England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE FAMILY DIVISION
MR JUSTCE WILSON
FD02D06673

		Royal Courts of Justice Strand, London, WC2A 2LL
		30/07/2004

Lord Justice Thorpe:

1. Floros Charalambous (the husband) married Martha Charalambous (the wife) on the 17^th June 1984. There are two children of the family, a girl of twelve and a boy of eight, who are separately represented before us by their litigation friend, Helen Sheeran. Before the birth of the second child the husband's mother created a Jersey settlement known as the Hickory Trust.
2. The financial affairs of this family are shrouded in mist. There were a number of business enterprises, including the operation of care homes for children and an estate agency. There is a document which seems to show that in February 2000 the husband suggested that his assets totalled £43M. However by the 1^st of October 2000 bankruptcy petitions were issued against the husband and wife and in the resulting proceedings it was asserted that on the 1^st November 2000 there was as estimated deficiency of approximately £5M. However the creditors asserted that there were undisclosed assets and interests. In that climate it is not difficult to imply a motive for the deed of appointment and removal dated 8^th January 2001 under the terms of which both husband and wife ceased to be beneficiaries under the Hickory Trust.
3. The marriage broke down in 2002. Both parties petitioned for divorce in September following a separation in July. Ancillary relief proceedings commenced with the filing of the wife's form A on the 8^th October 2002. Since then there have been continuing ancillary relief proceedings in the Family Division and bankruptcy proceedings in the Chancery Division. I need only refer to the wife's amendment of her form A on 24^th April 2003 to include an application under S.24 of the Matrimonial Causes Act 1973 for the variation of the Hickory Trust as a post-nuptial settlement. The husband challenged the court's jurisdiction under S.24. He denied that the Hickory Trust was a nuptial settlement. Alternatively he relied upon the provision of the settlement conferring exclusive jurisdiction on the Jersey courts and the provision in the settlement establishing Jersey Law as the proper law of the settlement and the provisions of the Recognition of Trusts Act 1987 importing into English Law the provisions of the Hague Convention of 1^st July 1985 on the Law Applicable to Trusts and on their Recognition.
4. These issues were debated before Wilson J at a three-day hearing commencing on the 1^st March 2004. He handed down his reserved judgment on the 2^nd April 2004. He rejected the husband's various challenges and granted a declaration that the court had jurisdiction to vary the Hickory Trust under S.24 (1)(c) of the 1973 Act. He refused the husband permission to appeal and gave directions for the further conduct of the proceedings.
5. On the 15^th April 2004 the husband sought permission to appeal and on the 19^th April I ordered an oral hearing on notice with appeal to follow if permission granted. That hearing was expedited to 29^th June 2004 since Wilson J had fixed a five day hearing to commence on 12^th July to be followed by a further five days commencing 11^th October 2004. Whether those hearings will succeed in dispelling all the mist surrounding this families' financial affairs seems to me questionable.
6. This chronology of the past, present and prospective ancillary relief litigation compels the familiar question: are the legal costs incurred disproportionate to what is in issue? Here both parties assert that they are either insolvent or in straightened circumstances. However the wife's case is that the husband has access to funds which he has not revealed, in breach of his duty in the current proceedings in ancillary relief and insolvency. She asserts that the proceeds of sale of the estate agency will amount to about £250,000 and would be apparently payable to the Hickory Trust. Those proceeds of sale are targeted by the wife's application under S.24 and are protected by an injunction which she has obtained to prevent the liquidator from making any payments other than to third party creditors. In those circumstances this court called for an account of all sums already spent and likely to be spent in the current proceedings. I take first the costs of the litigation friend. Her skeleton argument was received on the 25^th June, one clear working day before the fixture. She did not seek the court's directions as to whether counsel should be briefed and at the end of the day we questioned whether counsel's attendance had been necessary, given that the litigation friend had little or no contribution to make to the legal argument. Mr Emanuel explained that the litigation friend had not been served with much of the relevant court papers and that his decision to attend was in part to understand better what the case was about. Subsequently Mr Emanuel very responsibly waived his fee for the 29^th June. In those circumstances the costs of the litigation friend to date are £7,000. Prospectively the costs of the further hearings in the Family Division are put at approximately £27,500 if the litigation friend's involvement is limited to two days or approximately £42,000 without such limitation.
7. These are the comparable figures for the wife costs to date £175,000 and to be incurred a further £112,385. Of the costs incurred to date approximately £90,000 are publicly funded.
8. The comparable figures for the husband are £217,000 to date and to be incurred a further £36,000 (plus VAT). Of the costs incurred to date approximately £107,000 are publicly funded.
9. These figures speak for themselves. I hope that the Legal Services Commission will take note.
10. The judgement of Wilson J in the Family Division is reported at [2004] 2 WLR 1467. I am in no doubt that he was right to grant the declaration which he did. I would however reason that conclusion differently, partly because the respondent's case on appeal is more extensive than it was below. By Respondent's Notice dated 22^nd June 2004 the following additional ground was advanced: -

"As a matter of the conflict of laws, the petitioner's application to vary the Hickory Trust should be determined by reference to the Divorce Law of England and Wales and not by reference to the Recognition of Trusts Act 1987."

11. This is fleshed out in paragraph 14 of the skeleton argument of Mr Le Grice QC which reads: -

"The proper characterisation of the issue shows that the Court is concerned with the powers of the divorce courts rather than the "validity, construction, effects and administration of a trust." As a result the English conflicts rule on financial relief after divorce prevails."

12. Before attempting to reason my conclusions it is necessary first to record the relevant statutory material and the crucial provisions of the Hickory Trust. I will then summarise the submissions of Mr Francis QC and Mr Le Grice. Finally I will state my conclusions.
13. The contending statutes are the Matrimonial Causes Act 1973 and the Recognition of Trusts Act 1987. I need cite only part of S.24 of the Matrimonial Causes Act 19973 as follows: -

"24. – (1) On granting a decree of divorce, a decree of nullity of marriage or a decree of judicial separation or at any time thereafter (whether, in the case of a decree of divorce or of nullity of marriage, before or after the decree is made absolute), the court may make any one or more of the following orders, that is to say –

(a) an order that a party to the marriage shall transfer to the other party, to any child of the family or to such person as may be specified in the order for the benefit of such a child such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion;

(b) an order that a settlement of such property as may be so specified, being property to which a party to the marriage is so entitled, be made to the satisfaction of the court for the benefit of the other party to the marriage and of the children of the family or either or any of them;

(c) an order varying for the benefit of the parties to the marriage and of the children of the family or either or any of them any ante-nuptial or post-nuptial settlement (including such a settlement made by will or codicil) made on the parties of the marriage other than one in the form of a pension arrangement (within the meaning of section 25D below);

(d) an order extinguishing or reducing the interest of either of the parties to the marriage under any such settlement, other than one in the form of a pension arrangement (within the meaning of section 25D below)."

Subject, however, in the case of an order under paragraph (a) above, to the restrictions imposed by section 29(1) and (3) below on the making of orders for a transfer of property in favour of children who have attained the age of eighteen.

14. The principal purpose and effect of the Recognition and Trusts Act 1987 is to introduce into our domestic law the Hague Convention on the Law Applicable to Trusts and on their Recognition. Accordingly I need only cite part of S. 1 of the statute as follows: -

"1 Applicable law and recognition of trusts

(1) The provisions of the Convention set out in the Schedule to this Act shall have the force of law in the United Kingdom.

(2) Those provisions shall, so far as applicable, have effect not only in relation to the trusts described in Articles 2 and 3 of the Convention but also in relation to any other trusts or property arising under the law of any part of the United Kingdom or by virtue of a judicial decision whether in the United Kingdom or elsewhere.

(3) In accordance with Articles 15 and 16 such provisions of the law as are there mentioned shall, to the extent there specified, apply to the exclusion of the other provisions of the Convention."

15. Turning to the Convention itself, Article 6 provides "a trust shall be governed by the law chosen by the settlor" and Article 8 provides "the law specified by Article 6 … shall govern the validity of the trust, its construction, its effects and the administration of the trust." For the purposes of this appeal the key article is Article 15 which I cite in full: -

"Article 15

The Convention does not prevent the application of provisions of the law designated by the conflicts rules of the forum, in so far as those provisions cannot be derogated from by voluntary act, relating in particular to the following matters-

(a) the protection of minors and incapable parties;

(b) the personal and proprietary effects of marriage;

(c) succession rights, testate and intestate, especially the indefeasible shares of spouses and relatives;

(d) the transfer of title property and security interests in property;

(e) the protection of creditors in matters of insolvency;

(f) the protection, in other respects, of third parties acting in good faith.

If recognition of a trust is prevented by applications of the preceding paragraph, the court shall try to give effect to the objects of the trust by other means."

16. The deed of settlement of the 18^th September 1995 purports to have been made by the husband's mother (whether she was in reality the settlor is in issue). The original trustee, a Jersey Trust Company, was replaced ultimately by a company connected to a Mr and Mrs Tsirides on 27^th January 2003. The sum originally settled was a token US $ 100, subsequently supplemented by substantial assets which the wife asserts were derived from the joint resources of the parties. The settlement created a discretionary trust for the benefit of the settlor, the parties, their then only child and such other persons as the trustees might subsequently add. The trustee's powers to add or remove persons from the beneficial class are subject to the consent in writing of the "trust's" protector. The parties were appointed joint protector of the trust during their joint lives. However, the husband received the power to remove and appoint trustees. Section 3 of the settlement deals with proper law and jurisdiction as follows: -

"3.1 Subject to Clause 22 hereof, this Trust is established under the laws of the Bailiwick of Jersey and the rights of all parties and the construction and effect of each and every provision hereof shall be governed and construed only in accordance with the laws of Jersey, which shall be the proper law hereof (hereinafter called "the Proper Law")

3.2 Subject to Clause 22 hereof, this Trust shall be subject to the exclusive jurisdiction of the Royal Courts of the Bailiwick of Jersey which shall be the forum for disputes relating hereto (hereinafter called "the Forum")."

17. The instrument of the 8^th January 2001 removing the parties as beneficiaries was made in apparently orthodox form by Blevins Franks Trustees Ltd of Sliema, Malta.
18. The first ground of appeal asserts that the Hickory Trust ceased to be a post-nuptial settlement with effect from the date of the instrument removing the parties from the class of beneficiaries. Ground three asserts that any application to vary the Hickory Trust must be made to the Royal Courts in Jersey in compliance with clause 3.2 of trust deed. Alternatively that the wife's application to vary had to be determined in accordance with the laws of Jersey in compliance with clause 3.1 of the trust deed. Those are the issues raised by the appellant's notice.
19. Mr Francis' essential submission is that the trust instrument is explicit in its provision for exclusive jurisdiction and in its declaration of the proper law. Any application must be brought in Jersey. Alternatively this court must apply Jersey law in determining any question. Article 27 of the Matrimonial Causes (Jersey) Law 1949 confers upon the court, where a decree of divorce has been made, the power to "vary or modify ... any post-nuptial settlement …between the parties to the marriage…". Mr Francis therefore submits that paragraph 3.2 of the settlement requires the appellant to seek her relief in the Jersey court. Alternatively he submits that Mr Justice Wilson was bound to apply Article 27 of the Jersey statute rather than S.24 of the Matrimonial Causes Act 1973 giving due recognition to paragraph 3.1 of the settlement.
20. Mr Francis submits that these are the consequences of the application of S.1(1) of the Recognition of Trusts Act 1987 and Articles 6 and 8 of the Convention. Article 15, in the submission of Mr Francis, only permits the application of English conflict laws in the six instances defined by Article 15 and that Article 15(b) (the personal and proprietary effects of marriage) cannot possibly extend to the financial consequences of divorce. He submits that the restriction of Article 15 to the six matters specified is a construction fortified by the terms of S.1 (3) of the statute.
21. Although Mr Francis can find no authority to support his propositions in this or any other jurisdiction he claims support from the commentary to the Convention written by Professor von Overbeck, from the written views of Professor David Hayton and from the current edition of Cheshire and North. Mr Francis roundly rejects the characterisation argument advanced by the respondent's notice and submits that the authorities of Nunneley v. Nunneley [1890] 15 App Cas 186 and Forsyth v. Forsyth [1891] P636 are hardly reasoned and are of no surviving relevance since the commencement of the Recognition of Trusts Act 1987.
22. As to the proper characterisation of the Hickory Trust, Mr Francis concedes that as at the date of formation it constituted a post-nuptial settlement. However he submits that the effect of the instrument of the 8^th of January 2001 removing the parties as beneficiaries was to destroy the nuptial element.
23. The rival submissions of Mr Le Grice logically commence with his respondent's notice. What are in opposition are the conflict rules of trusts (Rule 151 in Dicey and Morris) and the conflicts rule of financial relief after divorce (Rule 86(7) in Dicey and Morris). Plainly the present application must be characterised as an application for financial relief after divorce governed by Rule 86(7) and not an application in relation to the settlement governed by Rule 151.
24. Alternatively Mr Le Grice submits that Article 15 of the Convention permits the application of the conflict rules of the forum in circumstances wider than the six particularised instances. In the further alternative he submits that Article 15(b) is clearly directed to taking trusts out of the operation of the Convention in the context of ancillary relief litigation.
25. In support of these propositions Mr Le Grice also relies upon Professor von Overbeck, Professor Hayton, the current edition of Dicey and Morris and the decision of the European Court of Justice in de Cavel v. de Cavel (1979) ECR 1055. Mr Le Grice submits, and Mr Francis disputes, that the language of Article 1 of the 1968 Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters (Brussels I), under which de Cavel was decided, is sufficiently close to the language of the convention to constitute the case a useful authority in the absence of any reported decisions on the Article itself.
26. I turn now to my conclusions on the rival submissions. I would not accept the case that Mr Le Grice advances by his respondent's notice. Characterisation is too crude a concept. The Act of 1987 cannot be so cavalierly dismissed. If it catches the Hickory Trust in the present circumstances it must be duly applied.
27. However there can be no doubt in my judgment as to "the law designated by the conflicts rules of the forum" in the context of a contested ancillary relief claim. In his concise judgment in the case of Nunneley v. Nunneley the President stated: -

"The language of the Act is exceedingly wide. I am clearly of opinion that the power thereby conferred extends to a settlement though made in another country and according to the law of that country."

(Counsel have traced the transition of the statutory power from its first appearance in the Matrimonial Causes Act 1859 and it is common ground that there is no material distinction throughout these transitions.)

28. In the later case of Forsyth Jeune J (himself subsequently President) followed the decision in Nunneley rejecting a submission that if the settlement was to be varied it had to be in accordance with Scottish Law. He said: -

"Nunneley v. Nunneley seems to me to go the whole length of deciding that whatever be the law applicable to the settlements the effect of S.5 of the 22 and 23 Vict. c. 61, is to give this court power to vary the settlements in its discretion according to the principles laid down in that section."

29. Mr Francis' submission that the courts of Jersey have exclusive jurisdiction to entertain the appellant's application by virtue of the provisions of S.3.2 of the settlement seems to me to be completely misconceived.
30. Statutory powers to vary post-nuptial settlements only arise on or after the decree that dissolves or annuls the marriage status. Individuals may not elect into or out of a jurisdiction that determines marital status. The necessary qualification to invoke such a jurisdiction will depend on habitual residence, or perhaps domicile or nationality depending on the lex fori. Each of the parties to this appeal held and exercised the right to invoke the jurisdiction of England and Wales. One or other or both may have had the right to invoke some other jurisdiction but it is manifest that neither had any right to invoke the matrimonial jurisdiction of the Jersey court. The provision of clause 3.2 cannot extend beyond an election for the law of Jersey in determining any question as to the construction or operation of the settlement qua settlement. This power to vary is derived not from the settlement but from the matrimonial regime of the state. Equally the right to seek variation derives not from the settlement but from the matrimonial regime of the jurisdiction that dissolves the marriage. So clause 3.2 of the settlement cannot oust or defeat the wife's exercise of her statutory right to apply under S.24 of the Matrimonial Causes Act 1973 for a variation of settlement order. The clause is of no avail to the husband.
31. Equally unavailing to the husband is clause 3.1 of the settlement. Once the wife has established the jurisdiction of the Family Division, the proposition that the husband has a right to the application of the law of Jersey in the determination of her S.24 application is completely misconceived. It is trite that a petition may only be defeated by a challenge to jurisdiction or stayed on a plea of forum non conveniens. Once a decree has been pronounced on the petition all ancillary issues must be determined in accordance with the relevant provisions of the Matrimonial Causes Act 1973. Unlike many civil jurisdictions which may inquire as to an applicable foreign law, this jurisdiction applies only the lex fori. In the specific instance of the variation of a post-nuptial settlement, the cases of Nunneley and Forsyth are conclusive. They have stood unquestioned for a century and Mr Francis' suggestion that they are unreasoned and therefore unpersuasive mistakes their power. The proposition that they proclaimed required no more elaboration.
32. Those conclusions alone are fatal to this appeal. However in my judgment Mr Francis' endeavour to invoke the Recognition of Trust Act 1987 is also unfounded. I am not persuaded that the liberation from Articles 6 and 8 which Article 15 provides is limited to the six specified categories. They are preceded by the plainest of language ("relating in particular to the following matters"). I do not consider that S.1(3) was intended or expressed to narrow the scope of Article 15. I find support for this conclusion in Professor von Overbeck's commentary at paragraphs 138 and 139 where he wrote: -

"138 It will be recalled that article 3 removes entirely from the Convention's coverage the acts done prior to the creation of the trust, which are necessary for its creation. To the contrary, article 15 looks to those hypothetical situations in which an existing trust may deploy effects which are incompatible with the mandatory rules of the forum or of the law of a third country for a field other than trusts. The intent was to preserve above all the forum's substantive law in cases where its conflicts rules designated its own law, but this provision is also intended to preserve a foreign substantive law which is designated by the private international law of the forum.

139 It should be emphasised that the enumeration of the first paragraph of article 15 is by way of example. Mandatory rules in matters which are not listed may therefore also override the trust's rules. Not without reason, it was said that a hostile judge might always find in article 15 a means of frustrating the trust."

33. Equally supportive is the following passage from the 13^th Edition of Dicey and Morris of the conflict of laws written by Professor David McLean: -

"The power of a divorce court to vary a settlement made by the parties to a marriage, under section 24 of the Matrimonial Causes Act 1973 after granting a decree and under section 17 of the Matrimonial and Family Proceedings Act 1984 after a foreign decree, has been considered in Rule 86. It is important that this power should be exercised in accordance with the English lex fori as part of the whole range of powers exercisable in those contexts and it is submitted that the Recognition of the Trusts Act 1987 does not affect that position."

34. I therefore conclude that if the statutory powers to vary settlements on or after decree are not covered by the specification in Article 15, they are nevertheless clearly covered by its general terms as "provisions of the law designated by the conflicts rules of the forum, in so far as those provisions cannot be derogated from by voluntary act".
35. The construction of Article 15(b) is not straightforward. Professor David Hayton is an expert of particular authority in this field. He spoke for the United Kingdom in the negotiation of the Convention. He has since written extensively on the Convention. In chapter 3 of The International Trust (Jordans 2002 p.123) he writes frankly of the realities surrounding the production of the text of the Convention: -

"In interpreting the Hague Convention, it is important to appreciate that near unanimity on clear 'black and white' provisions in a complex area was impossible, especially in view of time constraints. Often a problematic point was perceived and common lawyers would produce a proposal 'x' while civil lawyers would produce a proposal 'z'. After a 2-hour discussion the matter would be referred to the drafting committee to produce a compromise 'y' in the light of the discussion and in the light of the need to have the matter dealt with in French words comprehensible to civilian lawyers which would then have a parallel English text.

This led often curiously expressed English provisions and to matters being 'fudged' by the use of 'grey' open-textured language capable of being interpreted narrowly or broadly …"

36. In his 1987 article The Hague Convention and the Law applicable to Trusts and their Recognition (1987) 36 ICLQ 260 he introduced Article 15 thus: -

"Article 15 is concerned to ensure the application of the mandatory rules of the law applicable under the forum's conflicts rules to entitlement to assets that happen to be held on trust, irrespective of what the applicable law of the trust may provide. This requires the conflicts rules of the lex fori to be used to apply the mandatory rules of the lex fori or of the lex situs (or of the lex loci solutionis in a very rare case) in preference to applying the applicable proper law of the trust, e.g. if shortly before death or divorce a trust were created in an attempt to avoid the rights of a spouse on the settlor's death or divorce; or if a trust were created in an attempt to defeat claims of the settlor's creditors to the trust assets; or if Manitoban law had been chosen in an attempt to have English land escape the rules against perpetuities and accumulations."

37. In the current edition of Underhill and Hayton's Law Relating to Trusts and Trustees (16^th Edition 2003) he considers at p.1044 the interface with S.24(1)(c) in these terms: -

"It is clear from s 24(1)(c ) of the Matrimonial Causes Act 1973 that an English court has the power to vary a trust governed by English law when it has jurisdiction over divorce, nullity or legal separation proceedings involving the same parties. Section 17 of the Matrimonial and Family Proceedings Act 1984 confers a similar power on the court in respect of foreign decrees. In both cases, the decision to vary is at the court's discretion. Section 24 further provides a basis of competence to vary a trust governed by foreign law. However, whether a court with competence should actually vary a foreign trust raises a question governed by the applicable law of the trust. Article 8(2)(h) of the Trusts Convention makes clear that if a foreign law governs the trust, then it is that foreign law's substantive provisions on variation of trusts which should be applied, not those of English law. It must follow that it is to the applicable law of the trust that an English court should first look when deciding whether to vary the trust."

38. My difficulty in accepting that proposition is that the paragraph does not consider the effect of Article 15.
39. Finally we were referred to Professor Hayton's article The Hague Convention on Trusts: a Little is Better than Nothing but why so Little? (Journal of International Trust and Corporate Planning 1994, 3(1), 23-29 where he dealt with Article 15 in these terms: -

"Article 15 then preserves the pre-existing position, irrespective of what is the law applicable to a particular trust, to ensure that one jurisdiction's trust law does not override the mandatory rules of another (civil or common law) jurisdiction whose substantive domestic law is applicable according to the choice of law rules of the forum. Such mandatory rules concern matters such as insolvency, matrimonial property, transfer of title to property with protection afforded to bona fide transferees, and forced heirship succession rights: these rules my lead to the lex fori or the lex situs or lex successionis being applied so as wholly or partly to undo the effects of a trust of assets within the forum."

40. Professor Hayton's commentary is in my opinion inconclusive on the points at issue in the present appeal for the simple reason that he has not directly addressed them.
41. I conclude this review of academic opinion by citing the balanced appraisal to be found in the current edition of Cheshire and North's Private International Law (Butterworths, 1999) at p.1043: -

"There is power in the English court when granting a divorce, nullity or judicial separation decree, or at any time after the decree, to vary any settlement of movable and immovable property made on the parties to the marriage, whether by an ante-nuptial or a post-nuptial settlement. The court can also extinguish or reduce the interest of either of the parties to the marriage under such a settlement. Whenever the court has jurisdiction in the main proceedings for divorce, nullity or judicial separation, then it also has jurisdiction to order such variations. However, this application of English law as the law of the forum has not been restricted to settlements governed by English law or of English property. For example, in Nunneley v Nunneley and Marrian, the English court varied a settlement made in Scotland and in Scottish form of movables and immovables in Scotland. Is this power now limited by the Recognition of Trusts Act 1987 to settlements governed by English law? It would certainly seem undesirable that the power of the court in such family proceedings should be limited by the choice of law rules in the 1987 Act; and the exclusion of those rules might well be supported by reference to Article 15 which allows the English forum still to apply its conflict rules, here in fact leading to the application of the substantive law of the forum, to inter alia "the personal and proprietary effects of marriage". "

42. In the end on the due construction of Article 15(b) I again prefer the submissions of Mr Le Grice. The language of the sub-paragraph is too imprecise to exclude the statutory power to vary post-nuptial settlements on the termination of the marriage. These are the two essential ingredients of the statutory power: the relationship of the marriage of the parties to the settlement and the breakdown of the marriage, the driving force of the variation. An inclusive construction accords with good sense and with our legal tradition. It also avoids a great deal of complication and possible injustice which would result from an exclusive construction.
43. I need hardly add more but, if necessary, I would also accept Mr Le Grice's submissions as to the relevance of the parallel language of Brussels I ("this Convention shall not apply to …rights in property arising out of a matrimonial relationship") and as to the relevance of the decision in de Cavel v de Cavel.
44. The second and distinct issue in the appeal is purely one of English law: was the Hickory Trust a post-nuptial settlement within the terms of S.24 of the Matrimonial Causes Act 1973 at the relevant date? It being conceded by the appellant that it was a post-nuptial settlement until the removal of the parties as beneficiaries, the only question is whether their removal erased the nuptial element and with it the court's power to vary. I share the view of Wilson J that so to hold would be contrary to all good sense. We should reject the introduction of another evasive device into a field of litigation in which evasion abounds and in which there has never been any shortage of litigants who easily justify to themselves questionable tactics. However I cannot agree that a settlement which was nuptial when made retains that essential character come what may. It is easy to instance the head of a family who has created a number of settlements to preserve the family's fortune through two or more generations. His scheme may at one stage include nuptial settlements for his sons, their wives and issue. However at a later stage, to reflect events in the family or changes in the Taxing Acts, he might well radically revise the scheme and in so doing remove from one particular settlement a son, his wife and issue, compensating them with some advance or other security. So whether the removal of the spouses from the beneficial class does or does not erase the nuptial element must in my judgment depend on the facts and circumstances of the individual case.
45. In the present case the facts clearly indicate that the nuptial element of the Hickory Trust was not lost by the instrument of the 8^th of January 2001. The parties remain joint protectors. Their children remain in the beneficial class. The removal was apparently motivated by the desire to preserve the assets against claims that might be brought by the spouses' creditors. The parties may be reinstated to the beneficial class. The powers of the joint protector are extensive. Any decision of the trustees to distribute or accumulate requires the consent of the protector under clauses 8 and 22 of the deed of settlement. Subsequent to the removal of the parties there is clear evidence that the husband has in fact benefited substantially from the Hickory Trust which has provided him with working capital by substantial loans to one of his businesses.
46. Turning to authority, the judgment of Romer LJ in Prescott v Fellowes [1958] P. 260 provides an apt introduction. At 281 he said: -

"Inasmuch as the deed vested no property in trustees and created no successive legal or beneficial interests it had none of the attributes of a settlement which are familiar to conveyancing practitioners. It has, however, long since been established by decisions which are binding on this court that a disposition of property may a "settlement" for the purposes of section 25 of the Matrimonial Causes Act 1950, notwithstanding that it would not be regarded as a settlement of property for any other purpose. The liberality with which this legislation has been construed is sufficiently exemplified by Bosworthick v. Bosworthick. In that case a wife executed, a few years after her marriage, a bond which secured to her husband an annuity for his life. The marriage was dissolved in 1925 and the wife applied to the court for an order extinguishing her liability under the bond. This court, affirming the decision of Lord Merrivale P., held that the bond was a post-nuptial settlement for the purposes of section 5 of the Matrimonial Causes Act, 1859, and section 192 of the Supreme Court of Judicature (Consolidation) Act, 1925; and the wife's application succeeded. In the course of his judgment Romer J., who was sitting as a member of this court, said that the authorities established "that where a "husband has made a provision for his wife, or a wife for her husband, in the nature of periodical payments, that amounts to a settlement within the meaning of the sections. That may appear to be a very liberal construction of the sections, but I think that it is no more liberal a construction than should be given to them having regard to the obvious purposes for which they were enacted by the legislature."

47. As to the power to control as opposed to the entitlement to benefit, the case of Compton v. Compton [1960] P. 201 provides a good illustration. The point clearly emerges from the judgment of Marshall J at 210 where he held: -

"The first point taken by Mr. Beyfus on the wife's behalf is fundamental. He has submitted that the four settlements in question are not "post-nuptial settlements made on the parties "whose marriage is the subject of the decree." This submission was made before the registrar, but later abandoned before the hearing was concluded. It has, however, been revived before me and I must deal with it. If he were right in that submission this court would have no jurisdiction to make any order upon this application. I do not entertain any doubt that this submission is wrong. These settlements are settlements of property made in the course of marriage, and they deal with the interests of the children of the marriage. In the disposal of the property for the benefit of each child the respondent wife has been given a voice both as trustee and under the power of appointment even though it is the husband who provides all the money. Under the settlements on the two daughters she also has a beneficial interest in reversion. A settlement can settle on parties to a marriage power over the disposal as well as over the property itself."

48. Mr Francis relied much on the introductory paragraphs of the speech of Lord Nicholls in Brooks v. Brooks [1996] 1 AC 375 where, in defining what constituted a marriage settlement, he stated at 391: -

"In the Matrimonial Causes Act 1973 settlement is not defined, but the context of section 24 affords some clues. Certain indicia of the type of disposition with which the section is concerned can be identified reasonably easily. The section is concerned with a settlement "made on the parties to the marriage." So, broadly stated, the disposition must be one which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children."

49. That is of course an unimpeachable generalisation that was perfectly sufficient for the needs of the case then before the House. It is in my judgment unrealistic to suggest that it is conclusive of a point that was not before the House and one that is not covered by any existing authority. The words taken out of context provide an insubstantial foundation for Mr Francis' submission particularly since it is at odds with the facts and circumstances surrounding the Hickory Trust.
50. For the reasons given I share Wilson J's conclusion. However given the novelty and difficulty of the issues, I would grant the application for permission to appeal but dismiss the resulting appeal. I should record that the appellant's skeleton argument was settled by Mr Scott QC, who appeared below. It was adopted by Mr Francis, who appeared in this court in Mr Scott's stead.

Lord Justice May:

51. I agree that the application for permission to appeal should be granted but the appeal dismissed for the reasons given by Thorpe LJ.

Lady Justice Arden:

52. I agree with the judgment of Thorpe LJ and I gratefully adopt what he said with one minor qualification and one minor addition, as mentioned below.
53. The qualification I make concerns the passage which Thorpe LJ has cited in paragraph 47 of his judgment from the speech of Lord Nicholls in Brooks v Brooks [1996] 1 AC 375. To fall within the type of order which can be made under section 24(1)(c) of the Matrimonial Causes Act 1973, the settlement must be an "ante-nuptial or post-nuptial settlement … made on the parties to the marriage". The words "made on the parties to the marriage" constitute a condition for the application of section 24(1)(c) which is separate from, and additional to, the requirement for the settlement to be an ante-nuptial or post-nuptial settlement. The word "made" relates back to the moment of creation of the settlement. At that point in time, it must be within the description "made on the parties to the marriage". It probably must also have been an ante-nuptial or post-nuptial settlement at the date of creation though it is not necessary to decide that point. However, it is clear that the settlement must be an ante-nuptial or post-nuptial settlement at the time when the order is made: otherwise the section would have referred to former ante-nuptial or post-nuptial settlements as well. I agree that this was not a point dealt with by Lord Nicholls in Brooks v Brooks. I further agree with what my Lord has said about the meaning of the phrase "post-nuptial", namely that a settlement can lose this character after its creation. In this case, however, the settlement continued to be a post-nuptial settlement for the reasons given by Thorpe LJ in paragraph 44 of his judgment. In my judgment, the still extant and significant powers of Mrs Charalambous as joint protector, particularly her power to refuse to join in a consent to distributions by the trustees (see clause 8 read with clause 24 and schedule 7), are of themselves sufficient to invest the settlement with a post-nuptial character: see Compton v Compton, cited by Thorpe LJ in paragraph 46 of his judgment. These powers give Mrs Charalambous power to prevent the trustee from simply accumulating the income so that they have to make proposals to the joint protectors for distributing the income to the children of the marriage. In my judgment, these powers would be a sufficient form of continuing provision for Mrs Charalambous within the definition given by Lord Nicholls in Brooks v Brooks. It is, therefore, not necessary that either spouse should be a beneficiary at the date of the order under section 24(1)(c).
54. If Mrs Charalambous obtains an order under section 24(1)(c) of the 1973 Act varying the terms of the Hickory Trust, she will have to take separate proceedings against the trustees, probably in Jersey, in order that they too should be bound by the order. I note that in Compass Trustees v McBarnett [2002] JLR 321 the Royal Court of Jersey (Le Cras, Commissioner) was prepared as a matter of comity to recognise an order made in England under section 24(1)(c) of the 1973 Act as the English court had considered the matter fully and concluded that the need to provide capital to the wife outweighed the disadvantage caused to the other beneficiaries. The Recognition of Trusts Act 1987 has not yet been extended to Jersey pursuant to section 2(2) of the Act. (The only statutory instrument so far made under that section directs that the 1987 Act shall form part of the law of certain specified territories not including Jersey: The Recognition of Trusts Act 1987 (Overseas Territories) Order 1989, SI 1989 No.673).
55. As to the costs in this case, I too am greatly concerned by the question whether the costs in this case are proportionate to what is in issue. It is not moreover clear to me whether the estimates which this court have been given include costs incurred in the steps we are told have been taken in the administration proceedings of the parties' trading company or in the bankruptcy proceedings of Mr Charalambous. We cannot on this appeal answer the question posed by my Lord but it is the responsibility of the legal advisers to Mrs Charalambous to give appropriate advice to the Legal Services Commission.