Factual and Procedural Background
On 26th June 2007, the Plaintiff issued a Claim Form naming four Defendants and asserting that the High Court of England and Wales had jurisdiction under Council Regulation (EC) 44/2001 ("the Judgments Regulation") to hear the claim. The proceedings were served on the First Defendant. On 18th October 2007, the First Defendant applied for an order declaring that the court did not have jurisdiction or alternatively would not exercise jurisdiction, seeking the Claim Form to be set aside or the proceedings stayed. The grounds were that the court lacked jurisdiction under the Judgments Regulation or that Liechtenstein was a more appropriate forum.
The case involves interpretation of Article 5(6) of the Judgments Regulation concerning jurisdiction over persons sued as settlor, trustee, or beneficiary of a trust domiciled in a Member State. The First Defendant also contended that even if jurisdiction existed, the court should decline jurisdiction on forum non conveniens grounds in favor of Liechtenstein.
The trust at issue was created by a written declaration dated 11th June 1984 under English law, with the settlor deceased and domiciled in Spain. The First Defendant is the widow of the settlor and domiciled in Spain. The trust’s original trustee was a Jersey company, replaced over time by other trustees including entities incorporated in the British Virgin Islands, Jersey, and Liechtenstein. The Plaintiffs are three of the settlor’s five sons and claim to be beneficiaries under the trust.
The Plaintiffs allege breaches of trust by the trustees, including wrongful payments of income and capital to the First Defendant beyond her entitlement. They claim the First Defendant received trust property as a volunteer with knowledge of the trust and is liable as a constructive trustee. The Plaintiffs also challenge the First Defendant’s purported appointment as Appointor under the trust, arguing the appointment was invalid and seeking her removal and replacement.
The First Defendant applied to dismiss the claim for lack of jurisdiction or, alternatively, to stay proceedings on forum non conveniens grounds.
Legal Issues Presented
- What trust or trusts identified by the Plaintiffs come within Article 5(6) of the Judgments Regulation referring to trusts created by statute, written instrument, or orally evidenced in writing?
- Is the relevant trust domiciled in England?
- In relation to the first part of the Plaintiffs' claim, is the First Defendant sued "as beneficiary"?
- In relation to the second part of the Plaintiffs' claim, is the First Defendant sued "as trustee"?
- If the court has jurisdiction under Article 5(6), is it open to decline jurisdiction on forum non conveniens grounds?
- If yes to (5), should the court decline jurisdiction on those grounds?
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Re Diplock [1948] Ch 465; Ministry of Health v Simpson [1951] AC 251 |
Establishes personal and proprietary remedies for beneficiaries prejudiced by overpayment to another beneficiary. |
Referenced by Plaintiffs to support claims against the First Defendant for receipt of trust property without entitlement. |
| Re J Leslie Engineers Company [1976] 1 WLR 292 |
Supports principles related to claims by beneficiaries for recovery of trust property. |
Used to reinforce the Plaintiffs' position regarding remedies. |
| Butler v Broadhead [1975] Ch 97 |
Related to fiduciary duties and remedies in trust contexts. |
Referred to by Plaintiffs in support of their claims. |
| Mettoy Pension Trustees Limited v Evans [1990] 1 WLR 1587 |
Classification of fiduciary powers and powers of appointment; court’s control over fiduciary powers. |
Used to analyze whether the Appointor's power is fiduciary and whether the First Defendant is sued as trustee. |
| Rawcliffe v Steele [1993-1995] MLR 426 |
Distinguishes between trust powers, fiduciary powers, and bare powers. |
Supports the court’s analysis of the nature of the Appointor’s power. |
| Chellaram v Chellaram (No. 2) [2002] 3 All ER 17 |
Sets out the standard of proof for jurisdictional issues under the Judgments Regulation. |
Guides the court’s approach to jurisdiction and burden of proof. |
| Canada Trust Co v Stolzenberg (No. 2) [2002] 1 AC 1 |
Clarifies the "good arguable case" test for jurisdictional elements. |
Applied in determining the standard of proof for jurisdiction. |
| Seaconsar Far East Limited v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438 |
Supports the approach to jurisdiction and burden of proof under the Judgments Regulation. |
Referenced in jurisdiction analysis. |
| Carnoustie v ITF [2002] 2 All ER (Comm) 657 |
Discusses the standard of "good arguable case" in jurisdictional context. |
Supports the court’s assessment of jurisdictional arguments. |
| Kleinwort Benson Limited v Glasgow City Council [1999] 1 AC 153 |
Restrictive interpretation of Article 5 of the Judgments Regulation; principle of domicile as basis for jurisdiction. |
Guides restrictive interpretation of Article 5(6) and jurisdictional scope. |
| Martin Peters Bauunternehmung G.m.b.H. v Zuid Nederlandse Aannemers Vereniging (Case 34/82) [1983] ECR 987 |
Article 5 is a derogation from the general principle of domicile and must be interpreted restrictively. |
Supports the court’s restrictive approach to Article 5(6). |
| Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co (Case 189/87) [1988] ECR 5565 |
Emphasizes restrictive interpretation of special jurisdiction under Article 5. |
Reinforces the court’s narrow reading of Article 5(6). |
| Owusu v Jackson [2005] QB 801 |
Article 2 of the Brussels Convention is mandatory; no forum non conveniens discretion exists under the Convention. |
Key authority on forum non conveniens issue; court held no power to decline jurisdiction if jurisdiction exists under the Regulation. |
| Re Baden's Deed Trusts [1971] AC 424 |
Discusses fiduciary powers and court control over trustees’ powers. |
Supports analysis of fiduciary nature of Appointor’s power. |
Court's Reasoning and Analysis
The court first identified six central issues relating to the jurisdictional scope of Article 5(6) of the Judgments Regulation concerning trusts.
The court examined the nature of the trust(s) identified by the Plaintiffs, distinguishing between the expressly created trust by the written declaration dated 11th June 1984 and the resulting and constructive trusts alleged by the Plaintiffs. The court held that the resulting trust was created by operation of law and not by the written instrument and therefore did not fall within Article 5(6). Constructive trusts generally do not fall within Article 5(6), but claims against trustees involving constructive trusts could fall within the Article if the defendant is sued as trustee. However, the Plaintiffs did not seek to sue the First Defendant "as trustee" on the constructive trust claim but rather "as beneficiary".
Regarding domicile, the court applied Article 60(3) of the Judgments Regulation and relevant UK law, concluding that the trust was domiciled in England because English law was the governing law of the trust, and the system of law with the closest and most real connection to the trust was English law. The court rejected arguments that the trust was domiciled in Liechtenstein or the Cayman Islands based on administration or asset location.
On whether the First Defendant was sued "as beneficiary" for the first part of the claim, the court analyzed the nature of the claim. The Plaintiffs’ claim was that the First Defendant was not entitled to the monies received and thus was sued in a capacity inconsistent with being a beneficiary entitled to those funds. The court concluded the claim was not brought "as beneficiary" but rather as a person not entitled under the trust, thus outside Article 5(6).
Regarding the second part of the claim, concerning the First Defendant’s status as Appointor, the court considered whether the Appointor’s power was fiduciary and whether suing the Appointor was suing "as trustee". The court acknowledged that while the Appointor’s power might be fiduciary, it was not appropriate to adopt an expansive interpretation of "trustee" for jurisdictional purposes. The claim against the First Defendant as Appointor was therefore not within Article 5(6).
On the forum non conveniens issue, the court noted that if jurisdiction existed under Article 5(6), the court would not have discretion to decline jurisdiction, per the mandatory nature of the Regulation and the European Court of Justice’s ruling in Owusu v Jackson. Since the court held Article 5(6) did not apply, this issue did not arise.
Overall, the court emphasized the restrictive approach required in interpreting jurisdictional provisions derogating from the principle of domicile and applied established precedents to determine that the claims against the First Defendant fell outside the scope of Article 5(6).
Holding and Implications
The court held that the entirety of the Plaintiffs' claim against the First Defendant falls outside Article 5(6) of the Judgments Regulation. Specifically, the claim is neither brought against the First Defendant "as beneficiary" nor "as trustee" for the purposes of Article 5(6).
Accordingly, the court declared that it has no jurisdiction to hear the claim against the First Defendant under Article 5(6).
The direct effect is that the claim against the First Defendant cannot proceed in the English courts on the basis of the Judgments Regulation. No broader precedent was established beyond the application of jurisdictional principles to the facts of this case.