Supreme Court allows appeal on judicial separation assets due to unforeseen dramatic fall in agricultural land value.

THE SUPREME COURT

[Appeal No: 299/09]

Denham J.

Macken J.

McKechnie J.

BETWEEN/

M.D.

APPLICANT/RESPONDENT

AND

N.D.

RESPONDENT/APPELLANT

Judgment delivered on the 7th day of June, 2011 by Denham J.

1. The parties married in 1984, they are now in their fifties and have three children. At the time of the High Court order the third child

had just completed secondary school, was entering college and was the only dependent child.

2. The applicant/respondent, the wife, M.D., referred to as "the respondent" brought a claim for judicial separation. She is a solicitor

and employed in the public service. The respondent/appellant, the husband, N.D., referred to as "the appellant", is a farmer and

businessman.

3. In a judgment delivered on the 22nd July, 2008, and by order dated the 11th December, 2008, the High Court (Abbott J.) granted a

decree of judicial separation pursuant to s.3 of the Judicial Separation and Family Law Reform Act, 1989. Further orders were made as

to the Succession Act, 1965 and to properties owned by the parties.

4. The learned High Court judge sought to achieve an equal division of assets between the parties. The High Court intended to divide

the assets equally between the parties, subject only to the appellant retaining a portion of assets over 50% if he was in a position to

pay the respondent a lump sum of €2m by the 22nd July, 2009.

5. This appeal raises issues arising from the devaluation of assets since the order of the High Court which, it was submitted, makes

the financial provision unfair to the appellant and not in keeping with the intention of the learned trial judge.

6. The appellant filed a notice of appeal appealing the following aspects of the judgment of the 22nd July, 2008, and the order of the

11th December, 2008, which was perfected on the 3rd February, 2009:-

i) The order directing the appellant to pay to the respondent the lump sum of €2,853,000.00.

ii) The order directing the sale of so much of the lands owned by the appellant in a specific folio in County Tipperary as

might be necessary to pay a lump sum of €2,853,000.00 to the respondent.

iii) The order that the County Registrar for the City of Dublin execute such deeds as might be necessary to give effect to

the orders for sale of the appellant's lands in County Tipperary.

7. The grounds advanced in the appeal were that proper provision had not been made for the parties. It was submitted that requiring

the appellant to pay to the respondent the lump sum of €2,853,000.00 would not effect an equal division of the net assets owned

jointly and/or severally by the parties. In the alternative, it was advanced that matters have occurred since the date of the judgment

which so affect the basis on which the learned High Court judge made his decisions that the orders do not constitute proper

provision. In particular it was stated that the orders of the High Court were premised on the basis that the single largest asset in the

ownership of either party was the farmland situated at L. in Co. Tipperary, having a value of €28,000 per acre and that the said lands

could be sold for about that valuation, which valuation is significantly in excess of the value of the lands or any price which could be

achieved now by the sale of the lands. Further, that the order directing the appellant to pay to the respondent the lump sum of

€2,853,000.00 would not, in light of the valuation of the lands at L., constitute an equal division of the assets. Further, that the order

directing the appellant to pay to the respondent the lump sum of €2,853,000.00 is not capable of being complied with by the

appellant either through the sale of the farmland at L. or at all.

8. Thus a significant aspect of this appeal arises because of the dramatic fall in the value of property since 2008.

9. Initially the appellant had appealed on the issue as to whether a 50/50 division of property was proper provision. This is no longer

an issue. At the hearing of this appeal it was indicated on behalf of the appellant that he would be satisfied with a 50/50 division of

the property. Thus the decision in principle of the learned High Court judge to divide the assets equally is not under appeal.

10. The most valuable asset in these proceedings is a farm, owned by the appellant, which came from his family. However, it is

important to note that no issue arose on this appeal as to the nature of this asset as a family farm.

11. The appellant sought that further evidence be given on this appeal in respect of matters which have occurred after the date of

the High Court decision. He deposed that fundamental assumptions common to both parties at the hearing in the High Court in respect

of the net value of the assets of the parties, have been falsified by subsequent events. He deposed that to effect the orders of the

High Court in their present form would wholly frustrate the intention of the trial judge to divide the assets of the parties equally

between them, further to do so would not constitute proper provision between the parties. He deposed that it was agreed in the High

Court that the largest single family asset, being the 205 acres of farmland owned by the appellant at L., was worth €28,000 per acre,

giving a total gross value of €5,740,000.00. Also that the further tranche of 32 acres owned by the respondent was valued by expert

witnesses called by the respondent and the appellant at €20,000.00 and €28,000.00 an acre respectively. Based on the assumption

that those values were correct, the trial judge held that the total net family assets was €7,835,000.00, and that allowing for assets

attributable to the respondent to the value of €819,000.00, the balancing figure payable by the appellant to the respondent to

achieve equality of assets was €2,853,000.00. The appellant deposed that there was an assumption by the learned High Court judge,

as appears from the judgment of the High Court, that the appellant could raise that sum of money by selling part of the farmlands.

The appellant deposed that both assumptions have proved incorrect. He deposed to difficulty in selling lands, of the respondent not

agreeing, and of an offer of €7,000.00 an acre for the sale of a 60 acre folio, being a total of €420,000.00, to which the respondent

did not agree, and that the proposed purchaser had withdrawn anyway. He deposed that the current value of the 205 acres of

farmland at L. is approximately €1,600,000.00, which is just over €7,800.00 per acre. He deposed that the current gross value of the

house at L. and the 6 acres that goes with it is approximately €390,000.00 to €420,000.00 and that the approximate value of the 32

acres in the respondent's name, including the bungalow on it, is approximately €280,000.00 to €285,000.00. The appellant deposed

that, at this juncture, it is unclear whether the farmlands can realistically be valued at €7,800.00 per acre.

12. Quite apart from the new evidence which the appellant sought to bring before the Court, the Court has judicial knowledge of the

property bubble and bust. However, the Court is alert to the difficulty of addressing events subsequent to the High Court decision.

Submissions on behalf of the Appellant

13. On this appeal counsel for the appellant, Mr. Fitzgerald S.C., submitted that what is sought is proper provision between the

parties. Counsel stressed three issues. First, he raised the issue as to when the assets should be valued, whether it be at the trial or

on appeal. He argued that both in matters of judicial separation and divorce the jurisdiction of the court rests on the making of

auxiliary orders which will be "proper provision" for the parties. He submitted that an appeal should not act on the premise of historic

values, that this Court is in the same position as the High Court and that this Court should make a decision on the situation as it is

before this Court. Secondly, he sought to adduce new evidence. He did this without special leave on the basis that fundamental

assumptions have changed and that the common assumptions before the High Court as to land values were now false. Counsel

submitted that he did not have to indicate any error of law by the High Court. He submitted that the basis for the jurisdiction in the

Supreme Court is to make a decision on proper provision for the parties, and that to make that decision that must be based on the

reality now, before the Supreme Court, and so there was a need for the new evidence. Counsel submitted that the change in

property values is a catastrophic event, a change in financial circumstances that brings about a situation where under the High Court

order the parties are not left with the 50/50 division of properties as contemplated by the High Court, but where one party gets

virtually all the property. Thirdly, counsel submitted that there had been an error of law by the High Court. The learned High Court

judge had found that the respondent was the more secure of the two parties in that she had a settled income, a pension, and an

ability to raise credit. Nonetheless, in allocating the assets, he gave her the assets with no risks attached, he gave her the lump sum

by putting an excessive weight on the issue of a clean break. But the appellant had to realise the assets, to raise the lump sum, with

all the risks attached. This was described in the ground of appeal as that the learned trial judge failed to give any consideration to

the difficulties in the division of the assets that would leave one party with liquid assets and the other party with risky assets. He

submitted that if the respondent received the later figure offered of €1.9m and had her pension, and the appellant got the family

house and curtilage land and commercial yard, he would be receiving 15% of the assets.

Submissions on behalf of the Respondent

14. Michael McDowell S.C., for the respondent, referred to the decisions of the High Court by which the respondent was required to

transfer (a) her interest in the family home; (b) her interest in a bungalow and 32 acres; and (c) her interest in a profitable company,

all to the appellant, which she has done. So, the respondent has had no rental income from the farm or any income from the company

for the last 5 years. Counsel submitted that the kernel of the issue was the value of agricultural land. What if the value of agricultural

land had doubled? Could she then demand more? If that had been the case the appellant would have been getting, say, 75% of the

property and she would have received 25%. Or, counsel argued, suppose the company had struck gold and trebled in value, could she

come to the Court and say that she got less than half? Counsel submitted that a party could not argue that the equality principle had

been departed from because of subsequent events. Counsel submitted that the function of the Supreme Court is not to conduct a

rehearing, nor is it the function of the court to have a full hearing. While as between the Circuit Court and an appeal to the High

Court there is a hearing de novo, see s.37(2) Courts of Justice Act, 1936, an appeal from the High Court to the Supreme Court is

radically different. Counsel submitted that the Supreme Court has only a corrective function on appeal in matrimonial matters. The

Supreme Court, he argued, is not entitled to substitute its own decision on the merits. It is for the Supreme Court to look at the trial

in the High Court to see if that decision departed from what justice required at that time. He submitted that the Supreme Court only

interferes with the High Court when there has been error of fact or law. New evidence would only be admitted in the Supreme Court if

there has been an error of fact or law in the High Court. Counsel submitted that the High Court has an obligation to determine the

case on a final basis, subject to a corrective appeal in the Supreme Court. Counsel pointed to the context of a clean break, lump

sum, decision. He submitted that while reluctant to use the "flood gates" argument, if a lump sum decision were made in the High

Court it would almost be professional negligence not to appeal against the possibility that circumstances would change between the

High Court and the Supreme Court hearing. He submitted that the appellant should not be permitted to argue the value of agricultural

land issue.

Counsel pointed out that in the High Court the appellant had argued that the family farm was his assets and he opposed the 50/50

decision. Having submitted that the 50/50 division was wrong in the High Court he had withdrawn that submission in the Supreme

Court. The respondent wants a clean break and some finance to acquire a house etc. She has surrendered control over the family

home, farm and business. She has a lump sum order for €2.8m. She has her civil service position and ultimately her pension. To meet

the change in agricultural land price she has made an open offer that instead of selling all the land, the appellant could (a) keep the

family home on about 12 acres around it, and (b) the business; and (c) give to her €1.9m. At the hearing she made the offer that if

the land is sold (about 200 acres) and does not yield €1.9m she would take that lesser sum.

Counsel invoked cases from the United Kingdom. He admitted that they were not on all fours with our jurisdiction, but that if they

were relevant to an extension of time point, then when time had been extended the same reasoning is relevant to this appeal, as it

addresses whether it is a ground to intervene. Counsel argued that the only issue before this appellate Court is post trial

developments – the slippage in the value of agricultural land. Counsel submitted that the subsequent diminution of land values is not a

legitimate basis on which to appeal to the Supreme Court. He submitted that as a matter of policy the issue before the Supreme

Court is whether the learned trial judge made an error in not taking into account the fact that land prices were about to be reduced

and so he should not have made the decision he did.

Counsel asked the Court to determine whether it would interfere with the order of the High Court. Counsel said that the respondent

would take whatever the sale of the lands (205 acres) achieves up to €1.9m, and that the appellant could have 50% of any sum

between €1.9m and €2.8m. Any sum over €2.8m he would have entirely.

"Proper Provision"

15. The concept of "proper provision" in Irish law is grounded in the Constitution and statutory law. It is required that proper provision

be made for the spouses and any dependent members of the family, having regard to all the circumstances of the case. Section 20(1)

of the Family Law (Divorce) Act, 1996, referred to as "the Act of 1996", provides:-

"In deciding whether to make an order under section 12, 13, 14, 15(1)(a), 16, 17, 18 or 22 and in determining the

provisions of such an order, the court shall ensure that such provision as the court considers proper having regard to the

circumstances exists or will be made for the spouses and any dependent member of the family concerned."

In making the determination as to proper provision a court shall have regard to the matters set out in s.20(2)(a) to (h) of the Family

Law (Divorce) Act, 1996. In this case the learned High Court judge decided that the assets should be divided equally between the

spouses. While the appellant initially appealed the decision and opposed the decision of a 50/50 share of the assets, this ground of

appeal was dropped. At the hearing of the appeal counsel for the appellant stated that the appellant would be happy to receive 50%

of the assets. Thus there was no appeal against the decision in principle of the learned trial judge to divide the assets equally.

However, it remains the responsibility of the Court to ensure that there is proper provision for the spouses and any dependent

children. This will depend on all the circumstances of the case.

Family Farm

16. No issue arose, or was decided, on the fact that the single largest asset was a family farm originally owned by the family of the

appellant. So no inference should be drawn on this issue from this decision.

New Evidence

17. The appellant brought new evidence before the Court. He did this, without special leave of this Court, on the basis that matters

have occurred after the High Court decision. Reliance was placed on O.58 r.8 of the Rules of the Superior Courts, 1986 which states:-

"8. The Supreme Court shall have all the powers and duties as to amendment and otherwise of the High Court, together

with full discretionary power to receive further evidence upon questions of fact, such evidence to be either by oral

examination in court, by affidavit, or by deposition taken before an examiner or commissioner. Such further evidence may

be given without special leave upon any appeal from an interlocutory judgement or order or in any case as to matters

which have occurred after the date of the decision from which the appeal is brought. Upon any appeal from a final

judgement or order such further evidence (save as to matters subsequent as aforesaid) shall be admitted on special

grounds only, and not without special leave of the Supreme Court (obtained upon application therefor by motion on notice

setting forth such special grounds). The Supreme Court shall have power to draw inferences of fact and to give any

judgement and make any order which ought to have been made and to make such further or other order as the case may

require. The powers aforesaid may be exercised by the Supreme Court, notwithstanding that the notice of appeal asks

that part only of the decision be reversed or varied, and such powers may also be exercised in favour of all or any of the

respondents or parties, although such respondents or parties may not have appealed from or complained of the decision.

The Supreme Court shall have power to make such order as to the whole or any part of the costs of the appeal as may

be just."

18. The new evidence relates to the dramatic fall in the value of agricultural land since the order of the High Court. It was agreed in

the High Court that the single largest family asset was 205 acres of farm land owned by the appellant, then having a value of €28,000

per acre (with a total gross value of €5,740,000.00). A further tranche of 32 acres of farm land owned by the respondent was valued

by the expert witnesses called by the respondent and appellant in the High Court at €20,000 and €28,000 an acre respectively. On

the assumption that these values were correct, the High Court held that the total family assets were worth approximately

€7,835,000.00. There was a further assumption by the High Court that the appellant could, based on the same values, raise the lump

sum proposed by selling part of the farm lands. These assumptions are no longer correct. The appellant deposed to a dramatic fall in

agricultural land value. His figure was a fall to €7,800 per acre, from €28,000 an acre. Without accepting the precise figure advanced

on behalf of the appellant, the Court has judicial knowledge of the major collapse in property prices over the last few years. Without

doubt there has been a property crash. The question then is whether the fact that there has been a significant fall in the value of

agricultural land, between the date of the High Court order and the hearing of this appeal, can be considered by this Court. It is clear

that the assumptions set out above are now so undermined as not to be capable of being relied upon.

Jurisdiction

19. The order of the High Court is final, unless there is an appeal. There has been an appeal in this case and this Court now has

jurisdiction in the matter. The Supreme Court has an appellate jurisdiction. In the Constitution of Ireland 1937 Article 34.4.3º states:-

"The Supreme Court shall, with such exceptions and subject to such regulations as may be prescribed by law, have

appellate jurisdiction from all decisions of the High Court, and shall also have appellate jurisdiction from such decisions of

other courts as may be prescribed by law."

Order 58 r.1 of the Rules of the Superior Courts 1986 provides:-

"All appeals to the Supreme Court shall be by way of rehearing and (save from the refusal of an ex parte application) shall

be brought by notice of motion (in this Order called "the notice of appeal"). The appellant may appeal from the whole or

any part of any judgement or order and the notice of appeal shall state whether the whole or part only of such judgement

or order is complained of and, in the latter case, shall specify such part."

The rehearing in this Court is an appeal but not usually in the form of evidence being advanced again. The "rehearing" in the Supreme

Court is generally by way of re-examination of the documents, including transcripts of the evidence; only in exceptional cases is new

evidence received. While it is more usual to have an appeal on an issue of law, there may also be an appeal from a decision on fact,

although, given the jurisprudence of the court, that is of a more limited nature. In general, the Supreme Court is slow to interfere with

a finding of fact of the High Court. As McCarthy J. stated in Hay v. O'Grady [1992] 1 I.R. 210 at p.217:-

"If the findings of fact made by the trial judge are supported by credible evidence, this Court is bound by those findings,

however voluminous and, apparently, weighty the testimony against them. The truth is not the monopoly of any majority."

However, in this case the issue of fact is not a finding of fact of the learned trial judge, but rather is the crash in property values, a

fact since the decision of the High Court.

The Supreme Court has an inherent power as to how it exercises its jurisdiction. In Hughes v. O'Rourke [1986] I.L.R.M. 538, McCarthy

J. described at p.546 that it was:-

"beyond question that the Supreme Court has an inherent power to regulate the exercise of its own jurisdiction. This

power derives from the Constitution which, whilst expressly creating this Court and specifying its jurisdiction, of

necessity, cloaks it with all powers required properly to exercise that jurisdiction."

Restrictions on appeals to the Supreme Court may be legislated for by the Oireachtas. Thus, in certain statutes there may be an

appeal to the Supreme Court only on leave being given by the High Court. Or, in other cases, a statute may provide that an appeal

may only be taken to the Supreme Court on a question of law. There is no ouster of the right of appeal to the Supreme Court in the

Act of 1996.

Lump Sum

20. In this case the learned trial judge awarded a lump sum to the respondent, in an attempt to establish as clean a break as is

possible under our jurisprudence. The lump sum ordered in this case was to be funded from the sale of lands of the appellant. The size

of a lump sum in a case will depend on all the circumstances. The lump sum awarded to the respondent was grounded on facts which

have altered dramatically since the hearing in the High Court.

U.K. Case Law

21. I do not find the English authorities helpful for a number of reasons. First, many of them relate to the issue of an extension of time

for an appeal, which is not the issue in this case. Secondly, and more significantly, the jurisprudence of "proper provision" required

under the Constitution and the law is a unique requirement under Irish law and is not assisted by jurisprudence from the United

Kingdom.

Decision

22. The principle of an equal division of the assets, determined by the High Court, is not under review. That principle stands. The

second matter is that of the lump sum. The learned trial judge was entitled to make a lump sum order. However, the fabric of the

judgment of the learned High Court judge is incapable of being performed as he planned because of the collapse of the value of

agricultural land and the assumptions made as to its value by the High Court, which are no longer valid. The sale of agricultural land

based on those assumptions was the only mechanism by which the lump sum payable to the respondent could be achieved.

23. The appellant has brought new evidence before the Court, without special leave, of material matters which occurred after the

date of the High Court decision. This evidence is before the Court by way of Order 58 r.1 of the Rules of the Superior Courts 1986. It

is a matter for the Court to consider, to determine if it is relevant to the appeal, and, if it is relevant, what weight to give to the new

evidence. In some cases such new evidence may not be relevant, or material, or carry any weight, and will not be considered by the

Court. Indeed, if new evidence were advanced which was not relevant, or material, or carried no weight, it might have consequences

for the party advancing such matters by way of costs.

24. In this case, the new evidence has been brought to show that there has been a material change in the value of agricultural land

which was unforeseen at the time of the High Court hearing; the value of agricultural land has since fallen dramatically.

25. I am satisfied that the new evidence is relevant, and should be given consideration and due weight. Having considered it, I would

admit the evidence as not to do so would result in an injustice. I am satisfied that the value of the agricultural lands has fallen

dramatically since the High Court order was made. The effect of this material change and unforeseen event is that the scheme

created by the High Court to divide the assets equally by use of a lump sum funded from the sale of agricultural lands is incapable of

being performed as it is currently determined. While both the principle of an equal share of the assets to both spouses and the use of

a lump sum may still be applied, this must be done according to the reality of the situation as it exists now.

26. While it is clear that the value of agricultural land has fallen dramatically the Court has only the figures given by the appellant.

Thus, while accepting that there has been a severe drop in the value of agricultural land, the Court is not in a position to determine

the current value of the lands.

27. Counsel for the respondent did indicate that if this Court was going to intervene in the decision of the High Court, that it might

determine the matter. However, that is not possible in the circumstances.

28. This Court, as was the High Court, is required to ensure that there is proper provision for the parties. This must be based on the

facts of the case. Thus there will have to be a finding of fact as to the value of the agricultural lands, so that the parties may

receive an equal share of the assets, and that a lump sum for the appropriate amount may be ordered.

29. Consequently, I would allow the appeal. I would set aside the order of the High Court requiring the appellant to pay to the

respondent a lump sum of €2,853,000.00. I would affirm the order for sale of the farm lands of 205 acres. I would order that sale to

proceed and make such necessary orders as are required. I would remit the matter to the High Court, so that any further orders in

relation to the sale may be made by that court. On the sale being completed, the High Court may apply the principle of equality to

the assets so that each party achieve an equal share, including a lump sum for the respondent. It will be for the High Court to

determine how the assets are divided so as to achieve that equal share; this is a matter for the learned High Court judge.

30. I reiterate my initial words to the parties at the commencement of this appeal, it would be to the advantage of the parties and

their children if this matter could proceed by way of agreements rather than further litigation. It would be to the parties' benefit if this

lengthy litigation could be brought to a conclusion by mediation and agreement.