C (S) v B (J)
| Jurisdiction | Ireland |
| Judge | Ms. Justice Bronagh O'Hanlon |
| Judgment Date | 08 May 2015 |
| Neutral Citation | [2015] IEHC 537 |
| Court | High Court |
| Date | 08 May 2015 |
[2015] IEHC 537
THE HIGH COURT
BETWEEN:
Family – Divorce – The Family Law (Divorce) Act 1996 – O. 70A, r. 6 of the Rules of the Superior Courts, 1986 – Discovery of documents – Duty of disclosure
Facts: In the present divorce proceedings, the applicant sought an order directing the respondent to produce certain categories of documents in lieu of the compliance of an earlier order of the Court. The applicant contended that the true disclosure of the financial status of the respondent was necessary for the Court to make proper provision for the applicant and the dependent children of the parties as the status of the respondent was not in unison with the financial disclosure made by him that led to the execution of the deed of separation.
Ms. Justice Bronagh O'Hanlon granted an order to the applicant in that the Court directed the respondent to provide necessary financial disclosure pertaining to his interests in the subject Trust and other relevant documents to the extent that it did not concern the third parties. The Court observed that it had jurisdiction to grant a decree of divorce upon being satisfied that the particular spouses had lived separately, that there was no possibility of their union and that proper provisions for each spouse and dependent children were made. The Court held that parties were obligated under s. 38 (6) of the Family Law (Divorce) Act 1996 and also under o. 70A, r. 6 of the Rules of the Superior Courts, 1986 to disclose their property and income. The Court held that it had a quasi-inquisitorial role and could make relevant inquiries of its own motion, if necessary. The Court opined that parties had binary duty of disclosure to each other and also to the Court to give accurate information pertaining to their sources of income.
JUDGMENT of Ms. Justice Bronagh O'Hanlon delivered on the 8th day of May, 2015.
1. The parties were married on the 25th May, 2001. There are three dependent children of the marriage, namely, "S", "T" and "F"
2. During the marriage of the parties, the "B" Trust ("the Trust") was established to hold shares in "AFS" Ltd. The respondent was the settlor of the Trust and the trustees are "FTC" Ltd. The respondent transferred his ten percent shareholding in "AFS" to the Trust. The respondent retained one "AFS" share. In return, the Trust provided a promissory note to the respondent in the sum of €3.5 million. The original beneficiaries of the Trust were the applicant, the respondent and their children.
3. The parties separated in June 2009. At that stage, the family assets were as follows:
a (a). The "B" Trust.
b (b). A property in Munster, which was held in the joint names of the parties.
c (c). A property in Leinster, which was held in the respondent's sole name and was subject to a mortgage.
d (d). An apartment which the respondent had purchased in a foreign jurisdiction, which had loans related to its purchase.
e (e). A one-third interest in a property in Leinster as tenants in common, the said interest was held in the respondent's name.
f (f). A one-sixth interest in a holiday home in Munster, the said interest was held in the respondent's name.
4. On the 3 rd December, 2010, the parties executed a deed of separation. The respondent committed to discharging the mortgages on the two properties located in Munster by lump sum payments, which amounted to €540,000.00 approximately. The respondent also agreed to put in place an education fund in the maximum sum of €140,000.00 for the children. In addition, the respondent agreed to pay €1,600.00 in maintenance per month in support of the three dependent children, along with an annual payment of €6,000.00 for the children's primary school and related expenses. In turn, the applicant agreed to leave the "B" Trust and to surrender all claims on the Trust and its assets. The respondent continued as a beneficiary of the promissory note, the properties in Leinster, the holiday home in Munster, and the apartment in a foreign jurisdiction. The deed of separation outlined that there was no spousal maintenance payable by the respondent to the applicant.
5. In the present application, the applicant claims that prior to the execution of the deed of separation on the 3 rd December, 2010, the respondent valued the "A Ltd" shares (held by the "B" Family Trust) at €800,000.00 and claimed that "A Ltd" suffered a loss of $400,000.00. The applicant claims that as a result of these representations concerning the "A" shares and the future of the "A" Group of companies, she agreed to the terms of the deed of separation. Moreover, the applicant claims that the respondent failed to disclose the true extent of his financial circumstances prior to the execution of the deed of separation, and in particular, that the "A" group had entered into an agreement with "F" Ltd in October 2010. The applicant claims that the aforesaid agreement related to a multi-million dollar investment in "A" which had a significant impact on the value of the "A" shares held by the "B" Trust.
6. In March 2011, the respondent set up "D" Ltd. On the 28 th May 2014, the respondent swore an affidavit claiming that he had ceased all employment with "AFS(I)" Ltd (a subsidiary of AFS Ltd ) whereby "D" Ltd would provide consultancy services to "AFS(I)" Ltd. As outlined in his affidavit of means dated the 10 th December, 2013, and 10 th March, 2014, the respondent claimed that his only source of income (apart from rental income) was his salary from "D" Ltd.
7. On the 10 th May, 2011, the "B" Trust received the sum of $1.3 million in relation to the sale of "A" shares. On the 13 th June, 2011, the applicant claims that the respondent informed her that the Trust had sold its "A" shares and the respondent would receive the net repayment of monies in the sum of €826,882.00, owing on foot of the promissory note. The applicant highlights that during this period, the respondent provided the applicant with a bank statement relating to the bank account opened to receive the monies from the sale of the "A" shares. In addition, the applicant submits that the respondent did not have a difficulty in accessing internal documentation relating to the Trust from the trustees, including bank statements, during this period.
8. In July 2013, the respondent and his partner Ms. "R", purchased a property in Leinster for the sum of €1,150,000.00. The respondent and Ms. "R" obtained a mortgage for the said property in the sum of €972,780.28 from Allied Irish Bank (AIB).
9. In or around 2013, the respondent sought the applicant's agreement to a consent divorce. The respondent also sought a deed of waiver from the applicant so as to sell the Leinster property. At this time, the applicant claims to have had serious reservations concerning the provision made for her and the dependent children in the deed of separation. Following the deed of separation of the parties, the applicant claims that the respondent's lifestyle was not in unison with the financial disclosure he made leading up to the execution of the deed of separation on the 3 rd December, 2010.
10. On the 14 th November, 2013, the applicant issued the within divorce proceedings.
11. On the 19 th December, 2013, the applicant sought financial documentation and information. In particular, the applicant sought the following documentation/information:
a (a). A copy of the mortgage application submitted by the respondent to AIB concerning the Leinster property together with all documents submitted to the bank by the respondent.
b (b). Documentation to vouch the respondent's income from all sources including basic income, bonuses, profit share and expenses.
c (c). Documentation relating to the "B" Trust to include its assets and its dealings, including the sale of the "A" shares.
d (d). Documentation including financial statements relating to the "A" Group of companies and "D" Ltd.
e (e). Copies of statements relating to all the respondent's bank accounts and credit card accounts in this jurisdiction and abroad.
12. On the 10 th March, 2014, the respondent swore an affidavit which disclosed that, in fact, the "B" Trust had only sold three percent of the "A" shares. The applicant claims that as a result of that disclosure, she became aware that the respondent had undervalued the "A" shares prior to the execution of the deed of separation. The applicant claims that the Trust only sold a 2.62 percent stake in the "A" group, and in turn, the Trust received $1.3 million for the sale of only 314.9 of its 1199 shares. On assessment of this transaction, the applicant claims that the "A" shares were worth a minimum of $5 million at the time of the deed of separation, and not the sum of €800,000.00 as represented.
13. The applicant claims that the respondent provided some limited vouching documentation on the 18 th March, 2014, but failed to provide any P60s, tax returns and assessments, audited accounts and financial statements for "D" Ltd, financial statements relating to the "A" companies, statements relating to all his bank accounts and documentation relating to the Trust. The applicant alleges that the respondent failed to disclose an accurate account of his financial position prior to the execution of the aforementioned deed of separation. The respondent did provide the applicant with a copy of a loan agreement dated the 1 st September, 2012, which contracted a loan for the sum of €50,000.00 from "EAM" Ltd to the respondent.
14. On the 23 rd April, 2014, the respondent swore an affidavit...
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