Dorothy Audrey Brakspear v Nedgroup Trust (Jersey) Ltd

JurisdictionJersey
CourtRoyal Court
JudgeJ. A. Clyde-Smith,Jurats Grime,Thomas
Judgment Date05 July 2018
Neutral Citation[2018] JRC 121
Date05 July 2018
Between
Dorothy Audrey Brakspear
First Plaintiff

and

Alison Shane Bowler
Second Plaintiff

and

Ian Donald Brakspear
Third Plaintiff
and
Nedgroup Trust (Jersey) Limited
Defendant

[2018] JRC 121

Before:

J. A. Clyde-Smith, Esq., Commissioner, and Jurats Grime and Thomas.

ROYAL COURT

(Samedi)

Trusts — application by the defendant to strike out the whole or parts of the Order of Justice of the plaintiffs dated 20th November, 2017

Authorities

Bankers' Books Evidence (Jersey) Law 1986.

Royal Court Rules 2004.

Lapidus v Le Blancq [2013] 2 JLR 308.

Holmes v Linguard [2015] JRC 226.

Re Wooley [1991] JLR Note 11 C.

Classic Herd Limited v Jersey Milk Marketing Board [2014] 2 JLR Note 4.

Trusts (Jersey) Law 1984.

Law Reform (Miscellaneous Provisions) (Jersey) Law 1960.

Makarenko v CIS Emerging Growth Limited [2001] JLR 348.

Armitage v Nurse [1998] Ch 241, at p. 254.

Spread Trustee Co Ltd v Hutcheson [2012] 2 AC 194, at p. 200.

In the matter of II [2018] JRC 031

In the matter of II [2016] JRC 116

Three Rivers DC v Bank of England (No 3) [2003] 2 AC 1

JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm)

Abbar v Saudi Econimic & Development Company Real Estate [2010] EWHC 2132 (Ch)

Foley v Lord Ashcroft [2012] EWHC 1710 QB

Dubai Islamic Bank v Ridley [2016] JRC 102

Virgin Atlantic Airlines Limited v Zodiac Seats UK Limited [2014] AC 160

A v B (Family) [2015] JRC 262

Carl Zeiss Stiftung v Rayner & Keeler Ltd and Others No 2 [1967] 1 AC 853

House of Spring Gardens Limited v Waite [1991] QB 241

Halsbury's Laws of England Volume 12A

Stephenson v Garnett [1898] 1 QB 677 CA

Johnson v Gore Wood [2002] 2 AC 1, at 31D-E

Kotonou v Nat West [2015] EWCA 1106

Re Lart [1896] 2 Ch 788

Esteem [2003] JLR 188

MacKinnon v Regent Trust Company Limited [2005] JLR 198

Law Society Code of Conduct.

Dorothy Audrey Breakspear was present in person.

Advocate M. H. D. Taylor for the defendant

Advocate J.S. Dickinson appeared as Amicus Curiae

THE COMMISSIONER:
1

This is an application by the defendant to strike out the whole or parts of the Order of Justice of the plaintiffs dated 20 th November, 2017.

2

In essence, the defendant alleges that the plaintiffs are seeking by their Order of Justice to re-litigate issues which it says are either prescribed or which have already been finally determined by the courts of South Africa. It is necessary, therefore, for the Court to go into some detail as to the background.

The background
3

The defendant and the three associated companies that played a role in this matter all form part of a group that has undergone changes in its name over the period in question, so that in the case of the defendant, it started as Gerrard Trust (Jersey) Limited, and then changed to Fairbairn Trust Limited and finally, to Nedgroup Trust (Jersey) Limited. For convenience, we are going to refer to the four Nedgroup companies concerned as “the Jersey Trust Company”, “the Jersey Bank”, “the Guernsey Trust Company” and “the Isle of Man Bank”.

4

In 2003, the first plaintiff, Mrs Brakspear, and her daughter, the second plaintiff, Mrs Bowler, were trapped in Zimbabwe in a worsening situation in which they feared that their personal security and wellbeing was under threat. Mrs Brakspear's son, and Mrs Bowler's brother, the third plaintiff, Mr Brakspear, lived in South Africa.

5

The family had a connection with the Guernsey Trust Company in that Mrs Brakspear's late husband had established a discretionary trust there (“the J Trust”) of which Mrs Brakspear, Mrs Bowler (and her children) and Mr Brakspear were beneficiaries. As we understand it, the J Trust then had assets of some £1.5 million.

6

Mr Brakspear put forward a proposal for an investment in a farm in South Africa as a means by which his mother and sister could migrate there. It is unnecessary for the purposes of this judgment to explain how that process would work. He liaised with a number of advisers as to the structure to be put in place to hold that investment. The documentation we have seen shows Mr Brakspear as taking a leading role in this project.

7

The arrangement ultimately resolved upon was the creation of a trust structure for the benefit of Mrs Brakspear and Mrs Bowler, whereby a new trust, to be called “the Westley Trust”, would incorporate a wholly owned BVI company Westley Holdings BVI Limited (“Westley Holdings”) which would acquire a South African company, Moneybox Investments 0012 (Pty) Ltd (“Moneybox”), which in turn would hold a 60% interest in another South African company West Dunes Properties 5 Pty Ltd (“West Dunes”) which in turn would own the farm in South Africa. The remaining 40% of West Dunes was held through South African companies in which Mr Brakspear's business partner held an interest.

8

The Westley Trust was created by declaration by the Jersey Trust Company on 5 th May, 2004, over an initial £10. The named beneficiaries were Mrs Brakspear and Mrs Bowler, and it is a discretionary settlement in standard form, governed by Jersey law.

9

The purchase price of the farm, ZAR20,900,000 (South African Rands), was funded from two sources, namely the J Trust and a loan from FirstRand Bank Limited (“FirstRand”) in South Africa and it was structured in this way:-

  • (i) FirstRand lent West Dunes ZAR17.5 million secured as a first charge over the farm and by a personal guarantee from Mr Brakspear. Interest was to be rolled up for two years.

  • (ii) The Jersey Bank issued a guarantee in favour of FirstRand in the sum of £550,000.

  • (iii) The Jersey Bank lent the Jersey Trust Company as trustee of the Westley Trust the sterling equivalent of ZAR4 million (approximately £340,000). The bulk of that was on-lent by the trustee to Westley Holdings which in turn was used to acquire the capital of Moneybox, although the monies were paid directly to the lawyers of the vendor of the farm on the instructions of Mr Brakspear.

  • (iv) The liabilities of the Jersey Bank both in respect of the guarantee in favour of FirstRand and the loan to the Westley Trust were secured by a guarantee issued by the Guernsey Trust Company as trustee of the J Trust, secured over a deposit of £900,000 held by the Guernsey Trust Company with the Isle of Man Bank.

  • (v) In addition, the Jersey Trust Company as trustee of the Westley Trust gave the Jersey Bank a counter indemnity in respect of the above facilities granted by the Jersey Bank at its request.

    These arrangements were put in place in May 2004 and it can be seen that rather than use the J Trust to directly fund the purchase of the farm, monies within the J Trust were used by way of security for the financing of the acquisition.

10

It is relevant to note that Mr Brakspear was the sole director of the two South African companies, Moneybox and West Dunes, and in control, therefore, of all of the Westley Trust assets in South Africa and in particular the operation of the farm.

11

Subsequently, Mr Brakspear discovered that West Dunes had been defrauded by his South African business partner and through a prolonged process the whole interest in the farm came within the Westley Trust structure.

12

At the expiration of two years from the grant of the FirstRand loan, Mr Brakspear negotiated an extension until September 2007, but with the interest now being paid monthly. The bank guarantee from the Jersey Bank was reduced to £500,000, the loan from the Jersey Bank to the Westley Trust increased to £415,000 and the security provided by the J Trust increased to £915,000; with security documentation being re-issued accordingly.

13

West Dunes fell behind in its repayments under the facility with FirstRand and on 3 rd July, 2007, FirstRand called in the bank guarantee given to it by the Jersey Bank. On 5 th July, 2007, the Jersey Bank paid FirstRand £500,000, pursuant to the bank guarantee and enforced its security against the J Trust for that amount.

14

On 28 th November, 2007, FirstRand obtained judgment against West Dunes and Mr Brakspear in the sum loaned to West Dunes, namely ZAR12.5 million (reduced by the calling in of the guarantee by the Jersey bank), together with an order for immediate execution over the farm. At the request of the Jersey Trust Company, the Jersey Bank postponed repayment of the loan made to the Westley Trust.

15

The farm was sold at public auction on 13 th June, 2008, to Zambrotti Investments 35 (Pty) Ltd (“Zambrotti”), but completion was delayed due to problems with squatters.

16

On 29 th July, 2008, the Jersey Bank formally demanded repayment of the loan to the Westley Trust and enforced the security given by the Guernsey Trust Company. The J Trust therefore lost the whole of the £915,000 provided by way of security.

17

On 19 th December, 2008, the Jersey Trust Company presented a winding up petition in respect of West Dunes to the court in South Africa. The claim upon which the petition was based was the £500,000 paid by the Jersey Bank to FirstRand, which was described in the petition as an advance by the Westley Trust to West Dunes.

18

Initially, West Dunes, acting through Mr Brakspear as sole director, opposed the application, asserting in his affidavit of 22 nd December, 2008, that this liability of £500,000 was due to the J Trust and not to the Westley Trust.

19

However, when it became clear that a liquidation of West Dunes would enable liquidators appointed by the Court to apply to have the sale to Zambrotti set aside and to sell at a much higher price to another interested purchaser known as Applemint Properties 99 (Pty) Ltd (“Applemint”), namely for the sum of ZAR25 million, West Dunes, represented by South African counsel, agreed to withdraw its opposition. A provisional order winding up West Dunes and appointing two liquidators was made on the 23 rd December, 2008, and a final order on 5 th February, 2009.

20

On 9 th February, 2009, the liquidators applied...

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