The Supreme Court has set aside two financial orders made as part of a judicial separation, directing the High Court to reconsider how funds could be extracted from a company and the tax effects of doing so. The decree of judicial separation itself was not appealed and remains undisturbed by this decision.
The appeal was brought by the husband against an order requiring him to pay the wife €4 million between 2004 and 2006, and a separate order requiring a €100,000 contribution to her costs. The High Court had valued the group of companies at €10 million. The wife’s separate claim to a 50% beneficial interest in the companies had been rejected.
The husband argued that the High Court should have made findings about the method of raising the money, the tax liability and the consequences for the business. Evidence indicated that tax on the lump sum could range from 20% to 42%, or €800,000 to €1.68 million, before commercial realisation costs. The wife’s counsel accepted it would have been ideal for the trial judge to state a view on those matters, but argued that the husband could choose the most effective means of payment.
The Supreme Court said the possible tax burden was too significant to leave out of consideration. It held that the court should examine the available extraction mechanisms and their tax effects when assessing proper provision. It did not require the High Court to decide whether the money could be raised over two years or what the commercial effects would be; those matters were treated as resolved by the trial judge in the circumstances of this case. The Court noted that the company is legally distinct from its shareholders and that its interests, and those of others connected with it, may require consideration in other cases.
The Court also declined to interfere with the €10 million valuation, saying it was supported by evidence and was within the trial judge’s discretion. It set aside the €100,000 costs contribution and made no order for costs of the High Court action. Each party’s solicitor was to look to their own client for agreed or reasonable remuneration.
The case was remitted to the High Court to make findings on the mechanisms for extracting any funds ordered for the wife and the tax effects on the companies or the husband. The Supreme Court did not substitute a new lump sum, so the financial provision remains for the High Court to reconsider.