High Court of Ireland Decisions

Judgment Title: F. -v- F.

Neutral Citation: [2008] IEHC 471


High Court Record Number: 2005 15 M

Date of Delivery: 12/19/2008

Court: High Court

JUDGMENT of Mr. Justice Abbott delivered on the 19th day of December, 2008 (No.2)

1. Pursuant to judgment of this Court delivered on the 4th July, 2007, ( F. v F. [2007] IEHC 317) an order was made by the court on the 25th July, 2007, the material points whereof are set out as follows:-

“1. Pursuant to Section 13(1) (a) (i) of the Family Law (Divorce) Act, 1996 the Respondent shall pay to the Applicant the sum of €3,146.13 per calendar month in advance for her support and benefit. The first such payment shall be on the 1st day of July 2008 and the Court doth direct that these payments shall continue for the lifetime of the Applicant. The Court further directs that such periodical payments shall be increased by 15 % per annum with the first such increase to be on the 1st day of July 2009.

2. That payment of the said sum of €3,146.13 and the increased amount(s) shall be by standing Order direct to the bank account of the Applicant, the name and number of which are to be supplied by the Applicant at least six weeks in advance of the commencement of the payments.

3. Pursuant to Section 13(1)(b)(i) of the Family Law (Divorce) Act, 1996 the Respondent is directed to secure to the Applicant herein payment of the periodical payments and lump sum pursuant to Section 13 (1)(a)(i) for the lifetime of the Applicant as provided for in the terms of this Order over the Respondent’s legal and beneficial interest in 11 P in the County of the City of Dublin and in the proceeds of sale of same

4. Pursuant to Section 13(1)(c)(i) of the Family Law (Divorce) Act, 1996 the Respondent herein is directed to pay to the Applicant Spouse the lump sum of €60,000.00 on or before the 4th day of July 2008 said payment to be made through the Applicants Solicitor’s herein.

5. Pursuant to Section 19(1) of the Family Law (Divorce) Act, 1996 the Court orders the sale of the entire legal and beneficial interest in the premises know as 11 P, in the County of the City of Dublin together with the following consequential or supplementary provisions in respect of the sale as set out hereunder:


i. The respective Solicitors for the Parties in these proceedings to have joint carriage of sale.

ii. The parties have agreed an auctioneer for the sale of the property.

iii. The property to be sold at a reserve of €600,000.00 and the parties to accept the advice and recommendation of the auctioneer in respect of any reduction of same in respect of the manner of sale and in respect of the best possible price to be obtained.

iv. The sale of the said property to have closed on or before the 4th day of July 2008.

v. The Respondent is directed to satisfy any Judgement (and/or Judgement Mortgages) in relation to the said property at 11 P other than any Judgment and/or Judgement Mortgage or charge in favour of the Applicant herein

vi. After discharge of any Judgment Mortgage or Mortgages secured over the property together with any sale costs and legal costs of sale, the net proceeds of sale shall first be held in the Client account of the Solicitors for the Respondent, on their undertaking not to release the monies to the Respondent or any other person pending payment of any Capital Gains Tax due on the disposal of 11 P and upon payment of the said Capital Gains Tax the net proceeds of sale shall be thereafter immediately lodged in an interest bearing deposit account, the said account to be registered in the sole name of the Respondent herein.

vii. An Order lifting the In Camera Rule to permit the Respondent’s Solicitors who shall notify the Manager of the Financial Institution prior to and/or on the opening of the said deposit account of the terms of this Order and shall furnish a copy of same to such financial institution.

6. The Court herein notes the undertaking of the Respondent (and the Respondent so undertakes) to inform the said financial institution that no payments are to be paid out of the said deposit account during the lifetime of the Applicant other than the periodical payments made in respect of the Applicant’s nursing home care, as herein before provided for, and interest after DIRT with said interest falling due to the Respondent and which the Respondent is entitled to receive payment of.

For the avoidance of any doubt, the Manager of the financial institution in which the money is held on deposit is to be informed that no withdrawals from this account are to be permitted save the periodical payment by standing order to the Applicant's bank account, during the lifetime of the Applicant, and discharge of the €60,000.00 lump sum through the Applicant's Solicitors and such sums as represent interest, after DIRT, due to the Respondent.

The Applicant, personally, through her Solicitors or other nominated agent, is to receive copies of all statements and correspondence in respect of this bank account.

7. The Respondent is hereby restrained from drawing on, assigning, charging or otherwise dealing with the principal sum, being the net proceeds of sale of 11 P as set out hereinbefore in this Order, during the lifetime of the Applicant.

The Respondent is hereby permitted, only with liberty of the Court, to have recourse to the principal sum, being the net proceed of sale of 11 P, for the discharge of his own costs but only after exhausting other moneys on deposit or available to him.

8. In the event of the Applicant pre-deceasing the Respondent, the lump sum payment of €60,000.00 as provided for in paragraph four shall, if not already paid to the applicant during her lifetime, be paid to her estate. The periodical payment by way of standing order to the Applicant’s bank account shall cease as at the date of the Applicant’s death and any remaining balance in the hereinbefore referred to deposit account, if any, shall be payable to the Respondent.

In the event of the Respondent pre-deceasing the Applicant the principal sum of €600,000 being the net proceeds of sale of 11 P, or the balance of the said principal sum thereof as hereinfore set out in the Order, is to remain intact during the lifetime of the Applicant.

9. The Court directs that all periodical payments payable to the Applicant shall continue during her lifetime and that the lump-sum payment of €60,000 shall be discharged within the time limits as set out hereinbefore in the Order and in the event of the Respondent pre-deceasing the Applicant, such periodical payments and/or lump sum payment shall be paid to the Applicant by the Personal Representatives of the Respondent, after any costs reasonably incurred and/or taxes deducted by such Representatives, pertaining to the administration of the Estate of the Respondent. On the death of the Applicant any sums remaining to the credit of the deposit account from which the said periodical and/or lump sum payments were paid, shall pass to the Personal Representatives of the Respondent for the benefit of his estate.

10. In the event that the Respondent fails, refuses or neglects to provide the said undertaking as provided for herein, or in the event of any default whatsoever in relation to the payment of the said periodical and/or lump sum payments, the Court directs that the net proceeds of sale of the said premises then remaining be paid to the Applicant's Solicitors, who shall hold the monies on trust in an appropriate interest bearing account for the Respondent and administer the said periodical and/or lump sum payment to the Applicant. In this event, the said Applicant's Solicitors shall be paid fees of 2% per annum in respect of the Trustee fees, such payments to be deducted directly from the account on presentation to the Respondent through his Solicitors of an appropriate invoice.

11. Pursuant to the provisions of Section 18(10) of the Family Law (Divorce) Act, 1996 neither the Applicant nor the Respondent, on the death of the other, shall be entitled to apply for an Order pursuant to the provisions of Section 18 out of the Estate of the deceased.

12. Pursuant to Section 14(5) of the Family Law (Divorce) Act, 1996, and/or Section 19 of the Family Law (Divorce) Act, 1996, and/or pursuant to the Trustee Act, 1893, the Court directs appointment of the County Registrar for the County of the City of Dublin to execute all and any documents necessary to effect the sale of 11 P in the County of the City of Dublin in the event of either the Applicant and/or the Respondent herein failing or refusing to execute same within fourteen days of having been requested to do so.

13. That the Order made in the proceeding entitled “The High Court Circuit Appeal 1991 No. 55CA In the Matter of the Judicial Separating and Family Law Reform Act 1989 Between A. F. Plaintiff and E. F. Defendant” on the 25th day of November 1994 permanently restraining the Respondent from disposing of premises known as 23 B without giving to the plaintiff notice in writing of the making of a contract for sale of the said premises and four week notice of the proposed closing date thereof be and the same is hereby vacated as and from the date of this Order.

14. Each party does have liberty to apply and/or re-enter.

And on the application of Counsel for the Applicant in respect of the

Applicant’s costs herein

And on hearing said Counsel and Counsel on behalf of the Respondent

IT IS ORDERED that the Respondent do pay to the Applicant a sum of €10,000 by way of contribution towards her costs in this matter.”

This order has been slightly refined and stayed pending appeal by an order of this Court on the 2nd April, 2008, the details of which are not material to this judgment.

2. This application is in regard to the execution of the above order, particularly having regard to the dramatic fall in property values leaving the sale of the property at 11 P. impossible at anything approaching the reserve of €600,000 fixed in the order.

Attempts to Sell
3. The respondent (who shall be referred to as the husband) took advice from the auctioneers and as a result, secured vacant possession of the premises from the residential tenants therein with a view to improving the sale prospects thereof with such vacant possession. A contract was agreed for a sum in the region of €500,000 which was approved by the court but which collapsed by reason of the surveyor’s report indicating certain structural (but not life threatening) defects in the premises. Subsequent court applications indicated that the premises should be sold at the best price, and, until recently there was a prospect of selling the premises at €310,000. This too has not materialised into even a contract conditional on the acceptance thereof by the court or the parties.

4. I accept that, through no fault of the parties, and due to the dramatic and unforeseen turmoil in the financial and credit markets, known as the credit crunch, the price at which the premises is to be sold has fallen dramatically to a figure in the region of half of the reserve envisaged in the judgment. There was some mutual criticism of the parties – of the husband for not selling the premises sooner, and of the wife for not agreeing to a lower reserve without the necessity to apply to court for approval – but neither of these criticisms could be levelled adversely at the parties, insofar as they probably represent the typical reaction of the majority of vendors throughout the country to a dramatic collapse in the property industry, which was largely unforeseen by a population who felt (at worst) that there would in fact be what was referred to as a “soft landing” in the property market. During the course of the summer vacation in 2008, the wife applied to have a receiver appointed in respect of the rents of the property, but the court has indicated and decides that this was not a practical proposition, primarily because the rents had disappeared, and also because of the relatively small size of the asset. The appointment of receiver (even if feasible in law and fact) would mount costs which would be disproportionate to any benefit received.

Events since the Order
5. The court was informed that the health of the wife had deteriorated. She was unable to attend at the last hearing. I indicated to the parties that there was great urgency to have resolution of the requirements of the order as quickly as possible in view of the health of the wife. The husband did not object to this proposition. The wife’s asset position has not improved by any factor outside the consideration of the judgment and in fact her assets are being diminished by draw down of nursing home expenses.

6. On the other hand, the husband, (after judgment), purchased a premises in a provincial location for a sum in the region of €400,000 having obtained an interest only mortgage thereon. He stated that his intention was to get planning permission for a plot on which this premises was built, and thereby secure a quick profit. His affidavit of means now indicates that there is a substantial negative equity on this newly acquired premises arising from the property slump and, in addition, planning permission for the plot adjacent to this premises has been refused. The 1/7th share in the husband’s mother’s estate valued at a greater sum but which the court indicated should not be settled for a sum of less than €75,000 remains uncollected. It is very material that in an answer to a question put to the husband by Mr. Corrigan, Senior Counsel for the wife, the husband conceded (against a background of a reluctance to sue his family for his inheritance) that he did not even write a letter seeking expedition of the payment of the proceeds. During subsequent hearings it has emerged that the proceeds might well exceed €75,000 but Ms. O’Hanlon, Senior Counsel for the husband, has alleged that this sum would be consumed by costs in any event. As is clear from the affidavit of means filed on behalf of the husband, he is now making a case for adjustment of provision for the wife downwards by reason of his straightened circumstances, and suggested to the court that the premises 11 P. which was to be sold under the order of the court would now be rented by him to a single tenant (who would presumably sub-let the six residential units) and pay the net proceeds of the rent of €1,500 per month after discharge of the mortgage to the wife to assist in discharge of the wife’s nursing home costs on the basis that the wife still had some funds as noted in the judgment of the court.

The Law
7. The order of the court is executory. It is well accepted in this jurisdiction that during the course of the execution of an order, a court has general jurisdiction by way of adjournment, or adjournment coupled with a stay with or without a condition of payment of interest or such other conditions as to part payment or otherwise, as may be appropriate. In an extreme case, (as in orders following a dispute on a contract or specific performance), it may arise that performance of the contract, or compliance with the order, is impossible, and it may well be that the discretion of the court would dictate that notwithstanding non-compliance by the defendant with the order, he would be discharged from his obligation to comply therewith without the risk of being in contempt of court.

8. This later course, while it may be available to the court in respect of discrete parts of a divorce decree, may never be available in the sense that the decree may be abandoned by all concerned by reason of the fact that the Court is impelled by the Constitution to ensure that, come what may, even after the decree is made by the Court, provision continues to be made in the changed and even difficult circumstances presented while the order is still executory. During the course of the hearing herein, I drew to the parties attention to the case A. K. v. J. K. (Unreported, High Court, Abbott J., 31st October, 2008) as a case which might provide pointers to the parties as to the approach to be taken in this case. A. K. v. J. K. was a decision relating to the adjustment of provision made by an order in judicial separation, which although twelve years old, was still executory in nature. Both parties, in their various suggestions as to how the marketing difficulty, if not impossibility, of the premises at 11P could be dealt with, accepted that there would have to be some change in the order in this case. In relation to the principles to be applied from the outset to cases involving recently made executory orders, clear guidance is given in the judgment of Ormrod L.J. in the decision of the Court of Appeal in the English case Thwaite v. Thwaite [1982] 1 Fam., where at p. 8 he states:-

“Where the order is still executory, as in the present case, and one of the parties applies to the court to enforce the order, the court may refuse if, in the circumstances prevailing at the time of the application, it would be inequitable to do so: Mullins v. Howell [1879] 11 Ch D 763, and Purcell v. F. C. Trigell Ltd [1971] 1 Q.B. 358, 366, 367. Where the consent order derives its legal effect from the contract this is equivalent to refusing a decree of specific performance; where the legal effect derives from the order itself the court has jurisdiction over its own orders: per Sir George Jessel M. R. in Mullins v. Howell [1879] 11 Ch D 763, 766.”

1. If parts of the provision made in the divorce decree become impossible, the Court is obliged to consider what alternative provision may be made to ensure proper provision under the Constitution and the 1996 Act.

2. If circumstances prevail during the course of the execution of the order whereby the circumstances of the case have fundamentally changed through a dramatic and unforeseen drop in property values, short of the impossibility of a sale of some crucial asset available for the provision in the order then, on the test of Thwaite v. Thwaite there may be circumstances where the court might not enforce that part of the order relating to the sale of such property unless alternative arrangements may be made for provision to ensure the balance and symmetry of the order previously made. However, the test in Thwaite v. Thwaite that it would be “inequitable” to enforce the order in circumstances prevailing at the time of the application may be so general and neutral as to be misunderstood, and I would prefer the application of the test posited by me in my judgment in K. v. K. in the following passage-

‘Hence I conclude that the test as to whether a change, or changes, in circumstances ought to ground a strategic application going outside the limited circumstances envisaged by s. 18 of the Family Law (Judicial Separation) Act 1989, should be that (“other things”) being equal if they are of such a fundamental nature that it would be unfair and unjust to ignore such change or changes. The “other things” to be considered before this necessary condition for a further strategic order to be made after a separation order may be made sufficient, must, I conclude, be guided by the statutory framework set out in the provisions of s. 16(1) and (2), with the final overriding test of fairness and justice contained in subs. 5.’
This statement may be equally applied to the treatment of change of circumstances under the divorce code, bearing in mind, of course, that the Court in dealing with the K. v. K. case could, with a freer hand, deal with what is termed as strategic application on the basis that the order in that case, although still executory, was in fact twelve years old and was passed out by the lapse of time and other circumstances, so as to have acquired, in large measure, the character of a final and fully executed order following which, a strategic application (or for that matter a fine tuning application under s. 18) might have been made in the ordinary course of events.

3. As the Court has no power to appeal itself or reverse itself, the Court should, in the case of an executory order, be careful to ensure that, insofar as the circumstances of the case allow, the original intent, balance and symmetry of the order are maintained, while at the same time adopting whatever changes and adjustments in provision are necessary to ensure fairness and justice.

4. Along the lines suggested in my judgment in K. v. K. the question as to whether there would be any change in the provision and the nature thereof depends not only on the necessary condition of a change of circumstances or of execution arising so as to make it fundamentally inequitable to seek to enforce that part of the order but also that, the sufficient condition of the appropriateness of altered provision is met. I consider that while the court has a large discretion in relation to the course it might adopt in relation to this matter, it is not at large, - as the Act of 1996 and the Constitution apply to provision no matter how or when it is made.

13. I find that it is necessary for the property at 11P. to be sold at a price not less than €300,000 but that the payment of the net proceeds of the sale after expenses and tax into a separate account to be administered by the husband in accordance with the judgment, should not be required, as the objectives of the judgment cannot be practically met by providing the wife with security of payments for her nursing homes expenses, while at the same time allowing the husband to benefit from any outcome resulting from life expectations not being met. Accordingly, I direct that the proceeds of sale be paid directly to the wife on closing thereof. I direct that the sale be closed on or before the 15th February, 2009. I direct that in default of a contract for sale being signed before the 1st February, the property at 11 P be conveyed to the wife, and I direct the wife to discharge the mortgage payments on the said property from the date of the conveyance, pursuant to such property adjustment order. Such default provision may allow the wife to sell the property, or, alternatively, it may allow some relative to assist her in letting the property, and thereby ultimately avoid capital gains tax, if that relative is to participate in assisting the wife, with the expectation of inheritance – an arrangement which sometimes happens in families with elderly relatives. However, this further consequence of family inheritance is entirely speculative and only offered as a possibility without having any significant weight in determining the judgment of this Court. Primarily the default provision is made to avoid further costs in a case where there may have been as many as nine separate applications to court over the years, and where resources are threatened with spiralling costs. A further major significant reason for taking the above course is that the husband has fallen into the trap of moral hazard for which the wife was blamed in the judgment as a result of her “churning” activities regarding frequent changes and sales of accommodation. This time the moral hazard has arisen from the husband, not only engaging in a wild speculation in purchasing the house on interest only mortgage finance, but also in time wasting in regard to his claim for his inheritance, which by this stage must only be suggestive of a more robust approach to exploiting the actuarial possibilities of the case than the court was prepared to tolerate in its judgment herein, through the delay in claiming the inheritance by initiation of legal action, - and not even a letter of demand in relation to same!

14. The only manner in which the reduced circumstances of the husband may be taken into consideration is by the Court making an order that in the event of the property being sold, and proceeds paid over or in default in the event of the property being conveyed to the wife, that the husband stands discharged from his obligation to pay the lump sum of €60,000 to the wife as set out in the executory order. Needless to say, the detailed provisions in relation to banking and investing of the proceeds of the sale of the house contained in the executory order are now moot and do not require to be enforced.