In the latest judgment in the long running case of Goyal, Mostyn J has concluded that the pension sharing provisions contained in section 24B of the Matrimonial Causes Act 1973 cannot be used to share a foreign pension scheme, contrary to the view of the Court of Appeal in the same case.
The Court of Appeal, in a judgment reported as Goyal v Goyal  EWCA Civ 792, had given guidance on the issue, while also addressing another issue relating to the making of injunctions in support of such orders.
The application for financial remedies was brought by Mrs Goyal after a marriage of 8 years. The proceedings lasted for 4 years and involved 65 separate hearings before the Court of Appeal dealt with the matter. A final hearing took place in November 2015 where the husband (a successful banker) was found to have gambled away more than £500,000. The Judge concluded that the entirety of the remaining assets should be provided to the wife for her and the parties’ child’s needs, on the basis that they were likely to be dissipated if transferred to the husband.
The husband had agreed in an earlier order to a pension sharing order in Mrs Goyal’s favour in relation to two pensions held in the UK. He later claimed that he had, before the order, cashed those pensions and used the monies to pay debts. In fact he had transferred the funds to an annuity policy in India, from which an income was being paid into an undisclosed bank account in his name, facts which he had not only withheld but also denied in the face of a specific question.
The Judge at first instance concluded that he was unable to make a pension sharing order in relation to the fund as it was held offshore. He did consider, however, that he had the power to order the husband to transfer the policy to the wife and to pay the income to her. Though the Judge did not explicitly indicate the jurisdiction for this order it was agreed on appeal that the only possible route was an injunction under s.37 of the Senior Courts Act.
The husband appealed on the basis that the court was unable to make a pension sharing order in relation to an offshore fund and therefore could not make an injunction to circumvent that lack of power, as such orders could only be made in support of an existing power.
The Court of Appeal’s view was that the second argument – the lack of power to make injunctions other than in support of an existing power – was plainly made out. The court did not retain a jurisdiction to make whatever orders it considered necessary to do justice between the parties. The statutory regime sets out the available orders and the Senior Courts Act compliments rather than expands it.
On the first point, however, the court considered that the Matrimonial Causes Act is not so limited as the Judge had assumed. The Act applied to any ‘specified pension arrangement, which includes ‘an annuity or insurance policy purchased, or transferred, for the purpose of giving effect to rights under an occupational…or personal pension scheme.’ As the offshore annuity scheme was purchased using the funds from an onshore personal pension scheme it was possible for a pension sharing order to be made. It was accepted by the husband’s counsel that an overseas scheme ‘may satisfy the criteria for the making of a pension sharing order” (paragraph 29) and that there was no territorial limitation on the court’s power to make a pension sharing order. It was observed that in individual cases it may not be possible to enforce such orders abroad, which issue might require expert evidence and correspondence, through the usual procedural avenues, with the provider. The point was not fully argued, however, the parties accepting that the jurisdiction was not so limited. The wife had not undertaken those investigations and so the court discharged the Judge’s orders and listed the case for a hearing before another Judge. That hearing was listed before Mostyn J.
Mostyn J heard the matter on 17th October 2016 and his judgment can be found reported as Goyal v Goyal  EWFC 50. The husband’s application was that the court should dismiss the wife’s claim for a pension sharing order for lack of jurisdiction and because of the lack of any evidence that such an order would be enforced by the Indian courts. The husband’s counsel indicated that he had accepted that there was such jurisdiction based on the notes within the Family Court Practice 2016. The Court of Appeal accepted this without argument and the relevant passage was obiter dictum and therefore open to Mostyn J to reconsider the position.
Having invited written representations from Resolution and the Family Law Bar Association the court undertook a detailed analysis of the statutory provisions and of the general constitutional background. The court noted that it is a basic rule of statutory interpretation that parliament cannot bind a jurisdiction over which it is not sovereign, in the absence of some provision within that other jurisdiction to give effect to the statute.
While a property adjustment order can be made in relation to foreign property where there is clear evidence that the foreign court would enforce it, the judge was not so persuaded in relation to the provisions of s. 24B. property adjustment orders are in personam – they apply to bind the person subject to the order and not the property itself, unlike a pension sharing order, which binds a particular piece of property held by a third party. While it was not explicit in the statute, the presumption against extra-territorial effect applied and the court was unable to make a pension sharing order in relation to any foreign pension.
The judge considered, however, other routes by which the same result could be achieved. One route was to incorporate an agreement within the order, backed by undertakings, to obtain an order in the foreign jurisdiction where one is available (such as the USA). This would require evidence that the foreign jurisdiction would agree to such an order. This route was not available to Mrs Goyal as she had failed to provide any evidence for the court that the Indian Court would make any sort of order.
Another would be to make an order under s. 24(1)(c) of the 1973 Act for a variation of settlement in relation to the pension (see Brooks v Brooks  AC 375). There was some argument that this route too would be blocked by the presumption against extra-territorial effect, however that was a matter not before the court and so was not decided. This route was not available to Mrs Goyal as the court had previously dismissed her claims for property adjustment and financial provision orders.
The court could, however, make an order for periodical payments in the full amount of the annuity. That order could be accompanied by a legitimate injunction requiring the husband to receive the maximum amount and to pay it to the wife. These issues were adjourned for a further hearing on a later date.
It can be concluded then that, subject to any further appeal, the court is unable to make a pension sharing order in relation to any foreign pension scheme but can only either;
- Include in an order an agreement, supported by undertakings, that the parties will obtain such an order in the jurisdiction where the pension is held, provided that there is evidence that such an order is possible,
- Make a variation of settlement order in relation to that pension, providing there is evidence that such an order will be enforced, or
- Make a periodical payments order, supported by injunctions to ensure that the monies are paid and that the pension (if in payment) is taken in full.