C v C [2004] EWHC 742 (Fam)

JUDGMENT GIVEN IN CHAMBERS BUT LEAVE TO REPORT AS ANONYMISED HEREINCase No FDO2DO6673[2004] EWHC 742 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
PRINCIPAL REGISTRY
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 2 April 2004
Before
THE HONOURABLE MR JUSTICE  WILSON
Between
CPetitionerCFirst Respondent
Mr Valentine Le Grice QC and Mr Thomas Carter (instructed by Messrs Philippou & Co.) appeared for Petitioner wife.Mr Timothy Scott Q.C. and Mr Christopher Wagstaffe (instructed by Messrs Bolt Burdon) appeared for First Respondent husband.Dates of hearing: 1, 2 and 3 March 2004
JudgmentSECTION A: INTRODUCTION
[1]The wife makes claims against the husband for ancillary relief following divorce. Later this year I will address them. At this stage, however, I determine two issues raised by the husband which relate to the court’s jurisdiction to entertain one of the wife’s claims. The claim is for an order under s.24(1)(c) of the Matrimonial Causes Act 1973 varying, for the benefit of herself or of the two minor children of the family who live with her, a post-nuptial settlement made on the parties.[2]The husband contends that: (a) the features which made the settlement nuptial were subsequently removed from it, with the result that it cannot now be varied under s.24(1)(c); and, in any event, (b). any jurisdiction to vary it is solely vested in the courts of Jersey.[3]Although the parties have connections with Cyprus, where the husband’s mother lives, they are habitually resident in England and Wales and perhaps also domiciled here.[4]The settlement of which the wife seeks variation is The Hickory Trust established by a Deed of Settlement dated 18 September 1995. The deed has the following features:(a) it recited the husband’s mother as the settlor;(b) it appointed a Jersey trust company as the trustees;(c) it was a discretionary trust for the benefit of named persons, viz. the husband’s mother, the husband, the wife and the only child of the marriage living at its date, and also of such other persons as the trustees might add;(d) it conferred upon the trustees a power to add and remove persons to and from the class of beneficiaries but it subjected their exercise of that and other major powers to the consent in writing of the trust’s protector;(e) it appointed the husband and the wife as the joint protector of the trust during their joint lives;(f) it empowered the husband, acting alone, to remove and appoint trustees;(g) it provided that “this Trust is established under the laws of the Bailiwick of Jersey and the rights of all parties and the construction and effect of each and every provision hereof shall be governed and construed only in accordance with the law of Jersey, which shall be the proper law hereof” (“the proper law clause”); and(h) it provided that “this Trust shall be subject to the exclusive jurisdiction of the Royal Courts of the Bailiwick of Jersey which shall be the forum for disputes relating hereto” (“the exclusive jurisdiction clause”).[5]It is the wife’s case that the husband’s mother was only the nominal settlor of the trust and that the husband was its real settlor. Although the deed identified the amount initially settled as the conventional sum of U.S.$100, substantial sums were subsequently paid into the trust and it is the wife’s case that such were payments by the husband out of the parties’ joint resources and that the husband’s mother has never had resources of such substance. These contentions are strongly denied by the husband who says that the trust was in every sense set up by his mother and has been funded only by her.[6]Following its establishment The Hickory Trust began to own and operate a company which had been set up in the British Virgin Islands, namely Hickory Holdings Ltd. Through that company the trust effected a variety of transactions. It bought substantial properties in Totteridge, near Barnet; transferred some of them to the parties for considerations, if any, not yet clearly identified; made cash transfers to the husband; and became the owner of two U.K. companies through which the parties ran businesses. Through the first such company the parties operated registered care homes for children. Through the second such company they operated an estate agency.[7]The wife belatedly relies upon a document upon which the husband has not had a proper opportunity to comment. At face value it is a document prepared by the husband in February 2000 for the purpose of obtaining credit, by which he presented his net assets as totalling £43,000,000, including £34,000,000 said to be referable to equity in “companies owned by [the parties] through direct share holding and family trust”. If this document is genuine, it seems to represent an attribution by the husband to the parties of beneficial ownership of The Hickory Trust.[8]In 2000 the care homes company got into financial difficulty. This affected the parties personally because they had given guarantees for its obligations. In October 2000 petitions for bankruptcy were presented against the parties. They responded by conceding (or contending) that they were hopelessly insolvent. They represented to the petitioning and other commercial creditors that they jointly owed £2,185,000 to Hickory Holdings Ltd. They sought to demonstrate that, on bankruptcy, the unsecured creditors would receive nothing but that, were they instead to be allowed to enter into Individual Voluntary Arrangements, the creditors would receive 1% of their debt. The commercial creditors were suspicious of the alleged debt to Hickory Holdings Ltd and inquisitive about the identity of that company’s real owner.[9]On 8 January 2001 a Maltese trust company, which on a date not yet clear the husband had appointed as trustees of The Hickory Trust in place of the Jersey company, executed a Deed of Appointment and Removal of Beneficiaries referable to the trust. By the deed the trustees purported, with immediate effect, both to add to the class of beneficiaries the second child of the marriage born subsequent to the establishment of the trust and, more importantly for my purposes, to remove therefrom the husband and wife. Did the husband and wife, as joint protector, give the requisite written consent to this exercise of the trustees’ powers? The wife denies that she gave consent; the husband does not in terms allege that either of them gave consent; no document has been produced which is indicative of such consent; and the current trustees, to whom I will refer in paragraph 15, are in breach of an order of this court to permit inspection of trust documents.[10]The husband accepts that the intention behind the purported exclusion of himself and the wife from the class of beneficiaries of the trust was to enable them to represent in the bankruptcy proceedings that they had no interest in Hickory Holdings Ltd. Thus, in a statement in those proceedings dated 31 January 2001, he said:- “Hickory Holdings Limited is a company and discretionary trust established in the late 1980s or early 1990s by my mother who is a wealthy woman in her own right. My father died 6 years ago; he was a property owner and had substantial assets. Neither my wife nor I are beneficiaries under the discretionary trusts. Neither my wife nor I have put any assets into the company, and neither of us have any details as to its holdings. The company is not controlled by either myself or my wife.” The husband appended a letter from the Maltese trust company dated 18 January 2001 which stated that “neither [of the parties] are beneficiaries” of The Hickory Trust. By a statement also dated 31 January 2001 the wife confirmed that she had read the husband’s statement and concurred with its contents.[11]In May 2001 the parties’ creditors agreed that, in lieu of bankruptcy, they should enter into Individual Voluntary Arrangements.[12]The purported exclusion of the parties from benefit under the trust appears not to have prevented it from entering into further transactions which were at least of indirect benefit to them. Early in 2001 the husband decided to devote himself more fully to operating the estate agency owned by the trust through the second UK company. In February 2001, about a month after the purported exclusion, Hickory Holdings Ltd lent £250,000 to the second such company, secured by a floating charge and repayable with interest.[13]Late in 2001 the second UK company ceased to trade and the husband began to operate, in England and later also in Cyprus, an estate agency in his own right.. In proceedings brought by Hickory Holdings Ltd (and presumably funded by the trust) the second such company, being its subsidiary and debtor, has now been made the subject of an administration order.[14]In July 2002 the parties separated.[15]Early in 2003 the husband again exercised his power to replace the trustees of The Hickory Trust. He says that he did so at the request of his mother who wished to be able to speak to the trustees in Greek before introducing further money into the trust. In place of the Maltese company the husband appears to have appointed a woman lawyer in Limassol; but he may instead have appointed the lawyer and her husband jointly or indeed a trust company operated by her or them. The firm of which the lawyer is a partner is also currently representing the husband in relation to criminal proceedings in Cyprus. The trustees have been made respondents to the proceedings in this court but as yet have taken no active part in them and are in breach of orders for disclosure.[16]In March 2003 the husband was adjudicated bankrupt on his own petition. The wife has issued an application for the bankruptcy order to be annulled. The bankruptcy proceedings have been transferred to the Family Division so that I can determine her application. Had the husband not currently been required, as a condition of bail set by a Cypriot court, to remain in Cyprus, I would have determined it at this hearing.[17]“I believe”, says the wife, “that the [husband] still controls the Trust and uses it for his own benefit”. In the light of the above it is not surprising that the wife should be putting her case in that way. One might almost describe it as the usual allegation, namely that, whatever the documents may now say, the assets of this trust should, as a matter of reality, be ascribed by this court to the husband and that orders should be made on the basis that his resources are correspondingly enlarged. Whether in this case the allegation is true remains to be seen. I have been concerned to understand why, as well as presenting that usual argument, the wife is pressing for a specific order for variation of The Hickory Trust as a post-nuptial settlement. Mr Le Grice QC on her behalf has explained it to me. The wife is concerned lest, even at the end of the substantive hearing, visible assets of the husband, within easy reach of this court, remain in short supply. There is, however, one asset in England which, ostensibly, belongs to the trust: for it is estimated that the second UK company has assets likely upon sale to yield sums sufficient to enable its administrator to repay at any rate most of the debt of £250,000 which, on a secured basis, it owes to Hickory Holdings Ltd. That trust asset, which by an order of this court in effect stands frozen in the hands of the administrator until the conclusion of these proceedings, is, at the moment, the primary target of the application for an order for variation of the trust.

SECTION B: THE NUPTIAL FEATURES OF THE SETTLEMENT

[18]The husband’s first contention is deceptively simple. Although he now concedes that The Hickory Trust was a post-nuptial settlement until 8 January 2001, he contends that the deed of that date, by which the trustees excluded him and the wife from the class of beneficiaries, removed from it the features which had made it nuptial and rendered it no longer a settlement capable of variation under s.24(1)(c) of the Act of 1973.[19]The submissions of Mr Scott QC on the husband’s behalf are characteristically clear and comprehensive. He starts with the classic definition of a post-nuptial settlement by Hill J. in Prinsep v Prinsep [1929] P. 225 at p. 232:
“Is it upon the husband in the character of husband or [upon] the wife in the character of wife, or upon both in the character of husband and wife…. It should provide for the financial benefit of one or other or both of the spouses as spouses and with reference to their married state.”
Mr Scott moves to the speech of Lord Nicholls of Birkenhead in Brooks vBrooks [1996] 1 AC 375 at p.391G:
“So, broadly stated, the disposition must be one which makes some form of continuing provision for both or either of the parties to a marriage…”
I have underlined the words in both passages upon which Mr Scott places emphasis. But there was nothing in the facts of those cases to lead the judges to choose language sensitive to a change which could be said to have removed from a settlement the features which had made it nuptial.[20]Mr Scott cites two authorities which, according to him, establish that, if a settlement is to be capable of variation, the date at which it must have nuptial features is the date of decree absolute:(a) Dormer v Ward [1901] P.20. The question in that case was whether the court had jurisdiction to vary a settlement which was ante-nuptial, i.e. of which a subsequent valid marriage was a prerequisite, in circumstances in which a decree absolute of nullity had rendered the voidable marriage retrospectively void. The Court of Appeal’s answer was affirmative: it was enough that, at the time of the pronouncement of the decree, the marriage would have been said to have a valid existence.(b) Prescott (formerly Fellowes) v Fellowes [1958] P. 260. By a deed described as a “Settlement on Marriage” the intended wife agreed to give £15,000 to the intended husband (which, following the marriage, she duly gave to him) and to make him an interest-bearing loan of £20,000 in the event that he should become a member of Lloyd’s (which he never became, with the result that she never made the loan). Upon divorce the wife sought return of the £15,000 by way of variation of settlement. But the Court of Appeal held that at the date of the decree absolute there was no settlement in existence: the gift was not a settlement and the loan, which might have amounted to a settlement, had never been made.[21]I reject the submission that these authorities show that the features which made a settlement nuptial have to subsist at the date of decree absolute. In my view they show that such is the date at which the settlement must exist: otherwise there is nothing for the court to vary. Indeed, on one view, Dormer v Ward is unhelpful to Mr Scott: for the court there gave a slightly contrived response to the enquiry into its existence in the interests of giving efficacy to the jurisdiction to vary following a decree of nullity.[22]I regard myself as unaided by authority in deciding whether not only the settlement but also the features which made it nuptial need to subsist on the date, which may now be at any time after decree nisi albeit that it can take effect only following decree absolute, when the order is made. Mr Scott submits that there is no logical reason why the nuptial features should not also need then to subsist. He attempts to illustrate the merit of his submission by reference to the facts of the case. He stresses the value to the parties of the deed of exclusion dated 8 January 2001. It was not made in the context of divorce proceedings or, more widely, as part of any attempt to prejudice the wife. On the contrary she and the husband each relied on it in their respective bankruptcy proceedings. Although the wife now asserts that until 2003 she knew nothing about The Hickory Trust or the parties’ exclusion therefrom, she expressly concurred, by her statement dated 31 January 2001, with the husband’s assertion that the trust existed but that neither of them was a beneficiary. That assertion may well have helped to secure for the benefit of the parties the creditors’ consent to their entry into Individual Voluntary Arrangements instead of pursuit of them into bankruptcy.[23]A number of Mr Scott’s merit points, summarised above, have substance. But should they lead to the conclusion that the court has no jurisdiction to vary a settlement from which, by the date of the order, the features which made it nuptial have been removed? Or, rather, should they figure in the discretionary analysis which exercise of the jurisdiction would require? My first task must be to look at the words of s.24(1)(c). They confer jurisdiction to vary an “ante-nuptial or post-nuptial settlement… made on the parties to the marriage”. The word “made” looks to the past and there is no express requirement that the features which made the settlement nuptial should subsist. I can imagine at one end of the spectrum an order made in the Chancery Division under the Variation of Trusts Act 1958 under which, let us say, an ante-nuptial settlement is varied so as irrevocably to remove from the spouses any benefit, possible benefit, power or role in relation to it. It might well be offensive to justice for this court to direct further variation of it for the benefit of a spouse or the benefit (or further benefit) of a child. But the just result can be achieved as satisfactorily by this court’s refusal to exercise a jurisdiction to vary as by a conclusion that it lacks such jurisdiction. It is the scenario at the other end of the spectrum which exercises me more greatly: namely that, were Mr Scott’s submission correct, a spouse, his (or her) trustees, family members or confederates would, in anticipation of divorce proceedings or at any time up to the actual day when the order would otherwise be made, be able to deprive this court of jurisdiction to make a variation order in favour of the other spouse by exercising or procuring the exercise of a power to remove the spouses from benefit etc under the settlement. I will not accept that the power of this court is thus open to frustration unless I am driven to do so.[24]I hold that, provided that it exists at the date of the order, the court has jurisdiction to vary a settlement which, when made, was ante-nuptial or post-nuptial, notwithstanding that prior to the date of the order the features which made it nuptial have been removed from it. But, before it exercised jurisdiction in such circumstances, the court would no doubt give most careful consideration to the interests of the remaining or additional beneficiaries, even though they may well not have given consideration for their benefits or hope of benefits; and the wishes of any third party who was the genuine source of funds in the settlement would be of great importance, as of course would be the reason for the removal of the features which had made the settlement nuptial.[25]In the above paragraphs I have chosen my words carefully. In particular I have not adopted Mr Scott’s references to a settlement which no longer retains a nuptial element or character. I have thereby circumvented a semantic argument between him and Mr Le Grice, who submits that, if upon establishment a settlement is nuptial, it must always remain nuptial. By preferring instead to speak of the removal from a settlement of the features which made it nuptial, I have addressed the essence of Mr Scott’s point with, I hope, maximum concision.[26]In case my above conclusion is wrong, I turn to consider whether the deed dated 8 January 2001 removed from The Hickory Trust the features which made it nuptial. The relevant circumstances are as follows:(a) Under the Deed of Settlement the parties remain its joint protector and must so remain during their joint lives. In parenthesis I ask: can one readily conceive a provision of a trust which demands variation upon divorce more obviously than this?(b) (i) Under that deed the husband, acting alone, continues to have power to replace the trustees; and (ii) indeed such is a power which he has exercised twice during the last few years.(c) At any stage the trustees may (with the consent of the protector) add the husband (or the wife) back into the class of beneficiaries.(d) (i) The power of the trustees to lend money to the husband (or the wife), even without interest, is independent of his (or her) status as a beneficiary; and (ii) indeed prior to 2000 there was a pattern of such lending to the parties as then apparently gave rise to a debt of £2,185,000.(e) (i) The power of the trustees to invest in companies or lend money thereto for the indirect benefit of the husband (or the wife) is also independent of his (or her) status as a beneficiary; and (ii) indeed, shortly after execution of the deed dated 8 January 2001, the trustees lent £250,000 to a company in order that the husband could operate a business through it.(f) There is no evidence that the power to make a payment to or for a beneficiary has ever been exercised and the identity of those in the class of beneficiaries from time to time does not appear to have been relevant to the operation of the trust to date.[27]The above circumstances lead me to the conclusion that the presence of the parties until 8 January 2001 in the class of beneficiaries was only one of a constellation of features which made The Hickory Trust nuptial and that, even without that feature, the settlement would have been nuptial. It follows that the deed of that date has not removed from the trust the features which made it nuptial. It would betray a shameful lack of realism on the part of this court to hold that the effect of the deed was to deprive the husband of advantage under the trust. In particular, in that he can change the trustees, he is likely to be able to find trustees disposed to exercise their powers in his favour. Such a conclusion is not merely a reflection of modern financial reality. There is old authority in this regard which I propose to follow. It is the decision of Marshall J in Compton v Compton and Hussey [1960] P. 201. During the marriage the husband in that case had made a separate settlement on each of the parties’ four children, namely two daughters and two sons. The husband, who had reserved for himself no benefit or role under or in the trusts, contended that the connections with the trusts which he had created in respect of the wife made them post-nuptial and that they should be varied so as to eliminate her connections. The judge held that all four settlements were post-nuptial although he did not proceed to make the orders sought by the husband. The decision that the two settlements for the daughters were post-nuptial is of less interest because under them the wife enjoyed a contingent interest in remainder. But, in relation to the two settlements for the sons, she had no interest as a beneficiary whatever. She was merely a trustee of those settlements and had a power, in the event of the death of the sons while minors, to appoint as between the daughters. At p.210 the judge said:
“In the disposal of the property for the benefit of each child the respondent wife has been given a voice both as trustee and under a power of appointment, even though it is the husband who provides all the money… A settlement can settle on parties to a marriage power over the disposal of property as well as over the property itself.”
[28]For each of the above two reasons I reject the husband’s first contention.[29]It will be noted that I have reached my decision without needing to return to the possible invalidity of the deed dated 8 January 2001 for lack of the protector’s written consent. Had my decision turned on the validity of the deed, I would have wished the parties to give oral evidence on that point. As it is, I can put the issue to one side, perhaps permanently. Nor need I address Mr Scott’s argument that, by her stance in the bankruptcy proceedings, the wife waived the right to complain of any such invalidity.

SECTION C: THE JURISDICTION OF THE COURTS OF JERSEY

[30]The second contention made on the husband’s behalf is substantially founded upon the Recognition of Trusts Act 1987 (“the Act”), upon which there is surprisingly little reported authority in any branch of the law. I will shortly explain why, were Mr Scott’s submissions upon the effect of the Act valid, they would lead to a conclusion not that this court lacked jurisdiction to entertain the wife’s claim for an order for variation of settlement but that, in exercising such jurisdiction, it should apply the law of Jersey. Mr Scott concedes that, if he is to secure a ruling that any jurisdiction to vary rests only in the courts of Jersey, he needs something extra. The aptness of the word “extra” in this context is however open to debate: for any conclusion driven by the Act to the effect that the English court should apply foreign law to a claim is arguably inconsistent with a conclusion that the English court cannot entertain it at all. But, regardless of whether his need is for something extra or for something entirely different, Mr Scott proceeds to rely upon the exclusive jurisdiction clause in the Deed of Settlement as the feature which deprives this court of jurisdiction.[31]Were I to reject Mr Scott’s submission as to jurisdiction, it would be convenient for me to identify in this preliminary judgment the law which, in the light of the Act, this court should apply to the wife’s claim. The main reason why Mr Scott presses for the application of Jersey law, preferably in the Jersey court but in all events in this court, is that, although in Jersey the court also has power on divorce to vary a post-nuptial settlement, its power is for some reason more narrowly drawn than the power of this court. The distinction, recently noticed by the Royal Court in J v M [2002] JLR 330, is that, under article 27(1) of the Matrimonial Causes (Jersey) Law 1949, the settlement must be “between” the parties to the marriage whereas, under s.24(1)(c) of the Act of 1973, it must be “on” the parties to the marriage. Mr Scott appears confident of being able to repel any suggestion that The Hickory Trust was made “between” the parties.[32]The purpose of the Act, reflected in s.1(1), was to give legal effect to the Convention on the Law Applicable to Trusts and on their Recognition adopted at The Hague on 20October 1984 (“the Convention”), which is set out in the Schedule to the Act. The purpose of the Convention, which was promoted by the U.K., is explained in paragraphs 12 to 14 of the Explanatory Report of Professor von Overbeck. It was to address the difficulties attendant upon the use in common law states of the concept of a trust unknown to civil law states. The Convention provides a set of rules, common to all such states as might ratify it, for recognition of a trust and for identification of the law applicable to the despatch of most issues relating to it. For common law states the benefit was recognition of its creature abroad, so that, for example, trustees would not find beneficial ownership of trust funds held abroad imputed to them there; for civil law states it was ready access to what were intended to be simple rules for addressing what von Overbeck describes as “a somewhat troubling foreign institution”.[33]The following articles of the Convention are relevant:
“ Article 6 A trust shall be governed by the law chosen by the settlor… Article 8 Article 8 The law specified by Article 6 shall govern the validity of the 35. trust, its construction, its effects and the administration of the 36. trust. 37. In particular that law shall govern – 38. … (h).

(b) the personal and proprietary effects of marriage; …”

[34]There is nothing, whether in the Convention, the von Overbeck Report, the Act or otherwise, to indicate that either the signatories to the Convention or Parliament which gave it legal effect considered that it might have consequences for courts invested with a jurisdiction to vary certain types of trusts following divorce. But I agree with Mr Scott that such is of no consequence: subject in my view only to article 15, the effect of articles 6 and 8 is clear, namely that it is Jersey law which governs this court’s despatch of the application to vary The Hickory Trust.

The law specified by Article 6 shall govern the validity of the

[35]Thus, crucially, the argument turns upon article 15. Although the article provides only that the Convention “does not prevent” the application of other law in the circumstances there specified, s.1(3) of the Act obviates any resultant uncertainty by providing that such other law “shall” apply in such circumstances. The question therefore is whether this court’s domestic provisions for the despatch of applications for orders for variation of nuptial settlements following divorce are provisions which: (a)(i) are designated by this court’s conflict rules; and (ii) cannot be derogated from by voluntary act; (b) relate in particular to the personal and proprietary effects of marriage. I note at once that, so long as the provisions are of the type required by (a)(i) and (ii), it is not essential that they qualify under (b). The listed matters in article 15, including the personal and proprietary effects of marriage, are in the nature of an aide-mémoire of the subject-matter of provisions which might prevail over the proper law of the trust by virtue of the general introductory words. In paragraph 139 of the Report von Overbeck says: “It should be emphasised that the enumeration of the first paragraph of article 15 is by way of example. Mandatory rules in matters which are not listed may therefore also override the trust’s rules”.[36]So I focus first on the requirements at (a)(i) and (ii) above. Although the requirement at (i) refers to provisions designated by the court’s conflict rules, von Overbeck states, in para.138, that:
“The intent was to preserve above all the forum’s substantive law in cases where its conflicts rules designated its own law…”
English law chooses no substantive law other than its own for the despatch of applications for ancillary relief following divorce, even though belatedly it is beginning to recognise the need, in a case with foreign connections, for a sideways look at foreign law as part of the discretionary analysis required by its substantive law (Otobo v Otobo [2003] 1 FLR 192). Since, therefore, English substantive law is designated for the purpose of (i), the question is whether, for the purpose of (ii), there can be no derogation from it by voluntary act. In my view English law clearly decrees that there can be no such derogation. Parliament has conferred jurisdiction upon the court to make provision for a spouse following divorce in a variety of ways, including variation of a nuptial settlement; and, in its profoundly influential decision in Hyman v Hyman [1929] AC 601, the House of Lords held that there was a public interest in the making of fair provision for a spouse following divorce, with the result that a wife’s agreement not to apply to the court for maintenance could not oust the jurisdiction conferred upon it. Even nowadays, notwithstanding the law’s growing respect for properly negotiated pre-nuptial agreements, it is unarguable that they can succeed in ousting the jurisdiction of the court (M v M (Prenuptial Agreement) [2002] 1 FLR 654).[37]Mr Scott submits that, for teleological reasons, a court should always strive to apply the rule rather than the exception. I agree that an exception should be cautiously construed lest it grows to emasculate the rule and so to defeat its purpose. But exceptions have legitimate purposes of their own and I decline to feel uncomfortable about holding, as I do, that the introductory words of article 15 are engaged so as to except the wife’s claim from subjection to Jersey law pursuant to articles 6 and 8. That said, my conclusion would be fortified if I was able to hold, for the purposes of (b), that English provisions as to variation of settlements following divorce relate to the personal and proprietary effects of marriage.[38]Mr Scott submits that the right to seek variation of a nuptial settlement cannot sensibly be said to be an effect of marriage; that it is an effect of the opposite, namely divorce; and that the omission to make a simple addition of the words “or divorce” after the word “marriage” in article 15(b) is significant. Of course Mr Le Grice counters that, since divorce can flow only from marriage, the causal stream runs from the marriage to the right. He concedes that his construction stretches the words of the article but not, so he submits, to breaking-point.[39]Had the court been engaged fifty years ago in construing an English statute, Mr Scott might have won that argument – on points. But modern international provisions call for construction according to canons less pedantic, more flexible and in particular more purposive. What did the signatories have in mind when they excepted provisions relating to the proprietary effects of marriage from the ambit of the Convention? The answer is indicated in The Law of Trusts and Trustees by Underhill and Hayton, 16th ed., p.1047. The exception was driven by civil law states with provisions whereby on marriage spouses could by contract regulate the future ownership of their property and whereby, if they did not do so, the law would, by some form of community property, impose such regulation. States with such provisions were not prepared to suffer their erosion by any obligation to give effect to the provisions of a trust according to its proper law. At the risk of over-simplification, I suggest that, whereas civil law states use such provisions to regulate ownership of property following divorce as well as during marriage (when, as between spouses, ownership may have less significance), it is only at the point of divorce that our law makes its crucial provisions for ownership of property thereafter. If so, there is a close analogy between the provisions of the civil law states which, by article 15(b), remain sacrosanct and the rights of spouses to apply for relief ancillary to divorce under the Act of 1973.[40]Construction of article 15(b) is also substantially assisted by reference to the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters signed at Brussels on 27 September 1968 (“the Brussels I Convention”) which was given the force of law in the UK by the Civil Jurisdiction and Judgments Act 1982 and which, as revised, is now the subject of Council Regulation (EC) No.44/2001. Article 1(1) of the Brussels I Convention provides that it should not apply to “rights in property arising out of a matrimonial relationship”. In de Cavel v de Cavel [1979] ECR 1055 the question before the European Court of Justice was whether a freezing injunction made in France in the course of divorce proceedings was enforceable in Germany under the Convention. The answer was that it was unenforceable because it was incidental to rights in property arising out of a matrimonial relationship. At p.1066 the court construed article 1(1) to refer to rights “resulting directly from the matrimonial relationship or the dissolution thereof”. In Van den Boogaard v Laumen [1997] 2 FLR 399 the European Court gave a similar answer but had to proceed to wrestle with the interface between that exclusion in article 1 and the inclusion in article 5 of judgments in matters relating to maintenance. Notwithstanding a valiant submission by Mr Scott to the contrary, I see no distinction between the meaning of “provisions…relating…to… the … proprietary effects of marriage” in article 15 of the Hague Convention and of “rights in property arising out of a matrimonial relationship” in article 1 of the Brussels I Convention.[41]For the above reasons I hold that English provisions as to variation of settlements following divorce relate to the personal and proprietary effects of marriage and am thus fortified in my conclusion that the effect of article 15 is to except the wife’s claim from the ambit of the Convention. I note that my conclusion is also in line with some academic views. Thus: a) in The Conflict of Laws by Dicey and Morris, 13th ed., at p.1093 the editors submit that the Act does not affect the power under s.24(1)(c) and suggest in a footnote that if necessary article 15 could be invoked to achieve that result; and b) in Private International Law by Cheshire and North, 13th ed, at p.1043 the editors suggest that it would certainly seem undesirable that the power should be limited by the Act and that its preservation might well be supported by the reference in article 15 to the proprietary effects of marriage; however c) in Law Relating to Trusts and Trustees by Underhill and Hayton, 16th ed., at p.1044-5, the upshot of four somewhat difficult paragraphs is, I think, that the editor takes a more equivocal stance.[42]The only direct consequence of my conclusion that the Act has no application to the wife’s claim under s.24(1)(c) is that, if this court both has and chooses to exercise jurisdiction to entertain it, it will apply English law to it. Where, then, does my conclusion leave Mr Scott’s submission that this court lacks such jurisdiction? It leaves it for despatch by reference to basic principle. For more than a century this court has assumed jurisdiction to vary a nuptial settlement of which the proper law is foreign: Nunneley v Nunneley (1890) 15 P.D. 186. Although, as in The Hickory Trust, a proper law clause is often attended by an exclusive jurisdiction clause in favour of the courts of the state in which the proper law obtains, Mr Scott concedes that there is no reported authority on the effect in this context of an exclusive jurisdiction clause. For the reasons given in paragraph 36 I hold that such a clause cannot derogate from the jurisdiction of this court under s.24 (1)(c). I hasten to add that there may be circumstances in which this court will decline to exercise jurisdiction upon the footing that it would be better exercised in the courts of the state identified in an exclusive jurisdiction clause; or perhaps more likely, circumstances in which this court, while resolving in principle to exercise jurisdiction, will decline to make an order until satisfied that the courts of that state will recognise and enforce it. But such circumstances do not exist in the present case. The Hickory Trust no longer has Jersey trustees; there is nothing to indicate that it still holds assets in Jersey; and indeed the trust asset which is the primary target of the wife’s application is held in England. In such circumstances it is inapt to burden the courts of Jersey with this case in any way.

Cited in 1 later judgment