England and Wales High Court (Administrative Court) Decisions

1. On 4th February 1961 Roy and A Elaine Jordan married in Michigan. They were both about eighteen and American citizens. Over the following five years they had three sons who are now in their middle thirties. After some twenty three years of marriage the husband obtained employment in England as a director of JMH Bostrom Limited. The family lived in England from 1984 to 1988 when the marriage broke down. The separation occurred at Christmas time when the wife left for California. The husband stayed on for about eighteen months before himself returning home. At the point of separation it was agreed that the family assets, including the husband’s shareholding in Bostrom Limited, should be realised and equally divided. The husband says the wife received about $1M. The wife says it was more like $900K. An asset that was not available for immediate division was the husband’s pension fund in Bostrom. At about the time of his return home he arranged for the transfer from the Bostrom pension scheme of his fund in the sum of £115,330. The recipient was an Isle of Man corporate and trust administrator, ECS International, which set up the MPM pension scheme, of which the husband was the sole beneficiary. At about the same time the wife issued divorce proceedings in the Superior Court of the State of California, County of San Diego. The husband accepted the jurisdiction of that court to deal with the suit and all ancillary matters. Shortly thereafter he purchased a two bedroom condominium at Calle Devanar in San Diego.

2. Through the Californian lawyers a comprehensive marital settlement agreement was entered into on 1st January 1991 and subsequently elevated into an order of the San Diego court on 26th April 1991. Between the date of the agreement and the date of the order the San Diego court dissolved the marriage. The agreement and order are very extensive, some thirty pages in all. Their broad scheme was to identify the separate property of each, identify and divide the community property and to define the wife’s rights to spousal support. The division of community property required the husband to make an equalising payment of $190K to the wife. Despite the equal division of assets at separation and the further division of assets under this order it was not what we would term a clean break agreement. Paragraph 4(a) provided for spousal support in these terms:

3. Paragraph 4(b) provided that:

4. Paragraph 8 provided:

5. Paragraph 31 must also be cited in full:

6. Finally amongst the other terms and conditions in paragraph 37 is the applicable law clause:

7. The community asset referred to in paragraph 8(a) was defined in Schedule A to the order as:

8. It seems that the husband’s obligation to pay the equalisation payment of $190K was on or before 31st December 1993. The husband asserts that he satisfied that obligation by transferring to the wife in June 1992 two plots of land. The wife asserts that after transfer she discovered that the plots were heavily mortgaged and that by the date of closure of the ensuing accounts and settlements, far from receiving any benefit, she had met a deficit of approximately $20K. Shortly thereafter the husband returned to this jurisdiction in search of opportunities to deploy his skill as a company doctor. In August 1992 he married his present wife Joanna and in July 1993 entered into a complicated financial transaction with ECS International in the Isle of Man. By that stage the husband had, as I understand it, a substantial shareholding in a company, Oakland Elevators Limited, of which he was the managing director. These shares were transferred to an Isle of Man company called Otani Limited. There are only three issued shares in Otani Limited, two held by ECS International on discretionary trusts for the benefit of the husband and his present family (in 1996 he and Joanna adopted two children). The other share in Otani is held by ECS International on discretionary trusts for the benefit of a third party, one of the husband’s co-directors in Oakland Elevators Limited. Subsequently in April 1996 Oakland Elevators Limited was purchased by Booth Industries Group plc, of which public company the husband is the chairman. The only significant asset of Otani Limited is its shareholding in Booth Industries, amounting to approximately 43% of its issued shares. (This information is derived from a public source, namely a letter of 17th February 1998 from the chairman to all shareholders in Booth Industries convening and explaining the purpose of an extraordinary general meeting.)

9. Shortly after the husband entered into these sophisticated financial arrangements the wife obtained a further order in the San Diego court. The order is dated 20th September 1993 and on its face is hard to comprehend. It resulted from an ex parte application, although the wife’s attorney asserts that he gave notice, as a matter of courtesy, to the counsel who had acted for the husband in 1991. That counsel has subsequently stated that he has no recollection of having received such notice. The first paragraph of the order, although most ineptly drafted, seeks to say nothing that is not to be found in paragraph 8(a) of the 1991 order. The following paragraphs make reference to the laws of Great Britain, not England and Wales, and seem to lack purpose or point. In the current proceedings in this jurisdiction there is no evidence to explain the motive or intention of either the wife or her attorney in obtaining this seemingly useless order. As I shall demonstrate the wife has made no subsequent use of it and the husband says that he was not served with it until it arrived with the wife’s proceedings in this jurisdiction in December 1997.

10. On 2nd June 1995 the husband and his present wife purchased Tower House, Dingley as their family home in joint names. In an affidavit sworn on 18th May 1999 his solicitor asserts that the entire purchase price was provided by the Midland Bank on mortgage. If that be right the subsequent transfer assumes lesser significance. However we know that on 7th October 1996 and again on 22nd April 1997 the husband and his present wife sought advice from a specialist Birmingham lawyer ‘about wills and inheritance tax planning’. As a generalisation it may be said that men do not spend present money on lawyers fees unless there is something of actual or potential substance to protect from the inroads of future taxation. It is the husband’s case that part, or perhaps all, of the advice was to transfer his half share in Tower House to his wife, Joanna. However instructions to effect the transfer were not given until 6th January 1998 and in the intervening nine months there were very significant developments. No doubt coincidentally, the day after the second visit to the Birmingham solicitor a letter was sent to the husband by a firm of solicitors in Northampton instructed by the wife. The first paragraph is as follows:

11. They then set out five numbered claims. The first was the failure to make the equalising payment of $190K. The second was a claim to full documentary evidence regarding the Bostrom pension ‘to calculate our client’s claims’. Beneath the five numbered claims was this paragraph:

12. The letter concluded with notice that in default ‘we have instructions to commence enforcement proceedings in the High Court without further notice’. The letter went unanswered.

13. On 5th August the wife issued a summons seeking leave to apply for orders under Part III of the Matrimonial and Family Proceedings Act 1984. The affidavit in support contained in paragraph 14 the surprising assertion ‘I do not believe there is anything further I can do in the San Diego courts to protect my rights or to ensure that the respondent complies with the marital agreement ....’. I say surprising since the wife had taken no step to implement or enforce the 1991 order, her only return to the court having been the unexplained application of 20th September 1993. The application for leave was granted ex parte by Hogg J on 21st October and led to the filing of a notice of application on 24th November not for the implementation of the 1991 San Diego order but for the full range of ancillary relief. However the affidavit in support asserted that the husband was in breach of the 1991 order, that he would seek to evade his responsibilities and that accordingly relief and enforcement was sought in this jurisdiction. The husband’s response was a summons of 6th February 1998 to set aside the ex parte order. The affidavit in support failed by a wide margin to discharge the duty of full and frank disclosure. He said that he was a salaried director of Oakland Elevators Limited without shares in the company. He said that he was living in his wife’s house. Anyone interested in understanding the reality of his financial situation would have received more help from the chairman’s letter to shareholders in Booth Industries Group written in the same month. This breach was revealed by the wife’s investigations which were reported to the court in her affidavit in reply served on the 6th April, two days before the hearing of the husband’s summons. On the grounds of late notice the husband successfully sought an adjournment. The wife’s solicitors sought further information regarding the husband’s finances as they were entitled to do under Rule 2.63 of the Family Proceedings Rules 1991. The request went unanswered although some narrative explanation of his activities after his return to England in 1992 was given in a letter of 1st May 1998. Finally, only days before the adjourned hearing of the husband’s summons, he disclosed an extraordinary letter from ECS International. The relevant director, the husband’s trustee Mr Harper, admitted receipt of £115,329.58 from the Bostrom pension fund on 8th August 1990. He then wrote:

14. It would be difficult to conceive a letter that would create greater discontent on disclosure.

15. The husband succeeded before Hogg J who discharged the wife’s leave to apply under section 13 of the 1983 Act. She had regard to the duty upon her under section 16 to consider whether, in all the circumstances of the case, it would be appropriate for the court in London to make an order. She concluded that this was a Californian case through and through and the dispute as to whether or not the husband was in default had not been investigated by or brought to the attention of the judge in San Diego.

16. On 4th August the wife sought leave to appeal and, no doubt coincidentally, on the following day the transfer of the husband’s half share in Tower House to his wife Joanna was accomplished. On 7th October it seems that there was a meeting between the husband and his trustee Mr Harper at which Mr Harper explained the exhaustion of his pension fund. On 1st November leave to appeal was granted by Ward LJ on the basis that the unanswered questions relating to the Bostrom pension might justify the grant of leave. Despite this revival of her prospect of litigating in London on 24th November the wife reopened the San Diego proceedings. By her application she sought to enforce four of the five claims advanced in this jurisdiction by her solicitors letter of 23rd April 1997. The omitted claim was the claim for documentary evidence regarding the Bostrom pension. The final section of her application is headed:

17. Underneath that bold heading Paragraph 31 of the 1991 order was set out in full and in quotation underneath that the application closes with this sentence:

18. It seems that the application was personally served on the husband on 14th January 1999. The case was assigned to the judge who made the 1991 order, Judge Thomas Ashworth III, and a hearing was fixed for 15th March. On 10th March the husband’s English solicitors sent a letter by personal courier to the clerk of the court requesting an adjournment on the grounds that ‘Mr Jordan is the chairman of a major plc in the UK and his work commitments have not allowed him to instruct lawyers in San Diego to deal with the appointment’. It is hardly surprising that such a feeble application did not deflect Judge Ashworth on 15th March making the orders sought by the wife resulting in a total judgment debt of over $300K. The husband says that it is his intention to apply to set aside this order made in his absence alternatively to appeal it.

19. Shortly before the hearing of the appeal on 26th May two further pieces of information emerged. The first is a letter from Mr Harper to the husband referring to a telephone conversation between them of 10th May. He reiterates that the pension fund is exhausted and asserts that the husband was aware at all times of the investment risks ‘particularly in view of the financial climate of the early 90s’. Although these exchanges were at least a fortnight prior to the hearing and although both parties were pressing applications to adduce fresh evidence there is not a word from the husband to explain himself in the light of these assertions or to give any account of his stewardship of a fund which he well knew secured the wife’s needs in retirement as well as his own. Given ordinary competent management a fund transferred to pension trustees in August 1990 with a value of £115K would now be worth several hundred thousand pounds. All that the husband says through his counsel is that he may hold ECS International to account. But he and Mr Harper are on Christian name terms and Mr Harper is trustee of the Otani shares as well. If that were not enough, by an affidavit of 20th May the wife demonstrates that the husband’s Californian property is encumbered with two mortgages, one securing an advance of $152K and the other securing the advance of just over $22K. Thus it seems that it has a nil equity.

20. We admitted all the fresh evidence and it is against that factual background that the appeal proceeded.

21. Mr Duckworth for the wife makes a number of powerful submissions. As to the judgment of Hogg J he submits that she misdirected herself in law but in any event was gravely misled by the husband as to relevant facts. As to the law Mr Duckworth makes two submissions. First he says that the judge inappropriately applied the decisions of this court in Holmes v Holmes [1989] Fam 47 and Hewitson v Hewitson [1995] Fam 100 which were both cases in which the court applied the statute restrictively to a wife seeking a second bite of the cherry. This was not such a case. All his client sought was possession of the cherry awarded her in San Diego. There being no authority in relation to an application designed only to enforce a foreign order it was for this court to apply the statute purposively and with due regard to the Law Commission Report No 117 from which it originated. Secondly he criticised the judge for following a holding in N v N [1997] 1 FLR 900 to the effect that an applicant for leave must demonstrate that without it she would suffer hardship or injustice.

22. As to the facts Mr Duckworth asserts that the husband misled the judge into accepting that:

23. For the husband Mrs Roberts did not dispute, indeed could not dispute, that her client had failed to make full and frank disclosure. However she did not concede that her client had made any dispositions or arrangements with the intention of defeating or diminishing the wife’s rights under the 1991 order.

24. The litigation history well illustrates a lack of transparency on both sides. What did the wife seek to achieve by her application of 20th September 1993? Why did she make no effort to enforce what she says are her just claims under the 1991 order between 1993 and 1997? When she did initiate enforcement proceedings, why in this jurisdiction and not in California? Why in this jurisdiction did she seek to enforce all five heads of claim when only one related to an asset on this side of the Atlantic? Why did she issue identical enforcement proceedings, save only in respect of the Bostrom pension, in California shortly after grant of leave to appeal? With all these questions unanswered the inevitable conclusion is that the wife’s pursuit of litigation rights has not been guided by any straightforward, coherent, consistent or responsible strategy.

25. However the husband is equally vulnerable to criticism. Why did he not disclose prior to the making of the 1991 order that the Bostrom pension had already been transferred to a trustee company of his choosing offshore? Why did he cause or permit speculative investment of the pension fund when he well knew that he was gambling with the wife’s future as well as his own? Why did he not inform himself of and disclose to the wife a regular account of the fund, even if the results were dire? In entering into tax avoidance schemes both in relation to his shareholding and his home to what extent did he have regard to his continuing financial obligations to the wife and to what extent did he instruct his advisors to have regard to those obligations? Again without a straightforward and credible explanation from the husband accompanied by disclosure of all relevant documents it is hard not to draw the inference that he has been deliberately arranging his affairs to avoid enforcement of obligations arising from the 1991 order. Motivation is generally mixed and some of the ingredients are likely to be subconscious and others unacknowledged. But the inference that his misstatements and misrepresentations in this litigation were intended to disadvantage the wife is irresistible. Even on the most charitable interpretation both parties appear guilty of litigation gamesmanship all too familiar to specialists in this field, gamesmanship which the specialist judges in this jurisdiction are committed to stamp out.

26. All that said I am clearly of the opinion that Mr Duckworth succeeds to the full in his submission that Hogg J was misled on four relevant factual issues. The area of misstatement, the ownership of assets in both jurisdictions, is clearly highly material to outcome.

27. I turn now to the law. Before reviewing the authorities it would be helpful to set out the relevant statutory provisions. For the purposes of this appeal we need sections 13 and 16 of the statute. Those sections provide:

28. Section 15 defines the court’s jurisdiction. That requirement is here satisfied by the husband’s habitual residence in England and Wales throughout the year immediately preceding the date of the wife’s application for leave. Section 17 shows that, leave having been granted, the court has the jurisdiction to make the wide range of financial orders available in domestic litigation. Section 18 defines the matters to which the court shall have regard in exercising the section 17 powers. It is enough to sketch in sections 15, 17 and 18 without further elaboration. The outcome of the appeal depends upon the proper construction of sections 13 and 16 in conjunction. That they are to be taken in conjunction is clear from the leading case in this field, Holmes v Holmes . As Purchas LJ said in his judgment at 53H:

29. He repeated this point at 54E when he said:

30. Having rejected analogies from judicial review, mareva injunctions and asylum cases Purchas LJ found greater assistance from the analogy of forum conveniens as defined in Spiliada Maritime Corporation v Cansulex Limited [1987] AC 460. Having cited from the speech of Lord Templeman at 465 he continued:

31. Dillon LJ was of the same opinion. At 59B he said:

32. Finally Russell LJ rejected the analogy with judicial review saying that the test in section 31(1) was plainly more stringent. His opinion was succinctly stated in this passage:

33. Of course the paradigm case creating the need for the legislation was the case where the decree of the foreign court was entitled to recognition in this jurisdiction but where that court did not offer any rights to financial provisions either at all alternatively on any basis comparable to the rights arising under the Matrimonial Causes Act 1973 in this jurisdiction. The opening sentences of the Law Commission Report: Financial Relief After Foreign Divorce (Law Comm No 117) so state. However after Parliament had provided the remedies for the paradigm case, attempts were repeatedly made to extend the statutory provisions to obtain for the applicant some specific outcome or target which she had failed to achieve in the jurisdiction where the marriage had been dissolved. Hence Holmes v Holmes and the subsequent cases are in the main restrictive and negative in conclusion, defining and policing the boundary between relieving hardship in the paradigm case and disqualifying the forum shopper for the applicant seeking a second bite of the cherry.

34. But is Mr Duckworth right in his submission that this line of authority has no application to the claimant who does not seek either more or something other but only to gain what the foreign court has ordered should be hers? What light does the Law Commission report shed on the proposition? Clearly careful consideration was given to the enforcement of orders made in foreign jurisdictions. In paragraph 21 of the working paper that preceded the report (Working Paper No 77), having referred to the Maintenance Orders (Reciprocal Enforcement) Act 1972, the authors continued:

35. In paragraph 2.22 of the report itself the authors explained:

36. Thus it seems to me that whilst the Law Commission had enforcement under consideration, the ultimate policy decision was not to legislate specific powers in this statute, no doubt in reliance upon the 1972 Act and the power to make statutory instruments thereunder. Statutory instruments currently in force in relation to California are the Recovery of Maintenance (United States of America) Order 1993 (1993/591) which applies the provisions of Part II of the 1972 Act and the Reciprocal Enforcements of Maintenance Orders (United States of America) Order 1995 (1995/2709) which applies the provisions of Part I of the 1972 Act.

37. Against that background how should the court approach the determination of an application for leave where the applicant declares that her only objective is to enforce an order incorporated in the process by which the marriage was dissolved? As in every application for leave under Part III, the court begins and ends with the restrictive provision within section 13(1), ‘it shall not grant leave unless it considers that there is substantial ground for the making of an application for such an order’. Again as in every other application for leave under Part III, forum conveniens considerations come into play. De Dampierre v de Dampierre establishes the importance of fixing the primary jurisdiction before competitive litigation in more than one jurisdiction has unnecessarily depleted available assets. It is equally important to outlaw unnecessary competitive litigation after the primary jurisdiction, identified by common consent, has performed its essential function to divide assets and income. Prima facie the primary jurisdiction offering comparable rights of equitable redistribution will also offer comparable powers of implementation and enforcement. As a matter of general principle questions of implementation, being akin to procedural questions, should be seen as the prerogative of the jurisdiction that made the order allegedly unperformed. Thus an application for leave mounted under Part III and declared to have the sole object of enforcing a foreign order would in my opinion be unlikely to succeed unless:

38. The enforcement scheme under the 1972 Act has been extended since the date of the Law Commission report. In relation to the United States of America there are the 1993 and 1995 statutory instruments. But there are deficiencies in the present state of the law of enforcement, some of which have been noted in a recent report from the Ancillary Relief Advisory Group to the Lord Chancellor. I would prefer to see these deficiencies made good by extension of reciprocal powers under the 1972 Act rather than by the adaptation of the Part III remedy. Enforcement of foreign orders involves a degree of trespass and should wherever possible be preceded by appropriate international negotiation leading to mutually agreed reciprocal powers.

39. Before applying these principles to the present application, let me consider Mr Duckworth’s second submission, namely that Hogg J was wrong to follow the requirement of proof of hardship or injustice derived from the decision of Cazalet J in N v N .

40. Of course the notion of hardship is derived from the Law Commission report and was emphasised by Purchas LJ in Holmes v Holmes when he said:

41. But as a matter of logic it does not follow that hardship is a necessary prerequisite and I doubt that it was open to Cazalet J to hold that an applicant must prove some hardship or injustice in order to obtain the court’s leave. Parliament might have so legislated, but it did not. The statutory criteria are fully expressed. A case in which the applicant crosses the barriers contained in sections 13 and 16 without proving some specific hardship or injustice is perfectly conceivable. Therefore I accept Mr Duckworth’s submission that Cazalet J went too far in N v N and that Hogg J was accordingly wrong to follow him.

42. Since Mr Duckworth has also demonstrated misdirection in law, I conclude that Mr Duckworth is entitled to a fresh appraisal by this court on the facts more completely but by no means fully revealed.

43. However even on a proper approach in law to an application limited to enforcement and even on the basis of the husband’s revealed falsehoods, I nevertheless share the view of Hogg J that this remains a case in which leave should be refused. My reasons are as follows:

44. As my lord, Lord Justice Simon Brown, has pointed out, in the field of judicial review, once leave is granted on an ex parte application, an attempt to discharge inter parties is much discouraged: see the Rules of the Supreme Court, Order 53/14/4 at page 899 of the Supreme Court Practice. It must be questioned whether the present practice in the Family Division does not lead to waste of costs. Rule 3.17 of the Family Proceedings Rules 1991 provides for the ex parte application where leave is sought under Part III. A subsequent application to set aside is not specifically provided for under the rules but in my experience such applications have been commonplace. There may be good arguments for moving at once to the inter parties hearing which would test at once whether or not leave in principle is contested and assist the court to determine its substance.

45. For the reasons listed above I would dismiss this appeal.

46. Lord Justice Auld:

47. Lord Justice Simon Brown:

48. ORDER: Appeal dismissed. Respondent to receive half costs of appeal.

49. Order for costs below remains undisturbed. [This order does not form part of approved judgment].