Mackinnon v Mackinnon; Mackinnon v Regent Trust Company Ltd

CourtCourt of Appeal
JudgeSmith JA,Carey JA
Judgment Date19 May 2005
Neutral Citation[2005] JCA 66
Date19 May 2005

[2005] JCA 66



R.C. Southwell, Esq., Q.C., President; P.D. Smith, Esq., Q.C., and Sir de Vic Carey, Bailiff of Guernsey.

Andrew Kinross MacKinnon
Plaintiff/ APPELLANT
The Regent Trust Company Limited
First Defendant/ RESPONDENT


Kenneth James MacKinnon
Second Defendant


Elizabeth Victoria MacKinnon (née Sharman)
Third Defendant


Sebastian James MacKinnon
Fourth Defendant


Benjamin Thomas Skok MacKinnon
Fifth Defendant


Thomasin Anne Skok MacKinnon
Sixth Defendant


Sophie Linda Skok MacKinnon
Seventh Defendant


Alistair Kinross MacKinnon
Eighth Defendant


Ian James MacKinnon
Ninth Defendant

Advocate N.M. Santos Costa for the Plaintiff/ APPELLANT.

Advocate J.P. Speck for the First Defendant/ RESPONDENT.

Advocate C.G.P. Lakeman for the Second, Third, Eighth and Ninth Defendants.

Advocate M.L. Preston for the Fourth, Fifth, Sixth, and Seventh Defendants.


Re Knights (Jersey) Limited [1962] JJ 207.

Re Langlois [ 1985–86 JLR 392].

Poole v Poole (16th March, 1988) Jersey Unreported; [ 1987–88 JLR N-5].

Lazard Bros. v Bois & Bois [ 1987–88 JLR 639].

Rahman v Chase Bank (CI) Trust Co Limited [ 1991 JLR 103].

In Re Joseph Eagle Settlement (23rd February 1999) Jersey Unreported; [1999/38].

In Re Esteem Settlement [ 2000 JLR 119].

In Re Esteem Settlement [2003] JRC 092.

Shaw v Lawless (1838) 5 Cl & Finney 129.

Smith v Warde (1845) 15 Sim 56.

Bentley v Mackay (1851) 15 Beav 12.

Walker v Armstrong (1856) 8 De G.M. & G. 531 (CA).

Bowes v Foster (1858) 2 H & N 779.

Dutton v Thompson (1883) 23 Ch D 278.

Re Watson (1890) 25 Q.B.D. 27.

Madell v Thomas & Co [1891] 1 Q.B. 230 CA.

Polsky v S & A Services Ltd [1951] 1 All ER 185.

Polsky v S & A Services Ltd [1951] 1 All ER 1062.

Snook v London & West Riding Investments Limited [1967] 2 QB 786.

Re Vandervell's Trusts [1974] Ch 269.

Re Butlin's Settlement Trusts [1976] Ch 251.

Re Slocock's Will Trusts [1979] 1 All ER 363.

Street v Mountford [1985] AC 809.

Hadjiloucas v Crean [1988] 1 WLR 1006.

Antoniades v Villiers [1990] 1 AC 417.

Gibbon v Mitchell [1990] 1 WLR 1304.

Chase Manhattan Equities Ltd v Goodman and Others [1991] BCLC 897.

Re Goldcorp Exchange Limited [1995] 1 AC 74.

Midland Bank plc v Wyatt [1997] 1 BLCL 242.

Twinsectra v Yardley [2002] 2 All ER 377.

Matthews: “In the land of the blind, the one-eyed salesman is king” — The Jersey Law Review — June 1998 Volume 2 Issue 2.

Underhill and Hayton, Law of Trusts and Trustees (16 th Ed'n): pp 73–83.

Lewin on Trusts, 17 th Ed'n paras 4–01 to 4–04; 21–96.

Allen & Overy Trust Litigation Quarterly December 2003, Issue 14, pp 6–8.

AG v Weston (1979) JJ 141.

Rabin v Gerson Berger Association Ltd [1986] WLR 526 (CA.).

RSC (1999): para 18/7/11.

Cross and Harris: Precedent in English Law (4 th Ed'n) (1991): p.72.

Phipson on Evidence (15 th Ed'n) (2000): paras 42–48.

Abacus (CI) Ltd, Trustee of the Esteem Settlement: Grupo Torras SA et al v Sabah et al (9th January, 2001) Jersey Unreported [2001]JLR005.

Hitch v Stone [2001] STC 214 at pp. 229–230.

Appeal, adjourned on 28th February, 2005, by the Plaintiff/APPELLANT against the Order of the Royal Court of 6th December, 2004, whereby the Royal Court ordered that certain paragraphs of the Plaintiff/APPELLANT's Order of Justice be struck out as disclosing no reasonable cause of action.


This appeal concerns only questions of pleading in an action brought to upset three family settlements made by the late Mrs Dorothy MacKinnon, who died on 15 August 2002. The Plaintiff Andrew MacKinnon (“Andrew”) is one of her two sons; the other is Kenneth James MacKinnon (“James”), the Second Defendant. The Third Defendant is the wife of James, and the Eighth and Ninth Defendants are their children. The Third to Seventh Defendants are the children of Andrew. The First Defendant, The Regent Trust Company Ltd (“the Trustee”), is the Trustee of the three settlements, having succeeded Salamis International SA (formerly Salamis Trustees SA) in February 2001.


The three settlements were made by Mrs MacKinnon in 1981, 1998 and 1999 and are referred to by reference to these dates. Andrew alleges in his Order of Justice that the three settlements either have been at all times invalid and of no effect, or took effect only to the extent that the assets purportedly held subject to the settlements were held for Mrs MacKinnon absolutely, because

  • (i) the settlements breached the rule donner et retenir ne vaut; or

  • (ii) Mrs MacKinnon and Salamis did not intend to create trusts on the terms of the three settlement deeds, but intended that the assets of the settlements be held to the order of Mrs MacKinnon.


It is to be regretted that this dispute within a family about money has not been settled by counsel or by mediation.


Initially the Trustee took the lead in resisting Andrew's attack on the settlements. That was understandable in view of the allegations contained in the Order of Justice. Andrew and the Trustee recently reached an agreement as a result of which the Trustee will adopt a neutral stance. That has had the effect of placing James in the firing line.


The Court is, on this appeal, concerned only with the second head of claim, in paragraph 2(ii) above. We are not concerned with the donner et retenir ne vaut head of claim, in respect of which I would wish only to say that I reserve my judgment as to the correctness of the decision on this head of claim in Abdel Rahman v Chase Bank (CI) Trust Co Ltd et al (1991) JLR 103.


It is not wholly clear what is Andrew's case, not least because his case has been put somewhat differently before the Master, before the Bailiff and before this Court. We are concerned only with the case as Advocate Santos Costa for Andrew has put it before this Court. Advocate Lakeman appeared for James, but we did not call on him to reply.


Before turning to Andrew's case as now put, there is one point on which I wish to place some emphasis. These were trusts apparently established in favour of wide-ranging classes of family members. True it is that the range of potential beneficiaries had been narrowed, by exclusion, to Mrs MacKinnon and her descendants and James's wife. But it remains the position that there were ten potential beneficiaries (and the possibility of further beneficiaries yet to be conceived and born). Leaving Mrs MacKinnon out of account, that means that, if Mrs MacKinnon did not intend the settlements to operate as genuine trusts for the potential benefit of the other potential beneficiaries, she could be said to have been pretending, from 1981 to 2002, to establish trusts for the potential benefit of her family members, but in truth setting up no such trusts for their potential benefit at all. Here there were in the first instance numerous family members potentially to be affected, and in the end the nine members parties to this action who would be affected, if the three settlements were held to be invalid and intended by Mrs MacKinnon always to have been invalid. The Courts of Jersey would not readily conclude against a deceased mother and grandmother that she had acted in this way in relation to her children, her daughter-in-law and her grandchildren.


Andrew's aim, apparently, is to have it decided that the present assets of the three settlements vest in and form part of the estate of Mrs MacKinnon, from which presumably he would gain a larger share of the family money than under the trusts of the three settlements.


It seems to me to be unnecessary to set out the procedural history of these proceedings at any length. On 1 March 2004, over 14 months ago, the Trustee issued a summons seeking an order that certain parts of Andrew's Order of Justice be struck out on the ground that the second head of claim (see paragraph 2(ii) above) discloses no reasonable cause of action. The Master refused the application on 29 June 2004. On 6 December 2004 the Bailiff sitting alone in the Royal Court allowed an appeal by the Trustee and struck out those parts of the Order of Justice. As a result of the agreement between Andrew and the Trustee, James is now the principal respondent to this appeal.


The way in which Andrew puts his case, as stated by Mr Santos Costa to this Court, is that

Indeed Mr Santos Costa strongly contended that Andrew is entirely unable to plead any intent on the part of Mrs MacKinnon to mislead anyone.

  • (i) the trust deeds did not accord with Mrs MacKinnon's intentions throughout the period from 1981 to 2002, her intentions being that the assets placed in the three settlements should always be hers alone, held by the Trustee for her absolutely; and

  • (ii) insofar as this involved Andrew in alleging that the three settlements amounted to “sham” documents, it is sufficient for this purpose for Andrew to rely on the intentions either of Mrs MacKinnon alone or of her and Salamis; and

  • (iii) insofar as he relies on the settlement documents as being “shams”, it is unnecessary for him to allege that either Mrs MacKinnon or Salamis intended to give to any third parties any false impression of the effect of the settlement deeds.


In his judgment the Bailiff stated (in paragraphs 6–7) in terms agreed to be correct the test to be met if an application to strike out the whole or a material part of a pleading, on the ground that it discloses no reasonably arguable basis of claim, is to succeed. I agree and need not repeat what the Bailiff there stated.


It seems to me to be convenient first to deal with the case as to the settlements being “shams”, and then subsequently to consider whether or not there is a wider jurisdiction than that relating to “sham” transactions on which Andrew can rely.


The essential point for Andrew's purposes is that set out in paragraph 10(iii) above, whether Andrew has to allege,...

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    ...has been followed in MacKinnon v Regent Trust Company Limited 2004 JLR 477, a decision which was upheld by the Jersey Court of Appeal at [2005] JCA 066, [2005] WTLR 1367.' [52] In Re Esteem the Royal Court had in fact been referred to Midland Bank plc v Wyatt [1995] 1 FLR 696, [1996] BPIR 2......
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