Hunters Family Law team recently represented the successful applicant in his appeal against a Financial Remedy Order purporting to transfer his two pensions which had been transferred to India in 2014, to his wife.
Following hotly contested financial remedy proceedings, His Honour Judge Glenn Brasse concluded that that he could not make a Pension Sharing Order, or a Pension Attachment Order, pursuant to the Matrimonial Causes Act 1973 in relation to the husband’s two pension assets as they had by then been transferred by the husband out of the jurisdiction and the benefit assigned to a creditor in part settlement of his debts. The Judge was critical of the husband’s conduct which he felt was designed to prejudice the wife’s claims, and decided that the husband was still the beneficial owner of the policies. However, having decided he did not have jurisdiction to grant a substantive order for relief, he claimed that the court has jurisdiction “ancillary to its statutory functions under the Matrimonial Causes Act 1973” to make a “mandatory injunction” which required the husband to transfer or assign the pension assets to the wife and pay to her any income arising from them. It was this use of this ancillary jurisdiction that was challenged.
The Court of Appeal agreed that there is no general residual or inherent discretion for the Court to make any order it might think necessary to ensure that justice is done between the parties if such an order is a substantive, rather than supportive, order. The only power the court has to make a “mandatory injunction” in an ancillary or supportive capacity is under the Senior Courts Act 1981, but this does not establish a free standing jurisdiction to make substantive orders for relief. Having decided that he did not have the power to make a Pension Sharing or Attachment order in the first place, the Judge could not therefore justify the use of the injunction in a supportive capacity as there was no statutory function to support. The Judge was in fact granting substantive relief by another means.
The Court, therefore, granted the appeal and held that the Wife’s claim for a Pension Sharing Order remains open and the case was remitted back to the Family Court for re-determination.
The interesting point for practitioners is that the Court of Appeal felt the judge was wrong when he said he could not have made a Pension Sharing Order in the first place simply because the policies were by then in India. The territorial extent of the court’s power to make such orders will presumably be debated when the matter comes back before the court, but those who have transferred policies into a QROPS scheme should take note that those schemes may still be vulnerable to the court’s jurisdiction.
It was also pointed out that even if the court believed that it had the power to make a Pension Sharing or Attachment Order, none of the essential procedural prerequisites under FPR 2010, r 9.31 had been complied with and so it was not possible to know what the scheme administrator’s position was as they had not been served with the wife’s application. It was argued that the wife should have produced expert evidence as to the enforceability of the order in India against the specific schemes before seeking any orders in relation to them.
The issues before the Judge should have been (1) did the terms of the policies prevent a transfer to the wife, (2) what was the reaction of the scheme administrators and would they consent to the transfer (bearing in mind the procedural formalities had not been complied with) and (3) whether an English Pension sharing Order could be enforced in India in any event.
Hunters incorporating May, May & Merrimans