Pensions are often one of the most significant assets in divorce and financial proceedings. Happily, the law provides that pensions may be divided between divorcing spouses by virtue of a pension sharing order. Unfortunately, the decision in the long running case of Goyal v Goyal  EWFC 50 (Fam)
provides that pension sharing pursuant to s 24B is not available in relation to foreign pensions.
Mr and Mrs Goyal married in September 2003. Together, they had one child, a daughter born in April 2007. The parties separated in June 2011. Since separating, they have been involved in lengthy and costly proceedings in relation to child arrangements, the validity of the divorce and the finances. Decree nisi was pronounced in August 2013. Decree absolute has not yet been pronounced and the financial matters between the parties remain undetermined.
Mr Goyal ('the husband') had been a successful city banker but developed an addiction for spread betting, an addiction which ultimately led to the dissipation of the matrimonial assets. By the time of the separation, H had lost over £500,000.
At the time of separation, the husband had two pension policies. In February 2014, the parties signed a consent order in which the husband agreed to a pension sharing order over 50% of his pensions.
The husband then claimed that he had encased the pensions to pay off debts of some £33,000, in January 2014. The consent order was set aside.
It then transpired, in September 2014, that the husband had moved the policies into an annuity policy in India. The policy had a value of £87,000. The husband did not disclose the annuity policy at the time of creation nor did he disclose the existence of the pension annuity in his replies dated March 2015.
There was some further dispute as to the ownership of the fund: the husband argued that he had entered into an agreement with a Mr D. According to the husband, Mr D had agreed to pay off his debts in return for the husband assigning his interests in the annuity policy to Mr D. The pension issue was adjourned to a hearing before HHJ Brasse.
Decision at first instance
HHJ Brasse was not convinced by the husband’s case that Mr D was the sole beneficiary of the annuity. Indeed, he considered it a 'bare faced lie from beginning to end' and subsequently found that the pension annuity still belonged to the husband.
HHJ Brasse made a free-standing injunction order, dated 6 January 2016, which provided that the husband would transfer his interest in the pension annuity to the wife.
The husband appealed to the Court of Appeal.
The Court of Appeal
The Court of Appeal allowed the husband’s appeal and overturned the order in its entirety, including the findings on the husband’s beneficial interest in the pension fund and ordered that the wife’s claim for pension sharing should be “reheard”.
The case went before Mostyn J. Counsel for the husband (Mr James Turner QC, appearing pro bono) submitted that the wife’s claims for pension sharing should be dismissed in limine on the basis that: (1) it was not possible for the court to award a pension sharing order in respect of overseas pensions; and/or (2) in the event that it was possible, the wife had not provided enough evidence to show that the pension sharing order would be enforceable in India.
Pension sharing: the law
A pension may be shared on divorce by virtue of s 24B of the Matrimonial Causes Act 1973 (the 1973 Act). The power is limited to 'shareable rights under a specified pension arrangement' or a 'shareable state scheme rights', as per s 21(A)(1) of the 1973 Act.
Chapter 1 of Part IV of the Welfare Reform and Pensions Act 1999 at s 27(1), provides that pension sharing is available 'in relation to a person’s shareable rights under any pension arrangement'. Pension arrangements are defined at s 46(1) of the 1999 Act and include:
- an occupational scheme,
- a personal pension scheme,
- a retirement annuity contract
- an annuity or insurance policy purchased, or transferred, for the purpose of giving effect to rights under an occupational pension scheme or a personal pension scheme.
Retirement annuity contracts are confined to domestic arrangements (Chapter III of Part XIV of the Income and Corporation Taxes Act 1988) but for occupational pension schemes or a personal pension scheme, reference is made to pensions with the main administration in the United Kingdom or outside the EEA states (s 1 of the Pension Schemes Act 1993).
The pension arrangement at the heart of this case was an annuity, as per s 46(1)(d) of the 1999 Act.