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The Common Law Choice of Law Rules for Resulting and Constructive Trusts

Published online by Cambridge University Press:  17 January 2008

Adeline Chong
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Extract

There is a dearth of authority and in-depth discussion concerning what the choice of law rules are for claims involving the assertion that property is held on a resulting or constructive trust. It is usually thought that the choice of law rules set out by the Hague Convention on the Law Applicable to Trusts and on their Recognition (hereafter the ‘Hague Trusts Convention’), as enacted into English law by the Recognition of Trusts Act 1987, apply. However, it is arguable that this is not so for some types of resulting and constructive trusts, namely those governed by a foreign law; or, at the very least, that some doubt exists as to whether the Hague choice of lawrules apply to all resulting and constructive trusts. It is therefore important that the common law choice of law rules for such trusts is clearly elucidated. Unfortunately, this is an area of the law that is distinctly undeveloped. The aim of this article is to consider what are or should be the common law choice of law rules for resulting and constructive trusts.

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Articles
Information
International & Comparative Law Quarterly , Volume 54 , Issue 4 , October 2005 , pp. 855 - 883
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Copyright © British Institute of International and Comparative Law 2005

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References

1 eg Hayton, DUnderhill and Hayton: Law Relating to Trusts and Trustees (16th ednButterworths London 2003) (hereafter ‘Underhill and Hayton’) 1020–2.Google Scholar

2 Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378.

3 BCCI v Akindele [2001] Ch 437.

4 Guinness plc v Saunders [1990] 2 AC 663.

5 Trusts Law Text and Materials (3rd ednButterworths London 1999) 553. The inappropriateness of the terminology of ‘constructive trustee’ with respect to a personal remedy has been remarked upon: Paragon Finance v DB Thakerar and Co [1999] 1 All ER 400 at 409.Google Scholar

6 Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (hereafter ‘Westdeutsche’).

7 Lloyd's Bank plc v Rosset [1991] 1 AC 107.

8 Midland Bank v Cooke [1995] 4 All ER 562.

9 eg Harris, JThe Hague Trusts Convention (Hart Publishing Oxford 2002). A Dyer ‘International Recognition and Adaptation of Trusts: The Influence of the Hague Convention’ (1999) 32 Vand. J Trans Law 989; E Gaillard and DT Trautman ‘Trusts in Non-Trust Countries: Conflict of Laws and the Hague Convention on Trusts’ (1987) 35 Am J Comp Law 307; D Hayton ‘The Hague Convention on the Law Applicable to Trusts and on Their Recognition’ (1987) 36 ICLQ 260;Google ScholarKötz, H ‘The Hague Convention on the Law Applicable to Trusts and Their Recognition’ in Hayton, D (ed) Modern Developments in Trust Law (Kluwer The Hague 1999) ch 3;Google ScholarLupoi, MTrusts: A Comparative Study (Giuffre Milan 1997), trans Dix, S (CUP Cambridge 2000) ch 6; M Lupoi ‘The Shapeless Trust’ (1995) 3 Trusts and Trustees 15; J Schoenblum ‘The Hague Convention on Trusts: Much Ado About Very Little’ (1994) 3 J Int Trust & Corp Plan 5; AG Paton and R Grasso ‘The Hague Convention on the Law Applicable to Trusts and on their Recognition: Implementation in Italy’ (1994) 43 ICLQ 654.Google Scholar

10 AE von Overbeck ‘Explanatory Report’ para 77 p 387 (hereafter the ‘von Overbeck Report’).

11 Hansard HL Debs vol 482 col 940.

12 Westdeutsche [1996] AC 669 at 716 per Lord Browne-Wilkinson.

13 In contrast, the remedial constructive trust is imposed at the court's discretion and therefore only arises at the moment of judgment: Rawluk v Rawluk (1990) 65 DLR (4th) 161 at 185. It therefore clearly falls within the scope of s 1(2). The remedial constructive trust is currently not part of English domestic law: Westdeutsche ibid; Re Polly Peck (No 2) [1998] 3 All ER 812.

14 Automatic resulting trusts, which arise upon the failure of express trusts or when the purposes of the express trusts have been fulfilled, fall within the Convention: von Overbeck Report, para 51 pp 380–1. The phrase ‘resulting trust’ used here refers only to the presumed resulting trust unless indicated otherwise.

15 See Pearce, R and Stevens, JThe Law of Trusts and Equitable Obligations (3rd ednLexisNexis Butterworths London 2002), ch 8 (esp 233–42).Google Scholar

16 In Lightning v Lightning Electrical Contractors Ltd, 23/4/1998 (unreported), Gibson LJ left open the question whether the Recognition of Trusts Act 1987 applied to presumed resulting trusts.

17 They point out that Art 20, from which s 1(2) originates, refers to ‘trusts declared by judicial decisions’. However, the French version of Art 20 uses the word ‘créés’ which appears to mean a trust imposed by the court: Lupoi, MTrusts: A Comparative Study (Milan 1997), above n 9 p 343; Harris, (n 9) 240, p 139 (The official versions of the Convention are available in both English and French.)Google Scholar

18 ibid 145–8.

19 Collins, (gen ed) Dicey and Morris on the Conflict of Laws (13th ednSweet & Maxwell London 2000) (hereafter ‘Dicey and Morris’) para 29–026, p 1096.Google Scholar

20 ibid para 29–003, pp 1087–8.

21 Harris (n 9) pp 166–9.

22 Automatic resulting trusts are not included in this criticism as a choice of law in a trust instrument setting out an express trust which fails could safely be regarded as an indicator of the settlor's intentions as to the applicable law of the consequent automatic resulting trust.

23 Chambers, R ‘Constructive Trusts in Canada (Pt 1)’ (2001) 15 Trust Law International 214 at 222.Google Scholar

24 Even if such expectations were present, it is argued that they should take a back seat. As will be shown below, trusts properly belong within the law of property and should be treated as proprietary rights. The policy considerations present when dealing with property rights dictate that party expectations, if present, are to be relegated to the background.

25 PEN Croucher ‘Trusts of Moveables in Private International Law’ (1940–1) 4 MLR 111; DF Cavers ‘Trusts Inter Vivos and the Conflict of Laws’ (1930–1) 44 Harv LR 161; VTH Delany ‘Charitable Trusts and the Conflict of Laws’ (1961) 10 ICLQ 385.

26 Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 WLR 387.

27 Burrows, The Law of Restitution (2nd ednButterworths London 2002) 66, argues that the constructive trust imposed over the mistaken payment in Chase Manhattan v Israel–British Bank [1981] Ch. 105 (facts below text to n 38) should be seen as an example of proprietary restitution reversing unjust enrichment; and indeed, Goulding J's judgment makes extensive reference to the law of restitution and the circumstances under which constructive trusts arise under New York law, New York law being agreed by both parties to be the applicable law of the claim. However, this case is weak support for the application of the unjust enrichment rule to trusts claims; see below, text to n 79.Google Scholar

28 Panagopoulos, GRestitution in Private International Law (Hart Publishing Oxford 2000) 70;Google ScholarBird, J ‘Choice of Law’ in Rose, F (ed) Restitution and the Conflict of Laws (Mansfield Press Oxford 1995) 82–3.Google Scholar

29 ‘Resulting Trusts in the Conflict of Laws’ in Birks, P and Rose, F (eds) Restitution and Equity, Vol 1, Resulting Trusts and Equitable Compensation (Mansfield Press London 2000) 153.Google Scholar

30 ibid.

31 See Swadling, W ‘A Claim in Restitution?’ [1996] LMCLQ 63; A Tettenborn ‘Restitution of property not belonging to one: more awkward than it looks?’, WG Hart Workshops, Institute of Advanced Legal Studies, 1–3 July 2002.Google ScholarCf Grantham, RB and Rickett, CEF ‘Restitution, Property and Ignorance—A Reply to Mr Swadling’ [1996] LMCLQ 463.Google Scholar

32 Virgo, GThe Principles of the Law of Restitution (Clarendon Press Oxford 1999) ch 20;Google ScholarGrantham, and Rickett, ibid. Cf A Burrows ‘Proprietary Restitution: Unmasking Unjust Enrichment’ (2001) 117 LQR 412;Google ScholarMillett, P ‘Restitution and Constructive Trusts’ (1998) 114 LQR 399.Google ScholarBirks, PUnjust Enrichment (2nd ednOUP Oxford 2005) pp 63–9.CrossRefGoogle Scholar

33 Burrows, ibid; and (n 27), pp 60–75; Birks ibid.

34 Virgo (n 32), pp 11–15, p 591.

35 Although the decision of the majority of the House of Lords decision in Foskett v McKeown [2001] 1 AC 102 can be seen as support for the latter construction. Goff, Lord and Jones, GGoff & Jones: The Law of Restitution (6th ednSweet & Maxwell London 2002), go further and argue that Foskett ‘leads to the firm conclusion that English law does not recognise a restitutionary proprietary claim' (para 2–007, p 86; emphasis in original). See also NABB Brothers Ltd v Lloyd's Bank International (Guernsey) Ltd [2005] EWHC 405, para 36.Google Scholar

36 Kahn-Freund, OGeneral Problems of Private International Law (Sitjhoff Leyden 1976) 231; cited by C Forsyth ‘Characterisation Revisited: An Essay in the Theory of the English Conflict of Laws’ (1998) 114 LQR 141, at 153. The ‘enlightened lex fori’ approach is supported by Auld LJ in Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1996] 1 WLR 387 at 407.Google Scholar

37 Re Bonacina [1912] 2 Ch 394.

38 [1981] Ch 105 (hereafter ‘Chase Manhattan’).

39 ibid at 127.

40 Pettkus v Becker (1981) 117 DLR (3d) 257.

41 See L Barnard ‘Choice of Law in Equitable Wrongs: A Comparative Analysis’ [1992] CLJ 474, at 475–8.

42 Chase Manhattan [1981] Ch 105 at 127.

43 Canadian Conflict of Laws (4th ednButterworths Toronto 1997) 147.Google Scholar

44 Underhill and Hayton 1022; Pearce and Stevens (n 15) pp 233–42, p 264.

45 Unless it is shown that her contribution was meant as a gift to her husband, in which case, the husband owns the property solely.

46 See Barnard ( n 41) p 476; Castel (n 43) p 550.

47 Some commentators argue that unjust enrichment includes proprietary restitution as well: Birks (n 32); Burrows (n 32); Millett (n 32). However, the application of the unjust enrichment choice of law rule to trusts claims is considered under the rubric of ‘obligations’ here because, as will be argued below, most of the authorities in favour of this approach apply the unjust enrichment choice of law rule in the context of a personal restitutionary obligation.

48 eg Penn v Lord Baltimore (1750) 1 Ves Sen 444, 27 ER 1132; National Commercial Bank v Wimborne, 28 Apr 1978 (unreported); Angus v Angus (1737) West temp Hardwicke 23; Lord Cranstown v Johnston (1796) 3 Ves 170; Re Courtney ex parte Pollard (1840) Mont & Ch 239.

49 British South Africa Co v Companhia de Moçambique [1893] AC 601.

50 Lord Cranstown v Johnston (1796) 3 Ves 170 at 182.

51 Unreported, 28 Apr 1978, NSWSC (EQ), 1546/1978, quotation from Barnard (n 41), at 488.

52 ‘Equitable Obligations in Private International Law: The Choice of Law’ (1986) 11 Sydney LR 92 at 104–6.

53 Maharanee of Baroda v Wildenstein [1972] 2 QB 283.

54 White (n 52), at 108.

55 Unreported, 23 Apr 1998.

56 See also El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 at 736e–737j; United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766; A-G (UK) v Heinemann Publishers Australian Pty Ltd (1987) 10 NSWLR 86.

57 The courts may have used in personam reasoning, but ‘[t]his piece of historical hoodwinkery can hardly be used in the modern world to pretend that equitable titles are not rights of property’: A Briggs ‘The Brussels Convention’ (1994)14 YEL 557 at 565–6. The courts are using an in personam reason to grant a proprietary interest. For a detailed exposition of the intrinsically proprietary nature of rights asserted underatrust, see below, s IV.C.1.

58 In Lightning v Lightning, unreported, 23 Apr 1998, it was recognized as such, but Gibson LJ stated that ‘it seems to me implicit that the English court not unnaturally regarded English law as applicable to the relationship between the parties before it in the absence of any event governed by the lex situs destructive of the equitable interest being asserted’.

59 Barnard (n 41), at 490.

60 White n 52, at 107. eg British South Africa Co v De Beers Consolidated Mines Ltd [1910] 2 Ch 502 (overturned by the House of Lords [1912] AC 52, on a different point).

61 El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 at 739j, per Millett J; Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 at 387B-C (PC); Thahir v Pertamina [1994] 3 SLR 257 at 270B.

62 Bird (n 28), p 78.

63 See Stevens (n 29), pp 154–5; Panagopoulos (n 28), p 58; TM Yeo Choice of Law for Equitable Doctrines (OUP Oxford 2004) paras 2.19–2.30, pp 61–6, para 10.16, p 337.

64 The proposition that the lex fori should apply because trusts concern remedies has been criticised above; text to nn 38–46.

65 [1981] Ch 105.

66 [1996] 1 WLR 387 (hereafter ‘Macmillan’).

67 See also Pettkus v Becker (1981) 117 DLR (3d) 257.

68 [1995] 1 WLR 978 at 989

69 Above, text to nn 31–2.

70 § 160 of the Restatement of the Law of Restitution (US); § 1 of the Restatement (Third) of the Law of Trusts, comment e, 8; Barnard (n 41), at 478; Castel (n 43), p 550 (Canada); Pettkus v Becker (1981) 117 DLR (3d) 257; Sorochan v Sorochan (1986) 29 DLR (4th) 1; Rawluk v Rawluk (1990) 65 DLR (4th) 161; Peter v Beblow (1993) 101 DLR (4th) 621.

71 Westdeutsche [1996] AC 669 at 715, per Lord Browne-Wilkinson; Virgo (n 32), p 632. Cf Millett (n 32); and Barnard (n 41), at 478, who suggests that Canadian courts would consider the institutional constructive trust (if such trusts survived the development of the remedial constructive trust) as being a remedy imposed to redress equitable wrongdoing and thus apply the choice of law rule for equitable wrongs.

72 See Westdeutsche, ibid at 715, per Lord Browne-Wilkinson. Cf Rotherham, CProprietary Remedies in Context (Hart Publishing Oxford 2002).Google Scholar

73 Barnard (n 41), at 480 (n 25).

74 Panagopoulus (n 28), pp 66–7.

75 Para 29–026, 1096. See also Bird (n 28), pp 82–3; Castel (n 43), p 550.

76 Dicey and Morris 1502–4.

77 [1993] 3 All ER 717 at 736g–j.

78 [1981] Ch 105.

79 Panagopoulos (n 28), p 120.

80 9/5/2000 (unreported); hereafter ‘Trustor’).

81 The Court of Appeal also considered that Smallbone's liability was not confined to the amount that he had personally received. Since Introcom was essentially a creature of Smallbone and the payments made by Introcom of Trustor's money were made with Smallbone's knowing assistance, he was to be jointly and severally liable with Introcom for all the payments made by Introcom with Trustor's money. This aspect of their judgment was applied in Trustor AB v Smallbone (No 2) [2001] 1 WLR 1177. Furthermore, Trustor had an additional claim against Smallbone, as the managing director of Trustor, for damages or compensation for conspiracy and breach of duty. The Court of Appeal held that this was to be governed by Swedish law as Trustor is a Swedish company.

82 See Trustor AB v Smallbone (No 2), ibid at 1180–6.

83 Grupo Torras SA v Al-Sabah [2001] Lloyd's Rep Bank 36, esp [123] and [131].

84 Virgo, above, n 32, pp 554–5.

85 Beatson, JThe Use and Abuse of Unjust Enrichment (Clarendon Press Oxford 1991) 25–8, 206–43; IM Jackman ‘Restitution for Wrongs’ (1989) 48 CLJ 302. See also Chesworth v Farrar [1967] 1 QB 407.Google Scholar

86 Grupo Torras SA v Al-Sabah [2001] Lloyd's Rep Bank 36 at [122] and [140]. However, note that while the Court of Appeal rejected an unjust enrichment analysis for dishonest assistance claims, they did not at the same time examine whether such claims were a form of restitution for wrongs. In Royal Brunei Airlines v Tan [1995] 2 AC 378 at 386, the Privy Council stated that: ‘Recipient liability is restitution-based; accessory liability is not.’ However, as Virgo argues, the word ‘restitution’ was probably used synonymously with ‘unjust enrichment’ and therefore does not preclude an interpretation of dishonest assistance claims within the restitutionary framework based on a separate cause of action predicated on a wrong and not unjust enrichment; Virgo (n 28), p 555. In relation to equitable wrongs in general, see Base Metal Trading Ltd v Shamurin [2004] EWCA Civ 1316; [2005] 1 All ER (Comm) 17. The case concerned the breach of an equitable duty of care owed by a diretor of a company. Although Tomlinson J at first instance ([2003] EWHC 2419 (Comm); [2004] 1 All ER (Comm) 159, at [44]) had referred to a passage in the section in Dicey and Morris dealing with the application of Rule 200 to equitable wrongs cases (pp 1499–500, para 34–032) in relation to the breach of an equitable duty of care owed by a director of a company, the characterization adopted by the judge is unclear (Arden LJ in the Court of Appeal assumed that a contractual characterization was adopted at [73]) and the Court of Appeal did not consider Rule 200 at all. For a commentary on this case, see Yeo ‘Choice of Law for Director's Equitable Duty of Care and Concurrence’ [2005] LMCLQ 144.

87 See Panagopoulos (n 28), pp 81–94; Bird, above, n 28, p 76; Stevens, R ‘The Choice of Law Rules of Restitutionary Obligations’ in Rose, F (ed) Restitution and the Conflict of Laws (Mansfield Press Oxford 1995) 187–91; Yeo, above, n 63, pp 319–20. In Base Metal Trading Ltd v Shamurin [2004] EWCA Civ 1316; [2005] 1 All ER (Comm) 17, the Court of Appeal applied different choice of law rules to the concurrent actions of tort and equitable wrongdoing that arose in that instant case. They applied the law of the place of incorporation of the company to the latter claim. Yeo, ibid at 147, argues that the Court of Appeal characterized the claim within the category of ‘corporations’ and thus the case does not support a distinct category of ‘equitable wrongs’ for choice of law purposes. However, the Court of Appeal's approach would not be inconsistent with the existence of a category of ‘equitable wrongs’ under which the particular wrong of breach of the equitable duty of care by a company director would be governed by the law of the place of incorporation of the company.Google Scholar

88 El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 at 736g–h, per Millett J. See also Royal Brunei Airlines v Tan [1995] 2 AC 378 at 386; Grupo Torras SA v Al-Sabah [2001] Lloyd's Rep Bank 36 at [122].

89 Cf Yeo (n 63), para 9.13, p 313, who adopts a more proprietary interpretation of the case.

90 Thahir v Pertamina [1994] 3 SLR 257; Arab Monetary Fund v Hashim [1993] 1 Lloyd's Rep 543, [1996] 1 Lloyd's Rep 589 (CA). See J Bird ‘Bribes, Restitution and the Conflict of Laws’ [1995] LMCLQ 198; Panagopoulos (n 28), pp 84–6.

91 17 Dec 1998 (unreported Moore-Bick J); [2000] 2 All ER (Comm) 271 (CA); hereafter ‘Kuwait’. For commentaries on the case, see A Briggs ‘Decisions of the British Courts During 2000: Private International Law’ (2000) 71 BYBIL 435, at 471–2; G Virgo ‘Interest, Constructive Trusts and the Conflict of Laws’ [2000] RLR 122.

92 [2000] 2 All ER (Comm) 271 at [192], approving Chadwick J's judgment in Arab Monetary Fund v Hashim (unreported 15 June 1994).

93 See Briggs, above, n 92, at 471–2.

94 Although, ‘constructive trustee’ here was used more to denote the defendants' equitable liability for the purposes of awarding compound interest, rather than whether the defendants held identifiable property on an institutional constructive trust. See Virgo (n 92).

95 [2000] 2 All ER (Comm) 271 at [187]–[189]. His Lordship would limit the phrase ‘constructive trustees’ to persons who do not owe the principal any fiduciary duties. This restriction of the label of ‘constructive trustee’ to such persons appears to be a novel development; in Guinness plc v Saunders [1990] 2 AC 663, the House of Lords held that a director of Guinness, and who therefore owed the company fiduciary duties, was liable to account for an unauthorized payment he had received as a ‘constructive trustee’ for Guinness.

96 See also Chambers (n 23); Chambers ‘Constructive Trusts in Canada (Pt 2)’ (2002) 16 Trust Law International 2.

97 Cf Bird (n 28), pp 82–3.

98 Chambers (n 23), 228; Stevens (n 29), p 153.

99 Meagher, RP and Gummow, WMCJacobs' Law of Trusts in Australia (5th ednButterworths Sydney 1986), support application of the proper law of the relationship between the parties with respect to constructive trusts of moveables arising from contractual or fiduciary relations between the parties. By this, the authors mean either the law chosen to govern the relationship or, in the absence of choice, the law of closest connection: para 2804, p 712.Google Scholar

100 Unreported 23 Apr 1998. Facts above, text to n 55.

101 Below, section IV.C.1.

102 eg Dicey and Morris's Rule 200(2)(c); Art 9(3) of the proposed Regulation on the Law Applicable to Non-Contractual Obligations (hereafter the ‘proposed Rome II Regulation’), COM (2003) 427.

103 Although the preservation of mandatory property rules in some areas under Art 15 could be taken as support for a limited proprietary view of the Convention.

104 Paton, and Grasso, (n 9), at 656; Dyer, A and van Loon, HReport of Trusts and Analogous Institutions (Permanent Bureau of the Hague ConferenceThe Hague 1982) pp 158–70, paras 147–54.Google Scholar

105 See in general, Harris ( n 9), pp 65–77.

106 ‘Trusts Without Equity’ (2000) 49 ICLQ 599 at 605–7.

107 Although if the trustee wrongfully transfers trust property to a third party, it would be the beneficiary who would sue the third party.

108 Reference will be made to English law first to counter Gretton's points before drawing on foreign trusts and analogous institutions.

109 Re Kayford Ltd (1975) 1 WLR 279. Although Gretton thinks that since trusts such as charitable purpose trusts, where equitable ownership is not attributed to the beneficiaries, are also protected from the trustee's creditors, this factor is not a good indication of the ‘real’ nature of beneficial rights: n 10, at 606–7.

110 Section 5(1) of the Theft Act 1968.

111 Stevens, (n 729), p 148.

112 ibid.

113 Section 23 of the Sale of Goods Act 1979.

114 ibid section 24.

115 ibid section 25.

116 Briggs (n 57), at 565. Cf Webb v Webb (Case No C-294/92) [1994] I ECR 1717, para 15; [1994] QB 696.

117 Briggs, ibid. Cf Gretton, above, n 107, at 602.

118 Stevens (n 29), p 156.

119 As Yeo notes, ‘Trusts arising by operation of law generally do not serve management functions; they are intended to compel the trustee to convey the property to the beneficiary’: above, n 63, p 188, para 6.28.

120 (1841) 4 Beav 115.

121 Such as Australia and Canada.

122 Hayton, D ‘Principles of European Trust Law’ in Hayton, WA (ed) Modern International Developments in Trust Law (Kluwer London 1999) 23.Google Scholar

123 Graue, ED ‘Trust-Like Devices under German Law’ in Wilson, WA (ed) Trusts and Trust-Like Devices (United Kingdom Comparative Law Series, Vol 5) (The Chameleon Press Ltd London 1981) 65; Hayton, above, n 123, p 23.Google Scholar

124 Walters, DB‘Analogues of the Trust and of its Constituents in French Law, Approached from the Standpoint of Scots and English Law’ in Wilson, WA (ed) ibid 130.Google Scholar

125 Dyer, and van Loon, (n 125), p 52, para 42.Google Scholar

126 Lawson, FHA Common Lawyer Looks at the Civil Law (1953) 201, cited by Gretton (n 107), at 599; Walters (n 125), p 120.Google Scholar

127 Wilson, WA, ‘The Trust in Scots Law’ in Wilson, (ed) (n 124), pp 238, 241.Google Scholar

128 Dyer and van Loon (n 105), p 44, para 35.

129 (1841) 4 Beav 115.

130 1959 SLT (Notes) 13 (emphasis added).

131 Of course, now trusts governed by Scottish law would fall under the first limb of s 1(2) of the Recognition of Trusts Act 1987.

132 If institutions where this is not the case exist, arguably they would not fall under the category of ‘trusts’ in private international law and would be subject to a different choice of law rule.

133 Saunders v Vautier (1841) 4 Beav 115.

134 Panagopoulos argues that the property choice of law rules were developed to resolve issues arising out of voluntary transfers of property and competing titles and are therefore wholly inappropriate in the case of proprietary restitution: n 28, p 67. With respect, there does not appear to be much basis for this assertion. If the underlying heart of the issue is whether someone has absolute title over property, this is still a proprietary question even if it is labelled as a claim for proprietary restitution.

135 One exception is the choice of law rule for debts. According to Raiffeisen Zentralbank v Five Star Trading LLC [2001] EWCA Civ 68; [2001] QB 825; [2001] 2 WLR 1344, the assignment of debts is to be treated as a contractual question to be governed by the applicable law of the contract of assignment (application of Art 12 of the Rome Convention).

136 Macmillan [1996] 1 WLR 387 at 400.

137 Bird (n 28), p 118. See also S Cohen, ‘Quasi-Contract and the Conflict of Laws’ (1956) 31 Los Angeles Bar Bulletin 71 at 75.

138 [2001] 1 Lloyd's Rep 284 (hereafter ‘Glencore’).

139 See also M Bridge, who endorses a more dominant role for the governing law of the contract at least when it is a two-party case: ‘English Conflicts Rules for Transfers of Movables: A Contract-based Approach?’ in Bridge, M and Stevens, R (eds) Cross Border Security and Insolvency (OUP Oxford 2001) 123–43.Google Scholar

140 [2001] 1 Lloyd's Rep 284 at 294–5.

141 On the basis that, inter alia, application of the lex situs would best reflect the natural expectations of reasonable men, the realities of control of moveables, and the practical considerations of trade and commerce: ibid at 294–6.

142 Glencore [2001] 1 Lloyd's Rep 284, at [27]; Dicey and Morris, para 24–005 (p 965), para 33–109 (pp 1333–4); North, PM and Fawcett, JJCheshire and North's Private International Law (13th ednButterworths London 1999) 942.Google Scholar

143 Although admittedly some other contractual rights, such as the rights of stoppage in transit, have a quasi-proprietary character too.

144 Zahnrad Fabrik Pssau GmbH v Terex Ltd 1986 SLT 84; Glencore[2001] 1 Lloyd's Rep 284 at [23]–[24]; Dicey and Morris, para 33–111, p 1335. However, Dicey and Morris also posit an exception to the general rule (Rule 116, p 963, para 24R-001) that the lex situs at the time of transfer governs the validity of transfer of a tangible movable. They state: ‘If a tangible movable is in transit, and its situs is casual or not known, a transfer which is valid and effective by its applicable law will semble be valid and effective in England’ (para 24E-015, 968). This exception is envisaged to be very limited in scope; it is intended to apply only when the situs is indeterminate and unknown to the parties. From the illustrations it appears that the applicable law of the transfer is synonymous with the applicable law of the contract of transfer.

145 Glencore [2001] 1 Lloyd's Rep 284 at [28], per Moore-Bick J. See also Re Anziani [1930] 1 Ch 407 at 420.

146 Winkworth v Christie, Manson & Woods Ltd [1980] Ch 496 at 512, per Slade J.Google Scholar

147 ibid at 513, per Slade J.

148 [1996] 1 WLR 387 at 400.

149 ibid at 424.

150 Glencore [2001] 1 Lloyd's Rep 284 at [31].

151 [1980] Ch 496.

152 As for the bootstraps problem as to which law applies to the trust, it is suggested that if the alleged trust concerns property located in Ruritania, first, the lex fori must be satisfied that there is a good arguable case of a valid trust governed by Ruritanian law, Ruritanian law being the law identified by the property choice of law rules; before Ruritanian law, as the putative governing law of the trust, is applied to determine whether there is in fact a valid trust governed by Ruritanian law. See Harris (n 9), pp 276–8.

153 p 39.

154 339 A.2d 384.

155 See also Hawley & King v James 1838 WL 2884 (NY Ch); Hardy v Hardy 250 F Supp 956; Arbury v De Niord 152 NYS 763; Weston v Stuckert 329 F.2d 681; Bendean v Moody (1938) 5 NYS (2d) 94. The United States has signed but not ratified the Hague Trusts Convention.

156 Above, n 100, p 717, para 2812. Cf Damberg v Damberg [2001] NSWCA 87; 52 NSWLR 492; 2001 WL 588080. Australia has not taken up the opportunity to extend the provisions of the Hague Trusts Convention to trusts declared by judicial decisions; see the Trusts (Hague Convention) Act 1991, Commonwealth of Australia 50/1991.

157 ‘The Trust in Private International Law’ in Fawcett, JJ (ed) Reform and Development of Private International Law: Essays in Honour of Sir Peter North (OUP Oxford 2002) 212 (emphasis in original).Google Scholar

158 Option (iii) is not within the scope of this paper; however, the arguments set out here in favour of treating trusts claims as part of the law of property obviously apply a fortiori for claims for legal title.

159 A would only be an unsecured creditor in the eyes of Utopian law.

160 Lightning v Lightning Electrical Contractors Ltd, unreported 23 Apr 1998.

161 See also Webb v Webb (Case No C-294/92) [1994] I ECR 1717; [1994] QB 696, Opinion of Adv Gen Darmon, para 61.

162 Panagopoulous (n 28), p 67.

163 ibid 66–76.

164 Virgo (n 32), ch 20.

165 This category has been ignored in Dicey and Morris's Rule 200, para 34R-001, 1485, and Art 9 of the proposed Rome II Regulation, COM (2003) 427. Both formulations seem to be based on the idea of the law of restitution as comprising solely of personal obligations to make restitution in order to reverse the defendant's unjust enrichment. Although Rule 200(2)(b) offers a role for the lex situs with respect to a restitutionary obligation arising in connection with a transaction concerning land, it is clear from the explanatory text that this is aimed at a personal obligation arising from ownership of land and not questions of title over the land: para 34–028, 1497.