Deemster Corlett speaks at the BCR Law Autumn Family Law Conference in Jersey

News Publication Date: 19 October 2017



Having heard much French and Latin this morning I shall greet you in Manx gaelic: “Fastyr mie”.

I hope this will prove a suitable aperitif for your lunch.

When I was asked to give a talk on the Manx perspective on “protecting assets from divorce”, two thoughts immediately sprung to mind.

Firstly, will my audience actually know where the Isle of Man is?

Secondly, what can any judge usefully say about “protecting” assets on divorce?

Well in relation to the first issue, I hope I can at least assume that this learned audience know where the Isle of Man is. Surprisingly many who live south of Watford seem to have only the foggiest idea. This may be attributed to its disappearance from maps of the British Isles and the failure of all national television weather forecasts, with the honourable exception of Liam Dutton on Channel 4 news, to even acknowledge our existence.

It is of course geographically right in the centre of the British Isles, the nearest country being in fact Scotland.

As to the second issue, the overriding objective for judges is of course to obtain the fullest possible disclosure of assets and the desire to protect assets from the operation of the court’s wide discretionary powers is not one which the court shares. The court wishes to be able to exercise its powers or at least consider whether to exercise those powers over all assets which are arguably matrimonial. The days when Manx lawyers were involved in the morally dubious business of creating complex and meaningless trust and company structures to protect assets from lawful creditors or indeed the foreign taxman have so far as I am aware certainly long gone. No longer are we a “tax haven”. Mutual legal assistance is the name of the game.

A Little about the Isle of Man

The Isle of Man is a Crown Dependency in the centre of the British Isles. It is self-governing in all material respects with a separate legal system. It has a population of around 85,000; and measures around 33 miles x 12 miles. Its economy is based on financial services, manufacturing, internet gaming, and information technology.

It is only within the EU for the purposes of the free movement of goods and certain agricultural purposes. To that extent it is very similar to the Channel Islands. One might say “Brexit” has already happened.


Family practitioners may need to take advice on Manx law and/or take action in Manx Courts commonly when matrimonial assets are held or suspected to be held through a Manx company or trust. Issues of disclosure and enforcement arise.

This talk will concentrate primarily on the tools which the Manx courts have available to ensure that a just result is achieved. The cases and legislation to which I will refer are listed in your bundle (see the annex to this talk).

Comments from the English Judiciary

From our keynote speaker, Sir Paul Coleridge J in J v V (Disclosure: Offshore Corporations) (2004) 1 FLR 1042:

“Sophisticated offshore structures” neither impress, intimidate or fool anyone.”

More recently,

Moor J in Thakkar v Thakkar [2017] 2 FLR 399, at paragraph 14:

“Trust structures, particularly offshore foundations, bearer shares and the like, raise notoriously difficult issues for the Family Court, both as to the determination of financial remedy applications and, subsequently and perhaps equally importantly, as to the enforcement of orders that are made.”

A different emphasis – but both are true.

An Overview of the Legal System

It is worth emphasizing that although the Isle of Man has a rich Celtic and Norse history, in recent times it has become in legal terms rather closer to England than perhaps are the Channel Islands. Manx common law is, so far as family law is concerned, identical to English common law. Judgments of the English High Court and particularly of the Court of Appeal, Supreme Court and the Judicial Committee of the Privy Council (JCPC) are highly persuasive, although not strictly binding. Such a decision could only be binding if it were a JCPC decision from a Manx Court.

Our substantive law is generally very similar to England – our Matrimonial Proceedings Act 2003 is closely modelled on English legislation, but has not been updated. For example our section 32 of the Act is the equivalent of section 25 of the Matrimonial Causes Act 1973.

As to the law on assets acquired prior to marriage, and inheritances, English case law will be followed. Procedures are similar but by no means identical. We have somewhat outdated Matrimonial Rules from 2004. Our High Court Rules are based on the English Civil Procedure Rules and have not been updated since 2009. I should mention that we are somewhat ahead of the times in enabling civil partnerships for heterosexual couples.

Practical Issues

Advice can be readily obtained from Manx advocates (we have a fused legal profession) who specialise in family law. I am pleased to see three such persons in our audience today. Counsel (English barristers) can be specially licensed to appear (and conduct the case in court) in a particular case where local expertise is not available or where conflicts of interest or the length of proceedings prevent local representation. Licensing is by application to the First Deemster with a review to the Judge of Appeal (on paper).

In general, it seems to me that there has been a reduction in the number of counsel licensed over the last 5 years – this reflects the growing expertise and size of the Manx Bar. See recent decisions reported in the Manx Law Reports (MLRs) or on, in particular Carter v Old Mutual 2015 MLR 135, a decision on review of the Judge of Appeal reversing the decision of Deemster Doyle not to grant advocates’ licences. This sets out the detailed criteria which must be fulfilled.


The rules relating to champerty and maintenance still apply (so far as I am aware). Legal aid still exists. Costs generally follow the event. The loser pays. There is no principle of no order as to costs in financial cases.

Judiciary – private family law (including finance) cases are dealt with by myself and my exceptionally hard-working colleague the High Bailiff. We are generalists, not specialists. Although I do not keep a detailed record I would say that I spend only 40% of my time on family work. Panel Deemsters (local practitioners or English practitioners) may hear some cases in circumstances where workload/conflict factors are in play. Appeal is to the Appeal Division otherwise known as the Staff of Government Division – which normally consists of two judges (Judge of Appeal and another Deemster) and final appeal, with leave, is to the JCPC.

Agreements – post-nuptial, pre-nuptial – English case law (Radmacher etc) will be followed. Pre-Nups – these have not been the subject of judicial decision but are frequently used. The Isle of Man has played an important role historically – see the MacLeod litigation which culminated in the Privy Council decision in December 2008 which was actually a case about the validity and effect of a post-nuptial settlement or agreement. Post-nuptial settlements or agreements are capable of variation under the court’s statutory powers, unlike pre-nuptial agreements. The JCPC held that post-nuptial agreements providing for the consequence of a future separation were not contrary to public policy. The post-nuptial agreement was valid and enforceable but subject to the court’s powers of variation.

“Manx Common Law” – Some excitement has been generated in certain quarters by the growth in jurisprudence and reported cases which suggest that the common law of the IOM is diverging from that of England and Wales and that the Deemsters are fashioning a new form of “Manx common law”. Dampen your fevered brows – this is certainly not the case in the field of family law. There is no reason to diverge from the common law of England, and much to commend following it. We have similar legislation – and keeping the two very much in line is a matter of common sense. It enables certainty, reliance on precedents, and reduces litigation and costs. There have been, rare, occasions when Manx courts have in other areas been prepared to fashion new remedies or to follow judgments of Commonwealth Courts, where these decisions have been felt to be more attuned to local circumstances – most recently seen in the Appeal Division judgment in Lombard Bank v Spirit of Montpelier [2015] MLR 250 where the court (of which I was a member) held that there was power under Manx common law, in the absence of any legislation, to rescind a compulsory winding-up order. We preferred a New Zealand decision to those of the Chancery Division of the English High Court. The court was driven to this conclusion by the failure of Tynwald to take action to modernise our insolvency law. For those interested in reading it, there is a statement of the current state of what may be called the inherent jurisdiction at Manx common law at paragraphs 38 to 67 of the Appeal Division’s judgment in Spirit of Montpelier. The failure to update our matrimonial legislation may conceivably give rise to similar arguments in matrimonial finance cases, but this can I think be regarded as unlikely.

Publicity – Clients may be anxious about publicity. The Manx law on this is untested. Rules of Court provide that financial claims are held “in Chambers”. Is there a right to exclude the public and/or the press? Anonymisation is a particular issue in small jurisdictions. We do our best to produce anonymised judgments on interesting points of law but it can present overwhelming difficulties in trying to give a coherent summary of the important factual background without which the legal principles set out can be difficult to understand.


Information about assets held through Isle of Man trusts and companies – There is a fundamental need for full and frank disclosure. Adverse inferences and costs penalties will result from a failure to conform to this basic principle.

Trust Assets

The limits of disclosure of trust assets was tested and delineated in another Manx case – Rosewood v Schmidt, JCPC, 2001 – 03 MLR 511. The case concerned the issue as to whether the court had jurisdiction to order the disclosure of trust documents to the object of a discretionary power. The JCPC gave guidance on the factors to be taken into account and remitted the matter back to the Manx court for further consideration.


Evidence for use in existing proceedings (perhaps in England or elsewhere) can be obtained via a letter of request and the procedures set out in the Evidence (Proceedings in other Jurisdictions) Act 1975 (an Act of Parliament), as applied to the IOM. Any application must avoid the suggestion of a “fishing expedition”. A trustee may for example be summoned to produce documents and be cross-examined about the trust.

It is likely that Isle of Man courts would follow the Jersey authorities, such as Re H [2006] JLR 280, which suggest that the provision of information by an offshore trustee to an English court seized of an ancillary relief application is desirable, since any decision made by that court should be based upon the true financial position of the parties.

Seeking Directions

question may also arise as to what effect a judgment of the English court purporting to vary a Manx trust or declare it invalid or ordering distribution from the trust fund might have on Manx trustees.

In those circumstances it would clearly be desirable for the trustees to apply to the Manx High Court for directions, under section 61 of the Trustee Act 1961 and/or the court’s inherent jurisdiction. This is an important part of the court’s supervisory jurisdiction over trusts.

Such proceedings may be held in private and detailed guidance as to the circumstances in which this might occur was given in Re Delphi Trust Ltd [2014] MLR 51. This held that each application for the court to sit in private had to be considered on its own facts – in that case it was decided that the proceedings would be held in public, in open court, but there was to be no reference to the identity of the settlor, the name of the trust, the beneficiary, the size of the fund or the amounts of the proposed distributions. There was thus a heavily redacted judgment. The judgment drew on case law in particular from Jersey.

The court will naturally wish to consider whether the proposal to comply with the foreign judgment is (1) a proper use of the powers of the trustees, (2) whether it is consistent with the concept of judicial comity (3) specifically whether it is within the powers set out in the trust deed and (4) importantly whether the trustees have submitted to the jurisdiction of the English court. This latter issue is one of course upon which the trustees may seek specific guidance from the court, since the consequence of submission may make it a great deal easier to effect enforcement.


The well-known case of Prest v Petrodel Resources Ltd [2013] UKSC 34 has a very strong Manx flavour in that Petrodel Resources Ltd was a Manx company (I believe it was my order which wound it up) and as is equally well known, the Supreme Court held that the various companies which owned various properties held them on resulting trust for the husband and thus the assets of those companies were available to satisfy the orders made against the husband, ie they were properties to which the husband was beneficially entitled. The properties were in those circumstances held by the companies as bare trustees for the husband. The Manx courts, like those in England, will not be bamboozled by the use by husbands of “shams, artificial devices and similar contrivances”, to use the words of Rimer LJ in the Court of Appeal in Prest.


Enforcement – Assuming an order has been made in the home jurisdiction (typically in the London High Court) and having obtained information as to the whereabouts and the disclosure of the nature of matrimonial assets, what enforcement powers are available in the Manx courts to make good the claim?

Freezing Orders – Mareva jurisdiction and section 56B of the High Court Act 1991. These enable the Manx court to act in aid of English proceedings by providing that the High Court shall have power to grant interim relief where proceedings have been or are to be commenced outside IOM. There is no requirement for a cause of action in Manx law. Also specifically sections 88 – 89 of the Matrimonial Proceedings Act 2003 may be of relevance – they deal with the prevention and avoidance of dissipation of assets in circumstances where there is or may be an application for financial relief following a foreign divorce.

Ancillary Orders

- Norwich Pharmacal (disclosure against innocent parties mixed up in wrongdoing)
- Bankers Trust v Shapira (tracing funds – what has happened to them?)
- Chabra (TSB Private Bank v Chabra) – freezing orders against non-cause of action defendant where there is credible evidence that assets which appear to belong to a third party may in fact be the husband’s and therefore available to satisfy the judgment against him.
- Disclosure under the 2009 High Court Rules – see Rule 7.16(1)(g) which provides that court may grant a disclosure order about property or assets which are or may be the subject of a freezing order.

Enforcement of lump sum orders is via the Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968 whereby the Isle of Man High Court can order the registration in the Isle of Man of monetary judgments granted by the higher courts of United Kingdom, Guernsey, Jersey, Surinam, Israel, Italy and the Netherlands. The original court must of course have had jurisdiction over the parties. Once registered the judgment can be executed in the same manner as a domestic, Manx judgment. The powers of a Coroner (not to be confused with the Coroner of Inquests) are extensive and he can for example sell assets, seize bank accounts and examine debtors on oath.

Getting at Assets

If an asset (eg a super yacht, jet aircraft) is held through an Isle of Man company the court can make a charging order over the shares which can lead to their sale and/or the appointment of an equitable receiver of those shares who can direct the sale of the underlying asset. This may prove to be particularly useful where the super yacht etc is in Ibiza or some other far flung location.

Enforcement of periodical payments orders (maintenance) is via the 1995 Maintenance Orders (Reciprocal Enforcement) Act.

Further Trust Issues

Enforcement may involve an attempt to declare the Manx trust a sham or to vary the terms of a trust, essentially as a means of enforcement to enable payment to be made. In D v M (2011) MLR 462, the question before me was whether a company was the trustee of a settlement or settlements which were post-nuptial in character and thus capable of being varied in order to fund an award in favour of the wife. Heavy reliance was placed on English precedents including many of those referred to earlier today by Christopher Pocock QC.



All is not rosy however, because there is a general problem, as per the Goyal case, [2016] EWHC 2758 (Fam), with enforcement against a foreign pension of a domestic pension sharing order.

Reciprocal Enforcement within the British Isles

You might think that enforcement of Manx ancillary relief orders within the British Isles, and vice versa, ought to be straightforward, but there is a continuing failure to bring into force Part 6 of the Matrimonial Proceedings Act 2003 (enabling reciprocal enforcement of financial orders generally – “of any description” - including e.g. a property adjustment order) which therefore makes it impossible to enforce a pension sharing order made in England against pension assets held in the Isle of Man (eg held in one of our many offshore life insurance/pension companies), and vice versa.

Finally, I would add that we do have a similar regime of registration of the beneficial ownership of companies to that of Guernsey, about which we heard earlier today.


I hope this overview of matters from a Manx Deemster’s perspective is of assistance and that some appreciation may be gained of the approach of the Manx Courts and the contribution which this small, but perfectly formed, Island in the centre of the British Isles has made and can continue to make to this important area of the law.

Deemster Corlett
Second Deemster
October 2017

Case References (MLR = Manx Law Reports) (see also

 J v V (Disclosure: Offshore Corporations) [2004] 1 FLR 1042
 Thakkar v Thakkar [2017] 2 FLR 399
 Carter v Old Mutual [2015] MLR 135
 MacLeod v MacLeod [2010] 1 AC 298
 Lombard Bank v Spirit of Montpelier [2015] MLR 250
 Rosewood v Schmidt [2001-03] MLR 511
 Re H [2006] JLR 280
 Re Delphi Trust Ltd [2014] MLR 51
 Prest v Petrodel Resources Ltd [2013] UK SC 34
 Norwich Pharmacal v Customs and Excise [1974] AC 133
 Bankers Trust v Shapira [1980] 1 WLR 1274
 TSB Private Bank v Chabra [1992] 1 WLR 231
 D v M [2011] MLR 462
 Goyal v Goyal [2016] EWHC 2758 (Fam)

Manx Legislation

 Matrimonial Proceedings Act 2003
 Rules of the High Court (Matrimonial Proceedings) 2004
 Rules of the High Court 2009, Rule 7.16(1)(g)
 Evidence (Proceedings in Other Jurisdictions) Act 1975 (as applied)
 Section 56B High Court Act 1991
 Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968
 Maintenance Orders (Reciprocal Enforcement) Act 1995

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