Trustee in bankruptcy seeking to realise debtor’s half-share in property located in Portugal – Interpretation of Brussels Convention – Whether English court competent to order bankrupt to take necessary steps for sale with vacant possession
A property in the Algarve region of Portugal was locally registered in the names of the appellant married couple, who were domiciled in the United Kingdom. Following the bankruptcy of the husband, the respondent, his trustee in bankruptcy, obtained an order from a district judge requiring the appellants to give vacant possession to the respondent and to do all such things as might be necessary to procure the sale of the property with vacant possession. The appellants appealed to the High Court, claiming that, on the true construction of Article 16.1 of the Brussels Convention 1968, as applied by the Civil Jurisdiction and Judgments Act 1982, the proceedings fell within the exclusive jurisdiction of the Portuguese courts, being “proceedings which have as their object rights in rem in immovable property”.
Held: The appeal was dismissed.
1. Bankruptcy proceedings were expressly excluded from the Convention by the 2nd exception in Article 1. However, the proceedings in the court below were not about whether the debtor should be made bankrupt; nor was the respondent seeking a special bankruptcy remedy. The exception did not apply to a property claim consequential upon a bankruptcy: see Re Hayward [1997] Ch 45, following Gourdain v Nadler [1979] ECR 733.
2. For the purposes of English law, the property vested in the respondent by virtue of section 306(1) of the Insolvency Act 1986. That section was not limited to municipal effect: see Singh v Official Receiver [1997] BPIR 530, applying the words “every description of property wherever situated” contained in the definition of “property” in section 436 of the 1986 Act. Whether the trustee could do anything about the realisation of that asset was a quite separate question that depended, in the last resort, on the lex situs: see Dicey and Morris 13th ed para 31-023.
3. As the bankrupt was holding the property for the trustee, he could be compelled by English trust law to complete the trustee’s title or do any other act in relation to the property at the trustee’s direction. An order to that effect could be made by an English court in the exercise of its jurisdiction over a bankrupt who domiciled in this country.Since the order made by the district judge operated essentially in personam on the appellant husband, the jurisdictional objection raised by the applicants could not be sustained: see Webb v Webb [1994] QB 696.
Sebastian Prentis (instructed by Harkavys) appeared for the appellants; Raana Sheikh (instructed by Lita Gale) appeared for the respondent trustee in bankruptcy.
Alan Cooklin, barrister