Trust – further matters arising following removal of first to third
respondents as trustees.
[2016]JRC053
Royal Court
(Samedi)
4 March 2016
Before :
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J. A. Clyde-Smith, Esq, Commissioner, and
Jurats Fisher and Thomas
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Between
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Tanya Marya Dick
Stock
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Representor
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And
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Pantrust International SA
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First Respondent
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And
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Richard George De Winton Wigley
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Second Respondent
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And
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James Richard De Winton Wigley
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Third Respondent
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And
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G B Trustees Limited
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Fourth Respondent
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And
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John William Dick (Senior)
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First Third Party Respondent
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And
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John William Dick (Junior)
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Second Third Party Respondent
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And
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Darrin Stock
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Third Third
Party Respondent
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IN THE MATTER OF THE MANOR HOUSE TRUST
AND IN THE MATTER OF THE RUSSIAN TRUST
AND IN THE MATTER OF ARTICLE 511 OF THE
TRUSTS (JERSEY) LAW 1984
Advocate S. C. Thomas for the Representor.
Advocate N-L. M. Langlois
for the First and Third Respondents.
Advocate M. L. Preston for the Fourth
Respondent.
judgment
the commissioner:
1.
This
judgment deals with further matters that have arisen consequential upon the
removal of the first to third respondents as trustees of the Manor House Trust
and the Russian Trust (together “the Manor House and Russian
Trusts”) and the appointment of the fourth respondent as trustee in their
place. We will refer to the second
respondent as “Richard Wigley”, the third
respondent as “James Wigley”, the first
respondent as “Pantrust” and to the first
to third respondents together as “the former trustees”. We will refer to the fourth respondent
as “the new trustee”.
Second Charge over St John’s Manor
2.
In its
earlier judgment of 22nd January, 2016, (Stock-v-Pantrust International and Others [2016] JRC 021) at
paragraphs 48-51, the Court had declined to lift the second charge over St
John’s Manor and surrounding grounds in favour of Pantrust. This judgment needs to be read in
conjunction with that earlier judgment, but for ease of reading, we set out
those paragraphs again:-
“48 The position in relation to the second
charge created over St John’s Manor and surrounding grounds in 2014
appears to us to be different in this way:-
(i) The
request for financial assistance would appear to have come from St John’s
Manor Limited to Pantrust to assist it in servicing the
mortgage in favour of HSBC. The
mortgage had previously been serviced from funds made available by Land
Securities Investors Limited, which was then in Chapter 11 bankruptcy.
(ii) The facility letter was
addressed by Pantrust to St John’s Manor
Limited, as opposed to being addressed to itself, as trustee. Pantrust was
not lending to itself. It was signed on behalf of Pantrust
by Richard Wigley and countersigned and accepted by
both him and James Wigley on 3rd April 2014.
(iii) Minutes of the meeting of directors on
24th March 2014 resolving to grant this security do purport to declare an
interest on the part of the directors.
There are arguments as to whether this discharges their obligation under
Article 116 of the Articles of Association and Article 75 of the Companies Law,
but at least there is reference to the existence of a conflicting interest.
49. It
seems likely that as a result of the Colorado proceedings which commenced in
August 2013, there was a need in 2014 for funds to be made available to service
the HSBC loan. What we do not have
is any evidence from Richard Wigley as to whether any
sums were in fact advanced by Pantrust either to St
John’s Manor Limited or directly to HSBC pursuant to this facility. It seems curious that the former trustees
do not appear to be seeking repayment of this loan by St John’s Manor
Limited to Pantrust. Instead it forms part of the
former trustees’ claim against John Dick Sr and
the family for an indemnity and damages, but even so, in the interests of
justice, it is necessary for us to inquire as to whether, in fact, any funds
have been paid by Pantrust pursuant to this facility
letter.
50. It
is, of course, the existence of the second charge over St John’s Manor
and surrounding grounds that is causing the new trustee its greatest
difficulty, but in the circumstances, we are not prepared, certainly at this
stage, to order the removal of the charge.
The new trustee is now in receipt of the bank statements of HSBC, and at
the same time, the former trustees must still be in possession of their own
accounting records, and in particular, the accounting records of their client
accounts through which, as we understand it, any payments would have been made.
51. We
will therefore give directions for the Court to be provided with evidence as to
the existence of funds being paid by Pantrust under
this facility before hearing further argument on all aspects of this second
charge. The onus will be on the former trustees to demonstrate that funds have
been so paid.”
3.
Further evidence
in this respect was filed by Richard Wigley in his
fourth affidavit of 28th January, 2016, and by Oliver Paul
Egerton-Vernon of the new trustee in his third affidavit of 5th February,
2016.
4.
Richard Wigley exhibited extracts from Pantrust’s
computerised ledger system which he said showed draw-downs under this facility
of £842,947.73p. Of this,
Oliver Egerton-Vernon accepts that £484,840.14p had been advanced under
the facility and applied in the repayment of the HSBC mortgage. He acknowledges that two earlier payments
of £150,080 each made on 10th January, 2014, and 24th
April, 2014, had been made by Pantrust and applied to
the repayment of the HSBC mortgage, but he argues that these two advances
pre-dated the facility which is noted as being available from 24th April,
2015.
5.
The
remaining sums which Richard Wigley claims as being
due under this facility are disputed by Oliver Egerton-Vernon, but the key
point is that the evidence shows at least £785,000.14p being advanced by Pantrust to St John’s Manor Limited and applied
towards the HSBC mortgage, of which the new trustee accepts £484,840.14p
came within the facility; a substantial sum.
6.
Advocate Langlois conceded that there was an inconsistency in the
position of the former trustees in that they have included this loan within the
Pantrust loans which form the basis of their counter
claim in the Jersey proceedings, rather than pursuing St John’s Manor
Limited. She informed us that the
pleadings would be amended to remedy this inconsistency.
7.
The new
trustee did not dispute that in March 2014 St John’s Manor Limited was in
need of funding to service the HSBC loan and that funding to the extent set out
above was indeed made available by Pantrust for that
purpose. Richard Wigley explained that Pantrust
had provided the funds from third party lenders for whom it was acting as agent
and the facility would not have been made available without the security
granted. He pointed out that this
facility was made available after the fall out between the former trustees and
the Dick family.
8.
Advocate
Preston submitted that notwithstanding the advance of these substantial sums by
Pantrust to St John’s Manor Limited in order to
service the HSBC loan, the second charge should be lifted because:-
(i)
The security
was as much a fiction, he said, as the security which the Court removed in its
judgment of 22nd January, 2016, (see paragraphs 45-47).
(ii) No unconflicted mind
considered the issue of the registration of the second charge.
(iii) Only lip service was given to the conflict of
the directors in agreeing to the security.
The minutes of 24th March, 2014, record only the following:-
“The Chairman noted that,
under the Articles of Association of the Company, no declared interest
prevented any of those present from being entitled to vote at or from being
counted in the quorum of the meeting.”
(iv) The table produced by Richard Wigley appears, he said, to show Pantrust
drawing down part of the loan facility in order to repay itself, before then
making various payments from the facility which were in dispute and which
should not have been made. This has
not been explained by Richard Wigley.
9.
In
addition Advocate Preston submitted that Richard and James Wigley
(the two directors of St John’s Manor Limited who agreed to the facility
and the second charge) were in breach of their obligations under Article 75(1)
and (2B) of the Companies (Jersey) Law 1991 (“the Companies
Law”) which provides as follows:-
“75 Duty of directors to disclose interests
(1) A director of a company who has, directly or
indirectly, an interest in a transaction entered into or proposed to be entered
into by the company or by a subsidiary of the company which to a material
extent conflicts or may conflict with the interests of the company and of which
the director is aware, shall disclose to the company the nature and extent of
the director’s interest.
…
(2B) Any disclosure at a meeting of the directors
shall be recorded in the minutes of the meeting.”
10. As a consequence, the new trustee, as the
shareholder in St John’s Manor Limited, applies under Article 76(1) to
set the security aside. That
article is in these terms:-
“76 Consequences of failure to comply with
Article 75
(1) Subject to paragraphs (2) and (3), where a
director fails to disclose an interest of the director under Article 75 the
company or a member of the company may apply to the court for an order setting
aside the transaction concerned and directing that the director account to the
company for any profit or gain realised, and the court may so order or make
such other order as it thinks fit.”
11. Advocate Thomas, for the representor, referred
the Court to this passage from a judgment of Mummery LJ in the English Court of
Appeal decision of Towers v Premier Waste Management Limited [2011] EWCA
Civ 923, in which he said this in relation to the
equitable principles and duties underlying the general statutory duties placed
upon directors under the Companies Act 2006, which we accept are broadly
equivalent to the requirement under Article 74(1) of the Companies Law for
directors to act honestly and in good faith with a view to the best interests
of the company and under Article 75(1) to disclose conflicts of interest:-
“9 In Boulting
v Association of Cinematograph Television and Allied Technicians [1963] 2
QB 606 AT 636 Upjohn LJ said that the principle has nothing to do with
establishing that the director is guilty of fraud or corruption. In the case of a company director the
principle recognises the primacy of the interests of the company which he is
trusted not to betray. Thus a
company is entitled, in the words of Upjohn LJ ‘to the undivided loyalty
of its directors’. We have
been reminded by counsel for the appellant that Upjohn LJ referred to the rule
as being a broad and flexible one to be fashioned according to changing
circumstances and to be applied with common sense and realistically: see 636
and 638. That approach to the
formulation and the application of the principle does not, however, undermine
the strict nature of the liability enshrined in the principle where it
applies. The rationale and the
justice of the principle lie in its strict regard for the protection for those
interests potentially at risk from a director who does not give his undivided loyalty
to the company.
10 Thus
a director’s liability for disloyalty in office does not depend on proof
of fault or proof that a conflict of interest has in fact caused the company
loss: Foster Bryant Surveying
Ltd v Bryant [2007] EWCA Civ 200: [2007] BCC
804. A director’s potential
conflict of interest may arise, for example, in connection with a business
opportunity. If a director obtains
the opportunity for himself, he will be liable to the company for breach of
duty regardless of the fact that he acted in good faith or that the company
could not, or would not, take advantage of the opportunity.
11 As
explained by Lord Russell of Killowen in
Regal (Hastings) Ltd v Gulliver [1967] 2 AC 124 at 144 the liability of a
fiduciary to account for the profit made by use of his position:
‘…in no way depends on
fraud, or absence of bona fides; or upon such questions or considerations as to
whether the profit would or should otherwise have gone to the plaintiff, or
whether the profiteer was under a duty to obtain the source of the profit for
the plaintiff, or whether he took a risk or acted as he did for the benefit of
the plaintiff, or whether the plaintiff has in fact been damaged or benefited
by his action. The liability arises
from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well
intentioned, cannot escape the risk of being called upon to account.’
12 Equity’s
response of strict liability to account for breach of a fiduciary duty is
similar whether the liability is triggered by an event which breaches the
loyalty duty, or the ‘no conflict principle’ or the ‘no
profit principle’.”
12. Article 75(1) of the Companies Law is reflected
in Article 116 of the Articles of Association of St John’s Manor Limited
but Advocate Langlois drew our attention to Article
125 of the Articles of Association which is in the following terms:-
“Save as in these
presents otherwise provided, a Director shall not, as a Director, vote in
respect of any contract or arrangement in which he is interested, and if he
shall do so his vote shall not be counted, nor, save as aforesaid, shall he be
counted in the quorum present at the meeting, but neither of these
prohibitions shall apply to the following:
(a) Any contract or arrangement giving the Director
any security or indemnity in respect of money lent by him to or obligations
undertaken by him for the benefit of the company;
(b) …
(c) …
(d) Any contract or dealing with any other company
in which the Director is interested only as an officer, creditor or employee,
or as holder of shares or other securities; or
(e) …
And these prohibitions may at
any time be suspended or relaxed to any extent and either generally or in any
particular case or class of cases, by Extraordinary Resolution of the
Company” (her emphasis)
13. We accept that the equitable principles set out
by Mummery LJ above underlie the general duties owed by directors under the
Companies Law and Advocate Langlois did not dispute
that, as she put it, the position of Richard and James Wigley
as directors of St John’s Manor Limited, coupled with Pantrust’s
role as agent for the third party lenders, might be said to give rise to at
least a “sensible possibility” that their duty in one capacity
might conflict with their duty in another capacity, namely their position as
directors and, we believe in the case of Richard Wigley,
beneficial owner of Pantrust. That potential conflict, however, she
argued fell within the scope of Article 125(d) of the Articles of Association
which authorised the directors to vote on the facility with Pantrust
in which they both had an interest and it is not open to St John’s Manor
Limited to complain about it now.
14. She accepted, however, that the provisions of
Article 75(1) of the Companies Law overrode the Articles of Association and
whilst she conceded that Richard Wigley, as chairman,
did not expressly declare the nature and extent of their interest in the
facility being offered by Pantrust, she said it had
been declared implicitly, as the minutes referred to the provisions of
articles.
15. If that was not accepted by the Court, then she
referred the Court to Article 76(3) of the Companies Law, which is in these
terms:-
“76(3) Without prejudice to its power to order that a director
account for any profit or gain realised, the court shall not set aside a
transaction unless it is satisfied that –
(a) the
interests of third parties who have acted in good faith thereunder would not
thereby be unfairly prejudiced; and
(b) the
transaction was not reasonable and fair in the interests of the company at the
time it was entered into.”
16. The burden of proof in satisfying the Court of
the two matters referred to in Article 76(3) is, she said, upon the new trustee
as the shareholder seeking to have the security set aside and she submitted
that it was unable to discharge that burden. The new trustee had not advanced any
case that the facility was not reasonable and fair and in the interests of St
John’s Manor Limited.
17. Furthermore, the existence of this charge was
not impeding the new trustee in its role as trustee or affecting its ability to
secure re-financing. Pantrust had offered to subordinate its security to any new
lender. It was the factors
identified by Oliver Egerton-Vernon in his affidavit that were likely to prove
far greater obstacles, namely the size of the HSBC loan, the history of
repayment arrears and the financial position of the Manor House Trust.
Decision
18. It must be borne in mind that we are dealing
with the issue of the second charge at an interlocutory stage before the full
circumstances of the relationship between the former trustees and John Dick
Senior have been fully investigated and the evidence tested.
19. There is little doubt in our minds, however, on
the basis of the evidence as presented to us that Richard and James Wigley were in a position of conflict when, as directors of
St John’s Manor Limited, they considered whether or not to accept the
facility offered by Pantrust and to grant Pantrust a second charge over St John’s Manor and
surrounding grounds. That conflict
arose out of their position as directors and, in the case of Richard Wigley, his position as the beneficial owner of Pantrust.
20. Whilst that may be a conflict which permitted them
to vote under Article 125(d) of the Articles of Association, that article in
our view presupposes that the conflict has already been properly declared under
the provisions of Article 116 of the Articles of Association and under the
overriding requirements of Article 75(1) of the Companies law to disclose “the
nature and extent” of that conflicting interest and to have that
recorded in the minutes. The
disclosure made by them manifestly does not discharge their duties in this
respect.
21. That failure does, therefore, entitle the new
trustee to apply under Article 76(1) of the Companies Law to have the
transaction set aside, the transaction in this case meaning the second charge. That provision is permissive and
according to its terms, the setting aside of the transaction is required to be
in conjunction with a direction that the directors account to the company for
any profit or gain realised.
22. The new trustee is not seeking to set aside the
facility as a whole (through which it might be thought that Richard and James Wigley have profited through their interest in Pantrust) and in any event, St John’s Manor Limited
has substantially benefited from that facility. Instead, the new trustee seeks to set
aside the second charge (only), not for the purpose of obtaining any profit or
gain which Richard and James Wigley may have made
through Pantrust having that second charge, but
because its existence is, it claims, impeding the administration of the Manor
House Trust and its ability to refinance the HSBC loan.
23. We have some doubt, therefore, whether,
notwithstanding the failure to adequately disclose their conflict, this is a
transaction that the Court should, in its discretion, set aside under Article
76(1) of the Companies Law. Quite
apart from that, the new trustee faces the hurdle presented by Article 76(3) of
the Companies Law which stipulates that, without prejudice to the Court’s
power to order that a director account for any profit or gain realised, it will
not set aside a transaction unless the two stipulated conditions apply. We agree with Advocate Langlois that the burden of satisfying the Court in this
respect lies on the new trustee, as the member seeking to have the transaction
set aside.
24. The factual matrix is complex but at this
interlocutory stage, our reading of the evidence in relation to this particular
matter is that in March 2014 St John’s Manor Limited was in financial
difficulty and was unable to service the very substantial mortgage in favour of
HSBC from its own resources or from any resources within the Manor House
Trust. For whatever reason, the
Dick family were not willing or able to finance it themselves or from resources
available to them and Pantrust therefore made this
facility available. It was used in
substantial part for its stated purpose, namely to service the HSBC
mortgage. It is inconceivable, we
think, that the family were not aware that the HSBC mortgage over this
important property (which we believe comprises the family home) was being met
from this source, yet there is no evidence of any complaint over the granting
of the facility and its subsequent use for that purpose.
25. There is nothing to gainsay the evidence of
Richard Wigley that there are third party lenders
behind Pantrust (and in any event we think it is likely
that this is the case) and their interests would be prejudiced by the setting
aside of the second charge in favour of their agent Pantrust. Whether or not there are third party
lenders, the interests of Pantrust would be
prejudiced if it were to become an unsecured lender. Bearing in mind that the funds advanced
have been used to benefit St John’s Manor Limited in large part, this
would be unfair.
26. In the context of this matter, we think that Pantrust, in making these funds available, was acting in good
faith. There is no evidence to
suggest that any third party lenders to Pantrust were
not acting in good faith. We
suspect that Advocate Preston may have misinterpreted the table set out by
Richard Wigley in his fourth affidavit, when he
asserts that the funds were used in part to repay Pantrust,
but even if there are areas of dispute over the use to which some of the funds
drawn down were put, there is no escaping the fact that this facility was used
in substantial part for its stated purpose, namely the servicing of the HSBC
loan. No case has been put forward
to us that the terms of the facility itself were unreasonable or unfair.
27. Following the hearing, but before this judgment
was handed down in draft, the Court was informed by Advocate Baker, for the
representor, that the Colorado proceedings have now been adjourned to 17th
August, 2016, with mediation to take place in the interim. In a further affidavit from the
representor (which appears to be undated), she deposes that US counsel for
Richard Wigley and Pantrust
had sought the adjournment in order to resolve issues relating to his
clients’ sworn discovery responses in the Colorado proceedings. His clients had stated that the loan
documentation in relation to the Pantrust loans had
been prepared and executed at the time of the loans, i.e. the dates reflected
in the documents, but that it had now been determined that the documentation
for the Pantrust loans was collectively created and
executed at the same time in 2013.
In addition to correcting this error, US counsel felt obligated as
officers of the Colorado court to investigate and confirm the accuracy of all
of the discovery responses.
28. This is clearly a serious matter, suggesting,
as Advocate Baker says, that this documentation was manufactured and falsely
dated, but both Baker & Partners and Sinels
confirm in correspondence between them that the loan by Pantrust
to St John’s Manor Limited is not included in the Pantrust
loans being claimed in the Colorado proceedings.
29. The Court considered the loan documentation to
which US counsel referred at paragraph 9 of its earlier judgment of 22nd
January, 2016, which on the face of it dated from 1994 to 2012 (which we did
note was almost identical in terms) and which it would now appear may have been
created in 2013. Security was taken
over the assets of the Russian Trust pursuant to that loan documentation which
this Court set aside for the reasons set out in paragraphs 6 – 47 of that
judgment.
30. The position in relation to the loan by Pantrust to St John’s Manor Limited is different in
that this facility was made available in 2014 and the second charge created at
that time was put in place through Jersey lawyers. There is no suggestion that this
documentation was manufactured and falsely dated. We have found that substantial sums were
advanced under it. Whilst this new
information may enable the new trustee to question the good faith of Pantrust in relation to the Pantrust
loans which are the subject of the Colorado proceedings, it does not follow that
Pantrust acted in bad faith in relation to the loan
to St John’s Manor Limited. If
we are wrong in saying this, then we are still left with the second requirement
under Article 76(3)(b) and, to reiterate, no case has been advanced by the new
trustee that this facility was not reasonable and fair.
31. In the circumstances, the new trustee fails to
discharge the burden upon it under Article 76(3) of the Companies Law. We are not satisfied firstly that the
interests of third parties who have acted in good faith would not thereby be
unfairly prejudiced and secondly that the transaction was not reasonable and
fair in the interests of St John’s Manor Limited at the time it was
entered into. We decline,
therefore, to set aside the second charge in favour of Pantrust
over St John’s Manor and surrounding grounds. There will, in the circumstances, be
liberty to apply.
Trust Assets
32. The new trustee had come across a letter dated
11th August, 2004, sent by Richard Wigley
to Barclays Private Clients in relation to a guarantee proposed to be given by
John Dick Senior and which lists a number of assets under the heading
“Other trusts’ assets”, six of which had not been transferred
by the former trustees to the new trustee, namely:-
(i)
Three
apartments in Colorado;
(ii) Two apartments in Toronto;
(iii) An antique doll collection;
(iv) Hooper Industries (China);
(v) The Adastral mining
investment; and
(vi) The Belize land investment.
33. The new trustee issued a summons on 29th
January, 2016, seeking an order placing these assets under the control of the
new trustee. In response, Richard Wigley filed a fifth affidavit dated 11th February,
2016, (the day before the hearing) in effect saying that none of these assets
either now exist or are under the control of Pantrust. The new trustee was in the process of
considering his response and therefore no order was sought from the Court at
the hearing. It would seem that the
new trustee’s main focus is on Hooper Industries, the 2014 annual return
for which lists Richard Wigley as a director and La Hougue Boete SARL as a
shareholder, which might be thought to be inconsistent with the explanation
given by Richard Wigley in his affidavit.
34. As no order is sought at this stage, there is
no need for further comment from this Court on these particular assets, save to
reiterate what was said in Court, namely that now that John Dick Senior is a
party to these proceedings and bearing in mind the apparently close working
relationship between him and the former trustees, it seems to the Court that
any future requests for information in relation to the assets or former assets
of the Manor House and Russian Trusts should be addressed to John Dick Senior
(from whom we would expect the fullest co-operation) as well as the former
trustees.
35. There is one asset not listed in the summons,
namely 3NP LLC (“3NP”) which the Court considered in its judgment
of 22nd January, 2016, at paragraphs 3(iv) and 4, and which we set
out again for ease of reading:-
“3(iv) 3NP LLC “3NP”. This is a company incorporated in
Colorado which has the benefit of approximately $1.9M currently injuncted in an
account in Colorado at the instance of the representor, imposed, as we
understand it, to prevent the former trustees having access to those funds at a
time when they were still trustees of the Manor House Trust. Advocate Preston,
for the new trustee, took us through a number of documents as summarised in his
email of 12th November 2015 to 3NP’s US advisers, indicating that 3NP is
an asset of the Manor House Trust, including, in particular, its own responses
to discovery requests in the Colorado proceedings in which it confirms that it
is an asset of the Manor House Trust.
In his letter of 26th November 2105, Advocate Sinel said the position in
relation to 3NP was very confused and difficult and his clients were taking
advice. He wrote again on 4th
December 2015, stating that, following a review of the company filings, it was
quite clear that it was owned by another company, TIC Lending LLC
(“TIC”) and was not owned by the Manor House Trust. He further pointed to pleadings filed by
the representor both in Jersey and Colorado in which she had asserted that 3NP
was owned by Richard Wigley and a Mr Fishman.
(4) The
assertions in the representor’s pleadings were based upon her
understanding at the relevant time and have little relevance, in our view, to
the issue of 3NP’s actual ownership.
If we had to make a decision on the basis of the evidence now before us,
we would find on the balance of probabilities that it is an asset of the Manor
House Trust. However, there are two
reasons why we do not think it appropriate to make such a finding: -
(i) 3NP
is a Colorado based entity.
(ii) We are faced with the bare
assertion contained in Advocate Sinel’s letter of 4th December 2015, that
3NP is owned by TIC. We have not
seen the company filings on which that assertion was based, nor has TIC been
given an opportunity to be heard before this Court to substantiate its claim to
ownership. Natural justice requires
that it be given such an opportunity.
(iv) Whilst it would seem that the
ownership of 3NP is not a matter in dispute in the Colorado proceedings, its
assets are currently injuncted there and we are cautious about making an order
which might interfere with the conduct of those proceedings, the final hearing
in respect of which is to take place, we understand, in March of this
year. What is of concern here to
the representor and to the new trustee is the sum of $1.9M, the release of
which could bring very welcome cash-flow relief to the Manor House Trust. On balance, we feel that the lifting of
the representor’s injunction over these funds in Colorado and orders as
to where those funds should then be paid should be the subject of an
application to the Colorado courts.”
36. The evidence that the Court had before it at
that time is summarised in an e-mail dated 12th November, 2015, from
Advocate Preston to the US legal advisers to the first to third
respondents. Quoting from that
e-mail (but not from the underlying documents):-
“In order to avoid any
argument or attendant delay in relation to the question of the ownership of
3NP, I have attached the following documents:
1. Fifth Amended Disclosure Statement to Accompany
Chapter 11 Joint Plan of Reorganization – pages 19, 20 and 21. Please note the reference to Mr Wigley and his position that the trustee of the Manor House
Trust “owns” 3NP. NB
this was filed by LSI an entity which is controlled by a Mr Fishman (a close
associate of Mr Wigley). I have only sent the relevant section of
this document as it is 6MB however, let me know if you wish me to courier the
whole document over.
2. Affidavit of Richard Wigley
dated 9 January 2014. In paragraph
8 of the affidavit, Mr Wigley states that
“beneficial ownership has since transferred to Pantrust
in its capacity as trustee of a foreign trust”. The foreign trust appears to be the MHT.
3. 3NP’s Reply in support of its motion to
increase bond amount. Page 3,
section C, 3rd paragraph 3.
“the fact that Manor House Trust may be the beneficial owner of
3NP”. Fairfield and Woods are
Mr Wigley’s lawyers.
4. Note of a meeting between Mr Wigley’s lawyers and the Dick family’s counsel
(21.11.13). Paragraph 3 – Mr Wigley’s lawyers confirm that 3NP is a “Manor
House Asset”.
5. Defendant 3NP’s responses to Plaintiff’s
first set of discovery requests of 31 January 2014. I refer to the responses to requests 6,
10 and 13 which confirm that 3NP is beneficially owned by the Manor House Trust
(copy attached)”
37. Since that time, the new trustee has come into
possession of a copy of an e-mail from Richard Wigley
to Alan Fishman dated 26th January, 2013, in which he expresses the
view that 3NP is owned by the Manor House Trust and a copy of a deposition
taken on oath from Richard Wigley before the Colorado
courts on 9th December, 2015, which Advocate Langlois
confirmed was authentic. In his
evidence, Richard Wigley says in summary:-
(i)
He owns
TIC. TIC holds the shares in 3NP
for Pantrust, which in turn holds the same for
“the John Dick entities”.
(ii) 3NP was formed on instructions of John Dick
Senior for the purpose of acquiring certain FNB notes (First National Bank)
with a loan from Pantrust Clients of around US$1.9M.
(iii) The loan was repaid from the sale proceeds of a
property in Jersey, Le Câtelet, owned by St
John’s Manor Limited, which is in turn owned by the Manor House Trust.
(iv) Part of the proceeds of the notes (US$1.9M) was
injuncted before the Colorado courts at the behest of “the Dicks”.
(v) If released from that injunction, that money
would be payable to the Manor House Trust.
(vi) Richard Wigley would
not agree to its release “because I
don’t have control of the Manor House Trust”. He would agree to its release if it was
used to pay down the Pantrust loans. There was no written agreement to that
effect, but John Dick Senior had been advised that this was how these sums
would be used and he had not objected.
38. An e-mail from Richard Wigley
of 22nd November, 2013, refers to the “3NP/ Manor House Trust situation”. In it, he says that if the monies were
released, they would be used to pay down the debt from St John’s Manor as
opposed to being used to pay down the Pantrust loans.
39. This further evidence is important because, in
addition to further supporting the contention that 3NP is an asset of the Manor
House Trust, it confirms that TIC is owned by Richard Wigley
and is acting as nominee for one of “the John Dick entities” of
which the Manor House Trust is the only contender. The Court on the previous occasion had
been concerned about making an order without giving TIC, the shareholder in
3NP, an opportunity of being heard.
40. Taking all of this evidence into account, it is
clear to us that 3NP is an asset of the Manor House Trust and it should now be
transferred to the new trustee. We
accept that 3NP was not listed in the new trustee’s summons, but this new
evidence is dealt with in paragraphs 9 – 12 of Oliver
Egerton-Vernon’s third affidavit and the former trustees have not
therefore been taken by surprise.
41. Advocate Langlois
argued that we should leave this matter to the Colorado courts, but unlike the
Colorado courts, we are exercising a supervisory jurisdiction in relation to
this trust and over what assets should be transferred from the former trustees
to the new trustee. We are not
seeking to interfere with the injunctive proceedings over the funds in
Colorado, for which an application to the Colorado courts will indeed be
necessary.
42. Richard Wigley is
resisting the release of US$1.9M because he wants that sum utilised to pay down
the Pantrust loans, but that does not constitute a
valid reason for resisting the transfer of the company itself to the new
trustee, which he has the power to procure through his company TIC.
43. TIC has not been convened and notwithstanding
all the evidence pointing firmly to 3NP being an asset of the Manor House
Trust, we think it right to give it liberty to apply at its own risk as to
costs (and any potential orders for security for costs) within 14 days of this
judgment being handed down (of which it will have notice through Richard Wigley) to show cause why it should not transfer 3NP to the
new trustee, failing which we order Richard Wigley to
procure that transfer within the following 14 days.
Summary
44. Thus, in summary, (i)
we decline to set aside the second charge in favour of Pantrust
over St John’s Manor and its surrounding grounds, (ii) we adjourn sine die the new trustee’s summons
dated 29th January, 2016, (iii) give TIC liberty to apply at its own
risk as to costs (and any potential orders for security for costs) within 14
days of this judgment being handed down to show cause why 3NP should not be
transferred to the new trustee, failing which we order Richard Wigley to procure that transfer within the following 14
days and (iv) there will be liberty to apply.
Authorities
Stock-v-Pantrust
International and Others [2016] JRC 021.
Companies (Jersey) Law 1991.
Towers v Premier
Waste Management Limited [2011] EWCA Civ 923.
Companies Act 2006.