Christopher Richard Oakley v Osiris Trustees Ltd and Others
| Jurisdiction | UK Non-devolved |
| Judge | Lord Walker of Gestingthorpe |
| Judgment Date | 14 January 2008 |
| Neutral Citation | [2008] UKPC 2 |
| Docket Number | Appeal No 49 of 2006 |
| Court | Privy Council |
| Date | 14 January 2008 |
[2008] UKPC 2
Privy Council
Present at the hearing:-
Lord Scott of Foscote
Lord Rodger of Earlsferry
Lord Walker of Gestingthorpe
Lord Mance
Lord Neuberger of Abbotsbury
[Majority Judgment delivered by Lord Walker of Gestingthorpe]
On 19 July 2006 Her Majesty in Council approved a report dated 3 July 2006 advising that a petition for leave to appeal should be granted:
"solely on the grounds of whether the requisite intention to enter existed in executing the resolution of 3 December 1997 to change the proper law of the Trusts (and in particular the Tabatha Trust) from the law of Jersey to the law of the Isle of Man."
The petitioner was Mr Christopher Oakley, an English solicitor who practised for some time in the Isle of Man. The decision from which he was granted this limited leave to appeal was a judgment given on 21 December 2005 by the Staff of Government Division of the High Court of Justice of the Isle of Man.
The Staff of Government Division dismissed Mr Oakley's appeal from a judgment given on 26 August 2005 by Acting Deemster Linda Sullivan QC, after the hearing of a preliminary issue in accordance with directions which she had given in orders dated 13 August 2003 and 8 December 2004. After four days of oral evidence and two further days of closing submissions the Acting Deemster declared that the proper law of the relevant trusts (the Tabatha Trust and the Timothy Trust) remained the law of Jersey. In reaching that conclusion she rejected four separate lines of argument relied on by Mr Oakley as establishing a change of proper law to the Isle of Man (a fifth line of argument was abandoned in the course of the hearing). The leave granted for an appeal to the Board was expressly limited, not merely to one of those four lines of argument (the resolution of 3 December 1997) but to a particular component of that argument (intention).
The issue which it is open to the appellant to argue in this appeal is therefore an extremely narrow one. But in view of the contentious circumstances in which the issue arises, and because of the respondents' submissions as to what the appeal will or will not decide, it is necessary to provide at least a sketch of the very complicated background.
Mr Eric Morgan is a businessman who settled in Guernsey and then, in or around 1990, moved to Jersey. He has had various business interests of which the largest, and the most relevant for present purposes, was a joint venture for the assembly and sale of a large site at Hoo in Kent for development as a power station ("the Power Park project"). One of the corporate vehicles formed for the purposes of the project was a company called Belgrove (Isle of Man) Ltd ("Belgrove"). By direct or indirect means (the details are not before the Board, and are not material) Mr Morgan settled a majority shareholding in Belgrove in one or more of three settlements governed by Jersey law. The first of these, dated 22 September 1983 ("the 1983 Trust"), has been wound up, wholly or partly by a transfer to one of the other two settlements, the Tabatha Trust dated 21 November 1990. The third settlement, the Timothy Trust, was dated 12 December 1990.
Although the two subsisting settlements were governed by Jersey law, originally their sole trustee was a Guernsey company, Abacus (Guernsey) Ltd ("Abacus"), whose registered office is at St Peter Port, Guernsey. Both settlements contained a power (Clause 11) in the following terms:
"11. (1) This Trust is established under the laws of the Island of Jersey and (subject to any exercise of the powers conferred by sub-clauses (2) and (3) hereof) the rights of the Beneficiaries and the rights powers and duties of the Trustees under this Trust and the construction and effect of every provision of this Trust shall be governed by and determined according to the laws of the Island of Jersey which Island shall be the initial forum for the administration hereof.
(2) The Trustees may at any time or times and from time to time during the Discretionary Period by deed declare that this Trust shall from the date of such declaration be governed by and take effect in accordance with the law of some other jurisdiction in any part of the world (not being any place under the law of which (a) any of the trusts powers and provisions herein declared and contained would not be enforceable or capable of being exercised and so taking effect or (b) this Trust would be revocable) and that the forum for the administration thereof shall thenceforth be the Courts of that jurisdiction AND as from the date of such declaration or such later date as may be specified therein the law of the jurisdiction named in the said declaration shall be the proper law applicable to this Trust and the Courts thereof shall be the forum for the administration thereof but subject to the power conferred by this sub-clause and until any further declaration is made hereunder PROVIDED ALWAYS that so often as any such declaration as aforesaid shall be made the Trustees shall be at liberty to make such consequential alterations or additions in or to the trusts powers and provisions of this Trust as the Trustees may consider necessary or desirable to ensure that the trusts powers and provisions of this Trust shall (mutatis mutandis) be no less valid and effective than they are at the date hereof under the laws of the Island of Jersey.
(3) The Trustees may at any time or times and from time to time during the Discretionary Period move the general administration of this Trust or any part thereof to any part of the world whether within or outside the jurisdiction the law of which is the proper law for the time being of this Trust."
The two settlements were similar in many other ways. The beneficiaries were defined as Mr Morgan, his wife Mrs Valerie Morgan, his adult children Adrian and Paula, the International Committee of the Red Cross, and such additional beneficiaries as the trustees might appoint (but during Mr Morgan's lifetime only with his prior written consent). Mr Morgan himself was later excluded from the class of beneficiaries of each settlement.
There was however one significant difference between the terms of the settlements. Each defined a "Discretionary Period" but in the case of the Tabatha Trust this was to end on 1 December 2063 at latest; under the Timothy Trust it was to end on 12 December 2090 at latest. The most likely reason for the difference is that the Tabatha Trust was from the first intended to be able to receive a transfer from the 1983 Trust (which antedated the Trusts (Jersey) Law 1984 and was limited to an 80-year trust period ending on 21 September 2063).
Whatever the reason for the difference, it has, in the events which have happened, proved significant. Under the law of the Isle of Man (Perpetuities and Accumulations Act 1968 section 1) a fixed period of 80 years (but no longer) is a permitted perpetuity period (as an alternative to the traditional "royal lives" period). In view of the terms of clause 11 of the Timothy Trust, it was conceded that it was impossible to change the proper law of that trust to the law of the Isle of Man without first taking the preliminary step (presumably by exercise of a power of appointment) of curtailing the discretionary trust period. No such action was ever taken. Consequently this appeal relates only to the Tabatha Trust.
After the establishment of the two subsisting settlements many disputes and difficulties arose in connection with the Power Park project, and relations between Mr Morgan and Abacus became correspondingly strained. Mr Morgan as settlor complained about the way in which Abacus was handling the joint venture and the level of its charges for doing so. Abacus complained of interference by Mr Morgan and his close associates, including Mr Ronald Draper, Mr Morgan's business manager. In or about August 1996 Mr Morgan contacted an Isle of Man trust company, Crossman Trust Company Ltd ("Crossman"), with a view to it becoming a trustee in place of Abacus. Soon afterwards Mr Oakley (who was licensed to practise as a lawyer on the Isle of Man) was appointed to the board of Crossman, which seems to have been a corporate trustee of some substance, with about six directors. Eventually Crossman was appointed as a trustee of the two settlements on 26 May 1997. Mr Morgan seems to have thought that Abacus had by then agreed to retire as a trustee, but Abacus declined to retire, and Mr Morgan had no power to replace it without cause (insolvency, refusal or unfitness to act, or incapacity). So the settlements found themselves with one Guernsey trustee and one Isle of Man trustee, and Abacus understandably refused (as Mr Oakley accepted in his oral evidence to the Acting Deemster) to go ahead with changing their proper law as long as it remained a trustee. It was also unwilling to retire and part with the trust assets until satisfied that it was sufficiently indemnified against possible liabilities.
These apprehensions had some substance. The sale of the Power Park land was eventually completed, for a total consideration of over £40m, in September 1997. Proceedings against Mr Morgan and the trustees were threatened and then (in or about November 1997) commenced in the Royal Court of Jersey by some of Mr Morgan's business partners in the Power Park project. There were also proceedings in London before Ferris J and the Court of Appeal. At a later stage (May 1999) a provisional liquidator of Belgrove was appointed by the High Court of the Isle of Man.
There were long and difficult negotiations about arrangements for indemnifying Abacus against...
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