SM v AM
| Jurisdiction | Cayman Islands |
| Judge | Cheryll Richards |
| Judgment Date | 26 June 2019 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | CAUSE NO. FAM 0125 OF 2017 |
The Hon. Justice Cheryll Richards Q.C.
CAUSE NO. FAM 0125 OF 2017
IN THE GRAND COURT OF THE CAYMAN ISLANDS
FINANCIAL SERVICES DIVISION
Family Law — Final Ancillaries — Sharing of Matrimonial Assets — Debt between Spouses
Mr. John Meghoo for the Petitioner
Ms. Natahsa Bodden for the Respondent
This is an application by the Petitioner for final ancillary orders pursuant to s.21 of the Matrimonial Causes Law (2005 Revision).
The Parties were married on the 30 th July 2010 in Grand Cayman. This is the second marriage for both; their first marriages having ended in divorces. The Petitioner SM (‘the Wife’) was 55 years old and the Respondent AM (‘the Husband’) 50 years old at the time of their marriage. There are no children of the marriage. Both parties separated for six months in the first half of 2012 and ceased cohabiting in May 2016. The Wife filed a Petition for divorce from the Husband on the 9 th June 2017. The Husband acknowledged service on the 26 th June 2017 and indicated that he did not intend to defend the matter. The Petition was ordered proved on the 17 th July 2017.
Pursuant to directions given by Williams J on the 4 th September 2018, both parties filed Affidavits on the 5 th October 2018 for this hearing. The Wife filed a further Affidavit in response to the Husband's on the 9 th April 2019. This matter came before me on the 15 th May 2019 for a final ancillary hearing and I heard oral evidence from both parties.
The parties are professionals each with their own companies. The Wife is an accountant and the Husband is in the diving industry. Neither party seeks or appears to need ongoing assistance from the other. They are almost at the stage of a clean break and on the road to independent living. They have indicated through their Attorneys that they agree and have made it clear that there are only two outstanding issues between them which require the Court's determination. These are whether the Husband had an interest in the matrimonial home in Prospect, Grand Cayman and whether the sum of $54,750.00 which was loaned by the Wife to the Husband amounts to a matrimonial debt or was a corporate loan to his company. This sum is agreed between the parties as being the amount loaned by the Wife which remains outstanding.
The first issue arises in this way. Following their marriage in 2010 the couple resided at the home in Prospect, Grand Cayman. This home was then registered in the sole name of the Wife. She and her first husband acquired the property which is a strata lot, with the aid of a mortgage from a local bank in 1999. That marriage ended by a separation during which the first husband had left the Island and finally in divorce in 2010. This was shortly before the Wife's re-marriage to the Respondent Husband in July 2010. The Husband had been living in the home from 2009, about a year prior to the marriage. Following their separation in May 2016, the Wife sold the home and did not share the proceeds of the sale with the Husband. It is the evidence of the Wife that upon their marriage, the Husband's name was not added to the title for that property and that there were no discussions between them that he should own a part of the home.
The Husband's position is that he is entitled to a share of the proceeds of the home and that the Court should take into account the contribution which he made to the home by way of labour, maintenance and payment of household bills. The Wife's position is that any contribution which he made was non-financial and insignificant and that the proceeds from the sale of the house are solely hers.
As to the second issue, about one year prior to the commencement of the marriage, the Parties each began their own self-employed businesses under the umbrella of two companies. The Wife's company was an accounting business, and the Husband's company operated a dive training school. In the latter company the Wife who is Caymanian held 60 % of the shares and the Husband, a non-Caymanian held 40 % of the shares.
By all accounts, this dive company was not a success. Not only was it never profitable enough to be able to provide dividends to shareholders, it was unable to discharge its ongoing expenses on a regular basis. The Husband says that during the course of the marriage, the Wife provided several cash injections in order for that business to remain open. The Wife said that she was able to lend him money by increasing her working hours as an accountant. There is no documentation evidencing or recording the fact and terms of these loans. From about September 2011, the Parties began to experience personal difficulties, with a significant contributing factor, according to the Wife, being the financial difficulties, of the Husband's failing business. In March 2017, the Wife transferred her shares in the dive company for a nominal payment of $1.00 to another shareholder and resigned as a director and shareholder at that time.
The Husband's position is that the loans made by the Wife over time were loans to her own company. Further that these were cash injections into the company as their shared business, as directors and shareholders would usually do, and were not to him personally. Alternatively he says that they were loans to herself as part of the matrimonial unit which is a single entity, and thus cannot be recouped by her. The Wife's position is that the Husband's claim that this is a corporate debt lent to his company which claim he first made during the directions hearing in September 2018 is not true. Further that this is a recent invention of his in an attempt to be difficult and to avoid repaying her what he owes. She says that many times during their marriage they discussed the loan of these monies and not once was it discussed or agreed that it was a corporate debt between their respective companies.
The Court's powers in respect of these ancillary proceedings are contained in sections 19 and 21 of the Matrimonial Causes Law (2005 Revision).
Section 19 provides that in dealing with all ancillary matters arising under this Law, the Court shall have regard, first of all, to the best interests of any children of a marriage and thereafter to the responsibilities, needs, financial and other resources, actual and potential earning power and the deserts of the parties.
Section 21 provides that at the time of pronouncing a decree under this Law, the Court shall, as appropriate, make orders for:
“(a) the custody, care and control of the children of the marriage;
(b) the disposition of matrimonial property, including the matrimonial home;
(c) varying any settlement of the property of the spouses made in consideration of the marriage, whether such settlement was made before or upon the treaty of the said marriage.
(d) varying any other settlement of matrimonial property;
(e) making financial provision from the property of either spouse for the children of the marriage and for the other spouse;
(f) providing for periodic payments to be made by either spouse for the benefit of the children of the marriage and for the other spouse; and
(g) costs.”
The subsections which are most relevant to this application are sections 21 (b) and (e).
There is guidance from the Cayman Islands Court of Appeal in the case of McTaggart v. McTaggart 1 as to the interrelationship between these two provisions of the Law and their application. This includes that a court will need to consider whether having regard to the s.19 factors, an order under s.21(b) of the Law for the disposition of matrimonial property will make appropriate provision for the relevant party with regard to their needs, the level of compensation and sharing. If disposition of matrimonial property will not allow for the appropriate provision to be made, then the court should go on to consider whether to make an order under s.21(e) that financial provision be made from the property of either spouse. A court should not make an order for periodic payments under s. 21(f) without good reason. Such good reason would arise where the combination of orders under s.21(b) and (e) are insufficient to satisfy the three strands of need, compensation and sharing. 2
Additionally the appellate Court made it clear that although the s.19 factors are less extensive than those in England and Wales, in the Matrimonial Cause Act 1973 as amended by the Matrimonial and Family Proceedings Act 1984, the approach in the Cayman Islands should be the same as in that jurisdiction. 3 A court in exercising its powers under the statutory provisions should therefore consider all the circumstances of a case to include the following:
“(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
(c) the standard of living enjoyed by the family before the breakdown of the marriage;
(d) the age of each party to the marriage and the duration of the marriage;
(e) any physical or mental disability of either of the parties to the marriage;
(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court...
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