Wed | Apr 26, 2017

The court can look at separation agreements

Published:Monday | August 24, 2015 | 8:00 AM

The regime established under section 10 of the Property (Rights of Spouses) Act is intended to give spouses an opportunity to avoid court proceedings in the event of their separation or divorce by allowing them to decide how their property is to be divided. (The Maintenance Act also makes similar provisions in respect of maintenance.) In drafting such agreements, great care needs to be taken to ensure that they are thorough and comprehensive; because, as demonstrated in the decision of the Court of Appeal in the case of Miller and Another v Miller and Another [2015] JMCA Civ 42, the omission of even one property from that agreement can still lead to lengthy court proceedings.

The background to the case is that the Millers met and got married in the United States of America (USA). During some 15 years of marriage, they had three children and acquired four real estate properties in the USA and two in Jamaica. After the marriage ended, the parties signed a separation agreement in Connecticut in the USA, but it dealt with only five of the six properties. Since then, there have been multiple court proceedings in Connecticut and in Jamaica (see Miller v Miller [2015] JMSC Civ. 18).

The sixth property, Yardley Chase, St Elizabeth, was the subject court action that commenced in the Supreme Court in Jamaica in 2009. In 2012, Mr Miller prevailed in that matter and the court ordered Mrs. Miller to transfer her interest in the property to Mr Miller.

 

EQUALINTERESTS

 

Mrs Miller appealed to the Court of Appeal. The appeal was allowed, the order in favour of Mr Miller was set aside and it was declared that the parties had equal interest in the Yardley Chase property. Mr Miller was allowed to exercise the first option to acquire Mrs Miller's interest in the property, but ordered to pay Mrs. Miller's costs of the appeal.

The issues argued before the Court of Appeal included an appellate court's treatment of findings of fact by the Supreme Court and what recognition the court should give to separation agreements.

The resolution of the first issue involved references to the well-known principle that the appellate court will not disturb the Supreme Court's findings of fact unless those findings are "plainly wrong". Even if there are such errors, the Court of Appeal must then determine whether they are sufficient to undermine the judge's conclusions. Thereafter, the Court of Appeal can make its own assessment of the evidence and reach its own conclusion on the issues. It is that approach that was taken by the Court of Appeal in this matter.

On the question of the treatment to be accorded to separation agreements, the Court of Appeal rules that, "From section 14 it will be seen that the court is entitled to consider the contents of a separation agreement, authorised by section 10, in determining how to fairly allocate matrimonial property between spouses. Section 14(2)(d) states expressly that, in allocating the interest in property, other than the matrimonial home, the court may take into account "that there is an agreement with respect to the ownership and division of property". Even if that were not expressly stated, section 14(2)(e), being framed as a broad 'catch all' provision, would have allowed the court to consider an agreement dealing with property, as "such other fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account".

 

PRINCIPLE OF FAIRNESS

 

In making its own assessment of the evidence, the Court of Appeal considered the guidance from Lord Nicholls of Birkenhead's in Miller v Miller; McFarlaine v McFarlaine [2006] UKHL 24; [2006] 2 AC 618 in concluding that, unless there is good reason to depart from "the principle of fairness in the division of matrimonial property", it" requires that when the partnership ends each is entitled to an equal share of the property".

Although accepting that section 4 of PROSA stipulates that PROSA has displaced "the rules and presumptions of the common law and of equity to the extent that they apply to transactions between spouses in respect of property", the Court of Appeal held that it is obliged to look at the intentions of the parties at the time of acquisition and determine their intention at that time. In taking that approach, the Court of Appeal found that "the circumstances do suggest a joint intention by Mr and Mrs Miller to hold the property in equal shares"and that," there is no basis for departing from the equal allocation that the parties intended at the time of their acquisition of the property and the construction of the building".

While it is true that the court will always have the power to review separation agreements, a compromise separation agreement will be less likely to come under the court's scrutiny.