Provision for ex-wife found to be excessive

THE SUPREME Court has upheld an appeal by a divorced businessman against court orders requiring him to make better provision for his ex-wife, including to pay €1 million to buy her a second house and an additional €600,000 for her own use.

In an important judgment concerning the meaning of “proper provision” in the Family Law (Divorce) Act 1996, the five-judge court unanimously found the overall level of provision ordered for the ex-wife by the High Court was “excessive”. The court’s duty was to make proper provision, not enter into “a redistribution of wealth”, it said.

The judgment took into account the man had already provided a house for the woman, plus a lump sum of £70,000, under a 1996 separation agreement. It also noted a “radical change” in circumstances for both since that agreement, including a “dramatic” fall in the value of the man’s assets – put at €21 million in 2009 – and the woman being unable to work due to illness.

The case will now go back to the High Court to make provision “in a just manner” and in accordance with the Supreme Court findings. The woman’s needs would be met by increased maintenance and provision of a pension, the specific details of those provisions to be decided by the High Court, the Supreme Court ruled.

Giving the court’s judgment, the Chief Justice, Mrs Justice Susan Denham noted the man and woman married in the late 1970s and lived in a house inherited by the man. The woman brought £3,000 savings to the marriage and the couple, who have no children, ran a small business and farm in the early years before the man got successfully involved in other business.

The couple reached a separation agreement in 1996 with an agreed “full and final settlement” clause. Under that, the man provided a house for the woman, a £70,000 lump sum and her VHI costs. He was also required to pay £100 maintenance weekly for two years and then £50 weekly, subject to the Consumer Price Index.

The weekly payment was increased in 2002 to €70. In 2004, the man agreed to pay interim maintenance of €1,200 monthly pending maintenance proceedings that resulted in that sum rising to €2,500. The woman remained in the house provided for her and spent the £70,000 sum without investing it in any wealth-producing activity, the Chief Justice said.

The woman later initiated proceedings for a decree of divorce and provision for her under the terms of the Divorce Act, while the man argued proper and permanent provision was made under the separation agreement.

In 2009, the High Court granted a decree of divorce and ordered further provision. The man was ordered to buy the woman another house for €1 million near her existing home; buy a €600,000 annuity for her lifetime; make a €600,000 payment to her by December 2011 for her own use; pay €300,000 into a pension fund for her; €100,000 towards her legal fees; maintenance of €54,000 annually, index-linked; and €65,000 for VHI.

He was also ordered to continue instalment payments under a €500,000 life insurance policy for the woman until payments due to her under the court order were annuitised and made.

Senior counsel David Hegarty, for the man, appealed that order on several grounds including the level of payments was excessive and unfair.

The Chief Justice said the 1996 Divorce Act was at “the core” of this appeal and the court had to apply the Constitution, relevant law and general principles that may be applied where there was a prior separation agreement.

The court had a duty to ensure proper provision in the circumstances of each case and consider whether those circumstances had changed since the separation agreement due to factors such as illness or a change in the value of assets due to “the bursting of a property bubble”.

In this case, the man had net assets of €21 million at the time of the High Court case in 2009 but, without determining the value of those now, it was clear there had been “a radical change” in circumstances since. On the evidence, it was apparent the case would have to be returned to the High Court to order proper provision “in a just manner”.

The High Court should consider the changed circumstances since the separation agreement, including the woman had suffered an illness and could not work and the “dramatic” fall in value of the man’s assets. The High Court erred in directing the man to pay €1 million for a second house and a €600,000 capital sum for her own use.

Given the woman’s illness, there was no error in ordering increased maintenance as there was a deficiency in the initial provision for maintenance and security, she said. However, the overall quantum of maintenance and financial provision into the future ordered by the High Court was excessive.