[2018] IEHC 567
[2007 No. 50 M.]
IN THE MATTER OF THE JUDICAL SEPARATION AND
FAMILY
REFORM ACT, 1989 AND IN THE MATTER OF THE
FAMILY
LAW ACT, 1995 AS AMENDED BY THE
FAMILY
LAW (
DIVORCE)
ACT, 1996 A., B.,
C.
AND
D.,
PERSONAL REPRESENTATIVES AND EXECUTORS OF THE ESTATE OF E.
F.,
DECEASED
APPLICANTS
AND
G.H.
RESPONDENT
JUDGMENT of Ms. Justice Reynolds
delivered
on the 25th
day
of June, 2018 1. This matter
comes
before the
Court
by
way
of notice of motion brought by one of the executors of the estate of the late E.
F.
with
the
consent
of the
co-executors,
seeking to enforce the payment of a lump sum order
due
and owing on
foot
of the settlement entered into between the respondent and the late E.
F.
on the 11th June, 2008 and made an Order of the
Court
on the 12th June, 2008.
2. A subsequent motion
was
brought by the respondent seeking to
discharge
that part of the Order
dated
the 12th June, 2008, providing that neither party shall apply
for
a variation of the amount of the sums payable on
foot
of the said Order, pursuant to s. 18 of the
Family
Law Act, 1995 and
further
seeking to
discharge
the balance of para. 4 of the said settlement on terms as entered into and agreed as between the parties to the
within
proceedings.
Background
3. The respondent and the
deceased
were
married in 1992. There are two
children
of the marriage: O. aged 21 years and P. aged 17 years respectively.
4. The marriage between the parties broke
down
and the parties obtained a
decree
of judicial separation pursuant to the Order made on the 12th June, 2008.
5. The said Order of the High
Court
provided, inter alia , as
follows:-
6. The
first
payment of €1 million
was
discharged
by the respondent and the balance of €6.65 million has not been paid, in
consequence
whereof
the proceedings herein have now issued.
7. The late E.
F.
died
in 2008 and the two surviving
children
are the principal beneficiaries of the Trust
created
by the Last
Will
and Testament of the
deceased.
8. A grant of probate
was
extracted in respect of the said
Will
in 2010.
9. Since that time, the parties to the proceedings have sought to negotiate a resolution of matters between them having regard to the
fact
that the said sum remains
due
and owing.
10. It is
common
case
that
full
financial
disclosure
was
made by the parties
with
the assistance of
financial
advisors at the time the
Consent
Order
was
entered into.
11. The terms of settlement
were
premised on an assessment of the respondent's personal
wealth
which
was
almost exclusively reliant on assumed property values, both in respect of properties held in
corporate
structures and those held personally by the respondent.
12. Unfortunately, the said settlement
coincided
with
the beginning of the
worldwide
economic
crash
and the
collapse
of property markets and banking systems, thereby undermining the entire premise of the respondent's assumed
wealth.
13. In the
circumstances,
the applicants have sought to meet their obligations to try to recover the money
due
and owing pursuant to the said Order. However, it is
clear
that there is an acceptance by the applicants that the respondent's
financial
circumstances
are not
what
they
were
in 2008.
Further,
it is agreed by all parties that it
would
be
contrary
to the interests of the
children
if the applicants
were
to rigorously pursue a
forced
realisation of the respondent's assets to recover the sums
due.
14.
Following
protracted negotiations between the parties, and
further
in
circumstances
where
taxation and actuarial advice has been sought, the parties have now reached an accommodation (hereinafter referred to as "the Agreement")
which
provides as
follows:-
"The respondent to pay a lump sum of €10,590,000.00 on his 104th birthday, or on the
day
before his
death,
if same occurs prior."
15. It is
clear
that all parties are satisfied that the said Agreement meets the obligations made pursuant to the said settlement and acknowledges the altered
financial
circumstances
of the respondent.
16. Since the
death
of the late E.
F.,
the respondent has sold the
former
family
home situate in
W.
and now resides in R.
with
the two
dependent
children
of the marriage.
17. It
was
known at the time of the settlement that the
deceased
was
suffering
from
an illness and that her prognosis
was
uncertain.
18. The settlement entered into between the parties in 2008
contemplated
that their heirs, executors or assignees
would
be
charged
with
implementing the agreement. Paragraph 17 of the settlement provides as
follows:-
"17. In the event of the
death
of either party prior to the
completion
of
capital
payments and
consequential
property adjustment orders and
declarations
specified herein, (and in particular paras. 4, 5, 6, 7, 8, 9 and 10 hereof) they hereby irrevocably instruct their executors, heirs and assignees to
do
all acts and make all payments necessary to
fully
implement this agreement. The surviving party agrees to take all steps and
do
such acts and make all payments
due
under this agreement to the estate of the
decreased
party as thought that party survived."
19. Paragraph 23
further
provided as
follows:-
"23. The
within
agreement is accepted by the parties in
full
and
final
settlement of any and all
claims
which
either party now advances or may seek to advance in the
future
against the other. Both parties
declare
that this agreement makes "proper provision"
for
the purposes of any
further
divorce
application. These terms shall bind the parties in the event of a
future
divorce
application; no
further
ancillary relief shall be granted to either party
following
any such
decree
save
for
mutual blocking orders pursuant to s. 18(10) of the Act of 1996 and any orders necessary to
continue
this agreement in effect
without
prejudice to the right of either party to seek to review the periodical payments order."
20. The parties
clearly
intended that the settlement brought an end to their
financial
obligations to each other.
21. As already stated,
within
months of the settlement being entered into between the parties, the global
collapse
in
financial
markets and property values occurred, thereby greatly
diminishing
the value of the assets held by the respondent at that time.
Issues
22.
Clearly
there is an obligation on the executors of the estate to
collect
the assets of
deceased,
one of those assets being the lump sum payment
due
to the estate on
foot
of the settlement agreement.
23. However, it is accepted by all parties that the executors are not in any better position than the
deceased
would
have been in to resist an application by the respondent
for
a variation of the Order made on
foot
of the
consent,
despite
the
full
and
final
nature of the settlement.
24. The law relating to Judicial Separation and
Divorce
involves the
court
ensuring a
continuance
of proper provision
for
the parties in granting the said Order. However, the structure of the
Family
Law Act, 1995 and the
Family
Law (
Divorce)
Act, 1996 and the resultant
case
law
from
the Superior
Courts
make it
clear
that
when
asked to review or reassess arrangements
which
were
assumed or imposed in the past, the
Court
must ensure that the provision is proper in the altered
circumstances
and if it is not, must move to address that imbalance.
25. Section 18 of the
Family
Law Act, 1995, being the section that provides
for
variation or
discharge
of various orders, specifically provides
for
the possibility of new or unforeseen
circumstances
which
may arise in the lives of the parties. In providing
for
the review of past orders, the section allows
for
new evidence or
changed
circumstances
to be relied upon by a party
which
were
unknown or unanticipated at the time of the making of the original Order.
26. In the instant
case,
the application being made by the parties is a
consent
application having regard to the new and unforeseen
change
in the
financial
circumstances
of the respondent herein. It is submitted that the terms of the
consent
Order
do
not oust the right and
duty
of the
Court
to enquire
whether
proper provision exists.
Further,
it is submitted that it is open to the parties to agree to
waive
or not enforce against the other, any part of that settlement against the other.
The Law
27. Section 18(2) of the
Family
Law Act, 1995, provides as
follows:-
"Subject to the provisions of this section and s. 16 and any restriction pursuant to s. 9(2) and
without
prejudice to s. 11(2)(
d),
the
court
may, on application to it in that behalf by either of the spouses
concerned
or, in the
case
of the
death
of either of the spouses, by any other person
who,
in the opinion of the
court,
has a sufficient interest in the matter or by a person on behalf of a
dependent
member of the
family
concerned,
if it
considers
it proper to
do
so having regard to any
change
in the
circumstances
of the
case
and to any new evidence, by order vary or
discharge
an order to
which
this section applies, suspend any provision of such an order or any provision of such an order temporarily, revive the operation of such an order or provision so suspended,
further
vary an order previously varied under this section or
further
suspend or revive the operation of an order or provision previously suspended or revived under this section; and,
without
prejudice to the generality of the
foregoing,
an order under this section may require the
divesting
of any property vested in a person under or by virtue of an order to
which
this section applies."
28. It is
clear
from
the said provision that the respondent herein is entitled to bring a variation application and that the Trustees are the proper respondents to same.
29. The issue
which
arises is
whether
the Order is an order amenable to variation pursuant to s. 18 of the
Family
Law Act, 1995.
30. The Order under
consideration
in this application is one made pursuant to s. 8(1) of the
Family
Law Act, 1995. It is a lump sum Order pursuant to subs. 1(
c)
of s. 8
which
is payable in two instalments.
Relevant Authorities
31. In
D.T.
v.
C.T.
[2002] 3 IR 334, Keane
C.J.
stated as
follows:-
"It has not been suggested that the trial judge erred in principle in
deciding
to approach this
case
on the basis of the payment of a lump sum to the respondent
without
any provision
for
periodic payments by
way
of maintenance. In this
context,
it
would
appear that, having regard to the provisions of s. 22 of the Act of 1996, neither party
will
be entitled to a variation of the amount of the lump sum itself, even should
circumstances
change:
the extent of the permitted variation under s. 22(1)(
d)
would
appear to be as to the payment of the sum by instalments. Similarly, it
will
not be possible
for
the
court
on the application of the respondent to provide
for
a periodic sum by
way
of maintenance, since the power of the
court
under s. 22(2) is
confined
to varying or
discharging
an order
for
periodic payments already made."
32. In M.
D.
v. E.H.
D.
[2012] IEHC 580,
White
J. in
following
the rationale in the
D.T
.
case
ruled that "
for
a lump sum order to be reviewed the order has to be an instalment order".
33. It is
follows
that a once off lump sum order
cannot
be varied under s. 18,
whereas
a lump sum payable in instalments
can
be. It is
clear
that
what
was
anticipated
was
that orders
capable
of variation are ones
which
by their nature have the
feature
of ongoing obligation such as periodic maintenance payments. Once off payments or transfers of property
cannot
be so easily unravelled once
completed.
34. In interpreting s. 18, the
court
has to be mindful of its obligation to ensure that proper provision remains in place.
35. It is accepted that there is no reported Irish authority
where
the power of the
court
to make orders in judicial separation or
family
law proceedings
following
the
death
of one of the parties has been
considered.
36. However, there are a number of authorities
which
consider
circumstances
where
the parties have arrived at a settlement or an order of the
court
has been made, and unforeseen events occur after the making of the order arising
from
which
an application is made
where
one party asserts that these events invalidate the entire basis of the order.
37. In
C.O'C.
v.
D.O'C
. [2009] IEHC 249, the High
Court
considered
an application to vary the terms of a
consent
order and having
considered
all of the evidence in the
case,
Dunne
J.
was
satisfied that the
court
had jurisdiction to
consider
applications
for
further
property adjustment orders in the
context
of unforeseen events.
38. Similarly, in this
case
it is submitted that the
court
has jurisdiction to
consider
an application
for
the variation of the instalment lump sum payment pursuant to the specific provisions of s. 18 and entitles the
court
to make orders after the
death
of one of the parties.
Conclusion
39. Having
considered
the
circumstances
of the instant
case,
I am satisfied that it
would
be
fundamentally
unjust and inequitable to seek to enforce the Order of the 12th June, 2008.
Further,
this
Court
is mindful of its
duty
to ensure that adequate and proper provision is made not only
for
the parties but
for
the
children
of the marriage and
will therefore grant the Orders sought.