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:
