The Court of Appeal has dismissed a husband’s appeal against orders winding up a trust established for his former wife, releasing its funds to her and awarding her €160,000 towards her legal costs.
In a judgment delivered by Mr Justice Woulfe on 5 October 2022, the court affirmed the High Court’s decision that winding up the B.X. Trust was required to make proper provision for the respondent under the Family Law (Divorce) Act 1996. The trust had already been wound up in November 2020, after the High Court refused a stay and the appellant did not appeal that refusal.
The trust was created following the couple’s judicial separation in 2010, with €1.45 million intended to provide the respondent with income. The Court of Appeal recounted evidence that the trust’s investment restrictions and structure had resulted in much lower returns and capital distributions than anticipated. The respondent’s average annual income from it was reported as €10,426, compared with an expected €30,000 after tax from the trust fund. The High Court found that the trust was underperforming and that the respondent had managed other investments prudently. It concluded she should be able to manage her finances without the trust structure.
The appellant challenged that conclusion on four grounds. He argued that the respondent’s handling of an earlier legal-costs dispute amounted to gross and obvious conduct; that she was not financially minded; that he faced a future risk of further financial claims if she mismanaged the released funds; and that her additional €260,000 payment to solicitors in 2011 should count against her. These were submissions, not findings accepted by the Court of Appeal.
The appeal court found no basis to overturn the High Court’s conclusions. It said the evidence did not establish that the respondent had set out to mislead courts over the earlier costs dispute. It also held that the phrase “financially minded”, used by a High Court judge in 2010, was an observation tied to the circumstances then and was not a finding that she lacked capacity to manage her affairs. The possibility of a future maintenance claim did not justify restoring the trust, the court said.
On the €260,000 payment, the court noted that no formal undertaking by the respondent was recorded in the 2011 order. The High Court had found she paid on her solicitors’ advice that doing so would not breach the order and on the understanding any overpayment would be reimbursed. The appeal court held that this finding was open to the trial judge.
The Court of Appeal dismissed the appeal and affirmed the High Court’s decision. Woulfe J.’s provisional view was that the respondent should receive her appeal costs. Either party could seek a further hearing on costs within 14 days; otherwise, an order in those proposed terms would be made. Collins J. and Binchy J. agreed with the judgment and proposed orders.