The High Court has affirmed an order requiring a husband to pay his former wife €3,100 a month in spousal maintenance, taxable in her hands. It dismissed her appeal against an earlier ruling that the payment was a gross amount and did not reduce the maintenance despite the husband’s appeal seeking a reduction.
Mr Justice Michael White delivered judgment on 23 May 2012 in a Circuit Court appeal. The appeal concerned an order made on 9 March 2011, following the husband’s application to vary or discharge maintenance. The wife had appealed the declaration that the €5,000 monthly payment originally ordered in May 2009 was gross, leaving her liable for income tax. The husband also challenged the reduced amount of €3,100 a month, although the judgment says he had not originally intended to appeal.
The couple had been granted a judicial separation in 2009. The original order required the husband to pay the wife €5,000 monthly for 18 months, with a review after that period. In March 2011, the Circuit Court ordered that the payment continue for two months, then fall to €3,800 monthly, and reduce to €3,100 after the family home was sold.
The wife said in evidence that the judge who made the original order had described the €5,000 as a net payment and referred to an annual cost of about €100,000 to the husband. A solicitor who attended that hearing disputed that recollection. The High Court noted that neither the perfected May 2009 order nor a later clarification referred to income tax.
Mr Justice White accepted that the wife had misunderstood the tax position and expected the husband to choose joint tax assessment. He said the husband was entitled not to make that election and that the wife was not entitled to compensation for tax due on the maintenance. The court also said it would have been surprised if the original judge intended the €5,000 payment to provide no tax benefit to the husband, who had also been ordered to meet the children’s financial needs.
The judge considered both parties’ finances. The wife’s gross income, including a car allowance, was €74,900, alongside gross maintenance of €37,200 a year. The husband’s adjusted net practice profit for the year ending January 2012 was €228,092, with a lower projection for the following year. The court accepted that his practice income had fallen from its 2009 peak and that he had substantial commitments, including support for two children and higher mortgage payments on the practice premises.
Although the judge said the husband had made a good case for reducing maintenance, he left the €3,100 monthly order in place, citing the wife’s recent return to work and tax liabilities accumulated while she was unemployed. He set no review date, saying the husband could return to court if necessary, and observed that the payment was not necessarily to continue until his retirement.