Pollard v Ashurst
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JONATHAN PARKER,Lord Justice Potter,Lord Justice Kennedy |
| Judgment Date | 21 November 2000 |
| Judgment citation (vLex) | [2000] EWCA Civ J1121-3 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 November 2000 |
| Docket Number | Case No: B3 2000 0249 |
[2000] EWCA Civ J1121-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
(CHANCERY DIVISION)
Mr. Justice Jacob
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Kennedy
Lord Justice Potter and
Lord Justice Jonathan Parker
Case No: B3 2000 0249
Mr Sebastian Prentis (instructed by Messrs Harkavys for the Appellants)
Mr David Marks (instructed by Messrs Lita Gale for the Respondent)
INTRODUCTION
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.
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.
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.
It is common ground that nothing turns for present purposes on the fact that the property is in joint ownership.
THE CONVENTION
The only Articles of the Convention which are material for present purposes are Articles 1 and 16.
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."
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")
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."
"Property" is defined in section 436 as including:
"…. money, goods, things in action, land and every description of property wherever situated…." (Emphasis supplied.)
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."
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.
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.
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."
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.
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.
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."
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.
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."
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
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.
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...
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