M.G. (applicant) v M.G. (respondent)

Family Law - Divorce - Circumstances to which the court is to have regard when making ancillary orders - Criteria to apply when having regard to existing separation agreement - Whether alterations should be made to existing separation agreement - Family Law (Divorce) Act 1996, section 20 - Family Law Act 1995, section 20 - Divorce Act (Canada) 1985, section 17.

The Circuit Family Court, Dublin Circuit (before His Honour Judge John F. Buckley); judgment delivered 25 July 2000.

Where the parties (to proceedings involving the making of ancillary orders to a divorce) are well-educated intelligent persons, who have had the benefit of competent legal advice before entering into a separation agreement which is of recent date, the court should be slow to make any radical alterations to the terms of such agreement unless there have been sufficient changes in the situations of the parties.

The Circuit Court so held in directing that on any future sale of the family home the respondent should pay the applicant a sum equal to 10 per cent of the net sale price, after all encumbrances and costs of the sale.

Tabitha Wood BL for the applicant; Catherine Forde BL for the respondent.

His Honour Judge Buckley said that the parties had been married in 1975 and there were three children of the marriage attending schools. The parties had entered into a separation agreement on 6 April 1995 whereby the applicant agreed to transfer his interest in the family home to the respondent for £20,000 payable in the future. The house had then a gross value of £200,000 and a net value of £100,000. The applicant also agreed to pay maintenance for the children. In 1996 the applicant sought the respondent's consent to a divorce in the Dominican Republic and in consideration of her consent the applicant waived his entitlement to the £20,000 in a supplemental separation agreement of 25 March 1996. This sum was instead to be held by the respondent in trust for the three children. The applicant subsequently remarried.

In February 1998 the applicant lost his job and had since found it difficult to obtain employment other than short-term contracts. He was then entitled only to unemployment assistance and was unable to pay the full amount of maintenance under the separation agreement or the premiums on a policy subsequent to the supplemental agreement. On his obtaining employment he recommenced payment of maintenance and also paid some of the arrears of maintenance which had built up.

Judge Buckley examined section 20 of the Family Law (Divorce) Act 1996 which provides for the making of ancillary orders. Section 20(1) requires the court to ensure that such provision, as the court considers proper having regard to the circumstances, exists or will be made for the spouses and any dependent member of the family concerned. Sections 20(2) and 20(4) set out a number of factors to which the court is required to have regard. Section 20(3) requires the court to have regard to the provisions of any separation agreement. Section 20(5) provides that the court shall not make an order under section 20(1) unless it is in the interests of justice.

Judge Buckley said that there had only been a few written judgments dealing with the way in which a court should apply section 20 and in particular section 20(3). He said that many cases settle and in those that do come before the courts the facts vary enormously. He said that the provisions of section 20 are very similar to those of section 20 of the Family Law Act 1995 which prescribes the factors to which the court is to have regard when granting ancillary relief to a decree of judicial separation. He said that it would be reasonable to assume that these factors are in the minds of the parties' legal advisers when negotiating separation agreements.

Judge Buckley noted that the words "having regard" are used in four of the five subsections of section 20 but in subsection (3) no indication is given as to the factors to be considered. He said that the comments of Megarry VC in English Exporters (London) Ltd v Eldonwall Ltd (1973) Ch 415 were appropriate: "the term `have regard' is almost of necessity bound to create difficulties. How much regard is to be had and what weight is to be attached to the regard when it has been had?"

Judge Buckley said that at a recent seminar of Circuit Judges on Family Law it was suggested that some guidance might be obtained from the Canadian legislation as it lays down criteria which the court is to apply. Section 17(4) of the Canadian Divorce Act 1985 provides that before making a variation order the court should be satisfied that there has been a change in the circumstances of either former spouse or any child of the marriage for whom support is provided. Section 17(10) provides that any variation subsequent to the expiration of a previous order should not be made unless it is necessary to relieve economic hardship arising from a change (as defined) that is related to the marriage and that such changed circumstances would have given rise to a different original order. Judge Buckley stated that the jurisprudence of the Supreme Court of Canada provides examples of how that court has applied the criteria set out in section 17 and he cited two Canadian cases.

In Willick v Willick 119 DLR 4th 405, it was stated that "sufficiency of the change must be defined in terms of the parties overall financial situation . . . The fact that a change in circumstances was objectively foreseeable does not necessarily mean that it was contemplated by the parties . . . Not every change will justify variation. In deciding whether conditions for variation exist, it is common ground that the change must be a material change of circumstance. This means a change such that, if known at the time would likely have resulted in different terms."

In G(L) v B(G) 127 DLR 385 it was stated that the overriding policy should be to encourage people to take responsibility for their decisions but that "the weight to be given to agreements will depend, first on the extent to which the agreement reflects the principles and objectives stated in section 17 of the 1985 Act and second on the scope and nature of the change which has occurred taking into account all the circumstances of the parties".

Judge Buckley said that in applying our judicial separation law the Supreme Court, in a number of cases, urged the need for finality in future arrangements for the family, while the divorce legislation does not permit the application of a "clean break" regime. The case law of the Supreme Court of Canada requires that there be a "sufficient change" which must be defined in terms of the parties' overall financial situation and the fact that a change was objectively foreseeable does not necessarily mean that it was contemplated by the parties.

In this case, Judge Buckley said that the original separation agreement was entered into on the basis of figures for the family assets and liabilities prepared by the applicant which differed from the figures now presented. Judge Buckley stated that where the parties are, as they are in this case, well-educated intelligent persons, who have had the benefit of competent legal advice before entering into a separation agreement which is of recent date, the court should be slow to make any radical alterations to the terms of such agreement unless there have been sufficient changes in the situations of the parties. He said that the parties and their children hopefully would have adjusted to the new family regime established by the agreements. To the extent that there is a conflict between the statutory, and indeed constitutional, obligations imposed on a court to ensure that proper provision is made for the children of divorcing parents and the statutory obligation to consider every aspect of the parties' financial and family situation before granting the decree while "having regard" for the existing separation agreement, Judge Buckley considered that the court should be slow to order any changes which would affect the stability of the children's home life which hopefully would have been achieved following the separation agreement.

In this case the applicant sought the sale of the family home and only withdrew this claim during the hearing. Judge Buckley said that it would have been wholly inappropriate to oblige the respondent and the children to leave their family home in order to provide a cash payment for the applicant, which payment he had ceded in the supplemental agreement. Judge Buckley looked at the changes that took place after the first separation agreement. The first change was the applicant's desire to get a divorce and re-marry which led to the supplemental agreement. The second was the loss of the applicant's job leading to his further employment difficulties. The respondent's income did not alter significantly save that there was a shortfall in maintenance between 1998 and 1999. The third change was that the value of the family home did increase substantially. Judge Buckley stated that the seeking of a decree of divorce in Ireland by the applicant was certainly foreseeable at the time of separation. The loss by the applicant of his job might have been reasonably foreseeable as he had suffered two significant periods of unemployment during the marriage. Another change was that the applicant now lived outside Ireland with his new partner, who had lost her job on health grounds. The respondent had continued to live in the family home maintaining it as a secure base for the children and had been solely responsible for their welfare but had found her finances to be tight. The market value of the family home was now believed to be £800,000 with a mortgage debt of over £50,000.

Judge Buckley took all those matters into account in considering what ancillary orders he should make in order to provide proper provision for the spouses and children. He concluded that, with one exception, he should not make any alteration to the financial provisions which were made in the two agreements. The applicant should continue to have an obligation to pay maintenance for the children at the agreed rate. The one change Judge Buckley proposed to make was in relation to the family home. He did not think that it could have been contemplated by the parties at the time of the supplemental agreement that there would be such a remarkable increase in residential property values between the date of the supplemental agreement and the date of trial. He said that if it had been contemplated he doubted whether the applicant would have so readily surrendered all his interest in the family home. Judge Buckley directed that on any future sale of the family home the respondent should pay the applicant a sum equal to 10 per cent of the net sale price, after all encumbrances and costs of the sale had been deducted. He stated that the applicant was not to have any equitable estate in the property.

Solicitors: Ahern O'Shea & Co (Dublin) for the applicant, Mary O'Connor & Co (Dublin) for the respondent.