Neutral Citation Number: [2008] EWCA Civ 1065
Case No: A3/2008/0547
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE MORGAN
HC07C01676
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 03/10/2008
Before:

LORD JUSTICE JACOB
LORD JUSTICE LAWRENCE COLLINS
and
MR JUSTICE LEWISON
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Between:

	JOSE GONZALEZ GOMEZ & ORS	Appellants	
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	ENCARNACION GOMEZ-MONCHE VIVES 	Respondent	
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(Transcript of the Handed Down Judgment of
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Mr Nicholas Le Poidevin and Mr Tony Oakley (instructed by Farrer & Co. LLP) for the Appellants
Lord Goldsmith QC and Mr Peter Rees (Debevoise & Plimpton) for the Respondent

Hearing dates : July 24 and 25, 2008
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Judgment
Lord Justice Lawrence Collins : 
I	Introduction
1.	This is an appeal from a judgment of Morgan J dated February 18, 2008, in which he declared that the court had no jurisdiction in a claim by the three claimants against their mother, the first defendant, arising out of a trust created by their father. The family is Spanish and the trust is expressed to be governed by English law. The application involved the interpretation and application of Article 5(6) of the Council Regulation (EC) 44/2001 (“the Judgments Regulation”)  which, so far as material, is in these terms:
“A person domiciled in a Member State may, in another Member State, be sued:
…
(6) as settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Member State in which the trust is domiciled; …. ”
2.	The appeal raises an important question of principle on the ascertainment of the domicile of a trust for the purposes of Article 5(6), and also questions on the interpretation and the application of the expression “sued …as … trustee or beneficiary” in that Article.
3.	The background to this appeal is that on June 11, 1984 a declaration of trust was made by Fidei Trust Co Ltd, a Jersey corporation. The principal asset of the trust was certain shares in Gonzalez Byass & Co Ltd, a corporation incorporated under the law of the Cayman Islands. Gonzalez Byass is the well known producer of sherry.  
4.	The effective settlor of the declaration of trust was Alfredo Gonzalez Diez (“the Settlor”), who died on September 16, 1991, intestate and domiciled in Spain. 
5.	Encarnación Gómez-Monche Vives, the first defendant and respondent on this appeal, is the widow of the Settlor. She is domiciled in Spain for the purposes of the Judgments Regulation. The Settlor and the first defendant had five children, all sons, and the claimants (the appellants on this appeal), José González Gómez, Pablo González Gómez, and Álvaro González Gómez, are three of those sons. The claimants live in Spain, Portugal and the United States of America, respectively
6.	On  September 16, 1999, GB Investment Holdings Ltd, a BVI corporation, the second defendant and Ansbacher Trustees (Jersey) Ltd (then called St Helier Trust Company Ltd), a Jersey corporation, the fourth defendant were appointed trustees in place of Fidei Trust Co Ltd (which no longer exists). On  December 23, 2002, WalPart Trust Registered, a Liechtenstein corporation, the third defendant, was appointed trustee in place of Ansbacher Trustees (Jersey) Ltd. Consequently from December 23, 2002, the trustees have been GB Investment Holdings Ltd and WalPart Trust Registered. 
7.	The Trust is administered in Liechtenstein. All of the directors of the third defendant are resident in Liechtenstein, and it is the sole corporate director of the second defendant. All decisions relating to the Trust are taken in Liechtenstein, and all of the Trust’s bank account and accounting books are located in Liechtenstein.
II	The terms of the Trust   
8.	The declaration of trust recites that at the direction of the Settlor 6,000 ordinary shares in Gonzalez Byass & Co Ltd, a Cayman Islands corporation, the holding company of the well-known sherry producer, were transferred into the name of the Trustee (then, as I have said, Fidei Trust Co Ltd) to hold the same on the trusts of the declaration of trust. 
9.	The material terms of the declaration of trust are the following:
Clause 1
“In this Deed the following words shall have the following meanings:– 
1.1	Beneficiaries:	those persons resident outside the United Kingdom who are permitted by Article 28(B) of the Articles of Association of [Gonzalez Byass & Co Ltd] to hold Ordinary Shares in [Gonzalez Byass & Co Ltd].
1.2	Trust Fund:	 means the Shares, any further property added to these trusts, all income and capital gains of such Shares and other property and all property from time to time representing the same.
1.3	The Trust Period:	the period from the date hereof until the death of the survivor of the Settlor and his wife.
1.4	The Appointor:	any person or persons who shall be appointed as the Appointor revocably or irrevocably in writing by the Settlor (or his wife if he is incapacitated) or by his widow ….”
Clause 2
“The proper law of this Declaration of Trust shall be the law of England.”
Clause 3
“3.1	The Trustee shall not sell dispose of grant any security over transfer appropriate to a beneficiary or otherwise deal with the Shares otherwise than in accordance with Clause 4 below.
…”
Clause 4
“4.1	The Trustee shall hold the Trust Fund upon trust to pay or apply the same to or for the benefit of any one or more of the Beneficiaries in such shares and proportions (if more than one) and upon such trusts (if any) as the Settlor shall in his absolute discretion determine.
4.2	At the end of the Trust Period the Trustee shall hold any balance of the Trust Fund remaining subject to these trusts upon trust for the benefit of any one or more of the Beneficiaries in such shares and proportions (if more than one) … as the Appointor shall appoint within two years of the end of the Trust Period.
4.3	Subject to any appointment under Clause 4.2 above the Trustee shall at the end of the aforementioned two year period hold any balance of the Trust Fund remaining subject to these trusts upon trust for such of the sons of the Settlor as shall be living at the end of such two year period and if more than one in equal shares absolutely.
4.4	In accordance with Settlor’s instructions the Trustee may during the period of twenty-one years from the date of this Deed accumulate any income arising under the trusts hereof and invest the same ….”
Clause 6
“The Settlor … or his widow after his death shall have the power to remove any trustee hereof and to appoint new or additional trustees hereof.”
10.	Article 28(B) of the then Articles of Association of Gonzalez Byass & Co Ltd identified the following persons: “Any lineal descendant (both male and female) of any male whose surname is Gonzalez Gordon ….” The effect is to prevent shares being transferred outside the descendants of the two founding families of the Gonzalez Byass business.
11.	The broad effect of the trust is said by the claimants to be as follows: (1) during the Trust Period, the declaration of trust gave the Settlor (but not the trustees) a power of appointment, in the form of a discretion to determine to which (or for the benefit of which) of the Beneficiaries the trustees should pay or apply the trust fund, as to both capital and income; (2) the Settlor during his lifetime never exercised his power of appointment as regards capital and so the trustees were bound to retain the trust property during the Trust Period; (3) as to income, the Settlor during his lifetime never exercised his discretion, but the trustees could accumulate income for 21 years (Law of Property Act 1925, section 164 (as amended by Perpetuities and Accumulations Act 1964, section 13 would have prohibited a longer period), i.e. to June 11, 2005) “[i]n accordance with Settlor’s instructions” under clause 4.4; (4) any income in respect of which the Settlor did not exercise his discretion during his lifetime is therefore held on resulting trust for the settlor or his estate at least from the end of the 21 years (i.e. from June 11, 2005) and – if the declaration of trust means that there could be no accumulation unless he gave an express instruction – beforehand also.
12.	Consequently, the claimants say that income subject to the resulting trust which arose after the death of the Settlor (December 16, 1991) therefore fell into his estate.  Since he died intestate and domiciled in Spain, it went according to the Spanish law of intestacy.  Spanish law gives one-third of the income to the first defendant and the rest of the income to the settlor’s children (the claimants and their two brothers).  But if any of the shares settled were acquired during the marriage otherwise than by inheritance, they were assets within the matrimonial property regime applying to the Settlor and the first defendant; the first defendant would then, on the death of the Settlor, have become entitled to half of those shares and therefore to the income from that half, as well as to her one-third share of the income from the other half, making a total of two-thirds of the income of those shares. Consequently, the claimants concede that the first defendant has been entitled to one-third of the income, from June 11, 2005 and perhaps earlier.
13.	According to the claimants, when clause 4.2 provides that the fund is to be distributed at the end of the Trust Period in accordance with any appointment made by the Appointor within two years of the end of the Trust Period, it is not clear whether it is two years before the end of the period or two years afterwards. In default of appointment, the trust property goes to the Settlor’s sons living at the end of the Trust Period. The first defendant was not entitled to be paid all the income but only some of it; and was entitled to no capital at all.
III	Subsequent developments
14.	The claimants became concerned as to how the Trust was being administered, and claim that certain money and capital had been paid to the first defendant, which they say should have been kept in the Trust and ultimately paid (in whole or in part) to them and their brothers.   The particular matters about which they complain are these.
15.	On  May 27, 1997 the first defendant purported to appoint herself as Appointor.
16.	By a deed of appointment dated May 16, 2001 between the then trustees and the first defendant (who was referred to in the deed as “the Appointee”) the trustees appointed and declared that trust assets amounting to 6,654,648 Spanish pesetas (about 40,000 euros) be held on trust for the first defendant absolutely, and be transferred to her or as she should direct. Recital (D) of the deed of appointment stated that the first defendant was one of the Beneficiaries of the Trust. Recital (E) stated that the trustees wished to exercise the powers of appointment and advancement of capital said to be conferred upon them by clause 4.1 of the Trust in order to appoint the fund to the first defendant.
17.	On April 28, 2003 the then trustees resolved to distribute €435,000 to an account with Citibank Jersey, connected with the first defendant. The resolution referred to earlier deeds of appointment (in the plural) and to the deed of May 16, 2001 in particular. The appointment made by the resolution of  April 28, 2003 was expressed to be on the same conditions and with the benefit of the same covenants from the first defendant as appointee as set out in the deed of  May 16, 2001. The resolution contains a covenant by the first defendant which refers to her being the Appointor under the declaration of trust. 
18.	The claimants say that the first defendant has received about 4.6 million euros from the income of the Trust, namely 3 million euros in dividends and 1.6 million in bonus.
IV	The proceedings
19.	In October 2006 the claimants sued the third defendant in Liechtenstein for information. In May 2007 the Liechtenstein court of first instance granted the claimants relief, and in November 2007 the Liechtenstein appellate court dismissed an appeal. There is a second set of proceedings there against the second defendant, in which a challenge to the jursidiction of the Lichtenstein court was made but failed. This court was told there were other proceedings in Spain, but was not given any details of them.
20.	On June 26, 2007 the claimants issued the claim form in this action, and it was served on the first defendant in Spain. 
21.	On October 18, 2007, the first defendant applied in England for a declaration that the court did not have jurisdiction or, alternatively, should not exercise its jurisdiction, to try the claim. The grounds put forward in the application were that the court did not have jurisdiction over the first defendant under the Judgments Regulation, alternatively because Liechtenstein was a more appropriate forum in which to hear this claim. 
22.	On February 18, 2008 Morgan J declared, pursuant to CPR rule 11(1), that the court did not have jurisdiction to try the claimants’ claim against the respondent, and ordered that the claim form and service of it in these proceedings be set aside as against the first defendant. He also decided that, had it been relevant, he would not have had power to stay the proceedings on forum non conveniens grounds. Morgan J. granted the claimants permission to appeal on the jurisdiction issue alone.
23.	These proceedings were not served on the second, third and fourth defendants, and shortly before the claim form was due to expire, the claimants sought an extension of time to serve them. This court was told that this application is opposed and has yet to be determined. They were therefore not parties to the application before Morgan J and consequently are not represented on this appeal. It is not at all clear why the proceedings were not pursued more vigorously against the trustees.  They are respectively BVI, Liechtenstein and Jersey corporations.  By CPR 6.20(11) the English court may assume jurisdiction where a claim is made for any remedy which might be obtained in proceedings to execute the trusts of a written instrument where (a) the trusts ought to be executed according to English law; and (b) the person on whom the claim form is to be served is a trustee of the trusts.  Subject to any argument on forum conveniens, there is no possible doubt about the jurisdiction of the English court to determine claims against the trustees for unauthorised distributions.
V	The claims
24.	The claim form identifies the defendant as being “beneficially interested in” the trusts of the declaration of trust.  The particulars of claim plead that on May 27, 1997 the first defendant purported to appoint herself as Appointor, as defined in clause 1.4 of the declaration of trust, and that it was not open to the first defendant to so appoint herself. 
25.	The particulars of claim plead that the Settlor never made any determination under clause 4.1 of the declaration of trust. Accordingly the effect of the declaration of trust is that the Trust Period will end on the death of the first defendant, and until the expiry of two years after her death or, alternatively, until her death, the trustee was obliged to accumulate the income of the trust fund arising before June 11, 2005; alternatively, the trustee was obliged to accumulate the income of the trust fund arising before June 11, 2005 in so far as the Settlor so directed and the remainder became held on resulting trust. In either case, the income of the trust fund arising on or after June 11, 2005 became held on that resulting trust; and the trustee was and is obliged to retain the capital of the trust fund; and on the distribution date, the trust fund will be held on trust as the Appointor may appoint within two years after the termination of the Trust Period or alternatively as the Appointor may have appointed within two years beforehand; but except as so appointed the trust fund will be held for such of the Settlor’s sons as shall be living on the distribution date (and if more than one in equal shares).
26.	It is then pleaded that under Spanish law, which applies to the devolution of the Settlor’s estate (other than immovables), the first defendant and the Settlor fell within a matrimonial property regime under which assets (both capital and income) acquired during the marriage otherwise than by inheritance, called “bienes gananciales”, become jointly owned and other assets, called “bienes privativos”, remain separately owned; the Settlor’s estate comprised all of his bienes privativos and one-half of his bienes gananciales, the other half of the bienes gananciales passing to the first defendant, so that the first defendant entitled to a usufruct (a life interest) in one-third of the estate; and subject to the usufruct, each of his five children is entitled to the estate in equal shares.
27.	All or most of the shares in Gonzalez Byass settled on the trusts of the declaration of trust were the Settlor’s bienes privativos when so settled.  Accordingly any income of the trust fund since the Settlor’s death becoming held on a resulting trust was payable, so far as those shares were bienes privativos, as to one-third to the first defendant  (but possibly one-half down to formal division of the estate) and as to the balance in equal shares to his five children; and was payable, so far (if at all) as those shares were bienes gananciales, as to one-half and one-third of the other half to the first defendant and as to the balance in equal shares to his five children.
28.	The claimants allege (paras 16-20) that the trustees have acted in breach of trust by failing to pay any income of the trust fund to any of the Settlor’s children; and by  paying the whole income of the trust fund (subject only to trustees’ remuneration) to the first defendant or to nominees of hers.  Under the trusts of the declaration of trust the first defendant is entitled to only one-third of that income, either from June 11, 2005 or alternatively from the Settlor’s death. Particulars are given of the income, consisting of about 3 million euros in dividends and 1.6 million in bonus. It is also alleged that in breach of trust the trustees have distributed capital of the trust fund to the first defendant or to nominees of hers, because under the trusts of the declaration of trust she is not entitled to any such capital.  Particulars are given of the deed of appointment dated  May 16, 2001; a resolution of April 28, 2003 by which the trustees purported to appoint to the first defendant the further sum of 435,000 euros, and which mentioned previous purported appointments of capital as having been made before that of  May 16 2001, the particulars of which are unknown to the Claimants.
29.	The first claim against the first defendant is expressed in the following terms.
“24B.	[The first defendant] is liable for all those breaches of trust and is similarly bound to reinstate the Trust Fund by reason that:
(1)	She received the income and capital so paid to her as a volunteer;
(2)	She did so with both notice and knowledge of the declaration of trust (and in particular was a signatory to the deed of appointment of 16th May 2001 and the resolution of 28th April 2003);
				…
25B.	[The first defendant] holds all the income and capital so paid to her as constructive trustee and not for her own benefit.  So far as necessary, the Claimants will contend that in the premises it would be unconscionable for her to retain that income and capital.”
30.	In the prayer for relief, the claimants claimed against the first defendant “an account of all property subject to the trusts of the declaration of trust received by her and of her dealings therewith”, “an order for payment or transfer to the trustees of the declaration of trust of all such property received by her or the property now representing the same” and compensation for breach of trust and interest on such compensation. I should interpose the point that the claimants now concede that the first defendant was entitled to some payment.
31.	The second part of the claim against the first defendant relates to her appointment or purported appointment of herself as Appointor as defined in clause 1.4 of the declaration of trust It is pleaded that it was not open to her to appoint herself Appointor because: (a) the power to appoint an Appointor conferred by clause 1.4 of the declaration of trust is a fiduciary power; and (2) upon its true construction the power does not permit her to appoint herself. In any case, she is not a fit and proper person to be Appointor and the court ought to appoint a new Appointor in her stead. The prayer for relief seeks an order “appointing some fit and proper person as Appointor in the stead” of the first defendant. 
VI	The issues and the judge’s decision
32.	So far as material to this appeal the issues before the judge were summarised by him as follows: (1) What trust or trusts are identified by the claimants which come within the words of Article 5(6) which refer to: “… a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing …?” (2) Is the relevant trust domiciled in England? (3) In relation to the first part of the claimants’ claim against the first defendant, is the first defendant “sued……as beneficiary…”? (4) In relation to the second part of the claimants’ claim against the first defendant, is the first defendant “sued….as…..trustee….”?
33.	The judge decided that: (1) the trust was domiciled in England for the purpose of Article 5(6) ([61] et seq):  English being the proper law, it followed in the absence of any competing system that the trust was most closely connected with English law; (2) the claimants were not suing the first defendant as beneficiary in their primary claim because they were contending that she was not entitled to the payments she had received ([75] et seq); (3) the claimants were not suing the first defendant as trustee in their subsidiary claim, because the donee of a fiduciary power was not a trustee within Article 5(6) ([90] et seq).
34.	The claimants appeal from holdings (2) and (3) and holding (1) is the subject of a respondent’s notice.
VII	Domicile
35.	It is a necessary pre-condition of the exercise of jurisdiction under Article 5(6) that the trust be domiciled in England, and I will deal with that question first.
36.	Article 5(6) was introduced into the Brussels Convention at the time of the accession to the Brussels Convention by the United Kingdom, the Republic of Ireland, and Denmark. After prolonged negotiations the Accession Convention was signed in 1978.  The concept of the trust in the English sense was unknown to the original six Contracting States (the original EEC Member States), and it was considered important by the United Kingdom and the Republic of Ireland to retain a jurisdiction in trust matters connected with those countries and not to have jurisdiction based exclusively on the domicile of the defendant trustees or beneficiaries.
37.	The 1968 Convention as amended by the Accession Convention was scheduled to the Jurisdiction and Judgments Act 1982, Schedule 1.  Article 5(6) was in substantially the same terms as Article 5(6) of the Judgments Regulation and Article 53(2) provided, in substantially the same terms as the Judgments Regulation, that in order to determine whether a trust was domiciled in the Contracting State whose courts were seised of the matter, the court should apply its rules of private international law.
38.	The history of these provisions is relevant to the question raised on this appeal concerning the approach which the English court should take to the determination of the domicile of a trust, and in particular the weight to be given to a choice of English law to govern the trust.
Schlosser Report
39.	The following points emerge from the Schlosser Report on the Accession Convention: (1) the original provisions of the Brussels Convention were not always well adapted to the institution of a trust, and to base jurisdiction on the domicile of the defendant trustee would not be appropriate in trust matters (para 113); (2) the idea of the domicile of a trust had been developed mainly for the purpose of determining the legal system to be applied, usually English law or Scottish law, but the principal characteristics which led to determining the domicile of a trust for that purpose could also be used as the basis for founding jurisdiction (para 114); (3) it was to be left to the Contracting States to apply their own rules of private international law to determine the domicile (para 119), and in particular (ibid):
“… There are at present no rules of private international law in the legal systems of the Continental Member States of the Community for determining the domicile of a trust.  The courts of those States will have to evolve such rules to enable them to apply the trust provisions of the 1968 Convention.  Two possibilities exist.  It could be contended that the domicile of a trust should be determined by the legal system to which the trust is subject.  One could, however, also contend that the court concerned should decide the issue in accordance with its own lex fori which would have to evolve its own appropriate criteria.”
40.	It was for this reason that Article 53(2) of the Brussels Convention provided:
“In order to determine whether a trust is domiciled in the Contracting State whose courts are seised of the matter, the court shall apply its rules of private international law.”
41.	The rules of private international law were introduced by section 45 of the 1982 Act which provided:
“45.	Domicile of trusts
(1)	The following provisions of this section determine, for the purposes of the 1968 Convention and this Act, where a trust is domiciled.
(2)	A trust is domiciled in the United Kingdom if and only if it is by virtue of subsection (3) domiciled in a part of the United Kingdom.
(3)	A trust is domiciled in a part of the United Kingdom if and only if the system of law of that part is the system of law with which the trust has its closest and most real connection.”
42.	There are two aspects to the background against which the United Kingdom negotiated accession to the Brussels Convention which are relevant. The first is that Order 11, rule 1(1)(e) then provided (as it had done since first enacted in 1883 as Ord XI, r 1(d)) that the court could assume jurisdiction if the action was for the execution, as to property situate in England, of the trusts of a written instrument, being trusts that ought to be executed according to English law of trusts and which the person to be served with the writ was a trustee or if the action was for any relief which could be obtained in any such action. In 1983 the rule dispensed with the need for the property to be situate in England.
43.	The second aspect was the rules for the governing law of a trust as then recognised in English law.  In Duke of Marlborough v. Att.-Gen. [1945] Ch 78 it had been held that the proper law of a marriage settlement
“can only be the law by reference to which the settlement as made and which was intended by the parties to govern their rights and liabilities”.
44.	Trusts had first been dealt with in Dicey and Morris, Conflict of Laws, in a section written by Dr Morris himself in the 9th edition, 1973. Rule 122, p 655, as then formulated was as follows:
“The validity, the interpretation and the effect of an inter vivos trust of movables are governed by its proper law, that is, in the absence of an express or implied selection of the proper law by the settlor, the system of law with which the trust has its closest and most real connection.”
45.	The Comment to the Rule said:
“Although there is no express English decision to this effect, there can be no doubt that the settlor could select the proper law, at any rate if the trust has a substantial connection with the chosen law.  In the absence of such an express or implied selection, the court will weigh all the relevant factors and will endeavour to ascertain the system of law with which the trust has its closest and most real connection, just as it does when ascertaining the proper law of a contract.”
46.	No doubt the reference to the proper law of a contract in this sense was a reference to the common law principles enunciated in such cases as Bonython v. Commonwealth of Australia [1951] A.C. 201, 219; Re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007, 1068.
47.	In the 10th edition, 1980, Dr Morris added the following passage:
“An English court would presumably not allow a settlor creating an essentially English trust to evade the English rule against perpetuities by selecting as the proper law of the trust the law of some foreign country where the rule does not apply.  In the absence of such an express or implied selection, the court will weigh all the relevant factors and will endeavour to ascertain the system of law with which the trust has its closest and most real connection, just as it does when ascertaining the proper law of a contract.”
48.	That was the position when the Accession Convention was being negotiated and when the Civil Jurisdiction and Judgments Act 1982 came to be enacted. The 1982 Act came into force on January 1, 1987.
49.	The 1985 Hague Convention on the Law Applicable to Trusts and their Recognition was given the force of law in the United Kingdom by the Recognition of Trusts Act 1987, which was enacted in April 1987 and came into force on August 1, 1987. The Hague Convention gave primacy to a choice of law by the Settlor.
50.	It is apparent from the Explanatory Report on the Convention by Professor von Overbeck, 1985, para 65, that the Hague Conference deliberately avoided a requirement (for which some delegations had argued) of an objective connection between the trust and the chosen law. 
51.	By Article 3 of the Convention, the Convention applied only to trusts created voluntarily and evidenced in writing. Article 6:
“A trust shall be governed by the law chosen by the settlor. The choice must be express or be implied in the terms of the instrument creating or the writing evidencing the trust, interpreted, if necessary in the light of the circumstances of the case. 
Where the law chosen under the previous paragraph does not provide for trusts or the category of trust involved the choice shall not be effective and the law specified in Article 7 shall apply.”
52.	Article 7 applies where no applicable law has been chosen. In that case, the trust is governed by the law with which it is most closely connected. In ascertaining the law with which a trust is most closely connected, reference is made in particular to four matters. In summary, these are the place of administration of the trust designated by the settlor, the situs of the assets of the trust, the place of residence or business of the trustee and the objects of the trust and the places where they are to be fulfilled. 
53.	By Article 8, the law specified by Article 6 or Article 7 governs the validity of the trust, its construction, its effects and the administration of the trust. Article 8 provides for a number of matters which, in particular, are to be governed by that governing law. Article 9 recognises that a severable aspect of the trust, such as matters of administration, might be governed by a different law. 
54.	Those were the substantive rules of private international law in force in England when the Judgments Regulation came into effect on March 1, 2002. Article 60(3) of the Judgments Regulation provides:
“In order to determine whether a trust is domiciled in the Member State whose courts are ceased of the matter, the court shall apply its rules of private international law.”
55.	The Civil Jurisdiction and Judgments Order 2001 (“the 2001 Order”) was made to implement the Judgments Regulation. The relevant rule of private international law is contained in the 2001 Order.  Paragraph 12(1) of schedule 1 to the 2001 Order provides the rules required by Article 60(3) for determining where a trust is domiciled. By paragraph 12(2) a trust is domiciled in the United Kingdom if and only if it is by virtue of subparagraph (3) domiciled in a part of the United Kingdom. Paragraph 12(3) provides in terms identical to the original section 45 of the 1982 Act:
“A trust is domiciled in a part of the United Kingdom if and only if the system of law of that part is the system of law with which the trust has its closest and most real connection.”
56.	The effect therefore is to apply section 45 of the 1982 Act for the purposes of Article 5(6) of the Judgments Regulation.
57.	The result is that, although the wording of the English rule of private international law for the purposes of what is now Article 60(3) of the Judgments Regulation has remained unchanged since its original enactment in 1982, the background has changed, and there is no longer any doubt about the effectiveness and scope of the choice of an English choice of law.
58.	In my judgment, the history shows that what was intended from the start by section 45 was that the English and Scottish courts should have jurisdiction under Article 5(6) in relation to trust disputes where the trust was governed by English or Scottish law. It is likely that conclusiveness was not given to an express choice of law to cater for cases where the choice was evasive or for some other reason not to be given effect.
59.	In Chellaram v Chellaram (No. 2) [2002] EWHC 632 (Ch), [2002] 3 All ER 17, a decision of mine at first instance, the point which arises in this case was touched on, obiter, and I said: “… [A]rt 5(6) is probably limited to claims in relation to trusts governed by English law” ([141]). In that case two of the trusts were agreed to be governed by Indian law and the other two were governed by Bermudan law. As to the Indian law trusts I said (at [155]): “It is common ground that they are governed by Indian law, and there is no possible basis for English jurisdiction”. As to the trusts governed by Bermudan law, I said (at [162])
“… [T]he trusts are not domiciled in England, because they would not (if they still existed) have their closest and most real connection with English law.  I do not doubt that in deciding whether it is English law with which the trusts have their closest connection, it is permissible to take into account the express choice of Bermuda law to negate that connection”.
60.	The test in section 45 is treated as equivalent to the governing or proper law of the trust by Hartley, Civil Jurisdiction and Judgments (1984), page 39 and Layton and Mercer, European Civil Practice (2nd ed 2004), para 42.052, although Kaye, Civil Jurisdiction and Enforcement of Foreign Judgments (1987), pp 626-629, suggests that, although the proper law of the trust may usually be expected to be the law having the closest and most real connection, it should not automatically be so regarded.
61.	In those circumstances it seems to me that, although for the purposes of the 2001 Order, a choice of English law might not be conclusive, it is very difficult to see what other circumstances would be sufficient to outweigh it, so that it would be another system of law with which the trust had its closest and most real connection. It is more likely that a foreign choice of law in what would otherwise be an English trust may be disregarded where it is intended to avoid some important principle of English law.
62.	But I am satisfied that what is not contemplated by the version of section 45 in the 2001 Order is what the first defendant calls a multifactorial approach, or counting of contacts, to be derived from the Hague Convention, when, under the Convention, that approach is only to be adopted in the absence of choice. 
63.	It is true that, apart from the governing law, there is no connection between the trust and England.  The place of residence of the trustees is not England, the trust is not administered in England, the trust assets and documents are not in England and nor are any of the beneficiaries domiciled in England.  But I am satisfied that the trust is not domiciled in Liechtenstein, because all of the administration of the Trust is carried out, either directly or indirectly, by the third defendant in Liechtenstein.  To suggest that the domicile might be the Cayman Islands (because the principal trust assets, the shares in Gonzalez Byass, were shares in a company incorporated in the Cayman Islands) is merely fanciful. 
64.	The connection between a trust and its proper law is in every sense real and close. A trust is not like a commercial contract where it is only necessary to consider the content of the applicable law in exceptional circumstances. trustees in particular have to be intimately aware of their responsibilities under the general law applicable to the trust. They may have to know whether they can lawfully accumulate income. Resort to the law governing the trust is central to their responsibilities. Consequently the judge was right to find that the trust is domiciled in England.
Kilbrandon and Maxwell Reports
65.	Since coming to that conclusion I have consulted two reports, which lend some support to it. The reports are by committees established in order to advise the government on the implementation of the Brussels Convention and the way in which trusts should be dealt with. Each of the committees placed great weight on the governing law of the trust as the connecting factor, and their reports suggest strongly (but do not in any sense prove – even if they were technically admissible, which the first is certainly not, since it may not have been available to the public) that the legislative intention was in accordance with that conclusion.  
66.	The first report is that of the committee which was appointed by the Lord Chancellor and the Secretary of State for Scotland in March 1972 under the chairmanship of Lord Kilbrandon to advise on any adjustments which it might be necessary or desirable to negotiate with the Member States of the EEC with a view to enabling the United Kingdom to accede to the Brussels Convention.  This committee (whose members included Professor Anton) consulted widely (the consultees included Dr J.H.C. Morris) and reported in 1973 (Report of the Committee on the European Judgments Convention, October 1973). The Report dealt with trusts at paragraphs 162-165. As the committee pointed out, it was natural that the original Brussels Convention should have made no provision for jurisdiction in cases concerning trusts, since the institution of the trust was unknown in the six original Member States.  But some provision was needed to ensure that the jurisdiction of the United Kingdom courts over British trusts was preserved after accession.  Without some adaptation to the jurisdiction provisions, proceedings concerning trusts would normally be left to the domiciliary jurisdiction under Article 2, and that would mean that jurisdiction would be determined by the forensic domicile of the trustees or beneficiaries.  An arbitrary way of determining jurisdiction would rarely serve the interests of the parties. The most desirable adaptation would be the reservation of an exclusive jurisdiction for the United Kingdom courts over trusts requiring to be executed according to United Kingdom law.  But if a sole jurisdiction over trusts was not acceptable, an adaptation should be sought to enable British courts to exercise an additional (as opposed to an exclusive) jurisdiction under Article 5 over proceedings concerning trusts requiring to be executed according to British Law.  If necessary the jurisdiction could be limited to proceedings concerning trusts expressly embodied in a written document, although a more general provision applying to all proceedings concerning interpretation, validity, variation enforcement or administration of any trusts, whether express, implied, constructive or resulting, would be preferable and ought to be acceptable. 
67.	The second report was that of the committee established in 1977 by the Lord Advocate under the chairmanship of Lord Maxwell to consider the practical aspects of the implementation of the Brussels Convention as amended in Scotland.  The Scottish Committee on jurisdiction and enforcement (the Maxwell Committee) reported in the 1980, and in paragraph 5.64 it rejected the suggestion that the domicile of a trust could be defined as the place of administration of the trust.  The committee said:
“We are strongly opposed to this proposal.  We think that in principal litigation concerning the affairs of a trust ought to be conducted in the courts of the legal system which governs it, and the place of administration may be quite fortuitous. 
...
So far as Scotland is concerned we think it would be appropriate for the statute simply to provide that a trust shall be domiciled in Scotland if under existing law and practice it is a Scottish trust.”
VIII	The first claim: “As beneficiary”?
The judge’s decision 
68.	The judge held that the claim against the first defendant was not a claim against her “as beneficiary”. Article 5(6) was to be applied to the claim made by a claimant and was not to be governed by the nature of the defence run by a defendant. The principal difficulty with the claimants’ submission was that the relief they sought against the first defendant depended upon the claimants showing that the first defendant was not entitled to the monies claimed. That was made clear by the use of the words “as a volunteer” and “as constructive trustee” in paragraphs 24 and 25 of the particulars of claim. The claimants accepted that the legal basis of the claim was available where a defendant was someone who was not entitled under the trust in question at all, just as it was against someone who was a beneficiary under the trust but who was not entitled to the receipt in question. It was much easier to say that the claim against the first defendant was in her capacity as someone  not entitled to the monies received, or in her capacity as a stranger to the trust, rather than in her capacity as a beneficiary under the trust. 
69.	On the material available, the trustees paid monies to the first defendant on the basis that she was a permissible recipient of those monies as a beneficiary under the trust. But that basis was denied by the claim made by the claimants. Accordingly, the basis on which the monies were paid to the first defendant (the claimants say wrongly) was not of much help in determining the capacity in which the claimants were suing the first defendant. 
70.	The conclusion was reached essentially on the basis of the claimants’ own analysis of the nature of the underlying claim coupled with his conclusion that the words “as a beneficiary” required the claimants to show that they were suing the first defendant in her capacity as a beneficiary rather than in her capacity as someone not beneficially entitled to the monies which are claimed. The words “as beneficiary” naturally mean: “in the capacity of beneficiary”. That conclusion was supported by the words used in the Lugano Convention, apparently without intending to change the meaning from the words used in the Brussels Convention. The construction urged on behalf of the claimants cut across what was described as a fundamental principle requiring the court to construe Article 5(6) narrowly or restrictively. 
The first defendant’s position
71.	The first defendant, of course, supports the judge’s conclusion. In particular she says that there is no dispute that Article 5(6) would apply to a claim for a declaration of whether or not someone was a trustee or beneficiary and, if so, what his or her rights and obligations were.  However, that does not mean that it extends to cases brought against a defendant on the basis that he or she was not a trustee or a beneficiary, as that would turn the language of Article 5(6) on its head. The express written trust imposes no obligations on the first defendant not to receive money or to return money to which she is not legally entitled.  Thus, the claimants’ claims fall outside their own interpretation of Article 5(6) as well. The claimants are suing the first defendant in her capacity as someone not beneficially entitled to the monies which are claimed rather than in her capacity as a beneficiary.  The same claim could be brought against a stranger to the trust as it does not turn on the first defendant’s status as a beneficiary.  As with a claim against a stranger, the terms of the express trust are relevant as part of the background facts.  But the claim is not based the person’s capacity under the express written trust.  
Conclusions
72.	There is no dispute about the general approach to the interpretation of the special rule of jurisdiction in Article 5. Because Article 5 is in derogation from the basic principle of domicile in Article 2, the provisions of Article 5 are to be construed restrictively: Case 189/87 Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co [1988] ECR 5565, 5585, at [19]; Kleinwort Benson Limited v Glasgow City Council [1999] 1 AC 153, 163-164, 166, 171, 173, 179-180, 188. In Case 103/05 Reisch Montage AG v. Kiesel Baumaschinen Handels GmbH [2006] ECR I-6827 the European Court said
“22	It must be observed, at the outset, that the jurisdiction provided for in Article 2 of Regulation No 44/2001, namely that the courts of the Member State in which the defendant is domiciled are to have jurisdiction, constitutes the general principle and it is only by way of derogation from that principle that that regulation provides for special rules of jurisdiction for cases, which are exhaustively listed, in which the defendant may or must, depending on the case, be sued in the courts of another Member State ….
23		In that regard, it is settled case-law that those special rules on jurisdiction must be strictly interpreted and cannot be given an interpretation going beyond the cases expressly envisaged by Regulation No 44/2001 ….
24		It is for the national courts to interpret those rules having regard for the principle of legal certainty, which is one of the objectives of Regulation No 44/2001 …. 
25		That principle requires, in particular, that the special rules on jurisdiction be interpreted in such a way as to enable a normally well-informed defendant reasonably to foresee before which courts, other than those of the State in which he is domiciled, he may be sued ….”
73.	For convenience I set out again the head of jurisdiction in Article 5(6) of the Judgments Regulation:
“A person domiciled in a Member State may, in another Member State, be sued:
…
(6) as settlor, trustee or beneficiary of a trust created by the operation of a statute, or by a written instrument, or created orally and evidenced in writing, in the courts of the Member State in which the trust is domiciled; …. ”
74.	The Schlosser Report contains the following relevant passages in paragraphs 109 and 111:
 “…. Basically two kinds of legal relationships can be distinguished in a trust; they may be defined as the internal relationships and the external relationships.
	…
Problems arise in connection with the internal relationships of a trust, i.e. as between the trustees themselves, between persons claiming the status of trustees and, above all, between trustees on the one hand and the beneficiaries of a trust on the other. Disputes may occur among a number of persons as to who has been properly appointed as a trustee; among a number of trustees doubts may arise as to the extent of their respective rights to one another; there may be disputes between the trustees and the beneficiaries as to the rights of the latter to or in connection with the trust property, as to whether, for example, the trustee is obliged to hand over assets to a child beneficiary of the trust after the child has attained a certain age. Disputes may also arise between the settlor and other parties involved in the trust.”
75.	As I have said, Article 5(6) of the Judgments Regulation is substantially the same terms as Article 5(6) of the Brussels Convention. Article 5(6) of the Lugano Convention uses the phrase “sued in his capacity as settlor, trustee or beneficiary”. The Jenard-Möller Report on the Lugano Convention does not shed any light on the reason for the change.
76.	What is the relevant claim and what is the relevant trust?
77.	The claimants contend they have both proprietary and personal claims against the first defendant and are entitled to personal and proprietary remedies under the Diplock principle (Re Diplock [1948] Ch 465, affd sub nom. Ministry of Health v Simpson [1951] AC 251) and personal and proprietary remedies for knowing receipt. Their argument is that a beneficiary prejudiced by an overpayment to another beneficiary has both personal and proprietary claims against the overpaid beneficiary. The personal remedy established in Re Diplock is available to an underpaid beneficiary of an inter vivos trust against a person who has been overpaid, whether that person is also a beneficiary or a stranger to the trust. 
78.	There was much argument on the relationship between resulting trusts and constructive trusts and Article 5(6). The claimants pleaded a resulting trust in paragraphs 11 and 13 of the particulars of claim.  The resulting trust which was asserted to exist was a resulting trust which came into existence automatically as a matter of law because the Settlor had failed to dispose of the whole beneficial interest, the income from the trust assets, which was not permitted to be accumulated: Lewin on Trusts, 18th ed, para 7.05, 7.06 and 8.02. What the claimants say is that she is a beneficiary of the trust fund, although the express terms of the trust do not give her an interest, by virtue of her right under a resulting trust to part of the income. Accordingly, there was for the purposes of Article 5(6), “a trust created … by a written instrument” and she is sued as a beneficiary of it.  A resulting trust is not a separate trust: it is merely the name for the residual beneficial interest created on the execution of the trust instrument.  The trustees have to give effect to it like any other beneficial interest.
79.	I accept the submission that the first defendant is not being sued as a beneficiary of the resulting trust which the claimants allege.  Nor is it relevant that the first defendant is claimed to be a constructive trustee of the overpaid amounts. The claim of constructive trust goes to remedy and not to the question whether the first defendant is sued as a beneficiary of the written trust.  Article 5(6) does not apply to a constructive trust: Schlosser Report, para 117; Chellaram v Chellaram (No. 2) [2002] EWHC 632 (Ch), [2002] 3 All ER 17, at [138], [162];  Dicey, Morris & Collins, Conflict of Laws (14th ed 2006), paras 11-316, 29-061; Briggs & Rees, Civil Jurisdiction and Judgments (4th ed 2005), para 2.170; and Underhill & Hayton, Law of Trusts and Trustees (17th ed 2006), para 102.229).
80.	Consequently the only trust relevant for present purposes is the declaration of trust, and the question is whether the first defendant is sued as beneficiary of that trust.
81.	The claimants say that their primary complaint is that the first defendant has been paid both income and capital from the trust to an extent which the terms of the trust do not allow, and that they, who are beneficiaries of the trust, primarily complain that the first defendant has been overpaid as a beneficiary. 
82.	I have come to the conclusion that in the light of the claim, the correspondence and the evidence, the claimants are suing the first defendant as beneficiary because it is accepted that she was a beneficiary and the claimants are suing her for sums which she received by way of overpayment of her entitlement. The relief claims an account of all monies which she has received, including those to which it is conceded she is entitled, and this is a necessary preliminary to identifying the monies to which she is entitled.
83.	On May 25, 2007 the claimants’ solicitors wrote to all the defendants a letter under the pre-action protocol enclosing the draft particulars of claim.  By a letter of June 6, 2007 the first defendant replied to say:
“I do not understand why you consider proceedings should be brought in England and your letter does not provide any sensible explanation.  I wish to make clear that I do not accept that the English courts have jurisdiction over me or over this Trust.”
84.	In their reply of June 11, 2007 the claimants’ solicitors replied that the basis of the jurisdiction was in Article 5(6) of the Judgments Regulation.  They said:
“The differences between our clients and you will have to be litigated somewhere and it is surely sensible that the court which decides them should be applying the law with which it is most familiar, i.e. its own domestic law.”
85.	On October 18, 2007 the solicitor for the first defendant made a statement in support of an application contesting the jurisdiction.  She referred to the previous correspondence and said, but without any indication of the basis for the payments, that the claimants were not suing the first defendant as a beneficiary.
86.	In his witness statement in response, the claimants’ solicitor replied to Ms Morton’s statement that the first defendant was not being sued in her capacity as a beneficiary of the trust by saying: (a) nothing in the witness statements produced on behalf of the first defendant disputed the contention in the particulars of claim that she had at all times received the whole income of the trust; (b) nothing in the witness statements disputed the pleaded contentions that she had received the subject matter of a number of purported appointments of the capital; it was not immediately obvious to the claimants how the first defendant could contend that she was not being sued in her capacity as a beneficiary when it did not seem to be disputed that she had received more than £3 million of the income and a further £300,000 of the capital.
87.	In reply the first defendant’s solicitor said that the allegations were not disputed in her first witness statement because they were irrelevant to the application.  Even if she were a beneficiary under the trust, it was clear that the action against her was not in her capacity as a beneficiary, and she was being sued as constructive trustee.
88.	Ultimately, the judge was invited by both sides to proceed on the basis that the first defendant was beneficially interested in the trusts created by the declaration of trust. The claimants pleaded that the first defendant was within the class of Beneficiaries.  In the course of these proceedings they reserved their position on this point before the judge: judgment, para. 13.  The claimants and the first defendant agreed before the judge that the first defendant’s application should be determined on the footing that she was within the class of Beneficiaries. The judge said that he was not wholly clear as to the extent of the reservation as to whether the first defendant was a Beneficiary, but noted that the claimants wished to proceed on the basis that the first defendant was beneficially interested in the trusts. Consequently he proceeded on the basis that the first defendant was indeed beneficially interested in the trusts created by the declaration of trust.
89.	I do not consider that this part of the appeal raises a question of the construction of Article 5(6). It involves a question of the application of Article 5(6) to the nature of the claim in the light of the particulars of claim and the evidential material before the court. The claimants are not asserting that the first defendant was not a beneficiary at all, and so the appeal does not raise an issue analogous to the problem, discussed in relation to Article 5(1) (contract jurisdiction), which arises where the claimant denies the existence of a contractual relationship and seeks a negative declaration that he is not bound by any contractual obligation: Dicey, Morris & Collins, para 11-288.
90.	The dispute in this case is about the extent of the first defendant’s entitlement, and not its existence. She is sued because she has been treated as a beneficiary by the trustees and by herself, and she actually is a beneficiary. On the material before the court, that is the only basis on which she could claim to retain any of the moneys she has been paid. The claim involves, and arises out of, what Professor Schlosser called problems arising in connection with the internal relationships of the trust. In my judgment the first defendant is therefore being sued as beneficiary for the recovery of the overpayment.
IX	The second claim: “As trustee”?
91.	The claimants’ second claim is that the first defendant purported to appoint herself Appointor under the trust when she was unable to do so or disqualified from doing so and in any event should now be removed. The essence of the claim against the first defendant was that she was the donee of a fiduciary power and the Judgments Regulation must be applied to such a claim.
Judge’s decision
92.	The judge recorded that the claimants did not develop the claim in paragraph 28 of the particulars of claim to the effect that the first defendant was not able to appoint herself as Appointor. The claimants concentrated on the powers of the court to act where the first defendant had been validly appointed as the Appointor, but it was said that she should be removed. The claimants contended that (1) the Appointor had one function only, and that was to exercise the power of appointment which takes effect at the end of the Trust Period: see clause 4.2; (2) this power was a fiduciary power, because (i) the power could not be used to benefit the Appointor himself or herself; and (ii) the identity of the Appointor was not fixed in advance, as would be normal with a personal power. Consequently the Appointor filled an office like a trustee or protector, and the Appointor filled that office for the benefit of the Beneficiaries, and therefore the donee of such a fiduciary power was a trustee of the power.
93.	The judge referred in detail to Mettoy Pension Trustees Limited v Evans [1990] 1 WLR 1587, at 1613-1614, where Warner J referred to the categories (among others) (1) where a power was conferred on the trustees of property, or on any other person, as a trustee of the power itself, which was “a fiduciary power in the full sense”; and (2) discretionary trusts where someone, usually but not necessarily the trustees, was under a duty to select from among a class of beneficiaries those who are to receive, and the proportions in which they are to receive, income or capital of the trust property.
94.	The judge concluded that there were considerable differences between the office or the capacity of a trustee and the position of a donee of a fiduciary power. In some circumstances, it might be right to react to the word “trustee” in an instrument, or even in a statutory provision, by holding that the parties to the instrument or the enacting authority intended to embrace not just trustees properly so called, but also persons who had fiduciary duties where those duties were, in the wide spectrum of fiduciary duties, close enough to be regarded as analogous to or akin to the duties of a trustee. 
95.	It would be quite inconsistent with the restrictive approach to the special head of jurisdiction in Article 5(6) to read the words “as trustee” in the expansive way, in which they would have to be read, to produce a result in favour of the claimants.
The claimants’ position
96.	On this appeal the claimants essentially repeated the arguments made before the judge based on the case-law that the power to nominate or choose the Appointor is itself fiduciary, as is the power of appointment itself. They argued that there is a direct analogy with a power to appoint trustees, which is always fiduciary: Thomas on Powers, paras 6-96, 6-97, 11-30. Consequently the holder of a fiduciary power is to be equated with a trustee.  A fiduciary is, by definition, a trustee of his powers, and the court has power to remove the fiduciary or appoint a substitute: Re Papadimitriou [2004] W.T.L.R. 1141 (Isle of Man); Re Freiburg Trust [2004] JRC 056, (2003-04) 6 I.T.E.L.R. 1078 (Jersey) (removal); Mettoy Pension Trustees Ltd v. Evans [1990] 1 W.L.R. 1587 at 1617-1618; Rawcliffe v. Steele [1993-95] M.L.R. 426 (Isle of Man) (appointment).  On occasion the decisions have expressly equated the holder of a fiduciary power with a trustee for the purpose of the exercise of the court’s jurisdiction; Rawcliffe v. Steele, at 485, 496, 503; Re Freiburg Trust, paras [4]-[7]. If the holder of a power to appoint a trust fund is a fiduciary he or she is effectively a trustee; and the claim against her for her removal from that office is a claim against her “as trustee”. 
Conclusions
97.	I am satisfied that the judge was right on the simple ground that, even if the powers are classified as fiduciary, the first defendant is not being sued in the second claim “as a trustee … of a trust created … by a written instrument …” for the purposes of Article 5(6). 
98.	The interpretation of “trustee” depends on an autonomous Regulation concept, but since the origin of Article 5(6) lies exclusively in the accommodation of the trust as known in common law countries, that autonomous interpretation must be strongly influenced by the concept of “trustee” in those countries.
99.	In the light of the necessarily restrictive approach to the interpretation of Article 5(6) I can see no basis for extending Article 5(6) to such persons as appointors, or protectors, or to any other person with fiduciary powers who does not come within the normal meaning of the expression “trustee.” To so interpret and extend Article 5(6) would be entirely contrary to the approach which the European Court requires national courts to take in the interpretation of Article 5.
X	Disposition
100.	I would therefore allow the appeal in relation to the first claim and dismiss the appeal in relation to the second claim, and affirm the judge’s reasoning on domicile.
Mr Justice Lewison:
101.	I agree.
Lord Justice Jacob:
102.	I also agree.