Parujan v Atlantic Western Trustees

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Bailiff
• Judgment Date: 07 March 2003
• Neutral Citation: [2003] JRC 45
• Date: 07 March 2003

[2003] JRC 45

ROYAL COURT

(Samedi Division)

Before:

Sir Philip Bailhache, Bailiff, and Jurats Le Brocq and Le Breton.

Between

Yashvina Parujan

First Plaintiff

and

Atlantic Western Trustees Limited

First Defendant

Advocate M. H. D. Taylor for the Plaintiff;

Advocate D. F. Le Quesne for the Defendant.

Authorities

In re Malabry Investments Limited (1982) JJ 117.

Parujan v Atlantic Trustees (15th October, 2002) Jersey Unreported; [2002/195].

Lettersted v Broers (1884) 9 APP.CAS.371.

West v Lazards (1987–88) JLR 414.

Trusts (Jersey) Law 1984.

Application for directions under Article 47 of the Trusts (Jersey) Law, 1984 re: (i) right of a trustee to charge fees for the administration of the trust; (ii) should the trustee be ordered to repay to the trust amounts taken in order to meet legal fees incurred by it in connection with its disputes with the Settlor; (iii) whether the trustee overcharged the trusts; (iv) should the trustee be removed as trustee of the trust pursuant to Article 15 of the Trusts (Jersey) Law, 1984.

Bailiff

THE

Introduction.

1 On 21 January 1994 Yashvina Parujan (“Mrs Parujan”) established a discretionary settlement known as the Maple Trust of which Atlantic Western Trustees Limited has and remains the trustee. Mrs Parujan was, and appears still to be, resident in Canada. In or about 1995, a second discretionary trust known as the Pan-Am Trust, in identical terms to the Maple Trust, is said by the trustee to have come into existence. The assets of the Maple Trust are the issued share capital of Acacia Properties Limited (“Acacia”) and Lom Holdings Limited (“Lom”). According to the trustee, the Pan Am Trust hold the issued shares of a company incorporated in the British Virgin Islands called Shearson International Business Corporation (“Shearson”). By an undated letter of wishes, Mrs Parujan requested the trustee to consult with her brother, Harshad Kapadia (“HK”) or Jayant Kapadia (“JK”) at regular intervals and to consider their wishes in relation to the investment of funds, addition of beneficiaries and distributions to beneficiaries. In practice the main channel of communication has been between the trustee and HK.

2 On 10 August 2000 Mrs Parujan brought this representation seeking relief as set out in the amended prayer as follows:-

“(1) The Court grant leave to the Settlor to bring this Representation under Article 47(3) of the Trusts (Jersey) Law, 1984 as amended.

(2) An Order that the Trustee be served with a copy of this Representation and of the Affidavit of the Settlor and that it be convened before this Court on a date to be arranged.

(3) Order that the Trustee be removed immediately as Trustee of the Maple Trust and if the Court sees fit as Trustee of the Pan American Trust in favour of the New Trustee.

(4) Order that the Trustee obtain the immediate resignation of the directors of Acacia, Lom and Shearson in favour of persons to be nominated by the Settlor.

(5) Adjudicate on the claim that the Trustee has overcharged the trusts and companies having heard oral evidence and reviewed the Report of Royan Ellis and make such order as the Court sees fit in respect of the charges of the Trustee from the creation of the Trust and incorporation of the companies, or in the case of the Trust and incorporation of the companies, or in the case of Shearson, the date of purchase, to the 28 February 2001.

(6) Order that the Trustee repay all sums it has taken from the Trust structure to pay the legal fees it has incurred in this action.

(7) Make such other directions, if any, as the Court sees fit.

(8) Order that the costs of and incidental to this Representation should be paid by the Trustee personally on a full indemnity basis.”

Review by Mr Royan Ellis.

3 The representation was adjourned on a number of occasions while the parties endeavoured to settle their differences. On 25 April, 2001, the Court made the adjournment conditional upon the parties engaging in discussions with a view to seeking the appointment of a mediator or arbitrator. Their discussions were fruitful to the extent that there was agreement to appoint Mr Royan Ellis to review the fees charged by the trustees for managing and administering what was called “the Structures”, although that term was not defined. There seems to have been general agreement, however, that “the Structures” were the Maple Trust and the Pan American Trust, and their underlying companies. Mr Ellis, whose evidence we shall examine below, is a Fellow of the Chartered Institute of Bankers in Scotland and a Fellow of the Institute of Chartered Secretaries & Administrators. He has enjoyed a distinguished career in banking and trust administration, both in Jersey and elsewhere. Between 1983 and 1987 he was managing director of Samuel Montagu and Company (Jersey) Limited, and a director of its parent company. Between 1987 and 1988 he was managing director of Midland Bank Trust Company (Jersey) Limited and between 1989 and 1995, managing director of Westpac Banking Corporation (Jersey) Limited. When that company was sold to Henry Ansbacher in 1995, he became Head of Offshore Banking in Henry Ansbacher Holdings Limited, a post which he held until retirement in 1997. Since retirement he has held a consultancy and other senior positions with Chase Manhattan Bank and Standard Chartered Bank (CI) Limited. Neither party challenged his status as an expert witness, although Mr Le Quesne for the trustee sought to discredit his evidence on several grounds, one of which was that he had not complied with his terms of reference.

4 We accordingly set out below the agreed terms of reference, and the preamble to them:-

“Preamble:

The Reviewer's task is to consider the fees raised by the Company for managing and administrating the Structures and should use his experience in trust matters to consider whether those fees were reasonable and therefore justifiably charged.

The Reviewer may include in his consideration of whether work by the Company was justified matters such as the necessity for the work, whether work was requested of the Company, whether it was in the best interests of beneficiaries and whether it was economically beneficial, but that such matters are illustrative only and not compulsory or exhaustive and above all the Reviewer should approach the matter in the manner he considers appropriate, provided that all times he adheres to the terms of reference hereinafter provided:

TERMS OF REFERENCE

Task

The Reviewer shall:

• (A) Ascertain, for each piece of work carried out by the Company, by having regard to all the circumstances of that work, whether the work carried out and the time spent completing that work was reasonable;

• (B) In carrying out (A) above, have particular regard, and to consider separately, the time spent

  • (i) on the general management and administration of the Structures prior to 31 December 1999;

  • (ii) from 1 January 2000 to date, that management and administration which related solely and exclusively to dealing with the complaint against the Company in regard to its management of the Structures;

  • (iii) on the general management and administration of the Structures from 1 January 2000 to date not including the time which falls to be considered under (B)(ii) above;

  • (iv) on compiling and supplying accounting information relating to the Structures.

• (C) Not investigate the rates applied by the Company for its work except to the extent that he shall consider whether the work carried out was done so efficiently and in deciding this shall consider, in relation to each piece of work carried out, whether that work and the member of staff of the Company carrying out that work, were appropriately matched in terms of complexity and experience respectively.”

5 Mr Ellis was given wide powers to gain access to documents, files and records and to interview parties. A number of obligations were also placed upon him as set out below:-

“Obligations

The Reviewer shall:

• (A) At all times act independently from the parties to the dispute.

• (B) Carry out all interviews with the parties concerned in the dispute separately and privately.

• (C) Not divulge any information which comes to his knowledge directly or indirectly through carrying out his duties or exercising his powers other than in his final report.

• (D) File his final report to the legal representatives of each of the parties to the dispute simultaneously so that those parties may use the same when the matter comes to be resolved by the court.

• (E) At all times when carrying out his work to have in mind that his task is that of a reviewer whose final report is to be used by the parties to the dispute as evidence in legal proceedings and to assist the court by presenting his findings in a clear and concise manner.

• (F) Although aware of the dispute between the parties over the existence or status of the Pan American Trust, deem that Trust to be a valid legal entity for the sake of his report.”

6 It is perhaps unfortunate that the parties did not agree that Mr Ellis' findings should be binding upon them. Be that as it may, Mr Ellis conducted his review and submitted his report to the parties on or about 27 April 2002. The findings of the report were rejected by the trustee, and the representation accordingly returned to Court.

7 The Court recalls that these proceedings are brought under Article 47 of the Trusts (Jersey) Law 1984. In the view of the Court, the Law gives a wide power to determine how the issues between the parties should be resolved. Pursuant to that power, the Bailiff issued a number of case management directions, and also directed that Mr Ellis should be summoned to give evidence. Mr Le Quesne for the trustee maintained that Mr Ellis was to be regarded as no more than a witness for Mrs Parujan. We do not agree. Mr Ellis was directed by his terms...