A recent Supreme Court decision in family law proceedings has upheld an unprecedented High Court finding of fraudulent concealment of assets by a husband (the former husband) leading up to the granting of a Decree of Divorce. Rachel Murphy explains.
This Supreme Court decision arises from an appeal of an Order in proceedings seeking, in part, to set aside a divorce granted in 2001 on the basis that the former husband had engaged in deliberate concealment of substantial assets (running to many millions of Euro) during the divorce proceedings.
In 2001 a Decree of Divorce was granted to the parties and a variety of financial provisions were made in favour of the wife (the former wife) on terms agreed between the parties; a settlement having been reached after twenty-three days at trial.
A number of years after the divorce the former wife issued High Court proceedings alleging that the former husband was guilty of a deliberate failure to disclose the full extent of his assets. The former wife sought a variety of reliefs which raised the possibility that the entire Decree of Divorce made in 2001 might be set aside but also sought to have additional financial provision made to reflect "proper provision" in light of what was alleged to have been under disclosure of the former husband's financial position in the divorce proceedings.
The former husband remarried after the divorce. Therefore, the former husband's second wife was joined as a Notice Party to these proceedings in circumstances where there was a possibility that the Decree of Divorce might be set aside. If it was to transpire that the Decree of Divorce was to be set aside then that would have a serious effect on the status of the former husband's second wife.
These proceedings centred around six substantial assets held within complex financial arrangements involving numerous companies and trusts; some of which were offshore. It was alleged that the former husband had failed to fully and frankly disclose these assets in breach of Orders for discovery and in response to specific questions posed to him throughout the disclosure process and in cross-examination during the divorce proceedings.
After a lengthy trial spanning approximately twenty-one days, the High Court held in favour of the former wife in respect of four of these assets and found that the former husband had breached Orders for discovery made in the divorce proceedings; had made a conscious and deliberate effort to withhold material and valuable information and to misrepresent the true position in respect of these assets. The High Court held that the former husband’s failure to make proper disclosure was as a result of culpable and deliberate wrongdoing which amounted to fraud. The High Court held that the extent of the non-disclosure by the former husband was significant and material to the divorce settlement.
The High Court had to address its mind to the legal dilemma whether it was necessary to set aside the entire Order made in the divorce proceedings (including the Decree of Divorce), which would have had an impact on the rights of third parties such as the former husband's second wife. Having considered the legal framework and the rules and procedures relating to family law proceedings, the Court concluded that it was not necessary to interfere with the Decree of Divorce.
In leaving the Decree of Divorce intact, the High Court awarded the wife €2.5 million in addition to the financial provision she received on foot of the 2001 divorce. This figure was based on findings in relation to the value of the four assets as well as incorporating an additional sum of €500,000 on the assumption that further assets worth significantly more than €1 million were also concealed by the former husband at the time of the divorce.
The former husband appealed the High Court's decision to the Supreme Court.
The Supreme Court held that the findings of the High Court were correct in terms of the obligation to disclose, the finding of non-disclosure, the deliberate nature of the non-disclosure and the materiality and value of the assets concerned.
The Supreme Court referred back to the High Court for determination a query which arose in relation to one of the assets under appeal: whether that asset actually increased the resources available to the former husband. The sum of €240,000 was deducted from the award of €2.5 million in favour of the former wife pending the determination of this issue. If this issue is determined in favour of the former wife, the deduction of €240,000 should be reversed.
The scale and extent of the fraud on the part of the former husband was such that Mr Justice McKechnie (Supreme Court) in extracts from his Judgment reported in newspapers stated that the former husband had "knowingly committed perjury and deceit" and that in his many years in dealing with family law matters he had "never known of, or come across, a case where a party has so blatantly acted and where nothing short of utter contempt has been shown to the Court". It was also reported that Mr Justice McKechnie stated that matters should not be "let rest here". It remains to be seen what action, if any, will be taken against the former husband on foot of the reported findings of Mr Justice McKechnie.