England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BIRMINGHAM DISTRICT REGISTRY
HHJ PURLE QC
IBM30583

		Royal Courts of Justice Strand, London, WC2A 2LL
		26th July 2013

LORD JUSTICE LLOYD JONES :

1. This is an appeal by Mr. Said Tony Hamed, the defendant in these proceedings, against the Order of H.H.J. Purle QC dated 8 July 2012, dismissing Mr. Hamed's application challenging the jurisdiction and seeking a stay of these proceedings.
2. The claimant, Mr. Jeremy Stevens, is a British national who is resident and domiciled in this jurisdiction. Mr. Hamed is an Egyptian national who states in his witness statement that he divides his time each year equally between Egypt and England. The judge considered that by the standards of the common law he remains domiciled in Egypt, where he has his domicile of origin, although habitually resident in England where he is on the electoral roll, living predominantly with a partner in Hereford. He holds both an Egyptian and a UK passport. Mr. Hamed is a director of an English company, Bindi (London) Limited ("Bindi") which, he says, in turn acts as agent for Camarin Holdings Limited ("Camarin"), a company incorporated in the British Virgin Islands. Camarin owns the Hereford property in which Mr. Hamed and his partner live. Camarin is also the sole shareholder of Bindi from which the Hereford property was transferred for no consideration in 1999. Mr. Hamed is the sole director of Bindi. The judge below considered that, although there is no explicit statement in the evidence as to who ultimately is behind Camarin, the dealings with the Hereford property suggest that there is no great distance between Camarin and Mr. Hamed.
3. In these proceedings Mr. Stevens claims that in January 2007 he transferred the sum of US $300,000 to Mr. Hamed's account at the Commercial International Bank, El Gouna, Egypt on the basis that Mr. Hamed would hold the monies pending the formalities of the proposed sale by Mr. Hamed to Mr. Stevens and his civil partner Mr. Martin Shaw of an apartment in Egypt. It is said that the monies were, in the meantime, repayable on demand or in the event of a failure of purpose. It is also said that the agreement was later amended so that the purchase would be taken in the name of Mr. Shaw alone. Mr. Stevens claims that the Defendant failed to transfer the title of the property and now seeks to recover the sums transferred as money had and received.
4. Proceedings were commenced against Mr. Hamed in the Birmingham District Registry of the Chancery Division on the 26 October 2011. Mr. Hamed was served with the proceedings in the jurisdiction. By an application notice dated 12 December 2011 and issued on 3 February 2012 Mr. Hamed sought a declaration that the court does not have jurisdiction over the subject matter of these proceedings on the ground that the claim raises a disputed question of title to foreign land. Alternatively he sought an order that the court should decline jurisdiction on the ground of forum non conveniens. The challenge to the jurisdiction and the case on forum non conveniens both failed before Judge Purle. Mr. Hamed now appeals solely on the jurisdiction ground.
5. The Claimant's pleaded case may be summarised as follows:

(1) In 2006 Mr. Stevens and Mr. Shaw wrote a letter to Mr. Hamed stating that they wished to purchase from Mr. Hamed a holiday apartment in El Gouna, Egypt, know as MB13 1-101 ("the property") at a price to be agreed.

(2) In January 2007 in Hereford, Mr. Shaw and Mr. Hamed agreed the purchase price of US $300,000. Mr. Hamed gave Mr. Shaw the details of his personal bank account into which the purchase money should be paid.

(3) On or about 18 January 2007 Mr. Stevens transferred the sum of US $300,000 to Mr. Hamed's account in Egypt.

(4) The money was transferred so that Mr. Hamed would hold it pending the formalities of the proposed sale and purchase of the property. Accordingly Mr. Hamed was obliged to return the money upon demand or if the purpose for which it was held ceased to exist, together with any interest thereon.

(5) Mr. Hamed failed to transfer the title of the property to Mr. Stevens or Mr. Shaw.

(6) In September 2010 Mr. Shaw was advised by Orascom, the management company of the development where the property is located, that Mr. Hamed had informed Orascom that the deal was cancelled.

(7) The purpose of the transaction having failed, Mr. Stevens claims the repayment of US $300,000 plus interest as money had and received.

6. Because of the challenge to the jurisdiction, no defence has been served by Mr. Hamed. However, Mr. Hamed's witness statement of the 12 December 2011 includes the following statements which indicate what are likely to be the principal grounds of defence to the claim.

(1) Mr. Hamed states that he is of Egyptian nationality and the holder of an Egyptian passport. His principal residence is in El Gouna, Egypt where he has substantial business interests. He is a director of Bindi but is not a director or shareholder of Camarin.

(2) He states that he has never been the owner of the property. "To my knowledge this property was owned by [Camarin] and then, as far as I am aware, sold to a Mr. Martin Shaw, the civil partner of the Claimant."

(3) In or around 2007 when Mr. Shaw was on holiday in Egypt, it was agreed between Mr. Hamed and Mr. Shaw that Mr. Shaw would buy the property from Camarin at an agreed price of US$300,000. Mr. Hamed states that there has never been any contact between himself and Mr. Stevens on any business matter whatsoever at any time.

(4) Mr. Hamed states that he undertook to act as agent for Camarin in that Mr. Shaw could pay the purchase price into his personal bank account in Egypt and he would facilitate the transfer of those monies direct to Camarin.

(5) The money was paid into Mr. Hamed's account. Because he did not have a US$ account with that bank the money was put into a suspense account and converted by the bank into sterling to be put into his sterling account. The money was then transferred by Mr. Hamed to Camarin.

(6) Mr. Hamed says that he has fulfilled all his obligations regarding his limited involvement. Because he is not a director or shareholder of Camarin he cannot say with any certainty or precision what happened thereafter. He states that he has made enquiries of Camarin but Camarin will not give him details in case Mr. Shaw or Mr. Stevens makes a claim against Camarin.

(7) Mr. Hamed states that as far as he is aware the property transaction appeared to have completed. Mr. Shaw gave him that impression and Mr. Shaw certainly had possession of the property because he stayed there on a number of subsequent occasions and let the property over a number of years.

(8) He was informed by Orascom that there were some documents that Camarin and Mr. Shaw needed to sign in relation to the sale of the property. However he was subsequently told by the directors of Camarin that they were not prepared to sign the documentation involving Orascom unless Mr. Shaw paid other debts he owed to Camarin.

(9) In late 2009 he met Mr. Shaw's father in Egypt. Mr. Shaw's father showed him the keys to the property and told him to keep them with a view to settling his son's debts. Mr. Hamed says that he protested. However on departure Mr. Shaw's father sent the keys to Mr. Hamed with a view to settling his son's debts. Mr. Hamed states that in accordance with his duties as agent of Camarin he communicated that information to Camarin and held the keys on behalf of Camarin.

(10) Subsequently Camarin purported to sell the property to a third party.

(11) Mr. Hamed further states:

"37. As I understand it, the Claimant claims against me upon the basis that I was the vendor, which is denied, and was obliged to return the monies upon demand, or, if the purpose for which they were held ceased to exist (the proposed property transaction) together with any interest thereon. That is totally against any understanding of what was said and done but even on the assumption that the Claimant's claim was actually correct, which it is not, I would also seek to argue (in the alternative) that, in accordance with Egyptian law, the property transaction was completed, and the payment of the full purchase price and Mr. Martin Shaw's possession of the property for a number of years would seem to corroborate me in that assertion, and that the property was subsequently handed back to [Camarin] in settlement, or part settlement of debts Mr. Martin Shaw had with [Camarin]."

(12) Accordingly, Mr. Hamed submits that "even assuming that virtually all the facts asserted by the Claimant are correct, this matter is inextricably and fundamentally bound up with the true and correct ownership of the property in Egypt"

7. In his judgment on the application, the judge noted that Mr. Hamed claimed that he had received the money for the account of Camarin which owned the property and that he had paid the money over to Camarin. It was disputed that the arrangement was with Camarin. The matter could not be resolved on the application. The judge considered that there was, however, some documentary evidence indicating that the Mr. Hamed acted ostensibly as owner in his dealings with Orascom. Assuming that the monies were paid over by Mr. Hamed to Camarin, the judge considered that that might not override the arrangement asserted by Mr. Stevens, if established on the evidence. Alternatively a full examination of facts at trial might reveal that the connection between Mr. Hamed and Camarin was such that its receipt may be treated as enriching Mr. Hamed. The judge also referred to the dispute as to whether other monies were owed by Mr. Shaw to Camarin and whether the apartment was handed back to settle that indebtedness. The judge considered that that was an issue of fact which would have to be resolved at the trial. In his view none of that altered the simple fact that the purchase of the apartment had not completed, for whatever reason.
8. He stated his conclusions as follows:

"10. From that brief summary, it is impossible, in my judgement, to characterise the claim, whether in form or in substance, as one relating to title to foreign land. Everyone agrees that the purchase was never completed, and has now been onward sold. The Claimant is not raising a claim as owner of the apartment, nor is the Defendant saying in his defence that the apartment has been transferred.

11. It is well established that in personam claims are not covered by the exclusionary rule of jurisdiction. Thus, the English court can order specific performance of an agreement to sell foreign lands. That is not sought in this case, but I do not see any distinction in principle in this context between seeking completion by specific performance and seeking instead recovery of the purchase price of a property, the sale of which has not completed. Any judgment will have no effect on title, and will not involve the court adjudicating upon a disputed claim of title"

9. On this appeal, Mr. Pennock, on behalf of Mr. Hamed, submits that the proceedings are principally concerned with the question of ownership of immovable property in Egypt. He submits that the fundamental plank of Mr. Stevens's case is to establish that he was not the owner of the property. He submits that the claim of unjust enrichment is merely an attempt to dress up a substantive claim involving the disputed title and/or trespass to the property in the guise of a claim for unjust enrichment. Furthermore, he places particular emphasis on the judge's mistaken conclusion that it was common ground that there had been no completion. On the contrary, it is said that it will be Mr. Hamed's case that completion did take place.
10. On behalf of Mr. Stevens, Mr. Randall QC submits that the present case does not fall within the exclusionary rule. Alternatively, he submits that in any event the case falls within the exception to the exclusionary rule which applies where the claim is based on a contract or equity between the parties.

Discussion.

11. The current formulation of the Mocambique rule (British South Africa Co. v. Companhia de Mocambique [1893] AC 602) in Dicey, Morris and Collins on The Conflict of Laws, 15^th Ed., (2012), Rule 131(3) is, in relevant part, as follows:

"Subject to the Brussels I Regulation and the Lugano Convention, the court has no jurisdiction to entertain proceedings for the determination of the title to, or the right to possession of, immovable property situated outside England, except where:

a) the claim is based on a contract or equity between the parties; …"

In Hesperides Hotels Ltd v Aegean Turkish Holidays Limited [1979] AC 508 the House of Lords declined to depart from that part of the rule which precluded actions for damages for infringement of property rights in land abroad and, in fact, extended it by holding that it would apply when no question of title was involved. However, the exclusionary rule has more recently been modified and its scope significantly reduced. Following the decision of the House of Lords in Hesperides Hotels, Parliament enacted section 30, Civil Jurisdiction and Judgments Act 1982 which provides in relevant part:

"The jurisdiction of any court in England and Wales … to entertain proceedings for trespass to, or any other tort affecting, immovable property shall extend to cases in which the property in question is situated outside that part of the United Kingdom unless the proceedings are principally concerned with a question of the title to, or the right to possession of, that property".

12. On behalf of the Respondent, Mr. Randall QC relied heavily on observations in this court in Re Polly Peck (No. 2) [1998] 3 All E R 812 and in the Supreme Court in Lucasfilm Limited v Ainsworth [2012] 1 AC 208 as to the present scope of the Mocambique rule. In Polly Peck the Court of Appeal gave a wide reading to section 30. It concluded that while the proceedings did give rise to questions of title and possession of land situated abroad, there were other issues which could not be said to be merely incidental to those questions. Accordingly, the proceedings were not principally concerned with a question of the title to, or the right to possession of that property. Mummery L.J. approved the following statement of Rattee J, the judge at first instance, who, having referred to other substantial issues arising which included piercing the corporate veil and issues relating to remedial constructive trusts, continued:

"Given that the relevant proceedings, if allowed to be brought, will concern such questions quite as much as the question of the applicants' right to possession of the properties concerned, in my judgment those proceedings would be concerned, but not principally concerned, with such right to possession. I consider that the purpose of s. 30(1) of the 1992 Act is to preserve the Mocambique rule only in cases where the real issue in the proceedings is the question of title to, or the right to possession of, foreign land, and all other questions are merely incidental thereto. Such is not this case." (p. 829 G-H).

However, Polly Peck was concerned with torts allegedly committed against immovable property situated in the Turkish Republic of Northern Cyprus, by way of illegal occupation and exploitation of that land. It seems therefore that these observations were concerned only with the scope of section 30 and were not intended to apply beyond that aspect of the Mocambique rule which addresses proceedings for trespass and other torts in relation to foreign land.

13. The combined judgment of Lord Walker JSC and Lord Collins in Lucasfilm Limited v Ainsworth [2012] 1 AC 208, with which the other members of the Supreme Court agreed on this issue, includes statements on the present status of the Mocambique rule which may at first sight be wider in their scope. They observed (at para. 76) that the consequence of section 30(1) is that the trespass aspect of the Mocambique rule can only apply to foreign land where a question of title is involved. Later they observed:

"It is clear that much of the underpinning of the Mocambique rule and the decision in Potter v Brokenhill Pty Co. Ltd. has been eroded. All that is left of the Mocambique rule (except to the extent that it is modified by the Brussels I Regulation) is that there is no jurisdiction in proceedings for infringement of rights in foreign land where the proceedings are "principally concerned with a question of the title to, or the right to possession of, that property" (at para 105)

However, once again, these observations must be considered in the context of those proceedings, which were concerned with the infringement of rights situated abroad. This fact and the citation of the wording of section 30 suggest that the statement may not have been intended to apply to all aspects of the Mocambique rule.

14. Nevertheless, it has long been established that, before the Mocambique rule can apply, the proceedings must raise directly the issue of title to foreign land. In Mocambique itself, Lord Herschell observed:

"It is quite true that in the exercise of the undoubted jurisdiction of the Courts it may become necessary incidentally to investigate and determine the title to foreign lands; but it does not seem to me to follow that because such a question may incidentally arise and fall to be adjudicated upon, the Courts possess, or that it is expedient that they should exercise, jurisdiction to try an action founded on a disputed claim of title to foreign lands." (at p. 626)

In St. Pierre v. South American Stores (Gath & Chaves Ld.) [1936] 1 KB 382, Scott L.J. referred to this passage and continued:

"By these words I understand him to have meant that it is the action founded on a disputed claim of title to foreign lands over which an English Court has no jurisdiction, and that where no question of title arises, or only arises as a collateral incident of the trial of other issues, there is nothing to exclude the jurisdiction." (at p. 397)

15. A similar but not identical rule has developed in EU law. The provision, which was formerly to be found in Article 16(1)(a), Brussels Convention (Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters, Brussels, 27 September 1968) is now contained in Article 22(1) of the Brussels I Regulation (Council Regulation (EC) 44/2001). It provides that in proceedings which have as their object rights in rem in immovable property or tenancies of immovable property the courts of the Member State in which the property is situated shall have exclusive jurisdiction regardless of domicile. The same rule applies under the Lugano Convention (Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters, Lugano, 16 September 1988). This provision too is of limited scope. In a series of cases the Court of Justice has held that it must not be given an interpretation broader than is required by its objective. The fact that proceedings involve a right in rem in immovable property or that they have some link with immovable property is not sufficient to bring the rule into play. The action must be based on a right in rem and not on a right in personam, save in the case of proceedings concerning tenancies of immovable property. Thus an action for rescission of a contract of sale and for damages does not constitute proceedings which have as their object rights in rem in immovable property (Case C-518/99 Gaillard v Chekili [2001] I.L.Pr. 33). Similarly, actions for damages based on infringements of rights in rem or on damage to property in which rights in rem exist do not fall within its scope. (Case C-343/04 Land Oberosterreich v CEZ as [2006] ECR I – 4557.) In Lucasfilm Lord Walker and Lord Collins observed (at para. 73) that this parallel development in European law "also confirms broadly, that the foreign land principle in the European Union is concerned only with actions to establish title."
16. These recent developments in the common law rule and the limited scope of the corresponding rules in EU law and under the Lugano Convention suggest that the Mocambique rule is now relatively narrowly confined. In Lucasfilm Lord Walker and Lord Collins drew attention to what may now be regarded as the rationale for what remains of the Mocambique rule. They pointed to the observations by the House of Lords in Mocambique itself that such controversies should be decided in the country of the situs of the property because the right of granting it is vested in "the ruler of the country". They also drew attention to the observations of Lord Wilberforce in Hesperides Hotels that the purpose of the rule is the maintenance of comity and the avoidance of conflict with foreign jurisdictions. (Lucasfilm at para 106.). In addition, the exclusionary rule can be justified on the ground that a judgment in rem given by an English court would be ineffective unless it were accepted and implemented by the authorities where the land is situated. (See Cheshire, North and Fawcett, Private International Law, 14^th Ed., p. 479.) To my mind, none of these rationales would require the English courts to refuse jurisdiction over the present case which, on any view, would not involve an adjudication upon the current ownership of or right to possess land situated abroad.
17. If Mr. Hamed does plead, by way of defence, a case that there was completion under the contract, the court may well have to decide as an issue of contractual performance whether that took place. However, to my mind that is not sufficient to bring the present proceedings within the exclusionary rule. First, these are not proceedings for the determination of the title to or the right to possession of land situated outside England in the sense that that is the object of the proceedings. Secondly, any question of where title in the property was vested at any particular time would be purely incidental in these proceedings which are principally concerned with questions of contractual performance and rights arising from alleged non-performance. Thirdly, in the present case the court would not be required to adjudicate upon a current disputed claim of title, it being common ground that the title to the apartment is now vested in a subsequent purchaser. As a result, there is no question of a judgment in the present proceedings having any effect on title to land situated abroad. Any remedy which may be awarded to Mr. Stevens would be a personal remedy for the recovery of monies from Mr. Hamed and there is no basis for the suggestion by Mr. Pennock on behalf of Mr. Hamed that any determination by the English courts of whether the original transaction was completed or not may affect the validity of subsequent transactions in Egypt and the validity of the ownership of the current owner.
18. For these reasons I do not consider that the present case falls within the scope of what remains of the exclusionary rule at common law.
19. In any event, I consider that this case clearly falls within a long-established exception to the Mocambique rule. As Lord Mance observed in Pattni v Ali [2007] 2 AC 85 at para 26:

"…it has long been accepted in England that an English court may, as between parties before it, give an in personam judgment to enforce contractual or equitable rights in respect of immovable property situated in a foreign country:…"

This exception has its origin in the practice of Court of Chancery which was willing to exercise jurisdiction over a defendant within its jurisdiction so as to compel him to give effect to obligations he had incurred in relation to land situated abroad. (See e.g. Penn v Baltimore [1750] 1 Ves. Sen. 444.) In Deschamps v Miller [1908] 1 Ch 856 Parker J. stated, with regard to the obligations which the court will enforce in this way:

"They all depend upon 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 the Court of Equity in this country, would be unconscionable, and do not depend for their existence on the law of the locus of the immovable property." (at p. 863)

20. In this regard there is a growing recognition in the case law that, in the case of disputes relating to foreign land between parties who are both amenable to the jurisdiction of the English courts, certain issues which might previously have been regarded as going to jurisdiction may more appropriately be regarded as going to choice of law. In Lightning v Lightning Electrical Contractors Limited (Court of Appeal, 23 April 1988; [1988] NPC 71) Peter Gibson L.J., referring to the judgment of Millett J. in Macmillan Inc. v Bishopgate Trust (No. 3) [1995] 1 WLR 978 at p.989, observed:

"…where a plaintiff invokes the in personam jurisdiction of the English court against a defendant amenable to the jurisdiction and there is an equity between the parties which the court can enforce, the English court will accept jurisdiction and apply English law as the applicable law, even though the suit relates to foreign land. In contrast if the equity which is asserted does not exist between the parties to the English litigation, for example where there has been a transfer of the property to a third party with notice of an equity but by the lex situs governing the transfer, the transfer extinguished the plaintiff's equity, the English court could not then give relief against the third party even though he is within the jurisdiction."

Similarly, in Griggs Group Ltd v Evans [2005] Ch 153 Mr. Peter Prescott QC, sitting as a Deputy High Court Judge, observed:

"Private international law has moved on. Today we should treat the fact that the land is situated abroad as affecting the choice of law, not jurisdiction, if the case is one in which it is sought to enforce an equitable claim in personam." (at para 110).

21. The present dispute seems to me to fall within this exception. If the English courts may order specific performance of personal obligations to transfer land situated abroad, I can seen no reason why they should not exercise jurisdiction over a claim in restitution for the repayment of a contractual payment where the consideration is said to have failed. Indeed, the latter is a stronger case because the ruling will have no effect, even indirectly, on the ownership of or the right to possess foreign land.
22. On behalf of Mr. Hamed, Mr. Pennock submits, referring to the words of Parker J. in Deschamps v Miller cited above, that the present case does not fall within this exception to the Mocambique rule because the claim depends for its existence on the law of the locus of the immovable property. He submits that, in fact, the alleged equity between Mr. Stevens and Mr. Hamed depends for its very existence and continued operation upon the law of Egypt as to whether or not Mr. Stevens had become the owner of the property there in accordance with Egyptian law.
23. However, to my mind Mr. Stevens's pleaded case does not depend for its existence on the law of Egypt as to ownership of the property. In particular it is not dependent on establishing any right in land in Egypt nor does it seek to enforce, directly or indirectly, any rights in relation to land there. Rather, it depends on the principles of the law of contract and the law of restitution which, it is said, give rise to personal obligations owed by Mr. Hamed as a result of his conduct. The proceedings have as their object the personal accountability of Mr. Hamed to Mr. Stevens.
24. Mr. Pennock further submits that the exception to the Mocambique rule does not apply here because, he submits, the rights and duties in personam of Mr. Stevens and Mr. Hamed are governed by the law of Egypt. Assuming for present purposes that this may be correct, it does not seem to me that this should constitute any bar to the exercise of jurisdiction by the English courts over these two defendants who are amenable to its jurisdiction. In any event, there is no evidence before us as to what may be the Egyptian law on the subject.
25. For these reasons I would dismiss the appeal.

Respondent's Notice

26. By a Respondent's Notice, Mr. Randall on behalf of Mr. Stevens sought to argue an issue raised but not adjudicated upon below. He submitted, by reference to Case C-281/02 Owusu v Jackson [2005] QB 801, that as there is a good arguable case that Mr. Hamed is domiciled in the United Kingdom for the purposes of the Brussels I Regulation and as the case does not fall within the exclusive jurisdiction provision in Article 22 because the land is not situated in another Member State, Article 2 of the Regulation requires the English courts to exercise jurisdiction. In light of the conclusion to which the court had come on Mr. Hamed's grounds of appeal, we did not hear argument on this most interesting point which must await decision on another occasion.

LORD JUSTICE FULFORD:

27. I agree.

LADY JUSTICE ARDEN:

28. I also agree.