ROYAL COURT
(Samedi Division)
11 June 1999
Before: Sir Philip Bailhache, Bailiff, and
Jurats Myles and Georgelin
In re the Representation of Lex Trust Company, Ltd., Trustee of the B. Ostraat Settlement (the Representors).
And in re the B. Ostraat Settlement;
And in re an application pursuant to Articles 47 and 49 of the Trusts (Jersey) Law, 1984, as amended
The Liquidators of Effex International
Investments Ltd;First Party Cited
Jane Constance Martin, Advocate, guardian
ad litem of Christopher Alexander Ostraat and
Herman Marius Wuttudal Ostraat and of the
unborn and remoter issue under the SettlementSecond Party Convened
Application by the Representor, under Articles 47 and 49 of the Trusts (Jersey) Law, 1984
Advocate B H Lacey for the Representor
Advocate A D Robinson for the First Party Convened
Advocate J C Martin for the Second Party Convened
JUDGMENT
THE BAILIFF: This is a representation pursuant to Articles 47 and 49 of the Trusts (Jersey) Law, 1984 by Lex Trust Company Ltd in its capacity as Trustee of the B. Ostraat Settlement (to whom we shall refer as "the Trustee").
The Settlement is a discretionary trust subject to the law of Jersey which was established on 22 May 1992, by a Norwegian called Birger Ostraat - to whom we shall refer as "Mr. Ostraat" - for the benefit of himself and his family.
A representation was served upon Mr. Ostraat and the other adult beneficiaries of the Trust. It has also been served upon Advocate Martin, who was appointed guardian ad litem of the minor children of Mr. Ostraat and of the unborn and unascertained beneficiaries and upon the joint liquidators of Effex International Investment Limited (to which we shall refer as "Effex"). Effex was at all material times managed and directed by Mr. Ostraat. Vitali Investments Limited ("Vitali") and Eurocourtier Finance Corporation Limited ("Eurocourtier") are wholly owned by the Trustee. The Trustee seeks the approval of the Court to the execution of two agreements to which we shall refer as the first and the second agreement.
The effect of the first agreement would be the transfer of funds from Vitali and Eurocourtier to the liquidators of Effex. Those funds represent the entire assets of Vitali and Eurocourtier. The Trustee contends that the agreement represents the most favourable terms which it has been able to negotiate in settlement of litigation brought by the liquidators of Effex.
The effect of the second agreement would be to adjust the distribution of the proceeds of liquidation of a Danish company, formerly Effex Securities AS, which is a wholly owned subsidiary of Effex Holdings Limited. It is owned as to two-thirds by Vitali and as to one-third by a Panamanian company called Peblow Properties Inc "Peblow" which is in turn owned by a former associate of Mr. Ostraat. It is contended, however, that Peblow was a victim of Mr. Ostraat’s fraudulent activities. The liquidators of Effex have agreed with Peblow and with the directors of Vitali, subject to the approval of the Court, that Peblow will receive one half of the net proceeds of liquidation of Effex Securities AS.
Mr. Ostraat is a fraudster. He was engaged in foreign exchange trading and other activities. On 19 December 1996 he was convicted by the Oslo City Court of embezzlement and related offences of dishonesty and sentenced to seven years imprisonment. In addition the Norwegian Court imposed a confiscation order in the sum of NKK27,000,000. His appeal to the Norwegian Court of Appeal was dismissed but he subsequently escaped from custody and fled the country. He was later arrested in France and is now in prison in Paris, apparently awaiting extradition to Norway.
Miss Lacey, for the representor, has told us that the judgment is final and that no further avenues of appeal are open to him. Neither Mr. Ostraat nor any of the adult beneficiaries of the Trust has appeared at the hearing. Mr. Ostraat has, however, through his Paris advocate, sent an affidavit commenting upon the representation and the supporting documentation and opposing the order sought by the Trustee. It appears that an attempt was made by or on behalf of Mr. Ostraat to obtain legal aid in Jersey. The Bâtonnier appointed Advocate Grace to examine the papers and to advise whether it was proper that an advocate should be appointed to represent Mr. Ostraat’s interests. An opinion was given which the Court has not seen and it appears that the Bâtonnier has decided not to grant free legal aid to Mr. Ostraat.
Mr. Robinson, who appeared for the liquidators of Effex, supported the contentions of Miss Lacey. He placed before us an affidavit sworn by Jacqueline Barbara Stephenson, a chartered accountant and one of the joint liquidators of Effex. Miss Stephenson’s affidavit responded to the various assertions made by Mr. Ostraat. We do not find it necessary to itemise these assertions, nor the points made in rebuttal. Suffice it to say that in the exercise of our discretion we are satisfied that none of the assertions of Mr. Ostraat is of any weight. So far as the first agreement is concerned, Mr. Ostraat and his wife signed a variation agreement on 17 February 1997, varying a settlement agreement executed by them and by the liquidators of Effex. The variation agreement provided at paragraph 2 that:
"Mr. and Mrs. Ostraat agree to consent to the transfer of assets owned by Vitali Investments Ltd and Eurocourtier Finance Corporation Ltd to Effex."
It is now contended by Mr. Ostraat for the first time in the papers before us that this variation agreement was signed under duress. No credible evidence of such duress has been adduced. Miss Lacey submitted that the Trustee had made extensive enquiries to satisfy itself that the payments made into Vitali did come from Effex. She contended that, having regard to the terms of the variation agreement, Mr. Ostraat was estopped in equity from opposing the order sought by the Trustee. Furthermore, he did not, in any event, come to the Court with clean hands.
Miss Martin who appeared for the infant and unborn and unascertained beneficiaries of the Trust did not oppose the making of the order.
We are satisfied that it is just and equitable that we should make the order sought by the Trustee set out in sub-paragraphs (a), (b) and (c) of paragraph 4 of the prayer to the representation and we order accordingly.
Authorities
In re Representation of Bank America Trust Company (Jersey) Ltd (11 January 1995) Jersey Unreported.