A limited company could be restructured or even sold to make proper provision for a spouse following the breakdown of a marriage, according to the High Court.
In a recent judgment, Mr Justice Liam McKechnie said that as a matter or principle, "this court has jurisdiction over all the assets of both the applicant and respondent, including those held by the latter through the medium of a limited company, and can make use of them in the most appropriate manner feasible so as to make proper provision for the parties to this marriage".
If necessary, he said, this jurisdiction took precedence over any business decision made by a corporate entity such as a company.
"If there was no other way of achieving proper provision, I would not be dissuaded from exercising this jurisdiction, and if that involved a company restructure or even a sale, then so be it . . . Otherwise, I would simply be abdicating my duty and ceding my responsibility to one party of a marriage. That the court could never do," he said.
In the case in question, however, he did not consider such a drastic step to be necessary.
The case concerned a judicial separation between a man who controlled 99 per cent of a firm worth an estimated €10 million, which his wife had helped to build up and in which she had worked, as well as bringing up their family.
Mr Justice McKechnie was giving a second judgment in the case.
This followed a successful appeal by the husband to the Supreme Court of an earlier High Court judgment which ordered him to pay the wife €4 million for her share of the company, along with €500,000 for her share of the family home and €100,000 towards her legal costs.
The Supreme Court then referred the case back to the High Court, asking it to consider specifically how proper provision could be made for the wife, giving particular attention to the mechanism whereby the money would be extracted from the company and to the tax implications of taking out such a large amount of money.
The court held detailed evidence about the company, its transactions and assets, including the fact that it had bought extensive fixed assets between 2003 and the new hearing. This had reduced its cash reserves to €1.6 million from €3.7 million.
Mr Justice McKechnie said that this was clearly a successful company, which was likely to generate considerable income for the husband for the foreseeable future.
Evidence was heard from the company's financial controller of the difficulties the company would experience if large sums had to be taken out of it to pay the wife, in the light of the separation. He argued that the assets could not be disposed of if the company was to continue to trade.
"A comparable situation would not arise, or at least would be more readily capable of influence and perhaps challenge, if the asset was held not by a company, but by her husband personally," said Mr Justice McKechnie.
"In essence, by reason of this entity, the husband can make, or require to be made, decisions which can seriously affect what assets and in what form such assets might be available to the court when making proper provision . . .
"This court was left with the distinctly uneasy feeling [ that] the company had adopted a series of measures which considerably restricted what assets could readily be included in any assessment under section 6 of the 1995 Act [ dealing with 'proper provision']."
He then went on to state, as a matter of principle, that the court did have jurisdiction over the company's assets. He ordered the payment of €3.4 million to the wife, which includes €500,000 in cash and €400,000 in investments already paid, a pension contribution of €500,000, €1 million to be raised by a mortgage on the family home, which was retained by the husband, and a further €500,000 over four years.
She was also to receive €80,000 a year in maintenance until the age of 65.