Bereaved siblings whose stepfather ‘cut off all income’ are awarded damages

The High Court has awarded general and aggravated damages to three bereaved siblings whose stepfather engaged in “exceptional and wilful misconduct” by breaching his fiduciary duty to them.

Ms Justice Eileen Roberts said the man, who was the plaintiff in the action, made a “calculated decision, entirely in his own interests” and against the interests of the siblings to terminate payments in late 2012, including for the mortgage on their family home and for their education.

At this time he was an experienced businessman, while the siblings, whose mother died in 2008, were “grieving, vulnerable and inexperienced, just past their teenage years”, she said.

She awarded €45,000 in aggravated damages and €105,000 in general damages to the siblings for the man’s breach of contract and fiduciary duty.

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Setting out the background to the man’s action, Ms Justice Roberts said the siblings’ mother had died in a road traffic incident while on holiday abroad in 2008.

Unbeknown to the siblings and the man, she had secured a decree of divorce from him two days before she died.

Four years later the High Court granted him an order setting aside the divorce, a step he confirmed was intended to permit him to claim a share in the woman’s estate, as she died without making a will, the judge said.

Her estate comprised the family home which still had a mortgage, its contents, two cars (on which there was finance outstanding), ST£176,000 and a nursing home business she owned and which she operated with the man.

Significant borrowings against the nursing home were covered by a life insurance policy, and a claim was paid out for €1 million.

Following her death, relations between her children and the man declined, particularly in relation to the nursing home business. Since late 2009 the business has been owned by way of a partnership by the siblings, who are now adults, and the man, who has operated it.

Ms Justice Roberts said all parties in the dispute agreed the relationship between them has “irretrievably broken down” and the partnership should be dissolved.

The court was required to examine the partnership’s assets, each partner’s entitlements arising out of various settlement arrangements, and a claim for damages by the siblings, who are defendants in the case, against the stepfather.

As part of a 2009/2010 settlement agreement, carried out when the youngest sibling was aged 17 and 18, the company shares were to be divided 60:40 between the man and the siblings, with his share reducing to 55 per cent after three years. Profits were to be split roughly equally.

The family home was to be transferred into the names of the siblings, along with the money in the UK bank accounts. The man was to be paid €150,000 in recognition of his contribution to the nursing home and a €5,000 monthly salary.

The eldest sibling was to receive a €12,000 annual salary for “ongoing work” in the nursing home, while €72,000 from the nursing home earnings were to be used for the siblings’ domestic bills and mortgage repayments. The nursing home was to discharge school and college fees for five years up to a maximum of €25,000 per year.

The siblings agreed not to oppose the man’s application to set aside the decree of divorce, but he said they breached the agreement by seeking to object.

The agreement was amended in 2012, to include, among other changes, that the €72,000 should be paid within three years and that the nursing home would meet any shortfall if this figure was insufficient to meet the family home mortgage repayments.

Ms Justice Roberts said the siblings argued they endured “enormous and lasting hardship” when the man “unilaterally” terminated all payments due from late 2012.

The man, who has remarried, said the payments stopped because the business was “illiquid” and he did not have the funds. The eldest sibling was the authorised signatory of cheques and deliveries related to the business but did not cooperate with him, he claimed.

The judge said the evidence shows 2012 was a profitable year for the nursing home and that there have been profitable years since then. She did not accept his contention that he had to cease the payments due to financial issues with the business.

The judge also rejected his claim that he had overpaid the siblings by that date and that their interference in his divorce application justified terminating the payments under the settlement.

He simply no longer wished to be in partnership with them and by that time had secured a court order to overturn the decree of divorce, she said.

He “left the then teenage defendants living alone in the family home only to cut them off from all income once he had secured the court order he needed to lay claim to the nursing home”, the judge added.

Ms Justice Roberts said he was “callous and cruel” to the siblings in refusing to erect a headstone for their mother. She did not accept this was an oversight on his part.

By mid-2022, the adult children claimed, there was a possibility of the family home being repossessed and they could not pay their electricity and other bills. The man accused them of squandering their “substantial inheritance”.

The siblings said they received €110,000 from their mother’s estate, of which €27,000 went to the mortgage for 18 months and €29,500 went to legal fees, including in administrating their mother’s estate.

They lived in “horrific” conditions when the payments stopped while they were still students, the eldest sibling told the court. She claimed there were burst pipes they could not afford to repair and the house was so cold they could see their breath.

As well as awarding general and aggravated damages to the siblings, Ms Justice Roberts held that the man must compensate them for whatever additional interest they have incurred on their mortgage since he ceased paying them.

The alleged educational loss suffered by the defendants was not sufficiently pleaded, said the judge, but she did direct the man to pay €20,000 for unfinished study.

She refused the siblings’ request to be restored to a pre-settlement position.

In her detailed ruling, Ms Justice Roberts outlined the amounts to be considered “drawn” from the partnership by each side and some of the amounts owed under the settlement. She asked the parties to provide the court with an updated partnership statement that accounts for her decisions and will question them about further orders to be made, such as one dissolving the partnership, when the case returns next month.