Trigwell -v- Clapp [2018] JCA 018 (23 January 2018)

Appeal of the decision of the Royal Court dated 11th September 2017.

[2018]JCA018

23 January 2018

Before :		Sir William Bailhache, Bailiff of Jersey, President, Nigel Pleming., Q.C., and Jonathan Crow, Q.C.
Between	David John Trigwell		Appellant
And	Gerald Clapp		Respondent

The Appellant appeared on his own behalf.

Mrs Jane Clapp appeared on behalf of the Respondent.

judgment

pleming ja:

This is the judgment of the Court.

Introduction

1. This is an appeal from the decision and Act of Court of the Royal Court, Samedi Division, dated 11 September 2017 (Sir Michael Birt, Commissioner, and Jurats Nicolle and Grime) - ("the Judgment"), and also from the costs decision (by the Commissioner alone) dated 3 November 2017.

2. The dispute between the parties essentially concerns the beneficial ownership of a Jersey company, Astral Enterprises Limited ("Astral"). The Appellant claims to be the true beneficial owner. His claim was rejected by the Royal Court. This appeals purports to raise various points of law, but for the reasons we will set out below, we consider that none of these points assist the Appellant. In reality, the appeal is an attempt to overturn findings of fact made by the Royal Court. We will address this further below.

3. There are also proceedings in the Queen's Bench Division of the High Court of England and Wales between the Appellant and Astral, arising out of a complaint by the Appellant that Astral has caused him to suffer substantial losses (quantified in the QBD proceedings at £671,200). The present position in relation to those proceedings is that they have been dismissed following an Order in July 2016 from Master Fontaine, and an Order of Mrs Justice Elizabeth Laing (5 October 2017) refusing permission to appeal that decision. That Order has in turn been stayed by Mr Justice Haddon-Cave, made on 24 October 2017, "pending determination of the Appellant's appeal in the Royal Court of Jersey or further order". So far as this court is aware there has not been any trial in England of the merits of the Appellant's claim against the Respondent.

4. The proceedings in this jurisdiction started in May 2015 when the Respondent brought a Representation before the Royal Court claiming that he was the owner of the shares in Astral, and seeking the reinstatement of the company (Astral was dissolved in 2008 following the failure to file an Annual Return). By Act of the Royal Court dated 19th May 2015, Astral was duly reinstated. The reinstatement led in turn, on 27th November 20015, to a Representation by the Appellant alleging that he was the beneficial owner of Astral, on the basis that the former "sole shareholder and beneficial owner of the company" (a Mr John Harrod ("Mr Harrod")) had transferred his interest to the Appellant. The Representation sought various reliefs including, central to this appeal, a declaration "that [the Appellant] is the beneficial owner of the Company".

5. Therefore, the central issue for determination in the Jersey proceedings was whether or not Mr Harrod was ever the beneficial owner of Astral. If Mr Harrod had been the beneficial owner at the relevant times he would have been able to transfer beneficial ownership of Astral to the Appellant and, thereby, access to and ownership of assets including a property in Blandford Forum, Dorset ("the Blandford property").

6. There was a trial of the Representation in May 2017. The Royal Court considered a number of documents, and received witness evidence (both written and oral). The relevant paragraphs of the Act of Court are as follows:-

"The Court:-

1 having concluded that Mr Harrod has never been the beneficial owner of the Company dismissed Mr Trigwell's claim, it having been based on Mr Harrod being the beneficial owner prior to the purported transfer to Mr Trigwell;

2 concluded that OEEA Trust is the beneficial owner of the Company."

7. At paragraph 123 of the Judgment (Trigwell-v-Clapp [2017] JRC 145) the Court summarised its conclusion:-

"Having reviewed the documents and having had the opportunity of seeing and hearing the witnesses give evidence, the Court has no hesitation in concluding that Mr Harrod has never been the beneficial owner of Astral and the declarations of trust in his favour by Martello and Nautilus were erroneous."

8. The reference there to Martello and Nautilus require explanation - see later in this judgment. The OEEA Trust, referred to above in the Act of Court, was formed in 1998 for the benefit of the Respondent's family. (The current position of this trust is addressed at paragraphs 129-131 of the Judgment).

The Grounds of Appeal

9. The Appellant has set out the foundation for his appeal in paragraph 27 of his Affidavit dated 13 November 2017. There are 12 sub-paragraphs, but the grounds can be reduced to the following:-

(i) Ground 1 - The Respondent asserts ownership of the Astral "even though he does not have the shares which he claims ownership of".

(ii) Ground 2 - The Royal Court should not have rejected the evidence of Dr Osment, Mr Marshall (and the unchallenged written evidence of Mr Morgan).

(iii) Ground 3 - The Royal Court should not have accepted the oral evidence of Mr Chambers casting doubt "as to the veracity of the information in Astral's files".

(iv) Ground 4 - The Royal Court acted unfairly to the Appellant, and thereby putting him at a disadvantage, by allowing Mrs Clapp to speak on the Respondent's behalf, but refused to allow Dr Osment to speak for the Appellant.

(v) Ground 5 - The Royal Court failed to address the Appellant's "multiple legal submissions" including those set out in a witness statement for the QBD proceedings dated 23 October 2017.

There are other complaints including the allegation that the Respondent had moved assets into Astral in order "to evade UK tax" - this is considered under the legal submissions mentioned above. Overall, we consider that the five topics set out above fairly summarise the Appellant's complaint. At the hearing the Appellant handed up to the Court a 21 page document as his Skeleton Argument developing the grounds summarised above, and in particular, expanding reliance on the various legal submissions alleged not to have been considered by the Royal Court.

10. The Respondent put in a written Reply to the Appeal Contentions. Matters of concern to the Appellant in that document were addressed in his Skeleton Argument, and were the subject of questions from the Court. Mrs Clapp appeared to represent her husband, the Respondent, as she had before the Royal Court. We adjourned for a period to read the Skeleton Argument carefully, which we did, and on our return invited clarification from the Appellant on a number of points.

11. Having considered the Affidavit supporting the grounds of appeal, the Skeleton Argument for the Appellant, and the further submissions referred to above, we indicated that it was unnecessary to hear further from Mrs Clapp for the Respondent.

The Judgment of the Royal Court

12. The Judgment is lengthy and addresses the documentary and witness evidence in considerable detail. Considering the state of the documentary evidence presented to the Court, we are particularly grateful to the Royal Court for the care with which the history of Astral has been gathered together and presented. Where necessary we have taken the opportunity to consider the various pleadings, affidavits, and documents on the court file, to ensure that we can be satisfied that the Royal Court's summary is accurate and materially complete.

13. The background to the claim is set out at paragraphs 3 to 11 of the Judgment, not here repeated. The witness evidence is summarised at paragraphs 69 to 122 of the Judgment again not here repeated. However, as the documentary evidence was crucial to the Royal Court's reasoning, we consider it helpful to set it out in full. We prefer this to a shortened summary of what is itself a summary of a number of documents. These paragraphs of the Judgment also introduce and explain the role of the various persons involved. Where any further explanation is needed it has been added:-

"12. On 8th August, 1979, Mr Clapp purchased the Blandford property. His evidence was that he purchased it as his intended retirement home, although he has not in fact lived there and it has always been let, with the rent being paid to him.

13. It is not disputed that the professional person in Jersey who advised Mr Clapp in 1998/1999 was Mr Dermot Dimsey, who owned a company administration business called DFM Consultants Limited ("DFM"). On 26th March, 1998, acting on the advice of Mr Dimsey, Mr Clapp (albeit through a nominee settlor living in Spain) established a settlement called the OEEA Trust. The original trustee was Westminster Trust Company Limited which appears to have been a company of Mr Dimsey's as he signed the original trust deed on its behalf. The named beneficiaries of the OEEA Trust were Mrs Clapp, Matthew Clapp and Jordan Clapp, the latter two being the children of Mr and Mrs Clapp. Although we have seen three pages of the trust deed, we have not seen the remainder of the deed. We are not therefore aware of the other terms of the trust although it seems likely that it was a discretionary trust.

14. Mr Dimsey also advised that a company should be incorporated. DFM did not apparently incorporate companies and Mr Dimsey therefore instructed Mr Barry Shelton of Shelton & Co., Accountants, to carry out the incorporation.

15. In order to incorporate a company in those days, an applicant had to fill out what was known as a COBO application [a form required by the Control of Borrowing (Jersey) Order 1958]. This sought permission to issue shares in the proposed company. The COBO application for Astral was dated 1st May, 1998, and was signed by Mr Shelton. It contained the following information:-

(i) The ultimate beneficial owner of the proposed company was stated as being Mr Clapp, a registered insurance broker whose address in Warlingham, Surrey, was given.

(ii) The intended activities of the Company were said to be "to hold investments and property on behalf of the beneficial owner".

(iii) It was stated that the Company would be an exempt company for Jersey income tax purposes. The Company could only be an exempt company if it was beneficially owned by someone who was not a Jersey resident.

(iv) The question as to whether any additional owners would be introduced within six months of incorporation was answered in the negative;

Thus the information given to what was then the Financial Services Department ("FSD") of the States of Jersey was that the ultimate beneficial owner of the Company was to be Mr Clapp.

16. The Company was incorporated on 5th May, 1998, and the subscribing shareholders were Anchor Trust Company Limited and Anchor Management Limited. These were in-house companies of the Anchor Group which was run by Mr Shelton. The two Anchor companies appointed Mr Shelton and Mr Power (of Anchor) as the first directors. The first meeting of the directors was held on 5th May, 1998. Following the initial share issue of one share each to Anchor Trust Company Limited and Anchor Management Limited, Anchor Trust Company Limited transferred its single share to Pelegrin Nominees Limited ("Pelegrin") and Anchor Management Limited transferred its single share to Mr Dimsey. These transfers were approved by the directors who authorised the issuing of the relevant share certificates numbered 3 and 4. The meeting appointed Mr Dimsey and Mr Moignard (of DFM) as directors and Pelegrin as secretary.

17. At the conclusion of that meeting, Mr Shelton and Mr Power resigned as directors with effect from the end of the meeting and Anchor Secretaries Limited resigned as secretary. It follows that, at the conclusion of that meeting, the registered shareholders were Pelegrin (one of the companies in the DFM group run by Mr Dimsey) and Mr Dimsey (each holding one share) and the directors were Mr Dimsey and Mr Moignard. It also follows from the above board meeting that the administration of Astral appears to have passed to DFM and Mr Dimsey.

18. On 7th May, 1998, Mr Moignard sent a fax to Mr Clapp [note, not to Mr Harrod] telling him that Astral had now been incorporated.

19. Pelegrin and Mr Dimsey both executed declarations of trust dated 6th May, 1998, in respect of the single share which each of them held. The declarations of trust were in similar form and that of Pelegrin was as follows:-

"WE PELEGRIN NOMINEES LIMITED ... HEREBY ACKNOWLEDGE and declare that the company is the registered holder of the shares shown in the Schedule hereto as nominee of and trustee for Westminster Trust Company Limited, trustees of the OEEA Settlement (hereafter called "the Owner") and WE UNDERTAKE and agree not to transfer, deal with or dispose of the said shares or any of them save as the Owner may from time to time direct. And further to give full effect to the Trust hereby declared WE HEREBY DEPOSIT with the Owner the Certificate for the said shares together with a transfer thereof executed by the company in blank and WE HEREBY EXPRESSLY AUTHORISE and empower the Owner at any time to complete such transfer by inserting the name or names of any transferee or transferees and the date of the transfer and to complete the same in any other necessary particular. AND WE DECLARE that this authority is irrevocable to the company and WE FURTHER UNDERTAKE and agree to account to the Owner for all dividends and profits which may be paid to the company from time to time upon the said shares and for all other monies or profit which may be payable [and] to exercise the voting power as holder of the said shares in such manner and such purposes as the Owner may from time to time direct or determine.

Schedule

1 share No.3 of £1.00 each in Astral Enterprises Limited."

20. On 6th July 1998, Mr Dimsey wrote to Mr Clapp as follows:-

"Dear Gerald

Re Astral Enterprises Limited

Further to my telephone conversation I enclose copies of the documents regarding the Company which you required. I would confirm that I am holding the originals in the office.

I would suggest that if necessary that (sic) the original documents are possibly put into the safety deposit box held in the name of the trustees of the OEEA Settlement and I can discuss this point with you when I next see or speak to you."

21. According to Mr Clapp, Mr Dimsey placed the originals of the documents referred to in the safe deposit box with Midland Bank, details of which we have seen and which was in the name of "Westminster Trust Company Trustees of the OEEA Trust". He subsequently handed them over to Mr Clapp in March 1999. The documents were the original share certificates numbered 3 and 4 in the name of Pelegrin and Mr Dimsey respectively, executed share transfers in blank (i.e. with no transferee named) by Pelegrin and Mr Dimsey in respect of the share which each of them held and the two declarations of trust which we have just referred to.

22. On 1st February, 1999, the directors of Astral purported to hold a further board meeting. The directors were shown as Mr Dimsey and Mr Shelton. The minutes record that Mr Shelton was appointed as an additional director with immediate effect and Mr Moignard's letter of resignation was tabled and accepted.

23. There is unfortunately a defect in this minute. Mr Moignard is not shown as being present and accordingly the only director present initially was Mr Dimsey. Although Article 58 of the Articles of Association of the Company provides that the number of directors shall not be subject to any maximum but shall be at least one, Article 80 provides:-

"The quorum for the transaction of the business of the directors may be fixed by the directors and unless so fixed at any other number shall be two."

24. As Mr Moignard was not present, there was no quorum. Article 81 provides:-

"The continuing directors or sole continuing director may act notwithstanding any vacancies in their number, but, if the number of directors is less than the number fixed as the quorum, the continuing directors or director may act only for the purpose of filling vacancies or of calling a general meeting."

25. If Mr Dimsey had been the only remaining director, Article 81 would have come to the rescue and he could have acted for the purpose of appointing Mr Shelton as an additional director.

26. However, at the time of the meeting, there were still two directors, namely Mr Dimsey and Mr Moignard. Accordingly Article 81 does not assist and the appointment of Mr Shelton would appear to be defective.

27. On 22nd February, 1999, Mr Dimsey and Mr Shelton held a board meeting to record that a portfolio of shares had been gifted to the Company and should be accepted. Eight shareholdings are listed including shares in WSP Group Plc and 450 shares of Woolwich Plc. The only document we have been shown is that relating to the transfer of the 450 Woolwich shares, namely a copy of a stock transfer form showing that it was Mr Clapp who transferred these to Astral. This is consistent with the evidence of Mr Clapp that it was he who transferred the shareholdings in the various companies to Astral.

28. Although there is no reference to it in the minutes of Astral, it is clear that on 15th October, 1999, Mr Clapp transferred ownership of the Blandford property to Astral and we have seen the executed transfer form. The Blandford property has remained in the ownership of Astral since then. However it appears that the rental has continued to be paid to Mr and Mrs Clapp.

29. The next board meeting was held on 18th October, 1999, by Mr Shelton and Mr Dimsey. It appears that at this stage Mr Dimsey's business may have been winding down. In any event Mr Dennis Marshall and Mr Roger Barby (both of Anchor) were appointed as additional directors with immediate effect and Anchor Secretaries Limited was appointed as secretary. Mr Dimsey resigned as a director and Pelegrin resigned as secretary. As to the shareholdings, the minutes reported simply that requests had been received to make the following transfers:-

(i) 1 share from Pelegrin to Anchor Trust Limited;

(ii) 1 share from Mr Dimsey to Anchor Management Limited.

30. However, the minute does not specifically say that the transfer was approved or that the relevant share certificates were to be issued. It may be that this was because the original share certificates were in the possession of Mr Clapp. Indeed on 10th December, 1999, an administrator of Anchor wrote to Mr Clapp informing him that Mr Dimsey had resigned as a director and that Messrs Shelton, Marshall and Barby had been appointed as directors and Anchor Secretaries Limited as company secretary. The letter went on to say that, as the nominee shareholders were also changing, the administrators would at some time require the originals of share certificates 3 and 4 for cancellation, together with the relevant signed stock transfer forms and declarations of trust, all of which had to be cancelled and reissued. The administrator indicated that she understood these were presently in safe custody at the bank.

31. Despite the terms of that letter and of the minutes, Anchor seems to have proceeded on the basis that the two Anchor companies were now the registered shareholders. Thus share certificates number 5 and 6 dated 18th October, 1999, were issued in the name of Anchor Trust Company Limited and Anchor Management Limited respectively and those two companies issued declarations of trust in favour of Westminster Trust Company Limited. On 3rd May, 2000, the two companies issued new declarations of trust made out to Anchor Trustees Limited as trustee of the OEEA Trust, from which we infer that Anchor Trustees Limited had replaced Westminster Trust Company Limited (a company of Mr Dimsey's) as trustee of the OEEA Trust.

32. On 7th December, 2000, there was a board meeting at which it was resolved to sell the Company's holding of 4,666 WSP Group shares and on 26th January, 2001, there was a meeting to approve what was clearly an in-house transfer of one share in the Company from Anchor Trust Company Limited to Anchor Management Services Limited. Certificate number 7 was issued for one share to Anchor Management Services Limited which on the same date executed a declaration of trust in respect of that share in favour of Anchor Trustees Limited as trustees of the OEEA Trust.

33. At a meeting on 1st March, 2001, John Marshall was appointed as a director of the Company in place of Dennis Marshall. At a meeting on 27th February, 2002, John Marshall resigned as a director and Mrs M Murray was appointed as a director in his place.

34. On 26th September, 2002, Anchor wrote to Mr Clapp in connection with Astral stating that as a result of recent amendments in legislation, they had to update their procedures and record keeping. Accordingly they were writing to clients to obtain the documentary evidence needed to comply with those regulations. The letter asked if the relevant documentation could be provided in connection with Mr and Mrs Clapp together with their two children. A similar letter was written to Mr Clapp by Anchor on 11th November, 2003, in relation to the OEEA Trust.

35. On 4th December, 2003, a board meeting was held consisting of Mrs Murray and Mr Shelton which resolved that the Company should lend a small sum to the OEEA Trust in order that the Trust might settle fees due to Anchor.

36. The next meeting is dated 27th February, 2004, at which it was resolved to cancel a power of attorney dated 20th February, (no year is specified) which had been issued in favour of Mr Clapp for the purposes of appointing professional advisors or bringing or defending any legal proceedings in the United Kingdom. There was no resolution of the board of directors in connection with the issuing of that power of attorney. However we were referred to some correspondence on that topic. Initially, Mr Shelton as a director of Astral had sent a letter dated 7th February, 2003, to the Chancery Division confirming that Mr Clapp had the Company's authority to represent it in the Chancery Division proceedings (referred to at para 4 above) and to do all such matters as could be done by a director. That was clearly not sufficient because there is a letter dated 20th February, 2003, from Garcia Martin, solicitors, who were acting for Mr Clapp, to Astral in which they advised that the Registrar had required that a proper power of attorney should be signed by Astral in order to give Mr Clapp the necessary authority to act on behalf of the Company's affairs. There is then a letter dated 23rd February from Astral sending a power of attorney in favour of Mr Clapp to Garcia Martin.

37. The next minute in the Company's books is dated 12th January, 2004, at 2pm. Mrs Murray and Mr Shelton were present and the meeting was concerned with taking an assignment of the CMI bond from the OEEA Trust. The relevant part of the minute reads:-

"The Chairman reported that notification has been received from the trustees of the OEEA Trust who wholly own the shares in this Company to inform the directors that they intend to assign the remaining asset in the Trust being a CMI Bond issued by CMI Insurance Company Limited under policy number 2312920F dated February 1999 to this Company and thereafter have asked the Trustees to terminate the Trust.

IT WAS THEREFORE RESOLVED that (sic) Deed of Assignment between the Trustees and this Company be duly signed on behalf of the Company by Mr B Shelton Director and Mrs M M Murray of behalf of Anchor Secretaries Limited, Secretary with a fully signed copy to be attached to these minutes once signed by the Trustees." [Emphasis added]

38. A copy of the executed deed of assignment is indeed attached to the minutes but it is dated 12th January, 2005. Ultimately we think nothing turns on it but, given that fact and the positioning of the minute in the minute book, we think it most likely that the date of the board meeting has been mistyped and it was in fact held on 12th January, 2005, at 2pm rather than 2004. What is significant for present purposes is that the CMI bond was assigned by the trustees of the OEEA Trust to Astral and the minutes asserted on their face that Astral was wholly owned by the OEEA Trust. [As at January 2005, therefore, the assets owned by Astral were (1) the Blandford property and (2) the CMI bond, which had been purchased in 1998 for £105,000, and as ultimately realised for £166,918.]

39. On 7th May, 2004, Anchor wrote to Mr Clapp. The letter was headed "Re Astral Enterprises Limited / OEEA Settlement". The first paragraph read as follows:-

"Further to your meeting with Barry Shelton last week and your discussions for the future of the above entities, we should be obliged if you would let us know what your intentions for the company and trust are. If we are to terminate the trust and dissolve the company we would have to make arrangements to re-register the shareholdings currently held by the company into your own name, together with the insurance premium with Clerical Medical and the property at 14 Kingston Close, Blandford Forum, Dorset would also have to be re-registered."

There is no trace of any reply to that letter from Mr Clapp.

40. It is a matter of record that Anchor's ability to act as a company and trust administrator was coming to an end at this time. The judgment of the Royal Court in Anchor Trust Company Limited v Jersey Financial Services Commission [2005[ JLR 428 records that, following the introduction of registration of trust companies by the Financial Services (Jersey) Law 1998, such companies had to apply for registration by 2nd February, 2001. Under the transitional provisions all applicants were permitted to carry on business pending the grant or refusal of their application. Anchor's application was refused on 3rd March, 2005, after considerable exchanges, representations etc. over the previous year or two.

41. Against that background, there is a minute of Astral dated 12th January, 2005, at 3pm attended by Mr Shelton, Mr Barby and Mrs Murray, all of Anchor. As this is a significant meeting for the purposes of the present proceedings we quote below some of the relevant extracts from the minutes:-

"Transfer of Management

The Chairman reported that the Directors had received confirmation from the Trustees that the OEEA Trust, who wholly own the shares in this Company, that the services of Anchor Trust Company Limited as its managing Agents are no longer required, and that the Management and Control of the Company is to be transferred to John Stanley Harrod of Flat 7, 6/7 St Saviour's Road, Jersey JE2 7XN. [emphasis added]

Appointment of Directors

IT WAS THEREFORE RESOLVED to appoint Mr John Stanley Harrod as the new director of the company with immediate effect.

Resignation of Directors

IT WAS ALSO RESOLVED to accept letters of resignation from Mr B Shelton, Mr R Barby and Mrs M Murray as directors of the Company to be effective from the end of this meeting.

Appointment of Secretary

IT WAS ALSO RESOLVED to appoint John Stanley Harrod as the new Secretary of the Company with immediate effect.

...

Shareholders.

IT WAS ALSO RESOLVED that the 100 issued shares held in the nominee names be transferred as follows and that signed declarations of trust be prepared and signed, together with the appropriate share certificates to be duly signed by the new director and secretary of the Company.

Transferor Transferee Number of Shares

Anchor Management Limited Jane Helena Clapp 24

Anchor Management Limited Jane Helena Clapp 2

Anchor Management Limited Matthew Benjamin Clapp 24

Anchor Management Services Limited Jane Helena Clapp 50

Total 100

42. There were additional decisions recorded in the minutes of that meeting changing the registered office to Mr Harrod's address at Flat 7, 6/7 St Saviour's Road, St Helier, agreeing notification to the Land Registry to reflect the new registered office of the Company, closing the Company's bank account which was under the Anchor umbrella, and also resolving that all loans between the Company and the OEEA Trust be written off. It was finally resolved that the Company books should be sent to the new registered office.

43. There is a complication in relation to this meeting in that, although the minutes refer to the existing directors, Mr Shelton, Mr Barby and Mrs Murray having resigned with effect from the close of the meeting, the letters of resignation in the minute book are all dated 11th January, 2005, (i.e. the day before) and each states that such resignation is 'with effect from today's date'. Article 72 of the Company's Articles of Association provides:-

"The office of a director shall be vacated if:- .......

It would seem on the face of it therefore that Mr Shelton, Mr Barby and Mrs Murray had resigned on 11th January, and that accordingly there were no directors of the Company on 12th January.

44. Despite these minutes, no share certificates were ever issued to Mrs Clapp or Matthew Clapp, and the shares remained in the names of the two Anchor nominee companies. There is no explanation in the minutes as to how there were now apparently 100 shares in issue rather than only 2.

45. We should add that up to and including 1st January, 2005, the annual returns filed with the Companies Registry were consistent with the Company's records. In other words two shares in issue were shown and these were owned by various Anchor companies as described above except in relation to 1st January, 1999, when the shareholders of record were Mr Dimsey and Pelegrin Nominees Limited.

46. The next board meeting was purportedly held on 8th September, 2005. It is to be recalled that, on the face of it, there was only one director of the Company at that time, namely Mr Harrod who had purportedly been appointed on 12th January, 2005. He is not recorded in the heading to the minutes of 8th September as being present, but it is recorded in the first item that he was appointed chairman of the meeting and he has signed the minutes. The minutes record the appointment of John Marshall and Philip Stott (both of Martello Management Limited) as additional directors, with Mr Harrod resigning as both director and secretary. The registered office was transferred to Martello's office and it was recorded that Mrs Clapp transferred fifty of her shares to Martello Management Limited with the remaining twenty-six being transferred to Martello Trust Co Limited. Matthew Clapp was also recorded as transferring his twenty-four shares to Martello Trust Co Limited. However there is no evidence of any share transfers signed by Mrs Clapp or Matthew Clapp.

47. There was then a further board meeting dated 9th September, 2005, i.e. the following day. Mr Marshall and Mr Stott were present and the following entry is recorded:-

"It was noted that although the Company approved the transfer of 100 shares on 12th January 2005 from the Anchor group of companies to the Clapp family, the directors noted that the shares had never been issued and in any event there were only two shares in issue. The subsequent transfer of these 100 shares to the Martello group of companies was therefore also incorrect.

IT WAS RESOLVED that the 2 shares in issue be transferred as follows:-

Transferor Transferee No of Shares

Anchor Management Services Ltd Martello Management Ltd 1

Anchor Management Limited Martello Trust Co Limited 1

The board further decided to approve the affixing of the Company seal to share certificates 8 and 9 in respect of the above shareholdings."

The minute originally recorded the share certificates as 10 and 11 but this has been altered in manuscript to 8 and 9 to reflect the fact that certificates 8 and 9 had recorded the Martello companies as owning fifty shares following the meeting of 8th September, whereas the position was now corrected so that each Martello company owned only one share.

48. It is clear from the records that the minute of 9th September referred to in the preceding paragraph was factually correct. There had never been any resolution by the directors of Astral to issue more than two shares and the references to the total of one hundred shares in the minutes of 12th January, 2005, and 8th September, 2005, are inexplicable. No explanation is given as to why there are suddenly one hundred shares in issue and there are no entries in any of the Company's records which show any additional shares being issued.

49. What is of note is that the Martello companies issued declarations of trust. There are two undated declarations of trust whereby each Martello company states that it is holding fifty shares upon trust for Mr Harrod. They have been crossed through and there are then similar undated declarations of trust by each company in respect of one share in favour of Mr Harrod. In other words, although until September 2005, the registered shareholders were all holding as nominees for the trustees of the OEEA Trust, from 8th September, 2005, the registered Martello shareholders asserted that they were holding as nominees for Mr Harrod.

50. The Court has been shown a standard form produced by the Martello group. It is described as a 'company formation application' but Mr Marshall explained in evidence that it was also used by the group when it took over an existing company. That form is dated 8th September, 2005, and is signed by Mr Harrod as purported beneficial owner. Section 4 requires insertion of the name and address of the beneficial owner and it is Mr Harrod's name and address which appears there. Apart from this document, there is no documentary evidence to explain the apparent change in beneficial ownership of the Company from the OEEA Trust to Mr Harrod.

51. Administration of the Company by Martello only lasted some nine months or so because on 31st May, 2006, the next board meeting was held, at which time administration was transferred to the Nautilus group. Mr Stott and Mr Marshall were the directors present and four individuals from Nautilus were also present. The effect of the meeting was that the four representatives of Nautilus were appointed as the new directors with Mr Stott and Mr Marshall resigning from the end of the meeting. Nautilus Corporate Services Limited was appointed as secretary in place of Martello Secretaries Limited which resigned and the following purported transfer of shares took place, namely 51 shares from Martello Management Limited to Nautilus Nominee Services Limited and 51 shares from Martello Trust Company Limited to Nautilus Corporate Services Limited.

52. As can immediately be seen, this was a nonsensical minute. At the previous board meeting of 9th September, 2005, the directors (provided by Martello) had agreed that there were only two shares in issue and even the erroneous earlier minutes had only ever suggested that there were 100 shares in issue. Despite this Martello was now purporting to transfer a total of 102 shares. Clearly Martello was in a state of some confusion. Despite the minute of 9th September, 2005, which had recorded the correct position that there were only two shares in issue, the annual return filed by Martello on 1st January, 2006, stated that there were 100 shares in issue with fifty being held by each of the two Martello nominee companies.

53. Following the meeting of 31st May, 2006, the two Nautilus companies executed declarations of trust in respect of 51 shares in favour of Mr Harrod.

54. Mr Marshall appears to have moved to Nautilus and he clearly considered Mr Harrod to be the beneficial owner. When the Financial Services Compensation Scheme in England wrote to Astral as the parent company of Latham Hirst (which by then was in the process of being struck off) in June 2006 Mr Marshall sent the letter on to Mr Harrod for instructions although he does not appear to have received any reply.

55. On 27th January, 2007, Mr Clapp wrote a letter to Mr Marshall at Nautilus headed 'Astral Enterprises Ltd, OEEA Trust'. In that letter he complains about having received an invoice from Nautilus and says that he knows nothing of them (i.e. Nautilus) and has not given instructions to them. The letter includes the following passages:-

"As you know I have an agreement with you [i.e. Mr Marshall] to pay you an annual fee for keeping Astral and OEEA with a Jersey address and simply filing the annual non-trading return for Astral.

The one director if (sic) John Harrod, whom I remunerate separately.

I have given no instructions to Nautilus and neither have I been invited by them or you to do so.

You told me in no uncertain terms when we met that you shared my disgust with Barry and Anchor for emptying my sterling and dollar accounts with NatWest in Guernsey (and transferring them and appointing themselves as authorised person with The Bank of Scotland within their own company bank accounts).

We discussed my original agreement with Dermot, which he failed to tell me had evidently been assigned by him to Barry and Anchor and you also told me of the appalling way they acted and behaved to you.

I am obviously reluctant to suddenly find that Nautilus have assumed the rights to invoice me for work they intend or may decide or would like to do for me and I need to meet you and agree any possible alternative to the existing agreed arrangements, acceptable to us both.

...

As regards the 'urgent' letter that John Harrod sent to me via Theresa (and now faxed onto me by Martin Osment), I am unaware as to why Mr Grimshaw of Nautilus is seeking information from him.

As I need to visit Jersey to arrange for the two companies to have facilities, I shall hope to meet you shortly and look forward to doing so.

In the meantime I assume Astral is still within the annual period of reporting and the fees already paid."

The letter was copied to Mr Harrod with a covering note saying "John - thanks for sending the letter via Theresa and see you soon - Gerald". There is also a manuscript note on the letter by John Marshall indicating he has spoken to Mr Clapp who said he would contact Mr Marshall on his next visit to Jersey.

56. On 19th July, 2007, a manager at Nautilus wrote to Mr Clapp to inform him that John Marshall had left the employment of Nautilus in June 2007 and he had taken over responsibility for the clients previously under his administration. He said that having reviewed the files, the records provided by John Marshall indicated that John Harrod was the beneficial owner and that Nautilus had been seeking various information from him (Mr Harrod) which had not been returned. The letter emphasised that in order for Nautilus to continue to provide services, the outstanding fees and queries would need to be dealt with.

57. There then followed various letters from Nautilus to Mr Clapp seeking payment of its fees as to which there was no reply until eventually on 10th August, 2007, Mr Clapp wrote stating that he had never authorised or invited Nautilus to act for him and sending them an invoice for £350 for "inconvenience caused by persistent demands for money for claimed client relationship". The letter said that he had had a bad experience with Anchor but he had then met Mr Marshall who came highly recommended by a mutual friend. He had discovered that Mr Marshall had apparently joined Nautilus but had now left.

58. Not surprisingly this provoked a somewhat irritated response from Nautilus dated 15th November, 2007, in which it was asserted that they were informed by Mr Marshall that Mr Harrod was the beneficial owner of the Company and they had requested compliance information from him. The letter went on to say "If you are stating you are the beneficial owner, I will need to see proof of your entitlement to the shares.....". Mr Clapp's somewhat feisty response of 21st August [it is unclear whether this should be November 2007] stated that Nautilus had been incorrect in stating that Astral was owned by Mr Harrod and he was not interested in what Mr Marshall may have told Nautilus. He reaffirmed that Nautilus had never received any authorisation direct from Astral and he copied the letter to Mr Harrod.

59. On 21st December, 2007, Nautilus wrote further to Mr Clapp reminding Mr Clapp of the outstanding fee position and pointing out that Nautilus had taken over from Martello as Martello had not been able to secure an appropriate licence from the Jersey Financial Services Commission to conduct trust company business and that Nautilus understood that Mr Marshall had written to his entire client base advising them of this action in the early part of 2006. Despite further letters to Mr Clapp pointing out that the annual return could not be filed without fees, nothing further was heard from Mr Clapp.

60. Eventually on 6th May, 2008, Nautilus wrote to Mr Clapp stating that they had closed their files and written off all outstanding fees. They confirmed that they had arranged for all directors and the company secretary to resign from office and they would no longer be providing the registered office to the Company. The letter also sent what were described as copies of executed stock transfer forms transferring the issued shares from Nautilus into the name of Mr Harrod as he was the individual who their records indicated as being the beneficial owner. The original transfers dated 6th May, 2008, appear to have remained with the Company books. The Company books also contain the original resignation of all the directors and Nautilus as secretary with effect from 6th May, 2008.

61. Despite this, two of the Nautilus directors appear to have held a further board meeting on 28th August, 2008, at which they appointed Mr Clapp as the director of the Company with all the Nautilus directors resigning as directors with effect from the date of their letters of resignation, together with Nautilus resigning as secretary. A copy of that minute was sent by Nautilus to Mr Clapp on 28th August pointing out that he was now the director of the Company and that the Company was his responsibility.

62. Earlier, on 25th October, 2007, a letter from Mr Harrod's address had been sent on his behalf by a Mr Christian Daley to Mr Clapp concerning Astral. It claimed a total of £10,000 for outstanding fees to Mr Harrod in respect of the Company. The relevant parts of the letter were in the following terms:-

"As you are fully aware Mr John Harrod has been acting on your instruction regarding Astral Enterprises Limited and has accumulated unpaid time and expenses.

It has been estimated that cost of registration and loss of earnings.

2006 Company registration £180.00

2006 unpaid company secretary fees £4,820.00

2007 Company registration £180.00

2007 unpaid company secretary fees £4,820.00

Total due to date: £10,000

I must inform you that unless these payments are meet in full to Mr Harrods address before the close of business Fri. 9th November 2007 I will be instructing Mr Harrod to hand over all information in his possession and formal legal action will be sanctioned....".(sic)

We observe that this would be a very strange letter for a beneficial owner to write to someone who did not have any ownership interest in the Company. It is much more akin to a letter to the owner from someone who is providing professional services to the Company.

63. On 30th June, 2008, the JFSC wrote to Astral at Nautilus House giving notice that the Company would be dissolved at the expiry of three months unless the annual return was filed and this was sent on to Mr Clapp by Nautilus on 1st July, 2008. As mentioned earlier Astral was duly dissolved on 1st October, 2008, pursuant to Article 205 of the Companies (Jersey) Law 1991 because it had not filed its annual return for January 2008.

64. In 2013 Dr Osment acted to assist Mr Clapp in reinstating Astral. He wrote to the JFSC on 8th August, 2013, and the accompanying memo stated that the beneficial owner of Astral was the 'Clapp family trust called OEEA' and went on to say that Mr Clapp had been introduced to Mr Harrod as a suitable person to be the local director of Astral. As the effective settlor of the OEAA Trust, Mr Clapp had appointed Mr Harrod as the director of Astral. The JFSC responded on 12th August, 2013, explaining what was necessary for a company to be reinstated. There were then various exchanges between Dr Osment and Nautilus in the course of 2013 about the possibility of reinstatement but nothing further seems to have happened at that stage.

65. Mr Clapp had instructed Dr Osment in writing by letter dated 24th August, 2013, which was headed "Astral Enterprises (Jersey) Limited No. 71635 (the Company) and OEEA Trust". The relevant parts of the letter read:-

"As you know, I was the original settlor of the trust, and appointed Mr Dimsey of Westminster Trust in Jersey to deal with the affairs, which were principally to set up a fund for my wife and sons. This led to the formation of the Company. The affairs are now however in a mess, and need sorting out.

I am pleased to confirm my previous request to you to investigate these matters and find out how to resolve them, primarily focussed upon recovering control of the two core assets:-

The Clerical Medical Bond held in the Isle of Man

The property in Blandford, Dorset

I enclose a letter of authority to enable you to discuss this matter with all relevant bodies and persons, and authorising the giving of information. Once you are fully appraised of the situation, I then wish to discuss with you the steps to be taken to resolve the matters."

66. In due course, as already mentioned, Mr Clapp presented a representation dated 8th May, 2015, to reinstate the Company as a result of which it was reinstated on 19th May, 2015.

67. Following reinstatement of the Company, the Court has seen two rival versions of corporate actions purportedly taken since then. Mr Clapp and his son purported to hold a meeting of shareholders on 27th May, 2015, (Mr Jordan Clapp holding a form of proxy from Mrs Clapp). The meeting noted that the only two shares ever legitimately issued were the two subscriber shares and that these had been transferred to Mr Clapp and Mrs Clapp. This appears to be a reference to the transfers executed by Mr Dimsey and Pelegrin (as described at paragraphs 20 and 21 above). The meeting purported to confirm the appointment of Mr Clapp as a director and Mrs Clapp as company secretary and that Mr Harrod had resigned as a director on 8th September, 2005.

68. By way of contrast the Court has also seen minutes of a meeting on 21st August, 2015, attended by Mr Harrod, Mr Trigwell, Dr Osment and Ms Teresa Day. This records that, following the reinstatement of the Company, Mr Harrod is confirmed as the beneficial owner of the Company. The meeting was initially a meeting of shareholders (comprising Mr Harrod) and Mr Harrod appointed himself as director. Thereafter he held a board meeting and appointed Mr Trigwell and Dr Osment as additional directors and Ms Day as secretary. The board then noted the transfer of 102 shares to Mr Harrod from Nautilus Nominee Services Limited and Nautilus Corporate Services Limited and also noted the transfer dated 21st August, 2015, of 102 shares by Mr Harrod to Mr Trigwell."

14. From those documents (and without consideration of the witness evidence) the inevitable conclusion is that Mr Harrod was not involved with the formation of Astral in (or before) 1998, had no involvement in putting assets into Astral, and served as a director and secretary for some months in 2005. It is difficult to see any basis for a contrary conclusion that Mr Harrod was at all times the beneficial owner. We cannot see any basis for questioning the conclusion and approach in paragraphs 123(ii) and (iv) of the Royal Court's Judgment:-

"(ii) We are satisfied therefore that the evidence that the Company was beneficially owned by the OEEA Trust from incorporation until 8th September, 2005, is overwhelming. There is not a single contemporaneous document which suggests or even implies that Mr Harrod may have been the beneficial owner up to this point.

....

(iv) Given our finding that the Company was not owned for the benefit of Mr Harrod before 8th September, 2005, we have considered whether there is any evidence of a transfer of ownership at that point. We have not been referred to any written document which supports such a transfer (other than the declarations of trust referred to)."

15. The Appellant's original claim, as summarised in his Representation, and supported in particular by the untested Affidavit evidence of Mr Harrod, and the evidence of Dr Osment and Mr Marshall, was that Mr Harrod had at all times been the beneficial owner of Astral - it was his company. As noted above, this is not supported by the contemporaneous documents, and by the time the appeal was presented to us, the Appellant's submission had moderated. Indeed, when the Appellant was asked for clarification of his position in this respect, he agreed that he did not assert that Mr Harrod had any interest in Astral before 2005. His case before us was to accept that Astral was created for, and beneficially owned by, the Respondent (directly or through the OEEA Trust), but that sometime in 2005 the position changed and the Respondent somehow disclaimed his interest in the Astral shares in favour of Mr Harrod, in satisfaction of substantial fees said to be owed to Mr Harrod by the Respondent. It is correct, as noted above, that Mr Harrod was for a short time in 2005 both director and secretary of the Company, but the claim (in 2007) for payment of fees earned in 2006 and 2007 is wholly inconsistent with this contention. Indeed, the Appellant's present case before us is wholly inconsistent with the written evidence given at trial by Mr Harrod, who claimed to be the beneficial owner of Astral from its incorporation, and also inconsistent with the evidence given at trial by Dr Osment, which purported to support Mr Harrod's account. In the circumstances, it is difficult to see how an appeal can successfully be brought against the Royal Court's findings of fact when the Appellant himself disagrees with the oral evidence that was adduced ostensibly in support of his own case at trial.

16. Against that background, and conscious that the Appellant was not represented before the Royal Court or before us, it is necessary therefore to examine with care how the Royal Court considered and addressed the post-2005 history.

17. The Royal Court, at paragraphs 123(iii) and 123(v) to (ix) and by reference to the witness evidence (and the documents), addressed this central factual argument - was there any material to support a conclusion that there had been a transfer of ownership from the Respondent (or the Clapp family trust) to Mr Harrod in or after 2005? At paragraph 123(xii) the Judgment addresses the bill sent by Mr Harrod to the Respondent in October 2007, concluding that it is "wholly inconsistent with Mr Harrod being the beneficial owner of the Company but is consistent with his acting as a director or providing services for a company owned by the recipient of the letter". The overall decision is at paragraph 124:-

"In summary, we have no hesitation in concluding that the Company was established by Mr Clapp for the benefit of his family and that Mr Harrod had nothing to do with the establishing of the Company. Mr Harrod acted as a local director for a period in 2005 but was never the beneficial owner of the Company. There was no transfer of beneficial ownership from the Clapp family (through the OEEA Trust) to Mr Harrod in 2005 and the declarations of trust to that effect by Martello (and subsequently Nautilus in reliance upon Martello's records) were incorrect and of no effect. All the assets in the Company had been contributed by Mr Clapp and he did not intend to give them to Mr Harrod."

18. On the basis of the evidence presented to the Royal Court, and summarised in its Judgment, this is a conclusion which appears to us be sound and unsurprising. There is no obvious reason why, as the Appellant submitted, the Respondent would choose to disclaim his interest in Astral in 2005 when the company had:-

(i) a property in Blandford, originally bought by the Respondent and later transferred to Astral, the income from which was and at all times has been paid (indirectly) to the Respondent and his wife;

(ii) apparently, the majority of the shares in Latham Hirst Limited, an English company registered in England as an insurance broker.

A disclaimer of that underlying value (with or without the CMI bond transferred to Astral in 2005) might be thought to require more explanation than the mere assertion that Mr Harrod was owed an unquantified debt by the Respondent, details of which were unproven (even if claimed, in the 2007 letter from Mr Harrod, at the round figure of £10,000).

19. What is striking from the evidence is that there is not only nothing to suggest that Mr Harrod was the beneficial owner of Astral between 1998 and 2005, but also nothing to suggest that in 2005 the Respondent gifted to him the substantial assets listed above. Indeed, it emerged in the course of oral argument in this appeal that the Appellant's belief that Mr Harrod became the beneficial owner of Astral in 2005 is based not on any first-hand knowledge on the part of the Appellant, but purely on inference and assumption, derived from the declarations of trust made by Martello and Nautilus, described in paragraphs 49-51 of the Judgment. For his part, Mr Harrod does not mention in his affidavit (let alone give any reason why, or identify any document suggesting) that the Respondent gifted any assets to him. For Mr Harrod, it was total beneficial ownership from 1998, or nothing.

20. We now turn to the various grounds of appeal in order to test our preliminary conclusion.

The grounds of appeal

21. As mentioned above we have identified 5 grounds of appeal.

Ground 1 - The Respondent asserts ownership of the Astral "even though he does not have the shares which he claims ownership of".

22. The Appellant clarified in his oral submissions to us that this was simply a claim that the Respondent had never had the shares in Astral registered in his own name. But this is based on a mistaken belief that the Respondent cannot claim to have been the beneficial owner of Astral, or to challenge Mr Harrod's claim to beneficial ownership, without himself being registered as the legal owner of the issues share capital of the company. That is plainly wrong. Legal and beneficial ownership are separate concepts, and the fact that the Respondent was never the registered shareholder of Astral proves nothing as to beneficial ownership.

23. Furthermore, according to paragraph 113 of the Judgment, summarising the evidence of the Respondent, Mr Dimsey sent to the Respondent "copies of completed share transfer forms signed by Mr Dimsey and Pelegrin, declarations of trust and the original share certificates". It continues (with emphasis added) - "The originals were handed to him in person and were placed in a safe deposit box. The originals were still in his possession and indeed he produced them to the Court at the hearing." Returning to the summary of the documentary evidence, at paragraph 21 of the Judgment (see para 10 above), these were "original share certificates numbered 3 and 4". The Appellant does not challenge these paragraphs in the Judgment. At paragraph 123(xiii) the Royal Court concluded that the Respondent "was essentially a truthful witness and his evidence was consistent with the documentary evidence". The Royal Court also addressed whether there had been valid share transfers from Mr Dimsey and Pelegrin (see paragraphs 127 and 128), and this remains unresolved. But whether or not there was a valid transfer in 1999, it remains clear that Mr Harrod was not then a shareholder, and the beneficial owner was the OEEA Trust, not Mr Harrod - as the Appellant accepted before us on the hearing of the appeal.

24. As for the "assertion of ownership", and the claim to ownership of the shares in Astral by the Respondent, that appears to be a reference to the May 2015 application for restoration to the Register and the Annual Return submitted by the Respondent in which he claims:-

"... in 1998 I, alone, instructed and remunerated Mr Dermot Dimsey to incorporate Astral Enterprises Ltd and that I hold the only two share certificates issued for one share each to Mr Dimsey and Pellegrini Nominees Ltd respectively and both transferred to me on the 29 March 1999 by signed Stock Transfer form".

25. That this was the correct position was accepted by the Royal Court, but with the important caveat that the 1999 transfers may not have been valid - see paragraph 128 of the Judgment.

26. We reject this ground.

Ground 2 - The Royal Court should not have rejected the evidence of Dr Osment, Mr Marshall (and the unchallenged written evidence of Mr Morgan).

27. There is a careful, and detailed, description and analysis of the evidence of Dr Osment and Mr Marshall in the Royal Court's Judgment - see paragraphs 79-92, and 93-99. Those paragraphs have to be read together with the references to their documents in earlier paragraphs.

28. We remind ourselves of the test to be applied when there is a challenge to the Royal Court's acceptance or rejection of oral evidence. There is consistent case-law in this jurisdiction that the Court of Appeal will only overturn such findings of fact where it concludes that the Royal Court's findings are clearly or plainly wrong - see Hyams v English (1981) JJ 89, at pp.95-96, Jones v Plane (2006) JLR 438, at para 27-30, and Reg's Skips v Yates (2008) JLR 191 at paras 99-101. As explained by Lord Hope of Craighead in Thomson v Kvaener Goven Ltd [2004 SC (HL) 1, at paras 16-17]:-

"16. The rule which defines the proper approach of an appellate court to a decision on fact by the court of first instance is so familiar that it would hardly be necessary to repeat it, were it not for the fact that it appears in this case to have been overlooked. In Clarke v Edinburgh and District Tramways Co [1919 S.C. (H.L.) at 37; [1919] 1 S.L.T. at 248], Lord Shaw of Dunfermline said that the duty of the appellate court, not having the privileges, sometimes broad and sometimes subtle, of the judge who heard and tried the case, was to ask itself whether it was in a position to come to a clear conclusion that the judge who had these privileges was plainly wrong. The words 'plainly wrong' were picked up and repeated by Lord Macmillan in Thomas v Thomas [1947 S.C. (H.L.) at 59-60; [1948] S.L.T. at 8] when he said (pp 59-60):

'So far as the case stands on paper it not infrequently happens that a decision either way may seem equally open. When this is so, and it may be said of the present case, then the decision of the trial judge, who has enjoyed the advantages not available to the appellate court, becomes of profound importance and ought not to be disturbed. This is not an abrogation of the powers of a court of appeal on questions of fact. The judgment of the trial judge on the facts may be demonstrated on the printed evidence to be affected by material inconsistencies and inaccuracies, or he may be shown to have failed to appreciate the weight or bearing of circumstances admitted or proved, or otherwise to have gone plainly wrong.

.-�.-�.-�If the case on the printed evidence leaves the facts in balance, as it may be fairly said to do, then the rule enunciated in this House applies and brings the balance down on the side of the trial judge.'

17 As Lord Stott observed in his dissenting opinion in McLaren v Caldwell's Paper Mill Company Ltd [1973] S.L.T. at 168], a Lord Ordinary's view on the credibility or reliability of a witness is not sacrosanct. But the jurisdiction of the appellate court must be exercised within narrow limits where the only issue is whether it should take a different view from that which the trial judge formed on the facts. Viscount Simon said in Thomas v Thomas (p 48) that Lord Greene MR had admirably stated the limitations to be observed in the course of his judgment in Yuill v Yuill. In that case [[1945] P. at 19] Lord Greene MR said (p 19): 'It can, of course, only be in the rarest of occasions, and in circumstances where the appellate court is convinced by the plainest of considerations, that it would be justified in finding that the trial judge had formed a wrong opinion."

29. It is clear from the judgment that the Royal Court had serious reservations in relation to the evidence given by witnesses called by the Appellant - Mr Harrod, Dr Osment, Mr Marshall, and Mr Chambers. Mr Harrod swore an affidavit claiming that he had been the beneficial owner of Astral since its incorporation. He was not well enough to give evidence, and his statement was not tested by cross-examination. The Royal Court therefore considered this statement against the contemporaneous documents. We have also had the advantage of the Appellant's submissions referred to above at paragraphs 8 to 10. Both Dr Osment and Mr Marshall were cross-examined. The Royal Court noted conflicts in Dr Osment's evidence, paragraph 89 of the Judgment ending as follows (with an additional word, missing from the original, inserted):-

"Dr Osment admitted that he [had] no immediate explanation for this conflict."

Mr Marshall's evidence was also summarised, ending (at paragraph 99 of the Judgment):-

"He accepted that ultimately Martello has made out declarations of trust on the uncorroborated assertion by Mr Harrod that he owned the Company".

The Royal Court explains, at paragraphs 123(vi) and (vii) of the Judgment, why Mr Marshall's evidence was considered to be unsatisfactory (the date in the second line should read 1998 not 1988), and Dr Osment's evidence not accepted. The reasons appear to us to be sensible, and consistent with the contemporaneous documents examined by the Court.

30. It is striking that, even in relation to Mr Chambers (who was not involved at the time of the supposed transfer of beneficial ownership to Mr Harrod in 2005), the summary of his evidence (Judgment at paragraph 105) ends with a reference to there being uncertainty "as to who was in fact the beneficial owner". We have read the transcript of Mr Chambers' evidence. It supports the comment. See, for example, from pages 10 and 11:-

"... the records that Martello handed over to us were not of good quality, so whilst we have John Harrod as beneficial owner of record, I wasn't so certain that he was the beneficial owner of record because the record quality was not good".

"Commissioner: ... You were saying that you weren't entirely confident of the beneficial ownership position because of the quality of the records you received.

Mr Chambers: Absolutely."

This is repeated later in the record of Mr Chambers' evidence, at pages 27 and 28.

31. The summary of the evidence of the various witnesses does not appear to us to be unfair, or materially incomplete. If anything, the comments in the Judgment on, for example, the evidence of Dr Osment are restrained when there could legitimately have been more severe criticism.

32. What then of Mr Morgan? The Appellant relies strongly on his unchallenged letter of 20 December 2006, and his affidavit of 24 August 2016. The December 2006 letter does not advance the Appellant's case. It ends by stating that Astral was "the controlling shareholder of Latham Hirst Ltd", which does not assist at all in establishing that Mr Harrod was the beneficial owner of Astral. In paragraph 6 of his Affidavit, Mr Morgan states that he does not know "John Harrod", and he ends his written evidence as follows:-

"From what Gerald Clapp did tell me, I would never have deduced that he owned Astral - He always told me that he took instructions from the principals in Jersey, but never said who they were".

This evidence (summarised at paragraphs 106-107 of the Royal Court's Judgment) is a very long way from establishing that Mr Harrod was the beneficial owner. We cannot find a basis for disagreeing with the conclusion at paragraph 123(xv) that Mr Morgan's affidavit does not take the matter very far.

33. The findings of the Royal Court in relation to the evidence relied on by the Appellant, and the witnesses called are not, in our opinion, plainly wrong. Indeed, the findings appear to us (in light of the documentary evidence, summarised above, which we have also considered) as inevitable. In any event, on the crucial question of the beneficial ownership of Astral on its incorporation in 1998, and at all times until 2005, the Appellant now accepts that the evidence of Mr Harrod and of those supporting him was wrong.

34. Before leaving this ground of appeal, we note that the Appellant (particularly in his Skeleton Argument) stated that he was continuing to challenge "Mr Clapp's version of the facts", and "Mr Clapp can choose to confirm or deny it he returned to the witness box"; adding "I would ask the Court to invite Mr Clapp to return to the Witness Box to respond". We have not seen any basis upon which we could order some form of retrial of the facts, and we firmly reject the invitation to reopen the oral evidence, or (in particular) invite the Respondent somehow to continue his evidence.

Ground 3 - The Royal Court should not have accepted the oral evidence of Mr Chambers casting doubt "as to the veracity of the information in Astral's files".

35. We have already touched on this ground of complaint under Ground 2. The Royal Court's particular focus was on the declarations of trust in Mr Harrod's favour made by Martello and Nautilus in 2005, which were described in the Judgment as "erroneous". As noted in paragraph 50 of the Judgment o "Apart from this document [a reference to a company formation application signed by Mr Harrod], there is no documentary evidence to explain the apparent change in beneficial ownership of the Company from the OEEA Trust to Mr Harrod". The 2005 documentation for Astral is odd, and requires explanation - see, for a summary, paragraphs 41 to 52 of the Judgment. It is impossible to reconcile (on the face of the documents) the statement in the Astral minute of 12 January 2005 (para 41 of the Judgment) that "the Directors had received confirmation from the Trustee that the OEEA Trust, who wholly own the shares in this Company" with the statement a few months later, in September 2005, that each Martello company was holding fifty shares upon trust for Mr Harrod (who, according to the records, had acted as Director and Secretary only between 12th January and 8th September). Furthermore, the minutes for January 2005 refer to the transfer or management and control of Astral to Mr Harrod - not the transfer of ownership. As already noted, Mr Harrod undertaking a role as a director (and secretary of Astral is perhaps consistent with the claim in October 2007 for "unpaid company secretary fees" for 2006 and 2007, but wholly inconsistent with an earlier transfer of beneficial ownership of the shares in Astral.

36. The doubt as to the veracity, and reliability, of the information in the Astral files arises from the documents themselves. The witnesses relied on by the Appellant were unable to explain the inconsistencies, and Mr Chambers merely adds his own conclusion and confirmation that the documents, particularly the documents handed over by Martello, were of poor quality. Whether the unreliability arises from incompetence or something more disturbing does not need to be resolved. The Royal Court was entitled to conclude (1) that the documents all support the conclusion that at least until 2005, the OEEA Trust, and not Mr Harrod, was the beneficial owner of Astral, and (2) there is nothing in the company documents (or in the evidence generally) to explain why Mr Harrod should suddenly (and for no reason) become the beneficial owner in 2005.

37. There is nothing in this ground.

Ground 4 - The Royal Court acted unfairly to the Appellant, and thereby putting him at a disadvantage, by allowing Mrs Clapp to speak on the Respondent's behalf, but refused to allow Dr Osment to speak for the Appellant.

38. The Royal Court gave reasons for allowing the Respondent to be represented by his wife, summarising the applicable legal principles, and also explaining why the Commissioner decided not to allow Dr Osment to be allowed to speak and conduct the case on the Appellant's behalf - see paragraphs 132-145 of the Judgment. We do not see any error of law in those paragraphs. We would go further, in relation to Dr Osment, and state that it would be a wholly exceptional case, where otherwise there would be a denial of justice, to allow a central witness for a party (such as Dr Osment) to be permitted not only to speak on behalf of the party, but also to be permitted to cross-examine the other party (or his/her witnesses) who are presenting a contrary view of the facts. This is not such a case.

39. In his Affidavit, at paragraph 27(8), the Appellant states that the refusal to allow Dr Osment to speak put him at a severe disadvantage "as both Mr and Mrs Clapp have advocacy training, and I do not". This is not accepted by the Respondent.

40. However, whether or not Mrs Clapp had advocacy training is beside the point, as the main reason for allowing her to represent her husband was because of the medical assessment before the Royal Court that "Mr Clapp had the capacity to be a witness but did not have the capacity to present his case".

41. Accordingly, we reject this ground of appeal.

Ground 5 - The Royal Court failed to address the Appellant's "multiple legal submissions" including those set out in a witness statement for the QBD proceedings dated 23 October 2017.

42. The Royal Court decided the question of beneficial ownership on the basis of the facts presented to it. It was perhaps unnecessary for the Royal Court to go further and examine the various legal arguments relied on by the Appellant. We have, however, decided that we should address the arguments, even if only briefly, in this judgment. For the reasons summarised below, we do not consider that any of the various legal issues that the Appellant seeks to raise can affect that factual outcome.

43. In his Affidavit, in the Skeleton Argument handed up to us, and (in particular) in a Witness Statement in the QBD exhibited to the Affidavit, the Appellant makes the following overarching legal submission, that the decision of the Jurats, the fact-finding members of the Royal Court, "totally overrode Jersey Law .. as to shareholders, company records and time limits" and that the Commissioner "evidently lacked the power to apply Law over the verdict of the Jurats". The particular complaints are:-

(i) As the Royal Court "found Mr Clapp to have been a shareholder in fact (but not recorded in documentation)", the Jersey limitation, or prescription, period applied (see "Article 41 of the Law" - a reference to Article 41(5) of the Companies (Jersey) Law 1991), and "Mr Clapp is well out of time for this to be rectified".

(ii) Nothing that Astral does is ultra vires - see Article 18 of the Companies (Jersey) Law 1991; and a director's acts are valid "notwithstanding defects in his qualification", relying on Articles 80 and 212 of the same Law.

(iii) If there was any breach of duty by Mr Harrod, relying on Article 74(2) of the Companies (Jersey) Law, on the transfer of the company (Astral) from Mr Harrod to the Appellant, "the Appellant exonerated Mr Harrod by re-appointing him", and this "justifies Mr Harrod's actions whilst be believed he was the Beneficial Owner of Record (BOOR) and a director".

(iv) The fact that Astral has been restored to the Register "restores the company as if it has never been struck off, thereby validating all back actions" - relying on the Jersey Financial Services Commission letter of 26 May 2015.

(v) It is contrary to public policy for the Courts in Jersey to give aid to the Respondent who has been "dishonest in concealing information, uttered statements he knew were untrue, and in making a prayer which was untrue".

44. We will consider these complaints in turn.

Limitation/prescription

45. The Appellant's argument in this regard is again founded on the mistaken belief that the appeal is concerned with the Respondent's status as a shareholder - i.e. as a registered member of Astral. It is not. It is concerned with the question of beneficial ownership.

46. Article 47 of the Companies Law provides for the rectification of the share register, by application to the court. The possibility of such an application by (for example) Mrs Clapp is touched on by the Royal Court in paragraph 130 of the Judgment under the heading "the future". There is no time limit in Article 47, but the court has the power to refuse the application under Article 47(2). Article 41(1) imposes an obligation on every company to "keep a register of its members" and enter in it certain information. Article 41(2) provides - "If a company fails to comply with this Article, the company and every officer of it who is in default is guilty of an offence".

47. The Appellant relies on the period of limitation or prescription in Article 41, set out in (4) and (5):-

"(4) An entry relating to a former member of the company may be removed from the register after 10 years from the date on which the member ceased to be a member.

(5) Without prejudice to any lesser period of limitation or prescription, liability incurred by a company from the making or deletion of an entry in its register of members, or from failure to make or delete any such entry, is not enforceable more than 10 years after the date on which the entry was made or deleted or the failure first occurred."

48. Article 41(4) is clearly not relevant. Nor, in our opinion, is Article 41(5). It is concerned to set a limit on the enforcement of liability for making or deleting an entry in the company's register, or a failure to make or delete such an entry. It does not purport to limit the power of the Court to consider an application for rectification of the register, and Article 47 is not said to be subject to Article 41.

49. In any event, there is nothing in Article 41 to prevent the Royal Court from determining who, at the material times, was the beneficial owner of Astral. Beneficial ownership is not a matter to be recorded on the register - see Article 48 of the Companies (Jersey) Law:-

"(1) No notice of a trust, express, implied or constructive, shall be receivable by the registrar or entered on the register of members.

(2) The register of members is prima facie evidence of any matters which are by this Law directed or authorized to be inserted in it."

50. The provisions of these Articles did not prevent the Royal Court from making its decision that Mr Harrod was not, at any time, the beneficial owner of Astral.

Ultra vires & Article 80

51. Article 18(1) of the Companies (Jersey) Law 1991 does not have any relevance to the issues that were before the Royal Court. It provides:-

"(1) The doctrine of ultra vires in its application to companies is abolished and accordingly the capacity of a company is not limited by anything in its memorandum or articles or by any act of its members."

52. The doctrine of ultra vires is concerned with the corporate capacity of a company. There was no suggestion in this case that Astral had done anything that was beyond its corporate capacity, and the Judgment against which the Appellant is appealing is not based on any finding of ultra vires. Accordingly, the operation of Article 18 has no relevance to the issues in this appeal.

53. Turning to the position of the directors, Articles 80 and 212 provide:-

"80. The acts of a director are valid notwithstanding any defect that may afterwards be found in the director's appointment or qualification."

"212(1) If in proceedings for negligence, default, breach of duty or breach of trust against an officer of a company or a person employed by a company as auditor it appears to the court that that officer or person is or may be liable in respect of the negligence, default, breach of duty or breach of trust, but that the person has acted honestly and that having regard to all the circumstances of the case (including those connected with his or her appointment) he or she ought fairly to be excused for the negligence, default, breach of duty or breach of trust, the court may relieve the person, either wholly or partly, from his or her liability on such terms as it thinks fit.

(2) If an officer or person mentioned in paragraph (1) has reason to apprehend that a claim will or might be made against the person in respect of negligence, default, breach of duty or breach of trust, he or she may apply to the court for relief; and the court on the application has the same power to relieve the person as it would have had if proceedings against him or her for negligence, default, breach of duty or breach of trust had been brought."

54. Article 80 is irrelevant. The core issue concerns the beneficial ownership of Astral, not the validity of any acts done, or purported to be done, on its behalf. As such, the Appellant misses the point when he says that the effect of Article 80 is to "authorise all that Mr Harrod did, regardless of any complaints which Mr Clapp might latterly raise, based upon his expecting English, not Jersey Law to apply in Jersey". The beneficial ownership of a company is not in the gift of its directors, and accordingly it does not assist the Appellant to try upholding the validity of "all that Mr Harrod did" (whatever that is intended to mean).

55. In any event, from the summary of the documents, set out in paragraph 13 above, it is clear that Mr Harrod did nothing of significance in relation to Astral before January 2005 when he was appointed director and secretary. But even if that appointment was valid (or validated by Article 80), the same document (paragraph 41 of the Judgment) records that at the meeting it was resolved that "the 100 issued" shares be transferred to Jane and Matthew Clapp, and that "signed declarations of trust be prepared and signed". By September 2005, the company documents show that Mr Harrod had resigned as director and secretary. However, it is at this time that the Martello companies issued the unexplained declarations of trust naming Mr Harrod as beneficiary. Declarations of trust in favour of Mr Harrod "in respect of 51 shares" were made in May 2006, but again this is not an example of something Mr Harrod "did". The only document showing action by Mr Harrod during this period was a claim for £10,000 from the Respondent "acting on your instructions regarding Astral Enterprises Limited".

56. Article 80 is also irrelevant to the events in 2014 when, according to the Appellant, Mr Harrod (on behalf of Astral) consented to Judgment in the QBD proceedings in favour of the Appellant, and to a charging order over the Blandford property and a third party debt order in respect of the CMI bond in favour of the Appellant. By that time Mr Harrod had long since resigned as director, so Article 80 could have no application to his actions, as it is concerned only with saving the validity of the actions of someone who has been imperfectly appointed, not with conferring validity on the actions of someone who has voluntarily resigned as director.

57. The Appellant must, therefore, be relying on Article 80 to validate the events described in the minutes of a meeting on 21 August 2015 where there is a record of actions taken by Mr Harrod (summarised in paragraph 68 of the Royal Court's Judgment, and here again repeated):-

"68. By way of contrast the Court has also seen minutes of a meeting on 21st August, 2015, attended by Mr Harrod, Mr Trigwell, Dr Osment and Ms Teresa Day. This records that, following the reinstatement of the Company, Mr Harrod is confirmed as the beneficial owner of the Company. The meeting was initially a meeting of shareholders (comprising Mr Harrod) and Mr Harrod appointed himself as director. Thereafter he held a board meeting and appointed Mr Trigwell and Dr Osment as additional directors and Ms Day as secretary. The board then noted the transfer of 102 shares to Mr Harrod from Nautilus Nominee Services Limited and Nautilus Corporate Services Limited and also noted the transfer dated 21st August, 2015, of 102 shares by Mr Harrod to Mr Trigwell."

58. But again, the putative application of Article 80 in relation to these events does not assist the Appellant in demonstrating that Mr Harrod was in truth the beneficial owner of Astral. Furthermore, the actions recorded in these minutes are entirely inconsistent with the actions taken in May 2015, shortly after Astral was reinstated - as set out in paragraph 67 of the Royal Court's Judgment (again repeated):-

"67. ........ Mr Clapp and his son purported to hold a meeting of shareholders on 27th May, 2015, (Mr Jordan Clapp holding a form of proxy from Mrs Clapp). The meeting noted that the only two shares ever legitimately issued were the two subscriber shares and that these had been transferred to Mr Clapp and Mrs Clapp. This appears to be a reference to the transfers executed by Mr Dimsey and Pelegrin (as described at paragraphs 20 and 21 above). The meeting purported to confirm the appointment of Mr Clapp as a director and Mrs Clapp as company secretary and that Mr Harrod had resigned as a director on 8th September, 2005."

The Appellant's arguments are all, in the end, based on the contention that Mr Harrod was the beneficial owner of Astral in 2015 rather than on the validity, or not, of Mr Harrod's appointment as director, or on the validity of his actions since his appointment. The Royal Court rejected that fundamental building block, and we not consider that Article 80 assists the Appellant.

59. Article 212 is similarly irrelevant. It is concerned with issues that might arise if a company were to bring a civil claim against a director or former director for breach of duty, which is not what this case is about.

Exoneration

60. Articles 74(1) and (2) of the Companies (Jersey) Law provide:-

"(1) A director, in exercising the director's powers and discharging the director's duties, shall -

(a) act honestly and in good faith with a view to the best interests of the company; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

(2) Without prejudice to the operation of any rule of law empowering the members, or any of them, to authorize or ratify a breach of this Article, no act or omission of a director shall be treated as a breach of paragraph (1) if -

(a) all of the members of the company authorize or ratify the act or omission; and

(b) after the act or omission the company will be able to discharge its liabilities as they fall due."

61. These provisions are, like Article 212, irrelevant to the issues in this appeal. They are concerned with the scope of a director's duties to the company, which (again) is not what this case is about.

62. Specifically, the Appellant seeks to rely on Article 74(2), saying that "On the transfer from Mr Harrod to Mr Trigwell, Mr Trigwell exonerated Mr Harrod by reappointing him." This argument is irrelevant, circular and wrong. It is irrelevant because the issue in dispute is the beneficial ownership of Astral, and not any question of ratifying a breach of duty by a director. It is circular because the issue in question is whether Mr Harrod had any beneficial ownership to transfer. It is wrong because, even if it were relevant (which it is not) exoneration would have to be express and cannot be implied.

The effect of restoration to the register

63. The Appellant seeks to rely on the principle that, when a company is restored to the register, acts purportedly done on its behalf during the period of dissolution are retrospectively validated. This is, however, another irrelevant issue. The question in the appeal is not concerned with the legal validity of executive acts ostensibly performed on behalf of Astral, but on the question of its beneficial ownership. The directors of a company acting as such cannot confer or transfer beneficial ownership.

Contrary to public policy

64. The Appellant's contention is that it is contrary to public policy for a court to give aid to "a dishonest person" - relying on Patel v Mirza [2016] UKSC 42, [2017] AC 467, discussed in Al Tamini v Al Charman [2017] JRC 033. But the key passage relied on by the Appellant is found in Lord Mansfield's judgment in Holman v Johnson (Court of King's Bench, 5 July 1771, reported at (1775) 1 Cowp 341, the second sentence of which appears in paragraph 1 of Patel v Mirza:-

"The principle of public policy is this; ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiff's own stating or otherwise, the cause of action appears to arise ex turpi causâ, or the transgression of a positive law of this country, there the Court says he has no right to be assisted. It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff."

The allegation is that "Mr Clapp was dishonest in concealing information, uttered statements he knew were untrue, and in making a Prayer which was untrue".

65. There is, again, nothing in this point. As noted above the Royal Court found the Respondent to be a truthful witness on the key issue of beneficial ownership, and in any event it is the Appellant who was bringing the cause of action, not the Respondent. It expressly found that the Respondent was not without responsibility for the state of affairs as he had "contributed to the problem by allowing the Company to be struck off and by not engaging with Nautilus to sort matters out in 2006" (paragraph 130 of the Judgment). There was, however, no relevant misconduct by the Respondent in relation to the specific issue of beneficial ownership such as to disentitle him to seek a declaration as to such ownership. In the circumstances, the factual findings of the Royal Court were clearly supported by the evidence, and there is no basis at all for challenging or changing its conclusions by reference to any arguments of public policy.

Other arguments of law

66. In his Skeleton Argument for this appeal, the Appellant also seeks to rely on the definition of 'member' in Article 25(1) of the Companies (Jersey) Law. His argument is again misplaced, because it is looking at the identity of the members, not at the identity of the beneficial owner. In any event, Article 25(1) only applies to the subscribers to the Memorandum, which in this case were Anchor Trust Company Ltd and Anchor Management Ltd (see paragraph 16 of the Judgment) - not Mr Harrod.

67. The Appellant also seeks to rely on Article 51 and "Article 92 -The seal", saying that the Respondent failed to produce any sealed share certificates in his own name, whereas Mr Harrod did. Once again, this argument does not assist the Appellant, because it is concerned only with the identity of the registered members, not with the location of beneficial ownership.

68. The Appellant also says that the Respondent allowed Annual Returns to be made in the name of Astral which (on the Respondent's version of events) were incorrect, in violation of Article 71. This is another incarnation of the Appellant's public policy argument, which we have already rejected. In any event, the Respondent was never a director of Astral, so he cannot be held primarily liable for any inaccuracies in its Annual Returns.

69. The Appellant seeks to rely on the provisions of Article 73, requiring private companies to have at least one director, as somehow validating the acts of Mr Harrod. There is nothing in this point, because the case concerns beneficial ownership of the company not the validity of Mr Harrod's purported actions as a director. In any event, Article 73 does not support the Appellant's argument regarding the validity of Mr Harrod's actions because it merely fixes the minimum number of directors without making any provision regarding the validity of their actions.

70. The Appellant seeks to rely on Article 92(1) in support of the proposition that "the Company was clearly Quorate at all times". This argument is irrelevant. Nothing in the Judgment concerning the core issue of beneficial ownership turns on any decision having been taken by the members in a general meeting that was inquorate (which is what Article 92(1) is dealing with). The Royal Court does refer, at paragraph 127, to the fact that there may have been issues in relation to the quorum of directors, but the Court had not been addressed on the issue and it said expressly that it was "not in a position to reach a firm decision" on the issue.

Conclusion

71. For the reasons given in this judgment, we find that (i) the arguments of law on which the Appellant seeks to rely are either irrelevant or do not advance his appeal, and (ii) there is no basis for challenging the factual findings of the Royal Court.

72. The appeals against the decision and Act of Court of the Royal Court, Samedi Division, dated 11 September 2017, and the consequential costs decision dated 3 November 2017, are therefore dismissed.

Authorities

Trigwell-v-Clapp [2017] JRC 145.

Hyams v English (1981) JJ 89.

Jones v Plane (2006) JLR 438.

Reg's Skips v Yates (2008) JLR 191.

Thomson v Kvaener Goven Ltd [2004] SC (HL) 1.

Companies (Jersey) Law 1991.

Patel v Mirza [2016] UKSC 42, [2017] AC 467.

Al Tamini v Al Charman [2017] JRC 033.

Holman v Johnson (Court of King's Bench, 5 July 1771, reported at (1775) 1 Cowp 341.

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	Jersey Unreported Judgments
You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Trigwell -v- Clapp [2018] JCA 018 (23 January 2018) URL: http://www.bailii.org/je/cases/UR/2018/2018_018.html Cite as: [2018] JCA 18, [2018] JCA 018

Jersey Unreported Judgments