Supreme Court strikes down family law orders as excessive

by admin

Neutral citation (2011) IESC 40

Supreme Court 

Judgment was delivered on October 19th, 2011, by the Chief Justice, Mrs Justice Susan Denham, Mr Justice John Murray, Mr Justice Adrian Hardiman, Mr Justice Nial Fennelly and Mr Justice Joseph Finnegan concurring.

Judgment 

A High Court judgment containing various orders in a family law case, in particular an order of €1 million to buy a second house and €600,000 cash sum, was overturned and the case was remitted to the High Court for proper provision to be ordered.

Background 

The case concerned an appeal by the husband against a series of High Court orders in a divorce case, which followed a separation agreement containing a “full and final settlement” clause.

The weight to be given to this clause, and the meaning of “proper provision” in the 1996 Family Law (Divorce) Act were considered.

The couple were married in 1977 and lived in a house inherited by the husband. The wife brought £3,000 in savings to the marriage. They had no children and they ran a farm and garage. The husband began to pursue property development, building and selling houses.

The couple separated in 1995 and entered a separation agreement in August 1996, under which the husband agreed to pay the wife £100 a week in maintenance, reduced to £50 after two years. He also gave her a house in the estate he had developed and a lump sum of £70,000.

In 2004 the maintenance was increased to €1,200 a month, pending a hearing of the divorce application. This was further increased to €2,500 a month by the High Court.

The wife claimed she did not enjoy the same lifestyle as her husband and that she incurred debts until the maintenance was increased.

She brought a claim for divorce and that “proper provision” be made for her under the 1996 Act.

In granting the divorce in March 2009, Mr Justice Henry Abbott made a number of orders making further provision for the wife, including an order directing the husband to buy her an annuity worth €600,000; the payment of €300,000 into a pension fund for her; the payment of €100,000 towards her legal costs; maintenance of €54,000 a year until the sum was paid by the annuity; the payment of €1 million so that she could buy a second house and the payment of a further €600,000 in a lump sum; and a payment of half of the balance of her legal costs.

The husband argued that the orders imposed an unreasonable and unfair financial burden on him, amounting to a confiscation of assets, and that it unfairly fettered his use and control of his assets to the detriment of his long-term financial security and business activity.

He also argued that the High Court judge failed to have sufficient regard to the “full and final” clause in the separation settlement.

His lawyers argued that the court had embarked on a redistributive financial process and that it was not the function of the court to reopen the issue of proper provision, but rather to assess the previous provision in the light of current circumstances and, if it was inadequate, correct it.

Decision 

The first issue examined was the weight to be given to the deed of separation and what would happen if there had been a change in the circumstances of one or other of the parties.

The Supreme Court pointed out that previous judgments had stated that the Irish law did not establish a right to a “clean break”, but that this was a legitimate aspiration and the objective of seeking certainty and stability was desirable.

Changed circumstances that could lead to a revisiting of a separation agreement could include illness. However, if a person achieved wealth after the separation, and this was unconnected to any joint project of the spouses, there was no automatic right to an increase in the financial provision for the other spouse.

The standard of living of a dependent spouse should be commensurate with that enjoyed when the marriage ended. Assets inherited should not be treated as assets obtained by both parties in a marriage.

At the time of the High Court hearing, the husbands assets were worth about €21 million.

The original separation agreement envisaged the wife’s needs tapering off and her supporting herself.

However, she became ill and could not work and used up her lump sum. Therefore there was no error in the High Court ordering an increase in maintenance.

However, the overall amount of maintenance and financial provision was excessive and an error, in particular the provision of €1 million for an extra house, as she had been given suitable accommodation in the separation agreement.

The lump sum of €600,000 was also excessive.

The standard of living of a spouse, when the other party has subsequently achieved further wealth, is not entitled to be elevated on that basis. Here the husband did increase his wealth after the separation, which was not relevant to the proper provision of the wife, unless there had been a substantial change in her needs.

In this case her needs were met by her increased maintenance and provision for a pension, which should not be finally determined by the Supreme Court in the light of the dramatically changed values of his assets.

The case should therefore be remitted to the High Court, the judgment said.

The Irish Times, 7th November 2011

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