Woman must pay former husband €1.6m as part of divorce settlement, judge rules
This is not a headline that one reads in the Irish Times every day. Despite the headline, the article very clearly sets out the reasons behind the judgement. As ever, I wanted to look at the source judgment (which is available on the courts website) to see if there are any lessons we can learn.
Understanding the Financial Scope of This Case
While the financial figures in this case are substantial, the legal principles remain the same regardless of the amounts involved. That said, both parties were high earners. The husband has an annual income of approximately €150,000, while the wife previously earned over €1 million per year before, unfortunately, her illness affected her ability to work.
The house that they reside in is worth approximately €2 million and they hold significant pension assets, bringing the total estate above €3 million. Due to the scale of these assets, the case was heard in the High Court.
While the legal framework applies to all divorces, the way cases of this magnitude unfold in practice can be quite different.
Legal Fees in High-Value Divorce Cases
Legal fees in cases of this scale are significantly higher. One reason for this—though not the only one—is the involvement of Senior Counsel (and often Junior Counsel). These barristers are regarded as the most experienced and skilled in their field, and their expertise comes at a considerable cost.
The judgment notes:
“A ‘D v D schedule’ was compiled by the parties’ forensic accountants. There is a considerable measure of agreement between both sides in relation to the value of their respective assets and the combined value.”
As is common in High Court divorce cases, both parties engaged forensic accountants. The D v D report refers to a standardized format used to itemize and assess the value of each party’s assets.
Beyond the costs of forensic accountants (and any additional expert witnesses), legal fees in such cases are significantly higher. Solicitors’ fees, in particular, are greater due to the extensive work involved. A key principle in assessing legal costs is the value of what is at stake, and in cases involving multi-million euro assets, this can be substantial.
This case lasted four days in the High Court, meaning the combined legal costs would have been extremely high—far greater than if the case had been settled at an earlier stage.
Child Custody: A Non-Disputed Issue
One thing to note is that although the couple have two children, the custody, access, and maintenance of the children were not an area of dispute between the couple. The court ordered joint custody of the children with a shared parenting regime, in line with recommendations from the report of X.
The arrangements included flexibility to accommodate the father’s work commitments. The court also emphasised the importance of maintaining relationships between the children and their extended family on both sides. This meant that it was agreed that what is called a S.47 Report, which is an independent report prepared by a psychologist for the court. This involves interviewing the spouses and the parents and making recommendations to the court. The Court rarely deviates from these recommendations. In this case, it was envisaged that wherever the children resided, that the other parent would reside close by so that the children would have equal access to the children.
The Court’s Approach to “Proper Provision”
Effectively, the 50 pages of the judgment were mostly concerned with how the substantial assets of the marriage should be divided. This is where the repeatedly used mantra of “proper provision” was considered in minute detail.
The Judge starts off by setting out the general position:
“Proper provision should seek to reflect the equal partnership of the spouses.
Proper provision for a spouse who falls into the category of a financially dependent spouse (where the other spouse is the source or owner of all or the bulk of income or assets of the marriage) should seek, so far as the circumstances of the case permit, to ensure that the spouse is not only in a position to meet her financial liabilities and obligations, continue with a standard of living commensurate with her standard of living during marriage but to enjoy what may reasonably be regarded as the fruits of the marriage so that she can live an independent life and have security in the control of her own affairs, with a personal dignity that such autonomy confers, without necessarily being dependent on receiving periodic payments for the rest of her life from her husband”
He further says that:
“ If, in their different spheres, each (spouse) contributed equally to the family, then in principle it matters not which of them earned the money and built up the assets. There should be no bias in favour of the money- earner and against the homemaker and the child-carer”.
In addition, he states:
“In cases involving ample resources, it is the standard of living enjoyed by both parties before the breakdown of marriage which should guide the court as to how it should make proper provision having regard to the available assets, income and property.”
Lastly he states:
“The onus on the trial judge in the present case was to consider all of the assets potentially available and then to fashion orders for ancillary relief that would likely secure for the parties and for their lifetime the lifestyle which they enjoyed prior to the marriage breakdown”.
This may surprise some people as essentially it just summarises the law that work within the home is as valuable as the money-making endeavours. Additionally, it is the lifestyle of the high earning couple before the marriage breakdown that guides the judge and essentially, if there is a lesser earning spouse in the marriage, that spouse should be entitled to continue in the lifestyle that they have become accustomed. That is of course limited if the marriage is not of long duration and depends on the availability of assets to future fund this lifestyle.
I have previously discussed the concept of Proper Provision, but Judge Jordan in this case forensically goes through the statutory regime laid down in the legislation. He goes through each factor and discusses what weight he gives each factor in this specific case.
Here is my own attempt to summarize this analysis:
- a) Income, Earning Capacity, Property, and Financial Resources: The Wife’s assets are more valuable. Some provision requires to be made for the husband out of the wife’s assets in order that proper provision be made for him. The court estimates the husband’s potential income at €150,000 per annum. The wife’s earning capacity is also considered, including her “exit agreement” with her previous employer. She previously earned over 1 million per year and is younger than her husband so can be expected to be in a position to have a high earning capacity over the next 10-15 years despite having to perhaps work less due to her serious illness
- (b) Financial Needs, Obligations, and Responsibilities: Both spouses need separate accommodation and need finances to support their children.
- (c) Standard of Living: It is a very comfortable but not extravagant standard of living but there are resources available to allow them both to continue this lifestyle. Some provision will have to be made from wifes assets to husband to allow the continuation of this lifestyle..
- (d) Age and Duration of Marriage: Married in 2006, ages are 59 and 50. They continue to live together in the family home.
- (e) Physical or Mental Disability: The wife’s history of illness is considered relevant, supporting her desire to reduce work demands.
- (f) Contributions to the Welfare of the Family: Both parties made contributions but he assesses that the wife in this case financially paid 80% of the renovation costs to the family home.
- (g) Effect on Earning Capacity: The court considered the effects of the spouses’ responsibilities during the marriage on their ability to earn in the future. He states that these responsibilities have had no effect.
- (h) Income or Benefits Under Statute: Children’s allowance is paid to the mother.
- (i) Conduct: Addressed in detail (see above). The judge ultimately found that the wife had failed to prove the serious allegations which she has made that the husband has been threatening or violent or abusive to her or that she has been in fear of him.
- (j) The accommodation needs of either of the spouses: There are resources available to purchase two homes
- (k) Loss of Benefits (e.g., Pension): The loss of inheritance rights is more significant for the husband, as the wife has more assets, especially in pensions.
- (l) Rights of Other Persons: Not applicable.
It is a good example to a person who is going through a divorce themselves, to first list the family pot of assets and then put themselves in the position of the judge and review the respective spouses position through the lens of the factors listed and assess how a judge would properly provide for both spouses going forward.
When Does Conduct Matter in a Divorce Case?
One of the factors that the judge considered was the conduct of the parties and what weight should be given to it. This is a very important feature to consider in this case as most clients will want to go into minute detail as to their spouse’s conduct during the marriage. In my experience, clients are not very impressed when it is explained that it is not a factor in how the judge will decide the case. Just to explain the position, the idea is that misconduct, if proven, will lead the judge to financially punish the offending party.
The key point though is that the conduct must be “gross and obvious”. It effectively means that you will know it when you see it. It will jump out at you. It is accepted that during the breakdown of a marriage that people will not behave well and that while the court does not condone such “unedifying or shabby behaviour”, it does not rise to the “Gross and obvious “level.
It is helpful that the judge listed examples of these types of behaviours:
- Wife shoots husband with his shotgun with intent to endanger life.
- Husband attacks wife with a razor and inflicts serious injuries
- Wife twice inflicts stab wounds on her husband with a knife.
- Husband commits incest with children of the family.
- Wife stabs husband in the abdomen with a knife.
- Wife facilitates the husband’s attempted suicide.
- Wife incites others to murder the husband.
- Husband’s serious drink problem and “disagreeable” behaviour led to the forced sale of the matrimonial home and serious financial consequences to the wife.
- Serious assault and an attempted rape of wife by husband.
- Husband assaults the wife with a knife.
- Wife deliberately drugged husband to make him very sleepy and then while he was in a somnolent state placed a bag over his head, which she held in such a way that the husband could not breathe.
- Husband guilty of “very grave” misconduct in abducting the children of the marriage in contempt of court.
- Very serious assault by husband on wife with knife, leading to 12 years imprisonment for attempted murder.
I think you can see that the behaviour illustrated here would rise to the test “you know it when you see it”. Broadly speaking in this particular case, based on the judges’ appraisal of the evidence (one sides version against other), he felt that while the husband behaved badly at times, that it did not amount to gross and obvious misconduct – and so did not take conduct into account as one of the considerations.
Forensic Accountants and Valuing Business Assets
The only other issue in the case concerned the valuation of the Wife’s company. This is just an example of what happens in these types of cases. The forensic accountants differed on the tax treatment of the income of the Company. The Court heard evidence from both experts and arrived at a figure somewhere in the middle.
Why the Family Home Was Not Sold
Lastly, the Judge had to consider whether to sell the family home or allow the wife in the case to purchase it. Ultimately, he allowed the wife to purchase the husband’s value of the home for the following reasons
- The Home would not realise much more than the value of the purchase and the renovation costs.
- A Sale would involve an auctioneer and legal costs.
- A sale would have the effect of sending both parents into the open market to buy a house.
- It is sensible that the two children would benefit from the stability of staying in their home.
- The Wife contributed most of the acquisition costs of the House.
Final Takeaways from This High-Asset Divorce Ruling
All in all, I think that it was a very helpful decision for people to read and analyse. I imagine that the case would have been more easily settled if there had not existed the question of whether a judge would take the husband’s conduct into account. This was probably difficult to assess as a lot would depend on how impressive each party was in direct evidence and under cross-examination. As to how this played out had a huge swing on the financial orders to be made. It made the whole case quite difficult to predict.
