1. LORD JUSTICE THORPE: The parties to this appeal are husband and
wife, and the appeal arises out of Trusts of Land and Appointment of
Trustees Act 1996 proceedings issued in London on, I think, 22 March
2005. The parties married in 1981 and lived in this jurisdiction, the final
matrimonial home being apparently in Essex. Seemingly during the
marriage the parties, or one of them, acquired two flats in Notting Hill.
The marriage was in difficulties in 2001 but recovered relatively briefly
before its final demise in January 2004, when the wife returned to this
jurisdiction. She is English, and I am not clear as to the nationality of
the appellant husband, but it is clear that during the marriage, either in
1986 or 1988, the marital home moved from England to France and the
Essex property was sold. There is a dispute as to where the husband is
habitually resident and domiciled. He says that he is plainly domiciled and
habitually resident in France. The wife challenges that contention.
2. What is not in dispute is the husband petitioned for divorce in France
in May 2004. The wife's response was to issue divorce proceedings in this
jurisdiction shortly thereafter, an impermissible ploy that was controlled
and frozen by the application of council regulation No. 2201 of 2003,
commonly known as Brussels 2 Revised. Although thwarted on that flank,
the wife issued proceedings in this jurisdiction which were not dependent
on the existence of a marriage between them. That was the TOLATA
proceedings by which she sought a declaration in relation to the two flats
at Notting Hill that she was an equal owner in equity. She also sought
a tracing order in relation to the proceeds of sale of the Essex property,
which had apparently been invested in a property in Switzerland, which
in turn was sold leading to re-investment in some other property in
Switzerland.
3. Not unnaturally, that issue was challenged. On 26 April, solicitors in
this jurisdiction on behalf of the husband applied to the court for an order
that the TOLATA proceedings be stayed until the French proceedings had
been concluded. The evidence in support was briefly summarised on the
following page. Having set out the history, the author continued:
"This court is therefore left with a theoretical discretion. It cannot be
right to have two courts in two countries making orders about the same
properties and between the same parties."
4. The author then referred to two authorities, to which we have not been
referred, which were said to provide that where two member states were
seized of the same cause of action between the same parties, the second
court so seized should of its own motion stay the proceedings until such
time as the first court has determined whether it has jurisdiction or not.
The author does not indicate reliance upon any of the provisions of the
instrument designed to regulate jurisdiction and enforcement between
member states in civil and commercial dispute. That is the regulation
which for many years stood as the Lugano Convention, Brussels 1, which
was subsequently replaced by Regulation 44 of 2001 ("the Regulation").
5. So on that rather shadowy basis, the case proceeded to a hearing
before the district judge. Looking back with the unfair advantage of
hindsight, I do not understand why the application of 26 April was not an
application for the dismissal of the TOLATA application on the ground that
the husband was immune from suit under the general provisions of Article
2 of the Regulation, which provides:
"Subject to this regulation, persons domiciled in a member state shall
whatever their nationality be sued in the courts of that member state."
6. Mr Scott has speculated that it must have been fear of a challenge in
the resulting trial of the appellant's domicile which dissuaded him from
reliance on Article 2. That is no more than speculation and Mr Cohen and
his junior are not able to elucidate the decision that drove the application
on 26 April, because they are relative newcomers to the case.
7. The wife's response to this challenge was an endeavour to rely upon
the terms of Article 22, an exclusive jurisdiction provision which out-
trumps the general provisions protection of article 2. The relevant part of
Article 22 reads:
"The following court shall have exclusive jurisdiction regardless of
domicile:
"1) In proceedings which have as their object rights in rem in immovable
property or tenancies of immovable property, the courts of the member
state in which the property is situated."
8. That legitimate contention failed in front of the district judge, Deputy
District Judge Morris, on 11 July 2005, but succeeded in an appeal which
came before Pauffley LJ on 3 February 2006. The husband, as I have
already recorded, then applied to this court for permission and on 23
February I made an order for an oral hearing on notice, with appeal to
follow if permission granted.
9. I pause to make a preliminary observation. This is a second appeal
caught by the terms of section 55 of the Access to Justice Act 1999. We
are prohibited from granting permission unless we are satisfied that there
is some important point of principle or practice or that there is some other
compelling reason for granting permission. In my judgment, that stringent
test is satisfied in this case as a result of the unfortunate fact that the
proper construction and application of Article 22 of the regulation has
been considered by the European Court of Justice in a reported case, and
that decision in turn twice considered by reported decisions of this court.
None of that material was cited at the hearing before the deputy district
judge, nor was it cited at the hearing of the appeal in the Family division.
It did not emerge in the appellant's notice of appeal or skeleton argument
upon which I directed the oral hearing. It emerged for the first time when
Mr Cohen came into the case and filed a supplemental skeleton argument,
drawing attention to that authority. Mr Scott, also a newcomer to the
case, filed a supplemental skeleton in response.
10. So the need for a second appeal in this case flows directly from the
flaws in previous hearings, which are themselves created by the oversight
on the part of counsel instructed to cite to the court, either the district
judge or the Family division judge, the governing authorities. That is
regrettable. The consequence has been waste of resources (judicial
resources, court resources and practitioner resources) and there has
inevitably been a consequential waste in costs and, equally, additional and
unnecessary stress for the litigants. All that is ample justification for our
granting permission and inevitably we have treated the hearing today as
the hearing of appeal.
11. Now Mr Cohen's task has been a comparatively simple one. He has
had only to cite the decision of the European Court of Justice in Webb
v Webb, (which is conveniently reported at [1994] QB 696) in order to
make good his submission that the London proceedings do not fall within
the exclusive jurisdiction provision of Article 22.
12. The reason they do not fall within that provision flows from the
reasoning of the European court between paragraphs 12 and 18 of their
judgment, commencing at page 716(D) and concluding at 717 between
(B) and (C):
"12. The son and the Commission, who consider that the test for applying
Article 16(1) is the plaintiff's ultimate purpose and that by his action the
father is ultimately seeking to secure ownership of the flat, contend that
the main proceedings are covered by Article 16(1).
"13. That argument cannot be accepted.
"14. Article 16 confers exclusive jurisdiction in the matter of rights in rem
in immovable property on the courts of the contracting state in which
the property is situated. In the light of the court's judgment in Reichert
v Dresdner Bank A.G. (Case C-115/88 [1990] ECR I-27, where the court
had to rule on the question whether the exclusive jurisdiction prescribed
by that Article applied in respect of an action by a creditor to have a
disposition of immovable property declared ineffective as against him on
the ground that it was made in fraud of his rights by his debtor, it follows
that it is not sufficient, for Article 16(1) to apply, that a right in rem in
immovable property be involved in the action or that the action have a
link with immovable property: the action must be based on a right in
rem and not on a right in personam, save in the case of the exception
concerning tenancies of immovable property.
"15. The aim of the proceedings before the national court is to obtain
a declaration that the son holds the flat for the exclusive benefit of
the father and that in that capacity he is under a duty to execute the
documents necessary to convey ownership of the flat to the father. The
father does not claim that he already enjoys rights directly relating to the
property which are enforceable against the whole world, but seeks only to
assert rights as against the son. Consequently, his action is not an action
in rem within the meaning of Article 16(1) of the Convention but an action
in personam.
"16. Nor are the considerations relating to the proper administration of
justice underlying Article 16(1) of the Convention applicable in this case.
"17. As the court has held, the conferring of exclusive jurisdiction in the
matter of rights in rem in immovable property on the courts of the state
in which the property is situated is justified because actions concerning
rights in rem in immovable property often involve disputes frequently
necessitating checks, inquiries and expert assessments which must be
carried out on the spot: see Sanders v van der Putte (Case 73/77) [1977]
ECR 2383, 2390-2391, para.13.
"18. As the father and the United Kingdom rightly point out, the
immovable nature of the property held in trust and its location are
irrelevant to the issues to be determined in the main proceedings which
would have been the same if the dispute had concerned a flat situated in
the United Kingdom or a yacht."
13. Mr Cohen naturally submits that the present case is factually on all
fours. Here, the TOLATA claim cannot conceivably be said to be an action
in rem in relation to the long since departed Essex home: in relation to
the other two properties all that is really in issue is whether the dealings
between the parties result in the creation of an equitable interest. It
matters not where the property itself is situated and, accordingly, it
matters not where the issues between the parties, the issues of fact, are
to be tried out. There is nothing in that dispute that requires any on-the-
spot investigations or enquiries.
14. Mr Scott has endeavoured to refute that formidable submission by
saying that the decision in Webb has been criticised academically. The
subsequent decision of this court in the case of Ashurst v Pollard [2001]
Chancery 595 demonstrates that the application of Article 22 is always
fact specific. He relies on the holding in the head note, which summarises
the judgment of Parker LJ. That paragraph reads:
"Dismissing the appeal that proceedings had as their object rights in
rem, for the purposes of Article 16(1) of the convention, if such rights
were their principle subject matter, but in considering whether Article
16(1) which was to be construed restrictively applied to a particular case,
it was material to have regard to the Article's underlying rationale and
consider whether the proceedings involved a factual investigation best
carried out by the courts of the state in which the property was situated
or raised questions of local law or practice. The proceedings before the
court involve no such investigation or any question of foreign law or
practice and did not assert any property right against third parties or seek
to establish, protect or perfect a property right, but rather raised personal
issues between the parties as to the beneficial interests in the villa."
I however take that passage as being strongly supportive of Mr Cohen's
submission. I remark only that the Article considered by Parker LJ, Article
16(1), emerges in the current regulation as Article 22.
15. So says Mr Cohen, since his client is not caught in the trap of Article
22, his application is entitled to judgment under Article 27 or Article 28.
Those Articles provide as follows:
"Article 27:
"1. Where proceedings involving the same cause of action and between
the same parties are brought in the courts of different Member States,
any court other than the court first seised shall of its own motion stay its
proceedings until such time as the jurisdiction of the court first seised is
established.
"2. Where the jurisdiction of the court first seised is established, any court
other than the court first seised shall decline jurisdiction in favour of that
court."
"Article 28:
"1. Where related actions are pending in the courts of different
Member States, any court other than the court first seised may stay its
proceedings.
"2. Where these actions are pending at first instance, any court other than
the court first seised may also, on the application of one of the parties,
decline jurisdiction if the court first seised has jurisdiction over the actions
in question and its law permits the consolidation thereof.
"3. For the purposes of this Article, actions are deemed to be related
where they are so closely connected that it is expedient to hear and
determine them together to avoid the risk of irreconcilable judgments
resulting from separate proceedings."
16. Mr Cohen did not shrink from submitting that the wife's application for
ancillary relief within the French divorce proceedings and the application
in this jurisdiction under TOLATA were the same cause of action and
accordingly, the court was obliged of its own motion to stay under Article
27. I agree with Mr Scott that that submission in unsustainable. Although
there is no authority that has been cited to us, I accept his submission
that it is self-evident that they are not the same causes of action. So we
are here considering related actions pending in different member states,
and accordingly have the discretion to stay the proceedings.
17. Mr Scott has mounted a valiant argument that Article 28(1) is
not engaged because of the provisions of Article 28(3), the deeming
provision, which seems to limit the Article 28(1) discretion to actions so
closely connected that expediency requires their determination to avoid
the risk of irreconcilable judgments. If that is a restriction on the Article
28(1) discretion, I am of the view that it should be narrowly construed in
circumstances such as the present.
18. In any event, it seems to me that here there is the risk of
irreconcilable judgments, given that the wife's application for financial
provision in France is fundamentally focused on the husband's ownership
of the London and Swiss properties, and given that the object of the
TOLATA application is to achieve an equitable share.
19. Mr Scott has said that since exercise of discretion was fully and
carefully conducted by Pauffley LJ, this court should not interfere. I
cannot accept that submission. Mr Cohen was right to draw attention to
what is, effectively, the definition of the wife's claim for ancillary relief
in proceedings before the Tribunal de Grande Instance de Nauterre. It
was composed by her French lawyer on 27 September 2005. Towards its
conclusion, we see the statement that the two Notting Hill flats are worth,
respectively, £395,000 and £495,000, and then that the husband is the
owner of a Swiss chalet worth €450,000. The writer continues:
"The English and Swiss matrimonial property of the husband is therefore
worth in the order of €1.7 million."
20. The prayer for relief contains, in its third paragraph, this: condemn
the husband to pay compensation in the form of capital of £800,000 net
of all expenses. That closely relates to 50% of the value of the English
and Swiss matrimonial properties.
21. Pauffley LJ is not to be criticised for having arrived at what I believe
to be the wrong conclusion in law, given that the relevant authorities were
not cited to her. Equally, I would like to observe that insofar as I differ
from her in the exercise of the discretion which arises for us, the case that
was presented to her was radically different in shape to the case that has
been presented to us.
22. Mr Wagstaffe, in what was clearly a very able skeleton argument, had
asserted that the English proceedings were plainly complementary to,
rather than competitive with, the French divorce suit. That was the basis
upon which he invited the judge to exercise her discretion. Mrs Ward,
for the husband, presented the other face of the proceedings when she
suggested that the wife's London action was little more than an attempt
to apply for ancillary relief by the back door.
23. The judge in weighing these conflicting presentations said:
"I disagree with Mrs Ward's submission suggestive that the TOLATA
application is little more than a device to secure ancillary relief in this
jurisdiction by the back door. A claim to a beneficial interest arising under
constructive trusts or to an interest in the proceeds of sale of the property
owned by the parties in Essex can only be a discrete issue complementary
to rather than in competition with the French divorce proceedings."
24. There were other factors urged by Mr Wagstaffe and responded to
by Mrs Ward which the judge went on to consider, largely accepting
Mr Wagstaffe's submissions. I do not need to detail those because I
am satisfied that the judge erred in her acceptance of Mr Wagstaffe's
submission, or characterisation, and her rejection of Mrs Ward's
characterisation, which was at the heart of the decision she had to take.
25. There are a number of general points to be made. First, I find it
hard to conceive that where a married couple are engaged in contested
ancillary relief proceedings, the application of a TOLATA claim by one
against the other could possibly be justified. As the decision of the House
of Lords in White v White makes plain, issues between a husband and
a wife are to be determined within the four corners of the Matrimonial
Causes Act and on the application of the statutory criteria there set out.
The issue of separate proceedings to establish relatively arcane questions
as to equitable entitlement between them is deprecated. I cannot see how
that general proposition can be disapplied simply because the ancillary
relief proceedings have been instituted in one member state and the
parties to the proceedings are not both attached to that jurisdiction.
In these situations spouses will always have a strong prejudice for a
determination by a judge of their own land.
26. Of course some European jurisdictions will be regarded as a happy
land for an applicant or, put the other way, a bad land for a respondent.
No doubt this wife would have preferred her financial provision to have
been determined by a London judge. No doubt that was the basis of the
issue of her competing divorce proceedings in this jurisdiction. But the
issue of TOLATA proceedings, once her petition was stopped, is to be
characterised in my judgment as plainly strategic and plainly superfluous
to the well-established French ancillary relief proceedings.
27. If other reasons were required for my firm conclusion that the
discretion must be exercised in favour of a stay, I would point to the risk
of substantial waste of costs and the equal risk of unnecessary stress to
the litigants if two sets of proceedings are litigated instead of one, and
those two sets in different jurisdictions. The proportionality between the
costs in ancillary relief proceedings and the amounts in issue are, so far
as this jurisdiction is concerned, a matter of continuing concern, certainly
to judges and probably to practitioners. It is very important to impose
judicial restriction to curtail unnecessary proceedings.
28. My last reason, if further reason be required, is that the whole force of
developing European legislation in the family law field is to impose clear
and simple rules to establish the primary jurisdiction and to ensure that
once that primary jurisdiction is established it is given the fullest support
in the discharge of its consequent responsibilities. We have recognised
the primacy of the French jurisdiction by the stay imposed upon the
divorce proceedings initiated by the wife in this jurisdiction. It would be
quite inconsistent with the objectives and underlying policy of the revised
Brussels 2 regulation were we now to say in the exercise of the discretion,
that it was perfectly in order for the wife to bring civil proceedings in this
jurisdiction which only thinly disguise their true competitive objectives.
29. So for all those reasons, I would allow this appeal and impose the
stay sought.
30. LORD JUSTICE LAWS: I agree that permission should be granted in
this case and that the appeal should be allowed for all the reasons given
by my Lord, Lord Justice Thorpe. I wish only to underline my specific
agreement with the general observations of Thorpe LJ by which he
deprecates the issue of TOLATA proceedings here, against a background
where the parties' matrimonial dispute and, especially, matters of financial
provision are being litigated elsewhere.