[2018] IEHC 480
THE HIGH COURT
FAMILY LAW
[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
A.Y.
APPLICANT
RESPONDENT
COSTS RULING of Mr Justice Binchy delivered on the 15th day of May, 2018
1. This is a ruling on costs arising out of the judgment delivered by me on 12th March, 2018, and should be read in conjunction with that ruling. I heard submissions on behalf of each of the parties in relation to costs on 27th April, 2018. Each party seeks an order directing payment of his/her costs by the other.
2. In these proceedings, the Court was required to consider and adjudicate upon motions issued by each of the parties, the issue of which arose directly out of the non-payment by the husband of significant sums of money which he was bound to pay to the wife following upon an order of this Court made, by consent, on 17th January, 2011 (the “Order”). This Order was made consequent upon terms of settlement entered into between the parties.
3. It was almost inevitable that the failure by the husband to make the payments due by him pursuant to the Order would give rise to an application by one or other of the parties to court; an application by the wife to enforce the Order in some way or an application by the husband to vary the terms of the Order. In the event motions of each kind were issued by the parties. Following a lengthy hearing during the course of which the assets, liabilities and income earning capacity of the parties were explored in great detail, I concluded that the husband did not have the means to discharge the capital obligations imposed on him by the Order. Having regard to that, and also to the fact that the wife is a person who would be regarded as being of high net worth, I made order alleviating the husband of the obligation to make any further capital payments to the wife, and also curtailing his maintenance obligations to the wife under the Order with effect from twelve months from the date that I handed down judgment.
4. The nature of the reliefs sought by the wife in the motion first issued by her was to seek the attachment and committal of the husband on account of his failure to comply with the terms of the Order. The first relief sought refers to his “wilful failure” to do so. Other reliefs were also sought by the wife, including an order determining whether or not the husband had occasioned an information deficit in respect of his financial disclosure to the Court at the time the order was made.
5. As is recorded in the judgment, the wife withdrew her first motion and sought leave to issue a new motion (which leave was granted) seeking instead a judgment as against the husband in respect of the amounts due to her under the terms of the Order. And so it is apparent that the wife withdrew her first motion and issued a second motion which was not successful. The husband, on the other hand, succeeded with his motion to vary the Order, and in effect it is submitted on behalf of the husband that costs should follow the event.
6. It is further submitted on behalf of the husband that he informed her, informally, of the events that caused him to be unable to meet his obligations under the Order. It is also submitted that in cross examination the wife accepted that he had so informed her, and that she had no reason not to believe him in relation to the occurrence of the events which lead him to default. It is also submitted that the allegation that the husband had occasioned an information deficit in the period leading up to the making of the Order was completely unfounded and had to be withdrawn by the applicant, although not until the hearing of these motions had commenced. Counsel for the husband submits that it is well established that when a person withdraws some or all of a motion before or during the course of the hearing of that motion, that person will be held responsible for the costs incurred by the other party in resisting the motion. He also submits that allegation of an information deficit was particularly serious and since it was unfounded, the Court should express its displeasure at the making of such an allegation, through an order for costs. He also asks the Court to take into account that the husband’s motion issued on 10th April, 2015, and in the intervening period the husband has paid the wife maintenance of the order of €750,000. He submits that the hearing of these motions was adjourned on several occasions, mainly at the request of the wife, thereby causing the husband significant additional expense in the form of maintenance payments, which he could ill afford.
7. On behalf of the wife, counsel relies upon a letter of 7th July, 2017 sent by her solicitors to the husband’s solicitor. This is an open letter dealing with the withdrawal by the wife of the motion for attachment and committal of the husband, and the issue of a new motion seeking judgment in the amount due by the husband to the wife under the terms of the Order. It goes on to say that the wife remains amenable to discussing terms of settlement, but that any settlement would have to be predicated upon the following the husband confirming:-
(1) That the family home belongs exclusively to the wife. This was against the background that the husband had indicated during the course of the hearing that the parties had agreed a trust arrangement in relation to the family home.
(2) That the husband would continue to discharge maintenance in respect of the children in accordance with his obligations under the Order.
(3) That the husband would continue to discharge maintenance in respect of the wife until such time as the NAMA loan secured over the family home is discharged.
8. It is submitted on behalf of the wife that these three conditions were substantially reflected in the judgment, and the Court should take cognisance of this open offer when considering costs, and should make an order in favour of the wife accordingly.
9. While it is acknowledged that the wife withdrew the allegation of an information deficit on the part of the husband, it is submitted that much of the hearing was taken up with dealing with issues such as the allegation that the family home was subject to a trust and with the complexity of the husband’s financial affairs about which the wife could not reasonably be expected to have any knowledge. In particular, a lot of time was given to exploration of the affairs of the company referred to for purposes of anonymity in the principal judgment as M..
10. By a letter dated 25th April, 2018, the solicitors for the wife wrote to the solicitors for the husband suggesting that there should be no orders as to costs, but proceeded to state that in the event that the husband did not agree with that proposal and seeks an order for his own costs, then the wife would make application for an order for payment of her own costs as against the husband.
Decision
11. While the wife confirmed in evidence that she had no reason to doubt what the husband had to say as regards the occurrence of events that impacted upon his ability to discharge his capital obligations to the wife under the Order, that is a far cry from being an acceptance on her part that he could not discharge his obligations to her at all, either at the time or at any time in the future. The husband entered into his obligations under the Order with the wife voluntarily. He did so in the belief that he would be able to meet those obligations. While he was unable to meet those obligations due to a series of events that were outside his control, and while the wife did not disbelieve him in his account of those events, she was entirely within her rights to require him to demonstrate his inability to meet his obligations to her under the Order. More than that, I believe it was reasonable for her to do so.
12. The allegation that the husband occasioned an information deficit was misfortunate, but was withdrawn by the wife when it became apparent to her during the course of the hearing that her financial advisors had received the Bank A facility letter relied upon in support of this allegation. This allegation caused the husband much distress, but it was clearly made on the basis of an error, which was almost certainly compounded by the subsequent discovery of the proposal to Bank A of May, 2010. It will be recalled that this indicated that the husband had at the time a net worth of €18,421,000.00, whereas just a few weeks previously he had sworn an affidavit of means, in these proceedings, indicating that he had a negative net worth of €13,546,242.00. So therefore while the wife was under a mistaken impression at the time in relation to the disclosure of the Bank A facility letter, the subsequent receipt by her of this proposal to Bank A undoubtedly served to add to her impression as to the occurrence of an information deficit.
13. The disclosure of the proposal to Bank A in turn lead, inevitably, to a forensic examination of the contents of that proposal. This was in no way the fault of the wife. Insofar as it was prepared by the husband for purposes entirely unconnected with these proceedings, it may be said it was not his fault either. But once this document surfaced it was inevitable that it would be controversial and would require scrutiny. One of the items scrutinised, to which a considerable amount of time was devoted at the trial, was the husband’s interest in M., and also the financial capacity of M.. This required a considerable amount of time because, for the reasons set out in the judgment, the husband was very reluctant to give any information in relation to this entity. Not only did this take up a considerable amount of time at the hearing, it left me having to draw conclusions in relation to the financial standing of this entity, and the husband’s interest in it, without the benefit of corroborating evidence or independent vouching documentation of any kind. Notwithstanding this, for the reasons given in the judgment, the husband got the benefit of my conclusions in relation to M..
14. These motions came before the Court because the husband was unable to meet obligations to which he was made subject by a court order, which order was made on consent. While several other issues surfaced, and were canvassed in the course of the hearing, this was the principal reason behind the issue of the motions issued by each of the parties. But for the failure by the husband to meet his capital obligations to the wife, there would have been no necessity for either party to issue the motions that they did. That must be the overarching factor in the consideration of the most appropriate order as to costs. Anything else must be regarded as peripheral and serves only to muddy the waters. When a party comes to court seeking to be relieved of a financial obligation which is the subject of a court order, it goes without saying that that party has to satisfy the court as to the reasons for bringing forward that application. It also goes without saying that the party affected by that application is entitled to resist it and to test the evidence put forward in support of the application by the other party. The fact that the wife accepted in a general way what the husband had to say as regards the occurrence of events that impacted negatively upon his ability to meet his obligations to her, did not mean that she had to forego her entitlements or that she was not entitled to test his claims as to impecuniosity. She was in my view clearly entitled to do so. After all, the amount due to her at the time (excluding interest) was €2.750 million, and she was subsequently entitled to receive the balance payable in respect of the loans secured over the family home. Assuming all other sums due under the Order had been paid, that balance would have amounted to a sum of the order of €4.9 million.
15. While counsel for the husband has put forward very persuasive arguments as to why he should receive an order for the costs incurred by him in these applications, those arguments do not in my view withstand scrutiny. As I have said above, the overarching consideration is that the husband was unable to meet his obligations under the Order. Apart altogether from the fact that compliance with any order of the court is mandatory, the Order was made byconsent. These applications arose entirely out of the failure by the husband to comply with the Order. It is true that I have found that he was unable to do so, and that he has received the relief that he sought by his application to vary, but there was nothing unreasonable in the wife bringing forward her own application to enforce the Order or in resisting the husband’s application. If anything, these applications have caused the wife to incur costs owing to the husband’s default and it is she who should receive an order in her favour in respect of such costs.
16. However, to make such an order would be to ignore the findings already recorded by me in the principal judgment to the effect that the husband’s current financial standing is precarious. It may well improve over time, but the only certainties as matters stand are that the wife enjoys good financial health and a high net worth and the husband does not. Also, the wife very fairly made an offer, before the hearing of this application as regards costs, to the effect that each party should bear their own costs. This was a reasonable offer, and when faced with the rejection of that offer she was quite entitled to pursue an application for her own costs. Nonetheless, I have come to the conclusion that the fairest order to make in all of the circumstances is that each party should bear their own costs associated with these applications.
