Charalambous v Charalambous

A matrimonial court’s statutory power to vary an ante-nuptial or post-nuptial settlement derives from the matrimonial jurisdiction, not from the settlement instrument. A jurisdiction or proper-law clause in a trust deed cannot exclude that power or require the court to apply foreign trust law to the statutory application. The Recognition of Trusts Act 1987 does not displace the English lex fori in ancillary-relief proceedings. Article 15 of the Hague Convention permits mandatory forum rules concerning the personal and proprietary effects of marriage to prevail over the trust’s proper law. Whether a settlement which was nuptial when created remains so after spouses are removed as beneficiaries is fact-sensitive. Continuing powers or interests connected with the marriage may preserve its nuptial character.

The parties were married in 1984 and had two children. The husband’s mother established the Hickory Trust during the marriage. The spouses were beneficiaries and joint protectors, but an instrument made in 2001 removed them from the beneficial class. After the marriage broke down, the wife applied under section 24(1)(c) of the Matrimonial Causes Act 1973 to vary the trust as a post-nuptial settlement.

Wilson J rejected challenges based on the trust’s Jersey jurisdiction and proper-law clauses, the Recognition of Trusts Act 1987, and the alleged loss of the trust’s nuptial character, and declared that the Family Division had jurisdiction. The husband appealed. The central issues were whether the English court could exercise and determine the statutory variation power, and whether the trust remained a post-nuptial settlement after the spouses’ removal as beneficiaries.

1. Disposition. Permission to appeal was granted because of the novelty and difficulty of the issues, but the appeal was dismissed. The declaration that the court had jurisdiction under section 24(1)(c) of the Matrimonial Causes Act 1973 was upheld.
2. Jurisdiction and governing law. The statutory power to vary a post-nuptial settlement arises from the matrimonial regime of the state whose court dissolves the marriage. A clause conferring exclusive jurisdiction on the Jersey courts could govern disputes concerning the construction or operation of the trust as a trust, but could not oust the wife’s statutory right to apply under section 24. Once the English matrimonial jurisdiction had been invoked and a decree pronounced, ancillary issues were to be determined under the relevant provisions of the 1973 Act and the English lex fori.
3. The court applied Nunneley v Nunneley [1890] 15 App Cas 186 and Forsyth v Forsyth [1891] P636 as conclusive authorities that the English court’s statutory power extends to settlements made abroad and is exercised according to the statutory discretion, regardless of the law otherwise applicable to the settlement.
4. Recognition of trusts. Sections 1(1) and 1(3) of the Recognition of Trusts Act 1987, and Articles 6, 8 and 15 of the Hague Convention, did not require the English court to apply Jersey law to the section 24 application. Article 15 was not confined to its six listed examples. Its general language preserved mandatory provisions designated by the forum’s conflict rules, including the statutory power to vary a settlement on the termination of a marriage. The court also accepted, if necessary, the relevance of the parallel Brussels I language and de Cavel v de Cavel (1979) ECR 1055.
5. Nuptial character. A settlement which was nuptial when created does not necessarily retain that character indefinitely. Whether removal of spouses from the beneficial class destroys the nuptial element depends on the facts and circumstances. Here it did not. The spouses remained joint protectors, their children remained beneficiaries, the removal appeared designed to protect assets from creditor claims, reinstatement was possible, the protectors’ powers were extensive, and the husband later benefited through substantial trust loans.
6. The broad approach to settlements in Prescott v Fellowes [1958] P. 260 and the recognition in Compton v Compton [1960] P. 201 that a settlement may confer powers over disposal as well as beneficial interests supported that conclusion. The general description in Brooks v Brooks [1996] 1 AC 375 was not conclusive of the issue, which had not been before the House of Lords.
7. Lady Justice Arden added that the settlement must be a post-nuptial settlement when the section 24 order is made, and that Mrs Charalambous’s continuing powers as joint protector were themselves sufficient continuing provision to preserve that character. She further noted that separate proceedings against the trustees, probably in Jersey, might be needed to bind them, referring to Compass Trustees v McBarnett [2002] JLR 321.

• Court of Appeal (Civil Division) — [2004] EWCA Civ 1030, 30 July 2004: permission to appeal granted, but the appeal dismissed. The declaration of jurisdiction under section 24(1)(c) of the Matrimonial Causes Act 1973 was upheld.
• Family Division — Wilson J, judgment reported at [2004] 2 WLR 1467: rejected the husband’s jurisdictional and trust-law challenges and declared that the court had jurisdiction to vary the Hickory Trust under section 24(1)(c).