Trust – retirement of 4th defendant as trustee and appointment of
new trustee in its place and various other matters relating to the trust.
[2016]JRC085
Royal Court
(Samedi)
18 April 2016
Before :
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J. A. Clyde-Smith, Esq.,
Commissioner, and Jurats Nicolle and Sparrow
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Between
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Cristiana Crociani
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First Plaintiff
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And
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A (by her Guardian ad Litem, Nicholas Delrieu)
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Second Plaintiff
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And
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B (by her Guardian ad Litem, Nicholas Delrieu)
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Third Plaintiff
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And
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Edoardo Crociani
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First Defendant
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And
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Paul Foortse
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Second Defendant
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And
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BNP Paribas Jersey Trust Corporation
Limited
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Third Defendant
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And
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Appleby Trust (Mauritius) Limited
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Fourth Defendant
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And
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HRH Princess Camilla De Bourbon Des Deux Siciles
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Fifth Defendant
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And
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Camillo Crociani
Foundation IBC (Bahamas) Limited
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Sixth Defendant
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And
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BNP Paribas Jersey Nominee Company Limited
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Seventh Defendant
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And
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GFIN Corporate Services Ltd
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Eighth Defendant
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Advocate A. D. Robinson for the First, Second
and Third Plaintiffs.
Advocate W. A. F. Redgrave for the Third and
Seventh Defendants.
Advocate N. M. Santos-Costa for the Fourth
Defendant.
Advocate A. J. Clarke for the Fifth
Defendant.
judgment
the commissioner:
1.
This hard
fought and well advanced litigation has taken a surprising turn in that on 29th
January, 2016, the fourth defendant purported to retire as trustee of the Grand
Trust, the subject matter of the proceedings, and to appoint another Mauritius
based company, GFin Corporate Services Limited
(“GFin”) as trustee in its place
(“the 2016 appointment”).
This was done without prior notice to the other parties, apart from the
first defendant (and possibly the fifth defendant), and without prior notice to
the Court.
Background
2.
The
background to the Jersey proceedings and the relief being sought by the
plaintiffs has been summarised in a number of judgments but it is helpful for
us to briefly summarise it again to set the current developments in
context.
3.
The Grand
Trust was created by the first defendant on 24th December, 1987,
under Bahamian law, the initial trust fund comprising a secured long-term
promissory note issued by Croci International BV in
favour of the first defendant. The
intended beneficiaries included the first defendant’s two daughters,
namely the first plaintiff and the fifth defendant, for whose benefit the
promissory note was to be held in two equal shares. Thereafter various other assets accrued
to the Grand Trust.
4.
The trust
deed conferred various powers over the trustees, including the right to pay
income from their respective shares to the daughters, or, in each case, the
sixth defendant, as well as the right to pay capital to the daughters from
their respective shares. There were
also provisions for each daughter’s share to pass to their respective
issue on their respective deaths. In the event of both daughters dying without
leaving living issue the first defendant is the default beneficiary and failing
her the sixth defendant.
5.
There were
various changes of trustees and proper law but from October 2007, the trustees
were the first, second and third defendants (“the Jersey trustees”)
and the proper law was that of Jersey.
6.
Between
2007 and 2011, various distributions were made by the Jersey trustees from the
Grand Trust. On 9th
February, 2010, the Jersey trustees executed a deed (“the 2010
deed”) appointing all of the assets of the Grand Trust, except the
promissory note, to another trust called the Fortunate Trust, of which the
first defendant was both a trustee (together with the third defendant) and a
beneficiary.
7.
Relations
between the first defendant and the first plaintiff deteriorated in early 2011
and the first plaintiff moved out of her mother’s home. In June 2011, the first defendant
revoked the Fortunate Trust and withdrew all of its assets for her benefit. Before the end of 2011, the first
plaintiff raised allegations that the Jersey trustees had acted wrongly and
threatened to take steps against them.
On 10th February, 2012, the Jersey trustees executed a deed
(“the 2012 deed”) under which they resigned as trustees, appointed
the fourth defendant, a company incorporated and registered in Mauritius, as
sole trustee and changed the proper law to that of Mauritius.
8.
The first
plaintiff’s lawyers complained about the appointment of the fourth defendant
following which, on 2nd August, 2012, the Jersey trustees and the
fourth defendant executed a deed (“the Agate appointment”)
appointing the assets the subject of the 2010 deed into the Agate Trust, a
Jersey trust whose terms had been declared the same day by the second and
fourth defendants.
9.
The Jersey
proceedings were brought by the plaintiffs on 18th January, 2013,
against the first to fourth defendants.
In the original proceedings, the plaintiffs allege that:-
(i)
certain
payments amounting in total to around €6.6M and $1.2M were wrongly made
by the Jersey trustees to the first plaintiff but re-directed to the first
defendant and that these monies should be reimbursed to the Grand Trust;
(ii) the 2010 deed was executed in breach of trust
and that its effect should be reversed;
(iii) the execution of the 2012 deed was a fraud on
the trustees’ powers and that its effects should be reversed; and
(iv) the Agate appointment ought to be
reversed.
The plaintiffs also seek various heads of
consequential relief including the appointment by the Court of new trustees in
place of the fourth defendant.
The Order of Justice has now been amended
to include a claim for breach of trust over the alleged failure of the Jersey
trustees and the fourth defendant to collect the interest payable under the
promissory note.
10. The Order of Justice was served on the third
defendant, which was incorporated in Jersey, but no application was made to
serve the proceedings on the first, second and fourth defendants, who reside
outside of Jersey, because service was accepted on their behalf by Mourant Ozannes, who then acted
for them.
11. The first to fourth defendants then sought a
stay of the Jersey proceedings on the grounds that Mauritius, where they had
commenced proceedings of their own, was the more appropriate forum. That application was refused by the Royal
Court on 2nd October, 2013, (Crociani-v-Crociani [2013] (2) JLR 369) and that refusal upheld by
the Jersey Court of Appeal, on 7th April, 2014, (Crociani-v-Crociani [2014] (1) JLR 426) and the Privy Council, on
26th November, 2014, (Crociani-v-Crociani [2014] (2) JLR 508 and Crociani-v-Crociani [2014] UKCP 40). Those Mauritius proceedings have since
been adjourned sine die.
2016 appointment
12. Moving on to the current developments, the 2016
appointment contained the following provisions:-
“2 In the exercise of the
powers in the Twelfth Clause of the Grand Trust Deed and of every and any other
power enabling them to do so under the Trust, the parties hereby expressly
declare that:
(a) the proper law of the Trust
shall be and continue to be the laws of Mauritius, which is the forum for the
administration of the Trust, and the trusts of the Trust shall be read and take
effect according to the laws of Mauritius;
(b) all disputes which may
arise out of, or in connection with (whether, in each case, wholly or
partially, directly or indirectly) this Instrument and/or the Grand Trust Deed
or (whether, in each case, wholly or partially, directly or indirectly) the interpretation,
application, implementation, validity, breach or termination of this Instrument
and/or the Grand Trust Deed or any related instrument, agreement or document,
or any other provision hereof or thereof, shall be subject to the exclusive
jurisdiction of the Mauritius courts; and
…
7 This Instrument and
the trusts of the Trust shall be governed by and construed in accordance with
the laws of Mauritius.
8 For the avoidance of
doubt and notwithstanding any provision to the contrary, all disputes which may
arise out of, or in connection with (whether, in each case, wholly or
partially, directly or indirectly) this Instrument or (whether, in each case,
wholly or partially, directly or indirectly) the interpretation, application,
implementation, validity, breach or termination of this Instrument or any
related instrument, agreement or document, or any other provision hereof, shall
be submitted to the exclusive jurisdiction of the courts of Mauritius.”
New Mauritius proceedings
13. GFin has declined to be made a party to the Jersey proceedings and, on
the basis of the declarations contained in the 2016 appointment, has now made
two applications to the courts of Mauritius:-
(i)
Seeking
interlocutory injunctions restraining and prohibiting the plaintiffs from
joining GFin as a party to the Jersey proceedings,
from pursuing/continuing the Jersey proceedings and from enforcing any judgment
of this Court against GFin; and
(ii) Seeking a number of declarations from the
courts of Mauritius including declarations that the 2016 appointment is
governed by the laws of Mauritius and is lawful valid and enforceable and that
since the 2012 deed (by which the fourth defendant became sole trustee), and
more so since the 2016 appointment, the Grand Trust has been governed by the
laws of Mauritius and all disputes arising in relation to the Grand Trust are
subject to the exclusive jurisdiction of the Mauritius courts.
14. The combined effect of GFin
asserting that all disputes concerning the Grand Trust since 2012 (i.e. before
the Jersey proceedings commenced) are subject to the exclusive jurisdiction of
the courts of Mauritius and seeking an interlocutory injunction against the
plaintiffs continuing with the Jersey proceedings, is to attempt to argue (once
again) that Mauritius is the appropriate forum for the subject matter of the
Jersey proceedings, an argument that has been settled finally and conclusively
by the Privy Council in its judgement of the 26th November, 2014.
15. In his affirmations of 9th March,
2016, in support of the Mauritius proceedings, Sheokumar
Gujadhur, a director of GFin,
acknowledges the decision of the Privy Council but says this at paragraph 19:-
“19 The matter was
referred before the Judicial Committee of the Privy Council, which, in a decision
dated 26 November 2014, held that even if clause 12 of Trust Agreement
conferred exclusive jurisdiction on the Mauritius Courts, no stay should be
granted in respect of the proceedings in the Jersey Courts.”
16. This is a misreading of the Privy Council’s
judgment. At paragraph 4, the Privy
Council identified two issues for determination, namely firstly whether the
effect of Clause 12 of the Grand Trust deed was to bestow exclusive
jurisdiction on the courts of Mauritius and secondly, if so, the appropriateness
of permitting the proceedings to continue in Jersey.
17. On the first issue, the Privy Council found
that the effect of Clause 12 was not to bestow exclusive jurisdiction on the
courts of Mauritius. Quoting from
paragraph 30:-
“30 In the Board’s view, (i) the Court of Appeal was right in concluding that no part
of clause 12(6) of the 1987 Deed was concerned with identifying which
country’s courts should have jurisdiction to determine disputes relating
to the Grand Trust, but (ii) if that conclusion is wrong, (a) it may well be
that the clause would only confer non-exclusive jurisdiction on the courts of
the country to which it refers, and (b) there would seem to be a strong case
for saying that its effect was that the Jersey courts had jurisdiction in
relation to three out of the four principal claims brought in these
proceedings.”
18. That made it unnecessary for the Privy Council
to consider the second issue, but because it raised points of interest it did
so. Quoting from paragraphs 32 and
48:-
“32 This conclusion means that it is unnecessary
to consider the second issue.
However, it was fully argued and it raises a point of some
interest. Accordingly, the Board
proposes to address it.
…[Having addressed it]
48 For
these reasons, even if clause 12 conferred exclusive jurisdiction on the courts
of Mauritius in relation to the four claims raised by the respondents, the
Board considers that no stay should be granted in respect of the Proceedings in
the Royal Court.”
19. Sheokumar Gujadhur also said this in respect of the
Jersey proceedings at paragraph 17:-
“17 The Applicant has
been advised that the Jersey Proceedings have been fixed for 16 January 2017
over a period of 15 weeks. However,
the parties are still exchanging particulars and no defence has yet been filed
by any of the defendants in the Jersey Proceedings.”
20. It is simply incorrect to say that no defence
(answer) has yet been filed by any of the defendants in the Jersey
proceedings. In order to assist the
courts of Mauritius, we attach to this judgment a schedule showing the
extensive procedural steps that have been taken in the Jersey proceedings, but
in very broad summary:-
(i)
The fifth,
sixth and seventh defendants have been added as parties.
(ii) Amended Answers (and Amended Replies) have been
filed, which include a counterclaim by the first defendant seeking the setting
aside of the Grand Trust on the grounds of mistake and a third party claim by
the third and seventh defendants against the first defendant for an indemnity.
(iii) General discovery has been ordered and
substantially completed.
(iv) A trial date has been fixed, namely 17th
January, 2017, (estimated 12 weeks) and directions given for mediation.
(v) Extensive directions have been given to enable
the trial to proceed on that date for inter
alia the filing and exchange of the evidence of witnesses of fact (by 15th
June, 2016,) and of expert witnesses on US, Dutch and Italian tax issues and on
the laws of the Bahamas, Mauritius, British Virgin Islands and Guernsey (by 30th
September, 2016).
Representation
21. Up until May 2015, Carey Olsen had represented
the first to fourth defendants, and once joined, the seventh defendant. It is not in dispute that the first
defendant was paying the legal costs incurred on their behalf. From that time, Baker & Partners have
represented the third and seventh defendants who have been paying their own
legal costs.
22. On 2nd February, 2016, Carey Olsen
gave notice that it had ceased acting for the fourth defendant, which is now
represented by Collas Crill. Subsequent documentation indicates that
this was a decision taken by Carey Olsen. Advocate Robinson, for the plaintiffs,
surmises that this was as a result of the fourth defendant’s decision to
retire and appoint GFin.
23. On 17th February, 2016, Carey Olsen
gave notice that it was no longer acting for the first and second defendants, a
decision it would seem taken by the first and second defendants. Collas Crill
have been instructed to act for them, but they are not as yet on the record
pending resolution of a dispute over the fees claimed by Carey Olsen. In order to allow Collas
Crill to represent the first and second defendants (together with the fourth
defendant), the fifth defendant has moved to Le Gallais
& Luce.
Current Jersey application
24. On the 24th February, 2016, the
Master ordered the fourth defendant to file by the 9th March, 2016,
a full affidavit explaining all the circumstances leading to and its reasons
for retiring as trustee of the Grand Trust. All of the defendants were ordered to
produce by the 9th March, 2016, all documents in their possession,
custody or power relating to the 2016 Appointment, other than those over which
privilege is claimed.
25. The plaintiffs issued a summons dated 17th
March, 2016, that came before the Court on 21st March, 2016. In that summons, they sought the
following relief:-
(i)
Leave to
amend the re-amended Order of Justice to challenge the validity of the 2016
appointment and to join GFin as a party to the
proceedings (with leave to serve GFin out of the
jurisdiction).
(ii) For an order that the fourth defendant takes
all necessary steps to apply to the courts of Mauritius for a stay and/or for
an adjournment sine die of the new
Mauritius proceedings.
(iii) To the extent that the first, second, third,
fifth, sixth and seventh defendants appear in the new Mauritius proceedings,
and submit to its jurisdiction, to take all necessary steps to support the
fourth respondent in its application for a stay and/or adjournment.
(iv) Unless they comply with the Master’s
order of 24th February, 2016, (disclosure in relation to the 2016
Appointment) by close of business on 25th March, 2016, the first,
second, fourth and fifth defendants should appear before the Court on 6th
April, 2016, to show cause why they should not be debarred from defending these
proceedings.
(v) An order that the defendants shall produce all
documents in relation to the changes in the terms of the promissory note, which
comprises the main asset of the Grand Trust, apparently undertaken by the
fourth defendant prior to its retirement by close of business on 25th
March, 2016.
(vi) An order restraining the fourth defendant
and/or GFin from dealing in any manner whatsoever
with the promissory note other than to collect interest due thereon.
26. In common with the plaintiffs, the third and
seventh defendants are concerned that in the face of the Privy Council’s
judgment, GFin has commenced substantive proceedings
in Mauritius to which the third defendant is a party and immediately upon
receipt of notice of those proceedings, Advocate Redgrave, on their behalf,
wrote on 14th March, 2016, to the Mauritius court expressing the
third defendant’s clear view that the issue of the correct forum had
already been determined by the Privy Council and that GFin
was bound by that judgment. It is
worth quoting the penultimate paragraphs of that letter:-
“As I have already said,
my client was amongst those parties to the Jersey Proceedings which sought to
establish that the appropriate forum for the resolution of the issues being
litigated in the Jersey Proceedings was Mauritius in the 2013 Forum
Application. However the 2013 Forum
Application was dismissed by two appellate courts (the latter of which, the
Privy Council, is the highest court of appeal in both Jersey and
Mauritius). BNP Jersey consider that
GFin is bound by that judgment.
Very large sums have already
been expended on litigating the issues raised by Cristiana and her children in
the Jersey Proceedings in the Royal Court.
My client is concerned that the effect of the orders which GFin seek would be to further increase expense and delay
the determination of the dispute between the parties. I wish to take this opportunity to urge GFin and each of the Respondents to GFin’s
application to accept the determination of the Privy Council as to the proper
forum for this dispute and to concentrate on the proper resolution of the
issues therein.”
27. Advocate Redgrave supported the joining of GFin to the Jersey proceedings, but resisted the third and
seventh defendants being made the subject of any of the further relief sought
by the plaintiffs, as there is no evidence to suggest that they would attempt
to subvert the jurisdiction of the Royal Court or support any attempts by GFin to do so, or that they had any documents to
discover. Advocate Redgrave reminded
the Court of their ongoing general discovery obligations in any event.
28. Advocate Clarke, for the fifth defendant, had
no instructions and therefore no submissions to make to the Court. Advocate Santos-Costa, whilst instructed
by the first and second defendants, could not go on the record as representing
them as a result of the fee issue with their former legal advisors Carey Olsen
and was therefore only able to make submissions on behalf of the fourth
defendant. He had no submissions to
make on the joining of GFin as a party to the Jersey
proceedings, but resisted an order that the fourth defendant shall forthwith
take all necessary steps before the Mauritius court to apply to stay and/or
adjourn sine die the new Mauritius
proceedings.
29. The fourth defendant, whilst named as a
respondent in the Mauritius proceedings, had not been served with those
proceedings and it was difficult, he said, to know what was meant by “take all necessary steps” –
how could such an injunction be policed by the Court and how would the fourth
defendant know what the extent of its obligations were, bearing in mind any
failure to comply would sound in contempt.
The plaintiffs had failed to provide any authority for such an unusual and
draconian order. In all the
circumstances, he submitted that it was logical and appropriate for the Court
to await the explanation of all the parties as to why the trust assets had been
transferred from the fourth defendant to GFin, and
therefore beyond the reach of the Court, before the Court considered making
oppressive and draconian orders against the parties at this stage.
Reasons for the appointment of GFin
30. Whilst the Court is not at this stage
considering the validity of the 2016 appointment, it has a responsibility for
ensuring the just and proper conduct of the proceedings before it. For that purpose we set out sequentially
the reasons put forward by the fourth defendant for the steps it has taken:-
(i)
On 9th
February, 2016, the fourth defendant wrote directly to the Judicial Greffier
advising that Carey Olsen had ceased to act for it and expressing regret for
Carey Olsen’s decision. It
said it had been placed in a very embarrassing situation:-
“Moreover, given the fact
that our integrity and independence as trustee have been challenged for reasons
we perceive are totally frivolous by one of the beneficiaries of the Grand
Trust, we also wish to inform the Court that we have retired as trustees of the
Grand Trust as of 29 January 2016.”
(ii) On 11th February, 2016, the fourth
defendant e-mailed Bedell Cristin
saying this:-
“Our resignation as
trustee has been made in good faith following a realignment of our business
model.”
(iii) The Court was informed by Advocate Robinson
that at the hearing before the Master on 24th February, 2016,
Advocate Santos-Costa explained that the fourth defendant had retired as
trustee because it was “sick of the
litigation”. Advocate
Santos-Costa did not demur from that in the hearing before us.
(iv) In an affidavit of Lee Mo Lin Lee Chee Kiong Noel Patrick, a director of the fourth defendant,
dated 9th March, 2016, filed in response to the Master’s order
of 24th February, 2016, he gave these reasons for the fourth
defendant retiring:-
“4 That there have been
recent changes to the composition of the Board of Directors of the Fourth
Defendant and as a consequence we have reviewed our client relationships.
5 The decision of the
Fourth Defendant to retire as trustee of the Grand Trust, has been motivated
mainly by the fact that its independence as trustee has been challenged by one
of the beneficiaries of the Grand Trust for reasons which the Fourth Defendant
perceives to be totally frivolous.
6. The Fourth Defendant
further states that in order to defend those allegations made by the Plaintiffs
towards it, considerable costs and fees have been incurred so far.
7. Further, the Fourth
Defendant wishes to draw the Royal Court’s attention to prayer nine of
the Re-Amended Order of Justice dated 08 July 2015 order, whereby the
Plaintiffs request the appointment of new trustees in place of the existing
trustees of the Grand Trust, that is the Fourth Defendant.”
(v) Exhibited to that affidavit was a copy of the
2016 appointment and of the written resolution of the fourth defendant (the only documents disclosed by the
fourth defendant in response to the Master’s order), which gives these
reasons for its retirement:-
“IT IS NOTED THAT:
(a) we have an international reputation as a highly
professional, competent and independent service provider with a large client
base worldwide and we have acted as trustees and are acting as trustees on
numerous trusts without any issues;
(b) our integrity and independence as trustee has
now been put into question by one of the beneficiaries of the Grand Trust,
namely Cristiana Crociani (“Cristiana”)
in the re-amended order of justice that she has filed in certain court
proceedings in Jersey (“the Jersey Proceedings”);
(c) one of the prayers of Cristiana in the Jersey
Proceedings is that we should retire as trustee of the Grand Trust and that
another trustee should be appointed;
(d) pursuant to the Twelfth Clause of the Trust
Deed, we are entitled to retire as trustee and to appoint a new trustee subject
to the terms of the Trust Deed;
(e) for the above reasons, we are proposing to
retire from the Grand Trust and to appoint GFin
Corporate Services Ltd (‘GFin’) as the
new trustee;”
(vi) Mr Patrick expanded on this in a further
unsworn affidavit filed with the Court shortly before the hearing on 21st
March, 2016:-
“Reasons for retirement
2. The Fourth Defendant in
the aforesaid matter wishes to reiterate that the reasons behind its decision
to retire and appoint a new trustee.
That there have been recent changes to the ultimate shareholding of the
Fourth Defendant and the composition of its Board of Directors. The new Board
has imposed stricter compliance obligations on the management of the Fourth
Defendant.
3. As a consequence, the
Fourth Defendant had to review its client relationships. The management has taken the view that
the Grand Trust constitutes unnecessary reputational risk to the Fourth
Defendant in the light of the allegations made by the Plaintiffs. The new Board and the management of the
Fourth Defendant have opted for a more prudent approach in respect of this
matter and their compliance team have resolved to cease providing services to
the Grand Trust and instead spend more time and effort on its business and
non-litigious matters.
4. The Fourth Defendant
expected that the litigation before the Royal Court, which is essentially a
family dispute, would be managed reasonably and could be determined either by
way of a settlement or, at worst, following a hearing within reasonable
terms. Instead, the litigation, in
terms of discovery process, time and resources required, excessive costs,
gratuitous allegations and excessive and unnecessary issues and details, has
ran out of proportion. From the
perspective of the Fourth Defendant the present matter is a private family
trust and subjected to a family dispute.
Therefore, the discovery and other pre-trial processes and the trial
time should be a matter of days as this would have been in case of comparable litigation
in Mauritius. As an indication, the
Fourth Defendant has been advised and verily believes that the present dispute
would not have taken more than four or five days to be heard. Instead about 12 weeks of trial time has
been earmarked, which the Fourth Defendant believes goes far beyond a
reasonable assessment of the time and resources required for such a case.
5. That disproportionate
manner of litigating the present dispute has brought up significant costs
issues and the First Defendant has progressively expressed her reluctance to
bear those costs. That lead to a
level of frustration and eventually to disagreement with former counsel, Carey
Olsen, which, in the opinion of the Fourth Defendant was litigating the dispute
too aggressively and disproportionately both in terms of the volume of work
required and the corresponding legal fees.
The Fourth Defendant was unable to influence counsel to focus on the
relevant defences, which, from its perspective, should have been quite
straightforward.
6. The Fourth Defendant is trustee
company registered and regulated in Mauritius. The Grand Trust is a trust governed by
the laws of Mauritius. The Fourth
Defendant took the view that it was not conducive to the interests of all
stakeholders of the Grand Trust to continue to litigate a family dispute which
ran the risk of consuming the family wealth and resources of the beneficiaries
before the Royal Court.
7. Furthermore, the decision
of the Fourth Defendant to retire as trustee of the Grand Trust was also
motivated by the fact that its independence and impartiality as trustee has
been challenged by one of the beneficiaries of the Grand Trust. The Fourth Defendant felt that it was no
longer in a position to perform its duties as trustee given that any action or
inaction on its part would be construed to be without independence thereby
restricting it from exercising its discretion as would be expected from a
trustee in normal circumstances.
8. For those reasons, the
Fourth Defendant decided to retire and appoint a new trustee. The Fourth Defendant has been advised
and verily believes that such retirement and appointment is in accordance with
the laws of Mauritius, the governing law of the Grand Trust.
9. The Fourth Defendant
imparted to its attorneys at law in Mauritius that it wished to retire as
trustee and to appoint a new trustee.
The lawyers made arrangements via other legal advisers to identify and
appoint a new trustee as this is now known to all parties. The arrangements for the change in
trustee were done mainly in the form of meetings with the relevant legal
advisers and the Fourth Defendant considers that the details of those meetings
are legally privileged and subject to the exclusive jurisdiction of
Mauritius.”
31. It would seem fair to observe from this that in
retiring as trustee and appointing GFin in its place,
the fourth defendant was primarily concerned with its own interests, as opposed
to those of the beneficiaries, but leaving that aside it appears to have taken
the decision that it was not in the interests of the beneficiaries (the
stakeholders) as a whole to continue with the Jersey proceedings and this
apparently without any consultation with those beneficiaries. It then went on to make declarations in
the 2016 appointment (set out above) which created the platform upon which GFin has launched the new Mauritius proceedings. The fourth defendant will have to explain
how these actions could be said to be in the interests of all the
beneficiaries. We can see that it
might be that some of the defendants would regard these actions on the part of
the fourth defendant to be in their interests, but there can surely be little
doubt that if the plaintiffs had been consulted as beneficiaries, they would
have raised the most serious objection.
32. In making the declarations contained in the
2016 appointment that the courts of Mauritius will have exclusive jurisdiction
over all disputes in relation to the Grand Trust, the fourth defendant was
purporting to exercise its powers under the Twelfth clause of the trust deed,
but on examining that clause we note that it applies only where a new trustee
is appointed “outside the
jurisdiction at that time applicable to the trusts”-our emphasis. On its appointment GFin
was within the jurisdiction at that time (on the face of it) applicable to the
Grand Trust. In any event the Privy
Council had held definitively that this clause does not confer exclusive
jurisdiction upon the courts of Mauritius and the fourth defendant, which is
directly bound by the decision of the Privy Council and which as the retiring
trustee exercised the power, will need to explain how it could take it upon
itself to declare otherwise.
33. The only communication the Court has seen
emanating from GFin is its e-mail of 11th March,
2016, to Advocate Santos-Costa. It
draws his attention to the declarations contained in the 2016 appointment and
states as follows:-
“3 You may wish to note that GFin has agreed to the appointment as Trustee subject to
the specific condition that the Deed of Retirement and Appointment (“the
Deed) is governed by Mauritius law and that the Mauritius courts shall have
exclusive jurisdiction in relation with any matter arising in connection with
the Deed and the Grand Trust.
4 Your attention is
drawn to clause 2 of the Appointment Deed pursuant to which: (a) the proper law
of the Trust is the laws of Mauritius, which is the forum for the
administration of the Grand Trust, (b) the Grand Trust will be read and take
effect according to the laws of Mauritius, and (c) all disputes which may arise
out of, or in connection with the Appointment Deed and/or the Trust Deed will
be subject to the exclusive jurisdiction of the Mauritius courts.
5 On the basis of the
above, GFin sees no reason why it should be joined as
a party to the Jersey Proceedings and in any event if there is any dispute to
be resolved, same must be submitted to the Mauritius courts for determination
in accordance with Mauritius laws.
6 In the above
circumstances, GFin has made an application to the
Supreme Court of Mauritius requesting an anti-suit injunction to restrain the
parties in the Jersey Proceedings from joining GFin
to the Jersey Proceedings. I hereby
attach a copy of the application and the order of the Supreme Court of
Mauritius. You may wish to apprise
the Jersey Court and the parties to the Jersey Proceedings of the proceedings
initiated by GFin.”
34. GFin will need to explain the basis upon which it purported to make it a
condition of becoming trustee that, notwithstanding the decision of the Privy
Council, the courts of Mauritius should, after all and in defiance of that
decision, have exclusive jurisdiction over the subject matter of the Jersey
proceedings and this apparently without any consultation with the beneficiaries
as to whether it was in their interests for such a condition to be accepted. The fourth defendant will need to explain
how, directly bound as it is by the Privy Council decision and in the exercise
of its fiduciary powers, it could accept such a condition, again apparently
without consultation with the beneficiaries.
35. The first defendant wrote to the Court on the
29th March, 2016, in response to the Master’s orders of the 24th
February, 2016, in which she says this about her involvement in the appointment
of GFin:-
“Appointment of GFin
2. I wish to inform the
Jersey Court that I had no involvement whatsoever, save and except as specified
below, in the appointment of the new trustee of the Grand trust, GFin Corporate Services Ltd (“GFin”).
3. I was contacted by a
director of GFin in or about the end of January 2016
and informed that GFin and Appleby Trust (Mauritius)
Ltd had been in communication regarding the appointment of GFin
as the new trustee of the Grand Trust.
4. GFin
wanted specifically during our telephone conversation that I ascertain my
intention, at the time the Grand Trust was created, regarding the tribunal that
would have jurisdiction to hear any disputes relating to the Grand Trust.
5. I confirmed that at the time
that I created the Grand Trust, I intended that all disputes arising in
relating to the Grand Trust, including in relation to its administration,
should be heard by the courts of the place where the Grand Trust is
administered from time to time. GFin requested that I confirm my statement in writing. I herewith attach a copy of the letter
sent to GFin to that effect on 28 January 2016.
6. I also had other telephone
conversations with GFin regarding, inter alia, an
indemnity agreement that GFin wanted me to enter
into, as has been the practice with the previous trustees of the Grand
Trust. I agreed to provide an
indemnity to GFin and I herewith attach a copy of the
indemnity agreement dated 29 January 2016.”
36. The first defendant is the settlor of the Grand
Trust and, on her case, an intended (rather than just a default) beneficiary. The trust fund comprises the benefit of a
promissory note under which some €23M is due to be paid by a company she
controls. It might be thought,
therefore, that a change of trustee would be of considerable importance to her
and a matter over which she would have been consulted and very much involved. According to her letter, however, her
involvement was minimal, implying that the fourth defendant and GFin took these actions upon themselves, unprompted by
anyone connected to the beneficial class. The first defendant was not, apparently,
consulted over (i) the fourth defendant’s wish
to retire (ii) the identity and suitability of the proposed new trustee and
(iii) the condition upon which GFin was prepared to
act as trustee, a condition which would potentially have a direct impact on the
Jersey proceedings in which she was involved.
37. As can be seen, a number of issues arise out of
these documents and explanations which will need to be addressed:-
(i)
Our
understanding of the evidence given as to Mauritius trust law in the forum
challenge is that the fundamental principles of English trust law would apply
and under English trust law (as under Jersey trust law), it is well established
that the power to appoint new trustees is a fiduciary power which must be
exercised in good faith in the interests of the beneficiaries as a whole (see In
re Skeats’ Settlement [1889] 4 2 Ch D 522 and In re Bird Charitable Trust [2008] JLR
1). We do not think that a trustee
can be criticised for expressing a desire to retire as trustee. Indeed, we are sure many a trustee,
finding itself embroiled in trust litigation, would wish to do so. The problem relates to the exercise of
the retiring trustee’s power to appoint a new trustee, a fiduciary power
which we suggest can only be exercised in the interests of the beneficiaries as
a whole. As we have already
observed, the explanations put forward make no reference to any consultation
with the beneficiaries as to whether it was in the interests of all of them for
GFin to be appointed. We do not know whether the fifth
defendant was consulted but it seems clear that the plaintiffs were not. According to the first defendant’s
letter she does not appear to have been consulted over whether it was in the
interests of the beneficiaries of the Grand Trust for GFin
to be appointed. She appears to
have been consulted only over where, in 1987, she intended disputes to be heard
and over giving GFin an indemnity.
(ii) In addition to exercising its fiduciary power
to appoint GFin as trustee, the fourth defendant has
selected a new trustee which (according to GFin’s
e-mail of 11th March, 2016,) would only act as trustee on the basis
that, notwithstanding the decision of the Privy Council, all disputes
concerning the Grand Trust should be subject to the exclusive jurisdiction of
the Mauritius courts, hence the declarations made in the 2016 appointment set
out above, a document, according to the written resolution of the fourth
defendant, prepared on its behalf.
Again, as we have already said, there is no reference to any
consultation with the beneficiaries whether the appointment of a new trustee on
this basis was in their interests. It was a matter of very considerable importance
as it potentially had a direct bearing on the Jersey proceedings in which they
were all heavily involved.
(iii) One of the issues in the Jersey proceedings is
the validity of the 2012 appointment by which the fourth defendant was
appointed as sole trustee of the Grand Trust and the proper law changed to
Mauritius. Pending resolution of
that issue, there is uncertainty therefore as to whether the fourth defendant
is the duly appointed sole trustee of the Grand Trust and, indeed, whether the
Grand Trust is subject to the proper law of Mauritius. The fourth defendant will need to
explain why it has purported to exercise its power to appoint a new trustee in
the face of that uncertainty as to its status, its powers and the applicable
proper law.
(iv) The Grand Trust is illiquid. Its sole material asset is the benefit
of the promissory note under which interest is not currently being collected. Shortly before retiring as trustee, the
fourth defendant agreed to extend the repayment date from the 31st December,
2017, to 12th December, 2022, because of an apparent lack of
liquidity within the payor, Croci
International BV, a company controlled by the first defendant. GFin has
therefore accepted trusteeship of a trust embroiled in hostile litigation which
in the short to medium term would seem to have no ability to pay for GFin’s professional services. Furthermore, GFin
has now launched proceedings in Mauritius through lawyers in that
jurisdiction. On the assumption
that GFin would not be providing its professional
services gratuitously or using its personal funds to pay for the new Mauritius
proceedings, GFin must presumably be receiving
funding from another source. Attached
to the first defendant’s letter to the Court is a copy of a “Fee Agreement and Indemnity” dated
the 29th January, 2016, under which the first defendant gives GFin a wide indemnity for acting as trustee, as she says
she has done with previous trustees. The preamble to that indemnity also
anticipates litigation for which it says she has agreed to pay. The clear implication is that the first
defendant is the source of GFin’s funding. Indeed, it is our understanding, and not
we believe in dispute, that the first defendant has been paying or procuring
the payment of the fees and outgoings of the fourth defendant to date.
38. This Court is very concerned at the picture
that is emerging from the documents and explanations so far provided. The fourth defendant and GFin, possibly funded by the first defendant, appear to have
procured:-
(i)
The
removal of the remaining but still substantial trust assets beyond the reach of
this Court, and
(ii) The creation of a platform, the declarations in
the 2016 appointment, from which GFin has launched
the new Mauritius proceedings in defiance of the Privy Council decision,
proceedings which may have been contemplated when it was appointed trustee by
the fourth defendant.
39. We raise these concerns because they arise on
the documents and explanations provided to us but we acknowledge that the first
defendant, the fourth defendant and GFin, have not
had an opportunity to respond to those concerns. These actions must have given rise to a
substantial body of documentation over which the fourth defendant is claiming
privilege but which may well throw greater light upon what has transpired. Whether it is entitled to do so will need
to be determined by the Master as part of the discovery process initiated by
him pursuant to his orders of the 24th February, 2016.
Decision
40. The hearing before this Court took place on 21st
March, 2016, at very short notice in the light of GFin’s
application before the Supreme Court of Mauritius for interlocutory injunctions
against the plaintiffs being scheduled for the following Wednesday, 30th
March, 2016. The Court made a number of orders reserving its position on others
and we take them in turn.
Amendment of Order of Justice and joining of GFin
41. Although the application to amend the Order of
Justice is brought late in the day, it has been brought about because of the actions
of the fourth defendant in appointing GFin as trustee
in January of this year. The
circumstances in which that appointment took place as set out above makes it
inevitable in our view, that the plaintiffs would seek to challenge it. None of the counsel present raised any
objection to that amendment and to the joining of GFin
for that purpose.
42. The application for leave to serve the amended
Order of Justice on GFin outside of the jurisdiction
was supported by an affidavit by Ben Thorp of Bedell Cristin dated 18th March, 2016, which complies
with RC15/01. The application was
brought under Article 7(c) of the Service of Process Rules 1994 which is
in these terms:-
“Service out of the
jurisdiction of a summons may be allowed by the Court whenever –
(a) …
(b) …
(c) the
claim is brought against a person duly served within or out of the jurisdiction
and a person out of the jurisdiction is a necessary or proper party
thereto;”
43. There is no question that the first to seventh
defendants have all been duly served within or out of the jurisdiction as the
case may be.
44. GFin is a proper party to the Jersey proceedings, because its
appointment as trustee is being challenged by the plaintiffs and because it
holds the trust assets in respect of which the Court may ultimately seek to
make orders.
45. In the circumstances, we gave leave for the
Order of Justice to be amended, for GFin to be made a
party and for it to be served out of the jurisdiction.
Disclosure of documents
46. This related to the changes in the promissory
note agreed by the fourth defendant shortly before retiring as trustee. The Court accepted Advocate
Redgrave’s submissions that no such order was required against the third
and seventh defendants as there is no evidence that they had any involvement in
this, but the Court determined it was appropriate for the remaining defendants
to provide the disclosure sought.
Interlocutory Injunctions over assets of Grand Trust
47. Whilst Advocate Santos-Costa was correct to say
that there was no order preventing the fourth defendant from retiring and
appointing GFin as the new trustee, it was not in the
contemplation of the Court that it would seek to do so, certainly without prior
notice. The fourth defendant has
accepted the jurisdiction of the Jersey Court, albeit that it joined in with
the first, second and third defendants in unsuccessfully applying for a stay on
the grounds that Mauritius was the more convenient forum. By its actions taken this January, the
fourth defendant has now purported to place the trust assets beyond the reach
of this Court and has made declarations which have created the platform upon
which the new Mauritius proceedings have now been launched.
48. The Court was not prepared to countenance any
further changes in the trusteeship of the Grand Trust without its prior
approval and therefore granted the interlocutory injunctions sought by the
plaintiffs. It was not clear
whether the promissory note had yet been assigned to GFin
and whether the formalities, if any, required under the laws of the Kingdom of
the Netherlands (by which the promissory note is subject) for an assignment,
had been complied with and therefore the interlocutory injunction was extended
to both the fourth defendant and GFin.
Interlocutory Injunctions in relation to the new Mauritius
proceedings
49. The Court reserved its decision in respect of
the interlocutory injunctions sought by the plaintiffs in relation to the new
Mauritius proceedings. The precise
orders sought were as follows:-
“4 In relation to the
proceedings which have been commenced by GFin in the
Supreme Court of Mauritius by Plaint with Summons dated 24 February 2016 and a
subsequent application for injunctive relief issued by GFin
dated 9 March 2016 (together the “New Mauritius Proceedings”):
a) The Fourth Defendant shall forthwith take all
necessary steps before the Mauritius Court to apply to stay and/or adjourn sine
die the New Mauritius Proceedings with immediate effect, pending the
determination of the Jersey action (including any appeals). For the avoidance of doubt, the Fourth
Defendant shall take no other steps in the New Mauritius Proceedings other than
for the purpose of securing the aforementioned stay/adjournment.
b) To the extent that they enter an appearance at
any hearing in the New Mauritius Proceedings and submit to the jurisdiction of
the Mauritius court, the First, Second, Third, Fifth, Sixth and Seventh
Defendants shall take all necessary steps to support the Fourth
Defendant’s application to stay and/or adjourn sine die the New Mauritius
Proceedings with immediate effect, pending the determination of the Jersey
action (including any appeals). For
the avoidance of doubt, the First, Second, Third, Fifth, Sixth and Seventh
Defendants shall take no other steps in the New Mauritius Proceedings other
than for the purpose of supporting the Fourth Defendant’s application to
stay those proceedings and/or adjourn them sine die.”
50. In 2013, the Royal Court and the Court of
Appeal made orders against the first to fourth defendants not to take any steps
in the Mauritius proceedings that they had commenced at that time. The Court has personal jurisdiction over
the fourth defendant and Advocate Robinson submitted that we can therefore
require it to apply to have the new proceedings brought by GFin
in Mauritius stayed. He saw no
difference between the orders made against the first to fourth defendants in
respect of the proceedings in 2013 and what is sought now. He cited no authority to assist the
Court.
51. The Court was concerned that there may be a
difference between ordering a party to stay proceedings it has commenced in
another jurisdiction and ordering a party to apply for proceedings brought by
others in another jurisdiction to be stayed i.e. to take an active role in
those proceedings. The former
application would, by definition, be consented to and the outcome therefore
assured. The latter application may
well be contested and the outcome uncertain. What, precisely, would the fourth
defendant be required to do and how far would it be required to go in dealing
with that contested application?
How is this Court to avoid the danger of trespassing on the jurisdiction
of the courts of Mauritius by seeking to control, through orders, the conduct
of a party in a contested case before it? These are issues that require careful
consideration with the benefit of full skeleton arguments and authority, but
that is not to say that this Court will not act decisively to ensure the just
and proper conduct of the Jersey proceedings.
52. However, we would very much hope that such
further argument will prove unnecessary for this reason. The Privy Council is the ultimate Court
of Appeal in both jurisdictions (as we understand it) and it has ruled
definitively on where the matters in dispute in the Jersey proceedings should
be heard and determined, namely Jersey.
Very substantial procedural steps have been taken in reliance upon that
ruling at great cost to all the parties concerned and the action is scheduled
for a final hearing to commence in January of next year.
53. Courts have to bear in mind the strain
litigation imposes on litigants, particularly if they are personal litigants
and, as here, members of a once close family, and the anxiety occasioned by
facing new issues. Following the
Privy Council decision there is, or should be, a legitimate expectation on the
part of all of the parties that the Jersey proceedings will determine the
issues before the Jersey Court one way or another. It is also in the interests of the
community as a whole that proceedings should proceed efficiently and
expeditiously (see the comments of Lord Griffiths in Ketteman
v Hansel [1987] A.C. at 220 cited with approval in Cunningham v Sinel
[2011] JLR 54).
54. The bringing about of a second bout of parallel
proceedings in Mauritius can only increase the strain upon the parties,
considerably increase the costs that they must all bear and threaten the
efficient and expeditious resolution of the issues before the Jersey Courts. Quite apart from that it seems to us that
there is an element of futility in bringing about a second bout of parallel
proceedings in Mauritius in that, whatever orders GFin
might hope the courts of Mauritius may make, the Privy Council is their ultimate
court of appeal and it is hard to see how the Privy Council would do anything
other than to act in a manner which is consistent with the decision it has
already made as to where these disputes should be heard.
55. The new Mauritius proceedings have now been
adjourned to 22nd April, 2016, and we anticipate that the Supreme
Court of Mauritius will be as concerned at these developments as this Court is
and will wish to take all steps it properly can to uphold the decision of the
Privy Council, by which all of the parties in the Mauritius proceedings,
including we would respectfully suggest GFin as
successor trustee, are bound.
56. This Court’s only concern is to ensure
that justice is done between the parties in the proceedings before it and for
that purpose the current trustee, GFin (on the
plaintiffs’ case a trustee de son
tort), is a necessary party. To
the extent that the Supreme Court exercises a supervisory jurisdiction over GFin, it would be of assistance to this Court if GFin could be directed to submit to the jurisdiction of the
Royal Court of Jersey.
Unless orders
57. Finally, we need to comment on the application
for unless orders following the alleged non-compliance with a number of orders
made by the Master. As we have
separately ordered these matters should be referred back to the Master, who has
the ongoing management of these proceedings.
58. In the premises, having already granted the
applications as set out in paragraphs 25 (i), (v) and
(vi) above, we decline to grant the applications as set out in paragraphs 25
(ii), (iii) and (iv) above.
Authorities
Crociani-v-Crociani [2013]
(2) JLR 369.
Crociani-v-Crociani [2014]
(1) JLR 426.
Crociani-v-Crociani [2014]
(2) JLR 508.
Crociani-v-Crociani [2014] UKCP 40.
In re Skeats’
Settlement [1889] 4 2 Ch D 522.
In
re Bird Charitable Trust [2008] JLR 1.
Service of Process Rules 1994.
Ketteman v Hansel [1987] A.C. at 220.
Cunningham
v Sinel [2011] JLR 54.