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Cite as: [2012] IEHC 615
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Judgment Title: CC -v- NC Neutral Citation: [2012] IEHC 615 High Court Record Number: 2007 95 M Date of Delivery: 02/03/2012 Court: High Court Composition of Court: Judgment by: Abbott J. Status of Judgment: Approved |
Neutral Citation Number: [2014] IEHC 615 THE HIGH COURT [2007 No. 95 M] IN THE MATTER OF THE FAMILY LAW (DIVORCE) ACT 1996 BETWEEN: CC APPLICANT HUSBAND AND
NC RESPONDENT WIFE JUDGMENT of Mr. Justice Henry Abbott delivered on the 2nd day of March, 2012 1. The applicant husband and the respondent wife were married to one another on the 31st day of October, 1987 in a church in the County of K. At the time of the marriage, and at all times material hereto, the applicant husband and the respondent wife have been domiciled and ordinarily resident within the jurisdiction. 2. The applicant husband and the respondent wife have lived separate and apart from one another since 11th December, 2003. From that time until December, 2005 the applicant husband resided at TF, being the former family home of the parties. Since January, 2006 the applicant husband has resided at BH. Between 2003 and 2005 the respondent wife resided at BH. Subsequent to December, 2005 the respondent wife rented accommodation for some time and since April, 2006 the respondent wife has resided aT WH. There are four children of the marriage of the applicant husband to the respondent wife, namely; K., who was born on the 13th of October, 1988; D who was born on the 31st May, 1990; J who was born on the 14th November, 1991; and P, who was born on the 17th January, 1995. 3. By Order of the High Court made the 7th November, 2005, O’Higgins J (having delivered judgment on the 25th of July, 2005) granted the parties a Judicial Separation and made the following orders:
2. A Periodical Payments Order pursuant to section 8(1) (a) (i) of the Family Law Act 1995 directing the applicant husband to pay to the respondent wife the gross sum of €36,083.00 per month for her maintenance; (to the intent that she shall receive €20,000 net per month free from any deductions), the first such payment to be on the 15th December, 2005 and each subsequent payment to be monthly thereafter into a bank account to be nominated by the respondent wife. The said payments shall be increased annually in accordance with any increase in the Consumer Price Index using the month of August 2005 as a base date; the first such increase to be payable on the 15th December 2006 and annually thereafter on the 15th December of each subsequent year. The period of the said Order shall be for the life of the respondent wife, subject to the provisions of section 8 (5) (a) and section 18(2) of the Family Law Act 1995. 3. A periodical Payments Order pursuant to section 8 (1) (a) (i) directing the applicant husband to pay to the respondent wife the sum of €6,667.00 per month in respect of the maintenance of the four dependant children; the first such payment to be made on the 15th December 2005 and monthly thereafter into a bank account to be nominated by the respondent wife. The said payment shall be increased in accordance with any increase in the Consumer Price Index using the month of August, 2005 as a base date; the first such increase to be payable on the 15th December, 2006 and annually thereafter on the 15th of December of each subsequent year. The period of such Order shall be for as long as each child remains dependant, as defined in the Family Law Act 1995, [subject to the provisions of Section 18(2) of the Family Law Act 1995.] 4. A Periodical Payments Order pursuant to Section 8(1)(a)(ii) directing the applicant husband to pay the school fees of each of the four dependant children to the appropriate authorities in the relevant school or college for each child. The period of such Order shall be as long as the said child remains dependant, as defined in the Family Law Act 1995, and such child is attending such school or college for the purposes of second level or third level education, [subject to the provisions of Section 18(2) of the Family Law Act 1995]. 5. The provisions of the Periodical Payments Orders set out at paragraph 2, 3 and 4 hereof shall be binding on, and enforceable against, the estate of the applicant husband and against his heirs, executors and/or administrators. Should the applicant husband predecease the respondent wife, the said heirs, executors and/or administrators shall ensure that any continuing obligation on foot of the said Orders (or on the foot of the said Orders as varied, if applicable) shall be discharged out of the estate of the applicant husband and shall secure the payment of such Orders on the assets of the Estate. For the avoidance of doubt, the applicant husband consents to the Order herein. 6. An Order restraining the applicant husband from reducing the value of his land assets in this State to a sum below €10 million after deduction of all borrowings and expenses of any kind. The Court directs the applicant husband to furnish to the respondent wife, on one month’s notice, a certificate from his accountants confirming that the applicant husband has as of the date of such certificate land assets to a value in excess of €10 million after deduction of all borrowings and expenses of any kind. The respondent wife shall not be entitled to seek such a certificate from the applicant husband on more than four occasions in each calendar year. 7. An Order pursuant to section 8(1) (c) (i) directing the applicant husband to pay the respondent wife a lump sum of €3.3 million on or before the 15th December, 2005. 8. An Order pursuant to section 9(1) (a) of the Family Law Act 1995 directing the respondent wife to transfer to the applicant husband her shareholding in the company T Limited and to resign as Director of the said company. 10. An Order pursuant to Section 36 of the Family Law Act 1995 declaring that the respondent wife shall be entitled to the legal and beneficial ownership of motor car registration number xxxx and that she shall be responsible for all repayments in respect of the said motor car as and from the 15th December 2005. 11. An Order pursuant to section 14 of the Family Law Act 1995 extinguishing the share that the applicant husband would otherwise have been entitled to in the Estate of the respondent wife as a legal right or on intestacy under the Succession Act 1965 as amended. 12. An Order pursuant to section 14 of the Family Law Act 1995 extinguishing the share that the respondent wife would otherwise have been entitled to in the Estate of the applicant husband as a legal right or on intestacy under the Succession Act 1965 as amended. 13. An Order pursuant to section 15A (10) of the Family Law Act 1995 directing that the applicant husband shall not on the death of the respondent wife be entitled to apply for an Order pursuant to section 15A of the said Act. 14. An Order pursuant to section 15A (10) of the Family Law Act 1995 directing that the respondent wife shall not on the death of the applicant husband be entitled to apply for an Order pursuant to section 15A of the said Act. 15. An Order directing that the applicant husband shall pay the respondent wife’s costs of these proceedings, to include reserved costs, when taxed and ascertained or as may be agreed between the applicant husband and the respondent wife. 16. The Court notes that the applicant husband and the respondent wife will be taxed as single persons as and from the 15th December 2005. 17. The applicant husband and the respondent wife shall have liberty to apply. 18. An Order pursuant to Section 10(i)(c) of the Family Law Act 1995 and Section 4 of the Family Home Protection Act 1976 dispensing with the consent of the respondent wife to any future sale of the family homes at the manor house at TF and dispensing with the consent of the applicant husband to any future sale of any future family home acquired by the respondent wife. 19. The respondent wife shall be entitled to remove her personal belongings and the children’s personal belongings, animals and equipment from the family home. Personal belongings shall not include items of furniture, ornaments or paintings, save as may have previously been agreed in writing between the parties or as may have previously been determined by the Circuit Court. For this purpose this aspect of the matter is remitted to the Circuit Court. 20. The Court refuses a stay of execution in regard to any of the provisions of this Order.” By way of Special Summons dated the 13th December 2007 the applicant husband sought a decree of Divorce pursuant to the provisions of Section 5(1) of the Family Law (Divorce) Act 1996. Therein, the applicant husband sought:-
2. An Order pursuant to the provisions of Section 18(10) of the Family Law (Divorce) Act, 1996 3. Further and other relief 4. Costs 5. On the 16th June, 2009, the respondent wife filed a replying affidavit in the applicant husband’s divorce proceedings. In that affidavit she set out the history of an application for Discovery of documents against Lloyds of London, which culminated in an Order made Ex Parte, on the 10th October, 2007, by the Court of England and Wales directing Lloyds to disclose to the respondent wife all documents within their possession relevant to the ownership of BE. Copies of the documents which were subsequently discovered by Lloyds were exhibited in the Affidavit. The respondent wife seeks a number of reliefs in the alternative. These documents shall be referred to as “the Lloyds discovery”. These include the claim that she and/or the children of the marriage are the beneficial owners of the BE as a result of the marriage settlement of 1987 and/or a declaration that JC is the beneficial owner of the BE as a result of the settlement of 1988. Further and in the alternative, the respondent wife sought a property adjustment order directing the applicant husband to transfer into her sole name, the various parts of the BE and the companies attached thereto. 6. On the 28th November, 2008 the respondent wife issued a notice of motion against the applicant husband seeking his attachment and committal for failure to comply with the maintenance provisions of the Order of O’Higgins J. On the 18th June 2009, the applicant husband sought an Order varying downwards or in the alternative, suspending the provisions of the order which directed him to make periodical payments to the respondent wife. He also sought an Order staying the execution of the provisions of the said Order which required him to pay the respondent wife’s costs in the original proceedings. Developments after Separation 8. The husband’s spending and over-spending by way of capital investment and repairs on both the castle and manor house were no less massive, but at least it could be argued that their unsustainability was not so striking by reason of the fact that until the Lehmans collapse of 2008, or thereabouts, the capital values of the property left in his possession by the judicial separation provided a buffer, and by reason of the fact that through judicious management of the day-to-day business and increase in prices of entry, he managed to increase the profits of the business end of his properties. While his borrowing was high, he had the buffer also of a very low interest rate of 2.14% on an interest only basis. However, the benefit of this low cost financing evaporated when the bank demanded “ballooning” of the loan repayments on a sum in excess of €7m to include capital repayments. The position of capital repayments, together with increasing costs, began to put pressure on the disposable net income available to the husband to maintain himself, in addition to providing a livelihood for his wife and children. In more recent times, the husband applied to court for variation of maintenance by reduction of same by reason of his inability to pay in response to applications by the wife to commit for contempt in failing to pay maintenance and for orders enforcing payment of maintenance. When the taxation of the costs of the judicial separation proceedings was complete, the husband failed to pay the same which amounted to a sum in excess of €600,000, and eventually the wife’s solicitors applied and obtained an order of this Court under the Solicitors Ireland Act in respect of any sum recovered by the wife in these proceedings to cover such costs. 9. A situation has now been reached where the wife is massively in debt. This is highlighted by the fact that the Bank of Ireland have obtained an order of the High Court (Peart J.) dated the 16th November, 2011, appointing a receiver by way of equitable execution to recover a sum in excess of €4m subject to “this Court” making such allowance as is necessary for the wife, and an order restraining the husband by way of injunction from paying to the wife or any other person any sum prior to order of “this Court”. This is against the backdrop of further monies owed (in the region of €700,000) to the Revenue Commissioners and miscellaneous running debts, all of which could total up to €7m if interest is taken into consideration by the time of this judgment, - without the wife having any significant assets at all. 10. Three outstanding issues arise in this case which are both important and unusual. These are as follows:-
2. The influence of the order in the judicial separation proceedings on the provision to be made in these proceedings having regard to the provisions of s. 20 of the 1996 Act and the recent decision of the Supreme Court in G. v. G. 3. The order of the High Court (Peart J.) appointing a receiver by way of equitable execution on behalf of the bank together with consequences of insolvency of respondent wife. 11. While the judicial separation proceedings commenced and were opened on the basis that the applicant husband was the owner of both BE and TF, it emerged during cross examination of the husband that there was a suggestion that a trust settlement had been prepared by the applicant husband and Mr. LR at the time of difficulties. It was implied in consultation with Lloyds which was in or around late 1990, and that the applicant husband had told his wife that the purpose of the document was for the purpose of submitting to Lloyds. The applicant husband gave evidence in court (O’Higgins J.) that he did not recall any marriage settlement or document being drawn up or signed but he subsequently accepted in evidence that a document had been signed but contended it was never lodged with Lloyds. 12. This denial of the lodgement of the documents with Lloyds has proven to be untrue, at least in regard to what will subsequently be referred to as “the 1988 settlement deed”. This incident of seriously misleading the court has been blamed by the respondent wife for leading to a situation where O’Higgins J. found the wife’s evidence in the judicial separation less credible to the extent that he favoured the husband to keep possession of BH, then occupied by the wife as the family home with the four children of the marriage. This outrage of the wife on this subject in turn prompted her to initiate expensive ex parte proceedings to obtain the Lloyds discovery. I am far from satisfied that this alone caused her to lose BH in the judgment of O’Higgins J. An examination of the transcript will show that during the hearing she agonised “aloud” about the issue and was not helped by the fact that when Mr. Durcan objected in Ms. Clissmann’s cross-examination of the husband about the fact that Professor Sheehan had not addressed the issue of the family home in his s. 47 report and discussions. The cross-examination then veered off to challenge the husband on his drinking. 13. It is clear that an opportunity was missed here to put emphasis on the wife and children staying in the family home at BH. Indeed, no application was made on behalf of the wife to have the husband’s girlfriend excluded from the B. complex at least on a temporary basis, from the B. complex, in order to allow the fostering of a better relationship of the children with the father and increase the possibility of the wife and children remaining in the family home at BH. I spoke to all the children, and I am satisfied as a result, that the situation would have been much improved had this type of interlocutory application been made and granted, and had the terms of reference of Professor Sheehan been more specifically scoped to ascertain the voice of the children in this regard. 14. In the evidence of the husband in these divorce proceedings he admitted that he had stated in evidence in the separation proceedings that no document was lodged with Lloyds and he now admits that the 1998 settlement deed was lodged with Lloyds. 15. The wife stated in evidence in these divorce proceedings that documents had been signed by her husband in the registry of the church following their marriage, which had been witnessed by her mother, and that he had explained to her afterwards that this was a new will trust to take care of their future. She stated that her husband had shown her a copy of this document sometime between 1990 and 1992. In cross examination the respondent wife stated that the applicant husband had told her that a marriage settlement had been signed on the day of their marriage, that she had seen it and read the first few lines of it. The Lloyds discovery documents were admitted in evidence for the purpose of examining the various allegations and denials of husband and wife and, before examining same, it is appropriate to describe the only document which has emerged by reason of the Lloyds discovery or elsewhere in the case which could be described as a trust or settlement was that of the 20th October, 1988 (“the 1988 settlement”). 16. The settlement is stated to have been made on the 20th October, 1988, stated to be the husband (being called the settler) of one part and the husband and the wife (being called the trustees) of the other part. The recitals recite that the settlor was desirous of establishing the trust in the manner appearing and under Recital B it is stated:-
in the presence of E. O’R and in different writing (CAPITALS) Pall Mall, London.” The Lloyds Discovery
“Schedule III
As you do not have an interest in this property the hardship scheme will require an independent valuation and a brief description of the property.
2. In your letter, reference has been made to BCE owned by your father. Please clarify your interest in the estate. If this is of a reversionary nature, please provide copies of all documents that are relevant to your interest, including copies of any wills and trusts and/or an estimate of the value of any such interest.
… Schedule III 1. I have written to my solicitors to obtain a copy of the appropriate document (I do not have a copy) and I shall forward it to you as soon as received.
As you have requested the valuation, may I ask who is to pay for this? With respect, you must appreciate that such a valuation will be quite expensive.
2. I think the documentation to which you refer is covered by paragraph 1 above. My remainder man interest was the subject of the marriage trust as you know, I worked the farm and performed certain managerial duties for the estate.
C. In his letter dated the 19th January, 1996, the applicant husband replied to the letter of Ms. Burch and stated:-
2. …
3. …
4. The flat premises at 13 is owned by my wife and myself as trustees for our children. The appropriate title documents is the marriage trust enclosed herewith.
5. Your reference to “slatted house should be ‘Cattle House’” this is located on the farm and forms part of the marriage trust.
6. The land and buildings at TF and B, which is part of and owned by the marriage trust…
18. As regards the marriage settlement of 1988, the evidence of the applicant was variously described as follows:-
22. There was no disagreement between the parties in relation to the respondent’s outline submissions in relation to the three principal means by which a donor may transfer beneficial ownership and benefit to his or her intended donee which are as follows:-
2. Transfer by settlor of trust property to the trusts to hold and administer for the benefit of the beneficiaries. 3. Declaration by settlor that he holds certain property of his own on trust for the benefit of the beneficiaries.
(b) Subject matter, and (c) Objects or beneficiaries are certain. 23. The parties in these proceedings have taken two sides in relation to the effect of the authorities in relation to this proposition. The applicant husband, on the one hand, asserts that the property which forms the subject matter of the trust must be fully and validly transferred into the ownership of the trustees for the trustees to administer the property for the benefit of the beneficiaries. The respondent wife in her submissions submits that, in relation to the 1988 settlement deed, the three certainties had been met. She submits that the case T. Choithram Int’l SA, v. Pagarani [2001] 1 W.L.R., is authority for the proposition that while the donor in that case had not vested the gifted property in all the trustees of the foundation, he could not resile from his declaration that he was giving, and had given property to the trust which he had established and of which he had appointed himself to be trustee, and such property was therefore vested in the donor as trustee of the foundation and the gift was completed. The contrasting positions of the applicant and respondent are set out in the judgment of Lord Browne-Wilkinson at p. 10 of his judgment in the Privy Council at p. 11, paras. d, e, f and g as follows:-
Motivation in relation to Trust
The defendant relies on these principles and claims that his intention was that no gift was to be effected, the plaintiff holds the lands as trustee for him. But the plaintiff’s counsels ripostes with a fourth principle which is claimed a court applying equitable principles should apply in this case. Put shortly, it is that a purchaser will not obtain relief in equity by setting up his own illegality or fraud. This is the crucial point of law in this case, and I will now consider the cases which it is claimed illustrate to justify its application to the facts I am now considering.” 30. In Midland Bank Plc v. Wyatt [1995] 1 FLR 696, it was held according to the head note, inter alia:-
32. Section 4 Statute of Frauds (Ireland) 1695, provides as follows:-
But if the contest is between A who has changed his mind and C who is a mere volunteer, it is not clear why equity should interfere in favour of C when A has neglected to satisfy the requirement of form necessary to perfect his bounty. Indeed, intervention appears to defeat the policy stated behind the mandatory requirements of form. Such requirements have been analysed to have (a) a ritual or cautionary function, requiring a donee to pause and give due consideration to the transfer, (b) a protective function, safeguarding against undue influence and impositions, (c) an evidentiary function, providing reliable evidence of the creation of the trust as a guard against false claims, a guide to the location of beneficial ownership which constitutes a link in the chain of beneficial entitlement and the source of knowledge of the details of the trust, and (d) a channelling function, standardising transactions in an effective way.” Decision Re Trusts
2. There were minutes of meetings relating to the intention of the donor in relation to shares. 3. There was evidence of the donors frequent conversations in relation to his intentions to benefit the trust foundation concerned. 4. The charitable record and intentions of the donor in Paragani were well known throughout the world. 5. None of these aspects were present in the history of the dealings of the applicant and the respondent in relation to the estate - quite the contrary - there were no trust accounts, there were no minutes of any meetings, no evidence was called from any quarter in relation to the witness who allegedly signed the deed or the solicitor (McC) who allegedly prepared it and the TF and B had at all times been dealt with by the parties as if it were their own assets by working same, spending the profits, borrowing massively, using same as a security even to the point of financing the capital provision for the wife after the judgment of O’Higgins J. 37. Whereas Ms. Clissmann argued very forcibly that the applicant (husband) could not claim the benefit of his potentially illegal ruse to use the 1988 settlement deed as a protection from creditors without admitting the entitlement of the person beneficially entitled under the terms of the deed by reason of the reasoning of Costello J. in Parkes v. Parkes, and while I am also satisfied that the decision in Wyatt (not referred to in the submissions) would not radically alter the applicability of Parkes v. Parkes thinking of this case, the illegality of the acts and illegal motivation for the vesting of the property in the beneficiaries in Parkes and Wyatt were matters which related to a vested interest. In the Parkes case Costello J. was not prepared to allow a divesting by reason of the fact that the person causing the vesting did so illegally. This proposition is entirely different from any applicable principles in this case as in relation to the “1988 settlement deed” there is, in fact, no vesting unless the court (with the aid of Paragani type principles and going against the authority of Milroy and Lord and the judgment of O’Donovan J.), were to assist and complete the vesting. If that were the outcome, then the court would have assisted the illegal purpose or at least bad faith of the husband to put the family properties outside the reach of creditors such as Lloyds. Under no circumstances could the court use any principles of equity to achieve such an illegal subterfuge. Accordingly, I hold that the “1988 deed” has no effect. While the beneficiary KC, in the “1988 settlement deed” appeared in court as a notice party in relation to the issue and was represented by solicitors, he indicated to the court that he did not wish to participate in the proceedings. KC did not further participate in the proceedings but during the course of the submissions in this case, the court was informed by Mr. Durcan, counsel for the applicant, that KC had written to his solicitors claiming that he had now decided to claim a vested interest under the 1988 settlement deed as he had now reached twenty one. The claim by the respondent and any claim by KC, the notice party, is accordingly dismissed in relation to the 1988 settlement deed. The 1987 Marriage Settlement Influence of Judgment of O’Higgins J. 40. Mr. Durcan submitted that it was clear from the terms of the judgments of O’Higgins J. and the very terms of the order made by him that the provision being made by him was not merely of a short term nature pending a divorce application but rather was intended to constitute a long term arrangement. I fully agree that this is so. Further, in his written submissions and repeated in his oral submissions, he argued that it would be arbitrary and unfair if the principles set out in G. v. G. are applied in divorce cases where there had been a prior separation agreement or order for judicial separation by agreement, but not in divorce cases where there is an order for judicial separation following a contested hearing. He asserted very forcibly that such a state of the law would prove a positive disincentive for litigants to settle judicial separation proceedings lest they prejudice their position in divorce proceedings. He said that such a result could never have been intended by the Supreme Court and the judgment of Denham C.J., should not be construed as to bring this about unless there is no alternative. 41. He then went on to examine in detail the format and wording of the judgment in G. v. G. It was asserted that there were significant indications in the language used by the Chief Justice in G. v. G. to the effect that, a prior judgment in judicial separation proceedings made by the court such as that exemplified by the judgment of O’Higgins J. would be as binding as a prior written agreement as found to be in the G. v. G. case. 42. I consider that unless the parties have acted on foot of a court judgment by way of agreement rather than compulsion, the court judgment (as made operative by part or whole performance by happy and willing participants) should not be given the influential force overall, such as was attributed by the Supreme Court to an agreement documented by the parties especially of long duration. While Mr. Durcan’s arguments are forceful, it must be remembered that to concede their validity would give rise to a rash of appeals of separation orders to “preserve the situation”. It was a particular development of the G. decision that weight was to be given by an agreement of long duration, as the older agreements were in many cases found by the courts to have been flawed, as being underwritten by pre 1995-1996 legislation or by falling into desuetude and not representing any reality for the parties. Clearly, what the Supreme Court had in mind were agreements made between the parties which were acted upon and which constituted the driving force of their lives in active and binding way up to the date of the divorce. The position is otherwise in relation to a court judgment if the parties have never accepted same and regard it as something which has been forced upon them. Ms. Clissmann referred to a very valuable analysis in a judgment by Birmingham J., MB v. VB in relation to such a situation. I follow same for the purpose of obtaining a guide in relation to the binding effect of the judgment of O’Higgins J. in relation to this case on the basis of G. v. G. principles. In the case of MB v. VB, (Unreported, 19th October, 2007), Birmingham J. was dealing with a case where the parties had married in 1968 and had children, but none of which were still dependent. In matrimonial proceedings between the parties in 1988 the wife was granted maintenance for herself and the then dependent children. A declaration was made that each spouse ws entitled to a 50% beneficial interest in the family home and adjoining mews. The husband submitted that the court should have regard to the provisions of the 1988 Order by analogy in which the court would have regard to a separation agreement pursuant to s. 20(3) of the 1996 Act. Birmingham J. took the view that the analogy sought to be made with a separation agreement and the need to have regard to same was “far from a perfect one”. He said:-
2. The performance and dependability under compulsion of court order of the parties in relation to payment of maintenance and handling capital allocation can be used as a test by which the quality of stewardship may be assessed - and this has been identified in G. v. G. as being of major significance and is certainly of major significance in this case. 3. Any contempt or abuse of process by either party may be combined with other circumstances of the case arising in the divorce proceedings to entirely disqualify a party from defending their case or otherwise being appropriately dealt with so as to enable the court to exercise its implied power to control its procedure and ensure that its orders and procedures would be respected. 4. Providing a framework “cloud” within the matrix of facts and dynamics confronting the parties and the court to assist the debate and discussion on practical structures available to solve the conflict between the parties in much the same way as the modern open offers (while hardly ever fully accepted by courts dealing with them) which may provide enormous assistance to the courts in identifying possible parameters of decision making, and to prevent the divorce court from straying too far from the proper focus of the proceedings by an unguided adventure into the vast matrix which, (though justified by principle), could serve the interests of neither party. Equitable Execution Order 46. The order proceeds as follows:-
3. (The applicant husband) in the divorce proceedings) as notice party be bound by the order referred to at paragraph 1 above and be restrained from making any payment or transfer to the receiver OR TO ANY OTHER PERSON (my emphasis) consequent upon any order made in the defendant’s family law proceedings pending the relisting of the matter as provided in paragraph 2 hereof and further order of liberty to apply and the court doth reserve the question of costs.”
2. Where the husband is legally separated and the wife is living apart from him, the principle of pledging of credit for necessaries does not apply except in special circumstances as instanced below. 3. Where a husband initiates proceedings for divorce or separation in circumstances where the wife has no or insufficient assets, the defence of the proceedings in these circumstances may be regarded as necessaries for the husband although the wife may not be living with the husband having been separated. Dilemma
2. In XY v. YZ the insolvent person was effectively the provider, whereas in the instant case the insolvent person is the claimant (wife). 51. A moral dilemma is posed as to what is the appropriate course to take in order for both parties to survive financially. The only authority which I have obtained to assist in this dilemma is the judgment of this Court in K. v. K. [2008] IEHC 341 (Abbott J.), dealing with variation of an order of McGuinness J., when she was judge of the Circuit Court. During the course of the execution of that judgment it was decided that the family home would not be sold and assets divided between wife and husband where the husband had been guilty of lack of stewardship insofar as he remained on social welfare in circumstances where he could have developed his career, and where if the court were to compel execution of the order as made by McGuinness J. or effect a distribution of the assets, it would effectively leave the wife (who had been a very good steward of such family assets in her control) in a position where she would fall into the social welfare net and especially the public housing net so that neither party would be sustaining. It was held that it would neither be in the public interest or in the interest of the family at large that the husband would fritter such a provision as to leave the wife without a home. At para. 15 of the judgment it is stated:-
53. In this context, it is notable that during the hearing of this case, an adjournment was afforded to the parties to see if any compromise of the indebtedness of the wife to the Bank of Ireland could be obtained, and also whether other creditors might compromise so that the Court would have the scope to make such provision to facilitate such compromise and also make a provision which would not condemn the wife to en existence of being pursued by creditors, by receivers or, worse again, by bankruptcy. I had in mind (without the consent of the husband) to investigate whether the sale of some of the non-essential assets of the husband’s enterprise such as T.F. and outside residential property could be disposed of to ensure payment of such a reduced compromised sum and costs. No such compromise emerged, and it is of singular importance to bankers and creditors in the future to take the opportunity to positively negotiate sensible compromises with hopelessly insolvent spouses in circumstances where there is a risk (as in this case) that the Court, in making provision under the 1996 Act and the Constitution, must resolve the dilemma posed by seeking to ensure the financial survival of the family to such an extent that it may support both spouses with provision under the Constitution at a level which, at least, takes them out of the Social Welfare net. Conduct amounting to contempt and abuse of process by husband
(ii) Unilaterally reducing maintenance for the wife without permission of the Court. (iii) When defending application of the wife for committal for non-adherence to the court order, the husband concealed and understated his income as was demonstrated by the figures subsequently produced. (iv) The husband also misrepresented the situation in relation to B.H. tax claw back when giving evidence in the judicial separation proceedings. (v) He also indicated that he would not be able to take up residence in B.H. until 2009, which, in a less serious way, was a misrepresentation of what actually occurred. He misled the Court of O’Higgins J. in the course of judicial separation proceedings in respect of the marriage 1998 Settlement Deed insofar as he said that the same was not submitted to Lloyds. (vi) He reduced K.C.’s and C.C.’s maintenance during their gap years. He refused to pay €628,938.00 certified as being the tax costs since 23rd November, 2009 in circumstances where he could have, through proper monthly budgeting or profiling of expenditure, accumulated that sum within the budget of the business being conducted by him without undue detriment to other inputs into the business.
13. However, the position is not as simple as that. Even where the court makes a decision such as has been made on 22nd July, 2010 in this case (dismissing in limine), the constitutional and statutory imperative on the court to make proper provision for parties in the case of a divorce continues to knock on the door of the court to allow the defaulting party to come into court on better terms more acceptable to the court which will ensure that the litigation misconduct will not occur again. The question arises - what are the practicalities in this case arising from such a principle. During the course of submissions and discussions, Ms. Coughlan suggested that unless the husband radically changed his approach to litigation, she could proceed to have him committed or his property sold without further ado. To avoid this outcome and regain the protection of the constitutional and statutory imperative to the court to make proper provision, not only for the wife but for the husband, the husband in this case must make some tectonic gesture and assurance to the court in relation to his future conduct, backed up by a programme of action to allow the court to open the door again to the prospect of a variation.” 57. Having regard to the foregoing, I conclude that the court is coercively bound to protect the administration of justice in this and other cases and to take some steps against the applicant husband. I am satisfied that the most practical reaction to the situation may be met by an order that the husband pay into a joint account of his solicitors and the respondent’s solicitors the costs taxed and owing (and in respect of which an order under the Solicitors Ireland Act has been obtained) and that such monies shall be paid out on the basis that they are monies owed by the husband to the respondent’s solicitors directly on the basis that the said costs arose by reason of the implied pledge of the husband’s credit for such necessaries, and that similarly, pending agreement what taxation of the level of same that the costs of these proceedings estimated provisionally at €1m to include VAT should be paid into a similar account on the same basis, and that the order for divorce in these proceedings would not issue or be granted until the said sums have been paid as directed. However, in this regard, I exclude the costs of the ex parte application for the Lloyds discovery as costs in the proceedings and by reason of the unnecessary delay by the respondent wife in her report of the case and in particular during the course of her evidence by reducing the same by two days of the hearing. Consideration of Provision pursuant to S. 20(2) of the 1996 Act Husband’s Assets and Liabilities B, C and S: € 8,750,000.00 BH and lands € 4,300,000.00 B commercial & residential € 227,000.00 Miscellaneous fishing etc € 50,000.00 Forestry € 1,500,000.00 Total €16,827,000.00 TF €2,900,000.00 The total value of these assets amounts to €19,720,000. In addition, there is 13c N Road, valued at €225,000.00. Taking into account the husband’s AIB loan of €7,314,498.00 and realisation costs and capital gains costs, the net value according to Mr. Browne of these assets, having taken into account all dates, was €11,351,885.00. 59. Mr. LW, the wife’s accountant, at p. 452 of his report and having regard to the valuation and evidence of Mr. Shelly, has put a figure on the valuation of the property assets of the husband of €29,284,000.00. Mr. LW shows the net value of the husband’s total assets, including his companies, business and pension’s life policies to be €24,161,096.00. The current estimate of the money owing by the wife to the Bank of Ireland Mortgage Bank is €2,640,141.14. She also has debt to the Revenue which could be in the region of €700,000.00 with penalties and accrued interest. She also has bank debts including a Mastercard debt of €161,000 or thereabouts. Her costs including her costs in the judicial separation proceedings are in round terms €1,500,000.00. Her total indebtedness is thus a figure which may well approach €5,000,000.00. According to Mr. Browne’s calculation the husband’s income before maintenance and family costs is estimated to be €192,677.00. Mr. LW’s projected figures showed that the husband would have a profit for the year of 2010 after directors remuneration and taxation and available to pay down debt of €1,526,043.00. In relation to the capital sums I prefer the valuation method employed by the husband’s valuer who applied indexation having regard to the recession to the values carefully considered by O’Higgins J. in the judicial separation judgment, and I find that the evidence of Mr. Shelly did not have convincing comparables, and did not have regard to standard professional valuation methods used on behalf of the husband but took an intuitive approach. The only exception I would apply to the rejection of Mr. Shelly’s evidence is that in the event of the property being sold as a business on the world market, there might be an additional capital value to be added to the property in the event of a special purchaser coming along who might put a brand or trophy value on the property and be in a position to operate synergies between the business of the purchaser and the web internet potential of the business to project the brand. This is only speculative and added as a proviso to be taken into consideration to at least allow a disposal of the property to be addressed to that sort of market to see if there is any reality to it. The disposal income figures of Mr. Browne I consider are somewhat too low, but are on the side of the calculations indicating where the husband has a capacity to pay his own and wife’s income having regard to the fact that certain expenses and consultants income and expense may be reduced as a cost to the business and on the basis that I have considered and discussed with the parties during the course of the hearing, that the income from BH might be intensified to allow more summer opening time than at present to put available a sum of €25,000.00. 60. In determining the style of provision for the wife in this case the court has been decisively influenced in the first instance by opting away from the high valuation of the husband’s assets of €29,280,000.00 proposed on behalf of the wife to the lesser figure of approximately €11,000,000.00 proposed on behalf of the husband insofar as the €29,000,000.00 would allow the court to take the standard approach and direct disposal of assets to cover the wife’s debt and leave at the same time very substantial assets to provide for continuing maintenance or a capital payment in lieu thereof without totally destroying the income generation capacity of the husband. Taking the lower figure of €11,000,000.00 it is found that in order to cover the wife’s debts and liabilities of up to €5,000,000.00 it will be impossible to realise enough assets such as PF which are non-essential to the business which would cover same, and in any event, with the very poor margin of error there is no confidence in the court that even current valuations of Mr. Browne and saleability could be realised. 61. That conclusion leaves the court in the position where it must notwithstanding the bad stewardship and churning of the assets of the wife against the very sound advice of Mr. LW, decide that the wife is to be provided for by way of the payment for housing and utilities by the husband. Having regard to the fact that the rent of the house in England is in the region of €36,000.00 per year, this is the necessary value of that item. Other necessities should not be over €50,000.00 and accordingly, I direct that the husband discharge and furnish pocket money to the wife in respect of a further €50,000.00 per annum in addition to paying the rent of the house. 62. The maintenance to the children should continue as before, as they should not be visited by the lack of stewardship of the wife or the misfortunes the family have suffered economically with the recession. The husband should pay the costs and the wife’s maintenance if for life and counsel are requested to address the court in relation to the protection of the wife’s claims against the estate of the husband. On this outcome the husband’s income is almost completely taken up by the provision for wife and children, albeit to a great extent on a “necessaries basis”, await better times and tide himself over with disposal of smaller properties the proceeds of which the bank or any assignee in bankruptcy of the wife has no entitlement as he is entirely beneficially entitled to same. In the event of the husband not providing the provision as outlined in this judgment, then as an incentive to him to do so within six months of this judgment, the entire assets of the husband are to be sold and out of same the wife’s liabilities are to be paid and thereafter the balance of the proceeds after discharge of husband’s debts are to be paid equally between the husband and the wife on the basis that the wife continue to be responsible for the children until they are fully educated or 23 years of age, and a pension adjustment order be made in respect of the husband’s pensions as to 40% hereof to the wife and 60% to the husband.
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