AD v JD
| Jurisdiction | Cayman Islands |
| Judge | (Ramsay-Hale, J.) |
| Judgment Date | 10 November 2020 |
| Court | Grand Court (Cayman Islands) |
(Ramsay-Hale, J.)
Family Law — financial provision — earning capacity — spouse’s earning capacity not matrimonial asset to which sharing principle applies
Held, ordering as follows:
(1) The English Court of Appeal in the case of Waggott v. Waggott ([2018] EWCA Civ 727) held that as earning capacity was not property generated during a marriage it was not capable of being a matrimonial asset to which the sharing principle applied or the product of which, as a result, an applicant spouse had an entitlement to share. Insofar as the present court was required to decide the point, it declined the invitation to hold that the English Court of Appeal in Waggott was wrong (paras. 43–51).
(2) Despite the lengthy submissions by counsel for the wife, this was an ordinary case where the court assessed the wife’s needs, generouslyinterpreted. The following principles emerged from the authorities in determining the appropriate level and duration of an award for spousal maintenance: (i) the parties’ standard of living was the benchmark or starting point against which needs were assessed; (ii) also relevant would be the length of the marriage, the length of contribution by the claimant and the parties’ available resources; (iii) however, the marital standard of living was not the lodestar—the ultimate aim was independence and self-sufficiency based on all the financial resources available to the parties; (iv) the transition to independence might mean that one party was not entitled to live for the rest of the parties’ joint lifetimes at the marital standard of living unless he or she could afford to do so from his or her own resources; (v) as time passed, how the parties lived in the marriage became increasingly irrelevant; and (vi) the longer the period for which needs were met, the more likely that the court would not assess those needs at the marital standard of living throughout that period (para. 56; para. 63).
(3) The husband would be ordered (i) to pay maintenance for the children of $3,085 per month until the older child was 16, $2,075 thereafter until the younger child entered high school, and $975 thereafter; (ii) to pay spousal maintenance in the sum of $10,874 per month for the wife for 12 months, and thereafter $5,874 for four years; (iii) to pay the wife the sum of $529,190 as her share of the marital assets; and (iv) to pay the wife’s legal fees in the sum of $383,000 (para. 65).
(1)BD v. FD (No. 2) (Application of the Principle of Need), [2016] EWHC 594 (Fam); [2016] Fam. Law 670; [2017] 1 FLR 1420, considered.
(2)Charman v. Charman, [2007] EWCA Civ 503; (2007), 9 ITELR 913; [2007] 2 F.C.R. 217; [2007] 1 FLR 1246, considered.
(3)G v. G, [2012] EWHC 167 (Fam), considered.
(4)J. v. C. (Child: Financial Provision), [1999] 1 FLR 152, considered.
(5)McTaggart v. McTaggart, 2011 (2) CILR 366; on appeal, 2015 (1) CILR 123, considered.
(6)Miller v. Miller; McFarlane v. McFarlane, [2006] UKHL 24; [2006] 2 A.C. 618; [2006] 2 W.L.R. 1283; [2006] 3 All E.R. 1; [2006] 2 F.C.R. 213; [2006] 1 FLR 1186, considered.
(7)SA v. PA, [2014] EWHC 392 (Fam), considered.
(8)SS v. NS (Spousal Maintenance), [2014] EWHC 4183 (Fam), considered.
(9)Scatliffe v. Scatliffe, [2016] UKPC 36; [2017] 1 A.C. 93; [2017] 2 W.L.R. 106; [2017] 2 FLR 933, considered.
(10)Waggott v. Waggott, [2018] EWCA Civ 727; [2019] Fam. 479; [2019] 2 W.L.R. 297; [2018] 2 FLR 406; [2018] 2 F.C.R. 61, applied.
(11)White v. White, [2000] UKHL 54; [2001] 1 A.C. 596; [2000] 3 W.L.R. 1571; [2001] 1 All E.R. 1; [2000] 2 FLR 981; [2000] 3 F.C.R. 555, considered.
(12)XW v. XH, [2019] EWCA Civ 2262; [2020] 4 W.L.R. 22; [2020] 1 FLR 1015; [2020] 2 F.C.R. 203, considered.
Matrimonial Causes Law (2005 Revision), s.19: The relevant terms of this section are set out at para. 30.
s.21: The relevant terms of this section are set out at para. 31.
The petitioner applied for financial provision.
The parties were both 45 years old and had two children. They began their relationship in 1993 and married shortly after the petitioner (“the wife”) graduated from university and the respondent (“the husband”) completed his accountancy articles. The husband was an equity partner at an accounting firm. In addition to his salary of US$250,000 a year, he participated in a profit-sharing scheme. The wife had been employed in various jobs before the parties’ first child was born in 2008 but she had not worked since then. The parties’ marriage came to an end in December 2017. The husband continued to meet all the expenses for the family as the wife was not working.
The issues for resolution were the capital provision to be made for the wife and the quantum and duration of periodical payments for spousal maintenance. The wife sought a share in the husband’s post-separation income, which had increased substantially after the parties’ separation. She based her claim for spousal maintenance on the three strands of need, compensation and sharing. It was submitted that, in assessing the periodical sum to be awarded to the wife, the court should make an order that allowed the wife to share in the husband’s future income on the ground that his earning capacity was generated during the marriage and was the family’s main asset.
J. Turner, Q.C. and K. McClymont for the petitioner;
N. Cusworth, Q.C., G. Hampson and S. Tummala for the respondent.
1 RAMSAY-HALE, J.:
Introduction
This is the decision on the application of the petitioner, to whom I shall hereinafter refer as “the wife” for the sake of convenience, for financial provision ancillary to a petition of divorce which was proved on May 31st, 2018. She and the respondent, hereinafter “the husband,” are both Canadian nationals. They are both 45 years old, the husband being born on March 18th, 1975 and the wife on August 14th, 1975. He is an equity partner at an accounting firm (“the firm”) and she, a homemaker and an amateur athlete who has competed in international competitions. They married in Canada on September 15th, 2000 and have resided permanently in the Cayman Islands since 2006. There are two children of the marriage: 12-year-old “L” and 8-year-old “M.” The parties’ final separation came at the end of December 2017.
The background
2 The parties first began their relationship in 1993. They married shortly after the wife had graduated from university and the husband had completed his accountancy articles. In 2001, they moved to Cayman so the husband could pursue a job offer. While in the Cayman Islands, the wife, who had obtained a Bachelor of Applied Design in interior design, worked at a small architectural firm for about 18 months.
3 The husband was briefly seconded to Dublin and the wife left her job and went with him. On their return to the Cayman Islands, she secured a job working in furniture sales which she hoped would allow her to transition into a job in interior design. Unhappily, some two months later the Islands were devastated by Hurricane Ivan and the husband was relocated to Curacao by his then employers. As a result, the wife, unable to negotiate a leave of absence to accompany her husband to Curacao, was forced to resign.
4 On their return to the Islands, the husband took up employment with another employer and the wife found a position as an assistant interior designer at a small architectural firm that she was thrilled with. The husband was not, as it transpired, as happy in his new job and the couple decided to return to Vancouver, which they did in October 2005. There, thehusband joined an international accounting firm and the wife found another job in furniture sales that she again hoped would allow her to transition into a role in interior design.
5 According to the wife, they found living in Vancouver to be not as “financially viable” as living in Cayman so when the husband received an offer of a job from the firm, they decided to return to the Cayman Islands, some 12 months after they had left. On her return, the wife found a job in marketing in which she worked for 12 months. In April 2008, “L” was born and the couple made a decision that the wife would cease paid employment to care for the child. In 2012, “M” was born.
6 The husband continued to work at the firm and on October 1st, 2012, he became a non-equity partner and the family’s economic fortunes grew. On October 1st, 2015, he became an equity partner, entitled to share in the firm’s profits as set out in the firm’s partnership agreement which is re-negotiated every year.
7 The structure of the profit-sharing agreement is relevant to the history of this matter so I will set it out here and return to it when I consider the husband’s income and earning capacity below.
8 As a non-equity partner, the husband’s salary of $250,0001 a year was supplemented by an annual discretionary bonus which was immediately available to the family for spending.
9 As an equity partner, by virtue of being a party to the partnership agreement, the husband participates in a profit-sharing scheme which is a little more complicated than the bonus scheme. The profit-sharing scheme, as explained by the managing partner of the firm and by the husband, operated as follows.
10 Each partner receives a distribution of any profits from the firm after the payment of partner salaries of $250,000 a year. There are three elements of the profit-sharing scheme:
(i) The performance element pool: 15% of the remaining profit divided, with each partner getting between 30% and 200% of the average per partner of the pool, unless they have failed to perform adequately;
(ii) The seniority element pool: the remaining 85%, increasing from 8% to 85% of the average per partner over nine years; and
(iii) The leadership element pool: in which partners become eligible to share from their ninth year any remaining profit divided between 25% and 75% of the average for this pool.
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1The husband is...
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