Australian wife allowed to return home with children

Relocation cases are always extremely difficult for courts to adjudicate on as they usually mean that one parent or the other is going to see a lot less of their children and so there are no winners in all of this. When the children become habitually resident in one country it can be extremely difficult for one parent to get permission from a court to relocate back to their own country as this will naturally mean that the other parent is going to see a lot less of them and so compelling reasons must be put forward. A case in today’s Irish Independent demonstrates this:

Proposal to reduce divorce wait to two years

Josepha Madigan, family law Solicitor and TD, has introduced a Private Members Bill to allow the time that you have to be living apart from your spouse before you can apply for a divorce from four years to two. This is a much needed development as society has changed in the 20 years since divorce was introduced. Such a change, which requires a referendum, would mean an end to the two stage separation process that we have in this country which is unfair to spouses and also to the children caught up in a separation. Ironically, same sex couples who entered into Civil Partnerships only had to wait 2 years for a dissolution of their partnership and this reflected the fact that civil partnership was introduced at a time when societal attitudes to break up of relationships had changed. You can view a recent Irish Times article by clicking on the link below.

Cohabit with care!

New rights and obligations relating to couples that cohabit have been introduced pursuant to the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (“the Act”) which came into law in January 2011. The rights and obligations for cohabitants in the Act are a radical departure from the pre-existing position whereby cohabiting couples had little or no rights or obligations as against each other. It is important for couples living together to understand their possible new rights and obligations but it is also important for such couples to be aware that it is possible to contract out of the Act as it relates to cohabiting couples.

In order to qualify as a cohabitant a couple, whether same sex or opposite sex, must be living together in a committed relationship for five years, or two years if they have children together. It is important to note that the Act does not confer any automatic rights on such a couple but rather provides a redress scheme, allowing a financially dependant party to the relationship to apply to Court for relief in the event that the relationship breaks down or the other party dies. Previously such a party had no recourse if not married and could therefore be left in a very vulnerable position financially even if the couple had been in a committed relationship for many years.

The Act provides a welcome safety net for cohabitants left in a financially vulnerable position following the end of the relationship. However, on the other hand for a non dependent cohabitant the Act can mean that such a partner (or former partner) in the relationship may, unknown to him or her, have significant obligations to his or her financially dependant cohabitant if the relationship were to break down or if he or she (the non dependant cohabitant) were to die. It is important therefore that couples living together are aware of the new provisions and of their ability to contract out of the Act by means of a Cohabitation Agreement.

The Act makes provision for the recognition of Cohabitation Agreements. Such agreements can deal with issues such as what happens in relation to property, maintenance and other financial aspects of a relationship in the event the relationship breaks down or one party dies. Previously parties could only enter into an agreement in relation to property – now the agreement can deal with all of their financial affairs. Such agreement are only enforceable if they are in writing and if both parties have received independent legal advice and the terms must be negotiated on the basis of full financial disclosure by both parties. The Act does allow a Court the power to undo such an agreement if it is in the interests of justice to do so, although it is arguable that it is possible to contract out of this provision also!

Awareness of the new provisions contained in the Act for cohabiting couples is therefore vital. However, it is equally important that couples are aware of their right to contract out of the Act and to agree between them how to regulate their obligations and rights to one another by means of a Cohabitation Agreement in the event that the relationship ends or one party dies. For many couples it would be far more preferable to be in control of their legal obligations and rights to one another in such circumstances rather than leaving such rights and obligations to be imposed at the discretion of a Judge.

Justin Spain

This article appeared in – The Law Society Gazette | December 2015

Divorce cases may soon pierce the corporate veil

Irish courts have, to date, tiptoed around piercing the corporate veil in separation and divorce cases

Two recent family law cases have highlighted the issue of whether a company will be able to maintain its separate legal identity when its major shareholder is involved in divorce litigation.

It is a long established core principle of company law that a company is a distinct legal entity from its shareholders, even a majority shareholder who has total control over the company.

Notwithstanding this, the family courts in England have until recently routinely made orders directing a company to transfer its assets to the spouse of a shareholder.

The Irish courts have, to date, stopped short of going as far as this.

However, Irish courts do regularly make orders directing a company shareholder to give company data and documents, information that is confidential to the company, to their spouse.

This is to allow the spouse of the shareholder to value the shareholder’s stake in the company in the course of divorce litigation.

A recent English case has made clear when a company might have its assets transferred to the spouse of a shareholder.

The case in question is the case of Prest versus Petrodel. The husband, Michael Prest, was the founder and sole shareholder in Petrodel Resources. In his divorce case, he claimed that Petrodel’s assets did not belong to him and that he was £48 million in debt. Initially the court ordered the company to transfer properties worth £17.5 million to the wife. The company appealed this decision and the UK’s Supreme Court.

The court decided that, in general, orders could not be made awarding company assets to a shareholder’s spouse.

However, the court then went on to make just such an award of company assets to the wife in this case because it found that the husband was the beneficial owner of the assets.

He had, for example, provided the funds to buy them. He also took funds from the company whenever he wished without company authority.

The court therefore rubber-stamped the transfer of assets from a company to a spouse, albeit with limitations.

Legal tiptoe

Irish courts have, to date, tiptoed around piercing the corporate veil in separation and divorce cases.

Instead of making orders against a company, they have made orders against the shareholding spouse to either transfer some of his or her shares in the company to their spouse or to give their spouse a lump sum, such that the only way they will be able to pay the lump sum is to pull money out of the company.

Whichever of these methods of transferring assets to a spouse is used the results are often unsatisfactory and crude.

The former may leave the dependent spouse with an illiquid minority shareholding and the latter is very tax inefficient.

A case in Ireland in June of this year also highlighted the issue of the separate legal status of a company, albeit on a narrower issue.

The case of Q versus Q involved an application by a wife to compel a husband to give certain company information to her. The husband argued that he was not in a position to provide the information pertaining as the company was a separate legal entity.

He also argued that the information being sought was not within his possession or power to give.

Quasi-inquisitorial role

Mr Justice Keane in the High Court made the point that a court in a family law case has a quasi-inquisitorial role.

He found that the husband had been able to receive all and any information he needed and he could not therefore argue that the documents his wife was seeking were beyond his possession or power to give.

The case demonstrates that a company is not immune from involvement in family law cases in this country just because it is a separate legal entity.

One feels it is only a matter of time before the issues that arose in Prest versus Petrodel are before the Irish courts.

If the Irish courts do follow Prest, the impact on company law here would be dramatic in that company assets might become fair game for the spouses of divorcing shareholders.

Tackling the problem

A pre-emptive solution should be found now to avoid such problems arising in the future.

One option would be to introduce legislation along the lines of the Australian model which enables a court to make a whole range of orders concerning a third party, including orders against a company to transfer assets from the company to a spouse of a shareholder.

Indeed, perhaps such legislation should be introduced here sooner rather than later so as to provide certainty for couples and companies alike and to make it easier for the courts to make proper provision for spouses on divorce.

Justin Spain is a family law solicitor

By Justin Spain – Irish Times | Mon, Oct 20, 2014 | Link to Irish Times Article

Supreme Court: Divorce should not mean an automatic redistribution of wealth.

The Supreme Court handed down a Judgment of great significance on 19th October. The Judgment was given by the Chief Justice in the case of G v G and addresses the important question of what constitutes proper provision on the granting of a divorce in circumstances where a Separation Agreement has previously been entered into by the parties.

Until this case the law was unclear as regards the weight that a Deed of Separation should have in the context of providing proper provision on divorce at a later date. Parties were using the forum provided by a divorce application to seek a “second bit of the cherry” and there have been conflicted Judgments from the High Court on the issue of how much a weight a previous Deed of Separation should carry. The clarity provided by the Supreme Court in this case on the issue is therefore to be welcomed.

In the case of G v G the parties were married in 1977 and separated in 1995. A Deed of Separation was entered into by the parties in 1996, pursuant to which the husband agreed to pay the wife maintenance of £100 per week for two years, decreasing to £50 per week thereafter. He also agreed to provide a house for her, pay her VHI and gave an additional lump sum of £70,000. The Deed contained a “full and final settlement” clause which stated that the Agreement constituted a full and final settlement of all present and future financial claims by either party including a divorce at a later date.

After the Deed of Separation was entered into the husband became wealthy. Having inherited property, sold it and bought other lands which he later sold for €19 million. The wife still lived in the house provided for her at the time of separation. She had spent her lump sum of £70,000 and did not invest it in any wealth producing activity. The wife then instituted divorce proceedings, primarily with a view to improving her financial situation.

The divorce came before the High Court in May 2009 by which time the husband’s assets were worth €21 million. The High Court made the following Orders in favour of the wife:

  • €600,000 for the purchase of an annuity.
  • €300,000 for the purchase of a pension.
  • Maintenance of €54,000 per annum increasing annually in line with inflation.
  • €1,000,000 for the purchase of a second house for the wife.
  • A further lump sum of €600,000.

The husband appealed the Order to the Supreme Court on the basis, inter alia, that the amounts awarded to the wife by the High Court were excessive having regard to the law applicable to the making of proper provision for her. The husband argued that the High Court had failed to give any real weight to the parties’ prior Deed of Separation and had embarked upon a redistribution of wealth. He further argued that the Court should only make further provision if there is some material change in a party’s personal non-financial circumstances or if there was some deficiency in the initial provision.

The Supreme Court laid down some general principles to be applied where there is a prior Deed of Separation, including the following:

  • A Deed of Separation should be given significant weight by a Court when determining what is proper provision on divorce, particularly if it contains a “full and final settlement” clause.
  • If the circumstances of the spouses have changed significantly since separation the Court is required to make proper provision but there is no requirement on the Court to redistribute wealth between the parties. Such changed circumstances may include, for example, changed needs of a spouse due to illness or the bursting of a property bubble which has altered the value of assets so as to render an earlier provision unjust.
  • If a spouse acquires wealth after a separation that is unconnected to any joint project during their married life, there is no automatic right of the other spouse to further monies or assets.
  • The greater the length of time that has passed since separation, the less likely a Court will be to alter arrangements entered into at separation.
  • Assets which are inherited by one spouse will not be treated as assets of the marriage.
  • A spouse should not be compensated for their own incompetence or indiscretions to the detriment of the other party.

In applying the above principles to the present case the Supreme Court made a number of findings. The Court found that the initial level of maintenance was too low and also that the Deed of Separation did not provide a sufficient level of security into the future.

However, the Court found that the overall level of financial provision made by the High Court for the wife was excessive. In particular the Court allowed the Appeal of the husband in certain respects and held the following:

  • The husband should not have to pay €1,000,000 for the purchase of a second house for the wife.
  • The lump sum of €600,000 awarded to the wife should not have to be paid.
  • The Court found that where one party fails to maximise resources acquired under a Deed of Separation this in itself is not a basis for further provision to be made. In this case the wife did not maximise her capital resources, however her subsequent ill health and the low level of initial maintenance under the Deed of Separation meant that the High Court was entitled to make further provision for her.
  • Where there is a great improvement in one party’s finances following a “full and final” settlement the concept of “proper provision” should not be dominated by that change. However, if there is a new or different need then that may be met from the resources that now exist. The Court stated that the general standard of living of a spouse should be commensurate with that enjoyed when the marriage ended. Importantly, the Court stated that the standard of living of a spouse, when the other party has achieved further wealth, is not entitled to be elevated on that basis.

In the present case the Court found that the husband had acquired his wealth after separation and as such his wealth should not be relevant to making proper provision for his wife except if there is a requirement for a special consideration such as ill health. The Court therefore found that the wife’s increased maintenance and pension met her needs.

This case provides some much needed clarity on the weight to be given to a Deed of Separation when parties come to divorce at a later date. In the last number of years the practice of using divorce as a forum to have a “second bit of the cherry” appears to have been very significantly reduced by this Judgment.

Legal Opinion: Cohabitation legislation urgently needs information campaign

From experience I know there are many couples out there blissfully unaware of the fact they may have rights and obligations against each other

When the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 became law in January 2011 the civil partnership element received much media coverage and was broadly welcomed. However, the Act also introduced an important safety net for cohabitants and this part of the Act has come into force somewhat under the radar despite the fact it is this part that will potentially apply to a far greater number of couples than those in civil partnerships.

It remains the case in this country that the vast majority of families consist of married couples. However, the number of cohabiting couples is rising fast – the 2011 Census showed there were 143,000 in Ireland, an 18 per cent increase on the 2006 Census. This makes cohabiting couples the fastest growing family unit in Ireland.

Historically, cohabitants have had little or no rights in the event the relationship ended or one of them died. This is in stark contrast to married couples, who have enjoyed significant protection under the succession and matrimonial legislation.

To illustrate this point, take the example of a woman who has lived with her partner for 20 years but is not married to him. She gave up her job to have a family with him and sacrificed her career prospects to raise their children. Her partner is the sole earner, owns the house and is the only one of them with a pension. He meets someone else and ends the relationship.

Until recently she would only have been entitled to seek maintenance for the children – she would not have been entitled to maintenance for herself or to claim against any of her partner’s pension or their home (unless she had actually put money into it).

Vulnerable financial position

This would have potentially left her in an extremely vulnerable financial position. Similarly, if her partner died she had no automatic rights to any of his estate. This example illustrates the unfairness of the law as it applied to married couples as opposed to couples who lived together as a family unit but were not married.

The 2010 Act changed this by providing a redress scheme which would allow the woman in this example to apply to Court for financial relief, including orders for maintenance for herself, sale of property and pension provision. She would be able to claim against his estate if he had died.

To qualify as a cohabitant under the Act a couple must be living together in an intimate and committed relationship for five years, or two years if they have children together. A cohabitant must also satisfy a court he or she has been left in a financially vulnerable position as a result of the relationship breakdown due to their financial dependence on their partner. If these tests are met then the Court can make a range of orders in their favour.

This is a very progressive piece of legislation. For example, England has not introduced such provisions for cohabitants and so while Ireland has been behind the curve historically compared to England when it came to matrimonial legislation, in this respect at least Ireland is now leading the way.

However, there are some shortcomings. Important factors that need to be satisfied to qualify as a cohabitant are not defined in the Act, for example the phrases “intimate and committed relationship“ and “financial dependence”.

Within two years

The Act states a claim must be brought within two years of the end of the relationship but how do you define when a relationship has ended – one party may think it is going fine whilst the other party may feel it ended some time ago.

Furthermore, since there are no automatic rights the only avenue open to a cohabitant to get financial relief is to go to court. This can be expensive and, with the availability of legal aid so limited due to delays and means testing, many might be put off going to court because of the cost and also because the lack of cases so far means outcomes are uncertain.

The Act can also throw up some claims for relief that one might consider on the face of them to be unjust. Undoubtedly the Act is very welcome for the woman in the example above. However, take a different example. A divorced man owns his own house, mortgage free, and has a good income. He meets a woman and after a time she moves in with him, gives up her job with his consent and becomes financially dependent on him.

After seven years together she starts to drink heavily and become verbally abusive. Some time later he has had enough and asks her to leave. She then brings a claim under the Act for the sale of his house, maintenance and pension provision. No doubt the man in this example would be horrified to find out she may be entitled to bring such a claim under the Act.

From experience I know there are many couples out there who are blissfully unaware of the fact they may have rights and obligations against each other. Therefore whilst overall, this is a very welcome and progressive piece of legislation, the Act is crying out for an information campaign funded by Government to make cohabiting couples fully aware of the provisions contained in it.

Justin Spain is a Dublin-based solicitor specialising in family law

By Justin Spain – Irish Times | Mon, Jul 08, 2013 | Link to Irish Times Article

Genetic mother wins surrogacy case

The genetic mother of twins born to a surrogate mother has won a landmark case at the High Court to be declared the legal mother of the twins.

Mr Justice Henry Abbott ruled that the genetic mother was the legal mother and was entitled to have a declaration from the court stating that.

He also said the twins were entitled to have the genetic mother named as their mother on their birth certificates.

The State had refused to allow the genetic mother to be listed as the mother on the twins’ birth certificates.

The surrogate mother was the sister of the genetic mother, and had not objected to the couple’s application.

Mr Justice Abbott said the input of the birth mother was to be respected and treated with “care and prudence”. But the old maxim mater semper certa est, motherhood is always certain, which the State argued meant the birth mother was always the legal mother, did not survive the enactment of the Constitution, “as it applies to the situation of in-vitro fertilisation”.

“To achieve fairness and constitutional and natural justice for both the paternal and maternal genetic parents, the feasible inquiry in relation to maternity ought to be made on a genetic basis and on being proven, the genetic mother should be registered as the mother,” the Judge said.

He also ruled that the word “mother” in Article 40.3.3 of the Constitution had a meaning “specific to the article itself”. This was related to the existence of the unborn only when the foetus was in the womb and not otherwise, he said.

The state had argued the Article, often referred to as the right-to-life amendment, had defined motherhood as the birth mother only.

Mr Justice Abbott also noted that in Ireland positive legislation on surrogacy was “totally absent” and so the contract entered into by the couple and the surrogate mother was “not illegal”. But he said its performance in the Irish legislative context “would not be enforceable by any court”.

Responding to the ruling, Solicitor Marion Campbell, on behalf of the family, said they were delighted with the outcome.

“It has been a very long, hard and emotional time for them and they would like to express their thanks for the support shown to them by their family, friends and legal representatives,” she said.

“It is to be hoped now that much needed legislation in relation to this whole difficult area of surrogacy will be brought in and that children born by way of surrogacy arrangements will have their rights enshrined in such legislation.

By Fiona Gartland – Irish Times | Tue, Mar 05, 2013 | Link to Irish Times Article