Woman ordered to pay €2.14m to former husband

THE SUPREME Court has ruled a man is entitled to a €2.14 million payment from his estranged wife as “proper provision” in divorce proceedings over failure to disclose full information on the extent of her wealth when the two were negotiating a settlement of separation proceedings.

However, the three-judge Supreme Court altered the basis of the High Court award to the man after ruling the High Court was not entitled to include in the overall award €1.6 million as compensation for his “loss of self-esteem” resulting from “an embarrassing gap in wealth” between him and his wife resulting from her sale of her business in 2006.

In the High Court in 2006, Mr Justice Henry Abbott awarded €500,000 to the man over failure to disclose important information about the wife’s assets (which failure the judge ruled was not due to any bad faith on her part) plus €1.6 million for his loss of self-esteem. While finding both the man and woman had ample assets and income, Mr Justice Abbott expressed concern the husband would “be lagging behind” his wife in relation to wealth following her sale of her company and was at risk of suffering a lack of self-esteem. The judge said the man, when his children were with him or on holidays, should not be “shown up by an embarrassing gap in wealth when compared with the children’s mother”. Such a gap “could easily result in the husband suffering such loss of self-esteem, grieving or obsession with the litigation that he would easily lose the capacity to celebrate, enjoy and be bubbly with his children as a father should”.

The Supreme Court ruled there was no basis under the relevant provision of the Family Law (Divorce) Act 1996 or in the notion of “proper provision” in divorce proceedings for an award designed to compensate one party for loss of self-esteem and set aside the €1.6 million award on that basis.

However, it also found the man was entitled to a total €2.14 million “proper provision” arising from the “information deficit loss” and “significant failure of disclosure” related to his wife’s assets when the settlement was negotiated.

Mr Justice Nial Fennelly said the High Court had calculated the €500,000 “information deficit loss” part of its award on the basis of figures rendered false because they were based on inadequate information. On the basis of updated valuations, he ruled the €500,000 figure should be increased to €2.14 million. While this figure was in the nature of a “pragmatic decision”, the judge noted both sides wanted the matter finalised and the court considered €2.14 million was “proper provision” for the man.

The judge also said there was no basis to unscramble the terms of the 2001 separation settlement as the deficiencies in disclosure did not undermine the fundamentals of that settlement. He also upheld the High Court decision reducing from €10,000 a year to €7,000 the maintenance payment by the man for the couple’s two children.

The man and woman had married in England in the early 1990s but lived in Ireland. They separated in the late 1990s and their two children are in the wife’s custody. Both were described as well-off, with the man described as significantly less wealthy.

The two settled judicial separation proceedings in 2001 and the main issue before the High Court related to the extent to which that court was bound to have regard to the terms of that settlement, described as a full and final settlement for any divorce proceedings.

The terms included the husband paying the wife €300,000 for her interest in the family home and each retaining any property held in their sole names. The wife was declared beneficial owner of her shareholding in four companies where she carried on a business, of which the man also had a small shareholding; and the man was declared beneficial owner of a business he carried on.

In 2003, the wife instituted divorce proceedings and the High Court case arose after the man claimed the 2001 settlement did not constitute “proper provision” for him. The case went before the High Court in 2006, by which time the wife had sold her interest in her group of companies. The man sought additional payments arising from that sale, alleging she had not fully disclosed her financial circumstances in 2001.

The wife appealed the award of €1.6 million for loss of self-esteem, arguing there was no basis for such an award under the Divorce Act. She did not appeal the €500,000 award for “information deficit loss” and accepted, when the 2001 settlement was reached, the sides did not possess equal information as to her companies. The man argued that the €500,000 award was inadequate.