Martin v Secretary of State for Work and Pensions

Where there is no express choice of law for a putative implied trust of foreign land, the applicable law is that of the country with which the arrangement has the closest connection. The foreign situs does not itself prevent English trust law applying. The court must assess all the connections and the arrangement’s overriding purpose.

English personal connections may be outweighed where the arrangement was made solely to achieve a result under foreign succession law. A contributor’s personal remedies under the applicable foreign law do not create a proprietary interest which prevents the registered absolute owner’s property from being treated as capital for social-security purposes.

The claimant received income support without disclosing a house and land in France registered in his name. A friend had supplied the purchase price and renovation costs. The parties intended that she should control any sale and receive its proceeds, but the registration was chosen to achieve a desired outcome under French succession law.

The Appeal Tribunal and the Social Security Commissioner rejected the claimant’s challenge to the inclusion of the property in his capital. Following an earlier remittal, the Commissioner held that French law governed the alleged implied trust and that the friend had no proprietary interest under French law. The claimant appealed from the Commissioner’s decisions in proceedings identified as CIS/213/104 & CIS 214/04.

The central issue was whether English or French law governed the parties’ arrangement, and whether the evidence of French law required a further expert opinion.

1. Appeal dismissed; renewed application for permission to appeal refused. The Commissioner made no error of law in holding that French law governed the alleged implied trust. There was no express trust and no express choice of law.

2. At common law, foreign immovable property does not prevent English law from governing an implied trust. Webb v Webb and Lightning v Lightning Electrical Contractors Ltd established only that possibility. They did not determine this case, because their facts showed an arrangement substantially connected with England apart from the foreign property.

3. The applicable system was the law with which the whole arrangement was most closely connected. Here, the sole reason for putting the French property into the claimant’s name was to secure the intended result under French succession law. That purpose permeated the arrangement. It outweighed the parties’ English domicile, residence and relationship. The same conclusion followed from Article 7 of the Hague Convention, as set out in the Schedule to the Recognition of Trusts Act 1987.

4. The court therefore did not decide whether English law would otherwise have recognised a resulting or constructive trust. That issue was unnecessary to the result.

5. The Commissioner had sufficient expert evidence to find that French law gave the friend, at most, personal remedies. It gave her no proprietary interest in the property or its proceeds. The property could consequently be included in the claimant’s capital for the purposes of the Social Security Contributions and Benefits Act 1992.

6. The social-security process is co-operative, fact-gathering and inquisitorial. Formal burdens of proof are generally unnecessary. Applying Kerr v Department of Social Security, the court held that two expert opinions enabled an informed decision and that no important point of principle, practice, or other compelling reason justified a second appeal.

• Court of Appeal (Civil Division): In [2009] EWCA Civ 1289, dismissed the claimant’s appeal and refused permission for a second appeal on the French-law issue.

• Social Security Commissioner / Upper Tribunal Administrative Appeals Chamber: In final and interim decisions dated 29 August 2008 and 18 September 2007, held that French law applied and that the French property formed part of the claimant’s capital. The rehearing followed an earlier Court of Appeal remittal, for which no citation is stated.

• Appeal Tribunal (Colchester): The claimant’s appeal against the income-support and overpayment decisions was unsuccessful before the subsequent Commissioner proceedings.