Re Shanavazi [2021] EWHC 1832 (Ch)
Background
Gohlam Dastagir Shanavzi (“the Deceased”) owned a property in Germany (“the Property”).
Under the German intestacy rules, the Deceased’s widow, Bibi Marium Shanavzi (“the Claimant”), was entitled to one half of the Property. The other half was divided in equal shares between the Deceased’s five children, one of whom, Ilyas Firas Shanavzi (“Ilyas”), was a minor who was habitually resident in England.
The Claimant and the other adult children wished to sell the Property but could not do so in Germany without an order of an English Court authorising the proposed sale on behalf of Ilyas (see Council Regulation (EC) No 2201/2003 (“the Regulation”)).
In the circumstances, the Claimant issued a claim for approval of the proposed sale in the Chancery Division on 24th November 2020.
Jurisdiction
Master Clark held that the effect of the European Union (Withdrawal) Act 2018 and amended by the European Union (Withdrawal Agreement) Act 2020 and the Jurisdictions and Judgments (Family) (Amendments etc.) (EU Exit) Regulations 2019 (SI 2019/519) was that the Regulation governed claims which were commenced before 31st December 2020 and that, in such claims, the relevant EU case law decided before 31st December 2020 was to be applied in the interpretation of the Regulation.
Following Re Matouskova (C-404/14) [2015] I.L.Pr. 48), Master Clark held that the authorisation sought by the Claimant was within the scope of the Regulation and that such applications are governed by English law:
“32. There are no provisions in the Regulation concerning applicable law. Re AC [2020] EWHC 90 was a case concerning whether the court could authorise the mother of a child to accept an inheritance of a share in an Italian property. Peel J, having held that the English court had jurisdiction under the Regulation, assumed that the applicable law was English law. In Private International Law, Cheshire, North and Fawcett (14th edn), the editors express the view (on p.1096) that there seems little doubt that when an English court takes jurisdiction to make orders with respect to children, it will apply English law as the law of the forum. I note also that where the court exercises its inherent jurisdiction in matters of parental responsibility, it applies English law: see Dicey & Morris 15th edn, Rule 106(10).
33. In Hays v Hays [2015] EWHC 3825 (Ch), a minor (acting by her litigation friend) sought an order that her mother be appointed as her agent to enter into a contract for sale of her interest in an apartment in Paris. The judge (Master Matthews) was not referred to the Regulation; and indeed, the fact that the French court would not make such an order was a matter of inference rather than evidence. However, he characterised the issue arising in the case not as one concerning the best interests of a minor, but as a problem concerning the capacity of a person to enter into a sale of immovable property, and what could be done to cure any incapacity there might be. On this basis, he held that the applicable law was that of the place where the immovable property was situate, namely France.
34. This analysis is, however, inconsistent with that in Matouskova, which I prefer. Thus, although the position is not entirely clear, in my judgement, in a case governed by the Regulation, the court must apply English law.”
And to be determined under the Children Act 1989 (“the 1989 Act”):
“44. The application of this section [i.e. section 3 of the 1989 Act] in situations similar to this case has been considered in the two cases already mentioned. In Hays v Hays, the Master, as noted, applied French law, and the claim succeeded on that basis. However, he held that he would have had no power to make the order under the Children Act:
’25. I have no reason to doubt that the Defendant has parental responsibility for Estelle in English law. But I am not aware of any case law or other authority (and none was cited to me) to the effect that section 3 authorises the Defendant to dispose of Estelle’s immovable property rights. Section 3(3) in particular refers expressly to her being able to give a good receipt or sue for property belonging to the minor, as if that might otherwise be in doubt (cf In re Chatard’s Settlement [1899] 1 Ch 712) . But it is striking that there is no mention anywhere in section 3 of disposal, which goes far beyond receipt and recovery. Taken as a whole, I am not satisfied at present that this section confers powers on those exercising parental authority to enter into a contract to sell immovable property on behalf of a minor.’
45. Re AC was decided in the Family Division. As to section 3(1), the Judge said:
‘[the sub-section] is very widely drafted. I do not read into it any restriction to its applicability. It is all encompassing and should be construed purposively. Of particular note in this case is the emphasis on responsibilities as well as rights. Thus, [the mother] has a clear responsibility under (1) to act in [the child]’s interests in relation to property to which he is entitled. By (2) and (3) [the mother] has not only rights and powers, but also duties to take steps to receive or recover property for the benefit of the child. The wording of (2) and (3) plainly embraces the Property in this case, being a house in Italy in which [the child] has an entitlement. And in my judgment a purposive reading of subsections (1) to (3) also includes the responsibility and duty of the person with responsibility to take steps which enable the child to receive or recover property in the child’s own name, and not merely enabling the person with parental responsibility to receive or recover property in his or her own name for the benefit of the child. The former is apt for a situation like the one before me, the latter might be apt where the child has a beneficial interest in property by virtue of trust or otherwise as understood at English law.’
46. As to Hays v Hays, the Judge said:
‘my initial view is that the Master’s interpretation of section 3 was, with respect, too restrictive. If, in this case, [the mother] is not authorised to enter into a contract of sale on behalf of [the child], then [the child] will not be able in a meaningful sense to receive or recover his property until he is 18. Of course, he will hold it, but he will be prevented from converting it into other assets which can be managed, invested or deployed in his interests. I would regard a contract of sale in such circumstances as arguably falling within the phrase “entitled to receive or recover”. In any event, subsection (3) states that the rights referred to in subsection (2) “include” the right to receive or recover. The word “include” does not operate as a limit to the powers relating to property, which powers in my provisional view include disposal of property. It offers one particular example of circumstances in which the power may be exercised (probably aimed at trust arrangements commonplace in England but not encountered in many foreign jurisdictions), but does not limit the power to that example. I see no reason why section 3, read as a whole, should not be construed more widely to encompass entering into a contract of sale provided, of course, that the welfare checklist and paramountcy principle govern the exercise of that power.’
47. I find Peel J’s reasoning compelling, and respectfully agree with it. In my judgment, I have the power under section 3 of the Children Act to make the order sought.”
Master Clark also made obiter comments to the effect that similar cases issued after 31st December 2021 would be governed by the English Courts applying English law under the Hague Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in Respect of Parental Responsibility and Measures for the Protection of Children (“the Convention”):
“38. The objectives of the Convention include the allocation of jurisdiction in respect of “measures directed to protection of the person or property of the child”. These measures include “the administration, conservation or disposal of the child’s property”. Professor Paul Lagarde in his Explanatory Report (“Lagarde Report”) states that this would include the authority of a person to represent the child in order to authorise or approve a sale or purchase of property, but it does not seek to interfere with substantive rules of property or trust law.
39. Thus, Art 5 of the Convention provides that:
‘The judicial or administrative authorities of the Contracting State of the habitual residence of the child have jurisdiction to take measures directed to the protection of the child’s person or property.’
40. The Convention also determines the applicable law when the jurisdiction to take these measures is exercised, and the law applicable to parental responsibility15 . Article 15(1) provides that:
‘In exercising their jurisdiction under the provisions of Chapter II16 , the authorities of the Contracting States shall apply their own law.’
41. It is clear therefore that, in cases commenced after 31 December 2020, if the child is habitually resident in England, the Convention confers jurisdiction in matters of parental responsibility on the English courts, and requires them to apply English law.”
Result
Master Clark held that it was plainly in Ilyas’ best interests that the property be sold at the price agreed. There was no disadvantage to him from the sale. Indeed, the evidence was that the property was a financial burden. It was also in his best interests that his share of the proceeds be applied for his education, maintenance and benefit (and the Claimant gave an undertaking to so do), rather than being tied up in a property in a country where he no longer lived. Those considerations led to the conclusion that the Court should make the order sought under the 1989 Act, section 3.
Comment
This decision provides some welcome clarification as to the law applicable to applications on this type. However, the decision that these matters are to be determined under the 1989 Act may cause considerable delay and expense in the short term because the Family Division, to which proceedings under the 1989 Act are assigned, doesn’t at present have a well adapted procedure for applications of this type.
(Author: Mathew Roper, Barrister)