BNP Paribas Jersey Trust Corporation Ltd v Cristiana Crociani

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: Sir William Bailhache,James McNeill,John Martin
• Judgment Date: 25 July 2018
• Neutral Citation: [2018] JCA 136A
• Date: 25 July 2018

[2018] JCA 136A

COURT OF APPEAL

Before:

Sir William Bailhache, Kt., President

James McNeill, QC; and

John Martin, QC.

Between

BNP Paribas Jersey Trust Corporation Limited

First Appellant

and

Appleby Trust (Mauritius) Limited

Second Appellant

and

Camilla de Bourbon des Deux Siciles

Third Appellant

and

Cristiana Crociani

First Respondent

and

A (by her Guardian ad Litem)

Second Respondent

and

B (by her Guardian ad Litem)

Third Respondent

Advocate W. A. F. Redgrave for the First Appellant.

Advocate E Moran for the Second Appellant

Advocate A D Hoy for the Third Appellant.

Advocate A D Robinson for the Respondents

Authorities

Crociani v Crociani [2017] JRC 146.

Trusts (Jersey) Law 1984

Target Holdings Limited v Redferns [1996] AC 421

AIB Group (UK) plc v Mark Redler & Co Solicitors [2015] AC 1503

Canson Enterprises Limited v Boughton & Co (1991) 85 DLR (4th) 129

Re Pauling's Settlement Trusts [1962] 1 WLR 86, 108, 115

Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484

Walton Dégrèvement [2015] JRC 003

Twinsectra Ltd v Yardley (HL) [2002] 2 AC 164

Barlow Clowes v Eurotrust Ltd (PC) [2006] 1 WLR 1476

Trusts (Amendment No. 6) (Jersey) Law 2013

Investec Trust (Guernsey) Limited and another v Glenalla Properties Limited and others [2018] UKPC 7

States of Jersey Law 2005

Futter v Futter and Pitt v Holt [2013] 2 AC 108.

In re A Trust [2009] JLR 447 [2009] JLR 447

In the matter of the Lochmore Trust [2010] JRC 068

In re S Trust [2011] JLR 375

In the matter of Seaton Trustees Limited [2009] JRC 050

In the matter of the B Life Interest Settlement [2012] JRC 229

In re Z Trust 2016(1) JLR 132

Link Trustee Services (Jersey) Limited re the B Trust [2018] JRC 043.

Wilson v First County Trust Ltd (No. 2) [2004] 1 AC 816

Westdeutsche Landesbank v Islington LBC [1996] AC 669

Bristol & West Building Society v Mothew [1998] Ch 1

Guardian Trust and Executors Company of New Zealand Ltd v Public Trustee of New Zealand [1942] AC 115

Armitage v Nurse [1998] Ch 241, 252C-D

Re Barney [1892] 2 Ch 265

Kells v Cashback Limited [2012] JCA 140

Cloutte v Storey [1911] 1 Ch 18

Nestlé v NatWest Bank plc [1993] 1 WLR 1260

Crociani v Crociani [2017] JRC 145A

Trust — appeal against the judgment of the Royal Court [2017] JRC 146

PRESIDENT:

Introduction

1 This is the judgment of the court which concerns the appeals of three of the parties to proceedings before the Royal Court which resulted in a lengthy trial in 2017. The judgment in the Royal Court (Clyde-Smith, Commissioner, with Jurats Blampied and Ronge) Crociani v Crociani [2017] JRC 146 is compendious and a model of clarity and precision. For the most part the appeals are presented in relation to discrete points concerning issues of law and we therefore restrict our opening narration of the factual background to matters which enable a general understanding of the context within which the issues appealed arise. Our responses in this judgment to these appeal issues will be found in the following sections:

• (a) Salient factual background: paragraphs 2 – 13

• (b) Equitable Compensation: paragraphs 14 – 50

• (c) Remedies upon setting aside transfers because of mistake: paragraphs 51 – 116

• (d) Exoneration: paragraph 117

• (e) Breach of trust: paragraphs 118 – 171

• (f) Camilla's Appeal: paragraphs 172 – 202

Background

2 A family trust, known in these proceedings as the “Grand Trust” was settled on 24 December 1987 by the first defendant, referred to in these proceedings as Madame Crociani. The trust deed was drafted by legal advisers to Madame Crociani, based in the United States. The trust was governed by Bahamian Law and the first trustees were Madame Crociani, one Mr. Girolamo Cartia and Bankamerica Trust and Banking Corporation (Bahamas) Limited (“Bankamerica”), a trust company carrying on business in the Bahamas. In the trust deed Madame Crociani stipulated that the property held on trust was to be held on two separate trusts, in identical terms, for each of her two children and issue: one for her daughter Camilla, the fifth defendant in these proceedings (then aged 16 years) and the other for her daughter Cristiana, the first plaintiff in these proceedings (then aged 14 years).

3 The property initially settled in the hands of the trustees was the benefit of a promissory note (“the Promissory Note”). The Promissory Note had been issued to Madame Crociani by a family company, Croci International BV (“Croci BV”), a company incorporated in the Netherlands, in the sum of 75 billion Italian lira, bearing interest, and payable on 10 December 2017. Madame Crociani assigned the Promissory Note to the trustees of the Grand Trust.

4 By 2010, when acts relevant to these proceedings began to occur, Croci BV was owned by Croci International NV (“Croci NV”), a company incorporated in the Netherlands Antilles and beneficially owned by Madame Crociani. The corporate structure had been arranged for tax purposes relating, to a great extent, to a successful Italian company, Vitrociset SPA (“Vitrociset”), whose profits were in the control of its sole shareholder, another Italian company Ciset SRL (“Ciset”), which was itself wholly owned by Croci BV, which received relevant dividends. Over time the Grand Trust built up a substantial portfolio of artwork, investments and cash as a result of the receipt of payments of interest made by Croci BV under the Promissory Note.

5 As far as proper governance of the Grand Trust is concerned, on 27 January 1992 the proper law of the Grand Trust was changed from that of the Bahamas to that of Jersey. By April 1999 the trustees were Madame Crociani, the second defendant (“Mr. Foortse”) and Banque Paribas International Trustee (Guernsey) Limited (“Banque Paribas”) and the proper law had been changed from that of Jersey to that of Guernsey. By October 2007 the trustees were Madame Crociani, Mr. Foortse and the third defendant, BNP Paribas Jersey Trust Corporation Limited (“BNP Jersey”) and the proper law had been changed back to that of Jersey.

6 Quite separately from the arrangements for the Grand Trust, but of particular importance to part of these appeals, in 2004 and 2008 Cristiana purchased two apartments in Miami. They were held by her through a company incorporated in the British Virgin Islands, Crica Investments Limited (“Crica”). Cristiana and her family lived in one apartment for three months of the year and the other was held as an investment. Until 2010 Cristiana held almost the entire shareholding of Crica, with the remaining 0.02% being held by Camilla as a requirement of the structure of ownership.

7 Parallel to the Grand Trust, in September 1989 Madame Crociani settled property in what is known in these proceedings as the Fortunate Trust. The property held on trust in the Fortunate Trust comprised valuable works of art which had been acquired by Madame Crociani and her husband predominantly in the 1970s, separate from artworks acquired by the trustees of the Grand Trust. Madame Crociani's husband, Camillo Crociani, died of cancer in 1980. By 2010 Madame Crociani was the sole beneficiary of income and capital during her lifetime, and she had power to revoke the trust and withdraw all of the capital from it. Camilla and Cristiana and their respective issue were reversionary discretionary beneficiaries.

8 In 2010 an appointment was made by Madame Crociani, Mr. Foortse and BNP Jersey, as the trustees of the Grand Trust, to Madame Crociani and BNP Jersey as trustees of the Fortunate Trust (the “2010 Appointment”) of the whole assets of the Grand Trust apart from the Promissory Note. The 2010 Appointment was made under and by reference to Clause Eleventh of the Grand Trust deed, which gave the trustees power to appoint the trust fund to other trusts for the benefit of “all or any one or more exclusively of the others or other of the beneficiaries (other than the Settlor) …”. The settlor of the Grand Trust, of course, was Madame Crociani and, as we have just noted, by 2010 Madame Crociani was the sole immediate beneficiary of the Fortunate Trust, holding a power of revocation.

9 Separately, in 2010 Cristiana transferred one half of her shareholding in Crica to Camilla and the whole shareholdings were transferred to the Fortunate Trust (the “Crica transfers”). The circumstances surrounding the Crica transfers are the subject of one of the appeals. The Royal Court found that the Crica transfers had been carried out under a serious mistake on the part of Cristiana and should be set aside. That finding is not the subject of challenge: the essence of the appeal is as to the appropriate remedies.

10 By late 2010 – 2011 what had been a close relationship between Madame Crociani and her two daughters had broken down, with Cristiana and her family being estranged from Madame Crociani and Camilla. In about late November 2010 Cristiana had been removed as a director of Croci BV without her knowledge and Camilla had become the owner of Croci BV. At about the same time, and in questionable circumstances, Cristiana had transferred her shares in Croci NV back to Madame Crociani. In June 2011 Madame Crociani revoked the Fortunate Trust and withdrew all of the assets which, by then, included all of the assets appointed under the 2010 Appointment from the Grand Trust and the Crica shares which held Cristiana's Miami apartments. It appears that those assets have been dispersed by Madame Crociani around the globe and, whilst the Royal Court has made an order for disclosure at the instance of BNP Jersey, Madame Crociani has refused to disclose where and how they are held.

11 In February 2012 Madame Crociani, Mr. Foortse and BNP Jersey purported to retire as trustees of the Grand Trust and to appoint Appleby Trust (Mauritius) Limited (“Appleby Mauritius”), the fourth defendant, in their place. As its name suggests,...