D v D(3)

• Jurisdiction: Ireland
• Judge: Mr Justice Max Barrett
• Judgment Date: 29 December 2023
• Neutral Citation: [2023] IEHC 766
• Court: High Court
• Docket Number: [2021 No. 86 M]

In the Matter of the Judicial Separation and Family Law Reform Act 1989,

In the Matter of the Family Law Act 1995, As Amended

Between

D

Applicant

and

D(3)

Respondent

[2023] IEHC 766

[2021 No. 86 M]

THE HIGH COURT

Divorce – Judicial separation – Variation of maintenance – Respondent seeking variation of maintenance – Whether the fact of the respondent having been adjudged bankrupt in and of itself gave ground for acceding to the application

Facts: The respondent applied to the High Court seeking variation of maintenance. The respondent considered that Barrett J got matters wrong in his original judgment (following on his untruthful evidence to the court). The respondent’s self-declaration of bankruptcy (leading to the near-automatic adjudication of bankruptcy prior to the involvement of the trustee in bankruptcy) offered a basis for a variation of the payment of a maintenance order with which (a) he had never complied, and (b) in the circumstances, he claimed that it was impossible to comply. The respondent sought the variation of the existing maintenance order under s. 18 of the Family Law Act 1995.

Held by Barrett J that, notwithstanding the structure of the bankruptcy process in the respondent’s home country, it was the case that he had been adjudicated bankrupt (albeit subject to caveats as to what precisely this involved in the respondent’s home country and the extent to which it relied on the truthfulness of what the respondent had stated to the insolvency authorities in his home country). In all the circumstances presenting, it seemed to Barrett J that the fairest way to proceed for all concerned was that he would not vary the amount of the respondent’s outstanding maintenance liabilities. However, in acknowledgment of the details that the respondent appeared to have provided to his home country insolvency service, Barrett J held that he would suspend (i.e. not extinguish) the need to pay more than €3,000 per month for the duration of the bankruptcy process (backdated to the commencement of that process in March 2023) or for a period of six months from the date of the judgment, whichever was shorter (the Suspended Period); that monthly figure of €3,000 was an amount which the respondent appeared to find affordable. At the end of the Suspended Period, Barrett J held that he would consider matters afresh. Barrett J held that he was not extinguishing any unmet liabilities under the maintenance order; he was merely suspending for a short period when they fall to be paid so as to allow the bankruptcy process to work through to completion and/or so that he could see how matters were progressing six months from the date of the judgment, whichever was the shorter period.

Barrett J held that he would not vary the previously ordered liability for the respondent to meet his fair share of any medical or dental needs with which his children present; nor would Barrett J suspend the respondent’s liability to meet those expenses (duly vouched). Even in the respondent’s affidavit of means – so taking his case on his word – Barrett J found that there seemed to be some surplus cash floating around. For example, Barrett J did not believe by reference to the one quarter’s worth of bills put before him that the respondent was spending €250 p.m. on electricity, the monthly entertainment/socialising budget of €100 could be dipped into in any one month, and one or two ferry trips could be avoided (saving €200 a go). Barrett J held that the health and dental health care of the respondent’s children must take priority in terms of where their best interests lie.

Application refused.

Summary

In this judgment, I indicate how I will proceed following on an application for variation of maintenance.

JUDGMENT of Mr Justice Max Barrett delivered on 29th December 2023.

1 . I originally gave judgment in this case in January 2023. This followed a hearing at which Mr D gave evidence that, as I said in my original judgment, was, I regret to observe, ‘patently false’. The difficulty with misrepresenting oneself to a court is that so much of what happens in court relies on truthfulness. Once misrepresentations are discovered, a court has to take every care that it is not misled by the party who has been caught out in misrepresentations.

2 . For the benefit of the parties I note that the anonymised terms used in this judgment have the same meaning that they had in my original judgment.

3 . Mr D behaved badly as a director of Company A. As I said in my original judgment:

“3. Regrettably, trouble may lie ahead for Mr D as regards his actions as a director of [Company A]. It is clear from the evidence that he has been using [Company A]'s monies as something a privy purse, latterly spending large untaxed amounts of the company's funds on what might euphemistically be described as ‘personal entertainment’. Mr D accepts that this expenditure occurred and has suggested that it has ceased (though, as will be clear from the next paragraph below, it has not). This usage by Mr D of [Company A]'s monies has not been accounted for properly in [Company A]'s account-books. Consequently, the annual accounts filed with [Country A]'s equivalent of the Companies Registration Office do not correctly represent [Company A]'s financial position. Mr D says that he intends now to approach the authorities in [Country A] and tell them the truth of what he has done. I do not know if he will or not. What I do know is that he has been saying this since at least August 2021 and has done nothing about it. If the authorities of [Country A] are ever approached or otherwise become interested in the affairs of [Company A], Ms D may well have reason to be thankful in the years ahead that she was never a director of [Company A].

4. Although Mr D maintained in his questioning of Mr Harding (a forensic accountant called by Ms D) that he had ceased to use [Company A]'s proceeds as he had previously done, Mr Harding was able to show that in a roughly 4-month period across April to August 2022 Mr D's ‘personal entertainment’ expenditure (using primarily or exclusively untaxed company monies) has continued unabated. Thus, Mr. Harding gave evidence that the average amount of what he called “anomalous expenditure” (revenue authorities and lawyers might use alternative terminology) was close on €16k per month (yielding an annualised figure of about €190k). I note too (with regret) that the irregular accounting in [Company A] only came to light due to queries raised by Mr Harding and the details of same were never volunteered by Mr D. I must also regretfully observe that it is clear from the evidence before me that Mr D's affidavits of means of 15th November 2021 and 15th November 2022 contain falsehoods (especially as regards Schedule 2 Income and Schedule 4 expenditure). It is very hard as a court to achieve an optimally fair outcome between parties when one of the parties presents evidence that is patently wrong.

5. In passing, though the issue was discussed when the financial evidence was given in this case, I do not see that I need to get into how [Company A]'s affairs (or indeed Mr Ds personal tax situation) might be regularised with the authorities of [Country A]. They should of course be regularised and, for the avoidance of doubt, I disapprove of the fact that (i) taxes owed in [Country A] have not duly been paid in [Country A] to this time, (ii) Mr D has used company funds as he has, potentially to the detriment of the creditors of [Company A] and of course with an impact on the accounted-for profits of [Company A], and (iii) Mr D has allowed incorrect accounts to be filed with [Company A]'s equivalent of the Companies Registration Office.”

4 . At the original hearing before me, Mr D expressed remorse for the manner in which he had spent Company A's monies.

5 . It was my understanding from the original hearing that Mr D intended to rectify matters imminently with the authorities in his home country. 1 This he has not yet done and I am concerned that he may be seeking to use the in camera nature of these proceedings to conceal his corporate and revenue wrongdoings in such a manner as to impede the proper and informed course of justice, which is not of course what the in camera rule is designed to achieve. I will return to this concern later below. First, I turn to a brief consideration of what Mr D has done in terms of rectifying his affairs since my original judgment in this matter.

6 . Following on that judgment, Mr D has had himself declared bankrupt in Mr D's home country. As I understand matters from the way in which they have been sketched in the evidence and submissions before me, the way in which this process occurs in Mr D's home country is that (i) one applies for bankruptcy, (ii) within a short period thereafter, one is adjudged bankrupt by that country's insolvency service (possibly after some questions have been raised by the adjudicator, an employee of the insolvency service), (iii) the official receiver thereafter seeks more information about the bankrupt's assets and income, etc., and (iv) (I presume) such assets and income as are identified are used in (part-) discharge of the bankrupt's debts.

7 . Two points arise. First, the act of being adjudged bankrupt in Mr D's home country involves a self-reporting of one's assets and liabilities, here from someone whom, I regret to observe, has not hesitated historically to provide evidence to me that is patently false. Second, as I stated in my second judgment in this matter (which issued following a contempt application made by Ms D), “ Like counsel for Ms D, it is not clear to me how Mr D has made some of the representations that Mr D appears to have made to the insolvency service of Country A.”

8 . I am told that as part of the bankruptcy process, Mr D's bankruptcy file will be passed to the tax authorities of his home country, i.e. he no...