C v C (Ancillary Relief: Nuptial Settlement)
| Jurisdiction | England & Wales |
| Judgment Date | 02 April 2004 |
| Neutral Citation | [2004] EWHC 742 (Fam) |
| Date | 02 April 2004 |
| Court | Family Division |
| Docket Number | Case No: FDO2DO6673 |
[2004] EWHC 742 (Fam)
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
PRINCIPAL REGISTRY
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr JusticeWilson
Case No: FDO2DO6673
Mr Valentine Le Grice QC and Mr Thomas Carter (instructed by Messrs Philippou & Co.) appeared on behalf of the Petitioner wife.
Mr Timothy Scott Q.C. and Mr Christopher Wagstaffe (instructed by Messrs Bolt Burdon) appeared on behalf of the First Respondent husband.
JUDGMENT GIVEN IN CHAMBERS BUT LEAVE TO REPORT AS ANONYMISED HEREIN
Approved Judgment
Dates of hearing: 1, 2 and 3 March 2004
Date of Judgment: 2 April 2004
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
SECTION A: INTRODUCTION
The wife makes claims against the husband for ancillary relief following divorce. Later this year I will address them. At this stage, however, I determine two issues raised by the husband which relate to the court's jurisdiction to entertain one of the wife's claims. The claim is for an order under s.24(1)(c) of the Matrimonial Causes Act 1973 varying, for the benefit of herself or of the two minor children of the family who live with her, a post-nuptial settlement made on the parties.
The husband contends that:
(a) the features which made the settlement nuptial were subsequently
removed from it, with the result that it cannot now be varied under s.24(1)(c); and, in any event,
(b) any jurisdiction to vary it is solely vested in the courts of Jersey.
Although the parties have connections with Cyprus, where the husband's mother lives, they are habitually resident in England and Wales and perhaps also domiciled here.
The settlement of which the wife seeks variation is The Hickory Trust established by a Deed of Settlement dated 18 September 1995. The deed has the following features:
(a) it recited the husband's mother as the settlor;
(b) it appointed a Jersey trust company as the trustees;
(c) it was a discretionary trust for the benefit of named persons, viz. the husband's mother, the husband, the wife and the only child of the marriage living at its date, and also of such other persons as the trustees might add;
(d) it conferred upon the trustees a power to add and remove persons to and from the class of beneficiaries but it subjected their exercise of that and other major powers to the consent in writing of the trust's protector;
(e) it appointed the husband and the wife as the joint protector of the trust during their joint lives;
(f) it empowered the husband, acting alone, to remove and appoint trustees;
(g) it provided that "this Trust is established under the laws of the Bailiwick of Jersey and the rights of all parties and the construction and effect of each and every provision hereof shall be governed and construed only in accordance with the law of Jersey, which shall be the proper law hereof" ("the proper law clause"); and
(h) it provided that "this Trust shall be subject to the exclusive jurisdiction of the Royal Courts of the Bailiwick of Jersey which shall be the forum for disputes relating hereto" ("the exclusive jurisdiction clause").
It is the wife's case that the husband's mother was only the nominal settlor of the trust and that the husband was its real settlor. Although the deed identified the amount initially settled as the conventional sum of U.S.$100, substantial sums were subsequently paid into the trust and it is the wife's case that such were payments by the husband out of the parties' joint resources and that the husband's mother has never had resources of such substance. These contentions are strongly denied by the husband who says that the trust was in every sense set up by his mother and has been funded only by her.
Following its establishment The Hickory Trust began to own and operate a company which had been set up in the British Virgin Islands, namely Hickory Holdings Ltd. Through that company the trust effected a variety of transactions. It bought substantial properties in Totteridge, near Barnet; transferred some of them to the parties for considerations, if any, not yet clearly identified; made cash transfers to the husband; and became the owner of two U.K. companies through which the parties ran businesses. Through the first such company the parties operated registered care homes for children. Through the second such company they operated an estate agency.
The wife belatedly relies upon a document upon which the husband has not had a proper opportunity to comment. At face value it is a document prepared by the husband in February 2000 for the purpose of obtaining credit, by which he presented his net assets as totalling £43,000,000, including £34,000,000 said to be referable to equity in "companies owned by [the parties] through direct share holding and family trust". If this document is genuine, it seems to represent an attribution by the husband to the parties of beneficial ownership of The Hickory Trust.
In 2000 the care homes company got into financial difficulty. This affected the parties personally because they had given guarantees for its obligations. In October 2000 petitions for bankruptcy were presented against the parties. They responded by conceding (or contending) that they were hopelessly insolvent. They represented to the petitioning and other commercial creditors that they jointly owed £2,185,000 to Hickory Holdings Ltd. They sought to demonstrate that, on bankruptcy, the unsecured creditors would receive nothing but that, were they instead to be allowed to enter into Individual Voluntary Arrangements, the creditors would receive 1% of their debt. The commercial creditors were suspicious of the alleged debt to Hickory Holdings Ltd and inquisitive about the identity of that company's real owner.
On 8 January 2001 a Maltese trust company, which on a date not yet clear the husband had appointed as trustees of The Hickory Trust in place of the Jersey company, executed a Deed of Appointment and Removal of Beneficiaries referable to the trust. By the deed the trustees purported, with immediate effect, both to add to the class of beneficiaries the second child of the marriage born subsequent to the establishment of the trust and, more importantly for my purposes, to remove therefrom the husband and wife. Did the husband and wife, as joint protector, give the requisite written consent to this exercise of the trustees' powers? The wife denies that she gave consent; the husband does not in terms allege that either of them gave consent; no document has been produced which is indicative of such consent; and the current trustees, to whom I will refer in paragraph 15, are in breach of an order of this court to permit inspection of trust documents.
The husband accepts that the intention behind the purported exclusion of himself and the wife from the class of beneficiaries of the trust was to enable them to represent in the bankruptcy proceedings that they had no interest in Hickory Holdings Ltd. Thus, in a statement in those proceedings dated 31 January 2001, he said:-
"Hickory Holdings Limited is a company and discretionary trust established in the late 1980s or early 1990s by my mother who is a wealthy woman in her own right. My father died 6 years ago; he was a property owner and had substantial assets. Neither my wife nor I are beneficiaries under the discretionary trusts. Neither my wife nor I have put any assets into the company, and neither of us have any details as to its holdings. The company is not controlled by either myself or my wife."
The husband appended a letter from the Maltese trust company dated 18 January 2001 which stated that "neither [of the parties] are beneficiaries" of The Hickory Trust. By a statement also dated 31 January 2001 the wife confirmed that she had read the husband's statement and concurred with its contents.
In May 2001 the parties' creditors agreed that, in lieu of bankruptcy, they should enter into Individual Voluntary Arrangements.
The purported exclusion of the parties from benefit under the trust appears not to have prevented it from entering into further transactions which were at least of indirect benefit to them. Early in 2001 the husband decided to devote himself more fully to operating the estate agency owned by the trust through the second UK company. In February 2001, about a month after the purported exclusion, Hickory Holdings Ltd lent £250,000 to the second such company, secured by a floating charge and repayable with interest.
Late in 2001 the second UK company ceased to trade and the husband began to operate, in England and later also in Cyprus, an estate agency in his own right.. In proceedings brought by Hickory Holdings Ltd (and presumably funded by the trust) the second such company, being its subsidiary and debtor, has now been made the subject of an administration order.
In July 2002 the parties separated.
Early in 2003 the husband again exercised his power to replace the trustees of The Hickory Trust. He says that he did so at the request of his mother who wished to be able to speak to the trustees in Greek before introducing further money into the trust. In place of the Maltese company the husband appears to have appointed a woman lawyer in Limassol; but he may instead have appointed the lawyer and her husband jointly or indeed a trust company operated by her or them. The firm of which the lawyer is a partner is also currently representing the husband in relation to criminal proceedings in Cyprus. The trustees have been made respondents to the proceedings in this court but as yet have taken no active part in them and are in breach of orders for disclosure.
In March 2003 the husband was...
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