Easy debt

Thursday, 01 April 2010
Richard Frimston on easy debt in relation to cross-border succession.

P rivate client practitioners with clients with European connections now have to understand a broader range of issues than ever before. The Brussels I Regulation 44/2001 does not apply to ‘the status or legal capacity of natural persons, rights in property arising out of a matrimonial relationship, wills and succession’ and therefore when it first arrived in 2001 it did not occur to me that it would be relevant to me.

Last September, you may have missed Mrs Justice Slade DBE’s judgment in Haji-Ioannou (Deceased) and others v Frangos [2009] EWHC 2310 (QB) relating to the estate of Stelios Haji-Ioannou’s father, Loucas.1 Loucas’s ex-son in law, Ioannis Frangos, owed him USD49 million. Loucas had failed to obtain judgment in England but succeeded in doing so in Greece. Ioannis’ appeal in Greece was dismissed. Application to register the judgment of the Greek Court of Appeal of 12 May 2008 in the High Court in London under Brussels I was made on 15 December 2008. Loucas sadly died in Greece on 17 December 2008.

Master Fontaine made the original registration on 13 January 2009 and on 3 June 2009 substituted Loucas’ widow and his three children as the applicants. Ioannis appealed against these two orders. It was decided that Loucas died intestate, a British citizen domiciled in Monaco. A Monégasque acte de notoriété was issued on 18 May 2009, but under Monégasque law title to assets was vested in the heirs on Loucas’ death under the doctrine of seisin.

The case dealt with the very nice distinctions under the law of England & Wales between succession on the one hand and administration on the other. Such distinctions do not exist in the same way under Greek or Monégasque law.

What was the situs of the judgment debt? It held that the debt did not have Anglo-Welsh situs. An Anglo-Welsh grant was not necessary and the asset had not vested in England & Wales. The judgment had Greek situs and therefore the heirs could register in England & Wales under their personal capacity as per Vanquelin v Bouard (1863) 15 CBNS 341, 33 LJCP 78, 10 Jur NS 566 (19 November 1863). The court accepted that renvoi probably applied to succession, but not to administration. However, it appeared to consider that Vanquelin vBouard applied to assets vesting under Monégasque law as the law of the domicile rather than Greek law as the law of situs.

In any event, notwithstanding the vesting in the heirs under Monégasque law, there was no proof of the vesting until theacte de notorieté was actually made. Therefore until theacte de notoriété was issued on 18 May 2009, the heirs did not have sufficient status for Art 38 Brussels I registration purposes under English law, to show that they had the right to administer the Greek judgment and apply in London for it to be registered. The initial registration order was accordingly set aside as a nullity.

Whether or not the UK eventually opts in to the EU succession regulation, Brussels IV, these distinctions between succession law and administration will continue to have different effects in different jurisdictions.

The commercial cross-border world will increasingly need the skills of private client practitioners. Perhaps, it ain’t so easy after all.

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Richard Frimston

Richard Frimston TEP is a Partner at Russell Cooke LLP and Chairman of the STEP Cross Border Estates Group.

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