Fattal v Walbrook Trustees (Jersey) Ltd
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE LEWISON,Mr Justice Lewison |
| Judgment Date | 03 November 2010 |
| Neutral Citation | [2010] EWHC 2767 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC06C03748 |
| Date | 03 November 2010 |
[2010] EWHC 2767 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before : The Hon Mr Justice Lewison
Case No: HC06C03748
Mr Mark Cran QC, Mr Alastair Tomson and Miss Nicola Timmins (instructed by Memery Crystal) for the Claimants
Mr Simon Taube QC and Mr Thomas Seymour (instructed by Fladgate LLP) for the First and Second Defendants
Mrs Elspeth Talbot Rice QC and Mr Edward Cumming (instructed by Reynolds Porter Chamberlain) for the Third and Fourth Defendants
Hearing dates: 19–29 th October 2010
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 Lewison:
| Introduction | 2 |
| Proceedings | 6 |
| Amendments | 8 |
| Limitation | 8 |
| Discretion | 13 |
| Pleading dishonesty | 17 |
| Summary judgment | 18 |
| The exoneration clause | 19 |
| The draft Re-Amended Particulars of Claim | 24 |
| Introductory parts of the draft Re-Amended Particulars of Claim | 24 |
| Intention of the parties as to subsistence of the JVA | 25 |
| New trustees | 25 |
| Walbrook's personnel | 26 |
| The 1995 restructuring | 26 |
| The 2000 restructuring | 26 |
| Survival of the JVA | 27 |
| Fiduciary duties | 31 |
| Walbrook's duties arising by agreement | 35 |
| The sale of the Interlands interest | 37 |
| The indisputable facts | 37 |
| The claim against Walbrook | 38 |
| The claim against David Dangoor and Monopro | 40 |
| The letter of 7 July 1998 | 41 |
| The claim against Walbrook | 41 |
| The claim against David Dangoor | 43 |
| Concealment of Niazi Dangoor's involvement | 44 |
| The voting agreement | 44 |
| The Scheme to remove the Fattals | 45 |
| Failure to disclose documents | 46 |
| The claim against Walbrook | 46 |
| The claim against David Dangoor and Monopro | 47 |
| The Deed of Confirmation | 48 |
| The claim against Walbrook | 49 |
| The claim against David Dangoor and Monopro | 53 |
| Failure to monitor the Co-ordinator | 54 |
| Losses flowing from Walbrook's breaches of duty | 54 |
| The Delta Two claim | 55 |
| Overpayments and excess loans | 56 |
| The NCR flats auction | 56 |
| Flat 23 | 57 |
| The allegations | 57 |
| The claim against Walbrook | 57 |
| The claim against David Dangoor and Monopro | 58 |
| Car park leases | 58 |
| The office/storage spaces | 58 |
| Overcharging by David Dangoor | 58 |
| The claim against Walbrook | 59 |
| The claim against David Dangoor | 59 |
| General discretionary considerations | 59 |
| Minor matters | 60 |
Introduction
These applications arise in the course of long running litigation between the parties. The background is as follows.
These disputes relate to the property known as Berkeley Court, Baker Street, London NW1 (“Berkeley Court”). It consists of a large number of flats with commercial premises on the ground floor and basement storage and car parking facilities. It was purchased in January 1989 by Berkeley Court Investments Limited (“BCIL”) which, by a joint venture agreement (“JVA”) dated 30 January 1989 declared that it held Berkeley Court on trust for the Delta Trust, the Sofaer Trust, Selim Dangoor and the two Fattal brothers (William and Elias). Walbrook Trustees (Jersey) Limited (“Walbrook”) and its associated companies or personnel were the trustees of the Delta and Sofaer Trusts. Walbrook was the Jersey Trust arm of Touche Ross & Co, the well-known accountants. The first directors of BCIL were: Mr William Fattal; Elias Sofaer; Naim Dangoor; and David Dangoor.
The JVA recited (among other things) that the parties had agreed to participate together in the acquisition of Berkeley Court and to hold it “on the terms set out herein or in such other manner as may be agreed in writing between them”.
Clause 2 contained a declaration that BCIL would hold the property on trust for the parties as tenants in common in specified shares. The Fattals were entitled to a 25 per cent share. Clause 3 provided that except as expressly provided to the contrary all questions relating to the property or its realisation were to be determined by a three fourths majority vote. Clause 5 provided that at any time after the third anniversary from completion of the purchase any one or more of the parties would be entitled to give notice to BCIL requiring the property to be sold. If such a notice was given then detailed provisions came into effect. Clause 5 (3) said that each of the parties would be entitled to offer to purchase the property. Clause 6 contained rights of pre-emption in the event that any one of the parties wanted to sell his share in the property. The seller was to give notice to the other parties specifying the price at which he offered the share. Each of the other parties then had the right to buy that share for 90 per cent of the offer price.
Clause 9(2) of the JVA provided that
“The Parties shall procure that there is paid to the Delta or its nominee by [BCIL] as a co-ordinating fee on the 1 st February in each of the years 1990 1991 and 1992 (unless the Property has earlier been sold) the sum of FIFTEEN THOUSAND POUNDS (£15,000) each of such payments being exclusive of any value added tax which may be payable thereon in addition.”
The Delta Trust delegated this role to Monopro Limited which provided the services of David Dangoor.
By clause 13 each of the parties undertook to use all reasonable commercial endeavours to facilitate promote and carry forward the venture. Clause 14 (1) said:
“This agreement shall constitute the entire contract between the Parties and shall only be capable of being varied by agreement in writing by or on behalf of the Parties.”
Clause 14 (3) said:
“Nothing in this Agreement shall constitute or be deemed to constitute a partnership between the Parties or any one or more of them and their relationship shall be that of independent principals combining together in a joint venture.”
An undated (but signed) memorandum gave each of the parties liberty to assign his interest to trustees so long as the ultimate beneficiaries were themselves or defined family members. Such a transfer would not trigger the rights of pre-emption.
Later, each of the Fattal brothers instructed his solicitor Mr Buzzoni to prepare a settlement. On 1 June 1989 each executed the settlement. Walbrook were the original trustees. On 14 September 1989 each of the Fattals assigned his interests under the JVA to Walbrook as trustees of his respective Fattal Trust.
Each of the trust instruments is in the same form. The beneficiaries were the relevant Fattal brother, and a wider class of family members. The trustees had very wide powers of appointment within the class of beneficiaries; but subject to that the relevant Fattal brother was the life tenant. Each of the brothers was also designated as “Protector” of the settlement. In that capacity he had the power to appoint new trustees. Clause 10 of the instrument entitled Walbrook to charge for its services in accordance with its published terms and conditions from time to time. Each trust instrument contained a number of administrative provisions in the First Schedule. Paragraph 7 gave them power to enter into ventures in the nature of trade “and for these purposes make such arrangements as they shall in their absolute discretion think fit.” Paragraph 18 said that the trustees were not bound or required to interfere in the management or conduct of the affairs or business of any company in which the trust fund might be invested; but so long as they had no notice of any act of dishonesty or misappropriation or misapplication of monies or other property on the part of the directors were entitled to leave matters entirely to the directors. Paragraph 20 gave the trustees power to employ agents “without being responsible for the default of any agent if employed in good faith”. Paragraph 21 gave the trustees “power to enter into any transaction concerning the Trust Fund notwithstanding that one or more of the Trustees may be interested in the transaction other than as one of the Trustees”.
Paragraph 22 contained an exoneration provision in the following terms:
“In the execution of these trusts no trustee shall be liable for any loss to the Trust Fund arising by reason of any improper investment made in good faith or for the negligence or fraud of any agent employed by such trustee or by any of the Trustees although the employment of such agent was not strictly necessary or expedient or by reason of any mistake or omission made in good faith by such trustee or by any of the Trustees or by reason of any other matter or thing except wilful and individual fraud or dishonesty on the part of the trustee who is sought to be made liable.”
On 29 June 1995 Baker Street Limited (“BSL”), a Manx company limited by guarantee, declared that it held its membership rights on trust for Walbrook as trustee of the Delta Trust; Walbrook as trustee of the Sofaer Trust, Interlands SA; and Walbrook as trustee of the Fattal Trusts in specified shares. Interlands was a company connected with Selim Dangoor, although the precise nature of the connection is disputed. Clause 2 of the declaration of trust said that BSL agreed to act in accordance with the written directions of the relevant owner concerning its proportion of membership rights. In October 1995, each of the beneficial owners of Berkeley Court (the Delta Trust, the Sofaer...
To continue reading
Request your trial
-
Devon Commercial Property Ltd v Robert Adrian Barnett
...QC), both also restitution cases where good faith in change of position was in issue. 185 In Fattal v Walbrook Trustees (Jersey) Ltd [2010] EWHC 2767 (Ch), a claim was made that trustees had acted in breach of trust. On an application to amend the particulars of claim, the question was whe......
-
Robert Sofer v SwissIndependent Trustees SA
...the case, and it is clear that his views set out above nonetheless represent the law: see eg Fattal v Walbrook Trustees (Jersey) Ltd [2010] EWHC 2767 (Ch), [63], per Lewison J (as he then was). Timing of the application 37 I have already referred to the fact that no defence has yet been se......
-
Dennis Michael Seaton and Others v Anthony Seddon and Others
...than that which separates cases of fraud and dishonesty from cases of negligence and incompetence." 116 In Fattal v Walbrook Trustees [2010] EWHC 2767 (Ch), Lewison J, having referred to the judgment of Millett LJ in Paragon Finance said at [35] "It follows from this that the introduction o......
-
Madoff Securities International Ltd ((in Liquidation)) v Stephen Raven and Others
...who are not the objects of the trust is not the less dishonest because he does not intend to benefit himself." 325 In Fattal v Walbrook Trustees (Jersey) Ltd [2010] EWHC 2767 (Ch) Lewison J said at [79] that he took this to mean "that in order to establish dishonesty it is necessary to sho......
-
When is a loan to a beneficiary really a distribution?
...from the trustee’s dishonesty, wilful misconduct, or gross negligence. At [131]. Citing Fattal v Walbrook Trustees (Jersey) Ltd [2010] EWHC 2767 (Ch). A provision in loan agreements providing that interest is payable if demanded. See Re Marshall [1965] NZLR 851 Jeremy Bell-ConnellHenry Bran......