Strand, London, WC2A 2LL
B e f o r e :
| (1) R. GRIGGS GROUP LIMITED
(2) R. GRIGGS & CO. LIMITED
(3) AIRWAIR LIMITED
- and –
|(1) ROSS EVANS
(2) RABEN FOOTWEAR PTY LIMITED
(3) RONNY LEOPOLD LEWY
(4) GARRY LEWY
Robert Onslow (instructed by Collyer Bristow) for the Second to Fourth Defendants
Hearing dates : 11 December 2003 and 24 March 2004
Crown Copyright ©
Mr Peter Prescott QC:
II. ESPRIT DE L'ESCALIER?
III. MATTERS TO BE EXAMINED.
IV. THE SCOPE OF THE PROBLEM.
The Need For Some Rule About Property Agreed to Be Transferred in Futuro.
V. THE DOCTRINE OF THE PURCHASER WITH NOTICE.
The English Rule.
But the great class of cases, in which relief is granted, under this head, is whether the contract or other act is substantially a fraud upon the rights, interests, duties or intentions of third persons. And, here, the general rule is, that particular persons, in contracts, and other acts, shall not only transact bona fide between themselves but shall not transact mâla fide in respect to other persons, who stand in such a relation to either, as to be affected by the contract or the consequences of it.
Another class of constructive frauds consists of those where a person purchases with full notice of the legal or equitable title of other persons to the same property. In such cases he will not be permitted to protect himself against such claims: but his own title will be postponed, and made subservient to theirs. It would be gross injustice to allow him to defeat the just rights of others by his own iniquitous bargain. He becomes, by such conduct, particeps criminis with the fraudulent grantor…
The same principle applies to cases of a contract to sell lands, or to grant leases thereof. If a subsequent purchaser has notice of the contract, he is liable to the same equity, and stands in the same place, and is bound to do the same acts, which the person who contracted, and whom he represents, would be bound to do.
… The ground of the doctrine is (as Lord Hardwicke has remarked) plainly this: "That the taking of a legal estate, after notice of a prior right, makes a person a mâla fide purchaser; and not that he is not a purchaser for valuable consideration in every other respect. This is a species of fraud and dolus malus itself; for he knew that the first purchaser had the clear right of the estate, and, after knowing that, he takes away the right of another person, by getting the legal title. And this exactly agrees with the definition of the civil law of dolus malus."
My Lords, the character in the law known as the bona fide (good faith) purchaser for value without notice was the creation of equity. In order to affect a purchaser for value of a legal estate with some equity or equitable interest, equity fastened upon his conscience and the composite expression was used to epitomise the circumstances in which equity would or rather would not do so. I think that it would be generally true to say the words "in good faith" related to the existence of notice. Equity, in other words, required not only absence of notice, but genuine and honest absence of notice. As the law developed, this requirement became crystallised in the doctrine of constructive notice …
[I]t would be a mistake to suppose that the requirement of good faith extended only to the matter of notice, or that when notice came to be regulated by [the pre-1925 statutes] the requirement of good faith became obsolete. Equity still retained its interest in and power over the purchaser's conscience. The classic judgment of James LJ in Pilcher v. Rawlins (1872) LR 7 Ch App 259, 269 is clear authority that it did: good faith is there stated as a separate test which may have to be passed even though absence of notice is proved. And there are many references in cases subsequent to [the Conveyancing Act 1882] which confirm the proposition that honesty or bona fides remained something which might be inquired into (see Berwick & Co v. Price  1 Ch 632, 639; Taylor v. London and County Banking Co  2 Ch 231, 256; Oliver v. Hinton  2 Ch 264, 273).
In the case of a person taking the legal estate, and not seeking for or obtaining the title deeds from the mortgagor [i.e. not inspecting the title], the question may arise between the legal mortgagee and either a prior or a subsequent incumbrancer or purchaser. But in such a transaction the fraud about which the Courts are most solicitous is that which is practised when a man takes the legal estate with knowledge of a prior equitable sale or incumbrance, and yet strives to place himself in a position to show that he took without notice – that kind of fraud which Lord Hardwicke explained in Le Neve v. Le Neve, when he said:- "The taking of a legal estate after notice of a prior right, makes a person a mala fide purchaser … This is a species of fraud, and dolus malus itself; for he knew the first purchaser had the clear right of the estate, and after knowing that, he takes away the right of another person by getting the legal estate."
Mr Onslow contends that Fry LJ's remarks were obiter. I cannot agree. In any case the submission presupposes that Fry LJ, who had a deep knowledge of equity, was uttering an eccentricity. On the contrary I believe he was summarising what was, by that date, well-established doctrine.
A Parochial Rule?
Their Lordships are led to this conclusion by the ordinary rules of justice as between man and man, and the ordinary expectations of mankind in transacting their affairs. [My emphasis.]
Now, if a person does not stop his hand, but gets the legal estate when he knew that the right was in another, machinatur ad circumveniendum…
Fraud, or mala fides, therefore, it is the true ground on which the Court is governed in the cases of notice …
VI. FOREIGN IMMOVABLES.
The Moçambique Case.
In Personam Jurisdiction in Relation to Property Situate Abroad.
Rationale of the Moçambique Rule.
It would be difficult to find a harder task than that which faces me, namely, of expounding for the first time either in this country or Spain the relevant law of Spain as it would be expounded by the Supreme Court of Spain, which up to the present time has made no pronouncement on the subject, and having to base that exposition on evidence which satisfies me that on this subject there exists a profound cleavage of legal opinion in Spain, and two conflicting decisions of courts of inferior jurisdiction.
Indeed, since he had to make up his mind as between two conflicting Spanish court decisions, Wynn-Parry had necessarily to decide that one of them was wrong; which he did, saying its reasoning was not "at all satisfactory". There are strong reasons for believing that the courts of Spain – a proud and noble country, which nobody has accused of feebleness when it comes to justly resenting an usurpation of its prerogatives – would have not thought this to be disrespectful to their authority and jurisdiction.
It is, we think, clear from an analysis of the judgments in the Moçambique case that the House of Lords treated the question whether the English courts should entertain an action for trespass to foreign land as one of justiciability. The English courts should not claim jurisdiction to adjudicate upon matters which, under generally accepted principles of private international law, were the peculiar province and competence of another state…
We think that the approach of the House of Lords was, in substance, the same as that of Lord Esher MR in the Court of Appeal. He had identified the question … as:
"… whether, in regard to an action of trespass done to land situated outside its territory, there is evidence to justify the inference that by the comity of nations the jurisdiction to determine the rights resulting from such an act has been allowed by other nations to this country, and has been accepted by this country." [My emphasis.]
In Webb v. Webb the European Court ruled that an action for a declaration that a person holds immovable property as a trustee and for an order requiring that person to execute such documents as are required to vest legal ownership under the lex situs in the plaintiff does not involve rights in rem within the meaning of Article 16(1). It was held to be irrelevant that the ultimate purpose of the plaintiff was to obtain ownership of an immovable; what is important is whether rights in rem are the object of the proceedings. Since the plaintiff did not claim that he already enjoyed rights directly relating to the property which were enforceable as against the whole world, but sought only to assert rights against the defendant, the action was not a right in rem within the meaning of Article 16(1), but an action in personam. This ruling suggests that, even if the object of the proceedings is to vindicate equitable rights against a third party (for example, where the claimant seeks to establish that a purchaser of trust property holds it as constructive trustee), the proceedings should not be regarded as involving rights in rem. [My emphasis.]
Lack of Jurisdiction Contrasted with Forum Non Conveniens or Choice of Law.
Forum Non Conveniens.
[The cases] support the general proposition that a foreign plaintiff, who can establish jurisdiction against a foreign defendant by any method recognised by English law, is entitled to pursue his action in the English courts if he genuinely thinks that will be to his advantage and is not acting merely vexatiously. Neither the parties nor the subject matter of the action need have any connection with England. There may be proceedings on the same subject matter in a foreign court. It may be a far more appropriate forum. The defendant may have to suffer great expense and inconvenience in coming here. In the end the decisions of the English and foreign courts may conflict. But nevertheless the plaintiff has a right to obtain the decision of an English court. He must not act vexatiously or oppressively or in abuse of the process of the English court, but those terms have been narrowly construed.
Choice of Law.
Norris v. Chambres.
I am told that according to late decisions, and according to the law of England, if a man sell an estate to B and receive part of the purchase-money, and then repudiate the contract, and sell the estate to C, who has notice of the first contract and of the payment of part of the purchase-money by B, B shall, in that case, have a lien on the estate in the hands of C, for the money paid to the original owner. But assume this to be so, this is purely a lex loci which attaches to persons resident here and dealing with land in England. If this be not the law of Prussia, I cannot make it so, because two out of the three parties dealing with the estate are Englishmen, and I have no evidence before me that this is the Prussian law on this subject, and it if it be so, the Prussian Courts of Justice are the proper tribunals to enforce these rights. If the owner of an estate in Prussia mortgage that estate to an Englishman, it is new to me that the Courts of Equity in this country will administer, as between those persons, the law obtaining in England with relation to mortgages, and foreclose or direct a sale of the Prussian estate, if payment be not made of the amount due…
[T]here is no equity between the parties; here the Plaintiff is entitled to no decree against the Defendants for payment of any sum of money, nor is any such claimed, but the equity and relief sought begin and end with a prayer to make a certain transaction between other persons, one of whom is a stranger to the Plaintiff, an interest to an estate in Prussia, belonging to that stranger, and this independently of all personal equities attaching upon him. I never heard of any such case, and I will not be the first Judge to create such a precedent, which if adopted, for ought I see, would go to assert a right in the Courts here to determine questions between foreigners, relating exclusively to immoveable property in their own country.
With respect to this advance, I think that, upon the authority of Penn v. Lord Baltimore, which has often been acted upon, the Plaintiff would have been entitled to succeed if he could have proved that the claim for a declaration of the proposed charge or lien on the Maria Anna mine was founded on any contract or privity between him or the deceased [director] and the Defendants, the purchasers of the mine, and if there had not been a suit in the Prussian Courts, in which the same question was raised and had been decided in the Plaintiff's favour.
But I agree in thinking with the Master of the Rolls that the Plaintiff has failed to shew any such contract or privity. Upon the evidence adduced the purchasers of the mine, whom he sues, are to be considered as mere strangers, and any notice which they may have had of the transactions between [the deceased director] and [the old company] (which has now ceased to exist) cannot give this Court jurisdiction to declare the proposed lien or charge on lands in a foreign country. An English Court ought not to pronounce a decree, even in personam, which can have no specific operation without the intervention of a foreign Court, and which in the country where the lands to be charged by it lie would probably be treated as a brutum fulmen. I do not think that the Court of Chancery would give effect to a charge on land in the county of Middlesex so created by a Prussian Court sitting as Dusseldorf or Cologne.
But another objection is lis alibi pendens, a suit pending before the proper tribunal in Prussia, and that by this tribunal, a decree has actually been pronounced in favour of the Plaintiff, giving him what he seeks… We must suppose that the Court at Dusseldorf has ample means to enforce the whole of its decree, and that the Plaintiff will have the full benefit of that decree, which may be considered as creating a debt for which the opposite parties are personally liable and a charge upon the property sold.
Deschamps v. Miller.
But it is alleged that the conveyances of the husband under which the defendants claim title were not made for good consideration according to French law [i.e. were made at an undervalue], and that consequently, according to the same law, the wife could follow the property and claim it in the defendants' hands. It is obvious, however, that whether or not the wife could assert any interest against land outside France would be governed entirely by the law of the place where the land is situate. If, for example, the land were in England, it would not be enough to prove that according to French law the wife had an interest. In order to assert such an interest against the defendants it would have to be made out either that the defendants were not purchasers for value, or that, though they were purchasers for value, they had notice of the wife's interest under the French contract. Of course a purchase for value under the English law may have a totally different meaning from a purchase for good consideration according to French law; and I am told in the present case that in France good consideration for such a purpose as this means full consideration in money or money's worth. In order, therefore, to decide whether the plaintiff can succeed in following the property into the hands of the defendants I should have to consider the law relating to immovable property in India. Not only may that law differ from the law of England in the extent to which equitable interests are recognized, but also in the importance which attaches to the presence or absence of notice. It may also contain provisions such as the statutes for the limitation of actions or suits, or for the registration of title, which would materially affect the matter I have to decide.
In my opinion the general rule is that the Court will not adjudicate on questions relating to the title to or the right to possession of immovable property out of the jurisdiction. There are, no doubt, exceptions to that rule, but, without attempting to give an exhaustive statement of those exceptions, I think it will be found that they all depend on the existence between the parties to the suit of some personal obligation arising out of contract or implied contract, fiduciary relationship or fraud, or other conduct which, in the view of a Court of Equity in this country, would be unconscionable, and so not depend for their existence on the law of the locus of the immovable property. Thus, in cases of trusts, specific performance of contracts, foreclosure, or redemption of mortgages, or in the case of land obtained by the defendant by fraud, or other such unconscionable conduct as I have referred to, the Court may very well assume jurisdiction. But where there is no contract, no fiduciary relationship, and no fraud or other unconscionable conduct giving rise to a personal obligation between the parties, and the whole question is whether or not according to the law of the locus the claim of title set up by one party, whether a legal or equitable claim in sense of those words as used in English law, would be preferred to the claim of another party, I do not think the Court ought to entertain jurisdiction to decide the matter.
In the present case there is, in my opinion, no such personal obligation as above mentioned, and I do not think I could assume jurisdiction in this case without acting contrary to the decision in Norris v. Chambres.
A suit in equity was instituted between two parties resident in England to enforce an equitable lien to land situate abroad. The court declined to entertain the suit. It held that, although a purchaser to whom land out of the jurisdiction of the court had been agreed to be sold by a person within the jurisdiction may obtain an order for specific performance against the vendor … he cannot obtain an order against a third party to whom the vendor has conveyed the property even though such person took with notice of the contract and is within the jurisdiction. The case was treated as one of jurisdiction, but it would today more properly be regarded as one of choice of law; whether the claim be brought against the vendor himself or against his transferee, the plaintiff would be invoking the in personam jurisdiction of the court against a defendant who was amenable to that jurisdiction. The difference between the two cases is that in the second case there is no equity or privity between the parties which the court can enforce except such equity, if any, as may arise from the transferee's notice; while the sufficiency of such notice to affect the transferee's title is a matter for the lex situs. If, by that law, the transfer to the defendant extinguished the plaintiff's interest notwithstanding the defendant's notice, the plaintiff no longer has any proprietary interest upon which he can base his suit in England.'
[I]t is necessary for conflict of law rules to be applied and developed in cases where equitable remedies are sought. These limitations have received little express consideration in English and Australian decisions… Because these difficulties have generally been passed over sub silentio by the courts, they cannot be regarded as resolved; doubtless more precise rules that will accept the applicability of foreign laws in appropriate cases will be established in the course of time.
Dr Spry's views are entitled to great respect.
Conclusion on Immovable Property.
VII. OWNERSHIP OF FOREIGN INTELLECTUAL PROPERTY.
Truly Analogous to Land?
In a broad sense [Rule 113] is based on a general principle found in most legal systems that, where the action concerns immovable property, the courts of the country where the land is situated have exclusive jurisdiction… There are various reasons for the principle… land still has a rather special position in most legal systems …
Tyburn Productions v. Conan Doyle.
(1) The rule in the Moçambique case precludes English courts from determining title to foreign immovables.
(2) The High Court of Australia in Potter v. Broken Hill Pty Co Ltd (1906) 3 CLR 479 held that the Moçambique rule applies by analogy where the validity or infringement of a patent is in issue, for that would be to enquire into the validity of an act of a foreign sovereign.
(3) The principle was supported by a more recent decision of the High Court of Australia in Norbert Steinhardt & Son Ltd v. Meth (1961) 105 CLR 440.
(4) Furthermore it was conceded by counsel for the claimants in the Tyburn case that, if this was right, the same principle must apply to other intellectual property rights such as copyright.
(5) The court would be reluctant to decline to follow decisions of the High Court of Australia unless convinced that circumstances had so changed as a result of social or economic developments or statutory intervention that the rule should now be confined to actions in which title to land is in issue.
(6) The application of the rule to intellectual property could be supported by other authority, namely the decision of Sir Nicolas Browne-Wilkinson V-C in Def Lepp Music v. Stuart-Brown  RPC 273, where it was held that a claim to infringement of copyright by acts performed in the Netherlands and Luxembourg was not justiciable in England, because such a claim cannot satisfy the double-actionability rule, namely, that the relevant acts must be actionable in the foreign state and England.
(7) Finally, the principle was further supported by the decision in Rey v. Lecouturier  2 Ch 715;  AC 262, where it was held that a ruling by the French courts that the ownership of the trade mark Chartreuse (formerly belonging to the monastery of Grand Chartreuse) had passed to a liquidator under French law, could not affect the title to the English trade mark, since the French courts had no jurisdiction to determine title to this English property.
We can derive little or no assistance from the decision in the Tyburn Productions case on the question whether an action for alleged infringement of a foreign copyright by acts done outside the United Kingdom, in a case where the existence and validity of the right is not in issue, is justiciable in an English court. [My emphasis.]
(1) (Moçambique rule precludes English courts from determining title to foreign immovables.) This is not applicable to the present case, which concerns the scope of the court's equitable in personam jurisdiction. See the previous section of this Judgment. Even if that is wrong, the point was not before Vinelott J. He was being asked to say the rights did not exist at all.
(2) (Potter v. Broken Hill extends Moçambique rule to validity or infringement of patents). That was a case in which the plaintiff sued in the state of Victoria for infringement of a patent granted by the state of New South Wales. The defendant challenged the validity of the patent. In so doing he was necessarily calling into question the validity of an act of the local sovereign i.e. the state of New South Wales. He was contending that the authorities of that State had been wrong to grant the patent, or had been wrong to grant it in that form. This could not be allowed. But that, of itself, in no way establishes that an action for infringement could not have been entertained if the validity of the patent had not been in question. See the analysis of the case by the Court of Appeal in the Ove Arup  FSR at 551-554. Much less does it establish that a dispute over the right to a patent could not be entertained under the in personam jurisdiction.
(3) (Principle further supported by the more recent Australian decision in Norbert Steinhardt.) That case was an action for threats, uttered in England, to sue on an Australian patent in Australia. The action failed because a threat uttered in England was not within the scope of the Australian Patents Act. See the analysis of the case by the Court of Appeal in the Ove Arup case at page 554. (With respect, the Court appears somewhat to have misunderstood the nature of the cause of action, which was for the statutory tort of threatening to bring patent proceedings, not for threats to infringe a patent. But that error is irrelevant to its reasoning.) The Norbert Steinhardt case, therefore, adds nothing to the matter in hand.
(4) (Concession by counsel that, if Moçambique rule applies to patents, it must also apply to copyright.) It does not follow. Unlike patents, copyrights are not registered. Compare Art. 16(4) of the Brussels and Lugano conventions. Hence the Court of Appeal in the Ove Arup case held that an action lay in England for infringement of Dutch copyrights.
(5) (Court would be reluctant to decline to follow decisions of the High Court of Australia unless convinced that circumstances had so changed as a result of social or economic developments or statutory intervention that the rule should now be confined to actions in which title to land is in issue.) I have already pointed out that:-
- Times have changed seeing that we now do entertain actions for infringement of foreign copyrights, at least in some instances.
- The Australian decisions are not authority on the point before me: neither the existence nor validity of foreign patents, let alone copyrights, is in issue.
- Land may indeed be a special case (see paragraph 118, above).
(6) (Principle is further supported by Def Lepp Music v. Stuart-Brown.) If anything, Def Lepp is against Mr Onslow's contention, for it serves to explain why proceedings for infringements of foreign intellectual property rights could not be brought in the past. It was a rule about double-actionability and implied nothing about justiciability in the sense of comity. Anyway the rule has now been abolished by Parliament.
(7) (Rey v. Lecouturier is further support for the principle since French courts had no jurisdiction to determine title to English trade marks.) In the first place, what had happened in France was a decree of confiscation of the Carthusian monks' property. It is trite law that, in general, foreign penal acts of a confiscatory nature are not recognised in England. In the second place, the actual observation relied on, that the French court "had no jurisdiction to determine what ought to be the entries in the register of trade marks in England", while correct, is not in point. Of course the French court had no jurisdiction in rem – to give directions to our Registrar. But the case has nothing to do with what would have happened – in a case not about penal confiscation – if a French court had held that the monks were under an obligation, enforceable in personam, to transfer the trade marks.
Note 1 Even if Mr Evans told Raben that he was the beneficial owner because his fee did not cover use of the Logo by Griggs for all purposes, but only for use on point-of-sale material in the UK, and even if Raben believed him (which last point was not explored at the trial), that would not have been a sufficient countervailing factor. For the reason why, see paragraphs 45-57 of my previous judgment, particularly the last.
[Back] Note 2 Also, it is possible to enter into an agreement by which the legal title to the copyright in a prospective work will vest as soon as it is created (s.91 of the Copyright, Patents and Designs Act 1988); but the Act applies to British copyrights only. [Back] Note 4 The actual result in that case was regarded as controversial by some, because it might seem to overrule a statute concerning the registration of land in the County of Middlesex. But it was always followed on that point. Moreover, that particular issue is not pertinent for present purposes. [Back] Note 6 The second limb of the Moçambique rule (that damages may not be sought for trespass to foreign land even though the title thereto is not in issue, save incidentally) has since been abrogated by section 30 of the Civil Jurisdiction and Judgments Act 1982.
[Back] Note 7 Inre the estate of Adams, unreported, Browne-Wilkinson V-C, 31 July 1985 similarly had to decide what the Spanish Supreme Court would decide if faced with a similar question, and he did so. When the point did come before the Spanish Supreme Court (Denney, 5 May 1999) that tribunal, far from objecting, paid careful attention to our case law, and held that our Vice-Chancellor had been right. The materials are available on the website http://web.onyxnet.co.uk/antony.anderson-onyxnet.co.uk/ts-e.htm
Note 1 Even if Mr Evans told Raben that he was the beneficial owner because his fee did not cover use of the Logo by Griggs for all purposes, but only for use on point-of-sale material in the UK, and even if Raben believed him (which last point was not explored at the trial), that would not have been a sufficient countervailing factor. For the reason why, see paragraphs 45-57 of my previous judgment, particularly the last. [Back]
Note 2 Also, it is possible to enter into an agreement by which the legal title to the copyright in a prospective work will vest as soon as it is created (s.91 of the Copyright, Patents and Designs Act 1988); but the Act applies to British copyrights only. [Back]
Note 4 The actual result in that case was regarded as controversial by some, because it might seem to overrule a statute concerning the registration of land in the County of Middlesex. But it was always followed on that point. Moreover, that particular issue is not pertinent for present purposes. [Back]
Note 6 The second limb of the Moçambique rule (that damages may not be sought for trespass to foreign land even though the title thereto is not in issue, save incidentally) has since been abrogated by section 30 of the Civil Jurisdiction and Judgments Act 1982. [Back]
Note 7 Inre the estate of Adams, unreported, Browne-Wilkinson V-C, 31 July 1985 similarly had to decide what the Spanish Supreme Court would decide if faced with a similar question, and he did so. When the point did come before the Spanish Supreme Court (Denney, 5 May 1999) that tribunal, far from objecting, paid careful attention to our case law, and held that our Vice-Chancellor had been right. The materials are available on the website http://web.onyxnet.co.uk/antony.anderson-onyxnet.co.uk/ts-e.htm [Back]