A problem often faced by family law practitioners is what to do with a pension that is located in another EU state. Will the Trustees of such a pension scheme implement an Irish Pension Adjustment Order? The most practical solution so as to avoid such questions is of course is to leave it alone and to divide the assets in such a way that does not involve trying to divide the pension. However if the particular facts of the case require the pension to be divided then the question arises of how this can be achieved. This article examines the process in England, the most common country in which a foreign pension is likely to be located for historical and practical reasons.
It is necessary to briefly examine the case law on the recognition of Pension Adjustment Orders in other EU states. In the case of Van den Boogaard v Laumenthe question asked of the Court was whether a decision given in divorce proceedings ordering payment of a lump sum and transfer of ownership in certain property by one party to his or her spouse is excluded from the Brussels Convention on the ground that it relates to property arising out of a matrimonial relationship, or whether it may be covered by the Convention on the ground that it relates to maintenance. The Court answered this question as follows:
“Owing precisely to the fact that on divorce an English Court may, by the same decision, regulate both the matrimonial relationships of the parties and matters of maintenance, the Court from which leave to enforce is sought must distinguish between those aspects of the decision which relate to rights in property arising out of a matrimonial relationship and those which related to maintenance, having regard in each particular case to the specified aim of the decision rendered.
“It should be possible to deduce that aim from the reasoning of the decision in question. If this shows that a provision awarded is designed to enable one spouse to provide for himself or herself or if the needs and resources of each of the spouses are taken into consideration in the determination of its amount, the decision will be concerned with maintenance. On the other hand, where the provision awarded is solely concerned with dividing property arising out of a matrimonial relationship, the decision will be concerned with rights in property arising out of a matrimonial relationship and will not therefore be enforceable under the Brussels Convention.”
“It makes no difference in this regard that payment of maintenance is provided for in the form of a lump sum. The form of payment may also be in the nature of maintenance where the capital sum set is designed to ensure a predetermined level of income.”
It is clear from the above that a Court which is being asked to recognise and enforce an Order must first consider the purpose of the Order. If the purpose of the Order is to provide for the other spouse then it should be enforceable but if the purpose is to divide property then it is not. Given that the purpose of a Pension Adjustment Order is generally to provide maintenance for a spouse after retirement, it should be open to practitioners in most cases to present a strong argument that such an Order should be enforced in another EU state.
However, while the case law would seem to suggest that an Irish Pension Adjustment Order is entitled to recognition by Trustees of English pension schemes, it does not necessarily follow that such Trustees will recognise and implement the Order. If the Trustees refuse to recognise the Irish Order then practitioners are left with three options:
- Bring an application pursuant to the Brussels I Regulation to have the Order recognised and enforced.
- Bring an application in the English Courts under the Matrimonial and Family Proceedings Act 1984 for a mirror Order of the Irish Pension Adjustment Order.
- Enforcement of the Irish Pension Adjustment Order pursuant to Rule 74.3 of the Civil Procedure Rules 1998 which provides for the enforcement in England of judgments made in a different jurisdiction.
The first option above is less straightforward than the other two and advice that I have received from English practitioners is that is simpler and cheaper to make an application under the second or third options.
Myself and my colleague Eugene Davy were involved in a case recently which required the implementation of an Irish Pension Adjustment Order in England. The case demonstrates very well the difficulties that are faced by Irish practitioners in enforcing Pension Adjustment Orders in England.
The outline facts of the case were as follows. The parties were married in England in 1966 and lived there for many years before moving back to Ireland. They separated in 1998 and divorce proceedings were brought by the Applicant husband in 2006. The husband had retired in 2003 and, having worked in England for most of his working life in a senior role, had a very substantial pension there. The Terms of Settlement attached to the Decree of Divorce provided, inter alia, that the wife was to receive half of the retirement benefits. A Pension Adjustment Order in the normal format was not made by the Court in this case however. Instead the Court made an Order in addition to the Decree of Divorce pursuant to section 17(2) of the Family Law (Divorce) Act 1996 awarding the wife 50% of the retirement benefits. It further reflected the understanding of the parties that implementation of the Pension Adjustment Order would involve the Trustees transferring an actuanity calculated pension credit to a fund nominated by her so that she will have the benefit of that fund to provide for her own pension. The Order also dealt with which party should be responsible for the costs of the Trustees in implementing the Order in England. These charges can be relatively high so it is important that they are dealt with within the body of the Order.
On receipt of the Pension Adjustment Order the Trustees were notified of the Order and called upon to confirm that they would implement it. The Trustees duly replied that they would not implement the Order without an Order from an English Court. Solicitors in England were retained and advised that in such circumstances the best way to proceed was to seek a mirror Order under section 13 of the Matrimonial Proceedings Act 1984. In order to make such an application it is necessary to first seek leave of the High Court to bring such an application. In order to bring an application for leave the parties must satisfy jurisdictional requirements under section 15 of the Act as follows:
- either of the parties to the marriage must have been domiciled in England and Wales at the date of the application for leave or was so domiciled on date which the divorce was obtained in the overseas country took effect; or
- either of the parties was habitually resident in England and Wales throughout the period of one year ending with the application for leave or was so resident throughout the period of one year ending with the date on which the divorce obtained in the overseas country took effect in that country; or
- either or both of the parties to the marriage had at the date of the application for leave a beneficial interest in possession in a dwelling house situated in England and Wales which at some point during the marriage was the matrimonial home of the parties to the marriage.
The difficulty faced in this case is that the parties did not satisfy the above jurisdictional requirements and therefore no application could be made under the 1984 Act for a mirror Order. How then to implement the Irish Pension Adjustment Order?
The solution was to enforce the Order using Rule 74.3 of the Civil Procedure Rules. This process is normally used for enforcing a judgement for a debt issued in another jurisdiction and so the application to have the Pension Adjustment Order enforced under these Rules had to somewhat imaginative. In order to apply under the Civil Procedure Rules the following requirements must be met:
- An application needs to be made to the High Court (which can be made without notice).
- A witness statement in support must be prepared exhibiting the original judgement.
- The written evidence in support of the application must state:
- The name of the judgement creditor and his or her address.
- The name of the judgement debtor and his or her address.
- The grounds on which the judgement creditor is entitled to enforce the judgement.
- In the case of a money judgement the amount in respect of which it remains unsatisfied.
- Where interest is recoverable on the judgement under the law of the state of origin the amount of interest which has accrued to date and the rate of such interest.
Additionally evidence in support of an application under the Civil Jurisdiction and Judgment Act 1982 must also exhibit:
- documents which show that under the state of origin, the judgment is enforceable on the judgment debtor and has been served,
- in the case of a judgment in default, a document which establishes that the party in default was served with the document instituting the proceedings or with an equivalent document, and
- where appropriate, a document showing that the judgment creditor is in receipt of legal aid in the state of origin.
Given the nature of a Pension Adjustment Order it was not possible to set out the amount to which the debt remains unsatisfied in monetary terms save to say that the Order remained unsatisfied. Obviously no interest was payable whilst the costs of such an application are normally awarded against the judgment debtor in this instance costs were not sought due to the unique nature of the application.
The application was duly granted by the High Court and an Order made under the Civil Jurisdiction in Judgments Act 1982 registering the Irish Pension Adjustment Order as a judgment in England. Pursuant the Rules the Order was then served on the judgment debtor. The Order must be served on the judgment debtor by either:
- Delivering it to the judgment debtor personally, or
- As provided in the Companies Act 1985 or 2006, or
- In such other manner as the Court may direct.
In this case the Order was served on the Trustees of the pension and this qualified as good service under the Companies Act. The Trustees duly confirmed that they would now implement the Irish Pension Adjustment Order in full as the English Order, in their view, validated the Order of the Circuit Family Court in Dublin.
By way of a sidenote, it may be interest to note that the wife was able to transfer her share of the fund to an ARF in Ireland.
This case demonstrates the hoops through which one must jump in order to have an Irish Pension Adjustment Order implemented in England if the Trustees of the scheme do not accept the Order in the first instance. In addition to the delay involved in such a process there are of course additional legal costs in retaining English lawyers to bring the necessary application. It is important that both the costs and the risks involved in making such an application in England be taken into account before a case involving a large English pension is heard or settled in Ireland. It is also important that the Irish Order is worded in such a way as to facilitate its enforcement in England if necessary. Most of all this case shows that if there is a way around dividing an English pension then such a course of action will lead to a quicker, safer and cheaper solution to the division of assets and proper provision.