Representation of Hawksford Jersey Limited re H Trust
THE COMMISSIONER:
1. This is an application by the Representor ("the Trustee") for the Court's blessing of a decision which the Trustee has taken to sell what is essentially the sole asset of a trust. The Trustee's decision is supported by the First Respondent ("the elder son") but opposed by the Second and Third Respondents ("the younger son", "the daughter" and together "the siblings").
Background
2. The trust in question ("the Trust") was established by deed of settlement dated 3rd May 1979 made between the settlor and the original trustee. The settlor and his family resided in Kenya. The settlor is the father of the First, Second and Third Respondents and was the husband of the Fourth Respondent ("the widow"). He died in 1984.
3. Following his death, there has been considerable litigation concerning his estate including an appeal to the Judicial Committee of the Privy Council. According to the affidavit of the younger son, litigation continued until 2006 and it was only at that stage that a grant of probate was issued in Kenya. Following the grant of probate, the widow as executor, gave a power of attorney to the elder son. It is alleged by the siblings that the elder son has at all times been in control of the estate, which has not yet been distributed. The younger son asserts that there are currently nine court cases in two jurisdictions concerning the control and governance of companies belonging to the estate. We emphasise that it is not for this Court to establish whether the criticisms made by the siblings of the elder brother are correct or not; the only relevance of these matters is that there is a history of difficulty and dispute between the elder son on the one hand and the siblings on the other.
4. The Trust is a conventional discretionary trust governed by the law of Jersey. The named beneficiaries are the four Respondents although the trustee has power to add to the class of beneficiaries. The Trustee has been the trustee of the Trust since June 2009.
5. The Trust has only one material asset. This is a wholly owned Jersey company ("the Company") which in turn owns a property in London ("the Property"). The Property was acquired by the Company in October 1981 for £80,000. It has been used by the beneficiaries and their families when they visit London.
6. Neither the Company nor the Trustee has any funds with which to pay for the maintenance and upkeep of the Property. The expectation has been that family members who used the Property would pay for its outgoings. Both the elder son and the siblings say that they are owed money by the Trust for amounts that they have contributed to the upkeep of the Property. However, the Trustee asserts that these sums are not capable of easy assessment because the various beneficiaries have not provided receipts etc for sums which they say they have expended in relation to the Property.
7. According to the affidavit of Ms Cordelia Miller, a director of the Trustee, the Trust is illiquid and has become cashflow insolvent, in the sense that the Trustee is not able to discharge the liabilities which have arisen in connection with the Trust (or the Company) as they have fallen due. She gives three categories of liability as an example:-
(i) There are fees owed to the Trustee in connection with administration of the Trust and the Company. As at the end of April 2018, these were said to total £94,640 together with a further £17,500 in connection with attempts to broker an agreement between the beneficiaries in connection with the Property. The Trust also owes the sum of £1,595 as at March 2018 to LSL Corporate Clients Department ("LSL"), the appointed property manager for the Property. There are also ongoing fees of LSL and the various utility companies which have to be paid.
(ii) As mentioned earlier, there are the amounts claimed by the elder son and the younger son in respect of expenses which they say they have personally incurred.
(iii) The Property has deteriorated because of the lack of ability to pay for its maintenance and upkeep and is now in need of renovation and modernisation. There are no funds with which to undertake such work.
8. Given the illiquidity of the Trust, the Trustee indicated to the beneficiaries in 2016 that the Property might have to be sold. This caused a divergence of opinion, with the elder son supporting the liquidation of the Trust's asset and the distribution of the proceeds and the younger son (supported by the daughter) strongly resisting the same. The Trustee was sympathetic to the younger son's desire to retain the Property provided the elder son could realise his interest. The Property was marketed for sale in July 2016 which resulted in offers from third parties of between £1m and £1.15m being received. The elder son's view was that one of these offers should be accepted. The Trustee decided to give the siblings a chance to match the offers received either by purchasing the Property out of the Trust or effectively buying out the elder brother's share within the trust structure. The siblings indicated their agreement to this and proposed a 10% deposit against the purchase of the Property which would be completed by the end of September 2016. The younger son eventually reverted to the Trustee with an offer to pay £30,000 as a deposit but with a further £333,000 to follow on to buy out the older brother's interest in the Trust. In fact the younger son only provided a deposit of £15,000 and, according to the Trustee, his impetus or ability to make the deal work appeared to fade such that it appeared no longer to be pursued.
9. That opinion of the Trustee is strongly challenged by the younger son. He asserts that the obstacle to the matter proceeding was the inability of the Trustee to respond to requests for information or action. He points out that a Mr Robinson took over as the point of contact in May 2015 but was subsequently affected by ill health, which meant that he was replaced by a Mr Carr in February 2017. The younger son asserts that correspondence with Mr Carr was limited and often slow. He states that in September 2016, Mr Robinson failed to turn up to a meeting in London even though the younger son had flown over from Kenya for the meeting. We heard no evidence on this matter from the Trustee and therefore are unable to make any findings in relation to this aspect. In any event, we do not consider it to be relevant to the issue which we have to decide. In due course the £15,000 that the younger son had paid by way of partial deposit was used to settle some of the outstanding invoices of professional fees of the Trustee. Again, there is a dispute between the younger son and the Trustee as to whether the younger son consented to the use of the partial deposit in this way.
10. Discussions took place during the course of June 2017, about an arrangement which would enable the siblings to buy out the elder son's interest. However, these did not come to a successful conclusion.
Download >> Representation of Hawksford Jersey Limited re H Trust 14 Sept 2018
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