Friday, 13 January 2017

DOUBLE DOUBLE 'GOYAL' AND TROUBLE


Double, Double ‘Goyal’ and Trouble:
An Easy Way to Sharing Foreign Assets on Divorce?

In the hustle and bustle of the run up to Christmas one can (perhaps) be forgiven for overlooking the latest decision on the ability of the English courts to impose orders over foreign assets. Whilst we were all eating mince pies and watching Home Alone as if it were a new release, the court was seeking to provide clarity on an issue which is becoming so important in an increasingly globalised world.
 
The case of Goyal v Goyal [2016] EWHC 2758 (Fam) provides, at least in the interim, welcome guidance and reinforcement of the principles of sharing foreign assets. It is also a stark reminder of the fatality of failing to follow the correct procedures and how the court will not indulge such shortcomings even where a party does not have the benefit of legal representation (Mrs Goyal did not have a lawyer). 
 
The (Brief) History
Mr and Mrs  Goyal had been married for 8 years. Their litigation history is brutal.  By the time of the decision by the court of appeal (which I go on to discuss below) no fewer than 65 separate orders had been made in the case.
 
At the final hearing in October 2015 HHJ Brasse found that Mr Goyal had an addiction to spread betting. The judge found that conservatively he had lost over £500,000 and that Mr Goyal was:
 
“…digressive, evasive, argumentative and hence, unreliable as a witness…[he] found him to be highly manipulative…”
 
The judge was satisfied that he had lost almost the entirety of the matrimonial assets. There was nothing left save for two pension policies that he had exported to India (during the course of the case). It was worth £87,000. Mrs Goyal discovered documents in India that confirmed Mr Goyal was receiving income from the policies into an Indian bank account.
 
Having decided that the court did not have the power to make an order over a pension based overseas, rather courageously HHJ Brasse made an injunctive order against Mr Goyal which would have the effect of ensuring, at least in principle, that Mrs Goyal (and the parties child) would receive the benefit of the funds.
 
The Court of Appeal found that the injunctive order was not permissible and set it aside. At the same time they inadvertently set aside the entirety of the order. Interestingly Mr Goyal argued during the appeal that the court did have the power to make a pension sharing order. The matter was remitted to Mr Justice Mostyn in the High Court.
 
The Re-Hearing – “Extra – Territoriality”
Mr Justice Mostyn was very critical of the approach taken by the Court of Appeal. Further, Mr Goyal changed tactics. He argued that the court did not have the power to make a pension sharing order in respect of an overseas pension.
 
The judge sourced advice from experts in this field. There was a difference of views on the powers of the court. In simple terms one expert advised that the court could make a pension sharing order providing the pension originated in this jurisdiction. The other expert (Mr Marshall QC) advised that the court was not so confined by the legislation and could make an order regardless of its domestic origins.  The fact that there was such a divergence of opinion reflected how balanced the issue was (and still is).
 
Mr Justice Mostyn, whilst not disagreeing with the literal interpretation applied by the experts, felt that the presumption against the extra-territorial effect of this statute (ie the courts in England and Wales should not make orders that purport to  give an  impression that they are intruding or seeking to bind other countries) was compelling.
 
As such he concluded that:
 
“It is clear to me that this procedure can only work in the context of a domestic pension… For these reasons therefore I am satisfied that pension sharing …is not available in relation to any foreign pension”
 
Where does that leave us now?
Regrettably there has been some poor commentary upon the interpretation of this decision. Whilst it cannot be clearer that the court does not feel the English courts have power to make an order in relation to any foreign pension, the court goes on to detail the ‘other routes to achieve the direct sharing of an overseas pension’.  This involves a combination of undertakings and agreements. This is not an unusual way to approach to matters. There are various ‘strategic’ options available. One party could seek other orders to either procure undertakings and agreements from the other party  or to ensure that fairness is achieved. That will depend on the financial dynamics of any particular case. In the case of Goyal Mr Justice Mostyn felt that fairness could be achieved by ensuring that Mrs Goyal had the benefit of the income from the pension by the making of a periodical payments order in two parts. This would have been bolstered by an injunction to ensure preservation of the asset.
 
The issues in this case appear to have relighted the debate as to whether the court has power to make order in respect of foreign property and overseas trusts. Mr Justice Mostyn has acknowledged that the he “did not address the question of the presumption against extra-territoriality...” in cases about the issue of overseas trusts (watch this space).
 
The ability of the courts to make an order in relation to foreign properties is, for the time being, untouched. Following the decision in Hamlin v Hamlin [1986] 1 FLR 61 It remains well established practice that , “.. a property adjustment order can in principle be made in respect of property sited overseas provided there is clear evidence that such an order would be implemented in the overseas jurisdiction…” (emphasis added)
 
Procedural Issues
It is vital that in each case the procedure is followed by the letter. This involves validly serving the relevant person in accordance with the prescribed family rules. Further, it is imperative that the court is presented with clear evidence as to the enforceability of any order or undertakings in relation to any foreign assets. Mr Justice Mostyn suggests, in relation to a pension, that this should include obtaining clear confirmation that the complex pension sharing annex will be recognised and enforced. In our opinion it is also important, at an early stage, to take advice from a specialist practitioner in the relevant jurisdiction so that any orders can be structured appropriately.  
 
The courts expressed no sympathy to Mrs Goyal for failing to follow the correct procedure or obtaining the relevant evidence (slightly harsh when you think that she was not represented and Mr Goyal was represented by the brilliant James Turner QC!). As a result Mr Justice Mostyn said that this is another reason why her claims for a pension sharing order failed.
 
Digressing slightly from the issues in this case it is worth drawing to your attention the comments of the Court of Appeal in Tinker and another v Elliot [2012] EWCA Civ 1289 :
 
“…there may be facts and circumstances in relation to a litigant in person that may go to an assessment of promptness……they will only operate close to the margins,” [and that] “an opponent of a litigant in person is entitled to assume finality without expecting excessive indulgence to be extended to the litigant in person,” [the lack of understanding of procedures] “does not entitle him to extra indulgence”.
 
Conclusion
Pension sharing order cannot be made in respect of foreign pensions, however, all is not lost.  The court will always strive to achieve fairness. Adopting a clear, cogent and well considered strategy from the outset on an international level with the necessary expertise is likely to make all the difference between success and failure.
 
I don’t suppose the Court of Appeal will be overly enamoured by this judgment. Something makes us  think that this is just the start of a new era for the treatment of foreign assets by the English courts. 
 
I am a specialist matrimonial lawyer on international law. In 2016 I was awarded the International Academy of Matrimonial Lawyers Young Lawyer of the Year. If you would like an informal discussion about any issues you may have concerning assets or children on divorce please feel free to call me on a free and no obligation basis on 0121 203 5309 or drop me an email at mark.hands@irwinmitchell.com
 
 

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