Cessation of the community of acquests during separation proceedings

Plaintiff in her name & on behalf of her minor son vs Defendant

The Hon. Chief Justice S. Camilleri The Hon. Judges G. Caruana Demajo and N. Cuschieri

This case was an appeal to a judgement delivered by the Civil Court (Family Section) (‘First Court’) on 4 December, 2015 concerning an order for the cessation with immediate effect of the community of acquests (‘CoA’) existing between the parties in terms of Article 55(4) of the Civil Code. Plaintiff filed an appeal to the judgement, while Defendant requested that it be confirmed.

Facts: Plaintiff and Defendant married in 1993 and had a son, today a minor. In June 2005, Plaintiff instituted proceedings for personal separation against her husband (Defendant) requesting the Court to, inter alia, order the cessation and the liquidation of the CoA between them and that the assets be divided accordingly. Despite more than 10 years having passed since the institution of the proceedings, Plaintiff had still not closed her evidence, notwithstanding the Court’s request to do so. In February 2014, Plaintiff presented to the Court a list of more than 37 witnesses which she intended to produce. On this basis, Defendant filed an application requesting the First Court to order the cessation of the CoA. Plaintiff opposed Defendant’s request.

First Court: The Court took into consideration the fact that almost 10 years had elapsed from the initiation of proceedings and Plaintiff has still not concluded her evidence. The Court referred to local case-law on the matter and accepted Defendant’s request on this basis holding that such a request was reasonable.

Court of Appeal: Plaintiff appealed to the above judgement on the following grounds: (i) the First Court should have dealt with the element of “disproportionate prejudice”, an essential element for the successful application of Article 55[4] of the Civil Code. Instead, the First Court had applied the objective criterion of the passage of time, an element not contemplated by law. In her application Plaintiff informed that Defendant was a director of various companies, and that from the evidence it resulted that during the proceedings Defendant’s net pay had doubled and this apart from rental income as well as annual income from an overseas company. Defendant was paying a maintenance allowance to Plaintiff. Plaintiff claimed that the amount representing Defendant’s total net earnings disappeared completely. Furthermore, she claimed that certain shareholding was transferred to a trust.

Plaintiff, after claiming that Defendant had not availed himself of reconvention proceedings nor instituted separation proceedings, raised the following:

(1) the cessation of the CoA should not be a remedy for unnecessary delay by any party in concluding evidence. This may be addressed by other legal remedies; (2) the only reason for Plaintiff’s delay in concluding her evidence was her medical condition; (3) the First Court should have given due consideration to the fact that Defendant’s substantial yearly income was being kept solely by him and that he was hiding from the Court assets belonging to the CoA, putting them in trusts. Allowing for the cessation of the CoA, would allow Defendant to claim, following such cessation, that the assets which he had acquired were so acquired by him after the termination of the CoA; (4) the concept of ‘disproportionate prejudice’ should be considered widely and thoroughly. Faced with a request of this kind, the Court must: (a) assess whether the evidence regarding the extension of the CoA has been concluded; [b] ensure that no party would be in a position to successfully declare that assets pertaining to the CoA have been acquired after the cessation of the CoA; [c] ensure that the party making the request for the termination of the CoA must show clearly that if his/her request is not acceded to s/he will suffer unjust irreparable loss which could not be remedied in the final judgement of the court considering the separation proceedings; [d] have established that none of the parties merits to continue enjoying the benefits acquired solely as a result of the other party’s industry, or that none of the parties should be made to bear the debts made by the other party; [e] give due consideration to the financial position of both parties as well as to the contribution made by one of the parties to the family unit, by abstaining from any economic activity in order to commit herself/himself totally to the upbringing of children as well as doing household chores.

In his reply, inter alia stated that the First Court made a correct appreciation of the facts and that the judgement should be confirmed. He highlighted the First Court’s consideration that his request was reasonable since, notwithstanding that 10 years elapsed from the institution of the proceedings, Plaintiff had not concluded her evidence. Furthermore, as the contents of the appeal application revealed, it was evident that Plaintiff was aware of Defendant’s financial position, particularly his annual earnings. Furthermore, Defendant had given evidence on a number of occasions regarding his financial position. Plaintiff therefore had had a clear picture of the extent of the CoA. Furthermore, the cessation of the CoA refers to the future earnings or acquisitions of the spouses and does not affect what has already been acquired before the cessation. Plaintiff can still avail herself of the remedies granted by law to safeguard her interests. He also held that in terms of Article 55 of the Civil Code and local case-law, the onus of proving that the termination of the CoA at this stage would cause ‘disproportionate prejudice’ on Plaintiff was on Plaintiff – in this case, she had not successfully proven this.

The Court of Appeal referred to Article 55(4) of the Civil Code: “(4) Prior to ordering the cessation of the community as provided in this article, the court shall consider whether any of the parties shall suffer a disproportionate prejudice by reason of the cessation of the community before the judgement of separation.”

The Court made the following observations: (i) 10 years was exceedingly long for any of the parties to conclude evidence; (ii) it was ironic that whilst in her writ of summons Plaintiff requested, inter alia, the cessation of the CoA, a request which Defendant did not object to, 10 years later, Plaintiff was objecting to Defendant’s same request. In 10 years, Plaintiff had more than enough time to discover any assets which she claimed Defendant was hiding from her and from the Court. (iii) The excessively unjustified delay on Plaintiff’s part in concluding her evidence was unnecessarily delaying the progress and closure of the proceedings. This rendered it impossible for Defendant to conclude and settle his financial affairs vis-à-vis Plaintiff who at present, notwithstanding her initial request for the cessation of those acquests and the personal separation from Defendant, is still entitled to half Defendant’s earnings and assets. Rejecting Defendant’s request would cause him prejudice in terms of the Article 55(4); (iv) Plaintiff’s concern that Defendant would, following cessation of the CoA, claim that the assets he was allegedly hiding away in trust were acquired after the cessation was unfounded since lengthening the cessation further would not stop such possible eventuality following a final judgement.

On the basis of the above, the Court rejected Plaintiff’s appeal with expenses of both Courts to be borne by her holding that it did not consider that the acceptance of Defendant’s request for the cessation of the CoA would constitute to plaintiff disproportionate prejudice according to law. A copy of this judgement was ordered to be sent to the Director of Public Registry according to Article 55 [5] of the Civil Code.