Rahman v Chase Bank (CI) Ltd

JurisdictionJersey
CourtRoyal Court
JudgeTomes, Deputy Bailiff and Jurats Lucas andLe Boutillier:
Judgment Date06 June 1991
Date06 June 1991
ROYAL COURT
Tomes, Deputy Bailiff and Jurats Lucas andLe Boutillier:

W. J. Bailhache for the plaintiff;

L.A. Wheeler for the first defendant;

M.H. Clapham for the second defendant;

F.C. Hamon, P.R. Le Cras and J.P. Labesse for the third defendants;

D.A. Trott for the fourth defendant;

M.C. Birt in person;

F.C. Hamon, T.J. Le Cocq and J.P. Labesse for the sixth defendants.

Cases cited:

(1) Basden Hotels Ltd. v. Dormy Hotels Ltd., 1968 J.J. 911, dictum of Bois, D.B. applied.

(2) Bexon v. Chichester, Royal Ct. (1946), 242 Ex. 466; 1941-50 T.D. 145, unreported, followed.

(3) Bolan (Marc) Charitable Trust, In re, 1981 J.J. 117.

(4) Bradshaw v. McCluskey, 1976 J.J. 335, followed.

(5) Cohen, In re, [1960] Ch. 179; [1959] 3 All E.R. 740; (1959), 103 Sol. Jo. 961.

(6) Cooper v. Public Health Cttee., 1966 J.J. 685.

(7) Cutner v. Green, 1980 J.J. 269.

(8) Felard Invs. Ltd. v. Church of Our Lady &c. (Trustees), 1978 J.J. 1.

(9) Godfray v. Godfray (1865), 3 Moo. P.C.C.N.S. 316; 16 E.R. 120, followed.

(10) Greville Bathe Fund, In re, 1973 J.J. 2513.

(11) Howard's Will Trusts, In re, [1961] Ch. 507; [1961] 2 All E.R. 413; (1961), 105 Sol. Jo. 347, dictum of Wilberforce, J. applied.

(12) Jersey Dispensary & Infirmary, In re, Royal Ct. (1955), 249 Ex. 465; 13 C.R. 127, unreported.

(13) Johnson Matthey Bankers Ltd. v. Shamji, 1985-86 JLR N-26; Royal Ct., May 1st and 2nd, 1986, unreported, followed.

(14) Knights (Jersey) Ltd., Re, 1962 J.J. 207, applied.

(15) Latter v. Doyen de L'Isle de Jersey, Royal Ct. (1948), 50 H. 305, 311 (N.S.); 1941-50 T.D. 50, unreported, followed.

(16) Lissenden v. C.A.V. Bosch Ltd., [1940] A.C. 412; [1940] 1 All E.R. 425; (1940), 162 L.T. 195; 56 T.L.R. 347; 109 L.J.K.B. 350; 84 Sol. Jo. 357; 33 B.W.C.C. 21, dictum of Lord Wright not followed.

(17) Locker's Settlement, In re, [1977] 1 W.L.R. 1323; [1978] 1 All E.R. 216; (1977), 121 Sol. Jo. 796, distinguished.

(18) Meaker v. Picot, 1972 J.J. 2161.

(19) Pirouet v. Pirouet, 1985-86 JLR 151.

(20) Saumarez v. Ryley, veuve Saumarez, Royal Ct. (1904), 223 Ex. 318, unreported.

(21) Symes v. Couch, 1978 J.J. 119.

(22) Taylor v. Fitzpatrick, 1979 J.J. 1.

(23) Taylor v. Goodwin (1879), 4 Q.B.D. 228; [1874-80] All E.R. Rep. 873; 40 L.T. 458; 48 L.J.M.C. 104; 43 J.P. 653; 27 W.R. 489.

(24) Williams v. Stevens (1866), 4 Moo. P.C.C.N.S. 235; 16 E.R. 305, not followed.

(25) Wimborne (Viscount), Ex p., 1983 J.J. 17, followed.

(26) Yarmouth v. France (1887), 19 Q.B.D. 647; 4 T.L.R. 1; 57 L.J.Q.B. 7; 36 W.R. 281, dictum of Lord Esher, M.R. not followed.

(27) York St. Pharmacy Ltd. v. Rault, 1974 J.J. 65.

Additional cases cited by counsel:

Golder v. Socit des Magasins Concorde Ltd., 1967 J.J. 721.

Hall v. Hall (1873), L.R. 8 Ch. App. 430.

Inland Rev. Commrs. v. Duke of Westminster, [1936] A.C. 1.

Jackson (ne Jackson) v. Jackson (ne Hurst), 1970 J.J. 1285.

James v. James (1869), 19 L.T. 809.

Lawrence (G.) Ltd., Re, 1963 J.J. 341.

Londonderry's Settlement, In re, [1964] Ch. 594.

Penrose, In re, [1933] Ch. 793.

Peters, Re (1922), 23 O.W.N. 415.

Polsky v. S. & A. Servs., [1951] 1 All E.R. 185.

Priston, In re, 1963 J.J. 335.

Ramsay (W.T.) Ltd. v. Inland Rev. Commrs., [1982] A.C. 300.

Royal Trust Co. v. Tucker, [1982] 1 S.C.R. 250.

Snook v. London & W. Riding Invs. Ltd., [1967] 2 Q.B. 786.

Stoneleigh Fin. Ltd. v. Phillips, [1965] 2 Q.B. 537.

Turner v. Turner, [1983] 2 All E.R. 745.

Vatcher v. Paull, [1915] A.C. 372 ([1914] UKPC 100).

Villiers v. Beaumont (1682), 1 Vern. 101; 23 E.R. 342.

Texts cited:

Allen, Law in the Making, 7th ed., at 384, 385, 413-416 (1964).

Amos & Walton, Introduction to French Law, 3rd ed., at 99-100 (1967).

Basnage, 2 Commentaires sur la Coutume de Normandie, 4th ed., at 294 (1778).

Berault, Godefroy & d'Aviron, 2 La Coutume Reforme de Normandie, at 181 (1684).

Halsbury's Laws of England, 4th ed., vol. 26, para. 580, at 301; vol. 48, para. 501, at 272.

Houard, Dictionaire de la Cotume de Normandie, at 566-568 (1780).

Le Geyt, 2 Manuscrits sur la Constitution, les Lois & les Usages de Jersey, at 517 (1846).

Le Geyt, Privilges, Loix et Coustumes de l'Isle de Jersey, art. 5, at 58 (1953).

Le Gros, Droit Coutumier de Jersey, at 457 (1943).

Megarry & Wade, The Law of Real Property, 3rd ed., at 156-179 (1966).

Pothier, Coutume d'Orlans, 2nd ed., para. 18, at 355 (1861).

Pothier, Trait des Donations Entre-Vifs, 2nd ed., art. II, para. 64, at 373; para. 76, at 376; para. 79, at 377 (1861).

Pothier, Trait des Substitutions, 2nd ed., paras. 1-10, at 455-458; art. II, para. 11, at 458-459 (1861).

Report of the Commissioners appointed to inquire into the Civil, Municipal and Ecclesiastical Laws of the Island of Jersey, together with Minutes of Evidence (Command Papers, First Series, No. 2761), Report, Pt. II, at xiii, xv-xvi, xxv; Minutes, paras. 10950, 10955 (1861).

Routier, Principes Gnraux de Droit Civil et Coutumier de la Province de Normandie, paras. III, IV, V, at 281 (1742).

Terrien, Du Droict Civil, 2nd ed., at 194, 213 (1578).

Underhill's Law of Trusts & Trustees, 13th ed., at 17-19 (1979).

Trustsdonor's residuary rights"donner et retenir ne vaut"maxim in force as part of modern customary lawapplied by Royal Court to invalidate gifts of property inter vivos not perfected by don and traditionjudicial comity binds court to follow previous decisions unless convinced wrong

Trustsdonor's residuary rights"donner et retenir ne vaut"maxim applies to trusts created before Trusts (Jersey) Law, 1984 wherever settlor fails irrevocably to dispossess self of trust assets and vest ownership and possession in trusteeretention of power to destroy gift or exercise of dominion and control over assets renders trust invalid

Documentsdocuments evidencing fictitious transactionspolicy of courtcourts will not readily uphold "sham" documents bearing no real relation to facts of transaction they purport to embody

The plaintiff brought an action challenging the validity of a settlement made by her late husband.

In 1977 the deceased, Kamel Abdel Rahman ("KAR") constituted a settlement under Jersey law which contained, inter alia, trusts and powers directing the first defendant trust corporation to hold the trust fund and income therefrom upon such trusts as he should appoint in his lifetime with its consent, subject to the proviso that he could in any 12-month period appoint one-third of the capital of the trust fund without that consent. Provision was also made for the distribution of trust capital and income in default of such appointment and on KAR's death. The plaintiff and the second, third, fourth, fifth and sixth defendants were potentially interested under the settlement and/or in the intestacy of KAR.

Notwithstanding these provisions, the trustee was empowered to pay or apply the capital or income to or for the benefit of KAR and was directed to have regard exclusively to his interests in determining whether or not to exercise such power. Many of the administrative powers contained in the settlement required his prior written consent for their exercise in his lifetime. KAR referred to the fund as "my assets" and to the trustee as his "trust manager." The trustee made no independent investment decisions and invariably complied with KAR's instructions. Moreover, KAR obtained moneys and made distributions from the fund of which the trustee was only later informed and often gave direct instructions to banks holding trust property concerning its investment. Following KAR's death, the plaintiff brought the present proceedings challenging the validity of the settlement under Jersey law.

The plaintiff submitted, inter alia, that (a) the transfer of assets into the settlement was a don within the meaning of the maxim of Jersey customary law donner et retenir ne vaut (rien); (b) there was, however, no tradition of the gift into trust, since KAR did not divest himself of the power to control the ultimate destination of the gifted assets; (c) instead, there was a rtention by KAR under, inter alia, the proviso to the purported settlement of such rights, powers or authorities as would enable him substantially or wholly to revoke or otherwise destroy the gift for his own absolute benefit and since the existence of such power and not the fact of its exercise was of the essence, the settlement offended against the maxim donner et retenir ne vaut (rien) and was accordingly wholly invalid; (d) moreover, from the date on which KAR purported to constitute the settlement, he exercised dominion and control over the trustee's management and administration of the trust fund in clear contravention of the maxim, treating the trust assets as his own and the first defendant as if it were his mere agent or nominee; and (e) in any event, it was clear on the facts alone that if no appointment was made in KAR's lifetime, he had a life interest in the trust fund and that since he had no genuine intention of making such an appointment, the purportedly irrevocable settlement was in fact a vehicle for testamentary dispositions and such a sham transaction could not be upheld under Jersey law. The fifth defendant made like submissions.

In reply, the first, second, third and sixth defendants submitted, inter alia, that (a) the settlement was not a don within the meaning of the maxim donner et retenir ne vaut because in trusts things were not given, but rather beneficiaries acquired interests; (b) the maxim was inapplicable to trusts because it was derived from the Cotume de Normandie, to which the Anglo-Saxon juridical concept of trusts was wholly unknown; (c) alternatively, it was apparent from the authorities on the maxim that donner et retenir ne vaut applied only if the settlor retained the power to withdraw all of the trust capital and since KAR had not done so, the trusts and powers in his settlement were unaffected by the maxim; (d) nor did the exercise by the trustee of...

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