Fattal and Another v Walbrook Trustees (Jersey) Ltd and Another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE BLACKBURNE,Mr Justice Blackburne |
| Judgment Date | 25 June 2009 |
| Neutral Citation | [2009] EWHC 1674 (Ch),[2009] EWHC 1446 (Ch) |
| Docket Number | Case No: CH/2007/APP/0419,Case No: HC0602877 |
| Court | Chancery Division |
| Date | 25 June 2009 |
[2009] EWHC 1446 (Ch)
MR Justice Blackburne
Case No: HC0602877
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Thomas Seymour (instructed by Fladgate LLP) for the Claimants
David Chivers QC and Alastair Tomson (instructed by Memery Crystal LLP)
for the Defendants 1–3
Alan Steinfeld QC and Elspeth Talbot-Rice QC (instructed by Reynolds Porter Chamberlain LLP) for the Defendants 4–6
Hearing dates: 1, 2, 3, 6 and 7 April 2009
Approved Judgment
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.
Mr Justice Blackburne :
Introduction
This is another chapter in a complicated series of disputes which go back ten years and which centre on a block of flats and commercial premises called Berkeley Court (“the Property”) situated at the junction of Baker Street and Marylebone Road in central London. The Property was acquired by a contract entered into in September 1988 for the benefit of essentially four interests: (1) the Delta Trust, a family trust for the benefit of members of the Dangoor family, (2) the EM Sofaer Discretionary Trust (for short “the Sofaer Trust”) a family trust for the benefit of members of the Sofaer family, (3) Selim Dangoor, another member of the Dangoor family and (4) William and Elias Fattal who are brothers. The interests were 25% in each case except for the two Fattal brothers who each had a 12 1/2% interest so that, between them, they too held a 25% interest.
The contract for the acquisition of the Property was completed on 1 February 1989 in the name of a company specially set up for the purpose and known as Berkeley Court Investments Limited (“BCIL”). It became and has since remained the registered proprietor of the Property. An agreement in writing (“the Joint Venture Agreement” or, more simply, “the JVA”) was entered into by the four interests together with BCIL on 30 January 1989. The actual parties to the JVA were (1) Walbrook Trustees (Jersey) Limited (“Walbrook Jersey”), a Jersey company, as trustee of the Delta Trust, (2) Walbrook Jersey and two individuals (associated with the Walbrook group) as trustees of the Sofaer Trust, (3) Mr Selim Dangoor (for himself), (4) William and Elias Fattal (for themselves) and (5) BCIL. At the time, Naim Dangoor (a brother of Selim Dangoor) and his son, David Dangoor, and the two Fattal brothers were BCIL's directors. The JVA set out the basis on which the Property was acquired and thereafter to be held. I shall return later to refer to some of its provisions. Broadly speaking, the Property was held by BCIL upon trust for the four interests (referred to in the JVA as “the Parties”) as tenants in common in equal (25%) shares, taking the two Fattals as a single share. The parties provided the funds which BCIL needed to complete its purchase of the Property. Eight shares in BCIL were issued: two each in the names of the trustees of the Delta Trust and the Sofaer Trust, a further two in the name of Selim Dangoor and one each in the names of William and Elias Fattal respectively. No further shares have since been issued. The shareholdings thus created represented the percentage interests of the participants in the joint venture.
At the time the JVA was entered into an addendum to it (“the Addendum”) was also entered into. It is undated but was signed at the same time as, or shortly after, the JVA and by the same persons as are parties to the JVA omitting only BCIL. It was entered into in view of the terms of clause 12 of the JVA. Clause 12 provides that:
“Subject to the provisions of clause 6 hereof the rights and obligations of the Parties under the provisions of this Agreement are personal to them and none of them shall sell assign pledge or in any way encumber their share or any part thereof or their rights or obligations under this Agreement without the prior approval of all the other Parties.”
Clause 6 is a provision enabling any of the parties to sell his/their share in the Property: it sets out a procedure which, put shortly, gives the other parties a chance to acquire the share of the party invoking the clause.
The Addendum, which is very short, is in the following terms:
“We the undersigned hereby mutually agree and undertake that notwithstanding the provisions of clause 12 of the Joint Venture Agreement dated 31 st day of January 1989 and made between us relating to Berkeley Court Baker Street London NW1:—
(i) the transfer of a Share on the occasion of the appointment of a new Trustee of either the Delta Trust or the EM Sofaer Discretionary Trust shall not require any consent from any of the other Parties and
(ii) both (a) William Simon Fattal and Elias Simon Fattal and (b) Selim Dangoor shall be at liberty without consent from any of the Parties to transfer the whole of their respective Shares to the Trustees of a Trust so long as the ultimate beneficiaries are themselves and/other members of their immediate family which for this purpose shall mean their respective spouses and children and their own parents and brothers or sisters.
and any transfer pursuant to (i) or (ii) above shall not be deemed to be a disposal to which clause 6 of the said Agreement applies.”
One of the issues I am asked to determine—and to which I shall come later—is whether, since Selim Dangoor's share has since been acquired by a trust (the Sharet Trust) set up for the benefit of other members of the Dangoor family, a transfer of the Sharet Trust's share to new trustees requires any consent under clause 12. I refer to this issue as “the JVA transfer issue”.
In September 1989, as the Addendum had envisaged, the interest of each of the Fattal brothers under the JVA came to be vested in trustees for the benefit of settlements (respectively the WS Fattal Settlement and the ES Fattal Settlement) which each brother had separately established three months earlier. I refer to these two settlements as “the Fattal Trusts”. The trustees were Walbrook Jersey and an associated company, Walbrook International Trust Company Limited (“Witco”), a Cayman Islands registered company. In due course Selim Dangoor's share in the joint venture came to be vested in a corporate vehicle owned by him called Interlands SA, a BVI registered company. Yet later, in 1998, that share was transferred so as to be held by Walbrook Jersey and Nicholas Cuttiford (a Walbrook director) for the benefit of the Sharet Trust. The circumstances in which that happened, and in particular whether it represented a breach of the JVA, were the subject of proceedings which came before Henderson J in October 2007 and in further, as yet unconcluded, proceedings to which I shall refer later.
The further transfers had the consequence that all four 25% shares (again treating the two Fattal 12 1/2% shares as a single 25% share) were held by trustees functioning as members of or within the Walbrook group including, as a common trustee of all four shares, Walbrook Jersey. This commonality of trusteeship has given rise to difficulties and disputes as I shall also later explain.
In the meantime, and before the transfer from Interlands SA to Walbrook Jersey and Witco for the benefit of the Sharet Trust, a restructuring of the overall arrangement took place. This occurred in several stages in the course of 1995. It began with the incorporation of a Manx company limited by guarantee and called Baker Street Limited (“BSL”) of which at all material times there have been just two members, namely Walbrook Jersey and Witco. Next, by a two paragraph declaration of trust dated 29 June 1995 (“the BSL Trust”), Walbrook Jersey and Witco declared, by paragraph 1, that, being all of the members of BSL (referred to in the declaration as “the Company”), they held the benefits of such membership upon trust as nominees for the respective trustees of the Delta and Sofaer Trusts, Interlands SA (each in 25% proportions) and the respective trustees of the two Fattal Trusts (each in 12 1/2% proportions). Each such interest was described as “an Owner”.
By paragraph 2 of the BSL Trust, Walbrook Jersey and Witco stated:
“That we agree to act in accordance with the written instructions of the relevant Owner concerning its proportion of membership detailed above and to deal with all the benefits of membership of the Company, including all rights to distributions and all voting rights, arising in respect of such proportion in such manner as the relevant Owner shall from time to time direct in writing.”
The document ended by stating that it was to be governed by the laws of the Isle of Man.
A further issue is concerned with the meaning and effect of the BSL Trust, in particular clause 2. I refer to this as “the BSL membership issue”.
The final step in the 1995 restructuring took place on 20 October 1995 when the Delta, Sofaer and Fattal Trusts and Selim Dangoor transferred to BSL their respective 25% beneficial interests in the Property held by them under the terms of the JVA. They did so for £8.6 million. There is an issue over the effect of this transfer: the parties other than the two Fattal Trusts (for short “the Non-Fattal parties”) contend that this transfer of beneficial interests in the Property brought to an end not just the trust for sale declared by the JVA and the other provisions in the JVA associated with the trust for sale but, in effect, the joint venture itself so that...
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