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England and Wales High Court (Family Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> B v B (Maintenance Regulation -Stay) [2017] EWHC 1029 (Fam) (09 May 2017) URL: http://www.bailii.org/ew/cases/EWHC/Fam/2017/1029.html Cite as: [2018] 2 WLR 987, [2018] Fam 201, [2018] 1 FLR 658, [2017] EWHC 1029 (Fam), [2017] WLR(D) 326, [2017] 3 FCR 240 |
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FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
| B |
Applicant |
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| - and - |
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| B |
Respondent |
____________________
Mr Brent Molyneux QC (instructed by Sears Tooth) for the Respondent
Hearing dates: 27 and 28 April 2017
____________________
Crown Copyright ©
Mr Justice MacDonald:
INTRODUCTION
i) A provision recording that the Respondent would take what steps were necessary to register a charge against the property of third parties to whom the Applicant and the Respondent had agreed to loan certain monies, which charge would provide for the amount secured to be repaid in equal shares to the parties.ii) An undertaking by the Respondent to pay or cause to be paid an additional £100,000 into a school fees fund for the children of the family.
iii) An undertaking by the Respondent to hold two investment funds on trust for himself and the Applicant and, on the receipt of payments, to account to the Applicant for 50% of the receipts net of tax.
iv) An undertaking by the Respondent to assign to the Applicant his interest in a Zurich policy or, if this was not possible, to pay to the Applicant the value of the policy at a time to be agreed between the parties.
BACKGROUND
"With effect from 1 September 2011 the Respondent will pay to the Petitioner global maintenance for her benefit and the benefit of her children as follows:
(a) £84,000 per annum payable monthly in advance. Such payments shall be made with effect from 1 September 2011 with the first payment (for two months) to be made on 1 October 2011. Payments shall end on:
(i) The death of either the Petitioner or the Respondent; or
(ii) The petitioner's re-marriage; or
(iii) A further order terminating payments.
(b) On the "variation date" which will be on the date of the payment due in October 2012 and at yearly intervals thereafter the periodical payments set out in E2a above shall stand varied automatically. The change in payments shall be the percentage change if any between the UK consumer prices index for the date 15 months before the date of the first variation and the UK consumer prices index for the date 3 months before the variation date.
(c) With effect from 1 January 2012, the Respondent will pay additional periodical payments to the Petitioner equal to 50% of the Respondent's income (to include all payments from employment, advisory/consultancy fees, participatory interest or other income generated from professional or investment activities but not receipts from liquidation or other disposal of assets or from capital appreciation of assets or earnings from investments) in excess of €200,000 up to a cap of €500,000, such income receipts to be calculated on a rolling three-year basis in accordance with recital B10 ("the further share"). The further share will be accounted for on 15 July and 15 January each year commencing in July 2012 and paid (if any money is due) within 30 days. For the avoidance of doubt the first payment in respect of the further share (if any) will be made on or before 15 August 2012.
(d) On the "further share variation date" which will be the date of the payment due in January 2013 and at yearly intervals thereafter the figures for the Respondent's income and the income cap set out in E2(c) above shall stand varied automatically. The change in the said figures shall be the percentage change if any between the Eurozone consumer prices index for 15 months before the date of the first variation and the Eurozone consumer prices index for 3 months before the variation date.
(e) The payments in E2(a) and c above will be reviewed 5 years from the date hereof and biennially thereafter and in any event when the children leave education (first degree only)."
"B10. In respect of the parties' loan to the owners of Upper Slaughter Farmhouse, the Respondent will take what steps are necessary to register a charge over that property which provides that the amount secured will be repaid in equal shares to the parties including for the avoidance of doubt, such further sums as may be paid to the owner of Upper Slaughter Farmhouse, pursuant to his undertaking D4 [to fund the balance of the loan from his assets], such charge to be formalised and registered by 1 December 2011
…/
D1. To pay or cause to be paid a further £100,000 into the School Fees Fund by 31 October 2015.
…/
D5. That he will continue to hold the Fortress Funds and MS Hi-Tech 4 in trust for himself and the Petitioner and that on receipt of payment in respect to any of the funds he will account to the petitioner for 50% of the receipts net of tax. In addition he will by 1 December 2011 do all that is necessary to inform Fortress Investment Group LLC and Morgan Stanley of the Petitioner's beneficial interest in the said funds. The Respondent intends this undertaking to be binding on his personal representatives worldwide.
…/
D9. That he will take all necessary steps to assign as soon as possible to the Petitioner his interest in the Zurich International Insurance Policy … currently held under trust for him by Morgan Stanley International and to keep the Petitioner informed of all progress made; in the event that this is impossible to make payment to the Petitioner of such sum as is held in the said insurance policy at a time to be agreed between the parties."
"5. The Respondent agrees with the Applicant and undertakes to the court to give irrevocable instructions and a power of attorney for this purpose on or by 19 March 2016 to Mr Louis L to:
(i) surrender the Zurich International Policy … as soon as practicable;
(ii) retain such part of the proceeds of the surrender as Mr L believes may be required to meet any charges to tax arising out of the surrender;
(iii) pay the balance forthwith to the Applicant;
(iv) pay any remaining balance to the Applicant if the sum retained under (ii) proves to be excessive when the charge to tax is definitively known."
i) The Applicant ultimately accepted during her closing submissions that the Respondent has registered a charge over Upper Slaughter Farmhouse pursuant to the undertaking set out in the order of 13 October 2011, that the terms of that charge reflect the position set out in the consent order and that an application to "enforce" this aspect of the order is not appropriate.ii) The Applicant accepted during her closing submissions that the (now adult) children wrote to the Trustees of the School Fund on 22 October 2015 informing them that they should not accept payment by the Respondent of a further £100,000 into the fund in circumstances where the School Fund is adequately funded to meet the costs of their education. The Applicant further accepted that the likely outcome of any further payment into the School Fund would be an instruction by the children to the Trustees of the fund to repay the Respondent. Within this context, during her closing submissions the Applicant indicated that she no longer pursued this aspect of her application.
iii) Whilst the Applicant's case with respect to the enforcement of the provisions of the order relating to the investment trusts changed a number of times during the course of the hearing, in her closing submissions (and after the Applicant had indicated at several points during the hearing and of her own volition that the Respondent should have the funds "for his legal costs" and the Respondent had thereafter indicated, through Mr Molyneux during closing submissions, that he would not pursue his costs if the Applicant withdrew her application to enforce the provisions of the order relating to the investment trusts) the Applicant confirmed to the court that she did not pursue this aspect of her application.
iv) The Applicant continues to seek to enforce the provision of the order relating to the Zurich International Insurance policy. The Applicant was not able to articulate in clear terms the precise method of enforcement that she pursued in this regard save to state that she wished the Respondent to "sign paperwork" so that the policy could be "released" to her.
i) On 20 March 2015, the Respondent issued a petition in the Court of First Instance of Milan "for altering" the maintenance provisions of the order of 13 October 2011 based on a contended for change of circumstances of the children, of the Applicant and of the Respondent since the order was agreed.ii) The petition of 20 March 2015 contended that the Italian court had jurisdiction to hear the Respondent's petition having regard to the terms of Art 3 of the maintenance regulation and Order No 3680 of February 17 2010 of the Joint Division of the Supreme Court of Cassation in circumstances where the Respondent is an Italian national who had been habitually resident in Italy for at least six months. The petition further contended that Italian law was the applicable law.
iii) On 7 April 2015 the Presiding Judge in Milan listed the Respondent's petition for hearing on 24 September 2015 and gave certain directions for the provision of income statements.
iv) By a summons dated 24 July 2015 the parties' children, C and S, issued proceedings against both the Applicant and the Respondent also requesting an "amendment of the divorce agreement".
v) Following the listing of the Respondent's petition, on 9 September 2015 the Applicant lodged a defence brief disputing the jurisdiction of the Italian court. In summary, the defence brief contended that the Italian court did not have jurisdiction "because the connecting criteria in Art 3 of [the Maintenance Regulation] are not satisfied and it is totally irrelevant that the connecting criteria set out by Art 3 of Regulation (EU) No 2201/2003 are satisfied" and that "the competence of the Italian Court to change the foreign ruling would be expressly and totally exclude by Art 8 of [the Maintenance Regulation]".
vi) On 21 September 2015, the Respondent applied to consolidate his application with the application made by the children on 24 July 2015.
vii) On 22 September 2015, C "intervened" in the proceedings between the Applicant and the Respondent seeking an order against both parents for further maintenance and to have maintenance paid directly to him.
viii) On 24 September 2015, the Italian court considered each of the applications. It dismissed the Respondent's application to consolidate the two sets of proceedings and granted the Applicant and the Respondent until 30 October 2015 to file further submissions on the question of the jurisdiction of the Italian court.
ix) Both the Applicant and the Respondent filed further submissions as to jurisdiction. The submissions lodged by the parties engage fully, and in very considerable detail, with the question of jurisdiction (including, in the Applicant's submissions, a comparative analysis of the different language versions of the Maintenance Regulation). The Respondent's submissions raised a further argument pursuant to Art 5 of the Maintenance Regulation, asserting that the Applicant had implicitly accepted the jurisdiction of the Italian courts by defending the merits of his application. The further submissions as to jurisdiction of the Applicant and the Respondent each indicate clearly that the decision of the Italian court as to the question of jurisdiction was then still pending.
x) Following the hearing on 24 September 2015, the Respondent lodged an appeal with the Court of Cassation against the decision to dismiss his application to consolidate his application and the application of the children. Whilst this appeal was pending, his petition to vary the order of 13 October 2011 was stayed.
xi) On 28 January 2016, an act of discontinuance was filed by S in respect of the proceedings brought by the children against the Applicant and the Respondent.
xii) On 3 November 2016, the Court of Milan declared that the Italian court lacked jurisdiction in respect of the proceedings brought by the children on the basis of a finding that the children were habitually resident in the United Kingdom and dismissed the claim made by the children. Whilst this decision concerned the proceedings brought by the children and not by the Respondent, the court nonetheless found as a fact that the Respondent was habitually resident in the United Kingdom.
xiii) On 11 November 2016, the Supreme Court of Cassation dismissed the Respondent's appeal against the decision of the Court of Milan not to consolidate his application and the application of the children.
xiv) On 16 December 2016, the Respondent served a notice of appeal against the judgment of the Court of Milan that it lacked jurisdiction in respect of the proceedings brought by the children and that the Respondent was habitually resident in the United Kingdom. A letter from the Respondent's Italian lawyer that is before the court states that this appeal will be heard on 28 June 2017.
xv) On 25 January 2017, the Applicant made an application to set a new hearing date for the Respondent's stayed petition to vary the order of 13 October 2011 so that "the Court may finally adjudicate on the question concerning jurisdiction".
xvi) On 13 February 2017, and consequent upon the Applicant's application dated 25 January 2017 to lift the stay on the Respondent's petition and set a new hearing date, the Court of Milan lifted the stay and set a hearing date for the Italian proceedings between the Respondent and the Applicant, listing the matter on 15 June 2017.
SUBMISSIONS
Stay
(i) The Respondent
i) When considering whether two sets of proceedings in different jurisdictions involve the same cause of action the court must look at the substance of the proceedings. The label which is attached to the proceedings and the role each party plays are not relevant.ii) The Articles of the Maintenance Regulation must be construed and applied with the overriding goal of avoiding any risk of irreconcilable judgments, this being a fundamental principle of EU law.
iii) The court of one Member State is not permitted to form any view as to whether the court of the other Member State concerned does or does not have jurisdiction. To do so would amount to usurping the function of the court of the other Member State.
"We must espouse Brussels II wholeheartedly. We must not take or be seen to take opportunities for usurping the function of the judge in the other Member State. Once another jurisdiction is demonstrated to be apparently first seised, the jurisdiction must defer by holding itself in waiting, in case that apparent priority should be disproved or declined."
(ii) The Applicant
"1. Where a decision is given in a Member State or a 2007 Hague Convention Contracting State where the creditor is habitually resident, proceedings to modify the decision or to have a new decision given cannot be brought by the debtor in any other Member State as long as the creditor remains habitually resident in the State in which the decision was given."
Enforcement
(i) The Applicant
(ii) The Respondent
THE LAW
Stay
"1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established.
2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court."
"1. Where related actions are pending in the courts of different Member States any court other than the court first seised may stay its proceedings.
2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and the law permits the consolidation thereof.
3. For the purposes of this article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings."
"Article 21, together with Article 22 on related actions, is contained in Section 7 of Title II of the Convention; that section is intended, in the interests of the proper administration of justice within the Community, to prevent parallel proceedings before the courts of different Contracting States and to avoid conflicts between decisions which might result therefrom. Those rules are therefore designed to preclude, in so far as is possible and from the outset, the possibility of a situation arising such as that referred to in Article 27(3), that is to say the non-recognition of a judgment on account of its irreconcilability with a judgment given in a dispute between the same parties in the State in which recognition is sought."
Reflecting this, in the later case of Overseas Union Insurance Ltd v New Hampshire Insurance Co C-351/89 [1991] ECR I-3317, the European Court of Justice held that, having regard to the aim of Art 21 of preventing parallel proceedings before the courts of different Contracting States and to avoid conflicts between decisions which might result therefrom, Art 21 must be interpreted broadly so as to cover, in principle, all situations of lis pendens before the courts in Member States in order to achieve the aim of avoiding irreconcilable differences.
"Furthermore, the competent authority in the Member State of enforcement may, on application by the debtor, refuse, either wholly or in part, the enforcement of the decision of the court of origin if it is irreconcilable with a decision given in the Member State of enforcement or with a decision given in another Member State or in a third State which fulfils the conditions necessary for its recognition in the Member State of enforcement.
"A decision which has the effect of modifying an earlier decision on maintenance on the basis of changed circumstances shall not be considered an irreconcilable decision within the meaning of the second subparagraph."
However, in this case both the court of enforcement (in this case the Italian court) and the court of origin (in this case the English court) are seised of proceedings that have the potential to result in an amendment to the original order.
"For the purposes of Article 21 of the Convention, the "cause of action" comprises the facts and the rule of law relied on as the basis of the action."
i) The phrase "same cause of action" has an independent and autonomous meaning as a matter of European law; it is therefore not to be interpreted according to the criteria of national law.ii) In order for proceedings to involve the same cause of action they must have "le même objet et la même cause" (the same object and the same cause). This expression derives from the French version of the text and it is this expression that is translated in the English version of the text as "the same cause of action". Whilst the term is not reflected expressly in the English text the CJEU has held that it applies generally.
iii) Identity of "cause" means that the proceedings in each jurisdiction must have the same facts and rules of law relied upon as the basis for the action, Cooke J correctly stating in JP Morgan Europe Ltd v Primacom AG [2005] 2 Lloyd's Rep 665 at [42] that:
"The expression 'legal rule' or 'rule of law' appears to mean the juridical basis upon which arguments as to the facts will take place so that, in investigating 'cause' the court looks to the basic facts (whether in dispute or not) and the basic claimed rights and obligations of the parties to see if there is co-incidence between them in the actions in different countries, making due allowance for the specific form that proceedings may take in one national court with different classifications of rights and obligations from those in a different national court."iv) Identity of "object" means that the proceedings in each jurisdiction must have the same end in view.
v) The assessment of identity of cause and identity of object is to be made by reference only to the claims in each action and not to the defences to those claims.
vi) The Article is not engaged merely by virtue of the fact that common issues might arise in both sets of proceedings.
vii) The essential question is whether the claims are mirror images of one another, and thus legally irreconcilable, in which case the Article applies, or whether they are not incompatible, in which case it does not.
"It would appear from these five cases, of which the first two were in the European Court of Justice, and the latter three in the domestic Courts of England, that, broadly speaking, the triple requirement of same parties, same cause and same objet entails that it is only in relatively straightforward situations that art 21 bites, and, it may be said, is intended to bite. After all, art 22 is available, with its more flexible discretionary power to stay, in the case of 'related proceedings' which need not involve the triple requirement of art 21. There is no need, therefore, as it seems to me, to strain to fit a case into art 21. The European Court, when speaking in Gubisch (at para 8) of the purpose, in the interests of the proper administration of justice within the European Community, of preventing parallel proceedings in different jurisdictions and of avoiding 'in so far as it is possible and from the outset' the possibility of irreconcilable decisions, was addressing arts 21 and 22 together, rather than art 21 by itself.
Thus a prime example of a case within art 21 is of course where party A brings the same claim against party B in two jurisdictions. Such a case raises no problem. More commonly, perhaps, the same dispute is raised in two jurisdictions when party A sues party B to assert liability in one jurisdiction, and party B sues party A in another jurisdiction to deny liability, or vice versa. In such situations, the respective claims of parties A and B naturally differ, but the issue between them is essentially the same. The two claims are essentially mirror images of one another. Gubisch and The Tatry are good examples of this occurrence.
On the other hand, Sarrio v KIA is a case where the same claimant was suing the same defendant on different bases giving rise to different issues and different financial consequences, and where liability on one claim did not involve liability (or non-liability) on the other. Haji-Ioannou v Frangos illustrates the situation where even though the cause is the same, and even though there is some overlap in the claims and issues, nevertheless different claims, there the proprietary claim to trace, may raise sufficiently different issues of sufficient importance in the overall litigation for it to be concluded that the objet differs. The authority of The Happy Fellow at first instance may be somewhat shaken by the reservations expressed by Lord Justice Saville on appeal, but it too may be said to illustrate the process of analysing the claims and issues in the respective proceedings to identify whether they are the same. Where, for instance, there is no dispute over a shipowner's right to limit should he be found liable (a separate question, which need not even be resolved at the time when a limitation action is commenced or a decree given), I do not for myself see why it should be held that the liability action and the limitation action involve the same cause of action for the purposes of art 21."
"Article 9
Seising of a court
For the purposes of this Chapter, a court shall be deemed to be seised:
(a) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the claimant has not subsequently failed to take the steps he was required to take to have service effected on the defendant; or
(b) if the document has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the claimant has not subsequently failed to take the steps he was required to take to have the document lodged with the court."
"[14] It may properly be inferred from Article 21, read as a whole, that a court's obligation to decline jurisdiction in favour of another court only comes into existence if it is established that proceedings have been definitively brought before a court in another State involve the same cause of action and between the same parties. Beyond that, Article 21 gives no indication of the nature of the procedural formalities which must be taken into account for the purposes of considering whether or not to recognise the existence of such an effect. In particular, it gives no indication as to the answer to the question whether a lis pendens comes into being upon receipt by a court of an application or upon service or notification of that application on or to the party concerned.
[15] Since the object of the Convention is not to unify those formalities, which are closely linked to the organisation of judicial procedure in the various states, the question as to the moment at which the conditions for definitive seisin for the purpose of Article 12 are met must be appraised and resolved, in the case of each court, according to the rules of its own national law. That method allows each court to establish with a sufficient degree of certainty, by reference to its own national law, as regards itself, and by reference to the national law of the other court which has been seised, as regards that court, the order or priority in time of several actions brought within the conditions laid down by the Convention.
[16] The answer to the question raised by the Oberlandsgericht Munchen is therefore that Art 21 of the Convention must be interpreted as meaning that the court "first seised" is the one before which the requirements for proceedings to become definitively pending are first fulfilled, such requirements to be determined in accordance with the national law of each of the courts concerned."
"There is one additional point that arose during the course of debate which I have yet to record. At the date of the hearing before Johnson J the identity of the jurisdiction first seised was disputed in both Germany and in London and determined in neither place. In such circumstances Mr Marks submitted that article 12 would operate as a denial of remedy in both. Of course we are now at the stage where there is a judgment in both jurisdictions establishing Germany as the jurisdiction first seised. But the German judgment is said by Mr Marks to be under appeal and with excellent prospects of success since the wife has Professor Schlosser on her side and he will outweigh the contrary opinion of Professor Danneman. (In this as in other family appeals expert witnesses on the issue of law seem still to be available to deliver partisan opinions). So it is said that until the exhaustion of the appellate process the identity of the court first seised remains undetermined and article 12 available as a defence to both. I would unhesitatingly reject that submission not only on the basis of the judgements recently delivered in Mainz and London but also as things stood at the date of the hearing before Johnson J. There must be a strong presumption that, absent a clear case of irregularity, the court of first issue is the court first seised."
"1. Chapter IV of Council Regulation (EC) No 4/2009 of 18 December 2008 on jurisdiction, applicable law, recognition and enforcement of decisions and cooperation in matters relating to maintenance obligations, in particular Article 41(1) thereof, must be interpreted as meaning that a maintenance creditor who has obtained an order in one Member State and wishes to enforce it in another Member State may make an application directly to the competent authority of the latter Member State, such as a specialised court, and cannot be required to submit the application to that court through the Central Authority of the Member State of enforcement.
2. Member States are required to give full effect to the right laid down in Article 41(1) of Regulation No 4/2009 by amending, where appropriate, their rules of procedure. In any event, it is for the national court to apply Article 41(1), if necessary refusing to apply any conflicting provision of national law and, as a consequence, to allow a maintenance creditor to submit her application directly to the competent authority of the Member State of enforcement, even if national law does not make provision for such an application."
i) That the proceedings in question have "the same cause of action". In determining whether the proceedings in question involve "the same cause of action" for the purposes Art 12(1) of the Maintenance Regulation, the court must, by reference to the claims in each action and not the defences, look at the basic facts (whether in dispute or not) and the basic claimed rights and obligations of the parties to see if there is co-incidence between them in the actions in different countries (making due allowance for the specific form that proceedings may take in each national jurisdiction) and look at whether the proceedings in each jurisdiction have the same end in view. The essential question is whether the claims are mirror images of one another. Because the phrase "the same cause of action" must be given an autonomous meaning, two matters that may, as a matter of English law, be seen as separate may still amount to the same cause of action for the purposes of Art 12(1).ii) That the relevant proceedings in each Member State involve the same parties.
iii) That the relevant proceedings are brought in courts of different Member States.
iv) That the court in the other Member State is the court first seised. The question of whether the court in other Member State is "first seised" falls to be determined in accordance with the national law of each of the courts concerned. From the perspective of the English court, absent a clear case of irregularity there is a strong presumption that the court of first issue is the court first seised.
"[23] Moreover, it should be noted that in no case is the court second seised in a better position than the court first seised to determine whether the latter has jurisdiction. Either the jurisdiction of the court first seised is determined directly by the rules of the Convention, which are common to both courts and may be interpreted and applied with the same authority by each of them, or it is derived, by virtue of Article 4 of the Convention, from the law of the State of the court first seised, in which case that court is undeniably better placed to rule on the question of its own jurisdiction.
[24] Moreover, the cases in which a court in a Contracting State may review the jurisdiction of a court in another Contracting State are set out exhaustively in Article 28 and the second paragraph of Article 34 of the Convention. Those cases are limited to the stage of recognition or enforcement and relate only to certain rules of special or exclusive jurisdiction having a mandatory or public-policy nature. It follows that, apart from those limited exceptions, the Convention does not authorize the jurisdiction of a court to be reviewed by a court in another Contracting State.
[25] It therefore appears both from the wording of Article 21 and from the scheme of the Convention that the only other possibility available, as an alternative solution, to the court second seised, which should normally decline jurisdiction, is to stay the proceedings if the jurisdiction of the court first seised is contested. However, it cannot itself examine the jurisdiction of the court first seised."
"(2A) Where the court has made an order referred to in subsection 2(a), (b) or (c) above, then, subject to the provisions of this section, the court shall have the power to remit the payment of any arrears due under the order or any party thereof."
Enforcement
"33.3 How to Apply
(1) Except where a rule of practice direction otherwise requires, an application for an order to enforce an order for the payment of money must be made in a notice of application accompanied by a statement which must –
(a) state the amount due under the order, showing how the amount is arrived at; and
(b) be verified by a statement of truth.
(2) The notice of application may either –
(a) apply for an order specifying the method of enforcement; or
(b) apply for an order for such method of enforcement as the court may consider appropriate."
DISCUSSION
Stay
Enforcement
CONCLUSION
