maintenance. There is a further agreement not to sue for additional lump sums etc under existing legislations on “any amendment” thereof. This is technically unenforceable under the Family Law (Divorce) Act, 1996 see(R. G. v. C. G.), [2005] 2 I.R. 418 but nevertheless I will take it as part of the genre which is commonly referred to as a “full and final settlement” clause. In addition the separation agreement provided for valuable pick ups in relation to VHI, provision of second hand motor car, provision of car insurance by the Group, credit facility with the Group for petrol and payment of two sports stops. In addition the husband agreed to procure the continuation of his pension arrangements with his employer insofar as it benefited the wife in the event of the husband’s death. There was no extinguishment of succession rights.
The separation agreement was clearly made on the assumption that the wife was not and would not be employed. By the date of the separation agreement in 1991 the husband had become joint managing director of the immediate company in the Group and he remains a director of the Group and is also a director of many associated and subsidiary companies within the same. His existing shareholding in the Group was estimated to be worth c. £400,000.00.
The husband is 63 and the wife is 62. While the husband has envisaged reducing some of his day to day commitments within the Group, and has done so, he nevertheless intends to continue working in the Group within the foreseeable future, to face the challenges the Group faces in the next few years. This employment up to a reasonably active level will be subject, of course, to his health. He has recently come to realise that he is in a moderate state of health insofar as he will have to take care of himself, with blood pressure and diabetes concerns. The wife’s health is excellent.
To the credit of the parties and their advisors many issues were resolved in the lead up and course of the hearing of this case which commenced on the 18th July, 2006 and concluded on the 25th July, 2006. There remains a set of three issues outstanding, namely –
(a) The value of the husband’s shareholding in the Group, and value of his assets relative to the assets of the wife.
(b) The extent to which the court shall have, pursuant to the 1996 Act, regard to the 1991 separation agreement when making provision by way of ancillary relief before granting a decree of divorce.
(c) The quantum of such provision.
Valuation of the Husband’s Shareholding in the Group
The contest on this issue involved wide ranging debate and evidence on the method evaluation. It was necessary in evidence to examine the complex corporate arrangements in relation to the holding and control within the Group. It is not necessary or appropriate for me to set out in full complexity the detail of these arrangements but it is necessary for me to find the following facts, as I do –
1. The husband has a minority non-voting shareholding in S. company, which is the main equity holding vehicle in the Group.
2. The husband has voting shares and directorship positions in relation to the Group but does not have controlling voting rights, neither is he in a position of king maker in relation to his shareholding of any of his shareholdings, such as to give them a special value.
3. The Group was founded by the husband’s grandfather and the ownership thereof has expanded and continues to expand pyramid fashion down the generations to various members of the family in diverse holdings of various companies throughout the Group.
The Group has shown profit over the last few years from its distribution business, mainly, although recent challenges within the trade have had the effect of reducing this profit, but the husband and his fellow family shareholders are committed to continue the business of the Group in the distribution trade and do not intend to sell their shareholding, or to float the Group on any stock market, notwithstanding similar events occurring in relation to some of their competitors in the recent past. While there was an internal market evidenced by one transaction between members of the family for shares within the Group, I find that that is not sufficient to establish any meaningful internal market within the company and there are no constitutional means within the Group to facilitate arbitrage or exchange of value within the family. The Group was clearly set up by its founding fathers as one which was suitable for keeping the business within the family. It is likely that the family pyramid will continue to expand and that increasingly professional management will take over as the family numbers expand. Perhaps as the pyramid of ownership expands there might be developments tending towards a sale of the Group or major cash realisation of its assets, but I consider that that event is, while possible, is far too far off on the horizon for the practical purposes of this case.
The Group is likely to pay a modest dividend based generally on 1% of profits to its shareholders into the foreseeable future. While the dividend is modest, none of the shareholders appear to be agitating to have same increased, and it is the policy of the Group to maintain the business by reinvestment of profits to secure the future of the company. In current competitive conditions such profits may well be jeopardised in the short term and reinvestment of profits may be more to maintain market position than to expand it, but nevertheless such a reinvestment of profits preserves the opportunity for the company to capitalise on changes and vacancies within the market arising from recent turbulence in that area. The evidence adduced to show that the fixed assets of the Group are valued at a sum in excess of €300 million is not conclusive, by reason of the fact that the sampling method of valuation applied to a mark up of the book value of properties and the accounts, fell down when applied to a number of properties which were actually sold, and also by reason of the unsatisfactory nature, not so much the valuers called on behalf of the wife, but the evidence of a witness called as an expert in relation to properties in the distribution business of the type carried on by the Group. Notwithstanding that the attempts to put such a high value on the assets of the company of the Group were a forensic disaster, the evidence does indicate the wide scope and potential of the value of the Group in the event of a disposal or of the value becoming unlocked in some way in the future.
On the basis of the foregoing I find that the valuation of Mr. Peelo, backed up by the further expert evidence in the case, that the dividend was the chief guide to value the shares in a closely held Group such as the Group in this case, without an exit mechanism, and that the net value of same after allowance for capital gains tax is in the region of €3 million.
Extent of Regard to 1991 Settlement
I find that the facts of this case are closer to the cases K. v. K. [2003] 1 I.R. 326 and R. G. v. C. G. decided by O’Neill J. and Finlay Geoghegan J. respectively than to the case W. A v. M. A, [2004] 1 IR 1 decided by Hardiman J. insofar as the settlement is of long years standing and does not represent a sharing of assets and business opportunities between husband and wife such as occurred in W. A. v. M. A.
Both R. G v. C. G. and K. v. K. are authorities for the proposition that should the financial circumstances of the provider alter substantially and dramatically for the better, then less regard is to be paid to the previous settlement. Counsel for the husband has argued that if the court considers the fact that the 1991 settlement was reasonable in all the circumstances, is a factor to which considerable weight should be given in deciding to make provision. I have seen the disclosure made by the husband in his statement of affairs of 1991 and the disclosure is of a high standard. Apart from her disappointment about the after tax outturn of the maintenance, the wife was satisfied initially with the settlement. It is clear that the husband and wife took a reduction in their living standard insofar as the family home was sold to be roughly divided between them for the purpose of buying residences of a lesser standard while the husband’s shares were valued at over £400,000.00 the couple had not received dividend up to then and had for a considerable period of time not known that the husband’s father had placed the shares in the husband’s name. The £25,000.00 gross maintenance together with valuable pick ups compared to a salary of £81,000.00 (including dividends) which was represented as being the equivalent of net income after tax on s. 34 loan payments as £43,120.00 per annum. On the current rough valuation of pick ups – approximately €20,000.00 per annum the maintenance of the wife would have been somewhat over one third of the husband’s salary. The family had led a comfortable but cautious lifestyle and the provision made in the settlement for the wife seems to have accommodated this lifestyle within the parameters of the reduced resources arising from the separation. The wife continued to have the responsibility at least in part for the youngest child who was then aged 17. Her responsibilities therefore seemed to be less than the wife in the R. G. v. C. G. and K. v. K. cases. Unlike the W.A. v. M. A. case, the wife in this case did not have any resources given to her from which she could earn a livelihood or develop a business: she was solely dependent on the husband for her maintenance in the future. She had the comfort of knowing that succession rights were not barred and that the husband’s pension would be maintained and available for her on his death. These latter two elements represented accrued security which must at least be replicated by the equivalent in any provisions to be made in this case. There is no attempt made to provide any sum to represent the esteem in which the plaintiff had been held in relation to her efforts as a mother and housewife which had been described by her in her evidence. The husband had stated that he too contributed to the home by gardening and cooking. The husband admitted in cross-examination that the wife did not suffer in the settlement by reason of any alleged conduct on her part. Having regard to the foregoing I find that the settlement was a reasonable one and subject to the reservations giving rise to additional provision in divorce proceedings the same would represent a very solid centre of gravity restraining the court from going too far beyond the parameters thereof. The question arises whether the further test in the K v. K. and R. G. v. C. G. cases in relation to additional provision is met. This test is whether the circumstances of the provider (the husband) have altered substantially and dramatically for the better since the making of the settlement a relatively long time ago in 1991. The possible dramatic increase in the value of the shares in the Group owned by the husband is largely illusory in relation to answering this question given the locked-in nature. Of more tangible importance is the comparison between the increase in the husband’s annual income of around £80,000.00 to €420,000.00, which is approximately a four-fold increase, allowing for currency conversion with the maintenance and pick up value of the wife which is estimated now to be the equivalent of €72,000.00 – only slightly over double the initial maintenance in monetary terms. As the husband stated in evidence, that his salary was based on national wage agreements or understandings over the years, the only explanation for the discrepancy between the rate of growth of the husband’s income with the income of the wife in monetary terms, is that where as the wife was protected against price increases she did not share in the dramatic economic growth experienced in this country over the last few years. The case must surely illustrate that whereas the CPI adjustment may be suitable for protection against short term cyclical inflations it ultimately does not protect against longer term or secular alterations such as has been evidenced by the dramatic and unusual growth in the economy in the 15 years since the settlement. In my opinion, it would be unfair to allow the terms of the settlement to prevent the wife from enjoying the better standard of living experienced throughout the country in real terms especially when they have been enjoyed (albeit on a prudent or measured scale), by the husband in regard to his income. Additionally the husband has been in a position to accumulate a substantial pension and to increase dramatically and successfully his shares portfolio. While the wife has commendably been in a position to save something to establish a portfolio this falls into insignificance when compared to that of the husband. The evidence of the wife as conceded by the husband is that she has led a cautious life. She has to borrow or rely on friends for holidays, her house has become dated. She has become aware of vast increases in the cost of nursing home care in the event of her requiring same. On that basis that the settlement should not act as a restraint in relation to providing reasonable resources to enable the plaintiff to catch up with modern prosperity and to receive an adequate and proper amount of resources to provide security which she will lose by foregoing succession rights in the post divorce situation. The settlement should be of influence in ensuring that the shares in the Group in the hands of the husband should not be exploited to disrupt the family and inherited nature of the business or to provide resources by aggressive provisions in the divorce order for realisation or use as security.
The assets and income of the parties.
I find that the net assets of the husband are as follows:-
1. House €1,234,000.00
2. Pension Fund €2,156,000.00
3. Investments €1,500,000.00
4. Boat € 180,000.00
5. Bank Accounts € 41,000.00
Total €5,111,000.00
6. Husband’s share in Group €3,000,000.00
Total €8,111,000.00
The net assets of the wife are as follows:-
1. House€800,000.00
2. Shares € 80,000.00
Total €880,000.00
On the basis of the best figures worked out by Mr. Peelo and Mr. Grant, the two accountants in the case, the gross income of the husband from all sources is €450,000.00 and the net disposable income after tax is €282,000.00. The existing maintenance of the wife is €52,000.00 gross or €35,000.00 net. The maintenance plus pick up items is valued at €72,000.00 gross. It has been estimated by the accountants that the net disposable income of the husband after maintenance, tax and pick up items is in the region of €230,000.00. I consider the calculation to be done on this basis €280,000.00 – €72,000.00 = €210,000.00 plus €17,000.00 = €227,000.00. (Tax not paid by the husband in hands of wife) investment of 50% of pensions fund in an Approved Retirement Fund will result in an income/pension for wife of €52,000.
Consideration in relation to provisions pursuant to s. 20 of the 1996 Act.
Having regard to the criteria set out in s. 20(2) paragraphs (a) – (l), deal with same consecutively as follows.
In relation to paragraph (a) the husband will continue to have a high earning capacity in the immediate future which will reduce when he eases his workload and/or retires. Even in retirement and allowing for reallocation of resources by and in provision of this case between husband and wife, the husband will continue to have ample income, from pension and dividend income, from his shares in the Group and his investment portfolio. The wife will continue to have a dependency on the husband. Her shares can barely provide an income of €1,000.00 a year in net dividends. She has not the capital resources to upgrade her house or provide modest holiday accommodation elsewhere.
In relation to paragraph (b) the figure of €90,000.00 per annum gross maintenance has been suggested by counsel for the plaintiff as being adequate maintenance to enable the wife to catch up in her estimation on her requirements for day to day expenditure and basic outlets such as holidays. This compares with the current value of maintenance and pick ups of €72,000.00 gross. This figure requires to be augmented with capital sums to provide catch up expenditure such as up-grading or changing house and holiday accommodation together with pension provision in the future. An increase in the pool of capital available for the wife is necessary to ensure that she may plan for a fund to ensure security in relation to nursing care in her old age. The husband’s financial needs and obligations are essentially the same as those of the wife and he should have ample resources left after provision is made to the wife in these proceedings.
In relation to paragraph (c) it is clear that the husband has caught up with any possible surpass the standard of living enjoyed by the family before the spouses commenced to live apart from one another but that the wife’s standard of living has deteriorated as I have already described.
In relation to (d) both parties are in their sixties and both have a concern about security for their older years in relation to pensions and nursing home accommodation. While the duration of their marriage was long, the length of time in which they have lived apart is 15 years. I have dealt with the significance of the length of time of 15 years in relation to the consideration of the settlement. I also find it of significance that during all of the 15 years the wife has been solely dependent on the husband and remains so into the future. While the husband has concerns about blood pressure and diabetes and must take care of himself to control these, the health of the wife is excellent. I take into account the health of the husband from the point of view of endeavouring to ensure that the crafting and architecture of the eventual order in this case will not involve disruptive liquidation type procedures and that if an absolutely clean break cannot be ensured that the provisions are such that they will not be intrusive in relation to the family and inherited nature of the Group. To do otherwise would in my view place unnecessary strain on the parties by reason of the continuation of litigation would not be conducive to good health.
In relation to paragraph (f) the contribution of the wife as a mother and home maker for the duration of the childhood of her three children is to be taken into consideration with the vast bulk of the contribution made financially by the husband as described above. The contribution of the wife should be met by some adjustment in relation to the shareholding of the husband in the Group as hereinafter described and also allocations of some capital and pension, (part of which may be regarded as being part of a catch up on falling relative value of maintenance payments and in part recognition of past contributions). These capital adjustments will not go anywhere near the type of parity of treatment one might have if the marriage had continued to the date of the divorce and assets were being distributed on the basis of an application of the T. v. T., [2002] 3 IR 334 principles and in the event of there being no prior reasonable settlement has occurred in this case. The husband too made a contribution to the family by being the father and participating in the home, participating in holidays and making special contributions in relation to attending the garden and large lawn and doing some cooking. The children have succeeded well and both parents can take credit for ensuring their nurturing and upbringing.
As regards paragraph (g) the earning capacity of the husband was not inhibited by his marital responsibilities. As was the pattern in the 1960’s and 1970’s the wife gave up her employment and to that extent gave up the opportunity of earning outside the home. In the beginning of the settlement period she is unlikely to have earned more than the maintenance under the settlement and she is not particularly making a case that she would have ascended up the ladder to some other career arising from her former employment as a secretary and this paragraph does not really affect the outcome of the case in financial terms as the wife has not pressed it.
Paragraph (h) does not arise in so far as neither of the spouses entitled by or under statute to any income or benefits.
Paragraph (i), I do not propose to deal with the conduct as the parties would not wish me to do so and it is fair and just that I take that course.
Paragraph (j), the husband’s house is of somewhat higher standard then the wife’s house. She said that her house is cramped, and that she would like more room for her visiting children and their friends and possibly grandchildren. She would also like to have the opportunity of requiring a modest holiday home elsewhere in the country. I consider that the capital allocation provision in this case immediately realisable will enable the wife to seek to improve this accommodation.
In paragraph (k) the wife will lose her legal right under the Succession Act, 1965, to a share in the husband’s estate on death in the event of a divorce. She may also lose part of the pension arrangement but this will be amply compensated by new pension arrangements and these losses as they may arise may be catered for by securing maintenance and pension payments in the manner proposed by me.
Paragraph (l) does not arise as there is no dependency nor does the evidence disclosed that either party intends to remarry.
Provision
I propose to increase the annual maintenance of the wife to €90,000, increasing with the cost of living but obviously reviewable if the husband ceases employment. I accept suggestion of husband’s counsel that this should be secured in the event of death of husband on the husband’s ARF, but also on €500,000 of his portfolio. The suggestion of securing same on the husbands share in the group is too illusory for the wife and too distressing for the husband.
I propose to order payment of lump sum of €400,000 by the husband to the wife.
I propose to order the division of the pension fund by providing the sum of €1,250,000 for the provision of an ARF for the wife, having regard to the fact that the same might augment the lump sum in the further residential and holding of property which in turn will be security for the future pension or nursing home needs of the wife.
I direct that the husband, his successors and personal representatives do hold from henceforth ten per cent of his current non-voting shares in the S. company in trust for the wife to the intent that the wife may hold the same and dispose of same by deed or will (such disposed to take effect not less than 15 years from date of order) and for her own benefit as she shall decide, provided however that the wife shall not be entitled to call for the vesting of such shares in her but shall be entitled to such dividends and cash proceeds as they fall down on the basis that the husband shall be liable for funding any corporate action associated with such shares. For the purpose of avoidance of doubts I invite the parties to make suggestions as to how the order incorporates this principal in the event of a disposal by will and death within the 15 year period – obvious with Mr. McMin a trustee position.
I find that at the date of the institution of the proceedings the husband and wife have lived apart from one another for a period amounting to at least four years during the previous five years and that there is no reasonable prospect of a reconciliation between the spouses and that the court has made proper provision having regard to the circumstances existing for the spouses, being the husband and wife in this case, and that there are no dependent members of this family within the meaning of the 1996 Act and accordingly I am prepared to grant a decree of divorce in respect of the marriage of the husband and wife in this case. I leave to the submissions of counsel to address me in relation to the fine tuning of the formalities of the order having regard to the foregoing judgment.
S. -v- S.
[2008] IEHC 448 (21 November 2008)
JUDGMENT of Mr. Justice Garrett Sheehan delivered on the 21st day of November , 2008
1. The applicant wife instituted proceedings in November, 2006, seeking a decree of divorce in respect of her marriage to the respondent pursuant to s. 5 of the Family Law (Divorce) Act 1996, and various ancillary financial reliefs.
Background
2. The applicant and respondent were married on the 14th September, 1985, and lived together until June, 1992 when the applicant and the children left the family home. There are five children of the marriage. J. and D. who are 22, S. who is 21, M. who is 18 and S. who is 16. Both parties live in the South of Ireland.
3. The applicant and respondent both work in the same profession.
4. The applicant previously sought matrimonial reliefs in three separate sets of legal proceedings prior to the institution of the proceedings that are presently before this Court.
(I) In 1992 the applicant instituted proceedings in the High Court pursuant to the Judicial Separation and Family Law Reform Act 1989, which ultimately resulted in a consent order being ruled by this Court on the 5th October, 1993. The applicant was granted custody of the children and the financial arrangements were set out in a document entitled “Schedule B” which was headed:-
“In full and final settlement of all matters in dispute between them, and in compromise of the above entitled proceedings, M. S. the wife and P. S. the husband agree as follows:-
The main provisions of Schedule B related to the respondent paying the applicant IR£70,000 by the 1st December, 1993, to enable the applicant to purchase a home free of mortgage for herself and the children of the marriage as well as monthly maintenance payments of IR£1,000 for the applicant and the children.”
(II) In 1996, the applicant issued a second set of proceedings in the Dublin Circuit Court pursuant to the Judicial Separation and Family Law Reform Act 1989, and the Family Law Act 1995, which resulted in a following consent order being made on the 22nd July, 1997, which provided for increased monthly maintenance payments and the establishment of an Educational Trust Fund for the children. The applicant was to furnish the trustees with vouched expenses and the respondent was to be left informed by the applicant about the children’s education and development.
In the course of her evidence in these proceedings she stated it was never her intention to so update the respondent.
(III) In 2005, the applicant issued proceedings pursuant to the Family Law (Divorce) Act 1996, which said proceedings were not served and were ultimately struck out.
The agreements are sixteen and eleven years old. I attach no significance to them in respect of the maintenance orders I propose to make relating to the children, and little significance in respect of the orders I propose to make that relate directly to the applicant.
In the present proceedings the applicant represented herself and the respondent was represented by solicitor and counsel.
The Children
5. J. and D. are both 22 years of age and accomplished sportsmen. J. is a university graduate. His twin brother, D. is studying construction at D.I.T. and in his second year there. He is also an accomplished sportsman. On J.’s 21st birthday shares and investments to the value of €32,600 were transferred into his sole name. On the same date a similar number of shares and investments to the value of €32,600 were transferred into the sole name of J.’s twin brother D. S. is 21 and in the final year of a University Arts Degree. N. attends a private secondary school and is now in sixth year. He too has an interest in the same sport as his elder brothers. S. is in fourth year at a private secondary school and also has an interest in the same sport.
6. In 2007, the maintenance was increased to €3,000 per month, and there was also a further court order in summer of 2007, which directed that the applicant receive a lump sum of €5,000.
7. In 1998, the applicant won €243,000 in the lottery.
The Assets
8. The principal assets of the applicant comprise her family home which was valued at €1,000,000 in June, 2007, and at €850,000 on foot of a July, 2008 valuation obtained and produced to the court by her. The applicant also owns a property in Wexford valued at €280,000 in June, 2007, and at €290,000 on foot of a further valuation obtained by the applicant in July, 2008 and produced by her.
9. The applicant has taken out two mortgages on the family home, totalling €92,000 approximately and a mortgage on the property in Wexford which presently stands at just under €200,000. She has personal pensions to the value of €54,345 and life assurance in the sum of €16,712. In addition she has shares and cash in the bank totalling €32,984.
10. The principal assets of the respondent comprise his home which is valued at €300,000 and is subject to a mortgage of €17,000 and his 50% share in the building occupied by his professional practice. His half interest in this property is valued at €1,250,000 which gives the building a total value of €2,500,000. The said building is charged with mortgages and loans in excess of €2,000,000.
11. The respondent has pensions valued at €483,713 and life assurance valued at €42,736.
12. In addition the respondent has shares valued at €105,346 in July, 2008 and a sum of €160,000 in the bank.
13. The net asset value of the respondent’s share of his legal practice was agreed by the forensic accountants to be €544,710 as of March, 2008, and a further sum of €180,000 in respect of goodwill, leaving this business asset with a present value of €724,710. Finally the respondent has a further legal costs liability of €85,000 in respect of this case and a projected tax liability of €104,785.
14. Apart from these assets there is also the further asset in this case referred to as the “children’s fund” which the respondent maintains.
15. The total value of these shares and investments stands at €75,299 and includes an education fund valued at €13,431.
16. The two eldest children received investments worth €32,600 on attaining their 21st birthday. The third child is now due a payment and the youngest two children will have their particular investment funds transferred to them when they reach 21 years of age.
17. While I must look at the assets of the parties at the time of the hearing, I equally cannot ignore the fact that the applicant has weakened her financial position in the two years prior to this hearing by considerable spending and also, by entering into a work contract that appears to reduce her own earnings.
18. I now propose to review the evidence in light of s. 20(2) of the Family Law (Divorce) Act 1996:-
( a ) the income, earning capacity, property and other financial resources which each of the spouses concerned has or is likely to have in the foreseeable future,
The respondent’s projected income for 2008 was agreed at €256,000 and the applicant’s at €127,500. This latter sum included maintenance payments of €36,000 and a projected practice income of €80,000.
Shortly before the hearing of this case the applicant entered into an agreement whereby she will receive €50,000 per year, with commission of 25% in respect of fee income earned by her in excess of certain targets.
It is clear that the respondent’s future earning capacity is significantly greater than that of the applicant. The applicant also gave evidence of certain health problems which she maintained limited her earning capacity. I accept the evidence of the applicant’s psychiatrist who stated “I have been seeing the applicant for a number of years for management of stress and symptoms of depression and anxiety and, specifically insomnia. And over the years there are times when things go quite well. But then she relapses. But the effect of having to return to court proceedings is always a major stressor. It will be very beneficial for her overall health not to have to re-engage with court proceedings”.
I hold that the applicant’s earning capacity will improve when these proceedings conclude, notwithstanding the fact that shortly before these proceedings commenced she entered into an agreement which appears to have reduced that capacity.
( b ) the financial needs, obligations and responsibilities which each of the spouses has or is likely to have in the foreseeable future (whether in the case of the remarriage of the spouse or otherwise),
There was no evidence by either party of an intention to remarry. The respondent lives with his partner and her 20 year old son, and makes a modest contribution to his educational expenses, which is irrelevant in the context of these proceedings. I hold that the primary financial obligation of both the applicant and the respondent is to ensure the completion of their children’s education.
The applicant, in the course of her evidence, sought considerable financial support from the respondent for the childrens sporting interests. While the applicant’s practical support of the childrens interest in this activity is commendable, I hold that the respondent has no special obligation in this regard.
In her affidavit of means the applicant averred that her annual financial needs amounted to €193,556. This figure included a sum of €26,808 for sports related expenses, €17,388 in respect of education expenses and a sum of €16,800 in respect of pocket money for the two eldest children, both of whom also had part time jobs.
The applicant’s evidence on these expenses was unsatisfactory. Her accountants report was primarily based on information provided to him by the applicant, and it was unclear to me if the applicant had spent €193,566 the previous year or if this sum was her best projection of her needs. Either way, this level of expenditure is not sustainable.
The applicant also sought to establish that she had incurred medical expenses of €47,281.25 between 2001 and June, 2008. While these expenses were itemised in an affidavit sworn on the 17th July, 2008, the said expenses were not vouched and the applicant did not indicate whether or not she had received any tax deduction in respect of these expenses. Furthermore, as the respondent pays V.H.I. premiums for the family it is not clear from the affidavit whether the V.H.I. policy would have covered any of the said expenses.
I found the applicant’s evidence on the question of medical expenses to be unreliable.
( c ) the standard of living enjoyed by the family concerned before the proceedings were instituted or before the spouses commenced to live apart from one another, as the case may be,
The applicant and children have always enjoyed a good standard of living. This is largely due to the contributions the applicant and respondent have made towards the material needs of the children. I accept the evidence of the respondent that, following the High Court consent order in 1993, it took him some years to re-establish himself on a sound financial basis and that, effectively he was obliged to return to live with his mother for a period of two years following the initial separation. The position of the applicant and the children was also enhanced by the wife winning a sum of IR£192,000 in 1998.
( d ) the age of each of the spouses, the duration of their marriage and the length of time during which the spouses lived with one another,
The applicant wife is 53 years of age and the respondent husband is 48. The parties lived together for about 8 years. They have been married for 23 years.
( e ) any physical or mental disability of either of the spouses,
While the wife has had some health problems she has been in continuous employment for a number of years. I have already referred to the evidence of her psychiatrist. There was no evidence of any physical or mental disability on the part of the husband.
( f ) the contributions which each of the spouses has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution made by each of them to the income, earning capacity, property and financial resources of the other spouse and any contribution made by either of them by looking after the home or caring for the family,
Under this heading I take into account the contributions made by both applicant and respondent to the welfare of the family, and the fact that the wife has been looking after the children on her own since 1992.
( g ) the effect on the earning capacity of each of the spouses of the marital responsibilities assumed by each during the period when they lived with one another and, in particular, the degree to which the future earning capacity of a spouse is impaired by reason of that spouse having relinquished or foregone the opportunity of remunerative activity in order to look after the home or care for the family,
Again, under this heading I take into account the undoubted fact that the applicant’s family responsibilities have curtailed her earning income.
( h ) any income or benefits to which either of the spouses is entitled by or under statute,
Apart from the wife’s entitlement to child benefit, this section is of limited relevance.
( i ) the conduct of each of the spouses, if that conduct is such that in the opinion of the court it would in all the circumstances of the case be unjust to disregard it,
In the course of the hearing before me neither party made conduct an issue.
( j ) the accommodation needs of either of the spouses,
Both parties have suitable accommodation. However, I note the applicant lives in a comfortable family home and the respondent in a much more modest one.
( k ) the value to each of the spouses of any benefit (for example, a benefit under a pension scheme) which by reason of the decree of divorce concerned, that spouse will forfeit the opportunity or possibility of acquiring,
The pensions of the applicant and respondent are relevant under this section and have already been set out under that part of this judgment headed “Assets”.
( l ) the rights of any person other than the spouses but including a person to whom either spouse is remarried.
While the husband lives with his partner and her 20 year old son and has responsibilities towards them, he did not urge that their rights be taken into account.
Conclusion
19. In her opening address to the court the applicant stated that she wanted to sever all ties with the respondent and wanted the court to order that she receive all the cash in the respondent’s bank account, all his shares and all his pensions. The total value of the assets required by the applicant at that stage of the case came to €809,000.
20. In the course of her written submissions in addition to the above requirements, the applicant sought maintenance of €4,000 per month for herself, and €1,500 per month for each of the children of the marriage, backdated to the date in 2006 when the proceedings were instituted.
21. Ms. Clissman on behalf of the respondent opened her case by repeating an offer earlier made to the applicant in open correspondence, to pay €9,000 per annum in respect of each dependent child. The respondent also offered to pay out the remaining sum of €13,300 in the education trust fund over the next two and a half years, and to pay the applicant a lump sum of €60,000 within fourteen days of the decree of divorce. He further offered to transfer two pensions to the applicant with a total value of €101,942. The three youngest children would each receive the shares and investments made on their behalf on reaching 21, with the share to the third child S., being topped up by having the sum of €10,000 added to it.
22. The respondent also offered to pay 20% of a possible inheritance from a family trust fund to his children which will fall due in the event of his mother predeceasing him.
23. I have considered the evidence and the submissions of both parties. In relation to the applicant’s submissions I have not taken into account those submissions which were not based on or related to the evidence before me in this case or the applicable law.
24. I hold that in the particular circumstances of this case, proper provision for the applicant and the children of the marriage requires that I make the following orders which are substantially in line with the respondent’s offer:-
1. Payment to the applicant of a lump sum of €60,000 within 28 days of the finalisation of the orders in this case.
2. A sum of €10,000 per annum maintenance in respect of each child as long as each child remains a dependent child. Such maintenance to be backdated to the 1st September, 2008.
3. Transfer to the applicant the Canada Life pension with an estimated value of €39,712, the Hibernian Life pension with an estimated value of €62,230 and transfer to the applicant 50% of the Standard Life pension presently valued at €63,237.
4. I direct further that the respondent top up the education fund so that the sum of €9,000 is paid out on the 1st March, 2009. The court notes that the two youngest children attend fee paying private schools and that the second youngest is presently in sixth year. The respondent to top up the education fund, so that the sum of €5,000 is paid out in 2010, and €6,000 in 2011.
5. The respondent to increase the investment fund now, falling due to S. by €10,000 in line with his opening offer.
6. The respondent to maintain the funds presently in place for the two youngest children
25. I will grant a decree of divorce in respect of the marriage entered into between the husband and the wife on 14th September, 1985, and will discuss with the parties the precise form the order should take.