Y(X) v Y(X)

• Jurisdiction: Ireland
• Judge: Mr. Justice Abbott
• Judgment Date: 14 July 2010
• Neutral Citation: [2010] IEHC 440
• Court: High Court
• Date: 14 July 2010

Y (X) v X (Y)

FAMILY LAW

IN THE MATTER OF THE JUDICIAL SEPARATION AND FAMILY LAW REFORM ACT 1989 AND,

IN THE MATTER OF THE FAMILY LAW ACT 1995

BETWEEN

XY

APPLICANT

AND

YX

RESPONDENT

[2010] IEHC 440

[No. 65 M/2007]

THE HIGH COURT

FAMILY LAW

Judicial separation

Proper provision - Maintenance - Division of assets - Substantial assets - Economic downturn - Substantial debts - Assets in negative equity - National Asset Management Agency (NAMA) - Family home held on trust - Whether both parties contributed equally to family welfare and resources - Whether applicant entitled to half of family assets - Personal guarantees given by respondent - Respondent's businesses unable to continue without support of banks or NAMA - Bankruptcy - Implications of bankruptcy and NAMA legislation - Whether court could set aside order obtained fraudulently and in bad faith for purpose of defeating creditors and not of making proper provision for spouse - Whether judgment mortgage ranked in priority to claim by spouse in judicial separation proceedings - Importance attached to protection of provision to be made by family law court - Duty of family law court to act with probity and only for purpose of making necessary provision - Property ordered to be charged as security for maintenance - Whether likely that court would declare charging of maintenance on unencumbered property a disposition to be void - Interests of justice - Division of speculative gains - In re Abbott (A Bankrupt) [1983] Ch 45; Hill v Haines [2008[ 2 WLR 1250 considered - Bankruptcy Act 1988 (No 27), s 59 - Judicial Separation and Family Law Reform Act 1989 (No 6), s 2 - Family Law Act 1995 (No 26), s 16 - National Asset Management Agency Act 2009 (No 34), s 211 - Relief granted (2007/65M - Abbott J - 14/07/2010) [2010] IEHC 440

Y(X) v X(Y)

Facts: The applicant wife and respondent husband were married in 1982. The parties agreed that the Court was satisfied on the evidence that each of them was entitled to a decree of judicial separation. The case involved very substantial assets and even more substantial debts, in that the assets of the parties were in negative equity. A major implication of the case was that the debts attaching to the vast majority of the assets of the husband would be taken over by the National Asset Management Agency, established under the National Asset Management Agency Act 2009. In 2007, it was presented that the assets of the husband amounted to several hundreds of millions of euro. Case management sessions held towards the end of 2009 sought a presentation of the assets of the husband in an orderly way to assist the Court. The Court considered the criteria set out in s. 16 Family Law Act 1995, as amended to make proper provision.

Held by Abbott J. that the Court would make an order for inter alia a decree of judicial separation, would make the applicant the object of the trusts of the settlement, would grant to the applicant an exclusive right of residence for life in the family home, would direct maintenance to her, periodical payment, and would grant a pension adjustment order. The Court would adjourn further consideration of the NAMA process and/ or bankruptcy of the applicant.

Reporter: E.F.

JUDICIAL SEPARATION & FAMILY LAW REFORM ACT 1989 S2(1)(F)

FAMILY LAW ACT 1995 S16(2)(A)

FAMILY LAW ACT 1995 S16(2)(B)

FAMILY LAW ACT 1995 S16(2)(C)

FAMILY LAW ACT 1995 S16(2)(D)

FAMILY LAW ACT 1995 S16(2)(E)

FAMILY LAW ACT 1995 S16(2)(F)

FAMILY LAW ACT 1995 S16(2)(G)

FAMILY LAW ACT 1995 S16(2)(H)

FAMILY LAW ACT 1995 S16(2)(I)

FAMILY LAW ACT 1995 S16(2)(J)

FAMILY LAW ACT 1995 S16(2)(K)

FAMILY LAW ACT 1995 S16(2)(L)

BANKRUPTCY ACT 1988 S59

ABBOTT (A BANKRUPT), IN RE 1983 CH 45 1982 3 WLR 86 1982 3 AER 181

BANKRUPTCY ACT 1914 S42

BANKRUPTCY ACT 1914 S42(1)

MATRIMONIAL CAUSES ACT 1973 S24 (UK)

MATRIMONIAL CAUSES ACT 1973 S39 (UK)

HILL & ANOR v HAINES 2008 CH 412 2008 2 WLR 1250 2008 2 AER 901

S (A) v S (G) 1994 1 IR 407 1994 2 ILRM 68 1994/6/1789

ACC BANK PLC v MARKHAM & CASEY 2007 3 IR 533 2005/1/58 2005 IEHC 437

DOVEBID NETHERLANDS BV v PHELAN T/A PHELAN PARTNERSHIP & O'BYRNE UNREP DUNNE 16.7.2007 2007/16/3259 2007 IEHC 239

NATIONAL ASSET MANAGEMENT AGENCY ACT 2009 S211

NATIONAL ASSET MANAGEMENT AGENCY ACT 2009 S4

FAMILY LAW ACT 1995 S16(5)

FAMILY LAW ACT 1995 S9(1)(A)

FAMILY LAW ACT 1995 S9(5)

FAMILY LAW ACT 1995 S10(1)(A)(i)

FAMILY LAW ACT 1995 S8(1)

FAMILY LAW ACT 1995 S8(1)(B)

FAMILY LAW ACT 1995 S12

FAMILY LAW ACT 1995 S54(3)

FAMILY LAW ACT 1995 S10(1)(C)

FAMILY HOME PROTECTION ACT 1976 S4

FAMILY LAW ACT 1995 S8

FAMILY LAW ACT 1995 S17

FAMILY LAW ACT 1995 S15

FAMILY LAW ACT 1995 S14

FAMILY LAW ACT 1995 S15A(10)

FAMILY LAW ACT 1995 S36

1 JUDGMENT of Mr. Justice Abbott delivered on the 14th day of July, 2010

2 The applicant and the respondent shall be referred to in this judgment as XY and YX respectively for the purpose of ensuring anonymity and the Court sets out the operative part of its order herewith in the Appendix hereof for the reasons as follows:

3 1. The applicant wife and the respondent husband were married to each other on the 27 ^th December, 1982. At all times they were and remain domiciled within this jurisdiction and are habitually resident here. There are two children of the marriage. Both children are not dependent, but the older child more securely so.

Entitlement to Judicial Separation

4 2. The parties are agreed, and the Court is satisfied on the evidence, that the circumstances are such that, subject to provision being made pursuant to the relevant legislation, each of them is entitled to a decree of judicial separation pursuant to s. 2(1)(f) of the Judicial Separation and Family Law Reform Act 1989.

Scope of Case

5 3. This is a case involving very substantial assets, but even more substantial debts, in consequence whereof the assets of the parties (apart from property isolated in a trust, namely the family home and mews attached thereto) are in very substantial negative equity. A major implication of this situation is that it is likely that the debts attaching to the vast majority of the assets of the husband will be taken over by the National Asset Management Agency (NAMA), established under the National Asset Management Agency Act 2009 ("the Act of 2009").

Case Management

6 4. This situation is in stark contrast with the picture painted in the affidavits of means of the parties filed after the proceedings were initiated in 2007, which indicated that the husband's assets amounted to some hundreds of millions of euro, even if a forced sale of the assets had been effected by the banks.

7 5. With the likely onset of NAMA, and the ever worsening financial situation, the case assumed a greater degree of urgency in terms of case management towards the end of 2009, and a number of case management sessions were held, principally on the 28 ^th October, 2009. On this date, it was decided by the Court (largely with the agreement of the parties) that the husband should present the details of his assets in a schematic way and in a format which would assist the Court in ascertaining how value might be generated from the assets, notwithstanding the massive debts, over a period of time, and which would also isolate any trust property which might or might not be affected by these debts subject, of course, to the extensive queries in relation to a limited amount of detail sought by each party from the other, but mainly by the wife from the husband. This approach proved very successful and time saving for the Court, through the emergence of a spreadsheet prepared on behalf of the husband with which the financial expert, Mr. Kevin Byrne on behalf of the wife, could interact in his evidence regarding the effect of NAMA, and in respect whereof the other witnesses gave their evidence. A feature of this case (which sets it apart from the general approach in family law cases) is that valuers were largely dispensed with by both sides, the values set out in the spreadsheet depending solely on the expertise of the husband and his internal management team and sometimes derived from valuation reports commissioned by them in the ordinary course of business. The agreed attitude of the parties to this approach was that, due to the massive negative equity, the exact valuations were not very much at issue in the case, but that what was important was the dynamic of interaction between the assets and various attributes thereof, as described in the spreadsheet, and NAMA and any non-participating banks. This case management approach resulted in the case being heard intermittently between November, 2009 and March, 2010 over a period of approximately ten days, instead of the period of in excess of ten weeks anticipated had the case proceeded in a less collaborative form.

Provision

8 6. Subparagraphs (a) to (1) of s. 16(2) of the Family Law Act 1995, as amended, ("the Act of 1995") set out the criteria to be considered by the Court (subject to the overriding test of justice) in deciding the provision to be made to spouses on a judicial separation. I set out the consideration of the Court in respect of each of these subparagraphs seriatim, as they affect the provision to be made to each of the parties as follows:

9 (a) the income, earning capacity, property and other financial resources which each of the spouses concerned has or is likely to have in the foreseeable future

The Spreadsheet

10 In dealing with subparagraph (a) criteria, it is important to set out the style of the spreadsheet describing and analysing the properties of the husband. These properties include properties held in the children's trust and also the family home, which is held on a separate trust, herein called the B Trust. These trust properties were not...