DJ v BJ
| Jurisdiction | Cayman Islands |
| Judge | (Richards, J.) |
| Judgment Date | 05 August 2019 |
| Court | Grand Court (Cayman Islands) |
| Date | 05 August 2019 |
(Richards, J.)
Family Law — financial provision — pre-nuptial agreements — agreement that joint assets to be divided on dissolution or annulment of marriage or judicial separation — where parties separated in 2014 but divorced in 2019, assets acquired from 2014 to 2019 to be shared in accordance with agreement
Held, ruling as follows:
(1) In considering the division of matrimonial property pursuant to s.21 of the Matrimonial Causes Law (2005 Revision), a court should first determine what constituted matrimonial property. The court would not discriminate between a husband and wife, and the homemaker role should be given equal weight. The three strands of need, compensation and sharing should guide the court in reaching a fair division of property. There was a real difference between matrimonial property and non-matrimonial property. Property acquired during the marriage otherwise than by inheritance or gift would usually be matrimonial property, i.e. the financial product of the parties’ common endeavour (paras. 80–93).
(2) The court was the final arbiter of financial arrangements on conclusion of a marriage. It was not obliged to give effect to pre-nuptial agreements. The court should have regard to and give weight to a valid agreement except where it would be unfair to do so. Before giving such agreements full weight, a court should consider certain safeguards to include inquiry into whether each party (i) had entered into the agreement of their free will; (ii) had entered into the agreement without undue influence or pressure; (iii) had all the information material to his or her decision; (iv) intended that it would govern their financial affairs upon marriage coming to an end; and (v) fully understood and appreciated the implications of the agreement. This inquiry must be conducted in an effort to determine whether there were vitiating factors such as duress, fraud or misrepresentation, undue pressure or unworthy conduct such as exploitation of a dominant position which would serve to negate or reduce the effect of an agreement. Where the questions were answered to the satisfaction of the court and none of the vitiating factors were present it should give effect to the agreement unless it would not be fair to do so. It would be unfair if the effect of the operation of the agreement would be to place the children of the marriage and/or one of the parties in a position of real need. Need was to be interpreted in the context of each case, having regard to the circumstances of the parties, including their standard of living. Despite the existence of an agreement, the court was required to consider the statutory factors and the strands of need, compensation and sharing. In giving effect to an agreement and recognizing the autonomy of the parties to regulate their own financial affairs, a court would usually interfere with an agreement only to the extent necessary. In the majority of cases, that interference would take the form of ensuring that the strands ofneed and compensation were satisfied. The court was least likely to interfere with or vary an agreement in respect of the strand of sharing (paras. 94–113).
Assessment of the agreement
(3) In the present case, there were no vitiating factors which would make it unsafe to have regard to or give any weight to it. Neither party challenged its validity. There was no evidence to suggest that either party was subjected to duress, or that there was any fraud or misrepresentation. Nor was there any evidence of any undue pressure falling short of duress. There was no evidence that the husband sought to exploit his position so as to secure an unfair advantage over the wife. Both parties had independent legal advice on the draft agreement. The matter did not appear to have been rushed. No issues as to the inadequacy of disclosure had been raised. There was every indication that the parties were aware of what they were doing and were able to make an informed decision as to the agreement. In the absence of vitiating factors, the court must give weight to the agreement unless it would be unfair to do so (paras. 128–130).
(4) The plain meaning or construction of para. 4 of the agreement was that the assets not identified as separate assets were to be shared equally between the parties as at the date of dissolution of the marriage. “During the marriage” in para. 4 referred to the period of the marriage until judicial pronouncement, either of dissolution of the marriage or judicial separation. It was not the date of separation of the parties (paras. 142–154).
(5) Paragraph 6(e) of the agreement provided that the husband would provide “suitable” income provision for any child of the marriage. Contrary to the husband’s submission that suitable did not mean that he was to be responsible for all such costs and that they should be shared based on income proportions, para. 6(e) defined suitable income provision as including “any medical insurance costs, medical expenses, all educational and related costs, extra-curricular expenses and domestic assistance expenses.” It was plain that the husband had committed to paying for all of those expenses (para. 156).
(6) In respect of whether capital contributions made by the husband to the firm as per his joining agreement should be included as joint assets, the husband accepted that the wife was entitled to half of the increase from CI$175,000 (being the initial contribution to the firm) to either March 2014 or now, depending on the court’s ruling as to the relevant period (para. 160).
(7) The court had to consider whether the construction of the agreement which would result in the sharing of assets beyond the point of separation of the parties was a fair outcome in light of the entirety of the circumstances of this case. There had been changing circumstances, in particular that the parties had a child with special needs who required long-term treatment. The result of this unforeseen circumstance was that in addition to the sharing of his after-acquired assets, the husband would be requiredto pay all or the majority of the child’s therapeutic costs and maintenance contributions for a longer term than the anticipated school age period. The special considerations of the child and the needs of both the child and the wife might require that specific housing arrangements be made on a long-term basis for the child, which was a reasonable requirement the agreement ought not to prejudice. In addition, the parties could not have anticipated the very lengthy period which had elapsed between separation and finalization of divorce. However, both parties must have realized that a judicial pronouncement would not occur immediately. In the circumstances the agreement could not be said to be unfair because a judicial pronouncement took longer than expected. In light of all the circumstances and given the husband’s level of income and resources, giving effect to the agreement would not operate unfairly against him. Therefore, while there was a discretion in s.21(d) of the Law to vary the terms of the agreement, the court would respect the autonomy of the parties and consider the agreement as one aspect of the case (paras. 162–180).
Provision for the needs of the child
(8) Pursuant to s.19 of the Law, the first consideration was the needs of the child of the marriage and the provision that would be in his best interests. The child’s immediate needs were for housing, specialist therapeutic treatments and regular maintenance. The husband should meet the downpayment and acquisition costs of a home to be purchased for the child and the wife. The wife should pay 45% of the mortgage on the property, with the husband paying the remaining 55%. Maintenance and upkeep of the home should be apportioned in the same ratios. In light of the husband’s greater level of income and resources, he should pay all the costs of therapy for the child. The husband should also pay the maintenance costs for the child, as was provided in the agreement. With respect to the duration of the order for maintenance for the child, given his special circumstances the disability proviso to s.22 of the Law would be applied, which provided that “where a child of the marriage is . . . under a disability of such a nature as to preclude it from maintaining itself independently, the Court may order that the payments shall be continued throughout the period of disability, notwithstanding the age of the child” (paras. 181–213).
Clean break
(9) This was an appropriate case for a clean break. The wife, who was a professional with her own businesses, was well on her way to independent living and there were sufficient assets to enable the parties’ affairs to be settled with some finality. As the wife would have the primary care for the child on a long-term basis some element of compensation should be included in the settlement. When determining the parties’ assets to be shared, it would be unfair to include the husband’s capital contributions to his firm, which had to remain in the firm until the husband left it. The husband’s available assets were CI$1,507,581, one-half of which would be CI$753,790.50. This would be reduced by one-half of theprofit made by the wife’s companies during the period, to CI$747,878.99. This would be a fair outcome in the circumstances. Given the illiquid nature of the majority of the husband’s assets, he would be ordered to pay this in installments over a maximum period of 36 months (paras. 235–246).
(1)B-H v. H, 2009 CILR 185, referred to.
(2)Brack v. Brack, [2018] EWCA Civ 286; [2019] 1 W.L.R. 3438; [2019] 3 All E.R. 664; [2019] 2 F.C.R. 312; [2019] 2 FLR 234, considered.
(3)FF v. KF, [2017] EWHC 1093 (Fam), considered.
(4)Ford v. Beech (1848), 11 Q.B. 852, considered.
(5)Gordon v. Walter, C.A. Civil 13/2014, August 22nd, 2014, considered.
(6)H v. H, 2007 CILR 135, considered.
(7)...
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