2000/40
6 pages
ROYAL COURT
(Samedi Division)
14th February, 2001.
Before: P.D. Smith, Esq., Q.C., Commissioner,
and Jurats Rumfitt and Georgelin.
File No. 98/77
(The Breach of Promise Proceedings.)
Between: Eliza Hirschfield Representor
née Shalome
And: (1) Abacus (C.I.) Limited
(2) Alan Oke Dart
(as Administrator Pendente Lite of the Estate of
Howard Julius Hirschfield, deceased)
(3) Malcolm Henry Hirschfield
(4) Graham Adrian Hirschfield Respondents
And
File No. 98/123
(The Will Proceedings)
Between: Malcolm Henry Hirschfield First Representor
And: Graham Adrian Hirschfield Second Representor
And: Eliza Hirschfield First Respondent
née Shalome
And: Alan Oke Dart Second Respondent
(as Administrator Pendente Lite of the Estate
of Howard Julius Hirschfield, deceased)
And: Coutts (Jersey) Limited Third Respondent
And
File No. 97/134
(The Letter of Wishes Proceedings)
Between: Abacus (C.I.) Limited Representor
And: Graham Adrian Hirschfield First Respondent
And: Malcolm Henry Hirschfield Second Respondent
And: Eliza Hirschfield Third Respondent
née Shalome
Advocate N.M .Santos Costa for Eliza Hirschfield (née Shalome);
Advocate J.P. Speck for Graham Adrian Hirschfield and
Malcolm Henry Hirschfield;
Advocate T.J. Le Cocq for Abacus (C.I.) Ltd.
The other parties did not appear and were not represented
Application, under Rule 6/12(1) of the Royal Court Rules 1992, as amended, by the Representor in the Breach of Promise proceedings for leave for leave to file an amended representation.
JUDGMENT
THE COMMISSIONER:
1. By a summons dated 9th February 2001, (served informally on 6th February 2001), the Representor sought leave pursuant to Rule 6/12(1) of the Royal Court Rules 1992 to amend her Representation. The proposed amendments are contained in a draft annexed to the summons and, in substance, seek to raise two issues:
(i) That the settlement of 8th September 1986, the subject matter of the Representation ("the Jersey Settlement") was a sham; and
(ii) That the Jersey Settlement was void for uncertainty of objects because the primary class of beneficiaries was "too wide and/or vague".
2. The summons came on for hearing on 12th February 2001, the day fixed for the trial of the Representation and two other related sets of proceedings. The First Respondent (the Trustee) for whom Advocate Le Cocq appears, took a neutral stance on the question of whether or not the amendments should be allowed but indicated that if the first proposed amendment ("the sham amendment") were permitted, the Trustee would require an adjournment of the trial to enable it to meet the allegation. Advocate Speck, who appears for the Third and Fourth Respondents (beneficiaries of the Settlement) opposed the grant of leave to make either amendment.
3. Advocate Santos Costa for the Representor informed us that the sham amendment application was the result of his perusal of a bundle of documents received from the Trustee on 15th January 2001. In an affidavit sworn on 11th January 2001 in one of the related matters Mr William T Wilson, a director of the Trustee, averred that since 30th November 2000 (the date of a previous affidavit made by the deponent in response to a summons issued by the Representor in the instant case seeking specific discovery), it had come to light that documents had inadvertently not been disclosed. These are listed in the supplementary list exhibited to Mr Wilson's affidavit.
4. Trusts held to be shams are discussed in Lewin on Trusts, 17th Edition, paragraph 4-19 and the following paragraphs. A sham trust in the present context is one intended to give the appearance of a trust in the settlement instrument whereas the true intention is that the Settlor retains dominion and control over the assets purportedly settled. In our opinion, and this was shared by counsel, that although the Representor might also have sought to rely on the since abolished maxim donner et retenir ne vaut, (see Rahman v Chase Bank (CI) Trust Company Limited (1991) JLR 103) its application would add nothing of substance in the instant case.
5. One issue debated in Lewin (the same citation, paragraph 4-23) is how far it may be necessary to establish in every case of alleged sham that both Settlor and Trustee had the common intention that (as Diplock LJ put it in Snook v London & West Riding Investments Ltd [1967] 2 QB 786 at p. 802) "the acts or documents are not to create the legal rights and obligations which they give the appearance of creating". Mr Le Cocq argued, and we accept, that whatever may be the position in other cases the sham allegation in the present case, as argued before us on the Representor's behalf, could only be sustained on the basis that the Trustee was complicit in the sham or, to put it another way, was a knowing participant in a deception.
6. Mr Santos Costa referred us to approximately 15 documents in the bundle received on 15th January. However, all but four of these were already available to the Representor from other sources long before the bundle was received. We have carefully scrutinised those documents. In our judgment they do not point to the settlement having been a sham at the time of its creation, never mind the Trustee having been complicit. Disclosure of those documents could not and, understandably, did not result in the pleading of, or an attempt to amend to plead, the sham allegation prior to receipt of the January bundle.
7. Of the additional documents, one is a letter dated 7th April 1986 from an English solicitor to Mr Howard Hirschfield and marked "Strictly Confidential to be opened by the addressee only". Mr Santos Costa drew our attention to a passage in paragraph 8 of this letter which refers to the trustees (sic) exercising all appropriate powers in the deed to give effect to the prospective Settlor's wishes. But there is nothing whatsoever in this letter to implicate the Trustee in a sham.
8. Another of the additional documents is a memorandum dated 14th December 1989 from Mr R Rumboll, an associate of Mr Hirschfield, who became a Trustee of the Jersey Settlement, to a Mr Hollingsworth who appears to have been acting on behalf of the Trustee. However, what this memo tends to show is that the Trustee was concerned to act lawfully rather than indicating that the Trustee was nothing more than the creature of the Settlor.
9. A further additional document is a file note of a meeting between Mr Rumboll and the Fourth Respondent and his wife on 13th January 1996. It records that Mr Rumboll expressed concern as to Mr Howard Hirschfield's capacity to conduct his own affairs. Mr Santos Costa sought to extrapolate from this the proposition that Mr Rumboll's concern was that Mr Hirschfield may not have been able to direct his Trustees. In our judgment the document does not bear this strained interpretation. But whatever it means it does not point to the Trustee being complicit in a sham arrangement in 1986.
10. Finally, we were referred to notes of a meeting on 28th August 1996 between Mr Rumboll and representatives of the Trustee. There is absolutely nothing in these notes indicating any acknowledgement on the part of the Trustee that the purported settlement was a sham or that it was not properly exercising the discretion vested in it as it saw fit.
11. We have concluded that the additional documents identified to us do not add materially to the documents previously available to the Representor. Neither collectively nor individually do the documents to which we have been referred afford significant support to assertions that the settlement was a sham or, if it was, that the Trustee was complicit in the deception.
12. It was agreed by counsel that the court has a discretion as to whether or not to permit the amendments sought and that the relevant principles are set out in the commentary to Order 20 Rule 5 in the Supreme Court Practice 1999. Applying those principles as far as they are material to the sham allegation, we have reached the following conclusions:
(i) The proposed amendment raises the sham allegation for the first time. Mr Santos Costa contended that it was nothing more than a small accretion to allegations already pleaded. We do not agree. It is a new claim giving rise to factual issues not previously raised in the representation.
(ii) If the sham allegation is not a claim of fraud on the part of the Trustee, it certainly involves a very serious allegation of improper conduct.
(iii) Most of the material on which Mr Santos Costa relies has been available to the Representor for a long time and the additional documents do not materially add to it.
(iv) The documents to which we have been referred do not tend to show either that the settlement is a sham or that the Trustee was complicit in a sham.
(v) Mr Santos Costa did not suggest that he had reason to believe that he might obtain any further evidence from any witness as a direct result of perusal of the January bundle. He did say that if leave to amend were granted he would seek further discovery. In our judgment this would be nothing less than a fishing expedition which we should not facilitate.
(vi) It would be unjust to require the Trustee to defend the sham allegation, there being virtually no material to support it.
(vii) If leave to amend were granted and the Trustee successfully defends the sham allegation, it is doubtful whether the Representor could meet an order for costs made against her in the Trustee's favour. Although she is currently in receipt of £8,000 a month from the Jersey Settlement plus the expenses of her home, she has other very large debts and her own legal costs to discharge The outcome of these proceedings may be that the Representor would be in a position to meet a costs order against her but this may not be the outcome. Thus the end result might be the significant dissipation of the Settlement fund to the disadvantage of the beneficiaries.
(viii) If leave to make the sham amendment were granted, an adjournment of the trial would be necessary to enable the Trustee to meet it. The Representor may not be able to meet the costs thrown away.
13. The trial date was fixed in July 2000. The three matters before us are essentially a family dispute inevitably giving rise to more than the ordinary level of stress associated with a trial. It is important that litigation of this type is disposed of expeditiously and delayed only where there are reasonable grounds for doing so. There are no reasonable grounds here.
14. Accordingly, we refuse leave to amend to make the sham allegation. As far as the uncertainty of objects allegation is concerned, we refer to the relevant principles set out in Lewin on Trusts, already cited, paragraph 4-29 and the following paragraphs. The learned editors point out that the test is whether it can be said with certainty that a particular person is a member of the class of beneficiaries. Furthermore, this is to be judged at the time of creation of the trust. Mr Santos Costa was unable to describe a person, hypothetical or real, of whom it could be said that there was uncertainty as to whether that person fell into the class or not. In our judgment there is no uncertainty and, therefore, no basis for this amendment. Accordingly we refuse leave in respect of it also.
Authorities.
Rahman -v-Chase Bank (1991) JLR 103.
Trusts (Jersey) Law 1984, as amended.
Routier: Principes Généraux du Droit Civil et Coûtumier de la Province de Normandie.
In re the Rabaiotti Settlement (30th May, 2000) Jersey Unreported.
White Book: Civil Procedure 2000: Vol. 1; Part 17, 20.
Alsop Wilkinson-v-Neary & Ors (1996) 1 WLR 1220.
Snook v London & West Riding Investments Ltd [1967] 2 QB 786 at p. 802.
Lewin on Trusts (17th Ed'n): paragraph 4-19 et seq.