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Jurisdiction over foreign land

By Jack Wass (Stout Street Chambers)

Immovable property, including land, gives rise to particular problems in the conflict of laws. Since the House of Lords’ judgment in British South Africa Co v Companhia de Moçambique [1893] AC 602 (HL), the English courts have disclaimed jurisdiction to determine title to or possession of foreign land, even where the defendant has been properly served. This rule is then subject to two ‘exceptions’: the court will act on the conscience of a defendant to enforce contractual or equitable obligations in personam relating to foreign land, and the court will retain jurisdiction where the question of title arises incidentally in the course of the administration of an estate.

New Zealand courts have assumed that the Moçambique rule forms part of our law. Despite what Lord Wilberforce described in 1978 as a ‘massive volume of academic hostility to the rule as illogical and productive of injustice’ (Hesperides Hotels Ltd v Muftizade [1979] AC 508 at 536), it survives in England in attenuated form. In Schumacher v Summergrove Estates Ltd [2014] 3 NZLR 599, the Court of Appeal was not required to determine whether it should be abolished in New Zealand – because the in personam exception applied – but noted academic criticism of the rule in terms suggesting that the Court might be sympathetic to its abolition.

The scope and continuing justification for the Moçambique rule came before the High Court in Foster v Christie [2018] NZHC 3103. The plaintiff and her mother had owned land in New Zealand as joint tenants. The mother severed the tenancy (replacing it with a tenancy in common), and then died in Ireland. The effect of severing the tenancy was to deprive the plaintiff of her mother’s share of the property, which would have otherwise passed to her by survivorship. She was also excluded from the will. The plaintiff alleged that her sister had procured her mother to sever the tenancy by undue influence. There were also separate causes of action relating to the mother’s capacity and funds in a New Zealand bank account.

Associate Judge Andrew found that the latter two causes of action were within the jurisdiction of the Irish courts, and that Ireland was the appropriate forum for their trial. The principal question was whether the Irish courts had jurisdiction over the claim relating to New Zealand land.

For this purpose, the court had to decide whether the claim came within the scope of the Moçambique rule: the New Zealand courts would not recognise a foreign court asserting jurisdiction over land in New Zealand, unless the in personam exception applied. In other words, if the claim was one that New Zealand law regarded as exclusively within the jurisdiction of the New Zealand courts, then it could not decline jurisdiction; if it was not caught by the Moçambique rule, then there was no objection to referring the matter to Ireland if that country was otherwise the appropriate forum.

The issue arose in a particularly acute fashion because the Judge found that Ireland was otherwise the appropriate forum for the undue influence claim to be litigated; if the Moçambique rule did not apply, then he would have exercised his jurisdiction to send the whole case to Ireland: [79]. On the facts, the Judge found that the Moçambique rule did apply. The real issue was whether the severance of the joint tenancies could be set aside, and that was claim in rem; the allegation of undue influence was just an element of that central issue: [55]. That was supported by the relief claimed: to set aside the severance, to restore the plaintiff’s position as legal and beneficial owner, and to have the District Land Registrar amend the title accordingly: [63].

Whatever the precise ambit of the Moçambique rule, the Judge’s conclusion is sound. This was not a case like Schumacher, where the plaintiff asserted an equitable interest in Irish land that would be vindicated by the declaration of a constructive trust. The plaintiff in this case sought to restore legal and beneficial title that would be good against the world.

Two particular justifications have been advanced for the Moçambique rule. One is based on the principle of comity, or the respect given under international law by each country’s courts for the legitimate domain of other countries’ legal systems. Since land is inherently local, the risks of conflict are obvious where courts of one country purport to determine – let alone transfer – legal title of foreign land. The second is the principle of effectiveness: the courts strive to avoid making orders that would be futile, and any order in relation to foreign land would require the recognition and implementation by foreign authorities.

Assessed by reference to those justifications, the Associate Judge’s conclusion is readily justifiable. It remains to be seen whether the Court of Appeal would be prepared to entertain the prospect of abolishing the Moçambique rule entirely, and leaving concerns about the assertion of jurisdiction over foreign land entirely to an enquiry into the appropriate forum. I will explore that issue in my next post.

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