The Yaheeb Trust, The Havana Trust and The Yaheeb No. 2 Trust

JurisdictionJersey
CourtRoyal Court
JudgeBailhache, Bailiff
Judgment Date14 December 2001
Date14 December 2001
ROYAL COURT
Bailhache, Bailiff

G.R. Boxall and F.B. Robertson for the representor;

D.F. Le Quesne for the minor and unborn beneficiaries;

M.J. Thompson for the second respondent;

J.D. Kelleher for the third respondent;

The Attorney General appeared in person.

Cases cited:

(1) A Ltd. v. B Bank, [1997] F.S.R. 165, followed.

(2) Bayer A.G. v. Winter (No. 2), [1986] 1 W.L.R. 540; [1986] 2 All E.R., distinguished.

(3) Buttes Gas & Oil Co. v. Hammer (No. 3), [1982] A.C. 888; [1981] 3 All E.R. 616, followed.

(4) Comet Prods. (U.K.) Ltd. v. Hawkex Plastics Ltd., [1971] 2 Q.B. 67; [1971] 1 All E.R. 1141, considered.

(5) Den Norske Bank A.S.A. v. Antonatos, [1999] Q.B. 271; [1998] 3 All E.R. 74, distinguished.

(6) Kirkpatrick (W.S.) & Co. Inc. v. Environmental Tectonics Intl. (1990), 493 U.S. 400; 110 S.Ct. 701; 107 L.Ed.2d 816, followed.

(7) Oetjen v. Central Leather Co. (1918), 246 U.S. 297; 38 S.Ct. 309, 62 L.Ed. 726, followed.

(8) Pacific Invs. Ltd. v. Christensen, 1997 JLR 170, applied.

(9) Underhill v. Hernandez (1897), 168 U.S. 250; 18 S.Ct. 83; 42 L.Ed. 456, followed.

Legislation construed:

Proceeds of Crime (Jersey) Law 1999, art. 32(3)(b)(i):

"Where any person discloses to a police officer a suspicion or belief that any property is derived from or used in connection with criminal conduct . . .

(b) . . . he does not commit an offence under this Article if

(i) the disclosure is made before he does the act concerned and the act is done with the consent of a police officer . . ."

Royal Court Rules 1992, r.6/18(3): The relevant terms of this rule are set out at para. 7.

Constitutional Lawact of stateexercise of judicial restraintJersey courts not to adjudicate on acts of foreign government as sovereign authority within own territory, e.g. permitting minister to act in private capacity and receive commissions in commercial transactions involving state without breaching ministerial dutiescross-examination may be permitted to determine whether actions in accordance with permission granted and circumstances of commissions' receipt

Constitutional Lawact of stateexercise of judicial restraintconcern, embarrassment or offence caused to foreign state by conduct of police investigation into suspected criminality insufficient to justify refusal of Attorney General's application for cross-examination of minister of foreign state

Trustspowers and duties of trusteesapplication for directionscross-examination of applicant under Trusts (Jersey) Law 1984, art. 47 on contents of affidavit only refused in exceptional circumstances, e.g. when unable to provide additional information to aid determination of applicationmisconduct on previous related application irrelevant consideration if peripheral to issues raised by application

Trustspowers and duties of trusteesapplication for directionscross-examination of applicant under Trusts (Jersey) Law 1984, art. 47 on contents of affidavit not for collateral purpose, irrelevant or abuse of art. 47 procedure when aids determination of application, e.g. whether trust funds represent proceeds of crimeAttorney General's undertaking that information not used in future prosecution sufficient safeguard against self-incrimination

The representor, a minister in the Government of the State of Qatar and the settlor of the trusts, made an application under the Trusts (Jersey) Law 1984, art. 47 for a direction that the trustee could resume its normal administration of the trusts in accordance with their terms within a reasonable time.

The representor received substantial commissions from companies seeking to do business with the State of Qatar. The commissions were paid into the trusts. In July 2000, the trustee, pursuant to its obligation under the Proceeds of Crime (Jersey) Law 1999, informed the police that it suspected the trust funds under its administration were the proceeds of criminal conduct. The police launched an investigation. In May 2001, the representor obtained directions from the Royal Court to the effect that the trust funds were not impressed with a constructive trust, and asked the trustee to make a capital distribution. The trustee, concerned that a distribution would be an offence under the 1999 Law, sought police consent for the proposed distribution pursuant to art. 32(3)(b)(i) of the 1999 Law. The police declined to consent.

The representor then made the present application. The Attorney General opposed the proposed direction on the ground that it could amount to directing the trustee to commit a criminal offence, and applied for permission to cross-examine the representor and the managing director of the trustee on the affidavits filed in support of the application. He gave an undertaking that nothing said in cross-examination by the representor or the managing director would be used in their future prosecutions, or those of the trustee, its employees and directors, and certain named individuals. The Attorney General's application was opposed by the representor, the trustee, the State of Qatar and the minor and unborn beneficiaries of the trusts.

The Attorney General submitted that (a) the representor and the trustee procured the May 2001 judgment by deliberately misleading the court; (b) the papers exhibited to the police affidavits raised serious questions as to the accuracy of the affidavits filed by the representor in support of the application; (c) it would be contrary to public policy to grant the relief sought because the representor intended to use the declaration to hinder the criminal investigation and any subsequent criminal proceedings against him or any other party; and (d) the court should only refuse an application to cross-examine a deponent on his affidavit in exceptional circumstances.

The representor submitted that (a) the May 2001 judgment had determined that there was no constructive trust in favour of the State of Qatar or any other person since (i) the payments he had received were commissions and not bribes designed to secure government contracts, (ii) his actions had been authorized by the Amir of Qatar, and he had not therefore breached his fiduciary duty as a minister of the State of Qatar, and (iii) the trust funds were not the proceeds of criminal conduct; (b) the adverse inferences drawn in the police affidavits were misconceived, and were personally offensive to the Amir; and (c) the court could refuse an application to cross-examine without exceptional circumstances or, if not, there were exceptional circumstances in this case, namely that (i) the doctrine of act of state precluded cross-examination in relation to his appointment in respect of State contracts, the Amir's consent to the payments received, and the assertions that the State of Qatar made no claim to the trust assets and that no crime had been committed in Qatar by the representor, (ii) cross-examination of the representor would amount to interrogation for a collateral purpose, i.e. to ascertain whether he had committed a criminal offence, and would be oppressive, and (iii) cross-examination would not go to any relevant issue in the case, and would be an abuse of the art. 47 procedure.

The Attorney General further submitted that (a) the trustee had colluded with the representor in misleading the court at the May 2001 hearing by failing to draw the court's attention to flaws in the representor's case that were within its knowledge and failing to make full disclosure; and (b) it was therefore appropriate for the managing director to be cross-examined to determine why relevant information had not been brought to the attention of the court and whether he suspected that the trust funds were the proceeds of criminal conduct. The trustee denied that there had been any material non-disclosure or that further information could now be provided.

Held, allowing the application in part:

(1) The court would only refuse an application to cross-examine a deponent on his affidavit in exceptional circumstances. It was irrelevant that the affidavit was made in the context of an application for directions under art. 47 of the Trusts (Jersey) Law 1984 because of the hostile nature of the dispute ( para. 10).

(2) However, it was appropriate for the Jersey courts to exercise judicial restraint and decline to adjudicate on issues which could properly be characterized as "acts of state," i.e. acts of the Qatari government as a state, rather than commercial acts, occurring within the territory of that state. Cross-examination would not be permitted to challenge those acts as to do so would be to purport to sit in judgment on the acts of a foreign sovereign authority done within its own territory. The acts which were excluded from cross-examination by the doctrine were (a) the decision of the Amir to permit the representor to act in a private capacity in commercial transactions involving the State of Qatar without being in breach of any ministerial or fiduciary duty owed to the State of Qatar; and (b) the statements of the Amir that he consented to and approved of the payments made to the representor and that the State of Qatar made no claim to them. The representor could be cross-examined, however, as to the extent to which his own actions were reconciled with the permissions and consents afforded to him by the Amir. In particular, as the respondent asserted that he was acting in a private capacity when he received the commissions, and not in a governmental capacity, the circumstances surrounding the receipt of the commissions could not be regarded as acts of sovereign authority ( paras. 14-20).

(3) The other objections raised by the representor were without substance:

(a) Cross-examination of the representor in relation to the circumstances in which the commissions were paid and settled on trust would not be for a collateral purpose because the cross-examination would help determine the issue at the heart of the application, i.e. whether the...

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