High Court of Ireland Decisions

1. The Applicant and the Respondent were married on 7th October 1968 and there were two children of the marriage, neither of whom are now dependant on their parents, and both of whom in fact work in the family business. It is accepted by the parties that the relationship between them has irretrievably broken down and there is no possibility of a reconciliation. The Applicant is claiming a Decree of Judicial Separation pursuant to sections 2 and 3 of the Judicial Separation and Family Law Reform Act, 1989, together with a number of ancillary orders. The Respondent acknowledges the Applicant’s entitlement to a Decree of Judicial Separation, but counter claims for a Decree of Divorce pursuant to the provisions of the Family Law (Divorce) Act, 1996 and the provisions of the Constitution. The Applicant disputes the Respondent’s entitlement to a Decree of Divorce and I propose to consider that issue before turning to the financial position of the parties.

2. It is quite clear that there is no reasonable prospect of reconciliation in the present case, and the parties have agreed that it is a matter for the Court to make proper provision for them, and accordingly the only issue which I have to decide is whether the spouses have “lived apart from one another” for the relevant period or periods.

3. In 1988, the Applicant discovered that the Respondent was carrying on an affair with another lady and sometime about September 1988, having been confronted with his wife’s knowledge of the affair, the Respondent left the family home and continued to conduct his affair with this lady. In 1989 the Applicant consulted a Solicitor and several letters were written on her behalf to the Respondent threatening Family Law proceedings, although no such proceedings ever were actually issued by the Applicant. The Respondent in fact provided for her and she continued to reside in the family home with the two children.

4. In 1991 the Respondent ended his relationship and returned to live in the family home. The Applicant has said in evidence that she was glad to have him come back, because she had never really accepted that the marriage had ended, but the Respondent maintains that his primary motive for returning was that he wanted to develop a better relationship with his son, who was then just eighteen. I accept that at this time, that is in 1991, the Applicant certainly hoped that some form of normality could be achieved in the marriage. I think the Respondent did not have any such expectations, even at that stage.

5. There is some conflict in the evidence as to the relationship between the parties over the next few years. The parties slept in separate bedrooms and never resumed sexual relations. They did on several occasions go away on holidays with the children, but again slept in separate bedrooms while on holiday. When they were in the house together they appear to have had what might be called a civilised relationship, in that they were polite to each other and if both were present at meal times would take their meals together. When he was at home, the Respondent would tend to go to bed, or at least to his room, early and watch television and he had a separate telephone line installed into his room.

6. During this period, as will be detailed later in this judgment, the Respondent’s business was growing rapidly. The parties lived in a small town and the Respondent became probably the biggest employer in the town. Because of his business activities, he became involved in a number of local events, and the Applicant was also involved in a number of local social activities. They were important people in the town, and undoubtedly attended a number of local functions together. The Applicant also owned 15% of the shares of the holding company of the Respondent’s business, which he had given to her when the business was first incorporated, and at a time before any problems arose in the marriage. In addition, she managed a shop in the town which was part of the Respondent’s business, for which she was paid a wage. However, I am not sure how relevant the Applicant’s relationship to the Respondent’s business is in determining whether the parties were living apart, as the same situation had obtained between 1987 and 1991, when the parties were undoubtedly living apart, and has obtained since the Respondent finally left the family home in 1997. It may also be of some relevance that, following the return of the Respondent in 1991, he agreed to pay the Applicant a sum of £750.00 per month in cash, which sum was later increased to £1,000.00 per month, and her car and all motoring expenses were paid out of the Respondent’s business.

7. In 1995, while the parties were still living in the same house, the Applicant entered into a relationship, including a sexual relationship, with another gentleman and in 1996 the Respondent entered into a relationship with a lady with whom he is now living. On the evidence it seems that at the time neither of them was fully aware of the extent of the other’s relationships, but undoubtedly such relationships did exist.

8. This, of course, adds the further consideration of what is a household, although in Mouncer -v- Mouncer (1972) 1 W.L.R. 321, it was held that this statutory provision did not really alter the earlier common law situation. After holding that on the facts the parties were living together, Worthing J., said at page 323:-

9. The reasoning of this case would appear to apply what I might call a totally physical test as to whether the parties were living together or living apart, but a different attitude was taken by the Court of Appeal in England at much the same time in Santos -v- Santos (1972) 2 All ER 246. It should be said immediately the facts of this case were that the husband and wife were in fact not living in the same house, and the matter to be considered by the court was whether that fact was in itself sufficient to determine that the parties were living apart. The judgment of Sachs J., contains a very detailed consideration of the authorities, not only in the United Kingdom but also in other common law jurisdictions. The conclusion which he reached, as set out on page 255, is expressed as follows:-

10. There is a further English case which is of some assistance, although it was decided in the context of whether a wife had or had not been guilty of desertion. In Bartram -v- Bartram (1949) 2 All E.R. 270 a husband and wife had separated under conditions which undoubtedly constituted desertion on the part of the wife. Some eighteen months later, due to the fact that the wife was unable to find any other accommodation, she moved into the house in which the husband was residing with his mother, but slept in a separate room from him and as far as possible avoided meeting him except at mealtimes. It was held that the desertion had continued, notwithstanding the fact that both husband and wife were living in the same house. Bucknill L.J., said at page 272:-

11. Mr. McMenamin S.C. goes further, and urges on me that the Bartram case supports an argument that once the parties started to live apart, they continued to live apart in the legal sense even after the Respondent returned to the family home because there was no true reconciliation between the parties. I do not think I can accept that as a general proposition, and of course it must be remembered that that case was a desertion case, and the question of whether there has been desertion is not the same question as whether the parties are living apart. Furthermore, in my view the whole purpose of the provision in section 5(1)(a) of the 1996 Act to the effect that the parties must have lived apart from one another for at least four years during the previous five years is to allow for the situation where the parties may come together for a short time in an attempt to become reconciled, and indeed has been inserted to encourage possible reconciliation. The fact that the section in effect allows the parties to live together for one year out of five and then separate again without affecting the rights under the section, seems to me to make it quite clear that it was the view of the Legislature that it was necessary to make such provision as otherwise parties who attempted but did not attain reconciliation would not be able to avail of the Act if they lived together for a short time during the preceding five years. Nevertheless, the Bartram case is undoubtedly a further authority that the court should look to the intention of the parties in considering matters of this nature.

12. It must be born in mind that the right to a divorce in this country is a constitutional right arising under Article 41.3.2 of the Constitution, and that the 1996 Act sets out the circumstances under which such constitutional right may be exercised. In construing the Act the court must have regard to the context in which words are used, namely the termination of a matrimonial relationship. Marriage is not primarily concerned with where the spouses live or whether they live under the same roof, and indeed there can be a number of circumstances in which the matrimonial relationship continues even though the parties are not living under the same roof as, for example, where one party is in hospital or an institution of some kind, or is obliged to spend a great deal of time away from home in the course of his or her employment. Such separations do not necessarily constitute the persons as living apart from one another. Clearly there must be something more than mere physical separation and the mental or intellectual attitude of the parties is also of considerable relevance. I do not think one can look solely either at where the parties physically reside, or at their mental or intellectual attitude to the marriage. Both of these elements must be considered, and in conjunction with each other.

13. Applying this test, I have no doubt that, just as parties who are physically separated may in fact maintain their full matrimonial relationship, equally parties who live under the same roof may be living apart from one another. Whether this is so is a matter which can only be determined in the light of the facts of any particular case.

14. As I have said, there is some conflict between the parties as to the extent of the relationship between them between 1991 and 1997. The Respondent categorised his bedroom as his apartment, and said that it was his habit to go to bed early and watch television in the bedroom, and that normally he went away at weekends unless the children were at home, and that he would be away for three weekends out of four. He further said that he would only see the Applicant for two or three hours in any one week and that he felt like a lodger in the house. On the other hand it is quite clear that when the children were in the house, he took a full part in the household arrangements, and on a number of occasions went on holidays with the Applicant and the children.

15. Having heard both parties giving evidence, I am satisfied that the Respondent did not return with any intention of resuming a normal matrimonial relationship, but on the contrary that from the time he first left in 1988 he considered the marriage to be at an end. I have no doubt equally that the Applicant did not want the marriage to be at an end, and hoped that when he returned in 1991 it would lead to a normal matrimonial relationship. Marriage involves mutuality, and it is my view on the evidence that when the Respondent returned in 1991 he did not intend to return to a marriage, but rather that he wanted to have a better relationship with his children, who were then in third level education. I do not think he ever intended to live together with his wife as husband and wife, and as the phrase “living apart from one another” is used in the context of a marriage, I think the Respondent never intended to live other than apart from the Applicant.

16. Of course the period with which I am really concerned is the period of five years ending with the institution of proceedings for divorce, which occurred on 16th August 1999. More particularly in the circumstances of this case I am in fact concerned with the four years preceding that date. It is not in dispute that in 1995 the Applicant formed a relationship, including a sexual relationship, with another gentleman without the knowledge of the Respondent. In my view the existence of this relationship is evidence of the mental attitude of the Applicant to the marriage in 1995. Whatever she may have hoped for in 1991 when the Respondent returned, quite clearly by 1995 she was aware that for all intents and purposes the marriage was at an end, there had been no sexual relations for many years and she, perhaps understandably, was prepared to form a relationship with another person. If I consider the mental and intellectual attitude of the parties, therefore, I am satisfied that the Respondent never considered himself to be living together with the Applicant in a marriage, and that certainly in the last four years of the marriage the Applicant did not consider herself to be living together with the Respondent in that same sense. Accordingly, I am of the view that the Respondent has satisfied the conditions set out in section 5 of the 1996 Act and I would propose to grant a Decree of Divorce.

17. I have heard a great deal of evidence concerning the financial affairs of the parties. I do not think it is necessary for me to detail those affairs in this judgment, but I would say that in reaching my conclusions I have found the evidence given by the accountants for both parties to be extremely helpful. It is not out of any disrespect to them or to their evidence that I only intend to deal with the financial aspects of the case in broad outline.

18. The Respondent has built up a very successful and prosperous business which operates through a number of separate companies. However, the holding company for the entire business is owned as to 85% by the Respondent and 15% by the Applicant, which in fact acknowledges the initial input of the Applicant into the building up of the business. There has been considerable evidence as to the future viability of the core business, due both to recent competition and to the development of other technologies. I accept that there is probably little room for future growth, certainly unless there is a considerable investment in new technology, and indeed the business has probably peaked. On the other hand, the Respondent is a very successful businessman and has clearly recognised this situation. He has begun to move into totally different areas, both in this country and abroad. While I accept that his core business may not be so profitable in the future, I think there is a strong likelihood that he will compensate for this by extending his other business interests. However, some of his more recent ventures are not under the umbrella of the family holding company, but are in the Respondent’s sole name, and thus would not affect the value of the Applicant’s interest in that company.

19. There has been a certain amount of agreement between the parties as to the financial aspects of the case. It is accepted that the Applicant should have the family home and should also have full ownership of an apartment in Tenerife. It is also agreed that the Respondent should have the second home and the apartment in which he is now living. The Applicant is also to have the shop which she has been managing for many years and the house adjoining it, and that the business carried on in the shop shall now be carried on by her solely for her own benefit, and a house in Dublin.

20. With regard to the family business, it is accepted that the Respondent will acquire the Applicant’s 15% at a price which I have been asked to fix. This includes both the core business which has now almost certainly peaked and two hotel ventures into which the group has expanded.

21. Mr. Murtagh, who has given valuation evidence on behalf of the Applicant, starts his report with the comment:-

22. This is a comment with which I must wholeheartedly agree. Expert witnesses for both parties agree that one of the best methods of valuing a trading company is by applying a multiple to the after-tax profits, but unfortunately they are widely at variance as to what that multiple should be. Mr. Murtagh believes the multiple should be six, to be applied to a weighted average of the last three years post-tax profits. Mr. Peelo, on behalf of the Respondent, accepts that a multiple of six would be acceptable for certain companies, but makes the valid point that what one is really trying to assess is not the value of the income over the past three years, but the value of the future income. He argues that in a case like this, where there is a probability that future income may well be reduced, or alternatively a considerable amount of future capital is going to have to be invested, the figure should be considerably lower, and he suggests a multiplier of four. On a multiplier of six it appears that the value of the group is approximately £10,400,000.00, while on a multiple of four it is approximately £7,000,000.00. I do think there is a lot of validity in Mr. Peelo’s argument as to the future of this group of companies, primarily because of the number of imponderables. The appearance of considerably more competition in the very recent past and the technological changes in the business must certainly reduce the value of the group. In making a valuation, I have to have regard to the basic economic fact that the value of a business is what somebody will pay for it, and in my view a prospective purchaser would be discouraged from buying this business because of the future uncertainty. Accordingly, I would put a valuation of £8,000,000.00 on the group of companies. I do not think there should be any discount on the value of the Applicant’s shares because she is a minority shareholder, given the circumstances of this case, and accordingly I will value her 15% at £1.2 million.

23. This sum, of course, is money to which the Applicant is entitled as of right, irrespective of her rights under the Family Law (Divorce) Act, 1996. I am also asked to make Orders for periodical payments to the Applicant and a lump sum Order, with any necessary ancillary Orders to enforce these provisions. Section 20 of the 1996 Act sets out the matters which I must take into account, and they do not need repetition in this judgement. The position is that the Respondent has assets worth in the region of £2,000,000.00 in addition to his interest in the family group of companies while the Applicant does not have any significant assets in the context of this case over and above the money she will receive for her 15% interest. Having heard the Respondent giving evidence, and indeed having heard other evidence relating to the development of the business, I am quite satisfied that he is a very astute and hard working businessman, and I feel very certain that he will continue to prosper. At the moment he is in receipt of an income of about £120,000.00 per annum, which is easily sustainable by the business, and also has invested in properties which, even if not on a short term, certainly in the medium or long term should provide some considerable capital gain to him. He is a wealthy man and will probably continue to be such.

24. On the other hand, I must take into account that the Applicant will be in receipt of over £1,000,000.00 for her share in the business, and that the Respondent has agreed to transfer to her his interest in the family home, his interest in the holiday home in Tenerife, the shop which she manages and the house in Dublin where their son is residing, and that he will also procure that any monies which she may owe to any of the companies in the group will be written off, and in addition that he will pay her a periodic payment. In assessing the periodic payment, I take into account the fact that the Applicant will be separately assessed for tax, and therefore any amount which I award will be taxable in her hands, but I also must take into account the fact that she will undoubtedly have a sizeable income from the lump sum which she is going to get for the sale of her shares. I will assess the periodic payments in the sum of £4,500.00 per month to be paid on the first day of each month. There was some discussion in the evidence that the Respondent would provide a lump sum out of which an annuity could be purchased to contribute towards the maintenance. I am simply going to order the figure which is to be paid, and it is a matter for the Respondent as to how he finances this.

25. There then remains the question of a further lump sum payment. The Applicant is already going to get £1,200,000.00 in respect of her shares in the family company, and several valuable properties. She will therefore have a considerable amount of capital and a substantial periodic payment. I think it would be proper to award some further lump sum payment to her having regard to the assets of the Respondent, but I think it must be fairly limited. It would not be in the interests of either party to undermine the Respondent’s business potential. Accordingly, I will order that the Respondent pay to the Applicant a lump sum of £300,000.00, such sum to be paid within one year of the perfection of the Order herein.

26. Finally, there are two matters about which I am not quite clear, and which I will rule upon having heard further submissions. These are the Respondent’s pension fund, some of which I understand he proposed to use to purchase an annuity for the Applicant, and secondly, certain life assurance policies on the life of the Respondent, in which as I understand it the Applicant is named as beneficiary. I have not seen any documentation in relation to these matters, but I do think that some further benefit should accrue to the Applicant from them.