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Goyal v Goyal (No. 3) [2017] EWFC 1

Judgment by Mostyn J as to whether a declaration of ownership of pension rights had been set aside by the Court of Appeal, applicability of issue estoppel, a double-limbed periodical payments order and a ‘bolstering injunction’.

On 4 November 2016 the final paragraph (§ 48) of the judgment of Mostyn J in Goyal v Goyal (No. 2) [2016] EWFC 50 had set out the agenda for this further judgment. 

Mostyn J was asked to determine ownership of rights under a pension annuity contract together with the parties' cross applications for variation of a periodical payments order.

The factual background is set out at § 2 – 19 of the judgment of McFarlane and Macur LJJ in Goyal v Goyal [2016] EWCA Civ 792.  At § 7 the Court of Appeal had repeated HHJ Glenn Brasse's conclusion that "the husband's addiction to spread betting had led him to dissipate the entirety of the family finances almost to the point of their extinction".

Mostyn J added "[h]ad it not been for his reckless conduct in gambling away his high earnings there would have been no doubt a substantial sum of accumulated wealth for [the wife] to have shared at the end of the marriage" (Goyal v Goyal (No.3), § 18).

Ownership of pension fund
At first instance HHJ Glenn Brasse had determined that an Indian pension fund belonged to the husband, and had rejected the husband's case that he had transferred ownership of it to a third party, Mr D.  On 6 January 2016 HHJ Brasse had ordered the transfer / assignment of the pension to the wife, and, pending completion he had directed the husband to pay to the wife all of the income arising therefrom. 

On 29 July 2016 the Court of Appeal set aside those two paragraphs of HHJ Brasse's order, but in Goyal v Goyal (No. 2) [2016] EWFC 50 Mostyn J had expressed his view, at § 46, that in Goyal v Goyal [2016] EWCA Civ 792 the Court of Appeal had gone further and had "inadvertently set aside the formal declarations of ownership made by Judge Brasse".  Mostyn J subsequently "reflected on these remarks having had the benefit of careful submissions from [counsel]", and concluded that "the terms of the judgment and the terms of the order of the Court of Appeal are" (rather) "simply irreconcilable" (§ 4).

The court's findings as to ownership, recorded on the face of the order were not "mere recitals", but "findings of fact formally incorporated in a declaration within the court's order" (§ 5) and hence capable in principle of being set aside on appeal (see para 21 of M (Children) [2013] EWCA Civ 1170).  However "permission to appeal them had not been granted, nor even sought" and therefore the declaration of HHJ Brasse as to ownership "remains intact".

Was the husband estopped from challenging the ownership?
Mostyn J adverted to his summary of "res judicata and other abusive duplicative proceedings" in R (on the application of Mandic-Bozic) v British Association for Counselling and Psychotherapy & Anor [2016] EWHC 3134 (Admin), and also to para 22(3) of Lord Sumption's judgment in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46.  As the wife was no longer seeking a pension sharing order or transfer "by some innovative method", but rather "periodical payments calibrated by reference to the income deriving from the policy", issue estoppel was in play, the issue being the ownership of the pension policy (§ 8).

Mostyn J had permitted the husband to give fresh documentary and oral evidence on appeal.  Nonetheless, the declaration of HHJ Brasse remained fully effective as a result of issue estoppel (§ 11).

Upon hearing the husband, seven specific matters (§ 10) caused Mostyn J further to "unhesitatingly conclude on the evidence that the husband is the beneficial owner of the annuity" (§ 11).

The periodical payments
HJJ Brasse had intended the wife to "recover the few scraps that were left" following the husband's loss of "such vast sums by reckless gambling" (§ 12), and had directed proceeds of sale of certain UBS shares to be paid by the husband to the wife.  However, they had been distrained by a creditor.

Despite "powerful reasons" for making a supplementary periodical payments order of 100% of the income from the annuity, the court did not want to risk the "thicket of obstacles" which may arise from the husband "cut[ting] off his nose to spite his face" (§ 13).

Neither party was yet exercising its earning capacity in the manner predicted by HHJ Brasse.  Mostyn J noted the irony that press reports "strongly sympathetic to the wife and damning of the husband (and of which she may have had a hand in their creation) seem to have prejudiced the very periodical payments order she was awarded" (§ 16).

A spousal periodical payments order with two limbs was made: -

A 'bolstering injunction' made against the husband would require him to procure that the payments in limb 2 went to the wife, pursuant to the principle in Blight v Brewster [2012] 1 WLR 2841 and Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Company (Cayman) Limited [2011] UKPC 17.  The existing freezing order would be discharged.

It was beyond the court's power to order the company which was holding the policy in the name of the husband to pay the sums directly to the wife.

Conclusion
The court urged the husband to "accept the judgment and desist from further pointless litigation" but expressed its regret that the parties would likely "remain locked in litigious battle in India for years to come" (§ 20) on a related matter.

A request from husband's leading counsel, alleging inadequate reasoning, for Mostyn J to amplify the judgment was rejected as His Lordship said that it was not the function of the court to address every point raised by counsel – see FAGE UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 at § 115.

Summary by Gwyn Evans, barrister, Tanfield Chambers
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Case No: FD12D02732
Neutral Citation Number:
[2017] EWFC 1

IN THE FAMILY COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 16/01/2017


Before :

MR JUSTICE MOSTYN
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Between :

Ankita Goyal
 Applicant
- and - 
Amit Goyal Respondent
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Philip Cayford QC and Joanna Toch (instructed by Zaiwalla & Co) for the Applicant
James Turner QC
(instructed by Forsters) for the Respondent
All lawyers acted pro bono

Hearing date: 19 December 2016
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Judgment
This judgment was delivered in private.   The judge gives leave for this version of the judgment to be published. It should be referred to as Goyal v Goyal (No. 3).

Mr Justice Mostyn:
1. This judgment follows on from my judgment dated 4 November 2016 ([2016] EWFC 50), and it is my hope that it will bring to a conclusion this long running and futile litigation between the parties. 

2. In para 48 of that judgment I set out the agenda for the hearing which I concluded on 19 December 2016 and on which I now give judgment. The agenda is:

i) The question of ownership of the rights under the annuity contract ("the ownership issue").

ii) The wife's deemed application for a variation of the periodical payments order to provide that thereby she receives all the benefits arising under the annuity contract ("the wife's application").

iii) The husband's application to vary the existing periodical payments order which he issued in February 2016 shortly before it was due to take effect ("the husband's application").

The ownership issue
3. In my previous judgment I stated at para 4:

"… [the Court of Appeal] set aside the entirety of the offending order, including the provisions which made declarations as to the beneficial ownership of the Indian pension fund; and ordered that the wife's claims for a pension sharing order should be 'reheard'."

And at para 5:

"Judge Brasse found that the Indian pension fund belonged to the husband and dismissed his case that he had transferred all his interest in it to a Mr Deshmukh. He made strong findings of dishonesty against the husband. McFarlane LJ did not in his judgment question those findings, and indeed relied on them. He stated however at paragraph 15 that "the focus of this appeal is not upon the judge's findings of fact but upon the order that he made in the light of those findings." In paragraph 47 he held that paragraphs 1 and 2 of the order should be set aside - and those only concerned the injunction order. However, as I have already stated, the actual order of the Court of Appeal sets aside not merely the illegitimate free-standing injunction orders (i.e. paragraphs 1 and 2), but the order "in its entirety" made by Judge Brasse, and this included the key declarations as to the beneficial ownership of the fund. Therefore, it seems to me that, although this was probably unintended by the Court of Appeal, the question of the ownership of the fund is at large and needs to be re-determined, although in such determination the findings of Judge Brasse are naturally admissible and influential, if not decisive."

And at para 46:

"I cannot go down this route [of periodical payments] at this stage as the question of the ownership of the rights under the annuity contract has yet to be determined by me in circumstances where the Court of Appeal has inadvertently set aside the formal declarations of ownership made by Judge Brasse."

4. I have reflected on these remarks having had the benefit of careful submissions from Mr Cayford QC and Miss Toch and I have concluded that they need revision.  Mr Cayford QC and Miss Toch are in my judgment right to submit that the terms of the judgment and the terms of the order of the Court of Appeal are simply irreconcilable. The judgment expressly relies on the factual findings made by Judge Brasse. Para 47 of the judgment of McFarlane LJ sets aside only paras 1 and 2 of the order but does not set aside the declarations, which immediately precede the orders, and which concern the ownership of the Indian annuity contract. These state:

"AND UPON the court finding:

(a) that the Husband is the sole beneficial owner of the HDFC Life New Immediate Annuity Plan Number [redacted] with HDFC Standard Life Insurance Company Ltd;

(b) that the husband is the sole beneficial owner and operator of the ICICI Bank account number [redacted]; and 

(c) that the income paid quarterly into the Husband's ICICI Bank account number [redacted] since March 2015 of 152,968 Indian Rupees from the HDFC Life New Immediate Annuity Plan Number [redacted] belongs beneficially to the Husband."

5. The fact that the words used do not actually deploy the noun "declaration", or a cognate variant of it, does not mean that they do not amount to a formal declaration. The words are not mere recitals. In my judgment these are findings of fact formally incorporated in a declaration within the court's order. As such they can be set aside on appeal – see Re M (Children) [2013] EWCA Civ 1170 at para 21. But in this case the Court of Appeal could not have set aside those declarations as permission to appeal them had not been granted, nor even sought. Their validity had never been in issue in the Court of Appeal and so it was not possible for them to have been set aside. I therefore conclude that the order of the Court of Appeal which purports to set aside "in its entirety" the order of District Judge Brasse is mistaken, and that the declaration of Judge Brasse incorporating his findings concerning the issue of ownership of the annuity remains intact.

6. The next question is whether the husband is estopped from challenging the issue of ownership expressed in that declaration. In my recent decision of R (on the application of Mandic-Bozic) v British Association for Counselling and Psychotherapy & Anor [2016] EWHC 3134 (Admin) I attempted a summary of the principles relating to the doctrine of res judicata and other abusive duplicative proceedings. At para 5(ii) I stated:

"Next, is "issue estoppel". Here the parties must be the same (in reality), but the subject matter of the litigation in the prospective second action is not the same as that in the original action. In this scenario a bar may arise "where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant, one of the parties seeks to re-open that issue" (Arnold v National Westminster Bank plc [1991] 2 AC 93 at 105E per Lord Keith of Kinkel). In this situation, the bar is not absolute. Here, the public policy on which the doctrine is based and principles of justice have greater force. A discretion arises to do justice. It is in principle possible to challenge the previous decision on the relevant issue not just by taking a new point which could not reasonably have been taken on the earlier occasion, but even to reargue in materially altered circumstances an old point which had previously been rejected."

7. I then cited para 22(3) of the seminal judgment of Lord Sumption in Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd [2013] UKSC 46 [2014] 1 AC 160 where he stated:

"Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised."

8. In this case the parties are the same but the subject matter of the litigation differs. Before Judge Brasse the wife was seeking a pension sharing order; alternatively, by some innovative method, the transfer of that policy to her. Before me the relief that is sought is periodical payments calibrated by reference to the income deriving from the policy. Therefore, the relevant principle in play is not cause of action estoppel but issue estoppel; and the issue in question is the ownership of the policy. 

9. In the proceedings before me I allowed the husband to produce a document which was not before Judge Brasse. This is a schedule from HDFC Life which gives details of the policy. It states that the nominee for the death benefit is Mr Deshmukh. This does not cause me to think in the slightest that the findings of Judge Brasse were incorrect. Who the husband chooses to give the death benefit of the policy to tells me nothing about its current ownership. And in any event I am not satisfied that the husband could not with reasonable diligence have obtained this document for the hearing before Judge Brasse.

10. I allowed the husband to give oral evidence about the policy. The longer I listened to him the more convinced I was that Judge Brasse's findings were 100% correct.  I highlight the following points:

i) The policy is held in his name by HDFC Life.

ii) Although communication with HDFC Life appears to be made from an email address containing Mr Deshmukh's name ([redacted]@[redacted]) there is no evidence that HDFC Life do not believe that this is other than an email account operated by the husband.

iii) The ICICI Bank account number [redacted] is in the name of the husband. Although the husband claimed that it was operated online solely by Mr Deshmukh there is no evidence to support it. There is no evidence that the payments out go to an account in the name of Mr Deshmukh. The husband told me that it was very common in India for bank accounts to be owned and operated by people other than their ostensible holders. I find it hard to accept that international anti-corruption standards of "know your client" could be so casually disregarded.

iv) The document said to assign the husband's interest in the predecessor policies to HDFC Life and thence to Mr Deshmukh, dated 29 January 2014, is not signed by Mr Deshmukh.

v) On 18 February 2014 the husband agreed to Eleanor King J making a Rose order which assigned 50% of the predecessor policies to the wife. He did not reveal at that time the existence of the purported agreement of 29 January 2014 to the wife or to the court. (The Rose order was later set aside by consent).

vi) Mr Deshmukh has known for a long time that the ownership of the policy is in issue yet has filed no evidence notwithstanding that he has been served with the paperwork.

vii) The husband was not able to produce a single email between himself and Mr Deshmukh about this issue. He said that all his communications were by telephone or WhatsApp. His WhatsApp communications with Mr Deshmukh were wholly banal and did not reveal any anxiety on the part of Mr Deshmukh that his property, the annuity, was imperilled.

11. If I were trying the ownership issue anew I would unhesitatingly conclude on the evidence that the husband is the beneficial owner of the annuity. However, my primary conclusion is that the husband has not established any good reason why in justice the principle of issue estoppel should not be applied here. Therefore, I find that the declaration made by Judge Brasse is fully effective.

The wife's application
12. Judge Brasse was of the view that the wife should have the entire benefit of the annuity policy. In para 29 of his judgment of 6 January 2016 he explained that he was applying the underlying rationale of his earlier judgment of 9 October 2015 to that policy. That rationale was that because the husband had lost such vast sums by reckless gambling the wife should recover the few scraps that were left. It was for this reason that Judge Brasse ordered that the husband should pay to the wife the sum that corresponded to the proceeds of sale of certain UBS shares, worth some £19,000, believed to be owned by the husband. In fact, unbeknown to Judge Brasse and the wife, but probably not to the husband, those shares had been distrained by a creditor of the husband (who happened to be one of his relatives). So not even that scrap will be recovered by the wife.

13. There are therefore powerful reasons for making a supplementary periodical payments order in favour of the wife which equates to 100% of the income deriving from the annuity policy. On the other hand, I must be realistic.   If such an order were made I foresee that a thicket of obstacles will be placed in the wife's way to her receiving that income. If, instead, some part of the income were to remain the husband's it is less likely that he would cut off his nose to spite his face. I also bear in mind that in their agreement which led to the Rose order the wife accepted 50% of the predecessor policies.

14. I therefore vary the existing periodical payments order to provide that it has two limbs. The first limb will be the monthly amount payable by the husband under Judge Brasse's order as varied by me (as to which, see below). The second limb will provide that the husband will pay to the wife two-thirds of the quarterly income deriving from the annuity policy as it arises. This will take effect on 9 August 2016 being the date that I deemed the wife to have made her application. It will be paid to the wife's Indian bank account with the State Bank of India, [redacted] Branch, New Delhi (bank code [redacted], account number [redacted]). There will be a bolstering injunction made against the husband requiring him to procure that these payments go to the wife. This injunction is made pursuant to the principle expounded in Blight v Brewster [2012] 1 WLR 2841 following the Privy Council in Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Company (Cayman) Limited [2011] UKPC 17. On service of that injunction on HDFC Life the existing freezing order, initially made by the Court of Appeal and repeated by me, will be discharged. I would like to think that HDFC Life will, on service on them of this judgment, my order, and the bolstering injunction, pay the sums directly to the wife's account, but that is a matter beyond my power to direct. 

The husband's application

15. In para 105 of his judgment of 9 October 2015 Judge Brasse recorded that the husband had stated that he believed that within four months he could obtain work in a bank earning £60,000 per annum. In para 115 and 116 Judge Brasse recorded his prediction that within the same period the wife would obtain employment earning £18,000 - £19,000 annually, thus enabling her to come off state benefits. Whilst in receipt of benefits spousal maintenance has no economic benefit for the wife as there is a £1 reduction in benefit for every £1 of maintenance received. Therefore, he made a spousal maintenance award of £500 per month but deferred its commencement until 1 March 2016.

16. In fact, both predictions have proved false. We are now over a year from Judge Brasse's judgment but neither party has obtained full time employment. The husband argues with some force that the lurid press reports of Judge Brasse's judgment which were published (along with photographs said to have derived from the wife's Facebook page) following the open court hearing on 26 May 2016 by Cobb J of his application for permission to appeal, have fatally compromised his prospects of obtaining work in the financial sector. It is an irony that reports strongly sympathetic to the wife and damning of the husband (and of which she may have had a hand in their creation) seem to have prejudiced the very periodical payments order she was awarded. Be that as it may, the husband has not obtained employment as predicted. He is exploring qualifying as a teacher. He is also exploring writing a PhD. At present he is earning relatively modest sums tutoring 11 – 15 year olds in Maths and Physics.

17. The wife remains on benefits although she and a friend have formed a shell company which they hope to develop into a recruitment business.

18. I agree with Judge Brasse that having regard to the facts of this case the wife is entitled to recover from the husband some money by way of periodical payments. Had it not been for his reckless conduct in gambling away his high earnings there would have been no doubt a substantial sum of accumulated wealth for her to have shared at the end of the marriage. But £500 per month is a long way beyond the husband's capacity at present. I therefore vary the maintenance award to £100 per month from 1 February 2017 (payable in advance). This is within the husband's present earning capacity; of that I have no doubt. The arrears under the existing order are remitted. 

19. The wife will thus receive under the first limb of this new periodical payments order the sum of £1,200 per annum. Under the second limb, and using present exchange rates, she will receive £4,000 per annum. This is a total of £5,200 per annum, or a mere £100 per week. This is a very small sum objectively, but it will be a meaningful sum for her as she attempts to rebuild her life and to support their child. It will end, of course, if she were to remarry, which she hopes to do. 

20. I hope that the husband will accept this judgment and will now desist from further pointless litigation in these proceedings. I note that he will however resist the suit brought against him by the wife's family in India which concerns alleged defalcations made by him from them. I know nothing about this case but only express regret that it appears likely that these parties will remain locked in litigious battle in India for years to come.

Postscript
21. Following the distribution of this judgment in draft I have received from Mr Turner QC a request for "amplification" of my "allegedly inadequate" reasons. This request is in my view an attempt to reargue points rejected by me, some of which I did not deem necessary expressly to address. It is not my function to address every point raised in argument. My function is to reach conclusions on the relevant evidence and to give reasons to support my view (see Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5 per Lewison LJ at para 115). This I have done. I reject the request for "amplification".