Crown Copyright ©
LORD JUSTICE JONATHAN PARKER:
INTRODUCTION
1. Mr David Pollard and his wife Mrs Mary Pollard jointly owned a property
in Portugal. On 26 October 1993 a bankruptcy order was made against Mr
Pollard. On 31 August 1994 Mr Christopher Ashurst, a licensed insolvency
practitioner, was appointed as Mr Pollard's trustee in bankruptcy ("the
Trustee"). On 20 September 1999 the Trustee issued an application in
the Brighton County Court in bankruptcy, joining Mr and Mrs Pollard as
respondents and seeking an order for the sale of the Portuguese property
with vacant possession, and consequential relief. On 4 October 1999
District Judge Ley made the order sought.
2. Mr and Mrs Pollard appealed against the District Judge's order, on the
ground that by virtue of Article 16(1) of the Convention on Jurisdiction
and the Enforcement of Judgments in Civil and Commercial Matters 1968
("the Convention"), which was incorporated into United Kingdom domestic
law by section 2(1) of the Civil Jurisdiction and Judgments Act 1982, the
Portuguese courts have exclusive jurisdiction to hear and determine the
Trustee's claim.
3. On 3 February 2000 Jacob J handed down judgment dismissing the
appeal (his judgment is reported at [2000] 2 All ER 772). Mr and Mrs
Pollard now appeal to this court, pursuant to permission granted by Jacob
J.
4. It is common ground that nothing turns for present purposes on the
fact that the property is in joint ownership.
THE CONVENTION
5. The only Articles of the Convention which are material for present
purposes are Articles 1 and 16.
6. Article 1 provides that the Convention applies in civil and commercial
matters, subject to a number of exceptions including:
"bankruptcy, proceedings relating to the winding up of insolvent
companies or other legal persons, judicial arrangements, compositions
and analogous proceedings."
7. Article 16 is in the following terms (so far as material):
"The following courts shall have exclusive jurisdiction, regardless of
domicile:
(1)(a) in proceedings which have as their object rights in rem in
immovable property ..... , the courts of the Contracting State in which the
property is situated;
(b) [exception in relation to certain tenancies of immovable property]
(2)......
(3) in proceedings which have as their object the validity of entries in
public registers, the courts of the Contracting State in which the register
is kept;
(4) .....
(5) ....."
THE INSOLVENCY ACT 1986 ("the Act")
8. Section 283(1)(a) of the Act provides that the bankrupt's estate for
bankruptcy purposes includes:
"all property belonging to or vested in the bankrupt at the
commencement of the bankruptcy."
9. "Property" is defined in section 436 as including:
".... money, goods, things in action, land and every description of
property wherever situated ...." (Emphasis supplied.)
10. Section 306 of the Act provides as follows (so far as material):
"(1) The bankrupt's estate shall vest in the trustee immediately upon his
appointment taking effect .....
(2) Where any property which is .... comprised in the bankrupt's
estate vests in the trustee .... it shall so vest without any conveyance,
assignment or transfer."
11. Thus, under the Act Mr Pollard's joint ownership interest in the
Portuguese property formed part of his estate for bankruptcy purposes
and vested automatically in the Trustee on his appointment, without the
need for any further formalities. However, the vesting provisions of the
Act plainly cannot effect a change in the Portuguese register of title, which
continues to record Mr and Mrs Pollard as the joint owners of the property.
THE JUDGMENT OF JACOB J.
12. Two issues were raised before Jacob J. The first issue was whether
(as the Trustee contended) the proceedings were excepted from the
application of the Convention by virtue of the inclusion of "bankruptcy"
among the exceptions in Article 1. The second and more substantial issue
was, as already indicated, whether (as Mr and Mrs Pollard contended) the
Portuguese courts have exclusive jurisdiction to hear and determine the
Trustee's claim. On this second issue it was Mr and Mrs Pollard's case that
Article 16(1) applies to the proceedings, alternatively that under domestic
law the English court has no jurisdiction to make orders relating to trust
property held abroad.
13. On the first issue, Jacob J held that the proceedings did not fall within
the "bankruptcy" exception in Article 1. He expressed his reasons as
follows (in para. 13 of his judgment):
"These are proceedings consequential upon the bankruptcy - not
proceedings about whether or not the debtor should be made bankrupt.
The question of bankruptcy has already been determined. Moreover, the
claim is not a special bankruptcy remedy - it is just a property claim."
14. In support of that conclusion, Jacob J cited passages from the
judgment of Rattee J in Re Hayward [1997] Ch 45 and of the European
Court of Justice in Gourdain v. Nadler (Case 133/78) [1979] ECR 733.
15. Jacob J accordingly held in favour of Mr and Mrs Pollard on the first
issue. The Trustee has served a respondent's notice in respect of the
Judge's conclusion on the first issue.
16. On the second issue, Jacob J concluded that the order for sale sought
by the Trustee purported to have effect against all the world, and as
such was precluded by Article 16(1). However, he went on to conclude,
relying on the decision of the European Court of Justice in Webb v. Webb
(Case C-294/92) [1994] QB 696, that the case did not turn on the form
of the relief sought; and that where an English trust exists over land held
abroad, Article 16(1) is no bar to enforcement of that trust. On that basis,
he held that Article 16(1) did not prevent the bankrupt being compelled to
complete the Trustee's title. In paragraph 18 of his judgment he said this:
"There is no doubt that English law regards the Portuguese landholding as
vested in the trustee. To the extent that the trustee's title has not been
perfected, the bankrupt is, by English law, holding it for the trustee. So
the bankrupt can be compelled to complete the trustee's title or do any
other act in relation to the land at the trustee's direction. Any such order,
provided it is in personam, is an order which the English court can make
having, as it does, jurisdiction over the bankrupt who is domiciled here."
17. Jacob J then went on to conclude that an order in personam against
Mr and Mrs Pollard directing them to sell the Portuguese property at
the best price reasonably obtainable would not be within Article 16(1).
The Judge also canvassed the possibility of an order being made against
Mr Pollard directing him to convey the property to the Trustee (by
which I take the Judge to mean an order directing Mr Pollard to effect a
transfer of the property according to Portuguese law), commenting that
if that were done the Trustee could effect his own sale in Portugal under
Portuguese law.
18. The Judge then turned to the alternative submission made on behalf
of Mr and Mrs Pollard to the effect that the court has no jurisdiction to
make orders in relation to trust property held abroad. It was submitted
that although SECTION 14 of the TRUSTS OF LAND AND APPOINTMENT
OF TRUSTEES ACT 1996 confers jurisdiction on the court to regulate
the performance by trustees of their functions, THE ACT extends only
to England and Wales (see ibid. SECTION 27(3)). The Judge accepted
that that was self-evidently so, but concluded that it was irrelevant. He
continued:
"What the Act does not say is that the court cannot act in relation to trust
property held abroad or that similar order as can be made under THE ACT
cannot be made by virtue of the court's jurisdiction over property held
under an English trust."
19. Jacob J accordingly held in favour of the Trustee on the second issue,
and dismissed Mr and Mrs Pollard's appeal.
THE ARGUMENTS ON THIS APPEAL
20. In support of the appeal, Mr Prentis of counsel (for Mr and Mrs
Pollard), in an admirably clear and succinct argument, submits that
the question whether a particular right is a right in rem or a right in
personam has to be answered by reference to European law, and that
it does not follow from the fact that English law categorises a particular
type of ownership interest as an equitable interest that such an interest
cannot give rise to rights in rem. He referred us in this connection to the
discussion about rights in rem contained in the Report by Professor Peter
Schlosser, Official Journal 1979 No C59/71, paragraphs 163 to 168, and to
the decision of the European Court of Justice in Reichert v. Dresdner Bank
(Case C-115/88) [1990] ECR I-27.
21. Mr Prentis submits that in deciding whether Article 16 applies to
these proceedings the court must look at the substance of the dispute,
rather than the form of the relief sought or of the order made. He
submits that in substance the proceedings concern the ownership of
immovable property in another Contracting State, and are accordingly
"proceedings which have as their object rights in rem in immovable
property" for the purposes of Article 16(1). In support of this submission,
Mr Prentis relies strongly on Re Hayward (above), where Rattee J held
that proceedings brought by a trustee in bankruptcy seeking a declaration
that the bankrupt's interest in foreign land formed part of his estate for
bankruptcy purposes were not within the "bankruptcy" exception and
were caught by Article 16(1).
22. Mr Prentis submits that the instant case is on all fours with Re
Hayward. He submits that the relief sought by the Trustee in the instant
case is in substance the same as that which was sought by the trustee in
Re Hayward, and that the fact that in the instant case it may be possible
to frame the relief in terms of an order in personam against Mr and Mrs
Pollard that they take certain steps, the effect of which will be to alter the
ownership of the property in question, should not disguise the fact that
what are at stake in the proceedings are rights of ownership: rights in
rem.
23. Mr Prentis seeks to distinguish the decision of the European Court of
Justice in Webb on the footing that in that case the claimant was seeking
to establish a beneficial interest under a resulting trust, whereas in the
instant case the Trustee's beneficial interest in Mr Pollard's share in the
Portuguese property is not in issue. He submits that, in contrast to Webb,
what is in issue in the instant case is the exercise of an established right
of ownership.
24. Mr Prentis does not repeat in this court the submission which he
made to Jacob J to the effect that the English court has no jurisdiction
to make orders in relation to trust property held abroad: he accepts that
such jurisdiction exists, independently of the TRUSTS OF LAND AND
APPOINTMENT OF TRUSTEES ACT 1996. He submits, however, that it is
a jurisdiction which the court will rarely exercise in practice, and that it
should not be exercised in the instant case.
25. As to the "bankruptcy" exception in Article 1 of the Brussels
Convention, Mr Prentis submits that Jacob J reached the right conclusion
for the reasons he gave. In support of this submission Mr Prentis relies
once again on Re Hayward.
26. In opposition to the appeal, Mr David Marks of counsel (for the
Trustee) submits that the proceedings do not in any way concern title to
land, and that the Judge correctly recognised that they concerned the
declaration and enforcement of the Trustee's rights as against Mr and Mrs
Pollard, albeit in respect of foreign land.
27. In support of the respondent's notice, Mr Marks submits that in any
event the proceedings fall within the "bankruptcy" exception in Article 1,
with the result that Article 16 does not apply to them. He submits that
Rattee J in Re Hayward gave too restrictive an interpretation to the word
"bankruptcy" in this context. He submits that on its true construction
the exception extends not merely to the proceedings which led to the
making of the bankruptcy order itself but to subsequent proceedings in
the bankruptcy.
CONCLUSIONS
28. I turn first to the "bankruptcy" exception, since if the proceedings are
within that exception the question whether Article 16(1) applies does not
arise.
29. In Re Hayward Rattee J concluded, as noted earlier, that proceedings
by a trustee in bankruptcy seeking a declaration as to the ownership of
foreign land did not fall within the exception. He expressed his conclusion
in the following passage from his judgment (at p.54B-D):
"So far as the reference in article 1 of the Convention to bankruptcy is
concerned, [counsel for the trustee] forcefully and attractively argued that
the claim made by the originating application is a matter of bankruptcy,
because that claim depends essentially on the bankruptcy of the late Mr
Hayward. Only by virtue of that bankruptcy does the trustee have the
claim which he seeks to assert in the proceedings. However, the nature
of the claim made by the trustee in the proceedings, in my judgment, is
not a matter of bankruptcy in the sense that any question of bankruptcy
is the principal subject matter of the proceedings. The claim made in the
proceedings is essentially a claim by the trustee to recover from a third
party .... assets said to belong to the bankrupt's estate and, therefore, to
be vested in the trustee."
30. In my judgment Rattee J applied the correct test for determining
whether proceedings fall within the "bankruptcy" exception, viz: Is
bankruptcy the principal subject matter of the proceedings? The mere
fact that the claimant happens to be a trustee in bankruptcy cannot be
sufficient, in my judgment, to bring the proceedings within the exception.
31. Applying that test to the instant case, the conclusion follows, in my
judgment, that the proceedings are not within the exception. Accordingly
the Judge was right to conclude that the Convention applies.
32. I turn, then, to the question whether the proceedings fall within
Article 16(1) as being "proceedings which have as their object rights in
rem in immovable property".
33. The concept of proceedings which have as their "object" a particular
category of right is not a concept which I find entirely easy to grasp.
Proceedings may involve a dispute as to the existence of a right; they
may seek relief by way of exercise of a right. Indeed, in one sense it
can be said that all proceedings involve legal rights of some kind. So
in answering the question whether a particular category of right is the
"object" of the proceedings for the purposes of Article 16(1) an element of
judicial interpretation of the Article is required. Fortunately, this has been
provided in a number of decisions of the European Court of Justice and in
various authoritative texts, to which I now turn.
34. In the first place, it appears clearly from the decisions of the
European Court of Justice in Gourdain v. Nadler and Reichert that the
question whether the proceedings are "proceedings which have as their
object rights in rem in immovable property" for the purposes of Article
16(1) has to be considered in the light of Community law and in a pan-
European context. Thus in Reichert the Court said this (in paragraphs 8, 9
and 11 of the judgment):
"First of all, it is evident that in order to ensure that the rights and
obligations arising out of the Convention for the Contracting States
and for individuals concerned are as equal and uniform as possible, an
independent definition must be given in Community law to the phrase
"in proceedings which have as their object rights in rem in immovable
property", as has been done by the Court, with regard to other grounds
of exclusive jurisdiction laid down in Article 16, in its judgment .... in ....
Sanders v. Van der Putte [1977] ECR 2383 - concept of "tenancies of
immovable property" - and .... in .... Duijnstee v. Goderbauer [1983] ECR
3663 - concept of "proceedings concerned with the registration or validity
of patents ....
Secondly, as the Court has already held, Article 16 must not be given a
wider interpretation than is required by its objective, since it results in
depriving the parties of the choice of forum which would otherwise be
theirs and, in certain cases, results in their being brought before a court
which is not that of any of them ( .... Sanders v. Van der Putte, cited
above).
In those circumstances, Article 16(1) must be interpreted as meaning that
the exclusive jurisdiction of the Contracting State in which the property
is situated does not encompass all actions concerning rights in rem in
immovable property but only those which both come within the scope
of the Brussels Convention and are actions which seek to determine
the extent, content, ownership or possession of immovable property or
the existence of other rights in rem therein and to provide the holders
of those rights with the protection of the powers which attach to their
interest." (Emphasis supplied.)
35. In his Report, Professor Schlosser points out (at paragraph 166) that
the concept of a right in rem, as distinct from a right in personam:
".... is common to the legal systems of the original Member States, even
though the distinction does not appear everywhere with the same clarity".
36. Professor Schlosser continues:
"A right in personam can only be claimed against a particular person,
thus only the purchaser is obliged to pay the purchase price and only the
lessor of an article is obliged to permit its use.
A right in rem, on the other hand, is available against the whole world.
The most important legal consequence flowing from the nature of a right
in rem is that its owner is entitled to demand that the thing in which it
exists be given up by anyone not enjoying a prior right."
37. The rationale underlying Article 16 was identified by the European
Court of Justice in Sanders v. van der Putte (above), where the Court
stated (in paragraph 13 of the judgment):
"..... actions concerning rights in rem in immovable property are to
be judged according to the rules of the state in which the immovable
property is situated since the disputes which arise result frequently in
checks, inquiries and expert assessments which must be carried out on
the spot, with the result that the assignment of exclusive jurisdiction
satisfies the need for the proper administration of justice." (Emphasis
supplied.)
38. In Webb, a father provided the funds to purchase a flat in the
South of France. The flat was transferred into the sole name of his son.
Subsequently, the father brought proceedings in England for a declaration
that the son held the flat as trustee and for an order requiring the son
to execute the documents necessary to vest legal title in the father. The
son challenged the jurisdiction of the English court on the ground that
Article 16(1) applied, so that the French courts had exclusive jurisdiction.
The Judge at first instance held that the action was not an action in rem,
within the meaning of Article 16(1). On appeal by the son, this court
referred to the European Court of Justice for a preliminary ruling on the
question whether Article 16(1) applied. The European Court of Justice
held that for Article 16(1) to apply, it was not sufficient merely that a right
in rem in immovable property was involved in the action or that the action
had a link with immovable property, but that the action had to be based
on a right in rem and not on a right in personam; and that the father was
seeking only to assert rights against the son. Accordingly the Court ruled
that Article 16(1) did not apply to the father's action.
39. In his opinion in Webb, Advocate-General Darmon identified the
question on which a ruling was required in the following terms (at
p.705D):
"[D]oes an action brought by a person against another person for a
declaration that the other person holds immovable property as trustee
and for an order requiring the other to execute such documents as should
be required to vest the legal ownership in the plaintiff constitute an action
in rem within the meaning of Article 16(1) of the Convention?"
40. In paragraph 11 of his opinion, the Advocate-General said this:
"Where Article 16 is concerned, it should be borne in mind that this
provision .... determines which courts are to have jurisdiction where
the principal subject matter of the claim relates to a matter mentioned
therein."
41. Thus the Advocate-General equated proceedings which have "as
their object" rights in rem (see Article 16(1)) with proceedings where the
"principal subject matter" of the claim relates to rights in rem.
42. Later in his opinion, after citing Reichert, and after summarising the
opposing arguments, the Advocate-General said this (in paragraphs 27
and 28):
"The question is not an easy one and I have pondered on the correct
approach to take, for the claim of ownership undeniably underlies the
claim for the recognition of [a trust in favour of the father].
However, the approach which looks at the actual aim pursued by the
[father] is not supported by the relevant provision, by prevailing academic
opinion or by the case law of the court. The jurisdiction ratione materiae
of a court must necessarily be assessed in the light of the subject matter
of the claim, as defined in the originating application, without looking at
purpose ...."
43. In paragraph 32 of his opinion, the Advocate-General noted the
requirement of European case law for a restrictive interpretation of Article
16. In paragraph 34 he quoted from Professor Schlosser's Report (a
passage quoted earlier in this judgment). He then turned to consider
the nature of the father's claim, concluding (in paragraph 38) that by his
claim the father was seeking to establish a right of ownership as against
the son, as opposed to asserting an existing right of ownership, and that
on that analysis the claim was based on a purely personal relationship.
44. In paragraph 46 of his opinion the Advocate-General, in a further
reference to Professor Schlosser's Report, expressed the view that:
".... only actions bearing directly on "the extent, content or ownership of
immovable property" fall within the scope of article 16(1)."
45. In paragraph 48 of his opinion the Advocate-General stated as
follows:
"The dividing line [between proceedings which fall within Article 16(1)
and those which do not] therefore appears to lie between actions whose
principal subject matter is a dispute over ownership between persons who
do not claim inter se any fiduciary relationship and actions concerning a
breach of fiduciary duty which, if found to have been committed, will have
effects in rem. In such a case, the personal nature of the relations is, in
my view, the overriding factor."
46. As I read that passage, the Advocate-General is drawing a distinction
between on the one hand an action in which an existing right of ownership
is asserted against a stranger, and on the other hand an action in which
one party seeks to establish a right of ownership against the other party
as having arisen out of some personal relationship between them. In each
case the action concerns a right of ownership, but whereas in the former
case the "principal subject-matter" of the action (to use the Advocate-
General's expression) is the assertion of an established right, in the latter
case the principal subject-matter of the action is the personal relationship
which is said to give rise to the right.
47. In paragraph 62 of his opinion, the Advocate-General refers to the
rationale of Article 16, saying this:
"Finally, I would observe that the essential reason for conferring sole
jurisdiction under article 16(1), as recognised by the court in the Reichert
case, namely that the courts of the locus rei sitae are better placed to
ascertain the facts satisfactorily and to apply the rules and practices of
that locus, is irrelevant where, as in the instant case, the principal subject
matter of the dispute is the possible existence of a fiduciary relationship
between the parties."
48. In saying that the rationale of Article 16 was "irrelevant" on the facts
of that case, the Advocate-General was (as I understand him) simply
making the point that the rationale did not apply in that case since the
French courts were not in as good a position as the English courts to
ascertain the relevant facts as to the existence or otherwise of a fiduciary
relationship between father and son, nor did any question of French law
and practice arise in relation to the determination of that issue. It is
plainly implicit in this paragraph, as I read it, that he regarded the fact
that the issue in the case fell outside the rationale underlying Article 16 as
a further ground for concluding that Article 16 did not apply.
49. The Advocate-General concluded his opinion by proposing that the
court should rule that an action brought by a person against another
person for a declaration that the latter holds immovable property as
trustee and for an order requiring the latter to execute such documents
as should be required to vest the legal ownership in the plaintiff does not
constitute an action in rem within the meaning of Article 16(1).
50. In its judgment, the Court accepted the reasons and conclusion of the
Advocate-General. In paragraphs 14 to 16 of its judgment, the Court said
this:
"Article 16 confers exclusive jurisdiction in the matter of rights in rem in
immovable property on the court of the contracting state in which the
property is situated. In the light of the court's judgment in Reichert ....,
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.
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 documents
necessary to convey the 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 he 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.
Nor are considerations relating to the proper administration of justice
underlying article 16(1) of the Convention applicable in this case."
51. The Court accordingly held that the action was not an action in rem,
within the meaning of Article 16(1).
52. As noted earlier, Mr Prentis seeks to distinguish Webb, on the basis
that in the instant case (and in contrast to the father in Webb) the
Trustee "already enjoys rights directly relating to the property which
are enforceable against the whole world" in that he has an indisputable
beneficial interest in the property by virtue of the operation of THE ACT.
In my judgment, however, the distinction which Mr Prentis seeks to draw
is a false one. Reading the judgment of the Court in Webb in context, I
take the reference to a claim based on existing rights to be a reference
to proceedings in which the claimant seeks to assert a property right
which is by its nature a right enforceable against third parties, in contrast
to proceedings based on a personal relationship between claimant and
defendant.
53. In my judgment, the following factors appear from the authorities to
which I have referred as being relevant to the question whether Article
16(1) applies in the instant case:
1. Given that its effect is to override the parties' choice of forum, Article
16 is to be given a restrictive interpretation (see Reichert).
2. The rationale underlying Article 16 is "the proper administration
of justice", on the footing that the courts of the Contracting State in
which the property is situated will be best placed to conduct any factual
investigation which may be required, and to apply local law and practice
(see Sanders v. van der Putte and paragraph 62 of the Advocate-General's
opinion in Webb, quoted earlier).
3. In considering whether Article 16(1) applies in any particular case, it
is material to have regard to whether that rationale applies: that is to
say, whether the proceedings involve a factual investigation which is best
carried out by the courts of the state in which the property is situated,
and/or questions of local law and practice are raised (see paragraph 16 of
the Court's judgment in Webb).
4. The expression "which have as their object ..." in Article 16(1)
is synonymous with "which have as their the principal subject
matter...." (see paragraph 11 of the Advocate-General's opinion in Webb).
5. "Subject matter" in this context is not to be confused with "aim" or
"purpose" (see ibid. paragraph 28).
54. Returning to the instant case, it seems plain in the first place that
in so far as the court is minded to make orders in personam along the
lines suggested by the Judge, the rationale underlying Article 16(1) can
have no application, since no issue arises as to the factual situation in
Portugal, nor do the proceedings involve any question of Portuguese law
or practice. Prima facie, therefore, there is no reason why Article 16(1)
should apply.
55. In the second place, the proceedings do not seek to assert any
property right against third parties/strangers: rather, they raise personal
issues as between the Trustee on the one hand and Mr and Mrs Pollard on
the other. On that footing they are, in my judgment, on all fours with the
proceedings in Webb.
56. The fact that, as Mr Prentis submitted, the Trustee's ultimate aim
or purpose in prosecuting the proceedings is to effect a change in the
ownership of the property by achieving its sale is not material. What has
to be looked at is the subject matter of the proceedings. In the light of
Webb, the fact that the resolution of a dispute as to personal rights (rights
in personam) may impact upon property rights enforceable against third
parties/strangers (rights in rem) does not in my judgment lead to the
conclusion that the subject matter of the proceedings for the purposes of
Article 16(1) is rights in rem.
57. I turn next to Re Hayward, on which Mr Prentis places so much
reliance.
58. In Re Hayward, a villa in Minorca was purchased by two individuals
who contributed equally to the purchase price. They were registered in
the Minorcan property register as owners of the property "in indivisible
halves". One of the joint owners was subsequently made bankrupt.
On his death intestate, his widow purported to transfer his interest
in the villa to the other registered owner in satisfaction of a debt she
owed him for money which he had spent on the villa. The trustee in
bankruptcy of the deceased bankrupt applied in the County Court for
a declaration that the bankrupt's interest in the villa formed part of his
estate for bankruptcy purposes. The trustee also sought an order that
the bankrupt's widow and the remaining registered owner take steps to
rectify the Minorcan property register so as to show the trustee as owner
of the deceased bankrupt's share, together with an order for sale of the
villa and the division of the net proceeds of sale equally between the
trustee and the other registered owner. The County Court Judge struck
out the proceedings on the grounds (a) that they did not fall within the
"bankruptcy" exception in Article 1 of the Brussels Convention, and (b)
that they were "proceedings which have as their object rights in rem
in immovable property" for the purposes of Article 16(1), so that the
Spanish courts had exclusive jurisdiction. As noted earlier, in dismissing
the trustee's appeal Rattee J agreed with the County Court Judge that
the proceedings fell within Article 16(1). He also held that the claim for
rectification of the Minorcan property register fell within Article 16(3)
(proceedings which have as their object the validity of entries in public
registers).
59. In my judgment, Re Hayward is distinguishable from in the instant
case in that the principal subject matter of the proceedings in Re Hayward
was the ownership of the Minorcan property. As Rattee J said (at p.48B-
C):
"The essence of the present proceedings .... was an attempt by the
trustee to establish and protect, and indeed perfect, what he alleged was
his entitlement as trustee in the bankruptcy of Mr Hayward to what had
been Mr Hayward's half share in the villa."
60. On that basis, Rattee J was correct, in my judgment, to conclude that
Article 16(1) applied. By contrast, the proceedings in the instant case
do not raise any issue as to title to land. The Trustee in the instant case
is not seeking to establish or protect, let alone perfect, his title to Mr
Pollard's interest in the Portuguese property. I therefore conclude that Mr
Prentis cannot gain any assistance from Re Hayward in the instant case.
61. Accordingly, for the reasons I have given I conclude that the
proceedings in the instant case do not fall within Article 16(1).
62. I turn, lastly, to Mr Prentis' alternative submission that the English
court will rarely exercise its jurisdiction (the existence of which is now
accepted) to make orders relating to trust property abroad, and that it
should not exercise that jurisdiction in the instant case. In oral argument,
Mr Prentis did not elaborate on this submission, which should in my
judgment be rejected. Whether the English court in any particular case
will consider it appropriate to make an order relating to trust property
abroad will depend on the nature of the order sought and on the facts
of the case. In the instant case, the orders which the court is minded to
make require steps to be taken within the jurisdiction by a trustee who is
himself within the jurisdiction. That being so, I can see no jurisdictional or
other objection to the making of those orders.
63. I accordingly conclude that the Portuguese courts do not have
exclusive jurisdiction in relation to the proceedings in the instant case.
64. For those reasons, I would dismiss this appeal.
Lord Justice Potter
65. I agree.
Lord Justice Kennedy
66. I also agree.
Order: Appeal dismissed with costs to be assessed if not agreed.