TMSF v Merrill Lynch
| Jurisdiction | UK Non-devolved |
| Judge | (Lord Hope of Craighead, Lord Mance, Lord Collins of Mapesbury, Lord Clarke of Stone-cum-Ebony, Lord Reed) |
| Judgment Date | 21 June 2011 |
| Court | Privy Council |
| Date | 21 June 2011 |
(Lord Hope of Craighead, Lord Mance, Lord Collins of Mapesbury, Lord Clarke of Stone-cum-Ebony, Lord Reed)
S. Moverley Smith, Q.C., A. Pelling and C.G. Russell for the appellant;
C.D. McKie and Ms. J. Clarkson for the first to fifth respondents;
N. Meeson, Q.C. and S.G. Leontsinis for the sixth respondent.
(1) Bainton v. WardENR(1741), 2 Atk. 172; 26 E.R. 507, referred to.
(2) Bremer Vulkan Schiffbau & Maschinenfabrik v. S. India Shipping Corp. Ltd., [1981] A.C. 909; [1981] 2 W.L.R. 141; [1981] 1 All E.R. 289, referred to.
(3) British Airways Bd. v. Laker Airways Ltd., [1985] A.C. 58; [1984] 3 All E.R. 39; [1984] 3 All E.R. 39, referred to.
(4) Channel Tunnel Group Ltd. v. Balfour Beatty Constr. Ltd., [1993] A.C. 334; [1993] 1 All E.R. 664, referred to.
(5) Chief Const. (Kent) v. V, [1983] Q.B. 34; [1982] 3 All E.R. 36, referred to.
(6) Churston Settled Estates, In re, [1954] Ch. 334; [1954] 2 W.L.R. 386; [1954] 1 All E.R. 725, dicta of Roxburgh J. considered.
(7) Clarkson v. Clarkson, [1994] BCC 921; [1996] BPIR 37, dicta of Hoffmann, L.J. applied.
(8) Commr. of Stamp Duties v. Stephen, [1904] A.C. 137, referred to.
(9) Cowles, In re(1992), 143 B.R. 5, referred to.
(10) Derby & Co. Ltd. v. Weldon (No. 6), [1990] 1 W.L.R. 1139; [1990] 3 All E.R. 263, referred to.
(11) Edwards & Co. v. Picard, [1909] 2 K.B. 903, not followed.
(12) Field v. Field, [2003] 1 F.L.R. 376; [2003] Fam. Law 76, distinguished.
(13) Gilchrist, Ex p., In re ArmstrongELR(1886), 17 Q.B.D. 521, dicta of Fry, L.J. considered.
(14) Gouriet v. Att.-Gen.ELR, [1978] A.C. 435; sub nom. Gouriet v. Union of P.O. Workers, [1977] 3 All E.R. 70, referred to.
(15) Grassa, In re(2007), 363 B.R. 650, referred to.
(16) Harris v. Beauchamp Bros., [1894] 1 Q.B. 801, not followed.
(17) Holmes v. Coghill(1802), 7 Ves. Jr. 499; 32 E.R. 201, referred to.
(18) Holmes v. Millage, [1893] 1 Q.B. 551, not followed.
(19) Maclaine Watson & Co. Ltd. v. Intl. Tin Council, [1988] Ch. 1; [1987] 3 W.L.R. 508; [1987] 3 All E.R. 787; on appeal, [1989] Ch. 253; [1988] 3 W.L.R. 1169; [1988] 3 All E.R. 257, not followed.
(20) Markham v. FayUNK(1995), 884 F. Supp. 594, referred to.
(21) Masri v. Consolidated Contractors Intl. Co. SAL (No. 2), [2009] Q.B. 450; [2009] 2 W.L.R. 621; [2008] 2 Lloyd”s Rep. 128; [2008] 1 C.L.C. 657; [2008] EWCA Civ 303, applied.
(22) Mathieson, In re, [1927] 1 Ch. 283, considered.
(23) Melville v. Inland Rev. Commrs., [2002] 1 W.L.R. 407; [2001] S.T.C. 1271; [2001] EWCA Civ 1247, referred to.
(24) Mercedes Benz A.G. v. Leiduck, [1996] A.C. 284; [1995] 3 All E.R. 929; [1995] 3 L.R.C. 227, referred to.
(25) Morgan v. Hart, [1914] 2 K.B. 183, not followed.
(26) Morgan v. Inland Rev. Commrs., [1963] Ch. 438; [1963] 2 W.L.R. 416; [1963] 1 All E.R. 481, considered.
(27) North London Ry. Co. v. Great N. Ry. Co.ELR(1883), 11 Q.B.D. 30, referred to.
(28) Parker v. Camden London Borough Council, [1986] Ch. 162; [1985] 3 W.L.R. 47; [1985] 2 All E.R. 141, not followed.
(29) Pickering v. Liverpool Daily Post & Echo Newspapers Plc., [1991] 2 A.C. 370; [1991] 2 W.L.R. 513; [1991] 1 All E.R. 622, referred to.
(30) Siskina v. Distos Cia. Naviera S.A., The Siskina, [1979] A.C. 210; [1977] 3 W.L.R. 818; [1977] 3 All E.R. 803, referred to.
(31) South Carolina Ins. Co. v. Assurantie Maatschappij ‘de Zeven Provincien’ N.V., [1987] A.C. 24; [1986] 3 W.L.R. 398; [1986] 3 All E.R. 487, dictum of Lord Brandon applied.
(32) State Street Bank & Trust Co. v. ReiserUNK(1979), 389 N.E. 2d 768, referred to.
(33) TMSF v. Demirel, [2007] 2 All E.R. 815; [2007] 1 Lloyd”s Rep. 223; [2007] I.L. Pr. 8; [2006] EWHC 3354 (Ch); on appeal, [2007] 1 W.L.R. 2508; [2007] 4 All E.R. 1014; [2007] 2 All E.R. (Comm) 925; [2007] 2 Lloyd”s Rep. 440; [2007] EWCA Civ 799, referred to.
(34) Thorpe v. Goodall(1811), 17 Ves. 388, 460; 34 E.R. 150, 178, distinguished.
(35) Triffitt”s Settlement, In re, [1958] Ch. 852; [1958] 2 W.L.R. 927; [1958] 2 All E.R. 299, dictum of Upjohn J. applied.
(36) US v. RitterECAS(1977), 558 F. 2d 1165, referred to.
(37) Watts, In re, [1931] 2 Ch. 302, dictum of Bennett J. considered.
Grand Court Law (2008 Revision), s.11(1):
‘The Court shall be a superior court of record and, in addition to any jurisdiction heretofore exercised by the Court or conferred by this or any other law for the time being in force in the Islands, shall possess
and exercise, subject to this and any other law, the like jurisdiction within the Islands which is vested in or capable of being exercised in England by-
(a) Her Majesty”s High Court of Justice; and
(b) the Divisional Courts of that Court,
as constituted by the Supreme Court of Judicature (Consolidation) Act, 1925, and any Act of the Parliament of the United Kingdom amending or replacing that Act.’
Senior Courts Act 1981 (formerly Supreme Court Act 1981 (c.54), renamed 2005), s.37(1): The relevant terms of this sub-section are set out at para. 5.
Trusts-receivers-appointment-may appoint receivers by way of equitable execution over general power of revocation since tantamount to ownership-by Senior Courts Act 1981, s.37(1) and Grand Court Law (2008 Revision), s.11(1), may appoint receiver in all cases in which just and convenient to do so-jurisdiction may be incrementally developed though not unfettered-demands of justice overriding consideration-may appoint receiver whether or not asset presently amenable to execution
TMSF, as a judgment creditor of Mr. Demirel, sought the appointment by the Grand Court of receivers by way of equitable execution over his power to revoke two Cayman trusts.
TMSF had obtained summary judgment in the Grand Court to recover a judgment debt obtained against Mr. Demirel in Turkey, who had now been declared bankrupt in Turkey. It sought the appointment of receivers by way of equitable execution over Mr. Demirel”s power of revocation over two Cayman trusts, to enable its assets to be applied in satisfaction of the judgment.
The Grand Court (Smellie, C.J.) dismissed TMSF”s application for the appointment of receivers (in proceedings reported at 2009 CILR 324) on the basis that, although the jurisdiction to appoint a receiver was not limited to property available for legal execution, the subject still needed to be in the nature of property. The distinction between powers and property was well-established, and there was no authority to the effect that, in the absence of specific legislation, general powers were tantamount to property. Mr. Demirel”s power of revocation was not tantamount to ownership, nor was it delegable, and it would not be appropriate to make an order for receivers to be appointed by way of equitable execution over it.
On appeal, the Court of Appeal (Chadwick, P., Mottley and Vos, JJ.A.) upheld the decision of the Grand Court (in proceedings reported at 2009 CILR 474). It held that it did not have jurisdiction to appoint receivers by way of equitable execution over a power of revocation in a trust-any change in the law to allow this would have to be made by legislation-and even if it did, it would not have exercised the jurisdiction without further
information, as the natural person to get in Mr. Demirel”s assets was his trustee in bankruptcy.
On appeal to the Privy Council, TMSF submitted that (a) receivers should be appointed over Mr. Demirel”s power of revocation by way of equitable execution under s.37(1) of the Senior Courts Act 1981, as it was just and convenient to do so; (b) it was not to be presumed that powers were not within the scope of equitable execution unless a statute provided otherwise; (c) unfettered powers of revocation were tantamount to property and therefore within the scope of equitable execution; (d) moreover, as a matter of policy, steps should be taken so far as possible to ensure that the Cayman court”s judgments were enforced; and (e) Mr. Demirel should be ordered to delegate his power of revocation, which was delegable and non-fiduciary, to the receivers.
The respondents submitted in reply that (a) receivers should not be appointed by way of equitable execution over Mr. Demirel”s power of revocation, as it was not itself property; (b) unless and until he exercised his power of revocation, he was not the owner of the property subject to the settlement, but legal title was vested in the trustee; (c) his discretion to revoke the trusts should not effectively be exercised for him; (d) there was no legislative basis for allowing a single judgment creditor to enable the destruction of trusts to the detriment of their beneficiaries; (e) any development of the law to allow this should be left to the Cayman legislature; and (f) TMSF”s application was, in substance, for the delegation of his power of revocation to it, which the court had no jurisdiction to do.
Held, advising that the appeal be allowed:
(1) The Board would recommend appointing receivers over Mr. Demirel”s power of revocation and ordering him to assign or delegate it to the receivers. The court had the power to appoint a receiver in all cases in which it appeared just and convenient to do so by s.37(1) of the Senior Courts Act 1981 (part of Cayman law by virtue of the Grand Court Law (2008 Revision), s.11(1)). The court”s jurisdiction in this regard could be incrementally developed, although it was not unfettered. The demands of justice were the overriding consideration, and a receiver by way of equitable execution could be appointed over an asset regardless of whether it was presently amenable to execution (paras. 54–58).
(2) It would be appropriate to exercise the s.37(1) jurisdiction in this case. There was no invariable rule that a power was distinct from ownership. Nor was there an invariable rule that any...
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