Jersey Unreported Judgments

[2009]JRC158

royal court

(Samedi Division)

12^th August 2009

Before     :

M. C. St. J. Birt, Esq., Deputy Bailiff, and Jurats Tibbo and Morgan.

 

IN THE MATTER OF THE REPRESENTATION OF DH AND OF CHURCH STREET TRUSTEES LIMITED

AND IN THE MATTER OF THE H TRUST.

Advocate G. S. Robinson for the Representor.

judgment

the deputy bailiff:

1.        This is application which arises in relation to a trust established by DH as settlor.  It is a discretionary trust governed by Jersey law and was created on 16^th May, 1997.  The beneficiaries at present are the two daughters of the settlor.  The original trustee was a company called Curzon Secretaries and Trustees Limited.  That was replaced in 1999 by BDO Secretaries Limited which was in turn replaced in 2001 by Sterling Trustees Limited which was a company owned by the BDO Group.  Sterling Trustees Limited was purchased by the Capita Group in 2006 and became Capita Trustees.  On 21^st December, 2007, Capita was replaced as trustee by Mr Richard Arthur and the settlor.

2.        In fact, the person responsible for looking after the trust from the date of inception has been Mr Arthur.  He was the person responsible for the affairs of the trust with BDO and looked after the affairs of the trust on behalf of whichever company happened to be trustee at the particular time. 

3.        The settlor has encountered increasing difficulties in relation to Mr Arthur.  He has found it very difficult to get any information from him even once he was a co-trustee.  He therefore asked Mr Arthur to retire in favour of Capita earlier this year.  After some delay Mr Arthur did sign a deed of retirement in favour of Capita but prior to its execution by all parties the settlor changed his mind and felt that he would like to have a totally new company which had nothing to do with any of those who had previously been involved.

4.        Accordingly, on 6^th May, 2009, Appleby, acting on behalf of the settlor, sent a new deed of retirement and appointment to Mr Arthur indicating that the new trustee should now be Church Street Trustees Limited.  We should add that the power of appointing new trustees rested in the trustees for the time being.  There was no response to that letter from Mr Arthur.  This left the settlor with little choice but to bring a Representation which he and Church Street Trustees Limited did on 31^st May, 2009.  The Representation at that stage sought the appointment of Church Street Trustees Limited in place of Mr Arthur and it also sought disclosure of all the relevant trust documents. 

5.        There was no communication from Mr Arthur until 3^rd June.  On that date he had a conversation with Appleby and he gave a list of telephone numbers where he said he could be reached.  However, that turned out not to be the case in the sense that there were no responses when they tried.  He eventually called on 30^th June and there were a number of meetings.  One of those meetings was on 1^st July at which information was sought.  Furthermore, he then agreed to resign as trustee in favour of Church Street Trustees Limited and signed the necessary deed.  However there was still a lack of information being produced and accordingly the Representation which was due to be heard on 24^th July was adjourned to today's date.

6.        It is quite clear to us that Mr Arthur was made aware of today's date; there was a letter from Appleby on 22^nd July; there was further correspondence on 30^th July in relation to the missing documents to which we shall refer in a moment, and the court bundle was delivered by courier to Mr Arthur.  So we are quite satisfied that he was aware of today's hearing but he has not appeared. 

7.        Accordingly, today Miss Robinson asks for two matters; first of all she asks for an order that Mr Arthur, as outgoing trustee, should provide further information about the trust, which has not been made available at the moment, and secondly she asks for the costs of the Representation on an indemnity basis.

8.        We will consider first the point on information.  It seems that most of the trust assets are in a wholly owned company called Faircliff Property Limited which is a BVI company.  Mr Arthur was apparently a director of that company from an early stage.  Most of the assets would appear to consist of loans to various entities largely involved, as far as we can see, in the property or property development business.  Some draft accounts, or unsigned accounts have been produced for certain years, the most recent one being to 31^st December, 2007, which shows loans of some £13.9 million in total.  However very little information has been produced in relation to a number of matters including the terms of the loans, whether interest and capital have been repaid and there is also no up to date information.

9.        Following his retirement as trustee, Mr Arthur has produced some information but there are still large gaps.  We have been taken through a schedule which has been referred to as "the missing information list".  It refers to five entities, the trust itself, Faircliff Property Limited, Le Clos Perchard Limited, Milland Properties Inc and Pestano Investment Limited.  It appears that the latter two companies were not in fact owned by the trust, unlike the first two mentioned companies, but were beneficially owned by the settlor himself.  They play an important part because assets were transferred from those companies to the trust but there is a lack of information as to the amount and how that came about. 

10.      We are quite satisfied that, as that schedule has been amended during the course of the hearing before us, it represents information which ought to be produced by an outgoing trustee.  In this respect we remind ourselves of what the Court said in the case of Ogier Trustee Jersey Limited-v-C. I. Law Trustees Limited and Others [2006] JRC 158 at paragraph 7:-

"On the transfer of a trusteeship the outgoing trustee is under a duty to co-operate fully and actively in the transfer by making all relevant documents and correspondence available promptly to the incoming trustee and by providing any explanation to questions reasonably raised by the incoming trustee".

We are quite satisfied on the evidence before us that Mr Arthur has failed to live up to the requirements there described.  We are quite satisfied that the information required now in the "missing information list" should properly be provided by an outgoing trustee to an incoming trustee so that the incoming trustee can be aware of the trust assets and all necessary information. 

11.      We therefore make an order that Mr Arthur must produce that information within 14 days from service and we say that that order is made on pain of contempt.  We also order that the Act must be served on him personally by the Viscount's Department so as to ensure that he has notice of what is required of him.

12.      The second aspect relates to costs.  We have been taken through a detailed chronology of events by Miss Robinson.  In our judgment this shows a history of failure by Mr Arthur to respond.  As a result the Representation had to be issued and after its issue there was no adequate response for some time until the 1^st July.  Since then there has been a lack of provision of information on a timely and proper basis which has meant that the Representation has had to be continued with.  Again we were referred to an observation at paragraph 20 of the judgment in the Ogier Trustee case where the Court indicated that:-

"the normal order where a trustee fails in its duty in this way should be an order for indemnity costs.  It is very hard to see why costs incurred because of a breach of a fiduciary duty owed by a trustee should fall on the beneficiaries."

13.      In my judgment that principle should apply here.  I consider that on the evidence before us at present Mr Arthur has brought this Representation upon himself.  He has caused the trust through the new trustees, to incur the costs in connection with this matter which would never have been necessary had he complied properly and fully with the duties of an outgoing trustee.

14.      In the circumstances I order indemnity costs of and incidental to the Representation to date.

Authorities

Ogier Trustee Jersey Limited-v-C. I. Law Trustees Limited and Ors [2006] JRC 158.