Decision on whether a wife could claim certain pieces of jewellery released from her husband's bankruptcy estate

Date 14 mar. 2011

 

Introduction

On 11 October 2010, the Maritime and Commercial Court ruled in two cases, No. P-14-09 and P-25-09, which both concerned the question of whether a wife could claim certain pieces of jewellery released from her husband’s bankruptcy estate.

 

Facts

After prior cohabitation, the parties were married in November 2000. Neither an antenuptial nor a postnuptial settlement was made.


During the case, it was stated that the wife had earned approximately USD 2,000 a month. In addition, the wife had savings of approximately USD 20,000.

It was stated that the husband owned a holding company that invested in real estate. In the period from 2005 to 2007 he had a total of DKK 135.5 million at his disposal from the holding company. In addition, he also had income from other companies. In 2007, the husband received DKK 320,000 in distribution from the holding company.

 

The parties' expenses during the period 2005 - 2007 were estimated at approximately DKK 5 million of which approximately DKK 3 million were spent on consumption according to the estimation.


The cases concerned 15 valuable pieces of jewellery which the wife demanded released from the bankruptcy estate claiming that the jewellery belonged to her.


The Legal Basis

The Danish Bankruptcy Act, Section 82, states that objects belonging to third parties, or which for other reasons cannot be included in the bankruptcy estate, must be handed over to the proper owner.


In assessing whether a spouse may require jewellery released from a bankruptcy estate, it is essential whether the jewellery can be regarded as belonging to the spouse or not. In assessing this, the time of acquisition is crucial.


Jewellery which the wife acquired by means of own funds before the cohabitation was commenced may simply be regarded as belonging to the wife and thus be released from the estate, see the Danish Bankruptcy Act, Section 82.


Jewellery acquired in connection with the mutual maintenance, duty between spouses, see the Danish Legal Effects of Marriage Act, Section 2, are considered to belong to the part for whom the gift was intended. Jewellery may be a part of the maintenance duty between spouses, and therefore be released from the bankruptcy estate, see the the Danish Bankruptcy Act, Section 82.


Jewellery given as usual gifts belong to the gift recipient and therefore can not be released from the bankruptcy estate. It should be noted that a marriage settlement is not required for usual gifts to be valid if the gifts are not disproportionate to the giver’s conditions at the time when the gift is given. It is for the spouse who received the gift to prove that the gift is not disproportionate to the giver’s conditions, see the Danish Legal Effects of Marriage Act, Section 32.


The court’s decision

Five of the 15 pieces of jewellery were undisputedly acquired before the marriage.


Four of these pieces were acquired in the period from 28 June 2000 to 3 October 2000, during the period when the parties began the cohabitation, but before the marriage. The four pieces of jewellery had a total value of DKK 32,200.

 

The Court did not consider it proven that the wife herself had been able to pay for the four pieces of jewellery that were acquired before the marriage, for which reason these pieces could not be released from the bankruptcy estate and handed over to the wife.


The four pieces of jewellery could not be considered gifts because the jewellery was acquired by the wife according to the spouses.


The fifth piece was acquired in 1999, prior to cohabitation with the husband and had a value of DKK 16,000. The Court found that according to the wife’s income at the time of acquisition, the wife had purchased the jewellery using her own funds.


Two of the 15 pieces of jewellery were acquired after the marriage and were paid for with a credit card which belonged to the husband’s bank account. These two pieces had a total value of DKK 50,000. The parties explained that the jewellery was purchased as part of the common maintenance duty between spouses.


The Court stated that because these two pieces had a considerable value (the collective replacement value was DKK 50,000), they were not found to be covered by the common maintenance duty between spouses, see the Danish Legal Effects of Marriage Act, Section 2. For this reason, the jewellery was not handed over to the wife.


These pieces of jewellery could under the circumstances not be considered gifts as the spouses considered the jewellery as maintenance.


In addition, seven pieces of jewellery were given as gifts to the wife in 2005 and 2007. The jewellery was given as occasional gifts for Christmas, birthday and Valentine's Day. The gifts in 2005 had a total value of approximately DKK 340,000 , while the gifts in 2007 had a total value of approximately DKK 427,000.


The court held that the wife had not proven that her husband had an income at the time when the gifts were given which could justify gifts of the mentioned size. Finally, the court emphasised that the gifts with a value of DKK 427,000 in 2007 exceeded the annual distributions of that year in the holding company, which was DKK 320,000.


The court took into account that the gifts in 2005 and 2007 were disproportionate to the givers conditions, for which reason the gifts could not be considered part of the common maintenance duty between spouses, see the Danish Legal Effects of Marriage Act, Section 2. The jewellery could therefore not be released from the bankruptcy estate.


Finally, the suit concerned a man’s ring which was presumably not produced in Denmark. The wife asserted that she inherited the ring from her grandmother.


The Court emphasised that it was a man’s ring and that it therefore had to belong to the bankruptcy estate. The fact that the ring was probably not produced in Denmark could not in itself exclude the possibility that the ring belonged to the bankruptcy estate. The ring was therefore not released from the bankruptcy estate.


In total, 14 of the 15 pieces of jewellery remained in the bankruptcy estate to cover creditors, and only one piece of jewellery, the piece that was acquired in 1999 before beginning cohabitation, was released from the bankruptcy estate, see the Danish Bankruptcy Act, Section 82.


Consequences of the judgement

The judgement states that when  releasing jewellery from a bankruptcy estate pursuant to the Danish Act on Bankruptcy, Section 82, each piece of jewellery must be considered, and the circumstances in which the piece was acquired or given to the recipient. The spouses' statements about whether a jewellery is given as a gift, acquired as a part of the common maintenance duty between spouses or is acquired by own funds, forms the basis of the assessment.


For jewellery which is claimed to be acquired with own funds, it is assessed whether the spouse actually was able to purchase the jewellery by using own funds, taking into account the income at the time of acquisition.


An overall view is taken for each piece so that jewellery that may reasonably be regarded as belonging to a particular spouse is released from the bankruptcy estate.


The judgement states that jewellery may be part of the common maintenance duty between spouses. However, the mere fact that two pieces of jewellery had a considerable value meant that these could not be considered part of the common maintenance duty between spouses. The judgement does not address where the value limit of the common maintenance duty between spouses is.


In addition, the ruling states that even very valuable occasion gifts may be valid without marriage settlement. What matters is whether the gift is disproportionate to the conditions of the giver at the time at which the gift was given. It is for the recipient to prove that the gift was not disproportionate to the giver’s conditions.


If you have any questions or require additional information on the above, please contact partner Thomas Weitemeyer (twe@mwblaw.dk) or junior associate Ander Kjær Dybdahl Pedersen (akd@mwblaw.dk).


The above does not constitute legal counselling, and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis of decisions or considerations.