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High Court of Ireland Decisions


You are here: BAILII >> Databases >> High Court of Ireland Decisions >> M. v. M. [2000] IEHC 181 (23rd May, 2000)
URL: http://www.bailii.org/ie/cases/IEHC/2000/181.html
Cite as: [2000] IEHC 181

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M. v. M. [2000] IEHC 181 (23rd May, 2000)

THE HIGH COURT

FAMILY LAW
Record No. 1998/89 M

IN THE MATTER OF THE JUDICIAL SEPARATION AND FAMILY LAW REFORM ACT 1989 AND IN THE MATTER OF THE FAMILY LAW ACT 1995

BETWEEN
M.
APPLICANT
AND

M.
RESPONDENT

THE HIGH COURT

FAMILY LAW
Record No. 83M 1999

IN THE MATTER OF THE FAMILY LAW (DIVORCE) ACT 1996 BETWEEN

M.
APPLICANT
AND

M.
RESPONDENT

Judgment of Mr. Justice McCracken delivered the 23rd day of May 2000

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1. I gave judgment in this matter on 21st January, 2000 dealing with most of the issues between the parties, but left outstanding all questions relating to pension rights and the rights to certain policies of assurance which had not been fully argued. I have now been furnished with all the relevant documents and heard evidence from an expert in the field on behalf of each party. In addition, several practical matters arose out of my earlier judgment and I now propose to deal briefly with the outstanding points.


(1) CONSOLIDATION

2. There are two sets of proceedings, the earlier having been initiated by the wife seeking judicial separation, and the later having been initiated by the husband seeking divorce. In my earlier judgment I ruled that the husband was entitled to a decree of divorce, but many of the issues which arose were common to the two sets of proceedings. Unfortunately there has been no fixed practice as to the proper procedure when a party against whom judicial separation is sought wishes, in effect, to counterclaim for divorce, as the nature of the pleadings in such circumstances do not allow for a counterclaim as such. I certainly would take the view that where the respondent to the judicial review proceedings subsequently issues new proceedings seeking divorce as in the present case, the two proceedings ought then to be consolidated. I realise that this could have an effect on the costs issue, but I believe that any such effect can be dealt with by directions on costs to be given by the Trial Judge. Accordingly, I propose to make an order consolidating the two proceedings in this case, but I emphasise that this will not effect my ultimate decision on costs.


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(2) DIRECTORS LOAN ACCOUNT

3. Over the years it had been the practice of the company to discharge many of the wife’s outgoings such as motor expenses. In more recent times these items have been segregated into what was called a Director’s Loan Account as being monies owed by the wife to the company. It is accepted that the husband will accept responsibility for these items, but agreement has not been reached as to the date from which the wife should herself become liable. As the husband has in fact commenced making the maintenance payments provided for in my earlier judgment as of 1st March, I will direct that the husband shall be responsible for so much of the Directors Loan Account as has accrued at that date, and the wife is to be responsible for the balance.


(3) STOCK IN TRADE

4. The wife has for some years been running a small shop at 27/29 C., and it is agreed that she may continue to do so in her own right. I have already intimated that I will make a Property Transfer Order in relation to the premises, but the issue of the stock in trade was not addressed. The stock in trade has been valued at some £48,000 as of 31st December last. As the various financial provisions which I made in my earlier judgment were based upon the assumption that the wife would have an income from this shop, I think she should have the benefit of the stock in trade and effectively have the shop transferred to her as a going concern. There may be some doubt as to the actual ownership of the stock in trade, and I will discuss with Counsel whether I can extend the Property Adjustment Order in relation to it, or whether I should deal with it in the same way as the Directors Loan Account.


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(4) PAYMENT TO THE WIFE FOR HER SHARES

5. I have already valued the wife’s shares at £1,200,000, and it is common case that she must dispose of these shares. One solution is that I should make a Property Adjustment Order vesting the shares in the husband, and order a lump sum payment by him of £1,200,000. However, the reality of this is that he would probably have to raise that money from the company, which would have horrendous tax implications for him. It is agreed that the most tax efficient solution is that the wife should sell the shares back to the company, but even this will leave her with a capital gains tax liability of some £240,000. I cannot order her to sell the shares to the company, and she is not prepared to do so if it involves this liability. She is, however, prepared to sell them to the company for such sum as will realise a net £1,200,000 to her, and she is further agreeable to that sum being paid in two moieties, half being payable now and half on 1st November next. She rejects a proposal that capital gains tax should be shared equally between the parties. It would be quite unfair to impose the tax liability on the husband, and accordingly, in order to secure the wife, I propose to make a Property Adjustment Order transferring the shares to the husband, and an order for a lump sum payment of £1,200,000 by the husband to the wife, on the basis of an undertaking by the wife to transfer the shares to the company on or before 1st June next and an undertaking by the husband to ensure that the company will pay her half the purchase price as defined below on or before 1st June upon the transfer of the shares and will pay her the balance of the purchase price on or before 1st November, but to stay such order until 1st December next and a permanent stay thereafter in the event of the transfer being completed in this manner. The purchase price shall be such sum as will result in a net payment to the wife of £1,200,000 after she has discharged capital gains tax.


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(5) PENSION AND INSURANCE

6. The husband has a private pension trust governed by a deed of trust dated 9th December, 1996 which trust has assets as of 30th November, 1999 valued at £7S6,906. The husband also a small pension policy with the Norwich Union with the value of some £27,485, but in order to simplify matters I propose to ignore this latter fund and assume that it will be retained in its entirety by the husband. The husband also has a number of life assurance policies which mature at various stages in the future. Five of these policies are with Hibernian Insurance and expire in the Year 2010. The husband is prepared to give an undertaking to the Court to continue to pay the premiums on such of these policies as I may order to be assigned to the wife.


Under Section 17 (2) of the Family Law (Divorce) Act, 1996 I may make an order providing for the payment to the wife of a benefit consisting of all or part of the retirement benefit payable to the husband under the pension trust and which has accrued at the time of the making of the order. In doing so, I must specify the period of recognible service of the husband prior to the granting of such a decree which is to be taken into account and the percentage of the retirement benefit which accrued during that period and which is to be paid to the wife. In this case the pension trust was only set up in December 1996, and I have no doubt that the period of recognible service must be from December 1996 to date.

7. It is submitted on behalf of the wife that I should calculate the percentage of the trust fund to be held for her benefit in such a way as to ensure that it will produce an amount equivalent to the maintenance payments to her. When this sum became payable her husband would, of course, have to be relieved of his liability of his maintenance payments. It is further submitted that the pension should be of an amount, not of the current maintenance, but


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of the maintenance increased in line with inflation, and that the pension should be a pension which would itself increase in line with inflation. This would, of course, be very desirable from the wife’s point of view, but under the Act I must have regard to there being proper provision for both spouses, and on the evidence I have before me it would require 86% of the principal pension trust to provide the necessary pension for the wife. At first sight this certainly seems excessive, but it perhaps is not so if one takes into account that on retirement the husband would be relieved of the maintenance payments. The latter result would be that he would have a lower pension and lower liabilities under the maintenance order.

8. There are of course a number of imponderables involved. At the moment both parties have substantial assets, but I cannot foresee their circumstances in later years, which means that I do not know whether the maintenance order would subsequently be varied. I also do not know whether the wife might re-marry, nor do I know whether she may get a substantial benefit from the transfer of life insurance policies. All in all, I do not think it would be correct for me to assume that she is entitled to a permanent income increasing in accordance with the cost of living, or indeed increasing on any other basis such as a fixed percentage increase. I also have to take into account that I intend to transfer five policies which, if the husband should die before the year 2010, would result in a large lump sum payment to the wife independent of any pension rights. On the otherhand, I think there must be some increase in cost of living allowed for. Taking all this into account I would propose to order that 75% of the retirement benefit accrued from the commencement of the private pension trust to date be paid to the wife, but that none of the retirement benefit accrued under the Norwich Union policy be paid to her. With regard to life assurance policies, I propose to


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transfer the benefit of five policies for £100,000 each which expire in the year 2010 to the wife on the husbands undertaking to continue to pay the premium.


© 2000 Irish High Court


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URL: http://www.bailii.org/ie/cases/IEHC/2000/181.html