The Supreme Court judgment yesterday on 'big money' divorces will set the standard for future cases, writes Carol Coulter, Legal Affairs Correspondent
As more and more people benefited from the Celtic Tiger, and a proportion of them also experienced marital breakdown, there has been an increase in the number of family law cases where family assets run to millions of pounds. Many ended in negotiated settlements involving the transfer of very large sums. But lawyers acting in them have so far been operating without a compass indicating what the Supreme Court's view of such cases would be.
Irish divorce legislation, drawn up on the basis of the constitutional amendment passed in 1995, gave no guidelines on how such large sums of money were to be disposed of when a marriage broke down. The law provides that "proper provision" be made for both spouses, and lists various criteria to be considered, but it does not define what "proper provision" is.
The criteria included the earning capacity of each spouse, the number of dependent children, the contribution both spouses had made to the marriage both inside and outside the home, and a host of others. But nowhere was it stated, for example, that there should be an equal division of the assets, or, on the other hand, that "proper provision" meant enough to live on and no more.
In most divorce cases the issue does not arise, as the joint resources of the couple would be stretched to provide for two households, and the court would have to decide how best these resources should be allocated to provide, especially, for a dependent spouse and children.
However, when millions are involved, clearly each spouse can be provided with enough to live on comfortably and a lot of money will still be left over. It can be attractive to both parties here to have a "clean break", based on a substantial lump-sum, in the hope that that will end the matter.
But this is not permitted under Irish law, which allows spouses to return to court for adjustments in any provisions made, if this is justified by circumstances. As Ms Justice McGuinness said in relation to a previous case: "The Oireachtas has made it clear that a 'clean break' situation is not to be sought and that, if anything, financial finality is virtually to be prevented."
However, yesterday's judgment modifies this considerably. Mr Justice Keane explicitly disagreed with Ms Justice McGuinness and stressed the need to look at the individual circumstances of each case. Ms Justice Denham stressed the desirability of certainty and finality in any litigation.
In this case, Mr Justice Keane upheld the award of £5 million to the wife, pointing out that this, invested wisely, would give her financial security for the rest of her life. This award had been made by the High Court instead of maintenance, or periodic, payments.
It is very unlikely that a court would entertain a wife who had received such a settlement looking for more money later. So, in practical terms, this amounts to a "clean break", even though it is not provided for in law.
The basis of the calculation of the lump-sum will also be of interest to those negotiating similar cases in the future. The total assets of the husband were calcuated at £15 million. The wife's assets were about £1.5 million. He earned about £350,000 in his solicitor's practice.
She was a doctor, but, because she had devoted herself to rearing the family and, for a time, helping out in her husband's business, she had not developed her career.
The Supreme Court stressed the importance of her support to her husband as he built his career and his wealth, on which his property of £15 million was based. This had deprived her of the opportunity to build up her own career. Therefore, she was entitled to approximately one-third of the total assets. This gives substantial monetary recognition to the role of wives in supporting professionals or businessmen.
This rule of thumb is likely to now be the benchmark for such "big money" cases in the future. But it is only a guide.
Each case will still have to be considered on the individual facts, with no certainty as to how the law will be interpreted. There will still be a lot of work for lawyers.