High Court of Ireland Decisions

THE HIGH COURT

FAMILY LAW

Record No. 91M/2001

IN THE MATTER OF THE FAMILY LAW (DIVORCE) ACT, 1996

BETWEEN

L O’M

APPLICANT

AND

N O’M

(OTHERWISE KNOWN AS N McC)

RESPONDENT

 

JUDGMENT of Mr. Justice Roderick Murphy dated the 30th day of July, 2002.

1.                     ISSUE

                        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 Section 37 of the Act.

2                      PREVIOUS PROCEEDINGS.

2.1                   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:

2.1.1                26th February, 1999 25M 1997, O’M -v- McC settlement matrimonial matters;

2.1.2                2nd March, 1999 settlement of 1997 No. 3885P, McC -v- O’M;

2.1.3                1997 No. 71 COS, Oakleaf Construction Ltd. and

2.1.4                1999 No. 864P O’M, Oakleaf Construction Ltd., Hainault Properties (Tara) Ltd. and KPL Developments -v- McC.

2.1.5                On the 5th March, 1999 a Deed of Waiver O’M and McC was executed.

2.2                   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 Section 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.

2.3                   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.”

 

2.4                   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 twelve 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.

3                      CURRENT PROCEEDINGS

3.1                   By a special summons dated the 12th July, 2001 the Applicant commenced divorce proceedings seeking a decree of divorce pursuant to Section 5; an Order excluding the Respondent’s entitlement to apply for relief under Section 18 and, if necessary, an Order pursuant to Section 5 (2) of the Act and pursuant to Section 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 the 22nd January, 2002 counterclaimed seeking Orders under Sections 13, 14, 16, 17 and 18 of the Act.

3.2                   By Notice of Motion dated the 7th 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 Section 14.  While this matter was opened to the Court is 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 Section 37 of the Act was proceeded with.

4                      REVIEWABLE DISPOSITIONS

4.1                   Section 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 (Section 37 (2)).

4.2.                  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.

 

5.                     GROUNDING AFFIDAVIT

5.1.                  The grounding Affidavit of J.B. O’Connor, the Applicant's Solicitor, was sworn on the 7th 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 the 5th 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.

5.2                   The Deed of the 5th March, 1999 referred to at 2.1.4 above 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 of 1989, the Family Law Act of 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 require.  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”.

 

6.                     REPLYING AFFIDAVIT

6.1                   The replying Affidavit of the Respondent’s Solicitor, Muriel Walls, dated the 11th April, 2002 first dealt with matters raised by Mr. O’Connors 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 Section 18 (10).

6.2                   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 Section 29 of the Act of 1989) or relief (as defined in Section 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.

6.3                   Ms. Walls says that the Respondents seeks a variety of financial relief Orders to ensure that proper provision exists for herself and the dependant 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.

7.                     SUBMISSIONS ON BEHALF OF THE APPLICANT.

7.1.                  Mr. Allen S.C. 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. 

                        Section 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. 

                        Subsection 1 of Section 37 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 subsection 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 Sections 12 to 18 including a property adjustment Order under Section 14 or their variation under Section 22 every court should not make an Order unless it would be in the interests of justice to do so (Section 20 (5)). 

7.2                   SUBMISSIONS ON CASE LAW

                        The Applicant submitted that Tesco Ireland Ltd. -v- McGrath and Anor. Unreported decision of Morris P. of the 14th June, 1999 applies.  In that case proceedings under Family Law Reform Act, 1998 between the first named Defendant, as part vendor and his wife were in existence.  (That Section 35 of the Family Law Act, 1995 is equivalent to Section 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 page 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 Section 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”.

 

8.                     RESPONDENT’S SUBMISSIONS.

8.1                   Ms. Clissman S.C. 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.

                        Section 35 of the 1995 Act is equivalent to Section 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 MK -v- JP, (Unreported decision of the Supreme Court dated the 6th November, 2001 at page 16) it was held that Section 20 (1) of the 1996 Act does not allow an Applicant the relief sought under paragraph 3 of the Notice of Motion.  Subsection 5 of that section is limited to the financial provisions of Sections 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 the 2nd March, 2002 relates to a put and call in relation to valuation where there has been no development to part of the site.

8.2                   In any event it is not possible to have such a claim as is sought.  The provisions do not allow a clean break (see MK -v- JP page 16):

                                    “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, JD -v- DD (1997) 3 IR 64).  In this jurisdiction the overriding requirement of a fair outcome is governed by Section 20 (5) of the 1996 Act:- “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”.

 

8.3                   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.

8.4                   The application for the declaration sought can not 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 sections 13 to 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.

8.5                   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.

9.                     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.

10.                   DECISION

10.1                 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 Section 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.

                        Insofar 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.

10.2                 Moreover, in so far as the declaration sought applies to any properties that such a declaration is too general in nature.

                        The Applicant applied for relief under the Act.

                        It is clear that Section 37 limits the rights of spouses insofar as the disposition of their property is concerned once proceedings have issued in relation to the Act.

10.3                 In any event, where problems do arise with regard to the disposition of land, which are caught by requisition number 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 Section 35 of the Family Law Act, 1995 or Section 30 of the Family Law (Divorce) Act, 1996.

                        This would appear to be standard conveyancing practice.

10.4                 In the circumstances the Application stands dismissed.