Ces­sa­tion of the com­mu­nity of ac­quests dur­ing sep­a­ra­tion pro­ceed­ings

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

Malta Independent - - LAW REPORT - 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.

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