A PERSON who becomes very wealthy following a separation is not obliged to increase the money paid to his or her spouse under a separation agreement, unless the increased wealth came from a joint project, the Supreme Court has ruled.
“Proper provision” for a spouse does not require the redistribution of wealth, and the standard of living to be considered by the court is that enjoyed by the parties prior to the separation, it said.
The court yesterday upheld an appeal by a businessman against High Court orders requiring him to increase dramatically payments to his former wife, including the payment of €1 million to buy a second house, €900,000 in two sums, VHI payments and €54,000 a year in maintenance.
Under a 1996 separation agreement, the wife had been given a house, a lump sum of £70,000 (punts) and was paid maintenance which had been increased in 2007 to €2,400 a month.
The separation agreement contained a “full and final settlement” clause.
More than 20 years after the separation, the wife sought a divorce, which was heard in March 2009, in which she successfully argued the need for an increase in the provision to be made for her.
The husband then appealed and the ruling on his appeal was delivered yesterday.
The court was asked to consider the weight to be given to the separation agreement and the law applicable to “proper provision”.
The Supreme Court stated that substantial weight should be given to the separation agreement, especially if it was concluded some time ago and there was no dramatic change in the circumstances of the parties, such as a catastrophic change in health.
The court stated that the standard of living of a spouse following divorce should be commensurate with that enjoyed when the marriage ended, not with the level later attained by the other spouse if he or she subsequently achieved further wealth.
In this case, the husband bought lands after the separation with inherited money, which he subsequently sold for approximately €19 million. The court found these funds were not relevant for the “proper provision” of the wife, unless there had been a requirement for a special consideration of her changed needs, such as health.
The court added that it had knowledge of the fact that some assets that were highly valued some years ago are not so valued now. At the time of the divorce, the husband’s assets were valued at €21 million.
The High Court will now reconsider what “proper provision” should be made for the wife in the light of these principles.
This is the most recent in a series of judgments examining the weight to be given to previous separation agreements and the meaning of the requirement that “proper provision” be made for a spouse and other dependants in the event of a divorce sought following a legal separation.