London lawyers score pensions success for English client caught up in foreign divorce

In the middle of 2015 a solicitor in the family law team at Miles and Partners Solicitors in East London was asked by a client if it could help them enforce the terms of a pension sharing order they had obtained from an American court when they had got divorced there nearly 16 years’ earlier.

The facts of the case were complicated.

Our client had married an American man in the late 1960’s and together they had lived and worked in several countries. While based in Europe, a number of pensions were set up, including one with an English provider.

When our client and her then husband decided to divorce in the late 1990’s they agreed to split the pensions in half. This agreement was approved by the courts in America and recorded in a formal court order. The pension providers in most countries agreed to allow them to take money out of the pension fund at that point to achieve a 50/50 split. However, they could not do the same with the English pension and so it was left alone and an agreement reached that a split would not take place until our client and her former husband retired and payments from the pension provider began to be made.

Following the divorce, our client returned to live in England. Her ex-husband remained in America.

When the time came for the split to happen, our client made attempts to implement the pension sharing order but the pension provider would not accept the American order. Accordingly, as the pension was now in payment, rather than taking out 50 per cent of the pension fund as a lump sum (which is what had happened with the other pensions) our client was persuaded to take half of the monthly payments instead which was intended to be an interim measure. This was a bad decision for three reasons. Firstly, all payments made by the pension provider were paid to our client’s ex-husband, so she was reliant on him to make the payments due to her, which he did but infrequently. Secondly, our client had no way of knowing how much the pension provider was paying each month and therefore no way of checking if she was getting half of the full amount. Thirdly, because her ex-husband was living in America, the value of payments she received each month were less than they should have been because, by the time she received them, they had been transmitted from England to America and back again and so were subject to fluctuations in the exchange rate.

Understandably our client was unhappy about this and so sought advice from another firm of solicitors as to whether there was anything she could do to force the English pension provider to hand over 50 per cent of the pension pot to her as a lump sum. She was told that she would need an order from the English courts because pension providers here do not recognise orders from the American courts unless they have English court approval. She was advised that her chances of getting such an order were slim because of the amount of time that had passed since the American order was made. She was also told that the cost of going to court made it unwise for her to go down this route.

The client then sought a second opinion from Miles & Partners who disagreed with what she had been told.

In our expert solicitor’s opinion, while the delay in asking the court to recognise and enforce the American order might be problematic, it was still worth asking the question as it was clear that the order did not direct the pension to be shared by splitting the monthly payments and, because this is what was happening, they suggested showing the court that despite the delay, there was an ongoing reliance on this pension for maintenance.

As far as costs were concerned, there was no way of knowing how much money it would take to get the matter resolved until contact had been made with our client’s ex-husband to see whether he would voluntarily agree to lay a consent order before the court in limited to the issue of the pensions sharing order.

Confident in our solicitor’s advice, the client gave them permission to write to her former husband and ask him to agree to an order allowing the pension to be split in half so that she could take 50 per cent of the pension pot and use it to invest in her own pension fund.

At first, her ex-husband was reluctant to agree to this because he had remarried and wanted his new wife to be able to continue to benefit from the pension after he had died. However, after some forceful correspondence from our solicitor – and a warning that if an agreement could not be reached amicably, court proceedings in England under Part III of the Matrimonial and Family Proceedings Act 1984 would be started to resolve the matter – he finally agreed to do what was asked.

This was unsurprising given that what Part III of the Matrimonial and Family Proceedings Act does is allow the courts here to make financial provision for someone with a substantial connection to this country in circumstances where no financial provision has been made for them by a foreign court, or where provision has been made but it has proved to be inadequate.

“This was a great result for the client, who was really struggling to get her finances in order following her retirement. Under the old arrangement with her ex-husband she never knew from one month to the next what, if any, money she was going to receive. Now she has stability and a regular and predictable amount of income that has enabled her to plan for the future. This case should give hope to anyone else with a foreign divorce agreement which provides for the transfer or sharing of assets in England and Wales, because it is possible to get such orders recognised and enforced here. However, it should also act as a warning to anyone about to get divorced because, had our client been advised properly at the time the agreement was being negotiated, steps could have been taken to ensure the recognition and enforceability of the agreement here without the need for argument. It is important to remember that enforcement of an order is not in itself a reason for the court to allow such an application to be made and so it is important to get things right in the first place.”

If you have assets located in England and Wales or abroad and are thinking of getting divorced, or have any other family law, or money matters you would like help with, please contact us on 0207 426 0400 or email info@milesandpartners.com.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.