Composition of Court: Denham C.J., Murray J., Hardiman J., Fennelly J., Finnegan J.
I. SUMMARY
This is an appeal by N.G., a property developer, against the judgment and order of the High Court in a divorce settlement case delivered in 2008. Y.G., the wife of N.G., is the respondent. The central issues of the case relate to the level of support granted in favour of the respondent and the lack of emphasis placed on a previously accepted separation agreement. The Supreme Court remitted this case to the High Court for alteration and stressed that privately reached separation agreements shall be given significant weight in divorce orders.
II. FACTS
The parties married in 1977 and separated in 1995; they had no children during the course of their relationship. A separation agreement was created in August, 1996. Its terms included provisions that required the applicant to provide the respondent with a weekly maintanence, to pay the respondent’s VHI subscription, to provide a house, and to pay her an additional £70,000 lump sum. The settlement included a “full and final” settlement clause which stated that the terms of the agreement would be incorporated into the maintenance order of the High Court if the parties were granted a decree of judicial separation or divorce.
The High Court granted a decree of divorce to the parties in March, 2009. The settlement outlined the obligations of the applicant to provide for the respondent by paying €600,000 in an annuity, by paying €300,000 into a pension fund, by paying €65,000 for a VHI premium, and by providing €54,000 in annual maintenance. The order of the Court also included the provision of €100,000 as part payment of the respondent’s legal fees and an additional lump sum of €1,000,000 for the purchase of housing and insurance.
III. LEGAL BACKGROUND
The applicant, N.G., appealed the judgment of the High Court on the grounds that the level of capital provision and periodic maintenance was excessive and unreasonable, and that Abbott J. erred in his assessment of the applicant’s financial resources in the calculation of lump sums and annuities. The applicant also claimed that Abbott J. did not give due weight to the ‘full and final nature’ of the parties’ separation agreement. The applicant argued that he was unjustly forced to lose control of his assets when directed to pay periodic maintenance to the respondent and that the purchasing of annuities was an unreasonable waste of such assets. The applicant argued that it was unjust to deny an entitlement to apply for a review of maintenance costs in the future and that the order of maintenance was unfair in allowing the respondent to gain additional income in the form of a pension.
IV. RULING
The Supreme Court addressed the finality of the separation agreement and outlined general principles that apply when prior agreements exist between parties when an application is made to a court. These general principles stipulate that such an agreement shall be given significant weight and that its terms shall be incorporated into the court order, assuming that there is no fluctuation in the standard of living or value of assets since the the agreement was entered into. If circumstances were to differ significantly, then a court is required to consider all the facts before making a decision as to the relevance and strength of the original agreement.
The Supreme Court found that there had been a radical change in the value of the applicant’s assets and, therefore, the case was remitted to the High Court to allow for this change in circumstance. The sum of €600,000 for the respondent’s benefit was deemed to be excessive in relation to the original settlement agreed privately, as it did not take into account the other payments issued to her.
V. IMPACT
In divorce, the standard of living of a spouse shall not be elevated on the basis of the other spouse achieving further wealth. Another important point is that any wealth attained after the implementation of the separation agreement will not be admitted as a pertinent factor for consideration. Furthermore, a pre-trial non-legally binding order will be taken into account and given significant weight as long as there has not been any major fluctuation in the couple’s living standards or asset value. Does this leave an opening for the systematic enforcement of pre-nuptial agreements in Irish courts?
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Author: Shauna Beatty
