Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
Supreme Court of Ireland Decisions
You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> In the matter of the Judicial Separation and Family Law Reform Act, 1989, AA and BA and In the matter of the Family Law (Divorce) Act, 1996 BA and AA and by order CD [2014] IESC 49 (30 July 2014)
URL: http://www.bailii.org/ie/cases/IESC/2014/S49.html
Cite as: [2014] IESC 49
[New search] [Help]
Judgment Title: In the matter of the Judicial Separation and Family Law Reform Act, 1989, AA and BA and In the matter of the Family Law (Divorce) Act, 1996 BA and AA and by order CD Neutral Citation: [2014] IESC 49 Supreme Court Record Number: 328, 373 & 485/09 High Court Record Number: 1997 58 M Date of Delivery: 30/07/2014 Court: Supreme Court Composition of Court: Hardiman J., McKechnie J., Clarke J. Judgment by: Clarke J. Status of Judgment: Approved |
THE SUPREME COURT [Appeal Nos: 328, 373 & 485/09] Hardiman J. McKechnie J. Clarke J. IN THE MATTER OF THE JUDICIAL SEPARATION AND FAMILY LAW REFORM ACT, 1989
IN THE MATTER OF THE FAMILY LAW ACT, 1995
AA Applicant/Respondent and
BA Respondent/Appellant IN THE MATTER OF THE FAMILY LAW (DIVORCE) ACT, 1996
BA Applicant/Appellant and
AA Respondent/Respondent
CD Notice Party Judgment of Mr. Justice Clarke delivered on 30th July, 2014. 1. Introduction 1.2. The overall issue which arises on this appeal can, perhaps, be simply stated. As a result of a hearing of both of these proceedings in 2001, a decree of divorce was ultimately granted and a variety of financial provisions were made. As already noted, subsequent to that decree of divorce, Mr. A married Ms. D. However, Mrs. A maintains that, in the course of the process leading to the decree of divorce and the making of the relevant financial provisions, Mr. A was guilty of a deliberate failure to disclose the full extent of his assets and resources. In that context Mrs. A made an application, brought by notice of motion in the original proceedings, seeking a variety of reliefs which raised the possibility that the entire order made in 2001 (including the decree of divorce) might be set aside but also seeking to have additional financial provision made to reflect proper provision in the light of what was said to have been the under-disclosure of Mr. A’s financial position. It was in the context of the possibility that the decree of divorce might be set aside that Ms. D was joined as a notice party. Clearly, if it were to transpire that the decree of divorce were to be set aside, then that would have a serious affect on Ms. D’s status as Mr. A’s wife, and she was clearly entitled to be heard on that question. It will be necessary to return to the question of the extent of Ms. D’s interest in these proceedings in due course. 1.3. In any event the motion was heard in the High Court by Irvine J. who delivered her judgment on the 10th June, 2009, A.A. v. B.A. (Unreported, Irvine J., High Court, 10th June 2009). A series of issues had arisen in the High Court in the course of the procedure leading to the hearing which, in turn, led to that judgment. While an order had been made in the course of case management by Abbott J. on the 29th July, 2008, without, it would appear, any objection on the part of Mr. A, which directed that the question of whether there was a deliberate failure to disclose resources be tried on the motion in question, an objection was ultimately taken on behalf of Ms. D (belatedly supported by Mr. A) which suggested that the Court had no jurisdiction to enter into a consideration of whether there was a deliberate failure to disclose resources on a motion brought in the original proceedings. Rather it was said that the only way in which what was described as a final order could be revisited was in full plenary proceedings. Irvine J. rejected that argument and held that she was entitled to consider the merits of the case on the motion before her. Whether Irvine J. was right in that conclusion is, logically, the first issue which arises on this appeal, for if the High Court had no jurisdiction to determine the issues raised on a motion in the original proceedings, then the order would necessarily have to be discharged and none of the other issues would arise. 1.4. On the assumption that the High Court had jurisdiction, a number of separate grounds of appeal as to the merits are relied on. I will shortly turn to the issues which those grounds raise. In substance, Mr. A asserts that, even if there is a general jurisdiction of the type identified by Irvine J., the orders made were wrong for a range of reasons. In order to fully understand the issues which arise under this heading, it is necessary to identify those issues in the context of the way in which the proceedings originally progressed in the High Court. 2. The Issues and the Progress of the Case in the High Court 2.2. It next needs to be noted that by the time when, some months later, the proceedings were ultimately settled, Mr. A contends that he had made a further concession in the course of negotiations which was to the effect that 100% of the beneficial interest in all of the assets in contention in the proceedings could be attributed to him. The difference between this second asserted concession and the original concession which was made in clear terms in open court by his counsel, was that it is said to extend to a wider range of assets. The relevance of this concession question to the issues which Irvine J. had to decide was, of course, as she correctly noted, that if the case was ultimately disposed of on the basis that Mr. A owned the entire beneficial interest in all assets in contention then any question concerning his disclosure of the extent of his ownership in any assets which were in contention would become irrelevant. On the other hand, if, as Mrs. A asserts, the concession only went so far as to deal with those assets identified by counsel in October in open court, then any failure to disclose the extent of Mr. A’s true ownership of any other assets (not included in that concession by counsel) potentially had an effect on the outcome and would be thus a material non-disclosure. Put simply, if the case settled against a backdrop that there was an issue between the parties as to the extent of Mr. A’s beneficial interest in some assets and if Mr. A was guilty of material and culpable non-disclosure in respect of his interest in those assets, then it is clear that any settlement would be highly likely to have been materially influenced by that non-disclosure. 2.3. Irvine J., having heard evidence from many of those involved in the negotiations, concluded as a fact that no concession beyond that made in open court by counsel in October had been made by or on behalf of Mr. A. On that basis any material non-disclosure in respect of Mr. A’s interest in any assets beyond those which were the subject of the specific concession in October was, for the reasons already identified and on the basis of that finding of fact of Irvine J., potentially material. Mr. A has appealed to this Court against the finding of Irvine J. to the effect that there was no wider concession. 2.4. Next, it was argued on behalf of Mr. A before Irvine J. that the terms of the settlement agreement were such that Mrs. A was precluded from seeking to re-open the settlement for, it was said, a settlement which took into account questions which were in dispute between the parties could not be re-opened where the parties had expressed the agreement to be in full and final settlement of those very issues. However, Irvine J. came to the conclusion that, if it were to be established that there had been a deliberate failure to make appropriate disclosure in the course of the matrimonial proceedings, then same would vitiate the settlement as a whole so that Mrs. A could not be precluded, should she be able to establish a deliberate failure to disclose, from having the matters revisited. 2.5. Third, it is necessary to note that Irvine J. found a deliberate failure to disclose in respect of four specific assets. It will be necessary to examine each of those findings for Mr. A contests the High Court’s conclusion in respect of each of them. 2.6. Finally, Irvine J. came to the view that, in the light of what she had found to be a deliberate non-disclosure in respect of those four assets, it was appropriate to infer that there were yet further assets which had not been disclosed and directed that a payment of €500,000 be made to reflect that fact. Mr. A appeals against that finding on the ground that no such inference was either warranted or permissible. 2.7. In addition to those specific questions, a number of issues arise at the level of principle as to what the appropriate response of a court should be in the event that a deliberate and fraudulent failure to disclose assets in matrimonial proceedings is established. In particular, the question of the appropriate remedy (and whether it necessarily involves setting aside the entirety of the court order including the decree of divorce) was raised. It seems to me that this question logically falls last for consideration for unless there is jurisdiction and unless the finding of deliberate and fraudulent concealment of resources is sustained then the question of what the court should do about it does not arise. For those reasons it seems to me appropriate to group the issues into four.
Second, there are the identified questions concerning concessions and the terms of settlement. Third, there are the various issues on which I have touched which arise on the merits of the finding of deliberate and fraudulent concealment of resources. Fourth, there is the question of what the appropriate remedy can or should be in the light of a sustained finding of deliberate and fraudulent concealment. 3. The Judgment 3.2. Irvine J. then turned to consider the case-law and commentary which suggests that the correct manner of challenging final orders, said to be tainted by an allegation of fraud, is by a fresh action in which the allegation of fraud can be proved. The rationale behind this requirement was stated by Irvine J. to be:
3.4. After setting out all of the factors taken into account in her determination on this issue, she concluded at para. 11.21:
3.6. The concession of the 18th October, “limited to assets referred to at items 13-21”, was supported by his oral testimony, the formal pronouncement of his counsel, calculations in court of the value of this concession, the note of the O’Higgins J. and the immediate ceasing of the cross-examination of Mr. A in respect of these items. In contrast, the later concession was not found to be supported by either the solicitor’s notes of Mr. A’s instructions, any announcement by counsel, the testimony of Mr. A, the continuation of cross-examination inconsistent with such a concession, the failure of the judge to record such a concession, the failure of Mrs. A’s advisors to make further enquiries as to the consequences of this concession, or the evidence submitted pursuant to an earlier order of Abbott J. in a case-management hearing. Thus, the trial judge concluded that no additional concession was made. 3.7. The High Court made findings in respect of the non-disclosure of a number of assets. Those findings are challenged in relation to four of those assets. The relevant assets are (a) an option to purchase roof space above an apartment block; (b) an option to purchase land on which apartments were built; (c) cash bonds payable to company B; and (d) a contract to purchase certain lands. The findings in relation to each of those assets will be set out in turn. However, it is helpful to note the test applied by Irvine J. in respect of each of the assets. This is summarised at para. 6.1 of her judgment as follows:
3.9. The High Court was satisfied that this default on the part of Mr. A “constituted a conscious and deliberate effort on his part to withhold material and valuable information from [Mrs. A] and from the Court” in light of the fact that Mr. A “showed himself to have an intimate knowledge of all his business interests” and that he had made “no realistic effort … to distance himself from the assertions made by [Mrs A] that he used [company A] to disguise his interest in the roof space at a time when he was allegedly purposefully pursuing planning permission for the site in the months immediately prior to the original proceedings.” 3.10. On the question of materiality and preferring the evidence of the valuer on behalf of Mrs. A., Irvine J. held that the non-disclosure of this asset was significant and material to the settlement reached, particularly when taken in conjunction with the other assets discussed below. 3.11. Similar reasoning was applied by the High Court in relation to asset (b) - the option to purchase land upon which apartments were subsequently built. Again, it was held that the obligation under the orders for discovery were not complied with and that no valid explanation through independent testimony or otherwise was provided for this default. A contention that the failure was merely an “innocent mistake” was rejected. It was established that “this asset was clearly under active management from a planning perspective throughout 2001” and, in fact, had received permission just four weeks prior to the delivery of Mr. A’s statement of affairs in September 2001. It was held to be “inconceivable” that this would not have been brought to his attention or that he would not have known that an associated company made an appeal in respect of this permission. He would also have been highly involved in the provision of the information for the necessary affidavits. Irvine J. again held that the non-disclosure of this asset would have been material to the level of settlement entered into by Mrs. A. 3.12. Asset (c) concerned cash bonds repayable to company B, in which Mr. A once had an interest. These bonds were noted in that company’s accounts in previous years. However, the company was later struck off the Register of Companies and a letter was provided to Mrs. A by Mr. A’s advisors stating that Mr. A’s interests therein had been entirely disposed of. This was reconfirmed on behalf of Mr. A at a later date. Following the settlement, the company was restored to the Register. These bonds were then realised to the company and subsequently transferred to another company owned by Mr A. 3.13. Irvine J. concluded that any disclosure of the existence of the bonds was overtaken by the later responses confirming that Mr. A had disposed of his interest in Company B and that those letters misrepresented the actual situation. This misrepresentation again amounted to a default of disclosure in the context of this case. Again, the High Court expressed its surprise at the fact that no corroborating evidence was provided for Mr. A’s explanations in relation to the circumstances relating to the repayment of the bond. The High Court also rejected a claim that Mrs. A had herself asserted that Mr A did not benefit in relation to the various underlying transactions. 3.14. The Court’s findings in relation to this asset are summarised at para. 6.100:
3.15. Finally, asset (d) concerned the existence of an agreement to purchase certain lands. It was held that there had initially been an option to buy the lands. When inquiries were made by Mrs. A’s representatives as to the ownership of the lands, it was said that Company M held these lands on trust on behalf of another company in which Mr. A had no interest. Again, the relevant lands did not appear in the statement of affairs. After the settlement, Mrs. A became aware of an action seeking specific performance of a contract of sale involving Company M and Company C (in which Mr A was a director and shareholder). It became clear that the alleged beneficial owners of the land were Company C and company D (another company owned by Mr. A). 3.16. Again, the response originally provided by Mr. A to the effect that the beneficial owner of the lands was not connected to Mr. A was found to be a material misrepresentation and the failure to discover these materials was held to be in breach of the 2001 disclosure order. This correspondence was held to negate any prior knowledge of Mrs. A of these lands. The High Court dismissed arguments that certain solicitors would have deliberately misled the witnesses on this question and that, by reason of the alleged repudiation by the vendor, the asset should not have been included in the statement of affairs. A claim that representatives of Mrs. A received copies of the specific performance proceedings was also rejected. The innocent mistake submission was again rejected. 3.17. A synopsis of the trial judge's conclusions on asset (d) can be found at para. 6.142, which states:
3.18. As a result of these findings of concealment, Irvine J. turned to the question of the appropriate remedy. She considered that this case was not truly one were there had been a change in circumstances after the decree of divorce but one where the actual circumstances were not fully known at the time the decree was made. As a consequence, any application for “further ancillary orders” under ss. 13, 14, 15, 16, 17, 19 and/or 21 of the Family Law (Divorce) Act, 1996 ("the 1996 Act") was said to be “difficult to reconcile with the primary contention of the applicant which is that the original orders of December, 2001, should be set aside by reason of material non-disclosure and or fraud. The granting of ‘further’ orders, without the original orders being set aside, would seem to apply an acceptance of the validity of the original orders.” Similar logic was attributed to the use of the power of variation under s. 22 of the 1996 Act. The powers of a court under this section were additionally held to be “extremely limited”. 3.19. Section 5(1)(c) of the 1996 Act was subsequently referred to. This section provides:
(c) such provision as the court considers proper having regard to the circumstances exists or will be made for the spouses and any dependent members of the family, the court may, in exercise of the jurisdiction conferred by Article 41.3.2° of the Constitution, grant a decree of divorce in respect of the marriage concerned.” Irvine J. interpreted this provision as allowing a court to grant a decree of divorce even though “proper provision” had not yet been made, provided that it will be made at a later date. This view was said to be supported by the other provisions of the legislation allowing for further ancillary orders and/or a variation of original orders to ensure “proper provision” has been made. From this, Irvine J. concluded, at para. 12.42, “this Court believes that it must have an inherent jurisidiction on the facts of this case to provide relief to the applicant without interfering with the decree of divorce granted in December, 2001.” She also reasoned that “no useful purpose would be served by setting aside the divorce decree”. In coming to these conclusions, the High Court bore in mind the rights of innocent third parties such as Ms. D. and her children, the requirement to do justice, and the Court’s lack of faith, based on its earlier findings, that Mr. A would truthfully disclose his financial position in fresh proceedings. 3.20. The Court, therefore, did not interfere with the decree of divorce and made an order for an additional sum of €2,500,000 to be paid to Mrs. A as constituting proper provision. This figure was based on a findings in relation to the values of assets (a)-(d) above as well as incorporating an additional €500,000 on the assumption that further assets worth significantly more than €1,000,000 were also concealed as of the 21st December, 2001. 3.21. Against that background, it also seems to me to be necessary to address the constitutional context in which at least some of these issues arise. 4. The Constitutional Context
i. at the date of the institution of the proceedings, the spouses have lived apart from one another for a period of, or periods amounting to, at least four years during the five years, ii. there is no reasonable prospect of a reconciliation between the spouses, iii. such provision as the Court considers proper having regard to the circumstances exists or will be made for the spouses, any children of either or both of them and any other person prescribed by law, and iv. any further conditions prescribed by law are complied with.” 4.3. The obligation on a party to divorce proceedings to make full and proper disclosure of any resources which could be relevant to a decision by the court as to what is, in the circumstances of the case in question, proper provision, has, therefore, a constitutional status. The court, as well as any opposing party, has an entitlement to know what resources are available, for without the court knowing what resources are available, the court cannot exercise its express constitutional obligation to decide on what is proper provision in a proper manner. 4.4. The question of disclosure of resources in divorce proceedings is, therefore, in my view, different in character from whatever disclosure obligations may arise in ordinary inter partes cases. That is not to say that a deliberate failure to disclose relevant material in breach of a disclosure obligation imposed by court order (such as in the discovery process or by reason of interrogatories) might not, in an appropriate case in inter partes proceedings, and provided it was material to the outcome, raise questions as to whether any order made or settlement reached on foot of such inter partes process might not be capable of being set aside. However, there is an added, and constitutional, layer to any question of deliberate non-disclosure in the context of divorce proceedings which involves not only a misleading of the other party but also a misleading of the court and which might lead to the court, unwittingly, not directing proper provision. Furthermore, it seems to me that that constitutional backdrop is relevant to the question of jurisdiction to which I now turn. 5. Jurisdiction 5.2. This raises the question as to whether the procedure by which a party ought challenge a previous final order of the court is a matter going to the court’s jurisdiction or simply a matter which governs the court’s procedure and, thus, is a matter where the court has a discretion to permit a deviation, in an appropriate case, from the ordinary procedure permitted. In addition, there is the question of the applicability of the principle noted by Henchy J. in The State (Byrne) v. Frawley [1978] I.R. 326 (at p. 350) where, notwithstanding a finding of the court that the jury by which Mr. Byrne was convicted was unconstitutionally constituted, Henchy J. said the following:
5.3. It is true to say that there have been a number of judicial statements which suggest that the proper way to seek to challenge a previous final order of a court is by means of new proceedings. In Jonesco v. Beard [1930] 1 A.C. 298, Lord Buckmaster stated at p. 300:
5.4. It seems to me that three questions potentially arise under this heading. The first is as to whether, properly construed, those judicial statements amount to a determination that the only permissible means by which such a challenge can be brought is by plenary proceedings. If that be so, then there may well be a question as to jurisdiction. If, on the other hand, plenary proceedings are merely the means by which the court feels that such a claim should ordinarily be brought but that it is open to the court to permit proceedings to be brought in a different way, in an appropriate case, then very different considerations would apply. In substance, the first question is whether the undoubted desirability of mounting challenges to existing final orders by plenary proceedings is a question of absolute jurisdiction, on the one hand, or merely a desirable procedure, as a result of which the court retains a discretion, in an appropriate case, to allow for a different procedure, on the other. 5.5. The second issue is as to whether the fact that these are divorce proceedings involving the constitutional backdrop to which I have already referred makes these proceedings different in any event. It is true, of course, that there is a sense in which all financial orders in matrimonial proceedings are not final for the court can always revisit, in appropriate circumstances, financial provision whether made on a standalone basis, in the context of judicial separation or in the context of divorce. In that sense no such orders are absolutely final. However, it is equally true that a court, which has come to a specific set of conclusions on the evidence available at a particular point in time and made or approved financial provision on the basis of those conclusions, will not re-open the question of the appropriateness of financial provision except in cases of changed circumstances. 5.6. In G. v G. [2011] IESC 40, Denham C.J. set out general principles which may be applied where there has been a prior separation agreement followed by a subsequent application by a party to court. These principles included:
(vi) If the circumstances of the spouses, one or both, have changed significantly then the Court is required to consider all the circumstances carefully. However, the requirement is to make proper provision and it is not a requirement for the redistribution of wealth.” 5.7. In the event that the bringing of a challenge to a previous final order by means of plenary proceedings is truly a jurisdictional issue, a third question arises as to whether Mr. A might be said to have lost any entitlement to question jurisdiction by virtue of his acquiescence in the procedure actually adopted. Finally, the position of Ms. D under this heading would also need to be considered. 5.8. It has been said that the principle of finality is of equal importance in matrimonial proceedings as in any other area. Thus, financial provision orders have at least some of the characteristics of final orders when they are made at the conclusion of a case (as opposed to on an interim or an interlocutory basis) even though such orders are capable of being revisited in the light of changed circumstances. 5.9. However, it seems to me that the key question which arises concerns the constitutional obligation of the court to ensure that proper provision is made. This is not simply an inter partes case in which a final order or settlement is reached. It is a case where the court has its own constitutional obligations. In those circumstances, it seems to me that the court retains a discretion, at least in divorce cases, to decide the appropriate procedure whereby any issue concerning a deliberate failure to disclose resources can be resolved. While there is no doubt but that plenary proceedings are the proper means for bringing any claim to have a court order set aside, I am satisfied that, at least so far as divorce cases are concerned, the court retains a discretion to permit such a claim to be brought by any procedural means which the court considers fits the needs of the case. It is, therefore, unnecessary to consider what the situation might be in, for example, ordinary inter partes proceedings. 5.10. Given that the court has a discretion, it seems to me that it was within the jurisdiction of Abbott J. to direct and Irvine J. to uphold the decision that these proceedings, in all the circumstances, be brought by a motion. It might well be that had, from the beginning, Mr. A maintained that the proceedings should have been brought by plenary summons, the proper course of action for the court to have adopted would have been to direct that the proceedings be brought in that way. However, Mr. A made no such application at any realistic time. In those circumstances, I am satisfied that Irvine J. was more than entitled to continue with the proceedings in the form with which Mr. A had acquiesced. This is so not least because, as she pointed out, the proceedings had, in fact, come to hearing in much the same way as they would if they had been commenced by plenary summons. There was no material difference in substance in the process. 5.11. Subject to the position of Ms. D, I am satisfied that the court had a jurisdiction in these divorce proceedings to adopt such a course of action. In the circumstances, the High Court exercised its jurisdiction in an entirely appropriate way. 5.12. It is necessary, of course, to turn to the position of Ms. D. Ms. D was joined at a late stage by order of Abbott J. on the 29th July, 2008. At the hearing of this appeal, her solicitor argued that she raised the question of jurisdiction as soon as she could reasonably have been expected to. There was some factual dispute as to whether that was truly so given earlier correspondence of which it would appear Ms. D was aware. However, it seems to me that there is a more fundamental point. The only legitimate interest which Ms. D has in these proceedings (from a legal perspective) concerns the possibility that the decree of divorce itself might be set aside, thus potentially invalidating her marriage to Mr. A. While, as his wife, she has an interest in the colloquial sense in whatever provision he might be required to make for Mrs. A (given that any assets which he has to give to Mrs. A would no longer be available to him) that is not a direct legal interest such as would entitle Ms. D to become involved in these proceedings. She is, in that context, in no different position to, for example, a poorly paid husband of a wealthy business woman who is sued by a bank for an amount of money which might render her bankrupt. There is no doubt that such a husband would, in the colloquial sense, have an interest in the proceedings. If they go badly for his wife then the family fortunes would take a serious nose dive. However, that colloquial interest does not entitle him to be joined as a party. He has no legal interest in the proceedings. Likewise Ms. D has no legal interest in the financial provisions made against Mr. A even though they may indirectly affect her. What she does have a direct legal interest in is maintaining the decree of divorce on which her own marital status depends. 5.13. For the reasons already analysed, I am satisfied that, while there are strong reasons of principle why plenary proceedings ought, in the vast majority of cases, be the method by which a challenge is brought to a previous final order of the court on the grounds of fraud, nonetheless the Court retains a discretion, at a minimum in certain types of cases, to permit a departure from that procedure. This is so at least in cases, such as divorce cases, where the court itself has obligations under the Constitution or the law which, if the fraud be established, would mean that the court may not, unwittingly, have properly fulfilled its constitutional role. Of course, given the desirability of a full hearing, the discretion to depart from full plenary proceedings should be sparingly exercised and the Court should be careful to ensure that, as here, any procedure adopted does not prejudice a full and fair hearing of all of the issues. Against that background, and in the light of the fact that the only legal interest which Ms. D had in respect of these proceedings was in standing over the decree of divorce and the fact that the procedures adopted were analogous to a plenary process, I am not satisfied that there was any prejudice to her interests and in those circumstances I am satisfied that Irvine J. was correct in permitting the proceedings to continue in the form in which they were notwithstanding her objections. 5.14. In all those circumstances I am not satisfied that the jurisdictional issue raised by Mr. A and Ms. D can succeed. On that basis it is next necessary to turn to the two general questions raised in respect of the merits of the case being those which concern the alleged concession made by Mr. A and the terms of the settlement. 6. The Concession and the Terms of Settlement 6.2. I now turn to the argument which is based on the assertion that the terms of settlement themselves preclude the re-opening of any of the resources issues which were before the High Court. It is, of course, true that a case involving fraud is as capable of being settled as any other case (See, for instance, Mulrooney v John Shee & Co. Solicitors and Ors [2013] IESC 20). The desirability of cases being resolved is not diminished because there may be serious questions such as fraud before the Court whether relating to the underlying issues which fall for decision in the case or the probity of what might be anticipated to be the evidence likely to be given. In principle, the settlement of such cases is every bit as binding as any other settlement. A party who makes a judgement on what appears to be the likely evidence to be tendered and compromises on the basis of an assessment as to the likelihood of success or failure will be kept to their bargain. 6.3. It will be necessary to turn to the fact that these were not, for the reasons already set out, strictly speaking pure inter partes proceedings, in due course. However, even leaving aside that element, it does also need to be noted that the settlement of proceedings, like any other contract, can be vitiated by fraud. A person who is guilty of fraudulent misrepresentation in the context of negotiations leading to the settlement of proceedings is just as much liable to have that settlement set aside on the grounds of fraud as a person who is guilty of fraudulent misrepresentation in the context of any other form of contractual negotiations. 6.4. However, the mere fact that a party maintains a position in proceedings which, it might be suggested, was incorrect cannot, of itself, render the maintenance of that position fraudulent. In all cases there will be differences between the parties for if there were not it is hard to see how the litigation would have arisen in the first place. A settlement of the proceedings involves the parties adopting a course of action which substitutes the terms of the settlement for whatever possible rights and obligations might be established were the proceedings to run to a conclusion and be the subject of a decision of the court. It is not possible to undo a settlement simply by seeking to rerun the case and say that the evidence which it was anticipated the other side would have given would have been false or even deliberately so for that is the very matter that was settled, i.e. the issues of fact that would have arisen in the case arising out of potentially conflicting evidence. 6.5. However, all that being said, it must also be noted that the swearing of an affidavit of discovery or otherwise complying with legally binding disclosure obligations in litigation, represents an assertion on the part of the party concerned that all appropriate disclosure within the parameters of the relevant obligation has been made. Depending on the circumstances, it is potentially the case that a conscious and deliberate failure to make appropriate disclosure may amount to a material misrepresentation which, if acted on, may be sufficient to permit the rescission of a settlement of relevant proceedings. For example, a party who settles a case on the basis that the only documentary evidence that is likely to be available is as disclosed and who subsequently becomes aware that there was additional documentation which was significantly material to the case and was not disclosed, may be able to establish, if any failure of disclosure can be shown to be deliberate, that a settlement reached after that disclosure is vitiated by fraud. Whether that be so will, of course, depend on all the circumstances of the case including the extent to which there were remaining discovery issues outstanding. In such a case, it may be that the proper construction to place on the events is that the settlement took place against the backdrop of a dispute about discovery as yet unresolved which may effect the court’s assessment of just what has been settled. In some cases, it may well be that the dispute about disclosure can properly be regarded as having been itself resolved as part of the settlement. 6.6. However, in this case the proceedings had been at hearing for some period. There had been a detailed interaction between the parties and their advisors concerning the resources available to Mr. A. In the event that it could be established that Mr. A had deliberately failed to disclose resources which were available to him and in respect of which he was under an obligation to disclose, then it does not seem to me that a settlement against that backdrop could be said to be properly characterised as involving a settlement which included settling the disclosure issues. It follows that the settlement in this case cannot be said to have included a settlement of the sort of disclosure issues which have now been raised by Mrs. A as part of her claim. If there are sustainable conclusions that there was a material and deliberate failure to disclose resources whose existence Mr. A was obliged to disclose, then the settlement of this case at the earlier stage when it was before O’Higgins J. cannot, in any way, prevent Mrs. A from seeking to raise the non-disclosure issues which are at the heart of this appeal. That is sufficient to dispose of the settlement issue. 6.7. It should, however, be added that there may be cases where the court’s obligation to ensure, under the Constitution, that there is proper provision, will also come into play. If the court is misled by inadequate disclosure then that is a factor which may need to be taken into account. Clearly, where the court is aware that there are issues as to the adequacy of disclosure, then a court may, nonetheless, take the view that it is in the interest of all concerned that proceedings be compromised against the backdrop of it not being clear that there has been adequate disclosure. However, in those circumstances, the court would need to be satisfied that whatever disclosure issues remained outstanding were not such as might have such a significant bearing on the question of proper provision that it might outweigh the advantages of settlement. 6.8. In conclusion on this question, I am not satisfied that, on the facts of this case, there is any reason to believe that this settlement should be properly construed as involving a settlement of disputed disclosure issues as well. In those circumstances, I am satisfied that the grounds of appeal which rely on the assertion that the settlement excludes any form of re-opening, even on the basis of a fraudulent failure to disclose resources, cannot be sustained. Against that backdrop, it is necessary to turn to the specific findings of the trial judge in respect of failure to disclose resources. As a preliminary to that analysis, it is appropriate to start by referring to the test which the trial judge applied. 7. The Appropriate Test
(b) If so, a consideration of whether any such failure was conscious and deliberate as opposed to accidental and explicable; (c) If so, whether the failure to disclose was sufficiently material to the overall picture of the resources available so as to have materially affected the question of proper provision. 7.3. It must, of course, also be recognised that, again most particularly in complex cases, there can be errors in the disclosure process which do not bear the inference of a deliberate understatement. However, where the failure to disclose is significant, it may well be that the onus will rest on the party guilty of that failure to put forward evidence, at least in many cases, to establish an innocent explanation for the relevant non-disclosure. Given the weighty obligation on a party in divorce proceedings to make full disclosure, it is all the more important that any failure be adequately explained. 7.4. Finally, it does need to be emphasised that any failure must truly be significant and material in the context of the case. The mere fact that some tangential documentation or largely worthless asset or resource was omitted which would not have been likely to have had a significant effect on the overall assessment by the court of the provision to be directed could not justify the re-opening of a final order or, perhaps, what might, in the matrimonial context, and in the light of the possibility always present of further variation, be described as a “quasi final order”. 7.5. Having made those observations, I now turn to the specific assets. 8. The Specific Assets 8.2. Next the trial judge conducted, on a case by case basis, an analysis of whether there could be any innocent explanation for the relevant failure to disclose. The trial judge set out a reasoned basis in each individual case as to why she rejected any such innocent explanation. However, in addition, there were certain overriding factors which the trial judge was more than entitled to take into account. First, as she pointed out in respect of the individual cases, it might well have been expected that evidence would have been led from any of the advisors concerned as to how disclosure did not occur in a manner consistent with an innocent explanation. No such evidence was called. In addition, the trial judge had available to her, so far as one of the assets is concerned, evidence from another party to a relevant transaction which was to the effect that he had been asked by Mr. A to delay implementing an agreed transaction until after the matrimonial proceedings were complete so as to avoid disclosing his interest in the transaction concerned. That was evidence which the trial judge was entitled to accept. Given that the trial judge accepted that evidence, she was more than entitled to conclude that Mr. A was engaged in a policy of attempting to hide such assets as he could to minimise his exposure in the divorce proceedings. While it was more than appropriate for the trial judge to assess each asset separately for the purposes of considering whether there should be a finding that the failure to disclose was deliberate in respect of that specific asset, nonetheless the trial judge was entitled to take an overall view, in the light of the evidence as a whole, of a pattern of deliberate failure of disclosure not least because of the failure to lead evidence from advisors and the evidence of a request to delay implementation of a transaction to which reference has just been made. 8.3. Finally, the trial judge had ample evidence to justify her conclusions, in each of those three cases, that the resources attributable to the assets which had not been disclosed were significant in the overall context of the case. These were not assets of a trivial value. Insofar as some of the assets may have had a contingent or as yet not fully defined value, that does not take away from their potential significance. To take an illustrative example, a party to a divorce who had little or no current assets but who had the possibility of obtaining a very significant sum or asset with a very significant value at some stage in the future, would be assessed in a very different way from someone who had no such possibility. As pointed out earlier, what the court is required, under the Constitution, to satisfy itself of is that adequate provision either has or will be made. In such a case, a court might well be satisfied that a contingent entitlement to benefit by way of capital provision out of a future gain which was not certain might amount to proper provision. 8.4. While there may be cases where the possibility of future benefits may be so speculative as to not really be material to the court’s assessment, it is clear from the analysis of the trial judge in this case that each of the three assets with which I am currently concerned had a real potential to deliver significant benefit to Mr. A within a relatively short timeframe and there was, on that basis, more than ample evidence to justify the trial judge’s conclusion that, in respect of each of those three assets, the failure to disclose was material in the context of any overall assessment of proper provision. 8.5. I have left asset (c) to last because it seems to me that there is one complicating factor in that case. That it was not disclosed is clear. That the failure to disclose was deliberate is a matter which the trial judge was more than entitled to conclude on the evidence. There is, however, a curious situation in respect of its materiality. At the hearing before this Court very different accounts of the potential benefit of the bond in question to Mr. A were given by counsel. Counsel for Mrs. A suggested that the bond was in place as security for certain potential liabilities which ultimately did not materialise so that the bond could then be released to the ultimate benefit of Mr. A through various corporate vehicles which he beneficially owned and controlled. On the other hand, counsel for Mr. A suggested that the bond was simply in the nature of a secured guarantee so that the release of the guarantee type obligations concerned did not increase, it was said, Mr. A’s resources in any material way but simply removed a possible contingent liability. It has to be said that the court expressed its considerable surprise that such a difference in explanation as to the nature of the bond concerned remained at issue on appeal to this Court. Nonetheless, the Court invited the parties to supply a written document setting out the evidence which had been before the trial judge on this question. Having carefully reviewed that evidence, I have come to the conclusion that it may well be that the parties, or more accurately their advisors, were speaking at cross purposes for there was insufficient evidence which would allow an assessment as to which account of the bond, and its potential benefit to Mr. A, should be preferred. In those circumstances, it seems to me that the only just course of action to adopt is to refer this single issue back to the High Court for the sole purposes of determining whether, as a matter of fact, the bond concerned had the potential to increase the resources available to Mr. A. 8.6. So far as the other three assets are concerned, I can see no basis for suggesting that the trial judge was not entitled to conclude, in each case, that it ought to have been but was not disclosed, that the failure to disclose was deliberate and that the lack of disclosure was significantly material in the context of these proceedings as a whole. 8.7. It will be recalled that the trial judge made a further finding that, in the light of the established non-disclosure, it was reasonable to infer that there were yet further assets, currently unknown, which Mr. A had failed to disclose and, on that basis, added significantly to the further provision which she required to be made in favour of Mrs. A. It is said that it was neither permissible nor warranted for the trial judge to reach such a conclusion. I turn to that question. 9. The Inference of Further Assets 9.2. Someone who is prepared to go to those lengths to deprive their spouse of the proper provision which the Constitution requires must be open to the risk that a court will properly conclude that not all of their covert actions have been uncovered. Given the scale and nature of the non-disclosure established, it was reasonable for the trial judge to infer that there must have been more. In the circumstances, I am satisfied that the trial judge was entitled to come to the conclusions which she did both as a matter of law and on the facts of this case. The only remaining issue is as to the manner in which the trial judge proposed to remedy the failure of Mr. A to make proper disclosure. 10. The Remedy 10.2. It seems to me that any other remedy is fraught with danger. The resources available to any individual can change, and often change radically, over time. The history of the last decade or so in this country provides ample evidence of such movement in both directions. Persons became very wealthy very quickly. The same, or other, persons lost all in a short period of time. But the basic approach of any court on finding that there has been wrongdoing is to try and put the parties back into the position in which they would have been had that wrongdoing not taken place. Where inadequate provision is made as a result of a deliberate failure to disclose resources in the context of divorce proceedings, then the proper remedy should be to attempt to ascertain what provision would have been made on the occasion in question had proper disclosure occurred. This is the method adopted by the trial judge and I did not understand it to be suggested that there was not evidence on which she could have reached the conclusions as to the value of the various assets which she did. 10.3 I am satisfied that the trial judge’s assessment of the additional provision which would have been made had proper disclosure taken place at the time of the original divorce hearing is amply justified on the evidence. Whether the sums attributable to the bond ought be included depends on a proper resolution of the issue in respect of the bond which I have already identified. If it is established that the bond did have a value to Mr. A then I am satisfied that the assessment by the trial judge of the value of that interest cannot be interfered with. On that basis, the only issue which, in my view, should be remitted to the High Court is as to whether the bond did have a value to Mr. A. If it did, then the entire financial assessment of the trial judge must be upheld. If it did not, then a reduction would need to be made to reflect the amount of the additional provision ordered by the trial judge which could be said to be attributable to the bond. A summary of the values of assets and calculations of the High Court can be found at para. 12.46 of that court's judgment. The bond was valued by the trial judge as being worth €650,000. The total value of the undisclosed assets (a)-(d), after necessary deductions, was held to be €5,370,000. Irvine J. awarded €2,000,000 to Mrs. A as proper provision in relation to those assets. Therefore, as an approximate portion of the provision ordered in respect of assets (a)-(d), an amount of €240,000 can be said to be attributable to the bond (€650,000 x (€2,000,000/€5,370,000) = €242,085.66, rounded to €240,000). 10.3. There remains only the question of the decree of divorce. I should start by saying that I would have very grave reservations as to whether it can ever be possible to set aside a decree of divorce especially after the interests of third parties, such as Ms. D on the facts of this case, have been significantly affected by that decree. Ms. D was not party to any fraudulent concealment of resources. She married Mr. A in good faith on the basis of an order of the court, valid on its face, that he was divorced and, thus, free to marry her. I cannot conceive of circumstances when her status as a married woman could be interfered with because of circumstances entirely outside her control or knowledge. Different considerations would, of course, apply if the relevant divorce was foreign and questions arose as to its recognition in this jurisdiction. 10.4. On that basis, I am satisfied that the trial judge was correct to conclude that it is possible to make further provision without interfering with the original decree of divorce. This is not, of course, further provision in the statutory sense for, as the trial judge correctly pointed out, the provision here ordered does not derive from changed circumstances or the other circumstances contemplated by the legislation. 10.5. The legal basis for the further provision ordered by the trial judge in this case is that it is designed to meet the constitutional obligation that the courts ensure that there be proper provision in the case of a divorce in circumstances where it has now been established that, by virtue of the deliberate concealment of resources, Mrs. A and the court was misled into believing that what was then provided amounted to such proper provision. In those circumstances, I am satisfied that the court has a jurisdiction, without interfering with the original decree of divorce, to simply make such additional provision as the Constitution requires to be made to ensure that the total provision is appropriate in the light of the provision that would have been likely to have been considered proper at the time of the original decree of divorce, had adequate disclosure been made. 10.6. On that basis, I am satisfied that the trial judge was correct in her approach and in the order which she made. 11. Conclusions 11.2. I am satisfied that the trial judge was entitled to conclude, on the evidence, that there was no further concession made by Mr. A beyond that formally made to the court in October, 2001, concerning his beneficial ownership of assets and, on that basis, that the grounds of appeal in that regard should be dismissed. Likewise, for the reasons already set out, I am not satisfied that the settlement reached when the proceedings were at hearing before O’Higgins J. preclude Mrs. A from seeking further provision on the basis of a deliberate failure to disclose assets and resources. 11.3. With the exception of the issue concerning the bond to which reference has been made, I am satisfied that each of the findings of the trial judge in respect of the other assets which are the subject of this appeal were correct both in terms of the obligation to disclose, the finding of non-disclosure, the deliberate nature of same and the materiality and value of the assets concerned. 11.4. I am also satisfied that the trial judge was correct to leave the decree of divorce in place and to make further provision in the manner in which she did subject only to the question of the bond. I would, therefore, refer back to the High Court the single issue as to whether, as counsel for Mrs. A asserted on this appeal, the relevant bond actually increased the resources available to Mr. A or whether, as his counsel asserted, the release of the bond simply meant that a contingent liability did not arise but with no actual beneficial effect on his assets. No other aspects of the bond issue are, for the avoidance of doubt, being referred back. 11.5. On that basis it would appear that the order of the High Court should be affirmed save that a sum of two hundred and forty thousand Euro should be deducted from the total financial award of €2,500,000 made by way of provision pending the outcome of the one issue which I believe should be referred back. If that limited bond issue is resolved in favour of Ms. A then that reduction should be reversed and a further provision of €240,000 made.
|