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Macmillan V. Bishopgate Investment Trust Notes

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This is an extract of our Macmillan V. Bishopgate Investment Trust document, which we sell as part of our Conflict of Laws BCL Notes collection written by the top tier of Oxford students.

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MACMILLAN V. BISHOPGATE INVESTMENT TRUST FACTS Macmillan were a wholly-owned subsidiary of Maxwell Communications Corporation Plc., a company owned partly by the public and partly by Mr. Robert Maxwell and his family. Macmillan in turn had a majority holding of 10.6m. shares in Berlitz, registered in Macmillan's name in New York. On 5 November 1990 the shares were transferred out of Macmillan's name to a company called Bishopsgate Investment Trust Plc., which was in a part of the Maxwell group that was owned and controlled by Mr. Robert Maxwell and his family. Macmillan's share certificates were cancelled, and replaced by 21 certificates in the name of Bishopsgate. Mr. Maxwell signed a nominee agreement in which Bishopsgate acknowledged that it held the shares as nominee for the account and benefit of Macmillan, and had "no power or right to take any action with respect thereto without the express consent of Macmillan." But a practice began whereby numbers of the shares were used as security for debts owed to creditors by companies in the private ownership of Mr. Maxwell and his family. Thus the property of Macmillan, a company which was in part publicly owned through its parent and no doubt had creditors of its own, was used to secure loans to the private side of the Maxwell empire. There were thus two different routes by which the shares were pledged in the first instance --- by deposit of share certificates in London, and by a transaction in the D.T.C. system in New York. Shearson Lehman (or rather Lehman Bros.) were an example of the first, and Swiss Volksbank of the second. Credit Suisse received one parcel by each of the two methods. In all cases the pledgees eventually became registered as owners of the shares. And in all cases the pledge of shares was, as the judge found, a breach of trust by Bishopsgate. HOLDING Characterising the issue But the issue is not, or not any longer, whether Macmillan have a cause of action for restitution; it is whether the defendants have a defence on the ground that they were purchasers for value in good faith without notice of Macmillan's claim. I would regard it as plain that the rules of conflict of laws must be directed at the particular issue of law which is in dispute, rather than at the cause of action which the plaintiff relies on. We should translate lex causae as the law applicable to the issue, rather than the suit. In

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