C v C (Ancillary Relief: Nuptial Settlement)
| Jurisdiction | England & Wales |
| Judgment Date | 30 July 2004 |
| Date | 30 July 2004 |
| Court | Court of Appeal (Civil Division) |
Conflict of laws - Jurisdiction under European Convention - Variation of trust - Settlement made on husband and wife - Trust governed by Jersey law - Wife applying for variation of trust on divorce - Whether English court's provisions for disposing of application “designated by conflicts rules” - Whether English law applicable - Whether court having jurisdiction -
The husband and wife had been among the beneficiaries of a discretionary trust. The deed of settlement provided that rights under the trust were to be governed in accordance with the laws of Jersey and that the trust was subject to the exclusive jurisdiction of the courts of Jersey. The deed also conferred on the trustees a power to add and remove persons to and from the class of beneficiaries but only with the written consent of the husband and wife. In January 2001 the trustees executed a deed purporting to remove the husband and wife as beneficiaries. The parties subsequently divorced. On her claim for ancillary relief the wife sought a variation of the trust under section 24(1)(c) of the Matrimonial Causes Act 1973F1 for her benefit, or that of the two children of the family, on the grounds that the trust was a post-nuptial settlement made on the parties. By article 6 of the Convention on the Law Applicable to Trusts and on their Recognition, as scheduled to the Recognition of Trusts Act 1987F2, the variation of a trust was governed by the law specified by the settlor. However, article 15 of the Convention provided that the Convention did not prevent the application of provisions of law designated by a forum's conflict rules, including provisions relating to the personal and proprietary effects of marriage, so long as those provisions could not be derogated from. On the hearing of a preliminary issue the judge held that the court had jurisdiction to vary a post-nuptial settlement under section 24(1)(c) notwithstanding that the features that had made it nuptial had by then been removed, although the removal of the husband and wife as beneficiaries had not had that effect in any event; that the wife's claim for ancillary relief was governed by English law rather than the law of Jersey; and that the court had jurisdiction to hear the claim despite the trust deed's exclusive jurisdiction clause. He accordingly granted a declaration that the court had jurisdiction to vary the trust under section 24(1)(c).
On the husband's application for permission to appeal—
Held, (1) that statutory powers to vary post-nuptial settlements only arose on or after the decree which dissolved or annulled the marriage status; that individuals could not elect into or out of a jurisdiction which determined marital status but required the necessary qualification to invoke such a jurisdiction, which would depend on habitual residence, domicile or nationality depending on the lex fori; that neither of the parties had any right to invoke the matrimonial jurisdiction of the Jersey court; that the exclusive jurisdiction clause could not extend beyond an election for the law of Jersey in determining any question as to the construction or operation of the settlement qua settlement; and that since the right of the parties to seek, and the power of the court to order, variation derived not from the settlement but from the matrimonial regime of the jurisdiction that dissolved the marriage the exclusive jurisdiction clause could not defeat the wife's exercise of her right to apply under section 24 of the 1973 Act for a variation of settlement order (post, paras 29–30, 51–52).
(2) That since, once a decree had been pronounced on a divorce petition the jurisdiction in England applied only English law in the determination of ancillary relief applications, English law was the designated law; that, therefore, the statutory powers to vary settlements under section 24(1)(c) were provisions of the designated law which could not be derogated from by voluntary act within the meaning of article 15; and that, accordingly, the wife's claim was excepted from the Convention and was to be governed by English law rather than the law of Jersey (post, paras 27–28, 31–32, 34, 42, 51–52).
(3) Granting permission to appeal but dismissing the appeal, that a settlement which was nuptial when made was capable of losing its essential character as a nuptial settlement; that whether the removal of the spouses from the class of beneficiaries did or did not remove the nuptial element depended on the facts of the individual case; that since the facts clearly indicated that the nuptial element of the trust was not lost by the removal of the parties as beneficiaries the trust was a post-nuptial settlement within the meaning of section 24(1)(c) of the 1973 Act; and that, accordingly, the court had jurisdiction to vary it under section 24(1)(c) (post, paras 44, 45, 50–52, 53).
The following cases are referred to in the judgments:
Brooks v Brooks [
Compass Trustees Ltd v McBarnett [
Compton v Compton and Hussey [1960] P 201; [
de Cavel v de Cavel (Case 143/78) [
Forsyth v Forsyth [1891] P 363
Nunneley v Nunneley and Marrian (
Prescott (orse Fellowes) v Fellowes [1958] P 260; [
The following additional cases were cited in argument:
Dormer v Ward [1901] P 20,
Hyman v Hyman [
Prinsep v Prinsep [1929] P 225
Tebutt v Haynes [
Young v Young [1962] P 27; [
The following additional cases, although not cited, were referred to in the skeleton arguments:
E v E (Financial Provision) [
J v M [
APPLICATION for permission to appeal from Wilson J
By an application dated 8 October 2002 the wife applied for ancillary relief. In an amended application dated 24 April 2003 she applied, inter alia, under section 24(1)(c) of the Matrimonial Causes Act 1973 to vary a post-nuptial settlement that had been made on the parties. A preliminary issue arose as to whether (1) the features which had made the settlement nuptial had been removed with the result that it could no longer be varied under section 24(1)(c) of the 1973 Act; and (2) any jurisdiction to vary the settlement was vested solely in the courts of Jersey. On 2 April 2004 Wilson J held that (1) the settlement could be varied under section 24(1)(c); and (2) the jurisdiction to vary was vested in the English courts.
By an appellant's notice dated 15 April 2004 the husband applied for permission to appeal on the grounds that (1) the trust ceased to be a post-nuptial settlement with effect from the date of the instrument removing the parties from the class of beneficiaries; (2) any application to vary the trust had to be made to the Royal Courts in Jersey in compliance with clause 3.2 of the trust deed, alternatively, that the wife's application to vary had to be determined in accordance with the laws of Jersey in compliance with clause 3.1 of the trust deed.
By a respondent's notice dated 22 June 2004 the wife sought to uphold the judge's decision on the additional ground that as a matter of the conflict of laws, her application to vary the trust should be determined by reference to the divorce law of England and Wales and not by reference to the Recognition of Trusts Act 1987.
The facts are stated in the judgment of Thorpe LJ.
Nicholas Francis QC (who did not appear below) and Christopher Wagstaffe for the husband.
Valentine Le Grice QC and Thomas Carter for the wife.
Mark Emanuel for the litigation friend.
30 July. The following judgments were handed down.
THORPE LJ
1 Floros Charalambous (“the husband”) married Martha Charalambous (“the wife”) on 17 June 1984. There are two children of the family, a girl of 12 and a boy of 8, who are separately represented before us by their litigation friend, Helen Sheeran. Before the birth of the second child the husband's mother created a Jersey settlement known as the Hickory Trust.
2 The financial affairs of this family are shrouded in mist. There were a number of business enterprises, including the operation of care homes for children and an estate agency. There is a document which seems to show that in February 2000 the husband suggested that his assets totalled £43m. However by 1 October 2000 bankruptcy petitions were issued against the husband and wife and in the resulting proceedings it was asserted that on 1 November 2000 there was an estimated deficiency of approximately £5m. However the creditors asserted that there were undisclosed assets and interests. In that climate it is not difficult to imply a motive for the deed of appointment and removal dated 8 January 2001 under the terms of which both husband and wife ceased to be beneficiaries under the Hickory Trust.
3 The marriage broke down in 2002. Both parties petitioned for divorce in September following a separation in July. Ancillary relief proceedings commenced with the filing of the wife's Form A on 8 October 2002. Since then there have been continuing ancillary relief proceedings in the Family Division and bankruptcy proceedings in the Chancery Division. I need only refer to the wife's amendment of her Form A on 24 April 2003...
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