JUDGE PAUL BAKER Q.C.
23 May. read the following judgment. In this action the plaintiff, G.W.,
looks to compel his son, the defendant, L W., to transfer to him an
apartment in Antibes in the south of France, the title to which is currently
in the son's name. The father contends that the apartment was acquired
as a holiday home for himself and his wife in 1971 and has been regularly
used as such ever since. In addition to paying the original price and other
costs of acquisition, the plaintiff has paid and continues to pay for all the
furnishings and outgoings. Hence, he says, his son holds the apartment
on an express or resulting trust for him.
To this claim the defendant has retaliated by taking out a summons
for an order that the action be summarily dismissed on either of two
grounds: (1) the court has jurisdiction to entertain the proceedings; (2)
the statement of claim discloses no cause of action.
The first ground raises an issue of some general importance. It is said
that under the law of the European Community the French courts have
exclusive jurisdiction in this case. The other ground is more familiar, being
brought under R.S.C., Ord. 18, r. 19(1)(a). It is said that the allegations in
the statement of claim do not displace the presumption of advancement.
For both grounds I take the facts from, and only from, the amended
statement of claim, accepting them as true. It alleges that:
"(1) On or about July 1971 the plaintiff reached an agreement subject to
contract ... with Mrs. M. A.('the vendor') for the purchase by the plaintiff
from the vendor of apartment" and the description of it is set out "for a
price of French francs 550,000."
It goes on to say that the agreement to purchase included various items
of furniture, the particulars of which are set out and the additional price
for them. Then it sets out the evidence of the purchase agreement:
"(2) At the time of the purchase agreement the plaintiff was the owner of
an apartment ... in Antibes which the plaintiff proposed to sell but which
was given by the plaintiff to M. on 13 April 1972.
(3) Until the disposal of the apartment referred to in paragraph 2 above
the plaintiff initially resolved to purchase the property through N. Ltd. (an
English private company controlled by the plaintiff) and a request was
made by the plaintiff's bankers, Barclays Bank ... Kingston ... to its chief
foreign branch to apply for permission from the Bank of England pursuant
to the Exchange Control Act 1947 to purchase the property together with
associated furniture, legal and agents' costs for a total of FF. 600,000.
(4) In about the second week of August 1971 the plaintiff resolved that
the
property should be purchased by an individual rather than a company as
the property was intended for private use and that the application to the
Bank of England should be made on his behalf in the name of a member
of the plaintiff's family. Accordingly it was agreed between the plaintiff
and his son (the defendant) that the application would be made to the
Bank of England for permission to purchase the property in the name of
the defendant and that the property would be purchased in the name of
the defendant. Such application was made on or around 11 August 1971
to the Bank of England.
(5) The purpose of the purchase of the property was to provide a
holiday home in France for the plaintiff and his wife in succession to the
apartment referred to in paragraph 2 above. The entire purchase price
for the property together with the cost of all furniture, legal and agents'
fees and all outgoings in respect of the property were to be borne by the
plaintiff.
(6) The purchase of the property was completed on 12 October 1971. On
or about 7 October 1971 the plaintiff authorised Barclays Bank ... to debit
his account ... with the sterling equivalent of 600,000 French francs and
transfer that sum to the defendant's account at [the same branch]. The
sums were then telegraphed to an account in the name of the defendant
at Barclays Bank S.A., Antibes branch, in order to enable the completion
of the property to take place.
(7) Subsequent to 12 October 1971 the plaintiff acquired additional
furnishings ... which have approximate value of £100,000, and the
plaintiff has borne all outgoings in respect of the property. The property
has been regularly used by the plaintiff and his wife as a holiday home
from October 1971 onwards. The cost borne by the plaintiff of maintaining
the property over the last four years has been" and the details are set
out."
The conclusion is as follows:
"(8) In the premises there was an express agreement between the
plaintiff and the defendant and/or alternatively there is to be inferred a
common intention of the plaintiff and the defendant that the defendant
should hold the property upon trust for the plaintiff. Further, from the
moment of its transmission to the defendant's account on or about 7
October 1971, the defendant held the sum of 600,000 French francs on
express or alternatively resulting trust for the plaintiff and thereafter used
the said sum to acquire the property as trust property subject to the said
trust.
(9) Further and/or alternatively the plaintiff did not intend to confer any
gift upon the defendant and in the premises the defendant holds the
property as resulting trustee for the plaintiff."
The statement of claim then alleges:
"(10) The defendant has despite request failed ... to transfer the property
to the plaintiff.
(11) The defendant has at all material times been domiciled and ordinarily
resident in England."
The plaintiff then claims:
"(i) A declaration that the defendant holds the property and all its
contents as express and/or resulting trustee on behalf of the plaintiff
beneficially.
(ii) Alternatively a declaration that the plaintiff is entitled to trace against
the property in respect of the 600,000 French francs applied by the
defendant in its purchase.
(iii) An order that the defendant do execute such deeds and documents
as shall be required to vest the legal ownership of the property in the
plaintiff."
Then, alternatively, the plaintiff claimed an order for the execution of the
trusts and for accounts and inquiries.
For the first ground for dismissing this action in limine the defendant
relies on article 16(1)of the Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters 1968: see
Schedule 1 to the Civil Jurisdiction and Judgments Act 1982. Article 16 is
as follows:
"The following courts shall have exclusive jurisdiction, regardless of
domicile:
(1) in proceedings which have as their object rights in rem in, or
tenancies of, immovable property, the courts of the contracting state in
which the property is situated."
The 1968 Convention was followed by the Protocol of 3 June 1971 on
the interpretation of the Convention, and by the Accession Convention
1978 which was occasioned by the accession to the 1968 Convention of
additional member states to the European Economic Community, including
the United Kingdom. It accordingly revised the 1968 Convention so as to
embrace the enlarged Community. The purpose, or one of the purposes of
the 1968 Convention is to provide uniform rules of jurisdiction throughout
the Community, which rules, to be effective, need to become part of the
national law of each member state. In the case of the United Kingdom
that was achieved by the Civil Jurisdiction and Judgments Act 1982 where
the Conventions are defined as the 1968 Convention, the 1971 Protocol
and the Accession Convention. Section 2(1) of the Act provides that the
Conventions are to have the force of law in the United Kingdom and
judicial notice is to be taken of them. Then, on the interpretation of the
Conventions, section 3 provides:
"(1) Any question as to the meaning or effect of any provision of the
Conventions shall, if not referred to the European Court in accordance
with the 1971 Protocol, be determined in accordance with the principles
laid down by and any relevant decision of the European Court.
(2) Judicial notice shall be taken of any decision of, or expression of
opinion by, the European Court on any such question.
(3) Without prejudice to the generality of subsection (1), the following
reports (which are reproduced in the Official Journal of the
Communities), namely
(a) the reports by Mr. P. Jenard on the 1968 Convention and the 1971
Protocol; and
(b) the report by Professor Peter Schlosser on the Accession Convention,
may be considered in ascertaining the meaning or effect of any provision
of the Conventions and shall be given such weight as is appropriate in the
circumstances."
The plaintiff's object in bringing these proceedings is to become the owner
of the apartment in Antibes in place of the defendant, his son.
Hence the defendant's submission is simplicity itself. The proceedings
have as their object the acquisition of rights in rem, i.e. ownership, in
immovable property, i.e. the apartment, situated in France, one of the
contracting states, and thus its courts have exclusive jurisdiction. What
has to be determined, so it is said, is the ownership of the flat, and
whether that is achieved procedurally by a declaration of right against
the world or an order against the defendant to transfer ownership is
immaterial.
Article 16(1) however, calls for much more detailed examination and
analysis for two main reasons, one practical and the other doctrinal. The
conferment of exclusive jurisdiction can lead to great inconvenience for
the parties. Hence there are sound practical reasons for limiting it as far
as possible. The present position taken by the European Court of Justice is
summarised in the
opinion of Mr. Advocate General Sir Gordon Slynn in Roesler v. Rottwinkel
(Case 241/83) [1986] Q.B. 33, 36:
"Although it is clear that article 16 is a mandatory rule, Duijnstee v.
Goderbauer (Case 288/82) [1983] E.C.R. 3663, 3675, para. 15, the
court has already held that, since it deprives the parties of the choice
of forum which would otherwise be theirs, and may even require them
to litigate in a court which is not that of the domicile of any of them, its
provisions 'must not be given a wider interpretation than is required by
their objective:' see Sanders v. Van der Putte (Case 73/77) [1977] E.C.R.
2383, 2391, para. 18 where the court held that article 16(1) must not be
interpreted as including an agreement to rent under a usufructuary lease
a retail business carried on in immovable property rented from a third
person by the lessor."
The corollary to that is that this court must be careful to discover the
purposes of the rule and give effect to those, and only to those, purposes.
Roesler v. Rottwinkel [1986] Q.B. 33 gives guidance on that aspect also.
To set this in context it should be explained that that case involved a
dispute between two domiciled Germans. The plaintiff had let to the
defendant for three weeks a flat in a holiday villa in Italy which he owned.
The plaintiff was also taking a holiday in the villa at the same time. He
complained that the defendant had breached the terms regulating the
use of the flat and thereby spoilt the plaintiff's holiday. The plaintiff also
complained that the
defendant had damaged the furniture and left unpaid charges for gas,
electricity, water and cleaning. The questions submitted to the Court of
Justice by the Federal Court of Justice of Germany were whether article
16 of the 1968 Convention referring to tenancies, applied to short holiday
lettings, and whether the article applied to actions for damages for breach
of the lease. The court answered the first question affirmatively: the
article applied to all tenancies, even short holiday lettings. The court
further held that all claims of damages under the terms of the agreement,
for missing property and for charges for gas and so on, were within the
exclusive jurisdiction of the Italian courts, but not the plaintiff's claim for
loss of enjoyment of his own holiday and his travelling expenses.
Going back to the opinion of the Advocate General he continued, at pp.
36-37:
"In the Jenard Report on the Convention ... the explanation given for
adopting an exclusivity rule in relation to disputes regarding immovable
property is, partly, that in Germany and Italy the exclusive jurisdiction
of the courts of the situs is regarded as a matter of public policy, so
that rulings by other courts would neither be recognised nor enforced
there, and partly that the interests of the proper administration of justice
were thought to be better served by adopting such a rule. The fact that
checks and expert inquiries might have to be carried out on the spot,
entries have to be made in land registries, and special customary rules be
applicable, it was said, makes it much more
convenient for the court of the situs to be seized of the case. Tenancies
of immovable property in particular are 'usually governed by special
legislation' which should preferably be administered only by the courts
of the country where it is in force. Moreover, 'several states' provide for
exclusive jurisdiction in such proceedings. The committee, therefore,
intended article 16 to 'cover disputes between landlord and tenant over
the existence or interpretation of tenancy agreements, compensation for
damage caused by the tenant, eviction etc.,' but not claims for rent of the
property leased."
That was the Advocate General's summary of what Mr. P. Jenard said in
his report on the 1968 Convention: Official Journal 1979, No. C59/1 and
66. The Advocate General went on to disagree with Mr. Jenard in regard to
rent. He said, at p. 41:
"That leaves the claim for the supplementary charges. The argument
that they fall outside article 16 is based partly on the views of the
Jenard Report (though not the Schlosser Report) that a claim for rent
falls outside article 16(1). Whether that view is correct has not been
fully argued, and since it may one day fall for decision, it is perhaps
undesirable to express a concluded view about it. On what has been
argued in this case, I find it very difficult to accept that the Jenard Report
view is right on the present wording of article 16(1). Just as the primary
obligation of the landlord is to make available the property, the primary
obligation of the tenant is usually to pay
the rent. Most disputes as to immovable property probably concern rent.
To exclude rent disputes from article 16(1) would seem to take away
much of its content. I find it difficult to accept that consequence when
it is remembered that a primary reason for adopting article 16(1) was
that special legislation in several member states deals with the letting of
immovable property, and that one of the most important aspects of that
legislation usually concerns rents. Proceedings involving a dispute as to
the liability for rent or for unpaid rent due under an agreement seem to
me, on the arguments advanced here, essentially to have as their subject
matter a tenancy of immovable property."
The Court of Justice accepted the views of the Advocate General in its
decision and, I think, his reasoning. The court said, at pp. 58-59:
"19. The raison d'etre of the exclusive jurisdiction conferred by article
16(1) on the courts of the contracting state in which the property is
situated is the fact that tenancies are closely bound up with the law of
immovable property and with the provisions, generally of a mandatory
character, governing its use, such as legislation controlling the level of
rents and protecting the rights of tenants, including tenant farmers.
"20. Article 16(1) seeks to ensure a rational allocation of jurisdiction by
opting for a solution whereby the court having jurisdiction is determined
on the basis of its proximity to the property since that court is in a
better position to obtain first-hand knowledge of the facts relating to the
creation
of tenancies and to the performance of the terms thereof."
In light of that they accept that even short lettings are within the
exclusive jurisdiction. With regard to the second question, that is to say
the terms of the letting, the court said, at p. 59:
"26 ... it must be noted that the Convention grants exclusive jurisdiction
'in proceedings which have as their object ... tenancies of immovable
property.' In its judgment in Sanders v. Van der Putte (Case 73/77)
[1977] E.C.R. 2383, the court considered that that expression covers
disputes between landlords and tenants as to the existence or the
interpretation of leases or to compensation for damage caused by the
tenant. The court must point out that that list is not exhaustive. The
Government of the Italian Republic is right in arguing that disputes
concerning the payment of rent fall under that exclusive jurisdiction. It
would in fact be contrary to one of the aims of the provision in question,
namely the correct application of national legislation on tenancies, to
exclude from that exclusive jurisdiction disputes which are, in some
member states at least, governed by special legislation, such as the
Italian 'fair rent' legislation."
From this one can deduce that there is exclusive jurisdiction for all
disputes as to the existence of the tenancy or which arise from breaches
of its terms. It is only the court in the territory in which the property is
situated which can adequately deal with disputes arising from tenancies in
it.
In the present case it is said that the plaintiff is not seeking to enforce
rights in rem, but he is seeking to acquire them. His means of doing so
is by an action against an individual, which is not within article 16. Such
proceedings do not have rights in rem as their object. They may have as
their object no more than the acquisition of them. So runs the argument
for the plaintiff.
In order to test this I have to turn to the doctrinal issue to which I have
referred. Article 16 of the Convention is couched in the concepts of the
civil law systems of the original member states. It does not readily fit in
with the system of legal and equitable interests in property obtaining in
England and Wales and in both parts of Ireland. The reconciliation is one
of the matters addressed by the report on the Convention by Professor
Peter Schlosser (Official Journal 1979, No. C59/71) which the court may
consider. The most material part of his report for the purposes of this case
is contained in paras. 171 and 172 where he deals with the transfer of
ownership on sale in France and other places, and in the United Kingdom
respectively. Under French law, it seems, ownership as between the
parties passes to the purchaser as soon as the contract is concluded.
Professor Schlosser goes on, in para. 171:
"This means that the claim for handing over the property has as its basis
both a personal obligation and a right in rem. The system of remedies
which is available in the event of one party to a contract not complying
with its
obligations is fully in accordance with this. Accordingly, French domestic
law has treated such actions as a 'matiere mixte' and given the plaintiff
the right to choose between the jurisdiction applicable to the right in rem
and the jurisdiction applicable to the personal obligation arising from
the contract, i.e. the law of the defendant's domicile or of the place of
performance of the contract. The 1968 Convention does not deal with
this problem. It would seem that the personal aspect of such claims
predominates and article 16(1) is inapplicable."
I have some difficulty in following this because I do not know whether
the remedies available under "the jurisdiction applicable to the right in
rem" are the same as or different from those "applicable to the personal
obligation." If the former includes orders for possession and the latter
are confined to damages or to an order directing the vendor to deliver
possession, I can follow the conclusion that "the personal aspect of such
claims predominates and article 16(1) is inapplicable."
I am, of course, more familiar with the matters discussed in paragraph
172 of the report. Professor Schlosser notes that in the case of the sale of
immovable property in the United Kingdom:
"the transfer of ownership follows the conclusion of the contract of sale
and is effected by means of a separate document, the conveyance. If
necessary, the purchaser has to bring an action for all necessary acts to
be performed by the
vendor."
He then observes:
"the purchaser's rights prior to the transfer of ownership are not limited
to a personal claim against the vendor. In fact the purchaser has an
equitable interest ... in the property which, provided the contract is
protected by a notice on the Land Register, is also effective against
third parties.... It is only in one respect that a purchaser's equitable
interest does not place him in as strong a position as the French owner of
immovable property prior to ' transcription:' ... the vendor's co-operation
is still required to make the new owner's legal title fully effective. This
legal position would justify application of the exclusive jurisdiction
referred to in article 16(1) even less than the corresponding position
under French law."
The last paragraph shows that Professor Schlosser was writing from the
standpoint of one who is making a contract abroad in respect of land
in the United Kingdom, but the reasoning must apply in the converse
case. Indeed it reflects the ancient equitable jurisdiction expressed by
the maxim that equity acts in personam. One of the principal applications
of that maxim is in relation to the court's jurisdiction over property
abroad as exemplified in Penn v. Lord Baltimore (1750) 1 Ves. 444, and
in many subsequent cases. Where there is a defendant within the court's
jurisdiction, and there exists some relationship between him and the
plaintiff arising out of
contract, trust or fraud or other fiduciary bond, the court may make an
order directed to the defendant to perform his contract, carry out his
fiduciary duties or undo the effects of his fraud. Through the relationship,
the defendant's conscience is affected and bound. The sanctions
for failure to carry out the order are commitment for contempt and
sequestration of any assets of his to be found within the jurisdiction. It
is no objection that the order relates to land abroad, save only this, that
the order will not be made if the carrying of it out is illegal or impossible
according to the lex situs. In Penn v. Lord Baltimore the parties had
entered into articles of agreement as to the settlement of the boundaries
between the two American states of Pennsylvania and Maryland. A decree
of specific performance of the articles of agreement was made.
While in origin the only orders the Court of Chancery made were orders
enforceable by personal compulsion, gradually it enlarged the character
of compulsion so as to give the plaintiff satisfaction in specie. An early
step was the writ of assistance directing the sheriff to put the plaintiff in
possession of the property agreed to be sold. But that writ could not issue
in respect of land outside England, as Lord Hardwicke L.C. stated in Penn
v. Lord Baltimore, at p. 454.
Another step was introduced by the Trustee Act 1850 (13 & 14 Vict. c.
60) which conferred on the court powers to make a vesting order or to
appoint a
person to convey. The present provisions are in sections 46 to 50 of the
Trustee Act 1925. Those powers are confined to land in Her Majesty's
dominions: see section 56. I would therefore conclude that an order for
specific performance of a contract relating to the sale of land abroad
does not have as its object a right in rem in immovable property for the
purposes of article 16. In the words of Professor Schlosser, the order
does no more than specify acts to be done by the defendant so that the
transfer of ownership may become effective.
The plaintiff in the present case does not rely on any contract for sale.
He relies on a fiduciary relationship between him and the defendant
who, he says, is his trustee. That is one of the foundations of equitable
jurisdiction, and here again the main method of enforcement is an order
in personam against the defendant. He can be required to execute the
trust by transfers or rendering accounts. The relief claimed does not
include any form of vesting order, or an order directing the rectification
of some register of title, or even a declaration that the plaintiff is the
legal owner of the property. What the plaintiff claims is a declaration
that the defendant holds the property and its contents on an express or
resulting trust for him and an order to execute such deeds and documents
as shall be required to vest the legal ownership in the plaintiff. There is
an alternative claim for a declaration that the plaintiff is entitled to trace
against the property in respect of FF. 600,000 applied by
the defendant in its purchase. In the context of this case this is no more
than saying that the defendant holds the property as trustee for the
plaintiff, but in other cases where there has been an element of mixing
there might be a question. An order, say, for a charge on the property in
respect of the plaintiff's contribution might well be an action having as its
object a right in rem; but that is not a matter before me.
Finally, I can refer to Chellaram v. Chellaram [1985] Ch. 409, a decision
of Scott J. The issue was whether the court in this country had jurisdiction
to administer a foreign trust, including power to remove trustees and
appoint others. The assets consisted of or included shares in companies
registered in Bermuda. There was also an issue as to forum non
conveniens. The court held that it had jurisdiction for reasons I need not
go into here. When it came to consider the orders which could be made,
Scott J. said of the orders sought, removing the defendants as trustees
and appointing others as trustees in their place, at p. 427:
"An order in that form would not of itself, however, divest existing
trustees and vest trust property in new trustees. Consequently, such an
order would usually be accompanied by a vesting order under section 44
in the case of land or section 51 in the case of stocks and shares of the
Trustee Act 1925. It could not, in my opinion, sensibly be suggested and
Mr. Lyndon-Stanford has not suggested that a vesting order under section
51 could
divest the defendants of the trust shares in the Bermudan holding
companies or could vest those shares in new trustees. A vesting effect
could be achieved by a vesting order only in respect of stocks and shares
situated within the territorial jurisdiction of the court. Further, so long as
the trust shares remain vested in the defendant trustees their fiduciary
obligations in respect thereof must remain."
There follows a paragraph, at p. 428, which I shall not read out at length,
dealing with the in personam jurisdiction against trustees. There is
also a passage, at p. 432, which again I do not propose to read out at
length. I respectfully agree with Scott J. I have found support from those
paragraphs in my analysis of the jurisdiction.
The orders sought in the present case do not seek to disturb the title of
the defendant otherwise than by his own act. Accordingly, in my judgment
the proceedings do not have as their object rights in rem. They have
as their object the establishment of the defendant's accountability as a
trustee for the plaintiff.
The other ground for dismissing the action advanced by the defendant I
can deal with shortly. For the defendant it is contended that the transfer
of property from the father to the son gives rise to the presumption of
advancement. Only a subjective intention is pleaded. The real intention
was to avoid exchange control. The court will not countenance evidence of
that conduct so as to rebut
the presumption. Reliance was placed on Tinker v. Tinker [1970] P.
136 where a husband starting a new business caused the matrimonial
home to be purchased in his wife's name so that it would be beyond the
reach of his creditors. The Court of Appeal held that the presumption of
advancement was not rebutted. Indeed it was reinforced by the husband's
evidence, for if the wife had been a trustee, the creditors could have
claimed the house. The statement of claim in this case sets out the
applications to the Bank of England, but nowhere does it allege that
the transaction would be unlawful unless the defendant had purchased
the property for his own use and benefit. An express agreement is
pleaded that the defendant should hold the property upon trust for the
plaintiff. Furthermore the allegations in paragraph 7 of the statement of
claim regarding the subsequent use of the house provide materials from
which the court could infer that the plaintiff's intention was to retain the
apartment for himself. This does not depend in any way on any need to
avoid the provisions of the Exchange Control Act 1947. I am thus unable
to hold that the statement of claim discloses no cause of action. The final
result therefore is that I dismiss the defendant's summons.