HSBC International Trustee Ltd v Poon Lok to Otto

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: The Bailiff
• Judgment Date: 25 August 2011
• Neutral Citation: [2011] JRC 167
• Date: 25 August 2011

[2011] JRC 167

ROYAL COURT

(Samedi)

Before:

M. C. St. J. Birt, Esq., Bailiff, and Jurats Fisher and Kerley.

IN THE MATTER OF THE REPRESENTATION OF HSBC INTERNATIONAL TRUSTEE LIMITED

IN THE MATTER OF THE OTTO POON FAMILY TRUST AND IN THE MATTER OF ARTICLE 51 OF THE TRUSTS (JERSEY) LAW 1984 (AS AMENDED)

Between

HSBC International Trustee Limited

Representor

and

Poon Lok To Otto

First Respondent

Madam Kan Lai Kwan Kay

Second Respondent

Poon Wing Yun Karen

Third Respondent

and

Advocate Goulborn representing the unborn and unascertained beneficiaries

Fourth Respondent

Advocate R. J. MacRae for the Representor.

Advocate A. D. Robinson for the Second Respondent.

Advocate M. C. Goulbourn for the Fourth Respondent.

Other parties not represented or in attendance.

Authorities

In Re H Trust [2006] JLR 280.

Trusts (Jersey) Law 1984.

Re IMK Family Trust [2008] JLR 250.

The Bailiff

1 The application before us today is one made by HSBC International Trustee Limited as trustee of the Otto Poon Trust and it seeks directions as to whether the trustee should submit to matrimonial proceedings in Hong Kong between the First Respondent (“the settlor”) and the Second Respondent (“the wife”) and as to the level of disclosure which should be made to the wife.

2 The background is as follows. The trust was established by deed dated 25 ^TH July, 1995, between the settlor and the trustee. It is a conventional discretionary trust of which the beneficiaries are the settlor, the wife, their adult daughter and any other living descendant of the settlor, of which there are none at present. An educational establishment was added as a beneficiary in January 1996 under the power to add. The settlor is also the protector of the trust. The trust is governed by the law of Jersey. The trustee is a BVI company with a branch in Jersey. The trustee has delegated the administration of the trust to HSBC Trustee Hong Kong Limited and the administration of the trust is therefore carried out in Hong Kong; indeed the affidavits in this case have been sworn by the senior director of HSBC Trustee Hong Kong Limited, who resides in Hong Kong.

3 The settlor and the wife were married in January 1968. They have recently separated and are now engaged in divorce proceedings before the High Court in Hong Kong. The wife is seeking a lump sum order, but she also seeks an order varying the terms of the trust by directing that most of the shares in the holding company owned by the trust are transferred out of the trust as a distribution to the settlor and the wife in whatever proportions the Hong Kong court says.

4 The sole asset of the trust is an 84.6% shareholding in a Bermudan holding company which in turn owns 100% of a number of companies which form a substantial trading group. There appear to be a total of 21 companies of which 20 are incorporated in Hong Kong, Macau or the People's Republic of China and 1 in Canada. We have been given the figures as to the estimated net value of the group, which is substantial, and it is estimated by the accountants advising the trustee that approximately 70% by value of those net assets is owned by companies in Hong Kong.

5 The settlor has written a number of letters of wishes, the latest of which is dated May 2010 and was written in the knowledge of the divorce proceedings. The letter expresses his wish that, following his death, the trustee should divide the trust fund into three equal parts, one for the wife, one for the daughter and one for certain of his colleagues in the trading group who are not at present beneficiaries but could be added.

6 On 25 ^TH July, 2011, the Hong Kong court granted the wife's application that the trustee be joined to the divorce proceedings. Thus, the trustee now seeks directions as to whether it should submit to the jurisdiction of that court or not. It also seeks directions in relation to disclosure of trust documents. In each case it has reached a decision which it now asks the Court to approve as being reasonable.

7 The first issue is whether the trustee should submit to the jurisdiction of the Hong Kong court. It has decided that it should. Mr MacRae, on behalf of the trustee, has reminded us of what this Court said In Re H Trust [2006] JLR 280 at paragraphs 12–15:-

• “12. Significant consequences may flow from a decision by a trustee of a Jersey trust to submit to the jurisdiction of the Family Division of the High Court or indeed any other court considering the matrimonial affairs of beneficiaries of a trust. Any order subsequently made by the Family Division would be made in proceedings to which the trustee had voluntarily submitted and in which therefore it had full opportunity to put forward submissions on the order which the court should make. It follows that the trustee would be in some difficulty in arguing subsequently before this court against the proposition that any order of the Family Division relating to the trust should be enforced without reconsideration of the merits of such order .

• 13. Conversely, if the trustee has not submitted to the jurisdiction of the Family Division, any order of that court will not be enforceable in Jersey under the rules of private international law. On any subsequent application to this court to vary the...