Court holds wife's pre-existing property rights unaffected by new domicile law upon husband's death.

[*396]1982 April 27

(ARTEMIS, S.D.J. AND HADJIHAMBIS, AG.D.J.)

IN THE DISTRICT COURT OF LIMASSOL

In the matter of the estate of Chinnacolanday Krishna Pillay

Adamos Adamides K. and Another,

Plaintiffs,

v.

Selvum Reddy,

Defendant.

(General Application No. 3/81).

Husband and wife - Community of property - Doctrine of immutability and mutability - Upon change of domicile spouses' proprietary rights already acquired not affected - New lex domicilii only governs their proprietary rights acquired after the change of domicile - Acquisition by husband (testator) of immovable property, in England and in Cyprus, through proceeds of South African Assets after abandoning South African domicile - This property, does not belong exclusively to the testator but was held by him as to one half on a resulting trust for the wife as beneficiary under both English and Cyprus Law - The rights of the wife not affected by the provisions of s.3 of the Immovable Property (Acquisition by Aliens) Law Cap.109 (as amended) and of s.2(c) (definition of "trust in favour of an alien"), of the same Law.

A. Adamides, for the Plaintiffs.

K. Papachristoforou for Fr. Saveriades, for the Defendant,

DECISION

The

decision of the Court was delivered by:-

HADJIHAMBIS. AG.D.J.: These proceedings,[*397] instituted by the plaintiffs as administrators of the estate of the late Chinna colanday Krishna Pillay, henceforth referred to as "the Testator", are for the determination "by the Court of a number of Questions arising in the administration. The Testator died in Limassol on

21.11.78 and, following a renunciation of their appointment by the executors named in the will dated 24.1.52 (Appendix 1 to the Statement of Claim), Letters of Administration with the will annexed were granted to the plaintiffs by the Court in Probate Application 25/79 on 6.2.79. The defendant is the niece of the Testator, being the only descendant of his only sister Amurtham Devar, who died on 8.12.70 and to whom a legacy had been left by the Testator’s will. The Testator's wife, Caroline Martha Pillay, henceforth referred to as "the Wife", died in Limassol on 7.7.79 and probate of her will dated 25.1.79 (Appendix 2 to the Statement of Claim) was granted to the plaintiffs, named therein as her executors. The defendant and the wife are the Testator's only heirs. The Testator's adopted son, Colanday Vadival Pillay, the grandson of the wife from her previous marriage, henceforth referred to as "the son", died on 15.5.57 unmarried and without issue. The heirs of the wife were notified of the proceedings by the plaintiffs and received copies of the pleadings but have not joined the proceedings.

The proceedings were initiated by way of originating summons under s.53(1) (g) of the Administration of Estates Law, Cap. 1 89, which provides:[*398]

”53(1) Personal representatives or any of them, creditors, devisees, legatees or next-of-kin, or persons claiming through such creditors or beneficiaries by assignment or otherwise, may apply to the Court by originating summons for the determination, without an administration in Court of the estate, of any of the following questions or matters:-

………………………………………………………………………………………...

(g) the determination of any question arising in the administration of the estate".

As for the jurisdiction of the Court in this respect, we have no doubt that this is a proper case within s.53(1)(g).

The questions for determination as stated in the originating summons and in the Statement of Claim are;-

"(a) Whether Chinnacolanday Krishna Pillay was of Cyprus, or English or South African domicile.

(b) Whether the assets and liabilities of the estate of the deceased Chinnacolanday K. Pillay as same appear in the inventories of the administration (Probate Application 25/79 District Court of Limassol) would wholly or in part be considered as falling into common ownership with his wife Caroline M. Pillay according to the South African legal system of community of property and thus whether the [*399] estate of his wife Caroline M. Pillay deceased is by the one half share entitled to the assets and subject to the liability of the estate of Chinnacolanday K. Pillay or whether the change in the domicile of the spouses render the provisions “ of the South African Law inapplicable altogether.

(c)In view of the South African Law regulating the “...property relationship between the aforesaid spouses until the change of their domicile whether Chinnacolanday K. Pillay was thereafter holding the one half or any part of the property in his name upon resulting trust for his wife Caroline M. Pillay and in such a case whether Caroline M. Pillay was jointly liable in respect of the liabilities of her husband.

(d)If it is found that the property of Chinnacoland K. Pillay was in common ownership with his wife and/or held upon resulting trust in respect of the one half share, whether in view of the provisions “ of Cap.195 and Cap.109 as amended, the immovable property purchased by Chinnacolanday P. Pillay.in Cyprus does not fall into common ownership and/or was not held upon resulting trust.

(e-)Such other or further directions as to the rights and liabilities of Caroline M. Pillay in connection with the estate of her husband Chinnacolanday K. Pillay as at the time of his death. [*399]

(f) Whether Caroline M. Pillay. by virtue, of. the “ provisions of the will of her husband was entitled to receive all or part of the income derived from the estate of her husband up to the date of her death or whether the relevant beouest lapses in view of the fact that the main beneficiary predeceased the testator.

(g) Whether the net estate of Chinnacolanday K. Pillay would devolve according to the Law of intestacy or otherwise".

The factual background to these questions, as to which there is no dispute, is as follows:-

The testator and the wife were married without an antenuptial contract in or about 1929 in South Africa where they were born with a South African domicile of origin. In 1955 the testator and the wife, together with the son, left South Africa and settled in England. At the same time, all assets in the testator’s name in South Africa were liquidated and the proceeds transferred to England in his name where they were invested in the purchase of immovable properties. The testator and the wife acquired no other property and had no income other than the income from the lettings of such properties. The testator and the wife applied for an acquired British citizenship in 1961 and 1963 respectively. After visiting Cyprus a number of times, they left England and settled in Cyprus in 1978. In 1977 all the properties in [*401] the testator's name in England were sold and the proceeds were deposited in external accounts in England and in Cyprus. Part of the money was employed in the purchase, in the name of the testator who had applied for the necessary permit from the Council of Ministers, of a flat in Limassol. The testator and the wife acquired no other property and had no income other than from the investment of the said proceeds.

The first matter for consideration must surely he as to the rights and liabilities, if any, of the wife, in the property which was in the name of the testator at the time of his death, in view of the allegedly applicable doctrine of the law of South Africa as to community of property between husband and wife. On the understanding that the testator (and the wife) had a South African domicile at the time of the marriage, the law of South Africa applies to determine the effect of the marriage on their movable property rights on the basis of the rule that, in the absence of a marriage contract, the lex domicilii of the husband at the time of the marriage (or rather the law of the matrimonial domicile) governs the rights of the spouses in their movable property - Re Eger ton’s Will Trusts (1956) 2 All E.R. 817. Indeed, though this is not necessarily relevant, the testator In his will stated that he and the Wife were married in community of property. The law of South Africa, being the lex situs,would also apply to determine the effect of the marriage on their property rights in any South African immovables on the basis of the rule that the lex situs governs the rights of the spouses in their immovable property - Welch v. Tennent (1891 ) A.C.639. [*402]

In so far, therefore, as the law of South Africa applies to determine the effect of the marriage on both the movable and the immovable property rights of the spouses, the question arises as to the establishment of the law of south Africa on this matter. The long-established principle of the law is that foreign law is treated as a fact of which, unlike of the lex fori, no judicial notice is taken by the Court and which must be pleaded and proved by expert evidence in each case - Premoult v. D edire (1718) 1 P. Wms. 429, Nelson v. Bridport (-1845) 8 Beav. 527. However, foreign law need not be proved if it is admitted - Moulis v. Owen (1907) 1 K.B.746 (C,A.). In the instant case, the parties agree not only as to the applicability of the law of South Africa as the lex causa but also as to its content to the effect that, in so far as the spouses married without an ante-nuptial contract, the marriage creates community of property in the meaning that all the property, movable and immovable, belonging to husband and wife falls on marriage into the common ownership of both and that all the liabilities of either spouse become the joint liabilities of both. We are, therefore, content to proceed on this basis, which is sufficient for present purposes, without any further investigation into the law of South Africa, and rule that the parties' marriage created community of property rights and liabilities in respect .of all property, movable and immovable, belonging to or acquired by either spouse, at any rate while their South African domicile continued.

The question that does, however, arise, is whether in so far as movables are concerned, if the South African domicile was subsequently changed, the spouses' community [*403] of property continued (the doctrine of immutability), or whether the law of the new domicile governs their rights in movable property (the doctrine of mutability), and whether, in so far as immovables were subsequently bought in England and in Cyprus, their lex situs governs the spouses’ rights therein. As regards movables, the first issue in this respect is whether there was a change of domicile at any stage. In the course of the argument it transpired that the parties were agreed that the testator (and the wife) died domiciled in Cyprus,..whereupon we raised the Question whether domicile is a matter which the parties may agree upon, thereby precluding the Court from considering it, or whether it is rather a matter of law for the Court to decide. Although we favour the latter view of it, the matter is more theoretical than practical in the instant case for we are satisfied, on the facts as agreed, that the testator and the wife did, as the parties say, abandon their South African domicile of origin for an English domicile of choice which they in turn abandoned for a Cyprus domicile of choice. Although the acquisition of a domicile of choice involves a presumption against a change of domicile, particularly. the domicile of origin, and places the burden of proof of the change on the party who alleges so, we are satisfied that the intention necessary to establish the above changes of domicile was present. We need not go into the question of domicile any further.

This leads us to the question of mutability or immutability of matrimonial rights in property upon a change of domicile. In this respect, we do not consider Lashley v. Hog (1804) 4 Paton 581 , as a decision in favour of mutability [*404] for we read the case as turning not on matrimonial out on testementary rights in property, the point being that the wife acquired no common property rights upon marriage but only rights of succession which were, of course, governed by the husband's domicile at the time of his death and not by that at the time of the marriage. On the contrary, we regard the case as a decision in favour of immutability to the extent of rights in property acquired before the change of domicile. As Lord Halsbury, discussing Lashley v. Hog in De Nicols v. Curlier (19OO) A.C.21, at p. 27, put it:-

"If the wife by the marriage in Scotland acquired no proprietary rights whatever, but only what is called a hope of a certain distribution upon the husband's death, it is intelligible that that right of distribution, or by whatever name it is called, should be dependent upon the husband's domicil, as following the ordinary rule that: the law of a person's domicil regulates the succession of his movable property. But if by the marriage the wife acquires as part of that contract relation a real proprietary right, it would be quite unintelligible that the husband's act should dispose of what was not his; and herein, I think, is to be found the key to Lord Eldon's judgment".

The true rule, we venture to say, which is consistent with justice and principle as much as with authority, is that upon a change of domicile the spouses' proprietary rights already acquired are not affected and that the new lex [*405] domicilii only governs their proprietary rights acquired after the change of domicile. In the instant case, this means that the wife’s one half share in the testator's movable property acquired before they left South Africa is not affected by subsequent changes of domicile. If this is so, another' consequence follows: since the testator and the wife thereafter had no income, and acquired no movable property, other than through the proceeds of the South African assets and their investment, any. movable property acquired by him in his name ... while domiciled in England or in Cyprus through such proceeds belongs as to one half to the wife as representing her share in such proceeds, on the basis of a resulting trust, the principle of which applies both in England and in Cyprus. Consequently, the wife was beneficially entitled to one half of the movable property which was in the name of the testator at the time of his death to the extent that such property was acouired through the proceeds of the South African assets, and was, for the same reason, to that extent subject to the liabilities of such property.

Much the same considerations would seem to apply as regards the immovables acouired in England and in Cyprus. The change of domicile is, of course, irrelevant here because matrimonial rights in immovables are, as indicated, governed not by the lex domicilii but by the lex situs. English and Cyprus Law, therefore, governs the matrimonial rights of the parties in respect of the immovables acquired in England and in Cyprus respectively, and neither English nor Cyprus law recognizes the doctrine of community of property. However, [*406] in so far as these immovables were acouired through the proceed of the South African assets and their investment, it cannot be argued that they belong exclusively to the testator but were held by him as to one half on a resulting, trust for the wife as beneficiary under both English and Cyprus Law. Consequently. the proceeds of the English immovables also belong to the wife as to one half as representing those immovables. As to the Cyprus flat, learned counsel for the plaintiffs has raised the question of the applicability of the Immovable Property (Acquisition by Aliens) Law, Cap.109, as amended by the Immovable Property (Acquisition by Aliens) (Amendment) Law 1969 and by the Immovable Property (Acquisition by Aliens) (Amendment) Law 1972. Section 3 of the 1972 Law provides:

3 (1) Απαγορεύεται η υπό αλλοδαπού κτήσις,

άλλως η αιτία θανάτου, ακινήτου ιδιοκτησίας άνευ προηγουμένης αδείας του

Υπουργικού Συμβουλίου.

…………………………………………………………………………………………………………

(6) Διά τους σκοπούς του παρόντος άρθρου, ο όρος ‘κτήσις ακινήτου ιδιοκτησίας’, περιλαμβάνει ωσαύτως:-

6 (γ) την δημιουργίαν καταπιστεύματος προς

όφελος αλλοδαπού το οποίον αφορά, εν όλω ή εν μέρει, εις ακίνητον ιδιοκτησίαν,

μίσθωσιν ακινήτου ιδιοκτησίας εμπίπτουσαν εις τα διατάξεις της παραγράφου (α) ή

μετοχήν εταιρείας της οποίας η κτήσις εμπίπτει εις τας διατάξεις της παραγράφου

(β).

“Καταπίστευμα προς όφελος αλλοδαπού” is defined in s.2(γ) as: [*407]

Καταπίστευμα προς όφελος αλλοδαπού σημαίνει πάσης φύσεως καταπίστευμα (trust) του οποίου ο υφιστάμενος δικαιούχος (beneficiary) ή εις των υφισταμένων δικαιούχων

είναι αλλοδαπός και περιλαμβάνει οιανδήποτε ρητήν ή εξυπακουομένην σύμβασιν ή

συμφωνίαν, έγραφον ή προφορικήν, βάσει της οποίας ιδιοκτησία μη ανήκουσα κατά

την κυριότητα εις αλλοδαπόν τινά θα κατέχηται υπ’ αυτού ή προς όφελος αυτού ή

θα τελή εις την διάθεσιν αυτού άλλως ή βάσει μισθώσεως μη εμπιπτούσης εις τας

διατάξεις της παραγράφου (α) του εδαφίου (6) του άρθρου 3.

It seems to us that the said law aims to strike at agreements whereby trusts of immovables in Cyprus are created for the benefit of aliens and was not intended to extend to a resulting trust of the kind in question in the instant case. The resulting trust is, in reality, not a matter of agreement, express or implied, within the definition of a trust in s. 2(γ) but a rule of law outside the purview of s.3. Indeed, it would be surprising if a law which is primarily intended to regulate the acquisition by aliens of immovables in Cyprus were to be construed as affecting the matrimonial property rights of the spouses inter se, so as to deprive one of one's proprietary rights. Consequently, we see no obstacle in holding that the wife was entitled to one. half share in the value of the flat, representing her share, in the purchase money, upon a resulting trust.

Coming,now, to the question of succession to the testator’s estate consisting of half the assets found in his [408] name at the time of his death, the starting point must surely be the will itself. We need not concern ourselves with the bequest of £200.- to the testator's sister Amurtham Devar, which lapsed since she predeceased the testator - S. 12 of the Wills and Succession Law, Cap. 196. The real issue concerns the trusts created by clause

3 of the will in favour of the wife and the son. Clause 3 of the will provides:-

"I give and bequeath the rest, residue and remainder of my Estate and Effects to my hereinafter appointed executor and administrator IN TRUST, to hold, deal with, invest, re-invest, realise, call in and convert into money, sell and dispose of the same in such manner and at such times as he may in his sole and absolute discretion think fit, and shall in no case pay over any part thereof to the Master of the Supreme Court, or any other Official, and shall from time to time collect the income derived therefrom and utilise the said income in the following manner: -

(a) Income on the sum of TWO THOUSAND POUNDS (£2,000.-) of the said Trust Fund shall be utilised at the discretion of my said executor for the maintenance, education and support of my adopted son, COL AND AY VADIVAL .PILLAY, until he reaches the age of TWENTY-FIVE (25) YEARS, provided that my said executor shall have the right to utilise such portions of the Capital of the Trust Fund up to the sum of TWO THOUSAND POUNDS (£2,000.-) as he [*409] may think necessary in his discretion to adequately maintain, educate and support the said COLANDAY VADIVAL PILLAY. On my said adopted son attaining the age of TWENTY FIVE (25)YEARS the balance of Capital and any accumulated income shall be paid by my said executor to my said son as his sole. and absolute property.

(b) The balance of the income derived by the said Trust Fund shall be paid to my said wife, CAROLINE MARTHA PILLAY, for her maintenance and support until her death or remarriage.

On the death or remarriage of my said wife, then I nominate, constitute and appoint my adopted son, COLANDAY VADIVAL PILLAY, to be the Heir of the whole of the Capital and decreased Interest of the residue of the said Trust Fund".

It seems to us that Clause 3(a) establishes a trust, for the benefit of the son, of £2,000 if and as long as he is under 25, and a bequest of that sum absolutely to the son if he is or when he reaches 25. This trust and bequest, however, lapsed owing to the son having predeceased the testator without leaving issue - S.12 of the Wills and Succession Law, Cap.195. Clause 3(b) now establishes a trust, for the benefit of the wife, of the income derived from the Trust Fund which, since the bequest to the sister and the trust for and bequest to the son have lapsed,includes the whole of the testator’s estate there being no other trusts [*410] or bequests created by the will, on the basis of the rule that a will speaks and takes effect as regards the estate comprised in it from the testator’s death - S. 36 of the Wills and Succession Law, Cap. 195. This trust is to last until the death or remarriage of the wife, whereupon the Trust Fund goes for the benefit of the son on trust as regulated by Clause 4 of the will and to him absolutely upon his attaining 25. Consequently, the wife was entitled to the income of the testator’s estate until the time of her death, whereupon, since the son predeceased the testator, the trust for and bequest to the son of the Trust Fund lapsed and the Trust Fund remains undisposed of by the will and falls to be distributed by way of intestacy. This means that the entire estate of the testator, consisting of half the assets in his name at the time of his death, is to be distributed according to the law of Cyprus qua lex domicilii as regards movables and qua lex situs as regards immovables.

We award costs for Counsel on both sides. Costs to be assessed by the Registrar and be paid out of the estate.

Judgment and order for

costs as above.