Cristiana Crociani v Edoarda Crociani

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Jurats Blampied,J. A. Clyde-Smith
• Judgment Date: 11 September 2017
• Neutral Citation: [2017] JRC 146
• Date: 11 September 2017

Between

Cristiana Crociani

First Plaintiff

and

A (by her Guardian ad Litem, Nicolaas Delrieu)

Second Plaintiff

and

B (by her Guardian ad Litem, Nicolas Delrieu)

Third Plaintiff

and

Edoarda Crociani

First Defendant

and

Paul Foortse

Second Defendant

and

BNP Paribas Jersey Trust Corporation Limited

Third Defendant

and

Appleby Trust (Mauritius) Limited

Fourth Defendant

and

Camilla De Bourbon des Deux-Siciles

Fifth Defendant

and

Camillo Crociani Foundation IBC (Bahamas) Limited

Sixth Defendant

and

BNP Paribas Jersey Nominee Company Limited

Seventh Defendant

and

GFIN Corporate Services Limited

Eighth Defendant

[2017] JRC 146

Before:

J. A. Clyde-Smith, Esq., Commissioner, and Jurats Blampied and Ronge.

ROYAL COURT

(Samedi)

Trust — breach of trust and associated issues.

Authorities

Crociani v Crociani [2013] (2) JLR 369 .

Crociani v Crociani [2014] JCA 089 .

Crociani v Crociani [2014] UKPC 40 .

Crociani v Crociani [2016] JRC 220B .

Trusts (Jersey) Law 1984.

In re Internine Trust [2005] JLR 236 .

Trilogy Management Limited v YT Charitable Foundation (International) Limited & Others [2012] JCA 152 .

Equity & Trusts, 9th edition.

In re Merchant Navy Supply Association Limited [1947] 1 All ER 894 .

Liverpool and District Hospital for Diseases of the Heart v Attorney General [1981] Ch 193 .

Companies Act 1929.

Companies Act 1948.

Inland Revenue Commissioners v Yorkshire Agricultural Society [1927] 1 KB 611 at 633.

Charities Act 1960.

Companies Act 1989.

International Business Company Act (No 2) of 1990.

In Re Harper [2009] EWHC 1369 (Ch) at 47.

Alexander v Patterson & Sim [2015] CSIH 96 .

Hampden's Settlement Trusts [1977] DR 177 .

In re Esteem Settlement [2001] JLR 7 .

Pitt v Holt [2013] 2 AC 108 .

Duke of Portland v Lady Topham [1864] 11 H.L.C. 32 .

Cloutte v Storey [1911] Ch 18 .

Nolan v Minerva Trust and others [2014] (2) JLR 117 .

Re Pauling's Settlement [1962] 1 WLR 86 .

The P Trust and the R Trust [2015] JRC 196 .

Representation of the Z Trust [2015] JRC 196C .

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Underhill and Hayton Law of Trusts and Trustees 18th edition.

Scott v National Trust for Places of Historic Interest [1998] 2 AER 705 .

Bray v Ford [1896] A.C. 44 .

Public Trustee v Cooper [2001] W.T.L.R. 901 .

Target Holdings v Redfern [1996] AC 421 .

Pilkington v IRC [1964] A.C. 612 .

Re Clore's Settlement Trusts [1966] 1 W.L.R. 955 .

AIB Group (UK) plc v Mark Redler & Co Solicitors [2014] 3 WLR at 1367 .

Dicey, Morris and Collins, The Conflict of Laws 15th edition.

Kells v Cashback [2012] JCA 140 .

In the matter of the Antares and other trusts [2016] JRC 099 .

Cunningham v Cunningham [2009] JLR 227 .

Jasmine Trustees v Wells & Hind [2008] CH 195 .

Mendonca v Le Boutillier [1997] JLR 142 .

Bishopsgate Investment Management Limited v Maxwell (No 2) [1994] 1 All ER 261 .

Nicholls v Michael Wilson & Partners Limited [2012] NSWCA 383 at 171.

Maguire v Makaronis [1997] HCA 23 .

Lloyds TSB Bank plc v Markandan & Uddin (a firm) [2012] 2 All ER 884 .

Re Stewart [1897] 2 Ch 583 .

Santander UK plc v R A Legal Solutions [2014] EWCA Civ 183 .

Trustee Act 1925.

Re Windsor Steam Coal Company [1901] Ltd , (1929) 1 Ch 151.

National Trustees Co of Australia v General Finance Co of Australia [1905] AC 373 .

Judicial Trustees Act 1896.

Perrins v Bellamy [1898] 1 Ch 521 .

Fales v Canada Permanent Trust Co [1977] 2 S.C.R. 302 .

Bahin v Hughes (1886) 31 Ch. D 390 .

Bahamian Legitimacy Act 1956.

Legitimacy (Jersey) Law 1973.

Advocate A. D. Robinson, AdvocateE. B. Drummondand AdvocateP. O. J. Lewisfor the Plaintiffs.

The Second Defendant appeared on his own behalf.

Advocate W. A. F. Redgrave and Advocate S. M. Baker for the Third and Seventh Defendants.

Advocate E. Moran and Advocate S. Williams for the Fourth Defendant.

THE COMMISSIONER:

1 After some four years of fiercely contested interlocutory hearings, the final hearing of this matter has taken place between 16 ^TH January, and 3 ^RD April, 2017, and this is the judgment of the Court.

2 At its heart lies the validity of an appointment of very substantial assets (with an estimated value of some US$132M comprising a portfolio of investments, receivables and works of art), made out of the Grand Trust on 9 ^TH February, 2010, (“the 2010 appointment”), into a trust known as the Fortunate Trust and ultimately transferred to the settlor and one of the trustees of the Grand Trust, namely the first defendant (“Madame Crociani”).

3 The first plaintiff (who we will refer to as “Cristiana” as that is how she is described in the Grand Trust) and her two children (together “the plaintiffs”) seek to enforce their rights as beneficiaries of the Grand Trust to have the trust fund reconstituted in the hands of new trustees. There are other claims to which we will come shortly.

4 We start by giving a brief overview of the formal history of the Grand Trust, the facts of which are not in contention. Underlying this litigation is the story of the breakdown of the relationship between Cristiana on the one part and her mother, Madame Crociani, and her sister, the fifth defendant (who we will refer to as “Camilla” as that is how she is described in the Grand Trust) on the other part, who in happier times were a close-knit family. The history of that breakdown will emerge in due course.

OVERVIEW OF THE HISTORY OF THE GRAND TRUST

5 The Grand Trust was settled by Madame Crociani on 24 ^TH December, 1987. Although Italian, she was at that time residing in New York, and the trust agreement (which we will refer to as the “Grand Trust deed”) was drafted by her US legal advisers. It was governed by Bahamian Law and the first trustees were herself, a Mr Girolamo Cartia and Bankamerica Trust and Banking Corporation (Bahamas) Limited, (“Bankamerica”) a trust company carrying on business in the Bahamas.

6 We will consider the Grand Trust deed in detail later, but it records in clear terms on the face of the trust deed the intention of Madame Crociani to create within it separate trusts for each of her children, Camilla (then aged 16) and Cristiana (then aged 14).

7 The initial trust fund of the Grand Trust comprised the benefit of a promissory note (“the Promissory Note”), issued by Croci International BV (“Croci BV”), a company incorporated in the Netherlands, to Madame Crociani and assigned by her to the Grand Trust, in the sum of 75 billion lira, bearing interest at the rate of 8% per annum, and payable on 10 ^TH December, 2017. Under the provisions of the Grand Trust deed, the trustees were not obliged to enforce their rights under the Promissory Note.

8 At the time of the 2010 appointment, Croci BV was owned by Croci International NV (“Croci NV”), a company incorporated in the Netherlands Antilles beneficially owned by Madame Crociani. Croci NV and Croci BV formed part of what is described as “a Dutch sandwich”, the purpose of which was to reduce withholding tax on dividends paid to Croci BV by its wholly owned Italian subsidiary, Ciset SRL, (“Ciset”), which through its Italian subsidiary Vitrociset SPA (“Vitrociset”) operates a successful engineering, technical and logistics services business in Italy. There are numerous other companies within the Croci Group, holding prestigious real estate and a luxury yacht.

9 The Grand Trust acquired art work held through a company Twenty-three Investments Limited and over time built up a substantial portfolio of cash and investments from payments of interest made by Croci BV under the Promissory Note.

10 On 27 ^TH January, 1992, Bankamerica retired as a trustee and Chase Bank & Trust Company CI Limited (“Chase Bank”) was appointed as a co-trustee along with Madame Crociani and Mr Cartia. The proper law was changed from that of the Bahamas to that of Jersey.

11 On 1 ^ST December, 1997, Mr Cartia resigned as a trustee and on 20 ^TH March, 1998, a François Canonica and Dante Canonica, who had been nominated under clause Fourth of the Grand Trust deed to succeed him, disclaimed their rights to be appointed.

12 On 15 ^TH May, 1998, by letter addressed to Madame Crociani, Chase Bank retired as a trustee leaving her as the sole trustee.

13 On 9 ^TH April, 1999, the second defendant, Mr Paul Foortse, and Banque Paribas International Trustee (Guernsey) Limited (“Banque Paribas”) were appointed as co-trustees along with Madame Crociani and the proper law was changed from that of Jersey to that of Guernsey.

14 On 2 ^ND October, 2007, Banque Paribas (then known as BNP Paribas International Trustee (Guernsey) Limited – “BNP Guernsey”) retired as a trustee and the third defendant, BNP Paribas Jersey Trust Corporation Limited (“BNP Jersey”), was appointed as a co-trustee along with Madame Crociani and Mr Foortse and the proper law changed back to that of Jersey.

15 In 2004 and 2008, with funds distributed to her from the Grand Trust, Cristiana purchased two apartments in Miami, held through a British Virgin Islands incorporated company known as Crica Investments Limited (“Crica”). She lived in the first apartment for three months of the year, and the second apartment was purchased as an investment. In March 2010, Cristiana transferred the shares in Crica to the Fortunate Trust. She seeks to set aside that transfer on the grounds of mistake.

16 Between 2007 and 2011, substantial distributions were made out of the Grand Trust to Camilla and Cristiana. Much of it was transferred on by them to Madame Crociani (with whom they were living in an apartment in Monaco). It is alleged by the plaintiffs that these distributions to Cristiana (no complaint is made by Camilla), to the extent that they were transferred on by Cristiana to Madame Crociani, were a fraud on the power.

17 By the 2010 appointment,...