De Bruyne v De Bruyne and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Patten,Sir Paul Kennedy,Lord Justice Thorpe |
| Judgment Date | 13 May 2010 |
| Neutral Citation | [2010] EWCA Civ 519 |
| Docket Number | Case No: B4/2010/0067 B4/2009/2605(A) B4/2009/2605(B) B4/2009/2605(C) B4/2009/2605(D) B4/2009/2605(E) B4/2009/2605(F) CB04D00854 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 May 2010 |
[2010] EWCA Civ 519
His Honour Judge O'brien
Before: Lord Justice Thorpe
Lord Justice Patten
and
Sir Paul Kennedy
Case No: B4/2010/0067
B4/2009/2605
B4/2009/2605(A)
B4/2009/2605(B)
B4/2009/2605(C)
B4/2009/2605(D)
B4/2009/2605(E)
B4/2009/2605(F)
CB04D00854
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CAMBRIDGE COUNTY COURT
Mr Grant Crawford (instructed by Birketts LLP) for the Appellant
Geraint Martyn Jones (instructed by direct public access) for the 1 st, 2 nd and 3 rd Respondents
Mr Duncan Kynoch (instructed by direct public access) for the 4 th, 5 th and 6 th Respondents
Hearing dates: 21 st and 22 nd April 2010
Lord Justice Patten:
Introduction
This is an appeal by Mrs Tracey Ann de Bruyne (“the Wife”) against an order of His Honour Judge O'Brien dated 16 th October 2009 which was made following the hearing of two preliminary issues in ancillary relief proceedings brought by her against her former husband, Mr John Adrian De Bruyne (“the Husband”), in the Cambridge County Court.
Included as assets in the Wife's Form E financial statement were a property known as Anstey Hall Farm in Trumpington and the entire issued share capital (minus one subscriber share) of a company called Trumpington Investments Limited (“TIL”) together with the sums standing due under the directors' loan account. The Husband and the Wife are the two directors of this company which itself owns Anstey Hall, the former matrimonial home. Anstey Hall and Anstey Hall Farm are substantial properties worth in the region of £4.7m and £400,000 respectively.
The marriage between the Husband and Wife broke down in about 2004. The Wife petitioned for divorce and there was a decree nisi pronounced on 6 th December 2004. The wife moved to Italy where she still lives. The Husband has continued to live at Anstey Hall with his five children and runs an events business in part of the premises with his daughter, Abigail, through a company called Anstey Hall Limited which is a subsidiary of TIL. Abigail and her sister, Leila, are the children of the Husband's first marriage which was dissolved in 1988. Abigail was born in May 1981 and Leila in May 1984. There are three children of the second marriage (Anita, Jessica and John) who are triplets born on 5 th March 1989.
The Husband is the son of the late Dr Norman de Bruyne and his wife, Elma. Dr de Bruyne was an inventor and much of the family fortune appears to have been derived from Araldite glue which was one of his inventions. He established a company based at Duxford near Cambridge called Techne (Cambridge) Limited which developed and manufactured medical and laboratory equipment. In May 1971 he placed 999 shares in the capital of this company into a US trust (“the 1971 trust”) governed by the law of the State of New Jersey. The evidence before the judge was that Dr de Bruyne spent about half of each year in Princeton, New Jersey where there was a manufacturing facility owned by the company and the remainder of the time in Duxford where he retained a home. In time Techne (Cambridge) Limited became a subsidiary of a New Jersey holding company called Techne Corporation (“Techne”) and by 1991 the assets of the 1971 trust consisted of 257 of the 511 issued shares in Techne.
The 1971 trust was irrevocable and created a discretionary trust of both capital and income during Elma de Bruyne's life for the benefit of a class which included Elma together with Dr de Bruyne's descendents (of whatever degree and whenever born) living from time to time. The trustee was given power under Article One of the trust deed to appoint capital and income to any one or more persons within the class as he might in his discretion select and in any amount up to and including the entire value of the fund. But this power was subject to a proviso that during the settlor's life no distribution of capital or income should be made to Elma and further that no such distribution should be made to a descendent of Dr de Bruyne without Elma's consent. The trustee was directed in terms to give primary consideration to the widow's needs during her life.
Upon the death of Elma the fund was to be distributed to such of the settlor's descendents and in such shares as Elma should direct in her will but, absent the exercise of this testamentary power of appointment, the trust property was to be divided between the Husband and his sister, Anne, with gifts in substitution for their issue should the Husband and his sister pre-decease their mother.
In July 1986 the Husband and his first wife (Leila) arranged through Mr Henry J. Clay Jr, a New York attorney, to set up two New York trusts for the benefit of their daughters. Mr Clay acted as the trustee. The trust funds consisted of 63 Techne shares which the Husband had purchased from the estate of one of his father's former business partners together with some cash received from his wife's parents. 42 of the shares were placed in Abigail's trust and the remaining 21 in Leila's.
By 1988 when the Husband and his first wife divorced most of the 511 issued shares in Techne were split between the 1971 trust (257), Dr de Bruyne (148) and the two children's trusts (63). The remainder were held by Techne employees. It appears that from mid-1988 onwards Dr de Bruyne (who was then about 84) made various attempts to re-gain control of Techne by offering to acquire the shares held by the 1971 and the children's trusts both personally and through a purchase of its own shares by Techne using a loan provided by him. The Husband (who was a director of Techne (Cambridge) Limited at the time) was opposed to the sales of shares and in November 1988 made his own offer to Mr Clay to buy the 63 shares held by the children's trusts. But in December 1988 Mr Clay sold the shares to Dr de Bruyne.
In 1991 the family came under pressure from the trustee of the 1971 trust (Mr Alton Peters, also a New York attorney) to sell Techne. The evidence before the judge (in the form of a witness statement by Abigail based on information obtained from her father) was that the company's financial position had deteriorated during an economic recession in the United States and that the trustee was concerned about retaining the Techne shares as the trust's principal investment.
As the controlling shareholder in Techne, he asked the Husband to seek offers for the company. This led to a proposed management buy-out which the family was asked to consider. Their response appears to have been entirely hostile to any suggestion of an outside takeover. The bundle contains a statement sent to Mr Peters and to the Techne management signed by Dr de Bruyne, Elma, the Husband and the Wife in which the signatories state that they have no intention of selling the company now or in the foreseeable future. But, later in September of that year, there was a family meeting at which agreement was reached to terminate the 1971 trust.
Abigail's evidence is that the terms agreed were contained in a document which was signed by Dr and Mrs de Bruyne, and the Husband and Wife, but not by the Husband's sister, Anne, who was not able to attend the meeting. This document is lost but its contents were almost certainly identical to those of a letter to Mr Peters dated 30 th September 1991 which is in evidence. This document was typed by the Wife but not signed by her. It replaced the earlier letter because Mr Peters required the proposals to be signed by Anne de Bruyne who was one of the discretionary beneficiaries rather than by the Wife who was not a beneficiary.
The letter reads as follows:
“We are writing to suggest that we take the following action:
By mutual consent, the Trust be wound up as per the terms of Mrs de Bruyne's will.
(1) The Techne Corp shares conveyed to a US domiciled corporation established for the benefit of J A de Bruyne's five children.
(2) The Duxford house be conveyed to AC de Bruyne.
(3) The one third interest in the Duxford house held by P N Fluck to be satisfied in cash by a payment of £75,000 by J A de Bruyne to the Trust.
Independent valuation @ September 1991:
Real Estate Agent A £205,000
Real Estate Agent B £235,000
On basis of market price between parties, one third of median price is £75,000.
(4) Legal fees incurred to date and in winding up the Trust will be paid by a dividend from the Company.
(5) N A de Bruyne's employment contract with Techne Corporation to be amended to provide half remuneration to E de Bruyne for life in the event that N A de Bruyne pre-deceases her.
(6) You will know that under separate arrangements A C de Bruyne has received a house and property in Essex, property in Duxford, a double house and property in Cornwall and will receive the house and staff cottage belonging to E L de Bruyne under the terms of her will. When the Trust is wound up she will receive the house and P N Fluck will receive £75,000.
(7) Winding up the Trust will enable yourself and George Marchese to resign current directorships with Techne Corp and subsidiaries.
The undersigned are in agreement with the above proposals.”
The proposal that the Techne shares held by the trust should be dealt with in the manner described in paragraph 1 called for the other discretionary beneficiaries to be compensated in other ways. Anne was therefore to receive the Duxford property...
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