Jordan v Jordan
| Jurisdiction | England & Wales |
| Judge | Lord Justice Thorpe,Lord Justice Auld,Lord Justice Simon Brown |
| Judgment Date | 12 July 1999 |
| Judgment citation (vLex) | [1999] EWHC J0712-10 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | CCFMI 1998/1506/2 |
| Date | 12 July 1999 |
[1999] EWHC J0712-10
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(DIVISIONAL COURT)
Royal Courts of Justice
The Strand
Lord Justice Simon Brown
Lord Justice Auld
Lord Justice Thorpe
CCFMI 1998/1506/2
MR P DUCKWORTH (Instructed by Messrs Toller Hales & Collcutt, Northampton NN1 1JX) appeared on behalf of the Appellant.
MRS JENNIFER ROBERTS (Instructed by Messrs Benussi & Co, West Midlands B74 4BH) appeared on behalf of the Respondent.
(As Approved)
On 4th February 1961 Roy and A Elaine Jordan married in Michigan. They were both about eighteen and American citizens. Over the following five years they had three sons who are now in their middle thirties. After some twenty three years of marriage the husband obtained employment in England as a director of JMH Bostrom Limited. The family lived in England from 1984 to 1988 when the marriage broke down. The separation occurred at Christmas time when the wife left for California. The husband stayed on for about eighteen months before himself returning home. At the point of separation it was agreed that the family assets, including the husband's shareholding in Bostrom Limited, should be realised and equally divided. The husband says the wife received about $1M. The wife says it was more like $900K. An asset that was not available for immediate division was the husband's pension fund in Bostrom. At about the time of his return home he arranged for the transfer from the Bostrom pension scheme of his fund in the sum of £115,330. The recipient was an Isle of Man corporate and trust administrator, ECS International, which set up the MPM pension scheme, of which the husband was the sole beneficiary. At about the same time the wife issued divorce proceedings in the Superior Court of the State of California, County of San Diego. The husband accepted the jurisdiction of that court to deal with the suit and all ancillary matters. Shortly thereafter he purchased a two bedroom condominium at Calle Devanar in San Diego.
Through the Californian lawyers a comprehensive marital settlement agreement was entered into on 1st January 1991 and subsequently elevated into an order of the San Diego court on 26th April 1991. Between the date of the agreement and the date of the order the San Diego court dissolved the marriage. The agreement and order are very extensive, some thirty pages in all. Their broad scheme was to identify the separate property of each, identify and divide the community property and to define the wife's rights to spousal support. The division of community property required the husband to make an equalising payment of $190K to the wife. Despite the equal division of assets at separation and the further division of assets under this order it was not what we would term a clean break agreement. Paragraph 4(a) provided for spousal support in these terms:
"The court shall retain jurisdiction over the issue of spousal support. Such jurisdiction with respect to spousal support for wife shall terminate on wife's remarriage, the death of either party or further order of court, whichever first occurs. …… Should husband bankrupt-out the equalising note due wife under this agreement, that occurrence would constitute a change of circumstances for purposes of support."
Paragraph 4(b) provided that:
"Husband shall maintain, for the benefit of wife such health insurance coverage as is available through his employment until the death of either party, wife's remarriage or her cohabitation with an adult male."
Paragraph 8 provided:
"Retirement Benefits
a. The parties own as a community asset retirement benefits earned by husband as a result of his employment during the marriage in the United Kingdom. Husband shall pay to wife one half (1/2) of any sum received from this retirement benefit plan within forty eight (48) hours of his receipt thereof.
b. The court shall reserve jurisdiction to supplement the judgment incorporating this agreement so as to enable the court to subsequently issue a Domestic Relations Order pursuant to the Retirement Equity Act of 1984 or any other act with regard to implementing the foregoing provisions.
c. Each party shall pay their respective income taxes on the gross retirement benefits received by them after this division is accomplished."
Paragraph 31 must also be cited in full:
"Reservation of Jurisdiction
In the judgment of dissolution of marriage anticipated by this agreement, there shall be reserved to the San Diego County Superior Court, in addition to the jurisdiction specifically mentioned elsewhere in this agreement, the jurisdiction to;
a. Supervise the payment of any obligation ordered paid or allocated in this agreement.
b. Supervise the division of assets as agreed in this agreement.
c. Supervise the execution of any documents required or reasonably necessary to carry out the terms of this agreement.
d. Supervise the overall enforcement of this agreement."
Finally amongst the other terms and conditions in paragraph 37 is the applicable law clause:
"This agreement is entered into in the State of California and shall be construed and interpreted under and in accordance with the laws of the State of California applicable to agreements made and to be wholly performed in the State of California. California law shall also govern the relationship between the parties in connection with the assets retained by them as tenants in common with one another."
The community asset referred to in paragraph 8(a) was defined in Schedule A to the order as:
"One half of any pension benefits payable to husband by virtue of his employment during the marriage with Bostrom Limited."
It seems that the husband's obligation to pay the equalisation payment of $190K was on or before 31st December 1993. The husband asserts that he satisfied that obligation by transferring to the wife in June 1992 two plots of land. The wife asserts that after transfer she discovered that the plots were heavily mortgaged and that by the date of closure of the ensuing accounts and settlements, far from receiving any benefit, she had met a deficit of approximately $20K. Shortly thereafter the husband returned to this jurisdiction in search of opportunities to deploy his skill as a company doctor. In August 1992 he married his present wife Joanna and in July 1993 entered into a complicated financial transaction with ECS International in the Isle of Man. By that stage the husband had, as I understand it, a substantial shareholding in a company, Oakland Elevators Limited, of which he was the managing director. These shares were transferred to an Isle of Man company called Otani Limited. There are only three issued shares in Otani Limited, two held by ECS International on discretionary trusts for the benefit of the husband and his present family (in 1996 he and Joanna adopted two children). The other share in Otani is held by ECS International on discretionary trusts for the benefit of a third party, one of the husband's co-directors in Oakland Elevators Limited. Subsequently in April 1996 Oakland Elevators Limited was purchased by Booth Industries Group plc, of which public company the husband is the chairman. The only significant asset of Otani Limited is its shareholding in Booth Industries, amounting to approximately 43% of its issued shares. (This information is derived from a public source, namely a letter of 17th February 1998 from the chairman to all shareholders in Booth Industries convening and explaining the purpose of an extraordinary general meeting.)
Shortly after the husband entered into these sophisticated financial arrangements the wife obtained a further order in the San Diego court. The order is dated 20th September 1993 and on its face is hard to comprehend. It resulted from an ex parte application, although the wife's attorney asserts that he gave notice, as a matter of courtesy, to the counsel who had acted for the husband in 1991. That counsel has subsequently stated that he has no recollection of having received such notice. The first paragraph of the order, although most ineptly drafted, seeks to say nothing that is not to be found in paragraph 8(a) of the 1991 order. The following paragraphs make reference to the laws of Great Britain, not England and Wales, and seem to lack purpose or point. In the current proceedings in this jurisdiction there is no evidence to explain the motive or intention of either the wife or her attorney in obtaining this seemingly useless order. As I shall demonstrate the wife has made no subsequent use of it and the husband says that he was not served with it until it arrived with the wife's proceedings in this jurisdiction in December 1997.
On 2nd June 1995 the husband and his present wife purchased Tower House, Dingley as their family home in joint names. In an affidavit sworn on 18th May 1999 his solicitor asserts that the entire purchase price was provided by the Midland Bank on mortgage. If that be right the subsequent transfer assumes lesser significance. However we know that on 7th October 1996 and again on 22nd April 1997 the husband and his present wife sought advice from a specialist Birmingham lawyer 'about wills and inheritance tax planning'. As a generalisation it may be said that men do not spend present money on lawyers fees unless there is something of actual or potential substance to protect from the inroads of future taxation. It is the husband's case that part, or perhaps all, of the advice was to transfer his half share in Tower House to his wife, Joanna. However instructions to effect the transfer were not given until 6th January 1998 and in the intervening nine months there were very significant...
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