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Section 37 Senior Courts Act 1981 injunctions can be made only in support of existing substantive powers

Court of Appeal discharges injunction to transfer pension policy

The Court of Appeal has confirmed that injunctions made under section 37 of the Senior Courts Act 1981 can be made only in support of existing substantive powers.

In Goyal v Goyal [2016] EWCA Civ 792 the Court of Appeal heard that at first instance husband had been found to have gambled away the vast majority of the family's wealth. On this basis, and with the concern that H would dissipate any assets awarded to him, HHJ Brasse had awarded the full assets to the wife.

At the end of initial final hearing however, the issue of pension was adjourned for further consideration. It had transpired that H had encashed two pensions and placed them into an annuity in India. He had failed to disclose this either at the time, or in response to a questionnaire on the matter. HHJ Brasse held that the "secret transfer of these pensions without the wife's knowledge or consent or without disclosing the fact to the court was, in my judgment, a manifestly deceitful course of action which must have been designed to defeat the wife's legitimate claims". 

At the further hearing, the judge determined that the policy was still beneficially owned by H, given that W had discovered an account in India in H's name into which the proceeds were paid. At that hearing the judge understood that he was unable to make a pension sharing order against the annuity held as it was in India. He therefore made a mandatory injunction 'ancillary to [the court's] statutory functions under the Matrimonial Causes Act 1973' 'against Mr. Goyal to transfer or assign the HDFC pension policy to Mrs. Goyal so that she and the child will have some security for the future'. The order required H to transfer or assign to W all his interest in the policy, and pending the completion of the transfer or assignment, to pay to the wife all income in respect of the policy.

In the Court of Appeal it was noted that the judge was wrong to assume that a pension sharing order was not possible purely on the basis that the annuity was held in India. A 'specified pension arrangement', as required by s.21A MCA 1973, is given a wide definition in Section 46 of the Welfare Reform and Pensions Act 1999. There are no specific territorial limits on the definition, and therefore on the power to grant a pension sharing order.

However, McFarlane LJ, giving the lead judgment, held that HHJ Brasse had clearly not made an order under that power, as the original judgment expressly stated that the judge had understood that this was not an option open to him.

At the appeal hearing, it was effectively accepted that the only power that the judge could have used to make the injunction was Section 37 of the Senior Courts Act 1981. McFarlane LJ confirmed that, following authorities such as Wicks v Wicks [1998] 1 FLR 470 and The North London Railway Company v The Great Northern Railway Company [1883] 11 QBD 30, s37 SCA 1981 only confers ancillary or supportive, and not substantive, powers. As HHJ Brasse had expressly ruled out a statutory power in support of which the injunction was granted, there was no power for the provision to be made.

The relevant provisions of HHJ Brasse's order were therefore discharged. The issue of the pension sharing order was listed for a re-hearing to determine the use of s.21A MCA 1973, as well as issues of service on the pension provider and determination of whether the annuity policy would allow for assignment. This was despite H's arguments in relation to proportionality of a further hearing, and W being given an inappropriate second chance to remedy defects in her service now that H had highlighted them. In any event, the Court of Appeal did not have the power to dismiss W's pension claims.

For the judgment and summary by Samuel Little johns of 1 Hare Court, of which the above is an abbreviated version, please click here.

8/8/16