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Schofield v Schofield [2011] EWCA Civ 174

Appeal of decision to dismiss a wife’s originating summons seeking leave to make an application under Part III of the Matrimonial and Family Proceedings Act 1984 for an order for financial relief from the husband, following a divorce in Germany. Appeal unanimously allowed.

The parties married in Germany. During the marriage H was a serving soldier and accruing a British Army pension. The parties divorced in Germany. They had modest capital assets and divided these equally. The German court did not have jurisdiction to make any pension sharing order in respect of H's army pension. There was in the German court, an expectation that the pension would be divided in this jurisdiction. W sought leave to make the application to obtain an English pension sharing order in relation to the army pension.

Mostyn J dismissed the wife's application for leave and refused permission to appeal. The permission was refused on two grounds. Firstly, he was applying to the application the approach which he had designed in CG v IF [2010] EWHC 1062. This was to say that a substantial/solid ground would be shown where the court can confidently say that the probability is greater than, or equal to 50% that the applicant will achieve a substantial order were the matter to be tried. Second, he took the view that the army pension was essentially an irrelevance simply as a matter of scale.

The Court of Appeal had already rejected Mostyn J's 'gloss' in the case of Traversa v Freddi. Mostyn J had been plainly wrong to adopt it in CG v IF and plainly wrong to apply it in this case. On this ground the appeal was successful.

The Court of Appeal would have allowed the appeal on the facts in any event. Against the scale of the other capital assets which the parties did divide, and against the scale of the wife's modest earnings, this pension was very significant.

Thorpe LJ emphasised that this appeal raises a question of public policy. It is a good example of where a foreign court has sought international collaboration and has implicitly called upon the English court to determine any issue of pension equalisation. Once that general question of public policy was recognised and supported, it followed that Mostyn J, concluding as he did, was acting against the general principle.

Appeal unanimously allowed.

Summary by Alfred Procter, barrister, 1 Garden Court

__________________________

Case No: B4/2010/1410
Neutral Citation Number: [2011] EWCA Civ 174

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
FAMILY DIVISION
SIR NICHOLAS MOSTYN

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: Wednesday 2nd February 2011

Before:
LORD JUSTICE THORPE
LORD JUSTICE LEVESON
and
LADY JUSTICE BLACK
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Between:

Schofield 
Appellant

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Schofield 
Respondent

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(DAR Transcript of
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Mr Tim Amos QC and Rosemary Budden (instructed by Hethertons) appeared on behalf of the Appellant.

The Respondent appeared in person.

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Judgment

(As Approved by the Court)
Crown Copyright ©

Lord Justice Thorpe:
1. This is an appeal from the judgment of Mostyn J on 20 May 2010.  Permission to appeal was granted by Sir Mark Potter on 30 September.  The order below dismissed the wife's originating summons seeking leave to make an application under Part III of the Matrimonial and Family Proceedings Act 1984 for an order for financial relief from the respondent husband, following a divorce in Germany. 

2. The appeal raises issues of public policy in relation to pension sharing orders affecting the increasing number of pension schemes based outside the national jurisdiction. 

3. The background to the appeal is simply stated.  The parties were respectively British and German.  They are in their mid-forties.  They married in Germany at a time when the husband was serving in the British army, stationed in the British zone.  Three children were born to the marriage; boys now aged 17, 15 and 12 respectively.  The parties were divorced by a German decree of 30 May 2007. 

4. During the years of marriage, and indeed for years prior to marriage, the husband was serving in the Royal Electrical and Mechanical Engineers, and all the while he was accruing a British Army pension.  At the breakdown of the marriage the parties had only modest capital assets in the order of £87,000 which were divided equally between them.  Accordingly, as a result of that sensible arrangement no order was necessary from the German court of divorce. 

5. The German court did not have jurisdiction to make any pension-sharing order in respect of the husband's army pension.  That issue was plainly stated on the face of the German decree to this effect:

"The marriage of the parties contracted […] before the Superintendant Registrar […] be dissolved. Statutory pensions equalisation has been severed herefrom."

6. The German court also recorded, in its order of 19 October 2007:

"During the marriage, from 1/6/1987 to 28/2/2005, the Respondent acquired pension expectancies exclusively under English law, which cannot be apportioned by the court seized of the application. A German court cannot impinge upon pension expectancies that a foreign spouse has acquired with a foreign insurance body. By reason of a lack of any social insurance convention between Great Britain and Germany, the English underwriter of the husband cannot be bound by an order of the German family court as to statutory pensions equalisation."

From these citations it is clear that the German court was unable to deal with an English pension and that there was in the German court an expectation that the pension would be divided in this jurisdiction.

7. So it is hardly surprising that the wife sought leave to make the application in order to obtain an English pension sharing order in relation to the army pension. 

8. As Mr Amos QC and Ms Budden for the appellant submit, the appeal does raise a question of public policy not unique to this case.  As a general proposition, one jurisdiction can only make and implement pension-sharing orders relating to pension assets within that jurisdiction.  The question of whether the English courts will cooperate internationally to deal with English assets following a foreign divorce is particularly important where the foreign jurisdiction has made plain that it lacks jurisdiction to deal with the English pension and the claim has been deliberately severed and left for the English court to deal with.  Plainly, it is important that there should be judicial collaboration across state boundaries to ensure that the adjudication as between husband and wife is complete and comprehensive.

9. In the court below the wife's application for leave came before Mostyn J without notice on 28 April 2010.  That was entirely appropriate because the Family Proceedings Rules which support the statutory power are quite plain in providing that these applications for leave should be listed without notice. However, Mostyn J expressed concerns on that point, and in the exercise of his case management powers be adjourned the application to be heard on notice reserved to himself.  That on notice hearing took place on 20 May 2010 and on the eve the judge had circulated to the parties a copy of his decision in the case of CG v IF [2010] EWHC 1062 (Fam).  At the hearing the applicant was represented by Ms Budden and the respondent appeared in person assisted by his present wife as a McKenzie Friend.  The judge dismissed the wife's application for leave and refused permission to appeal.

10. As well as the application to this court for permission by an appellant's notice of 9 June there is an application to admit fresh evidence consisting of a letter from a German lawyer as to German law and a valuation of the army pension provided by Actuaries.  Plainly, those two pieces of evidence are relevant and, in my view, admissible under general principles and they should today be admitted.  They will obviously have relevance in future proceedings.

11. The judge below refused permission essentially on two grounds.  First of all, in a brief and clear judgment he explained that he was applying to the application the approach which he had designed in the case of CG v IF [2010] EWHC 1062.  That approach was to explain what the judge thought that Lord Collins had meant when in the Supreme Court he had said that the burden on the applicant was to demonstrate that the application rested on substantial ground, by which he meant solid ground.  Mostyn J below said that in his judgment of CG v IF he had attempted to rationalise to himself how these ambiguous phrases, "substantial ground" and "solid ground", could be expressed in a way which is more easy to comprehend, and he said that in his opinion a solid/substantial ground would be shown where the court can confidently say that the probability is greater or equal to 50% that the applicant will achieve a substantial order were the matter to be tried.  Having adhered to that test, in his final paragraph the judge said:

"So, using the test I have formulated in CG v IF, my probability assessment is significantly less than 50%, therefore the originating summons is dismissed."

12. Secondly, the judge refused the application because the view that he took of the facts was that the army pension was essentially an irrelevance simply as a matter of scale.  In his judgment he described it as "a paltry level of income".  That reasoning attracted a strong skeleton argument from Mr Amos and Ms Budden which was dated 22 June, and subsequently they have helpfully filed a brief supplemental skeleton designed to bring this court up to date on developments in the interim.

13. Within that supplemental skeleton at paragraph 18 they referred to the decision in CG v IF and continued that that authority had been considered in the case of Traversa v Freddi, argued on 11 November with judgment reserved.  That was an acute observation on the part of Ms Budden since the hearing in Traversa v Freddi and the issues that it raised had not, I think, been very widely reported, but the interrelationship of this case with Traversa v Freddi is undeniable.  The judgment has been circulated to counsel and the judgment will be handed down later this week.  So this morning we made the draft judgment in circulation available only to the parties in this case and only for the purposes of the convenient disposal of this appeal.  However, the argument addressed by Mr Amos in criticism of Mostyn J would not have been necessary had the reserved judgment been handed down at the end of last term.  This court in Traversa v Freddi has clearly, indeed trenchantly, rejected Mostyn J's gloss.  He was plainly wrong to adopt it in CG v IF and therefore he was plainly wrong to apply it in the determination of this case of Schofield.  So Mr Amos is entitled to succeed on this appeal on that ground alone. 

14. But even if the gloss had been permissible, and even if this court had thought it helpful, I would have allowed this appeal on the facts.  The judge's proportionate view of the army pension as "a paltry level of income" is in my view plainly unsustainable.  It seems that the husband received a terminal payment on retiring from the army, probably in the order of or in excess of £40,000, and it seems that the residual fund has a technical value of in the order of £280,000. Against the scale of the other capital assets which the parties did divide and against the scale of the wife's modest earnings from part-time employment in a pharmacy shop, this pension is very significant.  I say no more on that, since of course all we are considering is whether the wife has demonstrated solid ground.  What is the consequence in terms of apportionment and quantum would be for investigation by a judge of the court on much fuller evidence than is available to us. 

15. Insofar as Mr Amos has submitted that this appeal raises a question of public policy, again I accept his submission.  It does seem to me very important that, where a pension is rooted and funded within jurisdiction A and where the divorce is to be pronounced in jurisdiction B, with all ancillary issues decided according to the law of state B, it is very important that there should be judicial collaboration to ensure that the applicant in state B is not deprived of her entitlement to share in the pension rooted and funded in state A.  This case is a good example of one in which the German court has sought international collaboration and has implicitly called upon the English court to determine any issue of pension equalisation. 

16. So once that general question of public policy is recognised and supported, it follows that Mostyn J, concluding as he did, was acting against the general principle.

17. So, for all those reasons, I would allow this appeal.

Lord Justice Leveson:
18. I agree with Thorpe LJ's analysis both of the law and the facts on both grounds.  I also would allow this appeal.

Lady Justice Black:
19. I agree.

Order:  Appeal allowed