9th Australian National Family Law Conference–
Sydney 2000
International Property Workshop
Tuesday 4 July 2000 at 2.00 pm
International Matrimonial Property Litigation:
Some tips for the family lawyer
Introduction
As an Australian family lawyer who
has practised in London for the past 10 years I encounter international
cases frequently. When multi-jurisdictional issues arise in the context
of financial litigation answers to simple questions are not easily
found. The amicably separating couple who only want to know what a
“fair” property division would be cannot be blamed for
suspecting a professional conspiracy on the part of the lawyers who
advise that the answer depends on which jurisdiction or jurisdictions
is/are appropriate and that choosing the correct jurisdiction(s),
and the criteria for determining “fairness,” is likely
to be a very expensive exercise.
The subject of this workshop session
is, by itself, worthy of a week-long international conference. To
my knowledge no specialist international family law text exists. In
his elegant work Conflict of Laws in Australia (6th ed, 1995) Dr Peter
Nygh summarizes the international law of matrimonial property and
financial relief in 18 pages but you have to read most of the other
565 pages to get the full picture because topics are often interrelated
(for example procedure, enforcement, choice of law, trusts, corporations,
bankruptcy and deceased estates). The international lawyer’s
bible, Dicey and Morris on the Conflict of Laws (13th ed, 2000), also
contains much of relevance to family law in its 1600 pages. But there
is nothing comprehensive which is specifically focussed on international
family law.
In this paper I can but outline some
of the more significant issues which arise in international matrimonial
property litigation and give a few brief pointers on how to avoid
some of the more common pitfalls. This is by no means an exhaustive
treatment of this complex subject.
2. Some common problems and
a few answers
2.1 International recognition
and enforcement
Are matrimonial property adjustment
orders reciprocally recognised and enforceable between Australia and
other jurisdictions? We all know that orders for maintenance are because
Family Law Regulations 25 through 56 give us a nightmarish procedural
regime for doing so. When is some clever international convention
draftsmen going to cut through all that red tape and outline a simple
procedure which allows respectable due-process jurisdictions to simply
email or fax each other their certified maintenance orders for immediate
recognition?
We also know that “custody orders”
can be registered internationally in some jurisdictions as provided
in Family Law Regulations 23 and 24, the prescribed overseas jurisdictions
having been set out in Schedule 1A (an odd assortment which includes
most, but not all, of the United States plus Austria, New Zealand,
Papua New Guinea and Switzerland). Do those four non-American jurisdictions
have anything else in common except their inclusion in Schedule 1A?
And why are some obvious candidates, such as the various United Kingdom
jurisdictions and the provinces of Canada, not included? Another job
for the international convention drafters.
And, of course, everyone knows that
marriages and divorces are almost universally recognised between the
different jurisdictions of the world. However, there are some important
exceptions to this general rule.
With this background of amiable international
comity it is not surprising that family lawyers just assume that a
property adjustment order made by the Family Court of Australia will
be automatically recognised and enforceable in England, and vice versa.
The bad news is that this is not so.
The English antecedent of the Australian
Foreign Judgments Act 1991 is the Foreign Judgments (Reciprocal Enforcement)
Act 1933. Both Acts specifically exclude matrimonial causes from the
reciprocal enforcement scheme. On reflection, this is understandable.
Yes, there is specific legislation to allow reciprocal enforcement
of maintenance, but enforcing a maintenance order against a payer’s
income in a foreign jurisdiction does not raise the same gravity of
issues as enforcement of a property adjustment order, which would
strike at the core of national sovereignty over land. Forced sale
of real estate ought not to happen without a hearing on the merits
in an Australian court.
Dr Nygh discusses the problem of reciprocal
enforcement of matrimonial property orders at pages 419-420. The only
directly relevant case is Caddy v Miller (1986) FLC 91-720;
(1986) 10 Fam LR 858. A California court had divorced the couple and
divided their property, the order including a term that the parties
were confirmed in their ownership of an interest in a home in Sydney.
Some years later the wife applied to the Family Court of Australia
for a property adjustment order in relation to the home, tantamount
to a second bite at the cherry. She succeeded at first instance but
on appeal the Full Court held that her claim should be dismissed on
the basis of cause of action estoppel. It should be noted that the
California court order did not change the interest of the parties
in the Sydney home, it just confirmed their existing interest in it.
This is consistent with the general
principle, discussed in Dicey and Morris pages 938-948, that, where
a legal action concerns immovable property, the court of the country
where the land is situated has exclusive jurisdiction. This general
principle is also recognised by implication in section 31(2) of the
Family Law Act 1975 which provides that “…the jurisdiction
of the Family Court may be exercised in relation to persons or things
outside Australia and the Territories”, in other words, not
in relation to real property outside Australia. The section was referred
to in the judgment of Fogarty J in Gould and Gould; Swire Investments
Limited (1993) FLC 92-434, pages 80,451-80,454, a judgment with
which Nicholson CJ and Finn J concurred. In Gould the court held that
it did have jurisdiction to make orders in relation to a company registered
overseas, that is, a (corporate) person outside Australia.
The problem of not being able to enforce
property orders overseas has sometimes led parties, with the support
of judges, to try to extend the scope of the law. In Fickling
and Fickling (1996) FLC 92-664, the Full Court overturned a decision
whereby the trial judge had ordered a husband with assets overseas
to pay a lump sum to the wife. The judge had tried to help the wife
by converting what was in fact a property adjustment order into a
maintenance order, so as to enable reciprocal enforcement against
the husband’s assets in the United States. The case illustrates
the importance of distinguishing the various components of a financial
order, particularly maintenance orders from those that relate to property
adjustment.
Sometimes the distinction is not so
clear. In a case which, in many ways, was very similar to Fickling,
the European Court of Justice found a way to allow a wife to enforce
an English lump sum order against the husband in the Netherlands by
categorising the lump sum as relating to maintenance. In Van den
Boogaard v Laumen [1997] 2 FLR 399, the European Court said that
the fact that the maintenance was provided in a lump sum, or even
as a transfer of property, was not material. The central issue was
the intention of the original court in making the order. If the intention
were to provide for needs the order could be categorised as maintenance.
Following this decision by the European
Court it may be that an adventurous English judge will find a way
to allow enforcement in England of what might appear to Australian
eyes to be a property adjustment order in the manner of Fickling.
The devil will be in the detail of the precise words of the order.
Those hoping for international enforceability should take care to
make clear in drafting the order that a that lump sum is intended
to be for maintenance, that is, to satisfy needs. I wonder if the
Family Court of Australia has had a good look at the reasoning of
the European Court? Perhaps the problem illustrated in Fickling can
be overcome with some enlightened thinking.
2.2 Should I stay or should
I split?
When two or more jurisdictions are
entitled to hear a matrimonial case one must ask which of the available
choices is the more appropriate forum. For example, one or both of
the parties to a marriage might be an Australian citizen, which would
give the Family Court of Australia jurisdiction. However, if the couple
are expatriates living and working in London and with all their assets
within England and Wales, then common sense will dictate that, in
most cases, the matrimonial dispute ought to be sorted out in England
rather than Australia. If one of the parties were to commence divorce
or financial proceedings in Australia in these circumstances the Australian
court may well order an injunction staying the Australian proceedings
to allow the English court to determine the matter. Similar powers
exist in England to deal with the reverse situation.
Interestingly, however, in my experience
the Family Court of Australia is less likely than its English counterpart
to stay proceedings on a forum conveniens basis. The rule applied
in England, that a stay will be granted in favour of a clearly more
appropriate or natural forum (Spiliada Maritime Corp v Cansulex
Ltd [1987] 1 AC 460) is not applied in Australia where a more
stringent test prevails. Under Australian principles, a stay will
be granted only if the local (Australian) court is a clearly inappropriate
forum (Oceanic Sun Line Special Shipping Company Inc v Fay (1988)
165 CLR 197 and Voth v Manildra Flour Mills Pty Ltd (1990)
171 CLR 538. In Voth the High Court of Australia said it would be
appropriate to stay proceedings where they would be oppressive in
the sense of being seriously and unfairly burdensome, prejudicial
or damaging or vexatious in the sense of productive of serious and
unjustified trouble and harassment. Voth was followed in a family
law context by the High Court of Australia in Henry v Henry (1996)
FLC 92-685.
On the basis of Henry, it will be a
brave litigant who attempts to stay Australian matrimonial proceedings.
This is not to say, however, that appropriate circumstances will never
exist. In my opinion, the hypothetical case outlined at the beginning
of this section would fall clearly within the Voth criteria. The difficulty
arises in applying the law to less clear cases. Fine judgment is required.
Stay proceedings often go on appeal and the costs implications of
failing in an application can be significant.
With a little co-operation from both
sides, arguments over forum can sometimes be resolved by agreement.
For example, if there is real property in both Australia and England,
it may be necessary to have property adjustment orders made in both
jurisdictions because neither England nor Australia will be able to
enforce the other’s order. A device I have used with success
in the past is to reach agreement that proceedings will be issued
in both jurisdictions but that there will then be a consent stay in
one jurisdiction while the proceedings in the other jurisdiction continue
to completion by negotiated settlement or court order. Thereafter
the jurisdiction in which the proceedings have been stayed can be
revived for the purposes of making any orders which the court hearing
the substantive dispute does not have the jurisdiction to make.
This technique of “splitting”
the forum can be effective in helping to resolve financial disputes.
It can also be used when the parties want to divorce in one jurisdiction
but have financial orders made in another. Australians living in England
are usually repelled by the archaic Matrimonial Causes Act 1973 which
requires one of them to allege matrimonial fault against the other
if a divorce is to be granted before a two-year separation period
has elapsed. Conversely, English clients, impatient for a quickie
divorce, may not want to wait for the 12 month separation period mandated
by Australian legislation when they know they can be divorced in their
home country in three or four months by proving adultery or unreasonable
behaviour.
In some cases where a choice of jurisdiction
is available, it is possible to make everyone happy (a rare occurrence
for the family lawyer!). It can be agreed between the parties that
the divorce will take place in one jurisdiction and that the financial
proceedings will be entirely or partly conducted in the other jurisdiction.
For more on this interesting subject of splitting jurisdictions see
Forum Conveniens and Split Trials in International Family Law, November
1999, page 122.
There are some pitfalls to avoid when
splitting jurisdictions. In Australia, if the divorce is granted overseas,
the section 44 (3) Family Law Act 1975 bar on financial applications
12 months after decree absolute does not apply. In England, if there
has been a foreign divorce, the Matrimonial Causes Act 1973 jurisdiction
for financial orders does not exist. This is because in England financial
orders are ancillary to the principal proceedings of divorce. This
connection between principal relief and ancillary relief used to prevail
in Australia before the Family Law Act 1975. Australia is indeed fortunate
that it severed this nexus, making stand-alone matrimonial financial
applications possible. England has had to pass special legislation
to overcome the jurisdictional difficulty. The Matrimonial and Family
Proceedings Act 1984, Part III, allows a party to apply for financial
orders in England after a foreign divorce. The catch is that the applicant
must first be granted leave to apply. The case law indicates that
such leave is not easily granted. In fact, in about half the reported
decisions the applicant has failed to obtain leave to proceed.
The jurisdictional matrix between Australia
and the United Kingdom hides many traps for the unwary. With careful
preparation many of the pitfalls can be avoided. The golden rule in
matrimonial financial cases where international issues arise is that,
before negotiations or proceedings are commenced, indeed, before the
client is given recommendations as to a particular course of action,
advice should be sought from expert family lawyers in all other relevant
jurisdictions.
2.3 The logistics of international
litigation
I want to share some of the basic
rules of practice I have learned in the 10 years I have been in London
doing international matrimonial litigation. I have learned the hard
way, now I can make it a little easier for you.
3. Clever tactics or dirty tricks?
I will conclude with a story about an Irishman,
an Australian and a Mexican. The Irishman is a husband, the Australian
is a wife and the Mexican is a divorce lawyer. This actually happened.
The husband and the wife married but
did not live happily ever after. Following a judicial separation in
Ireland, the wife returned to Australia, and the husband moved from
the family home in Dublin to Paris with his company. Later he decided
he wanted a divorce. He was in the process of setting up a branch
of the company in London so he filed a divorce petition in London.
However, his timing was not quite right because he could not establish
the jurisdictional basis of one year’s residence in England
or English domicile. His Irish domicile of origin had clearly been
retained. Under Irish law this meant that, even if the English court
did have divorce jurisdiction, the divorce would not have been recognised
in Ireland.
Apparently none of the husband’s
lawyers in Ireland, France or England thought of asking an Australian
lawyer if divorce in Australia would be possible. The wife wanted
a divorce but she wanted this to be in Ireland because the former
matrimonial home was there and she needed a property adjustment order.
No order made in France, England, Australia or anywhere else would
be able to force the husband or an Irish Registrar of Land Titles
to sign the property over to the wife. Incidentally, she was also
attracted to the Irish jurisdiction by the fact that the law there
does not allow for a clean financial break on divorce.
Forum disputes can be quite adversarial
and costly and the wife’s English application for a stay was
vigorously pursued in the face of cries of foul play from the husband
and his solicitors. The correspondence was intemperate by the standards
of English solicitors. Just before the hearing the husband sacked
his English solicitors and came to court in person, agreeing meekly
to withdraw his petition on the basis that the wife would seek an
uncontested divorce in Ireland. The wife then commenced Irish divorce
proceedings. However, the husband had a secret when he came to the
English court to withdraw his petition. He did not tell the judge
or anyone else that six weeks previously he had obtained a Mexican
divorce by proxy, that is, by mail, in the State of Tabasco, without
notice to the wife or her lawyers.
What a neat trick! Presumably the Mexican
lawyer had advised the husband that the divorce would be recognised
world wide.
This ace was pulled out of the husband’s
sleeve in an affidavit filed by his Dublin solicitor in opposition
to the wife’s Irish divorce application. Furthermore, the husband
had already re-married in New York.
It was essential for the wife to get
divorced in Ireland if she were to get enforceable orders in relation
to the Dublin former matrimonial home. She was also still keen to
ensure that no court would give her a clean financial break on the
divorce. Could she continue with her Irish divorce and claim for property
adjustment notwithstanding the Mexican divorce? In Ireland, as in
England and Wales and many other jurisdictions, the power of the court
to make financial orders is dependent on the making of an order for
divorce as principal relief. No divorce in Ireland meant no property
adjustment order in Ireland. If the Mexican divorce were recognised
in Ireland then the wife’s Irish divorce proceedings had to
fail.
The general rule of private international
law is that at least one of the parties to a marriage must have a
real and substantive connection to the jurisdiction granting a divorce
in order for the divorce to be recognised internationally. The Australian
position is explained by Dr Nygh in Conflict of Laws in Australia.
He concludes (at pages 401-403) that a Mexican divorce by proxy will
not be recognised in Australia under the private international law
rules of real and substantive connection with the jurisdiction. He
cites as authority the decision of Justice Baker in Barriga and Barriga
(No. 2) (1981) FLC 91-088; (1981) 7 Fam LR 909, where it was held
that a Mexican proxy divorce would not be recognised in Australia.
In England and Wales, the recognition
of an overseas divorce is governed by Part II of the Family Law Act
1986. The tests include habitual residence in, domicile in or nationality
of the overseas jurisdiction in which the divorce is granted. There
is discretion to refuse recognition if the divorce was obtained without
notice to the other party. However, at pages 399-400 of Conflicts
of Laws in Australia, Dr Nygh sets out a hypothetical example to illustrate
how section 104 of the Family Law Act 1975, which deals with recognition
of overseas decrees of divorce, could allow Australia to recognise
the Mexican divorce because it was recognised in New York where the
husband re-married. Although this may be true in certain circumstances,
in the context of this particular case concerning the Irish husband
and the Australian wife, where the husband had deliberately misled
the court about the Mexican divorce, I cannot imagine that an Australian
court would make a declaration that the Mexican divorce was valid
in Australia. In England section 51(c) of the Family Law Act 1986
allows the English court to refuse to recognise an overseas divorce
as valid if such recognition would be manifestly contrary to public
policy. Although this point has not been examined in the English law
reports since Kendall v Kendall [1977] Fam 208, a case which
preceded the 1986 Act, in my opinion an English court would refuse
to recognise the Mexican divorce. Recognition would be manifestly
contrary to public policy in the light of the husband’s failure
to inform the court about it when he applied to withdraw his English
divorce petition.
So, did Ireland recognise the Mexican
divorce? The question was never decided because the parties settled.
The husband turned up at the Dublin High Court with counsel on the
day of the hearing and announced that he would accept the Irish jurisdiction
for divorce and financial settlement. The wife, who had flown from
Australia to Dublin for the hearing, participated in settlement negotiations
and a deal was struck at the door of court which gave her a settlement
sum which took into account the wasted costs in the English proceedings.
Although we will never know whether
the Irish court would have recognised the Mexican divorce, my hunch
is that it would not have. I do not offer this view as an expert opinion
because I am not qualified to advise on Irish law.
The moral of this story is that one should not try to be too clever
in international cases. The husband’s actions, in launching
an English divorce petition when not in a position to establish the
jurisdictional basis, and then obtaining a Mexican proxy divorce in
the course of those English proceedings without informing the court
or the wife’s legal representatives, put him at risk of a severe
reprimand, and perhaps a costs penalty, from the court. Both parties
would have been spared much anxiety and cost, and the divorce and
financial settlement which would have been resolved much more quickly,
if the husband had simply agreed at an early stage to accept the jurisdiction
of the most appropriate court, in this case, in Ireland.
Conclusion
International family law cases raise particularly
difficult issues. The first problem is how to recognise when an international
issue arises. Examples include:
