McTaggart v McTaggart

• Jurisdiction: Cayman Islands
• Judge: (Chadwick, P., Forte and Campbell, JJ.A.)
• Judgment Date: 29 November 2011
• Court: Court of Appeal (Cayman Islands)
• Date: 29 November 2011

Court of Appeal

(Chadwick, P., Forte and Campbell, JJ.A.)

McTAGGART

and

McTAGGART

B. Singleton, Q.C., Mrs. K.M. Thompson and Mrs. G.E. Nervik for the appellant;

R. F. Todd, Q.C. and Ms. F. Dowse for the respondent.

Cases cited:

(1) CR v. CR, [2008] 1 FLR 323; [2008] 1 F.C.R. 642; [2007] EWHC 3334 (Fam), applied.

(2) Doak v. Doak, 2002 CILR 224, referred to.

(3) Gojkovic v. Gojkovic (No. 2), [1992] Fam. 40; [1991] 3 W.L.R. 621; [1992] 1 All E.R. 267; [1991] F.C.R. 913, considered.

(4) H v. H (Financial Provision: Special Contributions), [2002] 2 FLR 1021, referred to.

(5) Miller v. Miller, [2006] 2 A.C. 618; [2006] 2 W.L.R. 1283; [2006] 3 All E.R. 1; [2006] 1 FLR 1186; [2006] F.C.R. 213; [2006] UKHL 24, dicta of Baroness Hale of Richmond and Lord Nicholls of Birkenhead applied.

(6) Minton v. Minton, [1979] A.C. 593; [1979] 2 W.L.R. 31; [1979] 1 All E.R. 79, applied.

(7) Rossi v. Rossi, [2007] 1 FLR 790; [2006] 3 F.C.R. 271; [2006] EWHC 1482 (Fam), considered.

(8) VB v. JP, [2008] 1 FLR 742; [2008] 2 F.C.R. 682; [2008] All E.R. (D) 230; [2008] EWHC 112 (Fam), considered.

(9) W v. W, 2009 CILR 255, referred to.

(10) White v. White, [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; dicta of Lord Nicholls of Birkenhead applied.

(11) Wight v. Wight, 2006 CILR 1; on appeal, 2010 (1) CILR 60, applied.

Legislation construed:

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. 3.

Family Law-financial provision-matrimonial property-matrimonial property is product of common endeavour-assets acquired after separation not matrimonial property unless derived from pre-separation earnings, savings or interest-court not to ‘deem’ proportion of after-acquired assets to be matrimonial but to require evidence-in case of intangible or fluctuating assets, to consider whether and extent to which assets as at hearing are same as, or derived from, corresponding assets as at separation-assets to be valued as at date of allocation, not as at date of separation

Family Law-financial provision-pensions-rights to future, uncertain retirement benefits under post-separation arrangement matrimonial property if derived from previous arrangement subsisting at date of separation-court able to assess value of benefits and capital sum may therefore be paid in satisfaction of wife”s interest-when provision calculated by reference to remuneration in (unknown) year of retirement, fair to base assessment on probable remuneration over period of years

Family Law-financial provision-compensation-court to consider need to compensate wife for relationship-generated disadvantage-if husband has significant future earning power so as to meet expenses without drawing on capital, need to compensate may require order allowing wife to do same-wife not expected to become significant income earner but expected to use income of capital available for investment to meet needs-court may order immediate transfer of capital to generate income to meet balance of needs

The appellant/husband petitioned for divorce and his wife sought financial provision.

The parties had been married for 20 years and had three children, aged 17, 22 and 24. Both parties were university educated, with bright career prospects. The husband pursued an increasingly successful career as an accountant at KPMG Cayman. The wife had originally intended to pursue a career in the financial sector but in 1985, after their first child was born, agreed that she should reduce her employment to devote more time to their child. In 1986, the husband was required to relocate to Florida which

necessitated the wife giving up her job completely; the move was a ‘sacrifice’ on her part in support of her husband”s career. In 1988, they returned and, with the assistance of a bank loan, a cash gift from the wife”s parents and a further loan from her brother, purchased their first matrimonial home. The wife resumed her part-time job at her brother”s law firm, otherwise dedicating her time and effort to looking after the children of the marriage, the home and the domestic side of the family. When her income was no longer needed, she gave up paid employment and gave more of her time to her company, Equestrian Centre of Cayman Ltd. (ECL), which she had set up with a friend on land owned by her husband and which ran on a break-even basis. In 1994, the wife acquired her friend”s interest in ECL and all its shares were then transferred to an asset-holding company in which the husband and wife had an equal interest and accordingly became joint 100% beneficial owners of ECL. After becoming a partner at KPMG Cayman, gradually the husband acquired more units in the partnership; by 1999 he had as much as 40% equity in the firm and earned over US$1.5m a year. The family”s standard of living increased significantly and the parties acquired other assets and also made significant savings and investments. In 1998, with the assistance of a loan from the wife”s father, they purchased a new and larger matrimonial home, selling their first house the following year.

In 2001, the husband discovered that the wife was having an affair and moved out of the matrimonial home. The following year he successfully petitioned for divorce on the ground of her adultery; the ground was uncontested and an order made that the grounds were proved and ancillary matters adjourned. Over the next two years they attempted reconciliation and the husband returned to live in the matrimonial home. This was unsuccessful and the parties separated for the final time in 2005; the husband moved out of the matrimonial home permanently and the wife continued to reside there. In 2006 the husband filed a notice of intention to proceed with the ancillary relief proceedings.

Since 2005, the husband has been managing partner of KPMG Cayman, earned further substantial income and acquired further valuable assets (‘the after-acquired assets’). There was also a change in the basis and value of his retirement benefits from KPMG under the 2006 Partnership Agreement which replaced the buy-in/buy-out previous arrangement, with provision for payment on retirement of four annual payments of an amount equal to one-half of the total remuneration received in the last full partnership year preceding retirement. His total remuneration in the last full partnership year (2008/2009) was US$3m., which was almost double what he had earned in each of the preceding five years; the amount would probably decrease by some 30% in the subsequent years.

The parties produced an agreed schedule of assets which identified ‘matrimonial assets’ and ‘after-acquired assets.’ The former category included, inter alia: (i) real estate; (ii) fluctuating current and savings accounts (including the husband”s KPMG drawings account); (iii) fixed deposits and investments; (iv) aircraft, motor vehicles and boat; (v) the

husband”s AXA life assurance policy and CI Chamber pension fund; (vi) ECL; and (vii) the husband”s undrawn share of KPMG profits and his KPMG retirement benefit. The agreed value of the matrimonial assets was CI$9.3m. as at 2005; and CI$9.6m. by 2009. The agreed value of the after-acquired assets was CI$7.8m., of which only CI$68,000 had been acquired by the wife. The aggregate value of the parties” assets as at 2009 was approximately CI$17.3m. Since separation the husband had been paying for the education of their children and for all their maintenance costs and he agreed that he would continue to do so; the proceedings were therefore concerned solely with financial provision for the wife.

The Grand Court (Foster, J.) held that s.21 of the Matrimonial Causes Law (2005 Revision) required the court to determine which assets were matrimonial property. Assets acquired after separation were usually non-matrimonial and therefore not subject to the general principle of equal division; however, assets which derived from undisputed matrimonial property should be categorized as matrimonial. Whilst there might have been some post-separation intermingling of matrimonial and non-matrimonial assets-which was to be taken into account-all of the after-acquired assets could not be treated as matrimonial. The wife”s argument that the after-acquired assets were the product of the parties” joint contributions and accordingly should be treated in the same way as undisputed matrimonial property was not accepted; her contribution to his earning power could not be acknowledged indefinitely. However, having regard to all the circumstances-in particular (i) the length of the marriage; (ii) the wife”s contributions; (iii) the length of time since separation; and (iv) the husband”s sole efforts-it was fair to deem 30% of the aggregate value of the after-acquired assets to be matrimonial property, to be divided in equal shares. The court considered that the fairer approach to valuation of the matrimonial property would be to adopt the values as at the date of allocation in 2009. The effect was that the wife would receive/retain assets to a total value of CI$5.9m., compared with the husband”s CI$11.4m. share. In the exercise of his discretion-having proper regard to need, compensation and sharing-the judge considered the disparity between these awards to be unacceptable and ordered the husband to make a further lump sum payment of CI$1m. to the wife out of his own non-matrimonial assets. The overall effect was therefore that the wife would retain/receive assets to a total value of CI$6.9m. and the husband would retain/receive assets to a total value of CI$10.4m.

The Grand Court further held that whilst the benefits acquired by the husband under the 2006 partnership agreement were themselves after-acquired assets, they had their origins in the earlier partnership agreement which was entered into during the...