TRANSFER OF PROPERTYINTER VIVOS

10.1.

Introduction

In this section we shall be considering the choice of law rules for the
transfer of property
otherwise than by succession (but excluding transfers as the result of marriage).
We shall see
that the governing law is normally the law of the country where the property is
situate, even
in respect of movables.

10.2.

Transfer of Movables

We are here concerned with the law which determines a given act,
transaction or event
transfers title or other proprietary rights in a movable from one person to another.
Title to a
movable is often transfer red in consequenc e of a contract, but the law
which governs the
contract is not necessarily the one which determines whether and when title
passes in
pursuance of it. In the case of contract of sale for instance, if the contract
is valid by its
proper law, the purchaser will acquire a contractual right to receive delivery of
the goods to
the extent provided for by the proper law, but it is not necessarily the same
law which
de termines whether the title to the goods passes, and if so, whethe r on the
making of the
contract, the delivery of the goods or at some other time. The effic acy of
a term of the
contract dealing with the passing of the title will be determined by the law
governing the
transfer of movables.
No doubt as between the parties to a contract whose object is to pass title,
it would be
reasonable for questions of title to be governed by the proper law of the contract.
But such
questions do not only arise as betwee n the parties to the contract. Often they
involve third
parties.
Thus
questionn the
whether
passed ibuyer,
n pursuance
of a sale
will
usually
arisethe
as betwee
buyer,the
or atitle
subsequent
and the original
of
stolen
goods
owner,
rather
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The rule is that the transfer of a movable is governed ,bythethe

lex
lawsitus
of the country
where the movable is situate at the time of the alleged transfer. That
law determines whe ther
a given act or event does not transfer proprietary rights, and to
what extent. The reason is
that a person who acquires goods, or rights in goods, should be
able to rely on any title
which he obtains according to the law of the country where the
goods are when he acquires
them, and to rely on that law for the retention of any title he obtains.
In Winkworth v Christie, Manson & Woods
[1980]
LtdCh 496, works of art of the
plaintiff were stolen from him in England and taken to Italy,
where the second defendant
bought them in good faith. The latter sent them back to England
to be sold by auction by
the first defendant, Christies. The plaintiff brought proceedings
against the defendant in the
English court seeking a declaration that the works of art had at
all material times been his
property, and various injunctions against the defendants. The
success of the action
de pended on whether English or Italian law should be applied to
determine whether or not
the title to the goods had passed to the second defendant as the re
sult of the sale to him in
Italy. By English law the title would not have passed, but by
Italian law it would, as the
buy er was in good faith at the time of the delivery of the goods
to him. It was held,
following the leading case of
Cammel[1860]
v Sewell
5 H & N 728, that Italian law, as the
law of the country w here the goods were situate at the time of
the delivery, governed the
question. Therule
lex was
situs held to apply even though this meant that the plaintiff
was
de prived of his title under English law of goods removed from
England without his consent,
and even though the goods were back in England at the time of
the proceedings. Any
argument based on the hardship to the original owner in such
circumstances was
counterbalanced by the interests of the innocent purchasers:
commercial convenience may
be said imperatively to de mand that proprietary rights to
movables shall generally be
de termined by thelex situs
Once a title has passed as the result of a transaction under
it islex
the
immaterial
situs
that
the movable is removed to another country, under whose law the title
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did not pass. Thus in

Similarly, if the title does not pass as the result of a transaction lex
, it situs
will
under the
make no difference that it is then taken to another country under whose
law it did pass, until
some even occurs when the goods are in that country under which the
title passes acc ording
to the law of that country. Difficult problems, which cannot be
fully explored here, can
however arise in the application of these principles in practice.
The proposition that the
governs
lex situs
the transfer of title to movable s may be misleading
unless it is understood to mean that the relevant rule of thelex
is applied
situsto decide the
question. In Winksworth v, Christie
some of the goods had already been sold by auction by
Christies before the proceedings were brought. Suppose the question
was raised whether the
title passed to the buyer under that sale. One would obviously
reach the wrong conclusion
by reasoning that because the goods were in England at the time of the
auction, the question
whether the title passed under it was governed by English law;
therefore the title did not
pass, because under the English law the original owner retained his title
to goods stolen from
him despite any subsequent sales. The right approach is to say that
because the auction took
place in England, the relevant rule of English law as to the passing of
title is applicable. That
rule is that title will only pass (in the circumstances in question) if
the seller had title to the
goods. That raises the incidental question whether the seller (i.e.
the buyer in Italy) had
obtained title under his purchase in Italy. According to English
conflict that is governed by
Italian law, under which he did obtain title. Therefore the title
passed to the buyer at the
auction.
The same considerations would apply in the converse case, where
the title does not pass
under the foreign law, but it would under English law. Suppose
, sells
a andAdelivers
seller,
goods to a buyer,
in Germany,
B,
the contract containing a clause which is effective
under
German law to retain the title to the goods in the seller, and to
preclude the buyer from
reselling them, until the price is paid. Under English law however,
the title would pass on
de livery. B brings the goods to England and there, before paying the price,
he sells and
de livers them toC, who buys in good faith.
passthe
C
to time when
C
88 Does the title? At

de cided by German law as thelex situsat the time when B purchased the goods.
did not
So
B
obtain title, and his me re bringing of the goods to England
If the auction took place not in England but a third c ountry,
presumably the incidental
question whether title had passe d under the purchase in Italy would
be decided according to
the conflict rules of the third country does not alter the position.C
therefore does not
obtain title on the basis that his seller had title. Another rule of English
domestic law is that
where a buyer who obtains possession of the goods with the
consent of the seller delivers
the goods under a sale to a person receiving them in good faith, the
latter receives good title
even though the former did not have title. The title would
underpass
thisCtorule, for at
the relevant time the goods were in England, and the application of
the rule accepts that
did not obtain title under this purchase from A.

Problems could arise as to which is the appropriate moment for the

lex situs.
selection of the
Suppose goods are sold byA, a German company,
, an English
to B company, f.o.b. (free on
board) Hamburg, the contract containing a reservation of title
clause which according to
German law is e ffective to retain the ownership of the goods in
the seller until the price is
paid. By English law, the effect of the clause is that the ownership
passes to the buyer when
the goods which would be void against creditors under s 395 of
the Companies Act 1985
because it was not registered.
becomes IfB
insolvent, then the seller would arguably be
entitled to claim the goods from the receiver. At the time the
goods passe d the ships rail
the goods were still in Germany, and by German law the title did
not pass. The subse quent
removal of the goods to England should make no difference. If
however the goods were
sold under an ex-ship contract under which, according to English law,
the title passed to the
buy er on de livery in England, the title would pass to the buyer, lexatsitus
the
for the
moment of the delivery is English law, according to which at that
moment the title passed.
The seller would then not be able to recover the goods on the
buyers insolvency. It is not
obvious however that the rights of the English c reditors should
de
liveryonterms
of a contract for the export of goods to England,
depend
the precise
and the court might
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In Winksworth v Christie
Slade J acce pted that there are the following exceptions to lex
the
situsrule.
If goods are in transit, and theiris
situs
casual or not known, a transfer which is
valid and effec tive by its proper law will be valid and effecti ve in
England
Title would not pass to a purchaser under
if the
he
lexhad
situsnot acted bona fide. This
case could well be regarded as an instance of the next exception
The English court may decline to recognise the particular law of
because
the situs
it considers
it c ontrary to English public policy. This may arise in relation to
the expropriation of
property by a foreign government. The principle that the transfer of
title is governed by the
lex situsapplies equally when the transfer is the result of expropriation by
a state under a
de cree or other legislation. If the property is in the territory of
that state at the time when
the transfer is alleged to have occurred, then the effect will be
given to it, subject to the
doctrines of public policy and the non-enforcement of foreign
penal laws. But the better
view is that effect will not be given to an extra-territorial
expropriation, i.e. if it purports to
operate on property outside the territory of the state concerned.
The court would have to apply English law if an English statute
obliged to do so. This and
the previous exception are of course applicable to all choice of law rule
s

10.3.

Transfer of Movables

As with movables, the general rule is that questions as to the transfer

of proprietary rights in
immovable property are governed by the lex situs.
So if the property is situate in England, English domestic law will
be applicable. This is no
doubt the proper approach for essential or formal validity (for
example, rules requiring
registration of a transfer) which may affect the public interest or the
interests of third parties.
However questions of capacity more commonly involve merely the
the
parties interests
themselves.
competing
of There is then no partic ular reason why
English domestic law should
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There will be few cases where the question will arise as to the law
governing the transfer of a
foreign immovable, in view of the fact that, as we have seen, it is
only in rare cases that the
English court will exercise jurisdiction in such a case. One such case
(where the question of
title arose incidentally) is
Adams v Clutterbuck
[1883] 10 QBD 403, in w hich a document
executed in England conveyed a right of shooting over certain
moorland in Scotland. The
conveyance was not formally valid unde r English law, because the
document was not under
seal, but it was valid by Scottish law. It was held that Scottish applied.
Where the immovable is situate in a foreign country, as we have
seen, the reasons why the
lex situsgoverns is that the property is under the control of the foreign
authorities. So the
law to be applied should be whatever domestic law the courtwould
of the
situs
apply if that
is proved to be other than its own domestic law.
As with movable s, the transfer of the title must be distinguished
from the contract in
pursuance of which the title is to be transferred. A question concerning
the contract is to be
de cided by the proper law of the contract, which may, but will
not necessarily, be the
situs. Moreover, as we saw in Chapter II, the English court may well
exercise jurisdiction in a
dispute over such a contract.

lex

Thus in Re[1916]
Smith2 Ch 206, the deceased and resident in England, had made
a
contract in England with his sisters by which he charged his
interest in certain land in
Dominica in their favour, as security for money which he owed
them. He also undertook in
the contract to execute a legal mortgage over the land, but never
did so. On his death, the
question arose as to the sisters rights in relation to the land. By the law
lex
of Dominica, the
situs, the contract was not effective itself to create a mortgage,
because the requisite
formalities for the creation of a mortgage had not taken place.
But the question of the
validity and effect of the contract was governed by the English
law, unde r which, the
de ceased having become bound to execute a mortgage, the exe
cutors were ordered to take
the necessary steps to do so.
If however the enforcement of a contract to transfer a proprietary
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de fendant, domiciled and resident in England, under which the

defendant undertook to
execute a mortgage over land which she owned in South Africa as
security for money
advanced to her husband. She failed to execute the mortgage, and the
plaintiff sought a
de cree of specific performanc e in the English court. Under South
Africa law a married
woman lacked capacity to stand surety for her husband, and a mortgage
in pursuance of
such a guarantee could not be registe re d, unless she expressly and
voluntarily renounced21 the
benefits of two
which
laws,
the defendant had not done. It was held that the wifes
capacity to make the contract was governed by South African law , as, and
thelexassitus
she
lacked capacity under that law, under which the defendant had full
capacity to make a
contract with regard to a n immovable, as opposed to transferring the
immovable, is not
governed by the
but lex
by situs
the law of the country with which the contract is most
closely connected. This was clearly English law, under which the defendant
had full capacity
to contract. But even if this is accepted, would it not have been futile for
the court to order
the wife to register the mortgage in South Africa, thus compelling her
first to renounc e the
benefits of the laws in question, when the
by the
lex
renouncing
situs
of the benefits would
not be effective unless it was voluntary?
Another criticism which has been levelle d against
Bank Of Africa Ltd vis Cohen
that a
South African court might well have held that its rule about a married
womans capacity did
not apply to a woman domiciled in England. That however would be
a matter to be
established by expert evidence of South African law, rather than for
speculation by the
English court.

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