Ashurst v Pollard

The bankruptcy exception applies only where bankruptcy is the principal subject matter of the proceedings. The claimant’s status as trustee in bankruptcy is insufficient by itself. Article 16(1) is construed restrictively and autonomously. Its reference to the object of proceedings means their principal subject matter, not the claimant’s ultimate aim. Proceedings concerning personal rights between parties, rather than rights enforceable against third parties, fall outside Article 16(1), even if the relief may affect foreign land or lead to its sale. The English court may make in personam orders concerning trust property abroad where the required steps are within the jurisdiction and no issue of local law, practice or site-based fact-finding arises.

Mr and Mrs Pollard jointly owned property in Portugal. After Mr Pollard was made bankrupt, the respondent trustee in bankruptcy applied for an order for sale with vacant possession. The Brighton County Court granted the order. Jacob J dismissed the Pollards’ appeal, holding that the Convention applied but that Article 16(1) did not prevent in personam enforcement of the trustee’s rights: [2000] 2 All ER 772.

The Pollards appealed to the Court of Appeal, arguing that the Portuguese courts had exclusive jurisdiction over rights in rem in immovable property. The trustee served a respondent’s notice concerning the bankruptcy exception. The central questions were whether the proceedings fell within that exception, whether Article 16(1) applied, and whether the English court should exercise jurisdiction concerning trust property abroad.

Disposition

Lord Justice Jonathan Parker delivered the principal judgment. Lord Justice Potter and Lord Justice Kennedy agreed. The appeal was dismissed with costs.

1. Bankruptcy exception. Article 1 requires the court to ask whether bankruptcy is the principal subject matter of the proceedings. The mere fact that the claimant is a trustee in bankruptcy is insufficient. Applying the approach in Re Hayward [1997] Ch 45, the proceedings concerned enforcement of the trustee’s rights after the bankruptcy and therefore remained within the Convention.
2. Effect of insolvency vesting. Under the Insolvency Act 1986, Mr Pollard’s interest in the Portuguese property formed part of the bankruptcy estate and vested automatically in the trustee without conveyance or transfer. The vesting provisions could not themselves alter the Portuguese register of title.
3. Article 16(1). The provision required an autonomous and restrictive interpretation. Reichert v Dresdner Bank [1990] ECR I-27 supported restrictive construction. Sanders v van der Putte [1977] ECR 2383 identified the rationale of situs jurisdiction: local courts may be best placed to investigate the property and apply local law. Webb v Webb [1994] QB 696 established that the object of proceedings is their principal subject matter, not their aim or purpose, and that personal rights asserted only against the defendant are in personam.
4. The present proceedings involved personal issues between the trustee and the Pollards. They did not assert property rights against strangers, require investigation in Portugal, or raise Portuguese law or practice. The possibility that the orders might affect ownership or facilitate a sale did not change the subject matter.
5. Distinction from Re Hayward. Re Hayward concerned proceedings whose principal subject matter was ownership of foreign land and which sought to establish, protect and perfect title. It was therefore distinguishable. The present proceedings raised no issue as to title and sought only personal orders.
6. The English court had jurisdiction to make orders concerning trust property abroad. Whether such jurisdiction should be exercised depended on the order and the facts. Here, the required steps were to be taken within the jurisdiction by a trustee within the jurisdiction, giving rise to no jurisdictional or other objection.

1. Court of Appeal (Civil Division) dismissed the appeal and confirmed that the Portuguese courts did not have exclusive jurisdiction: [2000] EWCA Civ 291.
2. High Court (Chancery Division), Jacob J, dismissed the Pollards’ appeal from the bankruptcy order and held that Article 16(1) did not prevent appropriate in personam orders: [2000] 2 All ER 772.
3. Brighton County Court, District Judge Ley, ordered the sale of the Portuguese property with vacant possession on 4 October 1999.