Jersey Unreported Judgments

[2008]JRC216

royal court

(Samedi Division)

15^th December 2008

Before     :		J. A. Clyde-Smith, Commissioner, and Jurats King and Morgan.
Between	SB		Plaintiff
And	RB		Defendant
	In his personal capacity and as the sole trustee of the R Trust
And	CB		Intervener

And in the matter

Advocate C. R. G. Davies appeared for CB.

Advocate M. P. Renouf appeared for RB.

Advocate D. R. Wilson appeared for SB.

Advocate S. J. Young appeared personally.

judgment

the commissioner:

1.        The intervener and representor in the above proceedings, who for convenience I will refer to as CB, is seeking in a separate action to set aside a final order of the Family Division of the Royal Court dated 14^th January, 2002, ("the final order") on grounds of material non-disclosure by her former husband RB and, ancillary to that action, issued the above captioned summons to intervene in proceedings by SB against RB and brought the above captioned representation ("the representation") in relation to a trust established by RB some three years after the final order.  On 14^th November, 2008, we dismissed both the summons to intervene and the representation and now set out our reasons.

Background

2.        CB married RB on 23^rd July, 1994.  They separated four years later in 1998 and have two children who are now aged 9 and 10 respectively. 

3.        RB commenced a relationship with SB in 1998 and they have one daughter, C, who is now 8.

4.        On 8^th August, 2001, a decree absolute was granted in respect of the marriage between CB and RB and on 14^th January, 2002, there was a final hearing to deal with ancillary matters which led to the final order.

5.        On 23^rd June, 2005, RB established the R Trust which is a discretionary settlement in standard form.  The named beneficiaries are SB and C.  RB is the sole trustee.  He settled in to the trust certain shares he owned in companies that conducted the trust company business in association with the partnership in which he worked ("the shares").  The shares were settled in anticipation of the sale of that trust company business which was completed in September 2005, netting to the R Trust approximately £2.3M.

SB Proceedings and Settlement Agreement

6.        SB and RB separated in June 2007, and SB issued a number of proceedings against RB.  In particular, on 4^th December, 2007, as a beneficiary of the R Trust, she issued an Order of Justice ("the Order of Justice") containing Mareva injunctions against RB, as trustee, and it is in respect of the Order of Justice that CB issued the summons for leave to intervene. RB, as trustee, sought directions in relation to the Order of Justice and Advocate Simon Young was convened as guardian of C for the purposes of those directions.

7.        All of the proceedings referred to in the preceding paragraph (apart from CB's summons seeking leave to intervene) were compromised by a settlement agreement ("the settlement agreement") between, SB, RB (in his personal and trustee capacity) and Advocate Young as guardian of C under which certain appointments to SB and variations to the R Trust were agreed, subject to the approval of the Court.  The Court required that notice of the proposals in relation to the R Trust should be given to CB and that she should have 14 days in which to bring any claims she may have against the R Trust.  As a consequence of receiving such notice CB issued the representation

Non disclosure

8.        CB alleges that in the proceedings that led to the final order RB, who represented himself, asserted that he was a salaried partner in the firm in which he worked with no interest in the equity.  She asserts that the Registrar did not have access to the partnership accounts or the partnership agreement - in essence that RB failed to disclose his interest in the shares which were settled into the R Trust and sold for a substantial sum some three years later.  She alleges that the shares constitute matrimonial assets in which she has an interest.  RB denies the allegation and the matter is due to be heard early next year.  The issue before the Court will be whether or not the final order should be set aside and it is only if it is set aside that the Court will then move on to consider the issue of what order would have been made had there been full disclosure.  Any order that is made will be made primarily against RB but if he is unable to discharge the same out of his own assets, CB may seek to pursue the assets that have been settled in to the R Trust.

Summons to intervene

9.        The summons seeking leave to intervene in the Order of Justice was issued by CB on 1^st October, 2008.

10.      In the Order of Justice, SB alleges breaches of trust by RB in his capacity as trustee of the R Trust and sought both an account and the return of assets wrongfully transferred by RB out of the R Trust.  Mareva injunctions were imposed against the assets of RB both as trustee and personally.

11.      In her affidavit in support of the summons to intervene, CB deposed as follows:-

"I believe that I need to intervene in these proceedings so that I am aware of the ongoing status of any injunctive relief that may have been granted to the Plaintiff [SB], particularly because I am concerned that the Defendant [RB] may try to dissipate assets or may have already done so.  I feel that this risk is heightened by the new proceedings that I have issued.  I also believe that, dependent upon the outcome of my Representation [seeking to set aside the final order], I may have an interest in the funds or assets of the Trust that I believe may have been set up to defeat my legitimate matrimonial claims."

12.      Rule 6/36 of the Royal Court Rules provides as follows:-

"Misjoinder and nonjoinder of parties

At any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application -

order any of the following persons to be added as a party, namely -

(i)        any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii)       any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between that person and that party as well as between the parties to the cause or matter".

13.      Mrs Davies referred us to Rule 15/6/9 of the Supreme Court Practice 1999, concerning the interest of an intervening party which provides as follows:-

"To entitle a person not a party to an action to intervene and to be joined as a party, the rule requires that the would-be intervener should have some interest which is directly related or connected with the subject matter of the action ....".

One of the main objects of the rule is to prevent multiplicity of proceedings.

14.      In our view, the summons to intervene in the Order of Justice is misconceived.  The subject matter of the Order of Justice is a claim in breach of trust brought by a beneficiary against the trustee.  Any claim by CB however would be as a stranger to the trust seeking to trace claims into it and potentially have it set aside.  The two actions are fundamentally different.  CB's presence in the breach of trust proceedings is not necessary for the determination of those proceedings (which have in any event been settled) and to have CB's potential claim against the R Trust dealt with in proceedings within the R Trust is neither just nor convenient.

15.      CB's real interest is not in the subject matter of the Order of Justice but in the Mareva injunctions imposed thereunder on RB over which she seeks to maintain a watching brief.  In a sense she wishes to ride piggy back on the injunctions obtained by SB.  It is not permissible in our view to seek to intervene for such purposes and we therefore dismissed the summons.

The representation

16.      As previously mentioned the representation was brought by CB as a consequence of a notice being given of the proposals in relation to the R Trust.  RB, SB and Advocate Young, representing C, were convened.  Under the representation, CB seeks disclosure of the following:-

(i)        The value of the assets currently comprised within the R Trust together with information as to the form which those assets currently take.

(ii)       A copy of the settlement agreement and the figures referred to in it.

17.      She further sought an order that the Court should not ratify the settlement agreement until her action seeking to set aside the final order had been determined, save that following disclosure certain elements of the settlement agreement could be approved.

18.      Mrs Davies submitted that her client's action against RB to set aside the final order and those brought by SB were essentially family disputes, not commercial cases.  She cited the interests of CB's children who were not beneficiaries of the R Trust.  She argued that the circumstances here were relatively exceptional and that CB's application was both necessary and proportionate to do justice in these family disputes.  She referred to the judgment of Tugendhat JA in Matthews v Matthews [2001/216] at paragraph 18:-

"In any event, commercial cases are not the same as family cases, and I adopt the view of Anthony Lincoln J that they 'call for a different approach'"

and at paragraph 27:-

"It seems to me that in matrimonial cases it is better to avoid the expression balance of convenience and speak instead of balance of justice".

19.      The letter to Advocate Davies giving notice of the proposals in relation to the R Trust made it expressly clear that the purpose of giving such notice was to enable CB to bring any claims she may assert against the R Trust, yet by the representation, CB seeks to intervene in not just the R Trust but the wider terms agreed between RB and SB.

20.      Mrs Davies accepted that the representation was unusual and without precedent.  A former wife was applying to intervene in litigation between her former husband and his partner so as to be heard on the agreement reached between them and in particular that part of the settlement which involves the R Trust.

21.      In our view, whilst CB's action to set aside the final order and the proceedings  brought by SB may be regarded as family disputes, it is not appropriate to regard the representation in the same light, certainly not until the final order has been set aside, if it is.  The decree absolute in respect of the marriage between CB and RB was obtained in 2001 and a final order made on 14^th January, 2002.  There is a public interest in the finality of litigation (see PS v HF [2008] JRC 128 at paragraph 29) and former spouses in the position of CB and RB should be able to get on with their lives without undue interference by the other of them.

22.      In her written submissions, Mrs Davies stated that CB could not proceed with a claim against the R Trust until such time as her application to set aside the final order had succeeded, nor was she in a position to quantify her claim.  However, she went on to submit that there was evidence to suggest that the R Trust was set up to defeat her claims.  Indeed she cited part of RB's own affidavit, sworn in connection with the proceedings brought by SB, where he stated:-

"My intention behind the placing of my entire shareholding into the Trust was to seek to protect my assets from any possible future attack by my former wife, rather than seeking to vary the equitable interests in the shares of ......"

23.      CB believes that further disclosure when obtained is likely to reveal that the settlement of the shares into the R Trust left RB in a position where he could not satisfy her claims from other assets and that there is a direct connection between the trust assets and the subject matter of her claim.

24.      Mrs Davies further submitted that whilst she was clear that there had been non-disclosure on the part of RB, she was not able was as yet to determine the issue of materiality.  She was therefore concerned with the proportionality of commencing litigation against the R Trust and the heavy risk in terms of costs.  The representation was an attempt to find a way of protecting her client but causing as little damage as possible and dealing with the matter proportionately.  She accepted that by issuing the representation her client was still exposed to adverse orders for costs.

25.      In substance, CB is concerned to intervene in the settlement agreement and prevent implementation of the steps proposed in respect of the R Trust pending her claim to set aside the final order but is not prepared to expose herself to the risk of costs involved in issuing hostile proceedings.  She seeks to achieve that end through the representation.

26.      CB is a stranger to the R trust created some three years after the final order and if she has a claim against the trust assets and is concerned that they may be dissipated to her prejudice, then she must bring proceedings by way of Order of Justice in the same way as any other creditor.  In such proceedings she can seek injunctive relief and orders for disclosure.  In the meantime as a stranger to the trust she cannot (without more) intervene in its affairs and has no right to disclosure of confidential information in relation to it beyond that already volunteered.  As a former spouse she has no right (without more) to intervene in the settlement agreement or to disclosure of the terms of the settlement agreement beyond that already volunteered.  We therefore dismissed the representation.

27.      We wish to make it clear that in dismissing the representation we did so on procedural grounds.  We make no comment on the merit of CB's potential claim against the R Trust but if she wishes to pursue it then she must do so by way of Order of Justice in the ordinary way.

Authorities

Supreme Court Practice 1999.

Matthews v Matthews 2001/216.

PS v HF [2008] JRC 128.