Freeman v Ansbacher

JurisdictionJersey
CourtRoyal Court
JudgeThe Deputy Bailiff
Judgment Date09 January 2009
Neutral Citation[2009] JRC 3
Date09 January 2009

[2009] JRC 3

ROYAL COURT

(Samedi Division)

Before:

M. C. St. J. Birt, Esq., Deputy Bailiff (sitting alone).

(1) Sarah Daile Freeman
(2) Robert Keith Freeman
(3) Rosanna Freeman
Plaintiffs
and
Ansbacher Trustees (Jersey) Limited
Defendant

Advocate A. Hoy for the Plaintiffs.

Advocate N. F. Journeaux for the Defendant.

Authorities

Royal Court Rules.

Re Esteem Settlement [2000] JLR 165.

Trusts (Jersey) Law 1984.

Lewin on Trusts.

Re Manisty's Settlement Trusts [1974] Ch 17.

Lemos v Coutts (Cayman) Limited (2005–06) 8 ITELR 153.

Schmidt -v- Rosewood Trust Ltd (2003) All ER 76.

Alhamrani v Alhamrani [2007] JLR 444.

Paragon Finance Plc v D.B. Thakerar & Co [1999] 1 All ER 400.

Midland Bank Trust Company (Jersey) Limited v Federated Pension Services [1995] JLR 352.

Hoechst UK Limited v Inland Revenue Commissioners (2004) STC 1486.

Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483.

Berezovsky v Abramovich (2008) EWHC 1138 (Comm).

Prudential Assurance Co Limited v Newman Industries Limited (No. 2) (1982) Ch 204.

Ellis v Property Leeds (UK) Limited (2002) EWCA Civ 32.

Foss v Harbottle (1843) 2 Hare 461.

Khan v Leisure Enterprises Limited [1997] JLR 313.

Johnson v Gore-Wood & Co (2002)2 AC 1.

Shaker v Al-Bedrawi (2003) Ch 350.

Re Lucking's Will Trust (1968) I WLR 866.

Walker v Stones (2001) QB 902.

Ellis v Property Leeds (UK) Limited (2002) EWCA Civ 32.

Gardner v Parker (2005) BCC 46.

Christensen v Scott (1996) 1 NZLR 273.

Walker v Stones (2001) QB 902.

Bartlett v Barclays Bank Trust Co Ltd (No 1) (1980) 1 All ER 139.

The Deputy Bailiff
1

This is an application by the defendant to strike out the order of justice under RCR 6/13(1)(a), (b) and (c) and under the inherent jurisdiction of the Court. It raises a number of questions, including the locus standi of the object of a mere power to sue for breach of trust and the application of the rule against reflective loss where the company in question is owned by trust. There is an associated application by the plaintiffs to amend the order of justice.

Background

(i) The Trust

2

The JB Sims No. 1 Jersey Settlement (“the Trust”) is governed by Jersey law and was established by deed dated 4th May, 1978. The named settlor was Mr Jack Sims, a resident of the US, who contributed funds of US$2,000. He does not appear to have contributed any other funds. He explained in correspondence at the time that he was setting up the Trust for the benefit of the children of his business associate, a Mr Kenneth George Freeman (“Mr Freeman”).

3

The Trust was set up on the advice of a London based accountant named George Boxall (“Mr Boxall”) who is said to have been the financial adviser to Mr Freeman. The defendant (“Ansbacher”) was the original trustee under its then name of Codex (Jersey) Trust Company Limited. It appears that Ansbacher dealt mainly with Mr Boxall in connection with the affairs of the Trust until his death in 1991, following which it dealt with Mr Freeman. Mr Freeman settled substantial additional assets into the Trust over the years.

4

The Trust was a conventional discretionary trust. Clause 5(a) of the deed provided as follows:-

The Trustees shall hold the capital and income of the Trust Fund UPON TRUST for all or such one or more exclusively of the others or other of the members of the Specified Class if more than in such shares and portions and at such time or times and subject to such conditions provisos and limitations and subject to such restrictions in all respects as the Trustees ……. may from time to time revocably or irrevocably in writing ……. appoint …… AND PROVIDED FURTHER …….. that any appointment may (if the Trustees think fit) be made in respect of income alone without any appointment of capital …….”

5

By virtue of Clause 2(b), the ‘Specified Class’ was defined as Sarah Daile Freeman, Robert Keith Freeman and any person added to the Specified Class by the Trustees in exercise of the power conferred upon them by Clause 9(b). Sarah Daile Freeman and Robert Keith Freeman are both children of Mr Freeman.

6

By instrument executed under its common seal on 18th September, 1989, Ansbacher exercised the power conferred upon it by Clause 9(b) to add the third plaintiff, Rosanna Freeman as a member of the Specified Class. Rosanna is a further child of Mr Freeman having been born on 18th December, 1986.

7

Clause 6 of the Trust provides as follows:-

“In default of subject to and until any such appointment as aforesaid the Trustees shall until the Vesting Date accumulate the entire income of the Trust Fund arising between the date hereof and the said date by investing the same and the resulting income thereof in any investments hereinafter authorised and the accumulations so made shall be held as an accretion to the capital of the Trust Fund PROVIDED ALWAYS that the Trustees shall have power to pay or apply such part or parts of the annual income of the Trust Fund as it arises to or for the maintenance and support or otherwise for the benefit of all or such one or more exclusively of the others or other of the persons who shall for the time being be members of the Specified Class in such manner and if more than one in such shares as the Trustees shall in their absolute discretion and without being liable to account for the exercise of such discretion think fit and so that the Trustees may at any time or times apply at their discretion the whole or any part or parts of the said accumulations as if the same were income arising in the then current year or for any of the purposes for which monies arising under this Settlement are authorised to be applied.”

8

Clause 8 then provides as follows:-

SUBJECT to the trusts hereinbefore contained the Trustees shall stand possessed of the Trust Fund on the Vesting Date UPON TRUST for such persons, corporations or charities as shall be then living or existing members of the Specified Class in such shares as the Trustees shall on or before the Vesting Date determine and in default of and subject to such determination UPON TRUST for such of the members of the Specified Class as shall then be living in equal shares per capita absolutely.”

9

From this it can be seen that the structure of the Trust is relatively conventional in providing for accumulation trusts of income, subject to powers of appointment of capital or income in favour of a specified class of beneficiaries until the Vesting Date and then ultimate default trusts in favour of those beneficiaries.

10

Ansbacher was the sole trustee from 1978 to 1998 but by deed of appointment dated 14th August, 1998, the settlor exercised his power under Clause 22(c) of the Trust to appoint additional trustees. The deed appointed Mr Freeman, his wife Pauline Ann Freeman and his personal assistant Sarah Jane Beazley (“the New Trustees”) as additional trustees to act jointly with Ansbacher.

11

Ansbacher retired as trustee of the Trust with effect from 1st March, 2000 and accordingly the New Trustees have been the only trustees of the Trust since that date. The New Trustees purported to execute another appointment of Rosanna as a member of the Specified Class by deed dated 7th December, 2007. Mr Journeaux suggested in argument that the deed dated 18th September, 1989, whereby Ansbacher purported to add Rosanna as an additional member of the Specified Class, was not a valid exercise of the power conferred by Clause 9(b). He submitted that the fact that the deed was executed under the common seal of Ansbacher meant that it was not executed ‘in writing under their hands’ as required by clause 9(b). I have to say that I find the suggestion that a document executed by means of the signature of a director and secretary of a corporate trustee is not a document under hand merely because a corporate seal has also been affixed to be somewhat far fetched. However, I do not need to rule finally upon the point as, for the purposes of a strike-out application, I am certainly content to proceed on the basis that it is, to say the least, very strongly arguable that the deed complies with the requirements of clause 9(b) and that Rosanna has accordingly been a member of the Specified Class since 18th September, 1989 rather than only from 7th December, 2007.

12

Part of the initial trust fund of US$2,000 was used to subscribe for the entire issued share capital of a Jersey company called S.D. & R. Trading Limited (“SDR”). At all material times the shares in SDR were the sole significant asset of the Trust and all the underlying assets were owned by SDR or its subsidiaries.

13

According to an affidavit filed on behalf of Ansbacher, the day to day administration of the Trust was carried out largely by an employee of Ansbacher named Mr Alfred Sidney Holley (“Mr Holley”). Mr Holley was also a director of SDR from 28th May, 1981 until his retirement as a director on 19th December, 2000.

14

The corporate records of SDR apparently show that the first directors of SDR were two residents of Sark, Mr and Mrs Maisney and a resident of Jersey, a Mr Norden. Mr Norden retired as a director on 28th May, 1981 at which point he was replaced by Mr Holley.

15

Mr and Mrs Maisney remained as directors until 30th April, 1986 at which time they were replaced by two persons resident in Bermuda, who were not employed by Ansbacher. They resigned on 1st February, 1989 at which point another employee of the Ansbacher group in Jersey, Mr Wilton, took office as Mr Holley's co-director until 31st May, 1991 at which point he was replaced by Mrs Pamela Simon and Mrs Patricia Jeanne, both employees of Ansbacher in Jersey. Mrs Simon retired as a director in March 1993 and was replaced by Mr Frith who resigned in turn in October 1998. Mrs Jeanne and Mr Holley continued as directors until their resignation on 19th December, 2000, which was after Ansbacher had retired as trustee of the Trust on 1st...

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    • United Kingdom
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    • 15 July 2020
    ...Cas 1. Edwards v Halliwell [1950] 2 All ER 1064. Foss v Harbottle (1843) 2 Hare 461; 67 ER 189. Freeman v Ansbacher Trustees (Jersey) Ltd [2009] JRC 003; [2009] JLR 1. Gardner v Parker [2004] EWCA Civ 781; [2004] 2 BCLC 554. George Fischer (Great Britain) Ltd v Multi Construction Ltd [1995]......
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    ... [2000] JLR 119 . Trusts (Jersey) Law 1984. Lewin on Trusts (18th Edition) at para 43–05. Freeman v Ansbacher Trustees (Jersey) Limited [2009] JRC 003 . Alhamrani v Alhamrani [2007] JLR 44 . Rae v Meek (1889) 14 App Cases 558 . Caparo Industries Plc v Dickman (1990) 2 AC 605 . Henders......
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    ...beneficiary any loss is a controversial one in a developing area of law. They rely upon Freeman V Ansbacher Trustees (Jersey) Limited [2009] JRC 003 where it was argued that the claim should be struck out on the basis that the losses suffered by a company, wholly owned by a trust, could not......
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    • Supreme Court (Bermuda)
    • 13 September 2018
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3 firm's commentaries
  • Do The Objects Of A Mere Power Have The Rights To Sue Their Trustees?
    • Jersey
    • Mondaq Jersey
    • 25 February 2009
    ...Daile Freeman and others -v- Ansbacher Trustees (Jersey) Limited [2009] JRC003 Facts and This judgment arose out of an application by Ansbacher Trustees (Jersey) Limited (the "Trustee") to strike out a claim made by Sarah Daile Freeman ("Sarah"), Robert Keith Freeman ("Robert") and Rosanna ......
  • Discretionary Trusts: Mere Power Too Meagre To Stand?
    • Jersey
    • Mondaq Jersey
    • 8 January 2010
    ...the Royal Court had to consider recently in the context of a strike out application in Freeman v Ansbacher Trustees (Jersey) Limited [2009] JRC003. The settlement in question was a discretionary trust which provided for accumulation trusts of income, subject to powers of appointment of capi......
  • Reflecting On Losses
    • Jersey
    • Mondaq Jersey
    • 8 January 2010
    ...been to reduce the value of the shares owned by that shareholder. In the recent case of Freeman v. Ansbacher Trustees (Jersey) Limited [2009] JRC003, the Royal Court was required to consider the application of the reflective loss principle in the case of a company which was a wholly owned a......

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