Gerald Abraham Davidson and Another v Roger Hugh Knight Seelig and Others

JurisdictionEngland & Wales
JudgeMr Justice Henderson
Judgment Date15 March 2016
Neutral Citation[2016] EWHC 549 (Ch)
Docket NumberCase No: HC-2014-001994
CourtChancery Division
Date15 March 2016

[2016] EWHC 549 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Rolls Building

Royal Courts of Justice

Fetter Lane, London, EC4A 1NL

Before:

Mr Justice Henderson

Case No: HC-2014-001994

Between:
(1) Gerald Abraham Davidson
(2) Maxine Yvette Davidson
Claimants
and
(1) Roger Hugh Knight Seelig
(2) Michael Haringman
(3) Promenade Trustee Company Limited
(4) The General Trust Company Sa
(5) Ian Frederick Ledger
(6) Simon Crispin Groom
Defendants

Mr Alan Steinfeld QC and Mr Giles Richardson (instructed by Harcus Sinclair LLP) for the Claimants

Mr Paul Girolami QC, Mr Francis BarlowQC andMr Matthew Smith (instructed by Macfarlanes LLP) for the Second Defendant

Mr Simon Taube QC and Mr James MacDougald (instructed by Wiggin Osborne Fullerlove) for the Fourth, Fifth and Sixth Defendants

Hearing dates: 14 and 15 December 2015

Mr Justice Henderson

Introduction

1

On 14 and 15 December 2015 I heard two applications in the present action, which is currently listed for trial in a window between 5 and 11 April 2016 with a time estimate of 12 days. Each application is made by the second defendant, Michael Haringman, who holds office as one of the protectors (or purported protectors) of the two settlements with which the action is concerned, the Manny and Brigitta Davidson Discretionary Settlements ("the Settlements") which were originally established on 30 March 1967. By his first application, dated 21 July 2015, Mr Haringman asks for permission to re-amend his defence and bring a counterclaim, in the form of a draft pleading annexed to his application notice. By his second application, dated 19 November 2015, he seeks specific disclosure of certain categories of documents from the fourth, fifth and sixth defendants, who are the present trustees ("the Trustees") of the Settlements.

2

The second application to a substantial extent reflects, and is predicated upon the success of, the first application, so the arguments before me were mainly concentrated on Mr Haringman's application to re-amend his defence. I heard oral submissions from Paul Girolami QC (appearing with Francis Barlow QC and Matthew Smith) for Mr Haringman, from Alan Steinfeld QC (appearing with Giles Richardson) for the claimants, Gerald and Maxine Davidson, and from Simon Taube QC (appearing with James MacDougald) for the Trustees.

3

The Settlements have a very substantial combined value, in the region of £500 million. Approximately 80% of this value is represented by a portfolio of real property, and the balance consists of a portfolio of liquid investments. The settled property derives from the settlor of the first of the Settlements, Emanuel Wolfe Davidson, generally known as Manny. It is common ground that Manny has been a shrewd and very successful businessman throughout most of his adult life, and until 2013 he played (at least) a significant role in the management and administration of the property portfolio.

4

The claimants, to whom I will refer as Gerald and Maxine, are the only children of Manny and his wife Brigitta Davidson ("Brigitta"). Maxine was born in December 1958, and Gerald in April 1961, so they are now aged 57 and 54 respectively. Each of them also has two sons now in their twenties, Jack and Isaac Davidson in the case of Gerald, and Toby and Douglas Kay in the case of Maxine. I hope all members of the family will forgive me if, for convenience, I refer to them in this judgment by their first names only.

5

Most unfortunately, relations between the settlors and their children broke down, it would seem irretrievably, in 2013. The ensuing feud has attracted a good deal of publicity, some of it self-inflicted. For example, Manny is on record as having said in an interview with a Sunday newspaper that he now regrets having ever established the Settlements. Views and positions have become polarised, and the Trustees and protectors of the Settlements have found themselves caught up in the dispute. That is the regrettable background to the present proceedings, in which Gerald and Maxine (who are the principal beneficiaries under the Settlements) challenge the validity of the protectoral regime, which was first introduced by deeds of appointment in 2003. By their particulars of claim dated 11 February 2014, they seek a declaration that the 2003 appointments are void, or should be set aside; alternatively, a declaration that the appointments as protectors of the first and/or second defendants are void, or should be set aside; and in the further alternative, an order under the inherent jurisdiction of the court removing the first and second defendants as protectors. The first defendant, Roger Seelig, resigned as a protector, in circumstances which I will relate, and on 17 February 2015 a consent order was made compromising the claim for his removal. Mr Haringman is therefore the only individual protector whose removal is now sought by the claimants.

6

A flavour of the intemperate tone in which this battle is being waged by the claimants may be gained from the written evidence of Gerald and Maxine on the present applications. In his second statement dated 12 November 2015, Gerald describes Mr Haringman as "a puppet of my father's", and says he has no respect for him "and absolutely no confidence in his judgment". Later in his statement, he says:

"9. I wake up each day hoping that Mr Haringman will act properly and leave Maxine and me and our advisors to involve ourselves in a trustee and protector review driven by our own and our families' best interests and untainted by our terrible feud with our parents. As Maxine has explained, the trustees have said that they will retire if that will help matters, but we have asked them to remain at least until Mr Haringman, who we regard as a puppet of our father and who has no interest in our happiness, has disengaged or been removed. Mr Haringman on the other hand clings to his purported office, now even seeking to widen these proceedings."

7

For her part, Maxine refers in her statement of the same date to Mr Haringman's "unhelpful meddling", and describes him in disparaging terms as an inexperienced conveyancing solicitor.

History: (1) The Settlements

8

The Settlements were established in 1967 upon broad discretionary trusts, with UK-resident trustees. Manny was then in his thirties (he is now in his eighties). There was an 80 year perpetuity period, and the Appointed Day was defined as three days before its expiry. The specified class of discretionary beneficiaries included (in the case of Manny's Settlement) his children and remoter issue, their spouses, and other family members. Brigitta's Settlement was in essentially identical terms.

9

By deeds of appointment dated 2 February 1976, the then trustees of each Settlement irrevocably appointed the trust fund upon accumulation and maintenance trusts for Maxine and Gerald contingently on attaining the age of 25, with one third of the fund to be held for Maxine and two thirds for Gerald. Subject thereto, the shares of Maxine and Gerald were held upon trust for them contingently on attaining the age of 50, which of course they both have. Clause 4 of each appointment contained a power of advancement, in the following terms:

"4. Notwithstanding the trusts hereinbefore declared:-

(i) The Trustees (being not less than two in number) may raise the whole or any part or parts of the vested contingent or presumptive share in the Trust Fund of either of the children of the Settlor who have attained the age of 25 years and pay or apply the same or transfer the same in specie to or for the advancement education or benefit of such child in such manner as the Trustees may think fit freed and discharged from the trusts hereof."

10

In 1989, the Settlements were exported and Monaco-based trustees were appointed, including the present fifth and sixth defendants, Mr Ledger and Mr Groom. Since that date, the trustees have been resident in Monaco. The present third defendant, The General Trust Company S.A. ("GTC"), is a Monaco trust company of which Mr Ledger and Mr Groom are officers, as well as being individual trustees in their own right.

11

By deeds dated 18 February 1994 ("the 1994 Deeds"), before Maxine and Gerald had reached the age of 50, the then trustees of each Settlement exercised the powers of advancement conferred on them by the 1976 appointments for the benefit of Maxine and Gerald, declaring fresh trusts of their still contingent shares. In broad terms, the effect of each advancement was to defer their contingent entitlements to capital until the Appointed Day (23 March 2047) if they were then alive, with a life interest in the income of the share meanwhile, subject to an overriding power of appointment vested in the trustees in favour of themselves and their issue, any spouse widow or widower of themselves or their issue, or charity. The trusts were intentionally not exhaustive, to avoid any risk of absolute entitlement for capital gains tax purposes, but each deed of advancement was expressed to be irrevocable.

12

In 1995, an appointment was made from Manny's Settlement constituting a separate fund for the benefit of the Settlors' grandchildren.

13

On 7 April 2003, the Trustees executed deeds of appointment ("the 2003 Deeds") supplemental to each Settlement, in exercise of the powers conferred by the 1994 Deeds. The main purpose of the appointments was to establish a protectorship regime, and to restate the beneficial trusts of the 1994 Deeds in substantially similar terms, but in certain important respects with a role for the Protector. Thus:

(a) the overriding power of appointment vested in the Trustees was now exercisable only "with the consent of the Protector" (clause 2(1));

(b) by virtue of clause 9, the appointment was made revocable before the Appointed Day, but only with the consent of both the Trustees and the...

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