IMK Trust

JurisdictionJersey
CourtRoyal Court
JudgeDeputy Bailiff
Judgment Date15 August 2008
Neutral Citation[2008] JRC 136
Date15 August 2008

[2008] JRC 136

ROYAL COURT

(Samedi Division)

Before:

M.C. St. J. Birt, Esq., Deputy Bailiff, and Jurats Le Brocq and Liddiard.

In the Matter of the Imk Family Trust

Between
Aaliya Mubarak
Representor
and
Iqbal Mubarak
First Respondent
Salem Mubarak and Noor Mubarak
Second Respondent
Advocate M. P. Renouf (as guardian ad litem of the minor beneficiairies Osman Mubarak and Hamza Mubarak and representative of the unborn or unascertained beneficiaries)
Third Respondent
The Craven Trust Company Limited
Fourth Respondent

Advocate C. G. P. Lakeman for the Representor.

The First Respondent did not appear and was not represented.

The Second Respondents did not appear and were not represented.

Advocate M. P. Renouf in person.

Advocate J. M. P. Gleeson for the Fourth Respondent.

Authorities

Matrimonial Causes Act 1973.

Re B Trust [2006] JRC 185.

Re the Fountain Trust [2005] JLR 359.

Saunders v Vautier (1841) 4 Beav 115.

Trusts (Jersey) Law 1984.

Trusts (Amendment No 4) (Jersey) Law 2006.

Judgments (Reciprocal Enforcement) (Jersey) Law 1960.

Conflict of Laws (14th Edition) Dicey Morris and Collins.

Lane v Lane [1985-86] JLR 48.

Compass Trustees Limited v McBarnett [2002] JLR 321.

In Re the H Trust [2006] JLR 280.

Re the A Trust [2006] JRC 020A.

In Re B Trust [2006] JLR 562.

Re the H Trust [2007] JRC 187.

In Re the A and B Trusts [2007] JRC 138.

Showlag v Mansour [1994] JLR 113.

Chapman v Chapman [1984] AC 429.

Lewin on Trusts (18th edition).

Charalambous v Charalambous [2004] 2 FLR 1093.

Re the Turino Consolidated Limited Retirement Trust [2008] JRC 100.

Deputy Bailiff

THE

1

This is an application by the representor for an order enforcing or giving effect to an order made on 30th March 2007 by Holman J in the Family Division of the High Court in England. Under that order, Holman J, pursuant to Section 24(1)(c) of the Matrimonial Causes Act 1973 ("the 1973 Act") varied a Jersey trust known as the IMK Family Trust ("the Trust") so as to require the trustees of the Trust to pay to the representor all sums owing to her under an order of Bodey J made in the Family Division on 10th December 1999. By that order Bodey J had, inter alia, ordered the first respondent to pay the sum of £4,875,000 to the representor. The Court made certain orders at the conclusion of the hearing and we now give our reasons.

2

Although the parties are divorced, we propose for convenience to refer to the representor as the wife and the first respondent as the husband. The second respondents, who are the adult children of the marriage did not appear at the proceedings but they wrote stating that they supported the wife's application. The minor and unborn beneficiaries were represented by Advocate Renouf. The husband has been represented by Advocate Begg who has appeared on his behalf in certain interlocutory hearings. However, Advocate Begg then wrote to the Court to say that he had been dis-instructed by the husband and would not appear at the main hearing. The reason given for this decision related to the fact that, at an interlocutory hearing on 6th February 2008, I had indicated a provisional view that, in the light of a letter dated 25th August 2006 which the husband had written to the trustees pursuant to an order of Bodey J, to which we shall refer in due course, it would not be open to him to oppose the wife's application, although the Court would of course still need to be satisfied that it should make the order requested. The upshot was that the husband elected not to appear and was not represented at the main hearing, although we have considered the material which Advocate Begg had lodged on his behalf prior to the hearing.

3

The application requires us to consider the circumstances in which this Court can enforce or give effect to an order of the English Family Division relating to a Jersey trust.

The Trust
4

The husband and the wife were both born and brought up in India. The husband is 49 and the wife is 48. In 1980 the husband moved to Kuwait and set up a jewellery business. The parties married in 1983 and the wife moved to join the husband in Kuwait. In 1986 the husband set up a further business manufacturing and trading in jewellery in Hong Kong and the family moved there. The husband's business expanded and he opened shops in Paris and London. In 1994 the husband caused a holding company, Twenty First Century Holdings Limited ("TFCH") to be incorporated in Bermuda. This owns, directly or indirectly, the shares in the relevant subsidiary companies to which we shall refer shortly.

5

In August 1997 the parties moved with their family to live in London. Immediately before the move there was a corporate re-organisation in relation to TFCH. Prior to the re-organisation TFCH had an issued share capital of US$34,903,500 divided into 34,903,500 common shares of US$1 each. Of these, 34,344,522 had been issued to the husband and 558,978 to the wife. By resolution dated 5th August 1997 it was agreed that TFCH would re-purchase all of the above shares at par save for 11,000 held by the husband and 1,000 held by the wife. The purchase price remains unpaid with the result that TFCH owes US$34,333,522 to the husband and US$557,978 to the wife.

6

By deed dated 2nd September 1997, the husband and the wife, as settlors, created the Trust. The trustee was and remains The Craven Trust Company Limited ("the Trustee"). The Trust is a discretionary trust governed by the law of Jersey. The beneficiaries are described in the trust deed as the settlors, their children Salem, Noor and Osman together with any other children or remoter issue of the settlors born thereafter. A fourth child, Hamza has been born since the date of the Trust. Salem and Noor have attained the age of 18 whereas Osman and Hamza are minors.

7

Under the terms of the Trust, the husband has the power to add and exclude beneficiaries, to appoint and remove the protector and to appoint new or additional trustees. The protector is the husband's father and he has the power to remove any trustee. A number of the trustees' powers can only be exercised with the prior written consent of the protector.

8

On the same day as the Trust was created the husband transferred his 11,000 ordinary shares and the wife transferred her 1,000 ordinary shares in TFCH to the Trustee to hold upon the terms of the Trust. However, they did not transfer the debts owed by TFCH, which accordingly remained owed to each of them personally. The effective result of these transactions was that the value of TFCH (and its underlying assets) as at September 1997 was retained by the husband (and the wife to a limited extent) and only the benefit of any subsequent increase in value would accrue for the benefit of the Trust.

9

In March 1998 the husband left the matrimonial home and the parties have not since cohabited. By deed of exclusion dated 20th April 1998, the husband exercised the power given to him by Clause 10 of the Trust by revocably excluding the wife as a beneficiary and declaring her to be an Excluded Person for the purposes of the Trust.

10

. There are two letters of wishes in relation to the Trust. The first is dated 2nd September 1997 and is signed by both the husband and the wife. It provides that the Trustee should consult the husband during his lifetime "on all aspects concerning the Trust [including] matters of administration and also the distribution (or accumulation) of income and capital to either of us". The letter of wishes also provided that following the husband's death, the settlors would like the Trustee to "hold the trust assets equally for the benefit of [the wife] and [their] children". The second letter of wishes was signed by the husband on 8th July 1998 and is described as clarification of the earlier letter of wishes. It provided that the Trustee should regard any reference in the original letter of wishes which had the effect of conferring a benefit on the wife as having been deleted: "In particular, in the event of my death, the trust assets should be held for the benefit of my children and not divided between [the wife] and the children as originally stated....." As we shall see, the wife had instituted divorce proceedings in England in July 1998, which was the same month as the second letter of wishes was written.

The assets of the Trust
11

As already stated, the Trust owns a group of companies engaged in the international jewellery business known as the Dianoor Group. The Trust owns all the issued share capital of TFCH, which is the holding company for the Group. The Court has seen a chart setting out the Group structure. TFCH owns 100% of Dianoor Jewels International Limited ("the Jersey company") which is an intermediate holding company. The Jersey company directly or indirectly owns 100% of Dianoor Jewelcraft Limited ("Jewelcraft"), a Hong Kong company, Dianoor International Limited ("International"), also a Hong Kong company, Dianoor Jewels Limited ("the London company") and DN Impex DMCC ("the Dubai company"). TFCH also owns, directly or indirectly, 90% of Verney SARL ("the French company") which runs a jewellery shop in Paris. TFCH also owns 100% of Checkers Limited ("Checkers"), another Hong Kong company. All of the companies are engaged in different aspects of the jewellery business whether in shops, manufacture etc.

12

The Trustee has three representatives on the board of TFCH and six on that of the Jersey company. The remaining two directors of both those companies are the husband's brother-in-law Mohammed Wani ("Mr Wani") and Mr Vembu Aiyer ("Mr Aiyer"). Mr Wani and Mr Aiyer are the sole directors of all the operational companies in the Group and the day to day control of the business therefore lies with them.

13

As stated earlier, TFCH owes approximately US$35m, mostly to the husband. TFCH in turn has made loans in a broadly matching total to its various subsidiaries....

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9 cases
8 firm's commentaries
  • Private Client Guide 2022 - Jersey
    • Jersey
    • Mondaq Jersey
    • 27 January 2022
    ...an overseas court order affecting a local trust. Much comfort can be taken from a judgment of the Jersey Royal Court (Mubarak v Mubarik [2008] JRC 136). This case involved a claim against trust assets by the spouse of a beneficiary on the dissolution of their marriage. It held Due to Articl......
  • Private Client Guide 2022 - Jersey
    • Jersey
    • Mondaq Jersey
    • 27 January 2022
    ...an overseas court order affecting a local trust. Much comfort can be taken from a judgment of the Jersey Royal Court (Mubarak v Mubarik [2008] JRC 136). This case involved a claim against trust assets by the spouse of a beneficiary on the dissolution of their marriage. It held Due to Articl......
  • Can A Foreign Court Alter The Terms Of A Jersey Law Trust?
    • Cayman Islands
    • Mondaq Cayman Islands
    • 27 November 2008
    ...Case The Matter of The IMK Family Trust [2008] JRC136 Facts One source of the steady flow of trust litigation coming the Royal Court in recent years has been a series of attempts to enforce orders made in divorce proceedings by the Family Division of the English High Court in relation to Je......
  • Asset Protection Trusts – Why The Recent Interest?
    • Jersey
    • Mondaq Jersey
    • 13 February 2019
    ...firewall provisions) when it comes to determining key issues on Jersey trusts. The leading judgment here is the case of Mubarak v Mubarak [2008] JRC 136 which concerned long running and bitter divorce proceedings. The Royal Court made it clear that it could not enforce a judgment of the Fam......
  • Request a trial to view additional results
1 books & journal articles
  • Piercing the Corporate Veil? A critical analysis on Prest v Petrodel Resources Ltd and Others
    • United Kingdom
    • Dundee Student Law Review Nbr. V, January 2019
    • 1 January 2019
    ...Group International Inc v Simms [2006] EWCA Civ 399; VTB Capital plc v Nutritek International Corp [2013] UKSC 5. 29[1974] 1 WLR 991. 30[2008] JRC 136. 31[2010] EWHC 3091 (Fam). 32Prest (n.4). 33ibid. 34ibid [36]. 35ibid [28]. 36ibid [33]. 37ibid [35]. 38[2012] EWCA Civ 808. 39Prest (n.4) [......

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