Mahme Trust v Lloyds TSB Bank Plc
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE LEWISON |
| Judgment Date | 15 September 2004 |
| Neutral Citation | [2004] EWHC 1931 (Ch),[2004] EWHC 2180 (Ch) |
| Court | Chancery Division |
| Docket Number | HC04C01720,No. HC04C01720 |
| Date | 15 September 2004 |
[2004] EWHC 1931 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rt.Hon. Sir Andrew Morritt
(The Vice-Chancellor)
No. HC04C01720
MS. C. NEWMAN Q.C. (instructed by Messrs. Herbert Smith) appeared on behalf of the Claimants.
MR. J. CHAPMAN (instructed by CMS Cameron McKenna) appeared on behalf of the Defendant.
(As approved by the Judge)
This is the application of the defendant, Lloyds TSB Bank plc, to which I shall refer as "the Bank", for a stay of all further proceedings on the grounds that Switzerland is clearly and distinctly the more appropriate forum and it is not unjust to require the claimants to bring their proceedings there. Alternatively, for directions as to the future conduct of these proceedings on the footing that the Part 8 claim by which they were commenced is inappropriate.
The first claim involves two issues, namely (1) whether in the light of the provisions of the Lugano Convention I have jurisdiction to order such a stay, and if so (2) whether in the light of the facts of this case I should do so.
The facts are long and somewhat complicated. For present purposes the following account will, I trust, suffice.
Mr. Shaker Al Abood, to whom I shall refer as "the deceased", was a wealthy Iraqi businessman. He was married to the fourth claimant, to whom I shall refer as "the wife". They had one son, the fifth claimant, who was born in June 1982, to whom I shall refer as "the son".
In January 1986 the deceased was suffering from a terminal illness for which he was receiving treatment in the United States. He sought and obtained advice from the Bank as to the collection and disposal of his assets. The individual principally concerned on behalf of the Bank was Mr. George Klonis, a senior manager in the International Wealth Management Department of the Bank's branch in Geneva. On 11th January 1986 the deceased established the SMA settlement in Jersey for the maintenance of his wife and son with a fund of some £30 million. In February 1986 the deceased arranged for assets to be deposited at the Geneva branch of the bank where he opened an account called the Body account for the benefit of himself and the wife. He instructed Mr. Klonis with regard to the establishment of the Shake Trust as a Trevunternehmen under Liechtenstein law. He signed the original by-laws to the Shake Trust to enable it to be duly constituted in due course.
The deceased died on 22nd February 1986 leaving the wife and the son as his most immediate dependants. Some while later, in May 2000, the wife obtained in England a grant of letters of administration with the will annexed to his estate but his estate and the trusts of his will do not enter into the account.
The Shake Trust was formally established by registration in Liechtenstein on 3rd March 1986, and an account in the name of the Trust was opened with the Geneva branch of the Bank. The relevant provisions governing the Trust, subject to the founders' rights of amendment and appointment and removal of trustees, were that Primeway SA, a subsidiary of the Bank, and Dr. Meier, a local lawyer, were the first trustees. Provision was made for 30% of the income to be payable to the trustees of the SMA settlement to the benefit of the wife, and the ultimate beneficiary was the son.
Seemingly, on 25th March 1986 there was a meeting between the wife and Mr. Klonis at which the wife gave instructions for the establishment of the Kamoud Trust for her benefit during her life and for the son after her death.
On 6th March 1992 there was apparently passed a resolution of the management committee of the Trust purporting to authorise the Bank's Geneva branch to charge an administration fee of not more than .5% per annum of the capital value of the Trust's assets. The wife's dissatisfaction with the administration of the Trust seems to have surfaced in 1997 when she first instructed lawyers in connection with its administration. Since then some eighteen or nineteen different firms, both here and abroad, have acted on her behalf.
As a consequence of the instruction of those lawyers, in July 1998 boxes of Trust documents were delivered to the wife's then advisers by the Bank. But in 1999 the wife and the son brought proceedings in Geneva against the Bank, Primeway, Dr. Meier and another. Their complaint arose from changes to the statutes of the Shake Trust effected by the trustees and implemented by the Bank. Further, on 4th April 2000 the Shake Trust and the son commenced proceedings in the Chancery Division of this court against Mr. Tayeb, the corporate trustee of the SMA settlement, and a Panamanian company controlled by Mr. Tayeb who was formerly the chairman of the Shake Trust's management committee. The purpose of those proceedings was to recover sums allegedly paid to Mr. Tayeb from the assets of the Shake Trust since 1st January 1992.
The Geneva proceedings were settled by an agreement made on 22nd June 2000. The terms of compromise provided for a complete discharge of the Bank of "everything related to the Shake Trust". Primeway and Dr. Meier resigned as trustees and provision was made for the appointment of the second and third claimants in these proceedings in their place. In consequence of that settlement, in June and July of the same year the Body account was closed (that is to say the Body account with the Bank); the Shake Trust bank account with the bank was moved from the Bank to Goldman Sachs; the Shake Trust was renamed the Mahme Trust, and the original statutes which governed it were reinstated. Primeway and Dr. Meier retired in favour of Mr. Jakob and Dr. Schwaibold.
The Chancery proceedings to which I have referred were concluded by a judgment of Rimer J. given on 26th July 2002. He concluded, amongst other things, that neither Mr. Tayeb nor the wife was a reliable witness; that the wife had demonstrated extreme antagonism against Mr. Klonis who had played a central role in the management of the Shake Trust affairs. He considered that the wife's claim was for the most part based on nothing more than her own unsupported suspicion, but he found that the wife's claim was made out to in respect of US$1 million as representing sums paid out of the Trust to Mr. Tayeb's company without proper authority.
In September 2003 the wife instructed Herbert Smith to act on her behalf. The correspondence between that firm and the Bank and its solicitors started on 13th October 2003 with a letter from the wife's solicitors to the Chief Executive of the Bank at its Head Office in London complaining about the way the Bank had handled the deceased's affairs and supporting the allegations in the letter by a thirteen page memorandum prepared by the wife's solicitors.
From then until the commencement of these proceedings on 24th May 2004 extensive correspondence and meetings between the parties and their representatives have occurred. On the wife's side they included her solicitors and counsel. On the Bank's side they featured Mr. Simon Davies, the Bank's managing director for international banking at its Head Office in London; Mr. Veal, a senior member of the Bank's internal audit department at Head Office in London; Mr. Andrew Scott-Plumber of the Bank's legal department in London, and the Bank's solicitors in England, CMS Cameron McKenna. A meeting between those, or some of those, parties had been arranged for 14th April 2004 at which Mr. Veal was to be present, and the contents of what has been called the "Klonis box" were to have been reviewed. But the meeting was cancelled by the Bank.
On 20th April 2004 the Bank declined to entertain any further co-operation with the wife. Mr. Scott-Plumber wrote this:
"Whilst I am not replying substantively to your letters, that should not be taken as an indication that any of the contentions you put forward are accurate or that the English courts would be a proper forum for any litigation.
My letter of 2nd April to your colleague, Mr. Gray, sets out the Bank's position. I would add that the very serious allegations made against the Bank by Mrs. Al Abood, the legal proceedings taken in Liechtenstein by her against ATU (characterised by Dr. Meier as a lawsuit); her stated intention to involve the police; purported repudiation of the June 2000 settlement agreement (your letter of 5th March) and more latterly your increasingly unveiled threats of litigation have all combined to make the Bank conclude that apart from the question of the FF 168,766.22, no further co-operation is possible with your clients on the matters raised by them. It has therefore decided that it should have no further dealings with them on such matters other than in response to any court action they decide to take."
These proceedings were commenced on 24th May 2004 by a part 8 claim issued by the claimants against the Bank. I shall refer to its contents in more detail later. At this stage it is sufficient to summarise the claim. The claimants rely on nine relationships between the parties, described variously as (1) adviser of the deceased in relation to the collection and organisation of his assets in contemplation of his death; (2) banker (at its Geneva branch) to the Shake Trust; (3) investment adviser and manager of the funds of the Shake Trust; (4) de facto trustee of the Shake Trust; (5) agent and banker for the deceased and the wife in relation to the collection of assets into and management of the Body account at the Geneva branch; (6) controller of the founder's rights in the Shake Trust; (7) adviser of the wife with regard to her assets in...
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