Goldstone v Goldstone & Ors [2011] EWCA Civ 39

Case No B4/2010/2039

[2011] EWCA Civ 39

IN THE HIGH COURT OF JUSTICE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM

The Honourable Mr Justice Hedley

FD08DO4321

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 28/01/2011

Before

THE RIGHT HONOURABLE LORD JUSTICE THORPE

THE RIGHT HONOURABLE LORD JUSTICE HOOPER

THE RIGHT HONOURABLE LORD JUSTICE HUGHES

Between

SONIA JAYNE GOLDSTONEAppellant

SAMPSON ROBERT GOLDSTONEAppellant

& OthersAppellant

SONIA JAYNE GOLDSTONE Appellant in 2039 and Respondent in 2181 &2360- and -SAMPSON ROBERT GOLDSTONE& Others Appellants in 2181 & 2360 Respondents in 2039

Mr Barry Singleton QC and Christopher Lundie (instructed by Irwin Mitchell LLP) for Appellant/Respondent (Sonia Jayne Goldstone)

Mr Charles Howard QC and Julian Wilson (instructed by Stewarts Law LLP) for Appellants/Respondents

Hearing Hearing dates: Monday 6th December 2010

Judgment

LORD JUSTICE THORPE :

Introduction

[1]The question which this appeal decides is whether the preliminary issue, the trial of which was ordered by Charles J on 25th March 2010, was thereafter governed by the Family Proceedings Rules or the Civil Procedure Rules. The question could hardly be simpler and so too, in my judgment, is the answer. However the submissions in support of the appeal and in response are extensive and reflect the scale on which the underlying ancillary relief proceedings are being fought and the importance that the parties attach to the outcome of this appeal.

Family Background

[2]The parties commenced their cohabitation in 1999 when in their twenties. They divided their time between London and Cheshire.

[3]In 2001 they moved to Monaco for tax reasons. In the following year the husband set up an alter-ego asset depository, Diadora Foundation. Soon after their first child was born they married in Monaco on 23rd November 2002.

[4]By the summer of 2003 the value of the assets held by the Diadora Foundation mounted to about £13 million.

[5]On 11th February 2005 a second daughter was born to the couple.

[6]In February 2006 an agreement was reached between the husband and the Jeeves group. It is the wife’s case, for which there is considerable evidential support, that thereafter the Jeeves group has been the depository of the bulk of the husband’s fortune.

[7]In 2006 the children commenced education in this jurisdiction after which the wife has divided her time between England, Switzerland and Monaco.

[8]The marriage failed in 2008, the wife’s petition being filed on 16th September. Earlier that year the husband had prepared a schedule of his assets for his accountants valued in total at a figure approaching £24 million.

[9]However, the husband’s asset schedule of 6th October 2008 in response to the wife’s Form A put his worth at £10.5 million. At that outset it was immediately apparent that the big issue in the case was the extent of the husband’s ownership and control of the assets in the Jeeves group.

The Ancillary Relief Chronology

[10]The wife’s Form A of 17th September 2008 sought a property adjustment order in relation to properties in Cheshire, London and Switzerland and, significantly, a Jeeves investment at Ovington Mews.

[11]On 16th October 2009 the wife issued an application under section 37 of the Matrimonial Causes Act 1973 to set aside the root agreement between the husband and the Jeeves group.

[12]On 26th October 2009 Moylan J adjourned generally both the wife’s section 37 application and also her application for an occupation order under the Family Law Act 1996, which she had issued on 23rd October 2009.

[13]On 23rd February 2010, following a failed FDR appointment, Bennett J joined the Jeeves group as respondents. Since they had had no notice of the hearing the order recorded their right to apply to set aside the joinder. This order also defined the wife’s applications as being: i) Her Form A. ii) Her Section 37 application. iii) Her application under the Family Law Act 1996. Further the order allowed the wife to enlarge her Form A to seek a property transfer order in respect of: a) The Ashley Road properties. b) Shares in Pearl Limited. c) Shares in Treasure Trade Limited.

[14]Paragraph 20 of the order provided for service on the Jeeves group. Other paragraphs provided for service of the wife’s applications and evidence on the Jeeves group and for evidence in response from Jeeves.

[15]This was plainly sensible and conventional case management. It had become necessary to provide for a trial. The major issue I have already recorded. Not only did justice demand that the Jeeves group be given notice of the issue and the opportunity to be heard on it but also that the trial judge be given the opportunity to see both sides of the transaction.

[16]On 11th March 2010 the Jeeves group issued an application to set aside their joinder. That application was therefore before the court on 25th March 2010.

[17]On that occasion case management was in the hands of Charles J.

[18]The resulting order is comprehensive and I record only those paragraphs that bear most directly on the present appeal: a) By the first paragraph the wife was required to serve “detailed points of claim” in respect of: i) Ownership issues relating to Jeeves assets attacked by either her Form A or her Section 37 application; and ii) Her allegations that the original deal between the husband and the Jeeves group was a sham, as had been asserted in a letter from her solicitors on 9th March 2010. b) Following provisions dealt with alternative bases, depending on whether Jeeves chose to contest or to accept their involvement in the trial. These alternative provisions seem to me to ignore the Jeeves application of 11th March to be discharged. c) However paragraph 6 provided for a discharge application to be listed on 5th July with a three day time estimate and paragraph 7 provided for a preliminary issue trial of the wife’s claims (as defined by paragraph 1 of the order) on 6th December with a ten day time estimate. d) Paragraph 12 of this order granted the wife permission to further amend her Form A to seek property adjustment orders in relation to Jeeves group assets not previously attacked.

[19]For the purposes of this appeal the order of 25th March is the critical order. Subject only to the possibility of the earlier discharge of the Jeeves Group from the arena, it precisely defines all the claims advanced by the wife against the husband and the Jeeves group. It requires both the claimant and the respondents to plead their respective cases and it provides for a trial of the issues as to both ownership and sham. This is the point at which it is submitted that the civil claim has been fully launched and directions given for a civil trial.

[20]Points of claim were filed in March and amended on 10th May 2010. Points of defence were filed on 16th April and amended on 18th June 2010. These are very long “pleadings”. Additionally on 10th May, pursuant to order, the wife served a lengthy statement of her case on jurisdiction.

The Trial

[21]The trial of the Jeeves application to be discharged came before Hedley J. At its conclusion he observed, handing down his judgment on 30th July, that he had put himself under considerable pressure in the knowledge that the parties, and indeed the court, needed to know the outcome before the end of term. Thus his judgment is succinct but clear.

[22]He first asked whether the Jeeves respondents had been properly joined. He held that the answer depended upon whether the joinder should be seen as within family proceedings or civil proceedings. If within family proceedings, the joinder was proper. If within civil proceedings, then the provisions of the CPR had not been complied with and the order should be set aside.

[23]This then was his answer to the question he had posed:

“I have reached the clear conclusion that these are family proceedings. They are both in form and substance the wife’s claim for ancillary relief against the husband. What that claim has thrown up i.e. the sham allegation, might if established have a significant impact on third parties. It is right both in terms of safeguarding the rights of third parties and no doubt with a view to ultimate enforcement, that they should have notice of and be joined to the proceedings. However, it is to extant family proceedings that they have been joined; this is not a new action against new parties from a procedural point of view.”

[24]He then went on to ask whether he should discharge the Jeeves respondents. In answer to that question he said:

“Since I have concluded that they have been properly joined, I am satisfied that the interests of justice require that they remain in these proceedings: fairness to the husband demands this as much as does fairness to wife.”

[25]Mr Justice Hedley then asked whether Lichtenstein or London was the forum conveniens for the trial of the preliminary issue. He thus expressed his conclusion:

“I did not find this issue particularly easy perhaps because I am sensitive about imposing the jurisdiction of this court on others that are not otherwise subject to it. When however I approach these facts through the lens of Spiliada, I am bound to conclude that the balance overwhelmingly favours trial in England.”

Submissions

[26]Mr Howard’s fundamental submissions are: a) The wife has brought a direct claim against the Jeeves group. By the successive enlargements of her main claim she is seeking the transfer of an expanding catalogue of Jeeves assets. b) Jeeves are extraterritorial entities and have no connection with this jurisdiction. c) The claim that they face is a proprietary claim to be decided in law that excludes judicial discretion. Properly categorised it is a Chancery claim which, for convenience, has been assigned to a judge of the family division. d) The applicable procedure as well as the applicable law is civil and the claim must be compliant with the Civil Procedure Rules.

[27]Mr Howard then submits that the joinder of and service upon the Jeeves respondents is not compliant with CPR Rule 6.36. This ensures that a foreign defendant may not be joined and served without the court’s permission. The gate to the grant of permission is a narrow one. The applicant avoided the gate by reliance on the Family Proceedings Rules. Had she applied for permission, as she was obliged to do by CPR Rules 6.36, she would not have passed through the narrow gate, permission would have been refused and the Jeeves respondents would have not been vexed. Accordingly their joinder must be set aside.

[28]Mr Singleton simply asserts that Hedley J was correct in his conclusion for the reasons which he gave. The Wife’s applications are family proceedings governed by the Family Proceedings Rules and the joinder of the Jeeves respondents was plainly necessary to resolve the dispute as to the extent of the assets over which a judge will exercise his ultimate discretion.

[29]Both Mr Howard and Mr Singleton address in detail FPR 1; CPR 19.2 and 6.36 with paragraph 3.1 of the practice direction 6B; and RSC Orders 11 and 15.

[30]Both Mr Howard and Mr Singleton submitted that: a) Section 24 of the Matrimonial Causes Act gives the court jurisdiction to transfer to the applicant only such property as the respondent is entitled to either in possession or reversion. Accordingly the court could only order the transfer of assets in the name of the Jeeves respondents if satisfied that in reality they were owned by the husband. b) The court’s responsibility to predetermine the extent of a respondent’s ownership where a third party claim is asserted can be traced to the decision of this court in Tebbut v Haynes

[1981] 2 All ER 238

. c) That predetermination must be disciplined in the way explained by Mr Mostyn QC in TL v ML

[2006] 1 FLR 1263

strongly endorsed by Munby J in A v A

[2007] 2 FLR 467

[31]Mr Singleton additionally asserted that in any event the participation of the Jeeves respondents was so obvious a necessity that were permission required under the provisions of the CPR it would be readily granted.

Conclusions

[32]In expressing my conclusions I do not intend to deal with the extensive submissions which we heard on the FPR, the CPR and the RSC. Mr Justice Hedley, as I have recorded, considered that the issue depended upon the answer to a simple question: were the proceedings that flowed from the order of 25th March family proceedings or civil proceedings? I believe that that is a correct analysis. The point that he had to decide was a short point; it remains a short point in this court. Mr Justice Hedley concluded that the claims stated against the husband and the Jeeves respondents were family proceedings. I am of the same opinion. Therefore it follows that this appeal must be dismissed.

[33]However I wish to reason my conclusion more fully. Before I do so, I record that I have had the advantage of reading the judgment of My Lord, Hughes LJ, in draft and I am in full agreement with his survey of the rules within the three codes: FPR, CPR and RSC.

[34]I have already expressed the opinion that the case management order of Bennett J was both conventional and wise. It brought in an obviously major player, whilst expressly recognising that player’s right to challenge the joinder.

[35]I am equally satisfied that the case management order of Charles J was wise and well founded on authority. He was implicitly following the course mapped by Mr Nicholas Mostyn QC in the case of TL v ML fully endorsed by Munby J in A v A.

[36]In the first case Mr Mostyn had identified the procedure for the determination of third party claims with admirable clarity. It is worth citing the material paragraphs of his judgment in full:

“33. It is well established that a dispute between a spouse and a third party as to the beneficial ownership of property can be adjudicated in ancillary relief proceedings: see Tebbutt v Haynes [1981] 2 All ER 238, per Lord Denning MR at 241: ‘It seems to me that under section 24 of [the Matrimonial Causes Act 1973], if an intervener comes in making a claim for the property, then it is within the jurisdiction of the judge to decide on the validity of the intervener’s claim. The judge ought to decide what are the rights and interests of all the parties, not only of the intervener, but of the husband and wife respectively in the property. He can only make an order for transfer to the wife of property which is the husband’s property. He cannot make an order for the transfer to the wife of someone else’s interest.’ 34. It is to be emphasised, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is, of course, completely different in nature from the familiar discretionary exercise between spouses. A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division. 35. Mr Brett makes the valid complaint that this issue has never been properly defined, pleaded or particularised. At no stage since the first appointment has this discrete issue been the subject of any case management, notwithstanding that the parties have been before the court on numerous occasions. 36. In my opinion, it is essential in every instance where a dispute arises about the ownership of property in ancillary relief proceedings between a spouse and a third party, that the following things should ordinarily happen: (i) The third party should be joined to the proceedings at the earliest opportunity; (ii) Directions should be given for the issue to be fully pleaded by points of claim and points of defence; (iii) Separate witness statements should be directed in relation to the dispute; and (iv) The dispute should be directed to be heard separately as a preliminary issue, before the financial dispute resolution (FDR). 37. In this way, the parties will know at an early stage whether or not the property in question falls within the dispositive powers of the court and a meaningful FDR can take place. It also means that the expensive attendance of the third party for the entire duration of the trial can be avoided. It is a great pity that one of these steps took place in this case. Had they happened, I believe that a great deal of the costs would have been saved.”

[37]The endorsement of Munby J is expressed in three paragraphs of his judgment which again, I cite in full:

“21. In this sense, and to this limited extent, the typical case in the Family Division may differ from the typical case in (say) the Chancery Division. But what it is important to appreciate (and too often, I fear, is not appreciated least in this division) is that the relevant legal principles which have to be applied are precisely the same in this division as in the other two divisions. There is not one law of ‘sham’ in the Chancery Division and another law of ‘sham’ in the Family Division. There is only one law of ‘sham’, to be applied equally in all three Divisions of the High Court, just as there is but one set of principles, again equally applicable in all three divisions, determining whether or not it is appropriate to ‘pierce the corporate veil’. 22. Putting the point more generally, I entirely agree with what Mr Nicholas Mostyn QC, sitting as a deputy judge, said in TL v ML (Ancillary Relief: Claim Against Assets of Extended Family) [2005] EWHC 2860 (Fam), [2006] 1 FLR 1263, at para [34]. Having referred to what Lord Denning MR had said in Tebutt v Haynes [1981] 2 All ER 238, at 241, he continued: ‘It is to be emphasised, however, that the task of the judge determining a dispute as to ownership between a spouse and a third party is, of course, completely different in nature from the familiar discretionary exercise between spouses. A dispute with a third party must be approached on exactly the same legal basis as if it were being determined in the Chancery Division.’ 23. The deputy judge recorded, at para [35], the complaint of counsel in that case that the issues had never been ‘properly defined, pleaded or particularised’ and went on to suggest, at para [36], how such issues should in future be handled by way of appropriate case management. I am sympathetic to the approach being suggested by the deputy judge, though I would not wish to be quite so prescriptive as he appears to be. Vigorous judicial case management in such cases is vital, but the appropriate directions to be given in any particular case must reflect the case managing judge’s appraisal of how, given the forensic realities of the particular case, the issues can be best resolved in the most just, effective and expeditious manner. 24. I do, however, entirely share the deputy judge’s view that directions should normally be given for such issues to be properly pleaded by points of claim and points of defence. In the present case the muddle confusion and ambiguities in the wife’s case would have been more pitilessly exposed, and at a much earlier stage in the proceedings, had the presentation of her case been exposed to the intellectual discipline which is one of the advantages of any system of pleading. Moreover, if the wife had been required to plead her case everyone would have had a much clearer idea, and at a much earlier stage, as to exactly what she was or was not asserting and as to exactly what the husband and the interveners were or were not saying by way of defence. As it was, matters were wholly unclear even as late as the first day of the final hearing.”

[38]These citations demonstrate that the case management directed by Charles J precisely met the circumstances and requirements of the case.

[39]Of course the ultimate trial required the family division judge to apply the law of property and the law of sham just as his brother judge would do in the Chancery Division. Careful preparation for that trial was necessary. However these impeccable directions do not require or permit the import of the CPR. In its essence the claim remains a claim by the wife against the husband. Ultimately it is a claim for discretionary relief. In this, as in many cases, there must be a preliminary issue trial to establish the extent of the assets over which the discretion is ultimately exercised. Here, as in many cases, the preliminary issue trial determines the claims and the rights of third parties. The preliminary issue trial is pendent on the originating application. It has no independent existence.

[40]Preliminary issue trials are common place in family proceedings. As well as in ancillary relief they are seen in Children Act proceedings, where there may be a preliminary issue trial to establish whether a child has been abused and if so by whom. In private law proceedings there may be a preliminary issue trial to establish the nature and extent of alleged domestic violence. The jurisdiction of the court to pronounce a divorce may have to be established by a preliminary issue trial to establish whether or not the statutory requirement has been met and/or whether a forum non conveniens plea has been made good. It is always possible to determine all issues at one rolled up trial notwithstanding the gain in the identification and resolution of a discrete preliminary issue. Had Charles J opted for an alternative management, directing all issues to be resolved at the final hearing without preliminary trial, the submissions advanced by Mr Howard could not have been conceived.

[41]Mr Howard, in his written skeleton, attacked Hedley J’s conclusion that London was overwhelmingly the convenient forum. He hardly expanded his skeleton orally. Wisely, in my view, since Hedley J was so plainly correct in his conclusion. The idea that the pendent preliminary issue should be determined in some other jurisdiction is, to my mind, fanciful.

[42]In his introduction Hedley J summarised the litigation in vivid language. He said: “1. This case is about whether Sonia Jayne Goldstone (the wife) should receive from Sampson Robert Goldstone (the husband) a sum of around £4 million or one around £11 million (or something in between) by way of ancillary relief in divorce. This issue has generated prodigious litigation involving so far five judges in the Division having made substantive orders which has brought the case but into the forensic foothills. In the future there lies a two day disclosure hearing, a ten day preliminary issue hearing and a seven day final hearing with who knows what beyond that in terms of appeal and enforcement. 2. The three days that have been expended before me have been part of the foothills skirmishing. In argument presented by three eminent Queens Counsel I have been conducted through six lever arch files of documents, two lever arch files of authorities, all supplemented by other documents as the arguments unfolded. In addition we consulted Rayden and Books both White and Red. In the fulsome erudition to which I have been treated no stone has been left unturned; indeed I occasionally wondered if stones appeared in the way simply for the purpose of being turned. I have throughout the argument sensed (in my innocence in these recondite areas) that the essential issues may not be all that complex notwithstanding the learning that has been generated.

[43]I share his concerns. In this court I notice that the richer the family the more imposing becomes the litigation team. They strive not only with great skill but also with great extension of all conceivably relevant issues. The bills incurred by the families mount to shocking summits, even if the totals remain a relatively small percentage of the overall fortune.

[44]In the present case it is said that the husband’s fortune is split between £8 million in his name and £15 million in the name of the Jeeves group. Some of the £15 million is represented by realty in this jurisdiction, such as Ovington Mews and the Ashley Road development. I cannot but wonder whether the fight on the joinder issue was not intensified by the wife twice amending her Form A upwards and then asserting separately and additionally that the original agreement between the husband and the Jeeves group was a sham. Her fundamental case was and remains that the husband is worth about £24 million as he demonstrated to his accountants shortly before he told her that the marriage was over. She asks the court to exercise his discretion on that basis. For the enforcement of the resulting order there are properties here and elsewhere in the husband’s name and realty in this jurisdiction in the legal ownership of the Jeeves group. I ask, rhetorically, is her case enhanced or extended by the steps that have been taken in and after February 2010?

[45]The answer to my rhetorical question may ultimately emerge. In the interim an undeniable consequence has been the reservation of 3 days for the joinder challenge, 7 days for the preliminary issue trial and 10 days for the trial hearing. This luxury is to the cost of other cases in the overloaded Family Division lists.

[46]As already indicated I would dismiss the appeal.

Lord Justice Hooper:

[47]I agree that the appeal must be dismissed for the reasons given by Thorpe LJ and Hughes LJ.

Lord Justice Hughes:

[48]I agree that this appeal must be dismissed, and for the reasons given by Thorpe LJ. I add only some brief observations on the Rules of Court, in deference to the detailed written and oral submissions which have been made to us.

Which Rules of Court ?

[49]The Civil Procedure Rules (“CPR”) apply by default to all civil proceedings except where specifically excluded: CPR 2.1(1). “Family proceedings” constitute one area of specific exclusion: CPR 2.1(2). The latter rule makes it clear that the reason is that there are separate rules for “family proceedings”, namely the Family Proceedings Rules 1991 (“FPR”), made under the Matrimonial and Family Proceedings Act 1984 (“MPFA 1984”).

[50]The “family proceedings” to which the FPR apply, and the CPR therefore do not, are defined in s 32 MPFA 1984 as “proceedings which are family business”. In turn, “family business” means, by the same definition section, business which in the High Court is for the time being assigned to the Family Division “and to no other Division” by or under section 61 and Schedule 1 to the Senior Courts Act 1981. In other words, “family proceedings” are those which are exclusively allocated to the Family Division when at High Court level. The FPR expressly uses the same definition of “family proceedings”: FPR 1.2.

[51]Among the kinds of proceeding which are exclusively allocated to the Family Division is divorce with its attendant ancillary relief. The wife’s ancillary relief proceedings in this case are therefore “family proceedings”.

[52]Where proceedings are “family proceedings” and the FPR thus apply, any topic not covered by the FPR is made good not by the default application of the CPR, but by the default application of the old Rules of the Supreme Court 1965 (“RSC”), which are expressly preserved for this purpose by FPR 1.3 and apply “with the necessary modifications”. In the county court, the old County Court Rules are similarly preserved and serve a comparable purpose.

[53]The two topics with which the judge was concerned in this case are(i) joinder of parties and

(ii) service outside the jurisdiction.

[54]As to joinder, the CPR and its predecessor the RSC contain broadly similar provisions. The FPR do not contain general provisions for joinder. The general provisions for joinder to family proceedings are therefore to be found in the RSC, at O15, r 6.

[55]RSC Order 15, r 6(2) provides, so far as material, as follows:

“Subject to the provisions of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application: (a) …. (b) order any of the following persons to be added as a party, namely (i)…. (ii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

[56]Similar provisions are contained in CPR 19.2:

“The court may order a person to be added as a new party if: (a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or (b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.”

[57]The principle underlying these rules is very clearly that it is desirable to equip a single court with the means of deciding all relevant connected issues within the same proceedings and to avoid a multiplicity of different and potentially conflicting proceedings. Although the FPR do not contain general provisions for joinder, they are entirely consistent with this principle. They do provide (FPR 2.59(3) and (4)) for notice of ancillary relief applications to be given to mortgagees of affected property, to trustees and settlers of settlements which may fall for variation, and to ‘such other persons…as the District Judge may direct’. That does not there and then make them parties (Re T

[1990] 1 FLR 1

and T v T (Joinder of third parties)

[1996] 2 FLR 357

at 364D) but the result is likely to be that if a dispute emerges then either such person applies to intervene, and thus to become a party, or one of the other parties applies to join him. Likewise there are provisions for the joinder of children to proceedings affecting them (FPR 9.5).

[58]As to service outside the jurisdiction, the starting point is of course that the English court should not seek to exercise authority over those outside the jurisdiction unless the power to do so is distinctly conferred. Such power may be conferred by international instrument, transposed into or directly applicable in our law (eg the Lugano Convention, the Judgments Regulation EC 44/2201 or “Brussels II bis”, EC 2201/2003), or by statute (as has been the case in relation to the service of divorce petitions abroad since the Matrimonial Causes Act 1857), or by Rules of Court.

[59]The RSC and the CPR recognise the cases where a party has an unfettered right to serve outside the jurisdiction. But they also contain consistent, although not identical, provisions enabling the court, in its discretion, to permit such service in additional cases if one or more specific gateways are passed. Since the present proceedings are family proceedings, the relevant rule is RSC Order 11, but there is no material difference between its provisions and those of the CPR at 6.36, incorporating Practice direction 6B paragraph 3.1. RSC Order 11(1) provides, so far as material, that proceedings may be served out of the jurisdiction if “… (c) the claim is brought against a person duly served within or out of the jurisdiction and a person out of the jurisdiction is a necessary or proper party thereto;” The provision is couched in terms of the service of a writ, but in its application to family proceedings must clearly be read “with the necessary modifications” to apply to claims made otherwise than by writ: see FPR 1.3.

[60]The equivalent provisions in CPR PD 6B at paragraphs 3.1(3) and (4) say:

“3.1 The claimant may serve a claim form out of the jurisdiction with the permission of the court under rule 6.36 where – …. (3) A claim is made against a person (“the defendant”) on whom the claim form has been or will be served (otherwise than in reliance on this paragraph) and (a) there is between the claimant and the defendant a real issue which it is reasonable for the court to try; and (b) the claimant wishes to serve the claim form on another person who is a necessary or proper party to that claim. (4) A claim is an additional claim under Part 20 and the person to be served is a necessary or proper party to the claim or additional claim.”

[61]The effect of these rules is to enable the English court to exercise jurisdiction over a foreign defendant if it is just to do so because he is a necessary or proper party to litigation which is already before the court. Like the rules upon joinder they are designed to enable the court to resolve connected issues all at the same time, and to avoid multiplicity of proceedings, provided that it is just to do so. There is no absolute right for a party to bring in a foreign defendant; he must persuade the court to exercise its discretion in his favour.

[62]For the reasons explained by Lord Goff in The Spiliada

[1987] AC 460

, 481e, it is no longer particularly helpful to rehearse Lord Diplock’s use of the adjective “exorbitant” (in Amin Rasheed v Kuwait Insurance

[1984] AC 50

, 65) to describe the exercise of such powers, for the expression “carries unfortunate overtones”. What it certainly is necessary to remember is that(1) the burden of justifying service abroad lies on the party who wishes to effect it,

(2) if he is relying on the Rules he must bring himself within one of the gateways there provided, and

(3) even when he has done so, he must persuade the court that it is “clearly” an appropriate case for jurisdiction to be exercised. In deciding that question, the English court must remember that it is taking an unusual step in extending its powers outside English territory; that is why it must be shown than England is “clearly” the appropriate forum in the interests of justice. As Lord Goff explained at 480-481, once a gateway is established, and remembering the different incidence of the burden of proof, the question is at bottom much the same as where a defendant who has been properly served seeks a stay on grounds that a foreign court represents the appropriate forum (“forum conveniens”): that is to say it is to identify the forum in which the case should be tried in the interests of justice.

[63]It follows that where joinder of a foreign party to an existing cause is in question, the court must address both the test of joinder and also the test of service outside the jurisdiction. As has been seen, they are closely related.

Application

[64]The core argument advanced by Mr Howard QC for the proposed “Jeeves” respondents is that the test for service outside the jurisdiction must be applied irrespective of the fact that there are already family proceedings in existence. The wife’s claim, so far as it concerns the Jeeves respondents, is, he says, a straightforward property claim. It would ordinarily be tried in the Chancery Division. It is not “family proceedings”. And it is not a claim which, considered in isolation from the existing ancillary relief proceedings, would pass any of the gateways for service abroad. It is impermissible, says Mr Howard, to mix up existing family proceedings and an independent Chancery claim, in order to circumvent the restrictions which the gateways create upon the reach of an English court towards a foreign defendant. Put in another way, he says that the Jeeves respondents are entitled to the protection from extra-territorial over-reach of the English courts which they would have if there were no existing family proceedings.

[65]That argument relegates RSC Order 11(1)(c), and its equivalent CPR PD 6B 3.13(3), to ciphers. The whole purpose of those rules is to recognise that it may be a justification for joinder of a foreign party that there exists between him and one of the parties to existing English litigation a question or issue which the court ought to try along with the existing issues between the existing parties. In the present case there are existing family proceedings. The wife seeks to join the Jeeves respondents to them. The Rules permit the court, if satisfied that it is in the interests of justice, to do so.

[66]It is certainly true that the law to be applied to the issue between the wife and the Jeeves respondents differs importantly from the law to be applied between husband and wife. On the ancillary relief claim, as between wife and husband, the court is required to perform an essentially inquisitorial and then discretionary exercise, pursuant to sections 23-26 Matrimonial Causes Act 1973. When determining the issue between the Jeeves respondents and the wife as to who owns what and what if any control the husband retains over the assets in question, the court is not performing a discretionary exercise but is determining issues of property law and associated fact. It is salutary for family practitioners to keep the distinction clearly in mind. This is what Mr Mostyn QC (as he then was) was saying in TL v ML

[2005] EWHC 2860 (Fam)

;

[2006] 1 FLR 1263

at paragraphs 33 to 36, and what Munby J (as he then was) made clear in A v A

[2007] EWHC 99 (Fam)

; [2007] 2 FL:R 467 at paragraphs 21 to 24. It is also why Charles J gave careful directions in the present case for the issues between the wife and the Jeeves respondents to be pleaded out properly. They will have to be determined according to ordinary principles of property law in exactly the same way as they would be determined if they arose in free-standing Chancery proceedings. But to say that is not at all the same thing as to say that they must be separated from the family proceedings to which they are directly critical. The latter proposition would tend towards a reversion to the forms of action and to the days before the court unification accomplished by the Judicature Act 1875. If the interests of justice are served by it, the same judge can and should determine both of them, and the rules of court are designed to enable him to do so.

[67]That conclusion is entirely consistent with the view taken by Wilson J at first instance in T v T (joinder of third parties)

[1996] 2 FLR 357

at 365G, although there was also in that case the additional ground for joinder that it might be necessary to vary a post-nuptial settlement, to which application the trustees were necessary parties. It is also consistent with the approach of Munby J at first instance in KSO v MJO & JMO

[2008] EWHC 3031 (Fam)

;

[2009] 1 FLR 1036

at paragraphs 47 and 48, albeit in that case joinder was not pursued on the facts.

[68]I should perhaps add that the joinder and service could also be justified under RSC O 11(1)(b) which permits service out of the jurisdiction on a defendant where there is a claim for an injunction against doing something within the jurisdiction (c.f. CPR PD 6B 3.1(2)). Some £3m of the disputed assets in this case are said to be in English real property. That may not be a large part of the alleged total, but the wife clearly has a prima facie case to an injunction restraining disposal of them pending the resolution of her claim.

[69]It follows that I can see no error of principle in the decision of Hedley J. I would disagree with him only to the extent that he suggested at paragraph 20 that if the issue had to be determined only under the CPR, no joinder would have been justified. As has been seen, joinder of a third party (including a foreign party) to existing proceedings may be justified under PD 6B 3.1(3), where the CPR apply, as they do not here: see also the notes in Civil Procedure 2010 at 6.37.28 & 29. Of course, whether England or the foreign party’s home was the forum conveniens would depend on the facts of each case, and a relevant consideration would be the nature of the existing English proceedings.

[70]On the exercise of the judge’s discretion as to service outside the jurisdiction and as to forum conveniens this court should not interfere unless he was plainly wrong. But in my view he was plainly right. The only order which the court can make in due course is an order against the husband. The Jeeves respondents cannot be ordered under the Matrimonial Causes Act to transfer assets to the wife. But in order to determine what discretionary order for ancillary relief ought to be made against the husband, it is essential to know what assets he possesses. There is no dispute between the husband and the Jeeves respondents such as would generate litigation between them; it is the wife’s assertion that the husband cannot possibly have given away several million pounds worth of assets which generates the lis. The property issue could no doubt be decided either in Liechtenstein or in England, and if there were no matrimonial proceedings the former would probably be the proper forum. But of the two courts, only the English one can decide the ancillary relief issue, and it is plain that the interests of justice will be served by the issues being before the same court at the same time. I agree that the court should enquire whether any order it makes will be futile for want of enforceability, but that is not this case. Any order made will be enforceable in personam against the husband and may be enforceable against the Jeeves respondents in relation to assets situated in England. Moreover, it may be enforceable by way of recognition in one or more of the several countries in which the multiple Jeeves companies have their homes. I also agree that any English court should pause and pause again before exercising extra-territorial jurisdiction over a foreign party. But where there is, as here, a clear prima facie case that the foreign party is (collectively) an asset manager complicit with a husband whose financial affairs are necessarily before a court tasked with an inquisitorial function, the case for doing so is a clear one.

Postscript; the Family Procedure Rules 2010

[71]It should be recorded that with effect from 6 April 2011 the rules position will change with the introduction of the new Family Procedure Rules 2010 in place of the existing Family Proceedings Rules 1991. The 2010 rules remove the default application to family proceedings of the RSC. They are plainly modelled generally on the CPR, and include a re-statement (in slightly different terms) of the overriding objective, but the CPR continue not to apply directly to family proceedings. After 6 April 2011, the provisions of RSC O 11 and O 15 r 6 will therefore not be applicable to a case such as the present, and nor will CPR 19.2 or 6.36 and its associated Practice Direction. It appears that the new 2010 Rules contemplate that the joinder of parties be accomplished according to the broad discretionary case management powers contained in the overriding objective, viz: 1.4(2) (b)(ii) which makes clear that that objective includes the duty to decide an early stage who should be a party to the proceedings; see also 4.1(3)(o) and Part 18. Since the 2010 rules say nothing about the principles on which joinder of third parties (onshore or offshore) should be exercised, it may be that courts will have recourse by analogy to the principles contained in CPR 19.2 and 6.36 with its Practice Direction 6B. The final resolution of that issue must however await a decision on the point.