The High Court has directed that a husband’s shareholding in a family company transfer to him as part of long-running judicial separation and divorce proceedings, subject to conditions intended to protect his wife’s financial security and address a substantial tax liability. The court said it would receive further submissions before making final orders.
In a judgment delivered on 5 November 2014, Mr Justice Michael White considered the parties’ competing proposals for control of the business. The spouses were equal shareholders and directors. The wife sought the husband’s shares and proposed hiring a qualified employee to run the business; the husband sought her shares. The judge rejected the wife’s proposal as unfair to the husband, who had run the business without her assistance since 1997, but said conditions were needed to protect her.
The court’s analysis found that €1,644,886 had been withdrawn from the company by the directors over five years to August 2012. After adjustments, they owed the company €1,133,643. The judge said most of the withdrawals benefited the wife and children, while also finding that both spouses had responsibility for addressing the tax position. He did not accept that the accommodation refurbishment dispute caused the tax difficulty.
The judgment valued the family home at €550,000 and purpose-built student accommodation at €850,000. It said the wife would ultimately receive both properties mortgage-free, then valued at €1.4 million. The court considered annual maintenance of €60,000 for her and €12,000 each for two children appropriate, subject to the availability of net student accommodation profits after outgoings and mortgage instalments. The husband was to continue paying the family home mortgage instalments; the wife would pay its utilities. Maintenance for one child was to end on 20 September 2015.
The share transfer was to be subject to a full indemnity from the husband for the outstanding tax liability on directors’ loans and restrictions preventing the shares from being sold or the company liquidated while security over the family home or student accommodation remained necessary for that liability. The court stressed that Revenue Commissioners would decide the tax treatment; its comments on a possible salary declaration were an opinion, not an order.
The court also directed that a Bank of Ireland endowment policy be cashed to reduce the family home mortgage, and that any balance in a Zurich Life policy be shared. Other life and pension policies were to be held by the husband, with an undertaking to use proceeds to reduce mortgage capital. The holiday apartment and garage in another EU member state were to transfer to the husband only after he reached an agreement with Revenue and paid the substantial lump sum envisaged in his proposal.
The proceedings began in the Circuit Family Court in 2008 and were transferred to the High Court in 2013. The judge said final orders would follow submissions to ensure fairness to both parties.