Walker v Stones

JurisdictionEngland & Wales
Judgment Date19 July 2000
Judgment citation (vLex)[2000] EWCA Civ J0719-1
Docket NumberA3/1999/0905
CourtCourt of Appeal (Civil Division)
Date19 July 2000
(1) Jason Walker
(2) Sarah Marchioness Of Milford Haven (née Walker)
(3)romla Walker
Claimants/Appellants
and
(1) James Nicholas Stones
(2) Timothy William Osborne
Defendants/Respondents
and
(2) Wiggin & Co (a Firm)
(3)john Hemingway
Respondents

[2000] EWCA Civ J0719-1

Before

Lord Justice Nourse

(vice President Of The Court Of Appeal, Civil Division)

Lord Justice Mantell and

Sir Christopher Slade

A3/1999/0905

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

(Mr Justice Rattee)

Royal Courts of Justice

Strand

London WC2

Mr T Philipson QC and Mr T Lowe (instructed by Messrs Harkavys, London W1) appeared on behalf of the Appellant Claimants.

Mr C Purle QC and Mr G Newey (instructed by Messrs Lovells, London EC1) appeared on behalf of the Respondent First and Second Defendants.

Mr A Simmonds QC and Miss A Clarke (instructed by Messrs Wiggin & Co, Cheltenham, Gloucestershire) appeared on behalf of the Third Respondent.

Mr D Oliver QC and Mr P Girolami (instructed by Messrs Richards Butler, London EC3) appeared on behalf of the Fourth Respondent.

Sir Christopher Slade
2

Introduction

3

The four original claimants in these proceedings, which were issued on 26th November 1996, were Jason Walker ("Jason"), Sarah Marchioness of Milford Haven ("Sarah"), Romla Walker ("Romla") and Jasaro S.A. ("Jasaro"). The first three claimants ("the children") are the children of Mr George Walker ("Mr Walker"), the founder and former chairman of the Brent Walker Group Plc ("BWG"), the financial collapse of which has given rise to this litigation. BWG was the fourth defendant to the original proceedings. The second and third defendants were Mr J. N. Stones and Mr T. W. Osborne ("the Trustees"), both partners in "Wiggin & Co", a firm of solicitors. They have at all times been the trustees of a settlement known as "the Bacchus Trust", constituted by a Declaration of Trust executed by them on 1st September 1989.

4

The Bacchus Trust was a settlement on discretionary trusts for a very wide class of potential beneficiaries, including members of the Walker family and charity. However, by virtue of a revocable "Deed of Appointment and Exclusion of Beneficiaries" executed by the Trustees on 4th September 1989, the three children became and have remained the primary beneficiaries under the trust for the time being.

5

At the material times, Mr John Hemingway, who is a solicitor, was a personal adviser to Mr Walker and was himself a non-executive director of BWG. He and Mr Stones had a long standing professional association. He acted in some consultancy role to Wiggin & Co and Mr Stones from time to time allowed him to be held out as his partner. Mr Hemingway was also a director of Birdcage Walk Limited ("Birdcage Walk"). This Hong Kong company, of which Mr Stones was an alternate director, at the material times held between 20–25% of the shares in BWG. The assets held or managed by Birdcage Walk consisted almost entirely of its shares in BWG.

6

Mr Walker was a beneficiary with a life interest under a settlement known as the Monaco Trust. His brother Mr William Walker had a similar interest under a settlement known as the Bahamas Trust. The assets of the Monaco and Bahamas Trusts consisted of all the issued shares in Birdcage Walk. Mr Walker thus had an indirect interest in Birdcage Walk through the Monaco Trust.

7

The essence of the complaint made by the three children in the proceedings, as originally constituted, was that the Trustees had committed breaches of trust by applying assets of the Bacchus Trust or exercising their discretions thereunder for the benefit of Mr Walker, BWG and Birdcage Walk rather than the beneficiaries under the Trust and that Standard Chartered Bank ("SCB"), which was joined as first defendant to the proceedings, had participated in such breaches of trust.

8

In a judgment given on 27th February 1998, Rattee J refused the claimants leave to re-reamend their statement of claim against SCB and struck out their claim as against that defendant.

9

By an Order dated 4th March 1998 Jonathan Parker J dismissed Jasaro's claims against the Trustees and directed that Jasaro should cease to be a party to the proceedings. On 12th March 1998 the claimants' statement of claim was amended. The pleading was reamended on 23rd June 1998 pursuant to an Order of Master Moncaster made on 27th May 1998. Thereafter BWG too ceased to be a party to the proceedings.

10

By an Order dated 25th March 1999 Rattee J (a) refused an application by the claimants to re-reamend their reamended statement of claim, (b) refused an application on their part to join Wiggin & Co and Mr John Hemingway as parties to the proceedings (c) struck out the reamended statement of claim and (d) dismissed the action.

11

With permission of Chadwick LJ, given on 12th August 1999, Sarah and Romla, but not Jason, now appeal to this Court from Rattee J's Order of 25th March 1999.

12

The claimants' pleadings

13

At the time when he delivered the judgment now under appeal, Rattee J had before him copies of

(a) a very lengthy reamended statement of claim showing the amendments in red and the reamendments in green ("the reamended statement of claim"); and

(b) the draft of a proposed re-reamended pleading, showing the proposed re-reamendments in purple ("the proposed re-reamended statement of claim").

14

During the course of argument before the Judge, certain further possible amendments were discussed, but not incorporated in the pleading. Since then, in an attempt to meet criticism of the earlier pleading, a reformulated draft statement of claim was submitted to Chadwick LJ and has accompanied the notice of appeal. I will refer to this as "the recently reformulated pleading".

15

The appellants' counsel in their skeleton argument frankly and rightly accept that the reamended statement of claim which the Judge had before him "could have been pleaded with greater precision and conceptual clarity". While sympathising with the difficulties facing the pleaders in this complex and unusual case, I have to say that in my opinion the imprecise and obscure features which characterised the earlier pleading have not been entirely eliminated either by the proposed re-reamended statement of claim or even by the recently reformulated pleading. These features have substantially added to the problems confronting this Court in dealing with this appeal.

16

I now turn to the facts of the case.

17

The establishment of the Bacchus Trust and its acquisition of interests in four French vineyards

18

The Bacchus Trust was established to acquire for a sum of about £50 million BWG's interests in four highly regarded French vineyards (Châteaux La Garde, La Tour, Smith Haut Lafitte and Rausan Segla) and a French wine merchants business (Maison Aubert Frères S.A.). At the time of the creation of the Bacchus Trust, the La Tour and Rausan vineyards were owned by a French company, Holt Frères et Fils S.A. ("Holt") while the Smith Haut Lafitte and la Garde vineyards were owned by another French company then known as Louis Eschenauer S.A. (The last-mentioned company changed its name to "Smith Haut Lafitte S.A." in 1990 and will hereafter be referred to as "SHL".) Holt held 65% of the issued shares in SHL, while BWG held the remaining 35%. BWG held all the issued shares in Holt.

19

In order to effect the transfer of BWG's interests in the vineyards to the Bacchus Trust, two companies were formed, namely JSR Estates Limited ("JSR Estates"), an English company, and Jasaro, a French company. The Trustees acquired the two issued shares in JSR Estates, which in turn acquired 2493 of the 2500 issued shares in Jasaro. Jasaro then, in November 1989, purchased the shareholdings of BWG in Holt and SHL. In the result Jasaro came to hold all the issued shares in Holt and 35% of the issued shares in SHL, the other 65% of which were held by Holt. Jasaro thus owned all the equity in Holt and SHL.

20

The principal assets of the Bacchus Trust have at all material times been the two issued shares in JSR Estates. At the material times the directors of JSR Estates were Mr Stones, Mr Peter Milner and Mr Michael Edge; the directors of Jasaro were Jason, Mr Ian Ledger and Mr Gordon Blair; the directors of Holt and of SHL were Mr George Walker, Jason and Mr Jacques Theo.

21

Though Mr Stones was a director of JSR Estates, neither he nor any of his partners have ever been directors of any of the subsidiary or sub-subsidiary companies of JSR Estates. Clauses were included in the Bacchus Declaration of Trust (prepared by Wiggin & Co) which were drafted in exceptionally wide terms and were clearly intended to give the Trustees the maximum possible protection in performing their functions as trustees. They are of crucial importance on the present appeal.

22

Clause 14 provides:

"14.Exoneration of Trustees from management of companies

The trustees shall not be bound or required to interfere in the management or conduct of the business of any body corporate in respect of which the Trustees shall hold shares (whatever the proportion of the issued share capital so held) and unless they have actual knowledge of some act of dishonesty or misappropriation of monies on the part of the directors having the management of such body corporate the Trustees shall be at liberty to leave the conduct of its business (including the payment or non-payment of dividends) wholly to such directors and no person having any interest under this Settlement shall be entitled to require the distribution of any dividend by any body corporate in which the Trust Fund or any part thereof may be invested or require the Trustees to exercise any powers they...

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