Jersey Unreported Judgments

Trust - damages sought from the First to the Third defendants in relation to the creation of the Ching Trust 2006.

[2015]JRC233

Royal Court

(Samedi)

17 November 2015

Before     :		David Hunt, Esq., Q.C., Commissioner, and Jurats Marett-Crosby and Grime
Between	(1) Niall Iain MacFirbhisigh (as Curator of Barry Lionel Ching) (2) Barbara Mary Marvell Ching		Plaintiffs
And	(1) C. I. Trustees and Executors Limited (2) Steven Gidley (3) Gary Killmister (4) Kevin Manning		Defendants

Advocate J. Garood for the Plaintiffs.

Advocate G. A. H. Baxter for the First and Third Defendants.

Mr Gidley appeared on his own behalf.

judgment

the commissioner:

Introduction

1.        In these proceedings as now constituted the Plaintiffs seek equitable compensation and damages from the First to Third Defendants on a number of different grounds arising out of the creation of the Ching Trust 2006 ("the Trust") and the subsequent administration of the affairs of the Trust.  On the second day of the trial the Plaintiffs discontinued their claims against the Fourth Defendant, Mr Kevin Manning (a Jersey qualified écrivain), who was represented by Advocate Williams of Ogier; accordingly we make no further reference to the claims against Mr Manning.  (When we refer to the Defendants hereafter, we mean only the First to Third Defendants unless the context requires otherwise.)  The First to Third Defendants dispute all the claims made against them; in addition, the Second and Third Defendants claim that the Plaintiffs' claims against them are barred by prescription. 

2.        In this judgment we confine ourselves to addressing those arguments made by the parties which seem to us to be of importance in resolving the various disputes between them.  We make clear, however, that we have had regard to all the submissions both written and oral made to us, whether we mention them specifically in this judgment or not. 

The parties

3.        The First Plaintiff, Mr Niall MacFirbhisigh, is the present curator of Mr Barry Ching.  Mr Ching, who is now 67 years old, was made the subject of a curatelle on 19 June 2006.  His first curator was Mr Manning.  By an order dated 25 November 2008 the Court accepted Mr Manning's resignation as Mr Ching's curator and by the same order the Court appointed Mr MacFirbhisigh as curator in Mr Manning's place. 

4.        Following a career as a stock-broker with the firms of Trevor Mathews & Carey, Philips & Drew, and Le Masurier James & Chinn, Mr Ching became the managing director and owner of ARC Capital Management Limited ("ARC"), an investment management and stock-broking firm.  Sadly he is now in the advanced stages of Alzheimer's disease and is a patient in St Saviour's Hospital.  The Second Plaintiff, Mrs Barbara Ching, is his wife.  They were married on 14 November 1997.  We refer collectively to Mr and Mrs Ching as "the Chings".  The Plaintiffs were represented by Advocates Pallot and Garrood of Carey Olsen (principally the latter), assisted by Ms Garrett-Sadler. 

5.        The First Defendant, C.I. Trustees and Executors Limited ("CITE"), is an English company, of which the Third Defendant, Mr Gary Killmister, is the sole director and beneficial owner.  CITE and Mr Killmister were represented by Advocate Baxter of Viberts, assisted by Ms Zambon. 

6.        The Second Defendant, Mr Steven Gidley, was from June 2001 to January 2007 the managing director of Compliance Solutions Limited ("Compliance").  During the ten years up to 2001 he was involved in offshore compliance with HSBC Bank International Limited, ending as head of offshore compliance.  Mr Gidley appeared in person.  This proved to be less of a problem for the Court than might have been expected since Mr Gidley conducted his case with considerable ability. 

7.        Mr Killmister, the Third Defendant, is a tax accountant in practice in Hexham, Northumberland; he has practised as an accountant since 1987.  He is also the sole director and beneficial owner of C.I. Accountancy Limited, an affiliate of CITE.  He initially trained and worked in Jersey.  Between 1994 and 2007 he was a director of, and a shareholder in, the Beresford group of companies providing trust and corporate services from Jersey. 

Summary of the Plaintiffs' claims

8.        The Chings, who were described in the Plaintiffs' opening skeleton argument as "two elderly, vulnerable individuals", claim that they each placed their absolute, unqualified faith and trust in the Defendants, whose advice they sought and relied upon in relation to their financial affairs.  More particularly, the Chings were concerned to ensure their financial well-being and security for their old age and they relied on both the Defendants' advice and the Defendants' implementation of that advice in order to safeguard their financial future. 

9.        The advice on which the Plaintiffs relied was initially given to Mr Ching by Mr Gidley in November 2005 and consisted in summary of statements to the effect that the Chings were in dire financial straits, that they had no alternative but to liquidate all of their assets and that the solution to their financial difficulties was to place their liquidated assets in trust.  This advice was repeated and confirmed on several occasions by each of the Defendants to both Mr and Mrs Ching.  The Plaintiffs assert that the advice was negligently given in that each of the Defendants knew or ought to have known that the advice was bad advice and therefore likely to occasion financial loss to them, or was reckless as to whether the advice was bad advice and therefore likely to occasion financial loss to them.  Thus, for example, the Plaintiffs submit that the Chings were not in fact in dire financial straits and that it was not necessary to liquidate all of their assets. 

10.      The Plaintiffs also say that each of the Defendants, in giving the advice that they did, in persuading the Chings to act on such advice and in assuming responsibility for implementing the advice, assumed particular responsibilities to the Chings which were essentially fiduciary in nature, in that each Defendant knew or ought to have known that the Chings placed their trust in the Defendants, believing that they could and should rely on the advice, that the Defendants could and should be trusted to implement the advice on their behalf and that the Defendants would at all times act in their best interests. 

11.      The Plaintiffs contend that but for the Defendants' advice the Chings would not have liquidated their assets (in particular Granville, their jointly-owned property in Jersey, and Berkeley Court, a flat in Eastbourne in Mrs Ching's name), would not have placed those assets in trust and would not have suffered the capital losses that they did suffer as a direct result.  The capital losses comprised in particular sums which could have been raised from sales of shares in a Canadian company, Digger Resources Inc. ("Digger") which had been incorporated on 31 December 1985, and losses on an investment bond ("the AIG bond").  The Plaintiffs also submit that the Chings would not have surrendered the financial benefit of maintaining ownership of their assets, particularly their real estate.  Nor would the Chings have been required to pay any of the Defendants any fees for their services.  Accordingly the Defendants are, so the Plaintiffs say, directly responsible for the consequences of the advice which caused the Chings' financial loss.  The Plaintiffs claim that the Chings are entitled to be and should be compensated by the Defendants and placed in a position to enjoy the remainder of their lives in the financial security which, were it not for the actions of the Defendants, they would now be enjoying. 

12.      Against that background, the Plaintiffs' claims as summarised in their opening skeleton argument fall under five distinct heads, namely (together with the sums now claimed):-

(A)           negligent misstatement, which is alleged against Mr Gidley and Mr Killmister, (originally jointly and severally, but now only severally)

Digger	£411,898
AIG Bond	£162,500
plus fees taken by
Mr Killmister	£59,425.14
Mr Gidley	£28,245
Mr Manning	£81,496.97
	£743,565.11

(Mr MacFirbhisigh's claim under this head is in respect only of the Digger shares);

(B)           breach of fiduciary duty, which is alleged against CITE, Mr Gidley and Mr Killmister severally:

Digger	£411,898
AIG Bond	£162,500
plus fees taken by
CITE	£66,537.85
Mr Killmister	£59,425.14
Mr Gidley	£28,245
Mr Manning	£81,496.97 £810,102.90;

(C)           breach of trust, which is alleged against CITE:

Digger	£411,898
AIG Bond	£162,500

(D)           dishonest assistance, which is alleged against Mr Killmister:

AIG Bond

£162,500;

and

(E)           fees improperly charged, which is alleged against CITE:

Paid to Mr Killmister	£59,425.14
Paid to Mr Gidley	£28,245

As originally pleaded, the claims under heads (A) and (B) included a figure for £250,000 in respect of the sale of Granville and the claim at head (A) included a figure for £10,000 in respect of a missing payment.  At the conclusion of his opening address, however,  Mr Garrood abandoned (rightly, in our view) any claim in respect of Granville and at the conclusion of the evidence he abandoned (equally rightly, in our view) the claim for £10,000.  Accordingly we say no more about these two claims.

The factual background

13.      At this stage of our judgment we confine ourselves so far as possible to matters which are uncontroversial.  We omit, therefore, the details of the disputed meetings between the parties in late 2005 and early 2006, and of Mr Ching's medical history, both of which we address later. 

14.      Mr Gidley first met Mr Ching in December 2002 when he was introduced to him by Mr Roger Matthews, then a director of ARC.  ARC was experiencing some compliance difficulties following an inspection by the Jersey Financial Services Commission ("the JFSC") and ARC engaged Compliance to provide advice.  The problem with the JFSC arose out of ARC's client account with HSBC in Jersey becoming overdrawn contrary (according to Mr Ching) to his instructions.  Following an extended period of discussions with the JFSC, the matter was finally resolved in early 2004 with the JFSC agreeing to take no further action against ARC or its directors on condition that ARC ceased trading.  ARC formally ceased trading the same year. 

15.      In July 2004 Mr Ching retained Compliance to seek compensation from HSBC.  Mr Gidley advised Mr Ching that he might have a claim against HSBC and Mr Ching asked Mr Gidley to act on his behalf.  Following lengthy negotiations between Carey Olsen for HSBC and Mr Gidley, Mr Ching's claim was settled in April 2005 with Mr Ching being awarded the sum of £64,736.00, of which £35,000 was retained by the bank to pay off the balance of an outstanding loan.  Mr Huw Shepheard, then a co-director with Mr Gidley of Compliance, participated in these efforts to assist Mr Ching. 

16.      Following the demise of ARC, Mr Ching was unemployed but he suggested that he would be of some value to Compliance by effecting new business introductions to the company.  Mr Gidley agreed to retain him as a non-executive director of Compliance for this purpose.  Although Mr Ching was initially very optimistic in terms of his ability to introduce new clients, it became apparent that most, if not all, of Mr Ching's contacts were like him either fully or semi-retired and that those still inclined to meet with him would do so only on a social basis.  Mr Ching did not actually generate any new business or revenue for Compliance. 

17.      By mid-2005, there was an established business relationship between Mr Gidley and Mr Killmister, with Mr Gidley providing training and consultancy services to Mr Killmister's businesses. 

18.      In October and November 2005 various discussions took place between, amongst others, Mr Ching and Mr Gidley at which Mr Ching's financial difficulties were discussed.  By that time Mr Ching owed over £100,000 to various credit card companies and was overdrawn on his account with HSBC. 

19.      On 26 November 2005, Mr Gidley, Mr Ching and Mr Killmister made a three day trip to Montreal to promote a proposed trust scheme ("the Investors in Canada scheme") for Canadian non-domiciled non-resident settlors.  By this time Mr Killmister had moved to Northumberland.  This was the first occasion on which Mr Killmister had met Mr Ching; Mr Killmister had no prior knowledge of either Mr or Mrs Ching or of their business or financial operations.  The Investors in Canada scheme did not come to fruition.  After their return further meetings took place between December 2005 and the end of March 2006 between, among others, Mr Ching and Mr Gidley. 

20.      In January 2006 Mr Ching received a summons from the Securities and Exchange Commission ("the SEC") in the United States to attend their offices to be interviewed with regard to an alleged market fraud involving one of Mr Ching's business associates, Mr Mervyn Fiessel.  Mr Gidley advised Mr Ching not to visit the United States on the basis that he could be detained there pending the outcome of the investigation. When questioned about his involvement with Mr Fiessel, Mr Ching became withdrawn and claimed that he could not remember the details of the company concerned.  The SEC was informed that Mr Ching was unable to travel to the US but would agree to be interviewed by telephone in the presence of his legal adviser.  The SEC did not respond to this offer either in writing or by email. 

21.      In February 2006 Mr Gidley provided the Chings with undated stock transfer forms in respect of their shareholdings in Bokhara Investments (Jersey) Limited ("Bokhara") and Scorpio Services Limited ("Scorpio"), Scorpio being one of the companies in which the Chings' Digger shares, and Digger shares owned by third parties, were held.  Mrs Ching signed the forms in respect of her shareholdings, as did Mr Ching and Mr Ching's mother in respect of theirs.  These documents were returned to Mr Gidley, who forwarded them to Mr Killmister. 

22.      On 30 March 2006 the JFSC served notices on both Mr and Mrs Ching issued under Art.32(2)(b) of the Financial Services (Jersey) Law 1998 ("the 1998 Law") requiring them to attend a formal interview at the offices of the JFSC on 23 May 2006.  Enquiries which Mr Gidley made of the JFSC confirmed that this was not a local investigation but was being carried out at the request of the SEC in connection with their January summons.  Whilst assisting the Chings to comply with the Article 32 request, it became apparent to Mr Gidley that Mr Ching had been working closely with Mr Fiessel in respect of one or more American companies known as Greyfield Capital ("Greyfield"), which were the subject of the SEC investigation.  Mr Ching had failed to keep proper documentary records of these arrangements.  During his collation of the available documents, Mr Gidley attempted to fill any gaps by referring to Mr Ching himself.  Mr Ching was extremely reticent about his activities with Mr Fiessel and when Mr Gidley questioned him directly about some of his correspondence with Mr Fiessel he claimed that he could not remember details of their dealings.  It was obvious from the documentation that the Chings had set up brokerage accounts where Mr Fiessel was a co-signatory with single signing powers; these arrangements allowed Mr Fiessel to deal on those accounts without prior authorisation from either Mr or Mrs Ching.  Mr Gidley pointed out to them both that based on this material, and since Mr Fiessel was being investigated for market manipulation and fraud offences, they could be vulnerable to investigation by the SEC as willing co-¬conspirators. 

23.      Mrs Ching, who claimed complete ignorance of the Fiessel affair, attended Mr Gidley's offices on 2 April 2006.  She was upset and angry that Mr Ching had involved her in this matter and she was worried about what action the regulators might take against her directly.  She informed Mr Gidley that her husband was acting erratically at home; his behaviour included emotional outbursts ranging from tearful episodes to aggressive tantrums when she attempted to discuss the Greyfield situation and the JFSC investigation with him, together with increasingly frequent episodes of very heavy drinking.  She stated that on more than one occasion she had found Mr Ching passed out from drink at home.  This was news to Mr Gidley; up to that point Mr Ching had always given the impression that he was in control of the situation, albeit concerned about the forthcoming JFSC interview.  Mr Gidley suggested to Mrs Ching that her husband was obviously under a huge amount of emotional strain as a result of having to come to terms with his financial losses and that the added pressure of the JFSC investigation was not helping.  In the light of Mrs Ching's disclosure of her husband's behaviour, Mr Gidley was concerned that the prospect of his being interviewed under caution by the JFSC, combined with the stressful period he had already been through, might be too much for Mr Ching to deal with.  Mr Gidley therefore suggested to Mrs Ching that she should discuss the position with her family GP and that, if Mr Ching's doctor was of the opinion that Mr Ching was not then fit to attend a formal interview under caution, he (the doctor) could issue a letter to that effect to the JFSC; the JFSC would have to respect that opinion.  Mr Gidley suggested this course of action on the basis that any postponement of the JFSC interview would give Mr Ching time to regain his composure.  Mr Gidley did not consider at this or any earlier time that Mr Ching was in any way incapacitated as he had not prior to that point behaved any differently from the person Mr Gidley had known for nearly two years. 

24.      The next day, 3 April 2006, when Mrs Ching and Mr Gidley put to Mr Ching the suggestion that he should undergo a medical examination by his GP regarding his increased alcohol consumption, he was initially very reluctant.  Mr Ching stated that there was nothing wrong with him and that he did not have a drink problem.  He did admit that he felt he was becoming a little absent-minded and that he had been drinking more heavily of late.  Once, however, he grasped the idea that a letter from his doctor might postpone the forthcoming interview, he agreed that such an examination could not do any harm.  Mrs Ching arranged for Dr Jackson, the family GP, to examine Mr Ching at their home the next evening.  Dr Jackson's note of Mrs Ching's telephone call reads:-

"Telephone encounter re predicament and emerging memory problems in relation to work."

Mrs Ching asked Mr Gidley if he could be present at the house during the appointment.

25.      Dr Jackson duly examined Mr Ching on 4 April 2006 at Granville, during which he performed a Mini Mental State Examination ("MMSE").  Mr Ching obtained a score of 28/30, making one error in recall and one error in spelling backwards.  Following the examination, the doctor, with Mr Ching's permission, discussed matters with Mrs Ching and Mr Gidley.  Dr Jackson voiced some concerns over Mr Ching's memory losses and retentive abilities and felt that this warranted further, more specialised investigation.  When asked, the doctor did state that he would be prepared to issue a letter to the effect that, pending further investigation of Mr Ching's psychological health, he did not think that it would be appropriate for Mr Ching to be placed under the strain of a formal interview.  Mr Gidley informed the Chings that he would notify the JFSC of these developments and seek to have Mr Ching's interview postponed pending the outcome of the further examinations.  Shortly thereafter Dr Jackson wrote to the JFSC.  This letter was not in the trial bundles but it simply said that Mr Ching was not fit to undergo a stressful interview at that time and requested that the interview be postponed. 

26.      The following day, 5 April 2006, Dr Jackson wrote a referral letter to Dr Harrison at the Psychiatric Department of the Jersey General Hospital.  The same day Mr Ching wrote to CITE saying:-

"I shall be transferring to your control a holding of one million shares in Digger Resources."

Finally, one of Mr Ching's credit card statements referred to a payment to the Oriental Club in London of £350.59, with a transaction date of 5 April.  What Mr Ching was doing in London on that date is unknown but Mrs Ching confirmed that her husband used the Oriental Club when he was on business trips to London. 

27.      CITE executed the Trust deed on 6 April 2006 in time for the start of the new United Kingdom tax year.  The Bokhara and Scorpio transfer forms were dated the same day. 

28.      On 12 April 2006 Mr Gidley sent a letter to Mr Gary Godel at the Enforcement Division of the JFSC and arranged at the same time to deliver up in accordance with the production order whatever documentation had been located with respect to Greyfield and Mr Fiessel.  In the course of a follow-up telephone call, the JFSC agreed to postpone Mr Ching's interview pending the outcome of his medical evaluation but insisted on interviewing Mrs Ching.  A date was set for the first week of June. 

29.      The same day Extraordinary General Meetings were held of Bokhara and Scorpio at which the existing directors were removed from office and replaced by Mr Killmister. 

30.      Having had the immediate threat of the JFSC interview removed, Mr Ching reverted to his normal cheerful state and seemed to accept that he did have a number of issues that he was now coming to terms with.  During the course of several meetings between Mr Gidley and the Chings, he discussed the prospects of getting back into the business.  He was of the opinion that once the JFSC matter had blown over he would seek to recover his lost fortunes through further investments.  In a separate discussion between Mr Gidley and Mrs Ching, she expressed her concerns that given his track record to date there was a significant danger that her husband, if left unchecked, would renege on the idea of a trust and seek to invest their remaining capital in high risk ventures as he had done in the past.  Mrs Ching asked what could be done to prevent Mr Ching adopting this course of action, to which Mr Gidley replied nothing, short of having him declared mentally incapable of conducting his own affairs.  Whilst Mr Gidley said this half-jokingly, Mrs Ching pressed him on the subject and asked how this could be achieved; at this juncture she was obviously very concerned for her future welfare.  Mr Gidley advised her to discuss these concerns with her husband's doctors and to seek their opinion as to whether he should be trusted to manage his own financial affairs in the future.  He also advised her that subject to medical confirmation Mr Ching might be placed into curatorship by the Royal Court and that this would prevent him from entering into any contractual arrangements on his own behalf.  Mrs Ching discussed this idea with Mr Ching who, surprisingly, was not averse to it when he attended Mr Gidley's offices a few days later.  Mr Gidley suggested to the Chings that if they wanted to pursue this matter, they should seek professional legal advice; Mr Gidley suggested that they speak to Mr Manning, who he knew had acted as a Curator in the past under similar circumstances.  At the Chings' behest Mr Gidley arranged an introduction between the Chings and Mr Manning and left the matter with them. 

31.      On 18 April 2006 Dr Harrison reviewed Mr Ching in out-patients.  As there was no improvement in his cognitive state, Dr Harrison recommended an application for curatorship and on 20 April he signed the Mental Health (Jersey) Law, 1969 Statement by Responsible Medical Practitioner as to Patient's Incapacity to Manage and Administer His/Her property and Affairs, on the grounds of "deterioration of his cognitive abilities".  At a meeting on 24 April between Mr Manning, Mr Gidley and the Chings Mr Manning agreed to be Mr Ching's curator. 

32.      On 21 April 2006 CITE began its efforts to regularise the position with regard to the Digger shares, many of which were held through Mitsukiku Investments Limited ("Mitsukiku"), a British Virgin lslands ("BVI") company which Mr Ching had allowed to be struck off and which therefore required to be reinstated. 

33.      On 27 April 2006 there was a meeting between Mr Ching, Mr Gidley and Mr Killmister at Mr Gidley's offices during which Mr Killmister confirmed that the Trust was in place.  The following day there was a further meeting, attended also by Mrs Ching.  Mr Killmister's note of this meeting reads as follows:-

"--        Confirm re [companies].

--         Explain operation of reinstatement - we will pay & bill once cash in trust from flat, if sold.

--         Compliance [Solutions] bill from trust when available.

--         Confirm Mrs [Ching] operation & their [communications] with us.

--         Send confirmatory minute

--         Mitsukiku on reinstatement

Mrs [Ching] via [Mr Gidley]."

34.      On 2 May 2006 there were meetings, attended by the Chings, to progress the regularisation of the affairs of Mitsukiku.  One of these meetings was chaired by Mrs Ching and she signed the minutes as chairman.  In due course Mitsukiku was reinstated in the BVI on 20 June 2006. 

35.      On Mr Gidley's return from holiday in late May 2006, the Chings attended his office to update him and to prepare Mrs Ching for her JFSC interview the next week.  The Chings informed Mr Gidley that arrangements for the proposed curatorship were being advanced and that both of Mr Ching's consultants were prepared to submit a report to the Royal Court that he was unfit to manage his own financial affairs.  Mr Manning was also preparing a submission to the Court for Mr Ching to be placed under curatorship. 

36.      On 9 June 2006 Mr Manning was appointed Mr Ching's curator.  Due to Mr Gidley's familiarity with Mr Ching's financial dealings, Mr Manning retained Mr Gidley's services as a consultant to help him unwind Mr Ching's financial arrangements.  The inventory prepared by Mr Manning as of the same day listed Mr Ching's liabilities as totalling some £393,000.  

37.      During the first week of the curatelle, it became apparent that Mr Ching had been less than open about the true state of his financial affairs.  Following the prescribed announcement in the local press, Mr Manning received a number of claims against Mr Ching's estate by previously undisclosed creditors.  For the most part, these claims related to investments allegedly made by Mr Ching on behalf of others, where Mr Ching was believed to be holding share certificates on their behalf.  The documentation which the Chings had already provided did not shed any light on these new claims but Mr Ching disclosed that he had retained records of all his financial dealings at home.  When Mr Gidley visited Granville, Mr Ching directed him to 50 or so document boxes stored in his garage.  Mr Gidley's cursory examination of these boxes revealed that they did indeed contain copies of transaction records, share certificates and correspondence but none of the documentation was filed in any order.  On reporting back to Mr Manning on 13 June 2006, it was decided that all of these records would need to be examined and sorted in order to make sense of the claims that Mr Manning was receiving from alleged creditors of Mr Ching.  The task of sorting and reviewing all of this documentation took eight working days, plus another two days to collate the relevant findings.  At the end of the exercise, Mr Gidley reported back to Mr Manning that all of the claims he had received to date were, to a lesser or greater extent, based on fact. 

38.      From an examination of the documents retrieved from his garage, it appeared that Mr Ching had received payments from a number of individuals in respect of investments he had recommended to them.  In the majority of cases, the recommendations involved speculative, high risk investments which were wholly unsuitable for the individuals concerned.  With the exception of the Digger shares, all of the investments made on behalf of others by Mr Ching turned out to be worthless.  Most of these investments involved companies in which both Mr Ching and Mr Fiessel had interests.  Based on the documentary evidence discovered, Mr Manning was able to settle a number of the claims against Mr Ching. 

39.      Under cover of a letter dated 22 June 2006, CITE sent a copy of the trust deed to Mr Manning. 

40.      On 27 June 2006 Mr Gidley accompanied Mrs Ching to the offices of the JFSC where she was to be interviewed under caution.  At the commencement of the interview, Mr Gidley notified the JFSC for the record that it was unlikely in the extreme that Mr Ching would be available for interview by the JFSC for the foreseeable future.  During the course of Mrs Ching's interview she gave the impression that she was naive in terms of financial matters and had left all such arrangements to Mr Ching.  She agreed that she had signed certain account opening documentation but said that she had done so on the basis that she trusted her husband and that she had not really understood what he was asking her to enter into.  As Mrs Ching seemed unable to shed any light on the dealings between Mr Ching and Mr Fiessel, the interview was terminated early.  Mrs Ching heard nothing further from the JFSC following the interview. 

41.      During the course of July 2006 a number of further claims were received by Mr Manning in respect of Digger shares.  Mr Ching was a founder director of Digger and had recommended the company as an investment to a wide circle of his friends and business associates.  During this period Mr Ching continued to refer to his investment in Digger as a potential windfall, stating that it was only a matter of time before the share price doubled, or even trebled, in value.  Even when Mr Gidley pointed out to Mr Ching that, according to the financial reports submitted to the Toronto Stock Exchange, Digger had zero assets and zero income for the previous three years, his optimism remained unshaken. 

42.      In late July 2006 Mrs Ching telephoned Mr MacFirbhisigh, who was in business as an independent estate agent, explaining that she and her husband had been advised that they needed to sell Granville but that she felt that the valuations she had received were on the low side.  Mr MacFirbhisigh thereafter assisted the Chings in the sale of Granville. 

43.      During October 2006, work continued on trying to identify the true beneficial owners of the Digger shares registered in the name of Mr Ching, Mrs Ching and their various companies.  A provisional list of potential shareholders was compiled from Mr Ching's partial records and in a number of cases by personal contact with persons claiming to own Digger shares.  This list was passed to CITE which assigned to a full time person the task of carrying out a full reconciliation of the Digger shares held in the Trust for the purposes of transferring them to the true beneficial owners. 

44.      By a Representation dated 20 October 2006, Mr Manning sought the permission of the Royal Court to sell Granville for £850,000 and for the settlement of the net proceeds into the Trust.  On 24 October the Court consented to Mr Manning's application. 

45.      The same day Mr Killmister wrote to Mr Manning as follows:-

"Ching Trust

I refer to our conversations on the above matter.  I believe that we are in agreement that once the dust has settled on dealing with Mr Ching's creditors, we will have approximately £750,000 net proceeds in the trust. Further, we are agreed that whilst there are also some shares to sell and take into account, these are highly speculative securities, and impossible to value.

Our policy towards the capital will be to invest it conservatively to produce income but whilst preserving capital.  This will therefore be in sterling bank instruments and money funds.  We are advised that we should reasonably expect a return of between 6.5% and 7.5% in the current market.  At 6.5% that would produce an income of £48,750.

It is also our intention to obtain an actuarial assessment on Mr & Mrs Ching's respective life expectancies once we are in a position to know with more certainty the net funds available within the trust fund.  As they are the only potential beneficiaries of the trust and there are no children of the marriage, we believe that it is prudent to plan for the contingency of a slow controlled diminution of capital as far as we are reasonably able to do so.

Therefore, to summarise the position, conservatively, we believe that gross annual income of £48,750 can be expected initially.  We have agreed to meet the rental charge of their new home of £1500 per calendar month from that income.  This leaves a figure of approximately £30,750 as an income distribution.  There will also be the option of small capital distributions if need be.  I confirm that it is our current intention to distribute all income to them as an absolute minimum.

In reaching these conclusions, we have also ignored the possible future interest of Mr Ching in his mother's estate.  I believe that she is in her early 90's, and that he would be the sole beneficiary.  This is possibly of the order of £350,000 - £400,000 in value.

I trust that this more fully places on record our deliberations and intentions in relation to this trust and its ongoing management.  If you need any further explanation, please do not hesitate to contact me."

46.      Granville was sold on 27 October 2006 for £850,000.  The same day Mrs Ching's flat at Berkeley Court was sold for £175,000.  On 2 November £166,180.76 was transferred to CITE by way of the proceeds of sale of Berkeley Court (less a small sum which Mrs Ching kept back for a rainy day).  Four days later Mr Manning transferred £400,000 to CITE by way of the proceeds of sale of Granville. 

47.      On 7 November 2006 Mr Manning wrote to the Chings enclosing a copy of his representation of 20 October and of the order of the Royal Court dated 24 October.  He confirmed that he had settled the amounts due on the mortgages, together with Mr Gidley's fees, and said that he would be settling Mr Ching's liabilities to HSBC (except for the credit cards) that day.  He continued:-

"Steve will now liaise on my behalf as Curator with the credit card companies as this will be more cost effective and I think Steve is more than capable of dealing with that aspect".

Finally he informed the Chings that he had transmitted an initial sum of £400,000 to CITE and that he would be in discussions with Mr Killmister regarding the investment of this sum.  There was no objection from the Chings to this letter.  Three days later Mr Manning wrote to Mr Gidley, enclosing a list of all the credit cards in Mr Ching's name and asking Mr Gidley to negotiate on his behalf with the various credit card providers:-

"bearing in mind that they may well have been grossly negligent in providing Barry with certain further facilities and failed to assess the risk when a "reasonable" provider should have".

48.      Despite Mr Gidley no longer having any involvement with their affairs, the Chings continued to attend his offices.  During a series of visits on 6, 14 and 23 November 2006, Mr and Mrs Ching expressed some dissatisfaction with the way in which Mr Manning was managing Mr Ching's affairs, stating that in their view more of the proceeds from the sale of Granville should have been settled into the Trust to fund their day to day income requirements.  At this time the Chings were receiving a monthly payment from CITE to cover their living expenses as well as having their rent paid directly by the Trust; since not all of this expenditure could be funded from investment income, a part distribution of capital was required.  Mr Gidley informed the Chings that in his opinion Mr Manning was legally bound to ensure that any claims pending against Mr Ching could be met before he could release any funds into the Trust. 

49.      So far as Mr Gidley was concerned, this appeared to be the beginning of a downward spiral in the relationship between Mr Manning and the Chings.  Having finally come to terms with their changed circumstances, Mrs Ching in particular gave the impression that they had been hard done by and that she resented the fact that what she perceived to be their residual net worth was still being paid out in fees and settlements. 

50.      On 28 November 2006 Mr Manning wrote again to the Chings as follows:-

"The remaining proceeds of the sale of "Granville" have been placed on an interest bearing call account with HSBC Bank Plc and principally relate to two outstanding issues.

The first, of course, is in respect of the outstanding credit card liabilities the negotiation of which I have delegated to Steve.  He will attempt to get the best possible settlement that he can.

The second relates principally to the "Sheehan monies"....

I am also now attending to various other issues, e.g. finalising the revocation of the JFSC Licence and ensuring that any other companies which were either owned or which Barry was a Director of are properly dealt with.

I will also be speaking further with Gary Killmister to discuss how (more precisely) the Trust funds will be invested to obtain a maximum return for both of you.

I think however it would be a good time to meet at my office (both yourself and Barry) to discuss further where we go from here ...."

51.      On 29 January 2007 Mr Manning wrote another letter to the Chings:-

"I wrote to you both before Christmas suggesting we have a meeting to discuss matters generally and for me, in particular, to explain certain aspects of how precisely Curatorships work and where matters progress from here.

I know that it has been an immensely difficult time for both of you but there are some outstanding issues and I really do think that a meeting with myself, both of you, Steve Gidley and possibly Gary Killmister as soon as possible would be beneficial for everybody."

He asked the Chings to call as soon as possible to arrange a meeting. 

52.      Two days later, on 31 January 2007, Mr Killmister met Ms Alexandra to discuss what became the investment in the AIG bond.  On 20 February Mr Killmister wrote to Mr Manning enclosing "the information on the investments the Trustees are undertaking" and saying:-

"It is our intention to commence with a 70/30 bonds to equity/near equity split.  The point of the ASI bond is that it maintains the investments free of taxation, and allows a minimum annual withdrawal of 5% of the original capital invested tax free.  These amounts are permitted to be cumulative, so in the initial period, there will be no need to draw against these."

Mr Killmister wrote a letter in the same terms to the Chings.  The same day Mr Killmister emailed Ms Alexandra asking her to send him the application forms for the proposed investment. 

53.      On 22 February 2007 Ms Alexandra wrote to Mr Killmister to confirm the outcome of their discussions, as follows:-

"Objectives

During our meeting we discussed various aspects of your requirements as Trustee.

At the present time, your prime objective is to invest a lump sum in a diverse range of shares and asset classes over the medium to long term, with flexibility in terms of taxation at this stage.  Your objective is to secure some capital growth with a view to providing income to the trust beneficiary in perhaps three years time.  In three years time you anticipate that you will take between 5% and 10% as income for the beneficiary.

I explained how, when making financial provision to fulfil these objectives, the degree of risk you are prepared to accept for each one would be a major factor in considering the most appropriate choice of product.

We established that the attitude to risk you require could realistically be described as cautious."

On that basis Ms Alexandra recommended an offshore bond offered by AIG Life. 

The AIG bond comprised six constituent funds representing fixed interest assets, property, UK equities, US equities, European equities and Far Eastern equities. 

54.      On 26 February 2007 the Chings responded to Mr Killmister's letter of 20 February in the following terms:-

"Thank you for your letter of 20 February enclosing the information from ASI which we have read with interest.  It would seem to have the tax advantages that we have discussed the investments will have to be made through expensive insurance linked products which will result in considerable loss of capital performance(sic).  The letter from ASI is difficult to fully comprehend as it is written in technical terms relating to the insurance industry and we would appreciate them writing in "[layman's]" terms.

On page 2 it states that the arrangement fee has been reduced to £13,500 which still appears excessive.  All investments are in open ended funds with no consideration having been given by the advisors to closed end funds which have the advantage of being very cheap to purchase, should incur no annual [agents'] charges and often trade at discounts to their underlying asset value."

55.      On 5 April 2007 Mr Killmister completed the application form for the bond, the amount to be invested being £400,000.  The £400,000 was transferred from the Trust on 1 May.  Ms Alexandra sent the original policy documentation to Mr Killmister on 29 May. 

56.      On 30 May 2007 Mrs Ching wrote to Mr Manning asking for an update of the assets he was holding on her husband's behalf.  Two weeks later, on 14 June, Mr and Mrs Ching both signed a letter to Mr Manning enclosing a cheque for £1,519.00 and expressing "our wishes that these monies be transferred directly to the Trust".  The same day Mrs Ching alone wrote to Mr Manning, as follows:-

"Further to the text message you left on my phone, yes I would like to arrange a meeting but prior to this, I would like a breakdown of all the transactions that have passed over the account inclusive of any recent debits and credits.

I look forward to receiving this information in the very near future.  Once this information has been received I will be in touch with you to arrange a meeting."

Mr Manning replied on 23 July:-

"I refer to Barbara's letter to me of 14th June 2007 and now enclose herewith a breakdown of movements on the account together with a summary ... of current balances on all accounts.  If you have any queries at all regarding the figures then please either of you do give me a call.

In the meantime I enclose herewith my fee note covering the somewhat lengthy period from 31st October 2006 to date which of course, subject to your confirmation, I will transfer from the funds which I am currently holding."

The breakdown evidenced curatorship fees of £8,000 and £8,466 payable to Mr Manning and fees of £19,120 and £2,015 payable to Jurist Legal in respect of the fees of Compliance.  There was no immediate response by the Chings to this letter.  It seems that the Chings did not take issue with the fees payable to Mr Manning, although in an unsigned letter of 31 December 2007 to Mr Manning they asked for supporting invoices in respect of the payments to Jurist Legal (a firm which Mr Ching said in the letter that he knew). 

57.      On 20 September 2007 Mr Ching wrote a letter to Mr Manning, which read:-

"Further to my letter of Friday, I think it best if you and I discuss these matters at a separate meeting with just the two of us at a later date.

I do not want to cause Barbara any additional stress but I do have concerns regarding tax liabilities in the UK in relation to the Trust and the lack of any accounting or valuations.  I am also concerned at the charges that were made for the underlying investments."

The same day he wrote to Mr Manning, as follows:-

"I should be grateful if you would let me have the following information before our forthcoming meeting.

A schedule of the cash balances and details of all payments and receipts relating to the assets that you hold on my behalf with details of the current yield.

The [accountant's] or legal opinion regarding the liability to UK tax of the Ching 2006 Trust together with detailed accounts for the Trust since inception and a copy of the original investment scheme together with a current valuation and [manager's] report.

You will appreciate the need for detailed up to date information prior to any meetings."

58.      Five days later, on 25 September 2007, Mr Ching wrote again to Mr Manning in these terms:-

"Thank you for your valuable assistance yesterday.

I do have some concerns regarding the accounts for the trust which are as follows:

I understand the name of the trust to be The Ching 2006 Settlement.

Administration and professional fees totalling GBP 22,650 seem excessive for a simple basic UK trust.

Can it please be confirmed in writing that the trust is not liable to UK tax as was explained to us all at the outset.

Investments are valued at cost and there is no indication of the market value as at the date of the accounts.

The holding in Digger Resources would appear to relate to a holding of approximately 40,000 shares.  I had expected to see a holding of circa 800,000 shares.  I assume that circa 760,000 shares are awaiting transfer into the Trust and I feel that bearing in mind the value of this holding this matter should be clarified at an early date.

I would be pleased to discuss these matters with you in greater detail prior to you making contact with the Trustee."

59.      Mr Manning summarised the Chings' concerns in a fax to Mr Killmister of 21 November 2007.  He sent reminder faxes to Mr Killmister on 11 December 2007, and on 25 January and 14 February 2008, and a reminder email on 30 April 2008. 

60.      In the meanwhile, on 11 December 2007 Mr Killmister emailed Mr Manning as follows:-

"The other matters which are now proving extremely problematic are that following Mr Wilson's intercessions, it now appears that there may be an investigation in Jersey as to whether or not Barry was operating a fiduciary operation without a [licence].  Over and above that, I am now informed of the existence of another Ching Trust established by Barry in Switzerland, but I believe for other persons, and now we have claims against Digger shares which exceed the number of shares we apparently hold, and absolutely no paperwork to back any of it up.

After I have dealt with the matters surrounding my father's passing, I intend to sort all of the foregoing out to the extent that I am able given the dearth of records in our possession.  I believe that this will involve [travelling] to Canada to be able to effect control over the various brokerage accounts.  Once this is done, we will be resigning at the earliest opportunity.  We find ourselves in the middle of a Gordian [knot] of epic proportion which is entirely of Barry's making, and now we're being made everyone else's whipping boys because they all entered into these transactions without recording them."

61.      On 16 February 2008 the Chings wrote to Mr Manning:-

"Further to our letter of 1st February we attach a schedule of the share price of Digger Resources since 4th January.  You will see from this that the price has more than doubled over that period.

We are very concerned that [CITE] has failed to deliver any share certificates that have been requested by underlying holders.  With the prospect of the share price continuing to rise there could be a very substantial claim from holders who in due course may wish to reduce their holdings.  For this reason we feel it essential that the certificates and supporting documentation are delivered to a competent third party at an early date.

In addition we do not wish any Digger shares held by the Ching 2006 Settlement to be sold without prior approval from you and ourselves.  Mr Killmister and his fellow directors have to our knowledge no investment qualifications nor are they experienced with the technology used in oil exploration.  As such, they are unable to accurately assess the value of [Digger's] technology or its impact on the value of the Company.  We would appreciate your comments on this matter."

62.      Apart from a telephone discussion between the Chings, Mr Manning and Mr Killmister on 28 January 2008, it was not until 1 May 2008 that Mr Killmister responded to Mr Manning's faxes and emails set out in para.59 above.  Having dealt with Mr Manning's numbered questions, Mr Killmister continued in the following robust terms:-

"Further, you quote your duty to "administer the Interdict's property and affairs as if they were my own."  You would do well to remember that this is a fully discretionary trust, settled by Barry before he became an Interdict.  The property contained therein is not his nor is it Barbara's, and it is certainly not yours to deal with as if it were your own.  The trustees presently make regular distributions at their absolute discretion to meet the payment of the Ching's rent and provide them with a level of support.

Further, if and when you make an application to the Royal, or indeed any other, Court, kindly ensure that they are in possession of the full facts of this case, in particular those surrounding Barry's dealings in the Digger, and other, shares, and purported investments he supposedly arranged for other people.  In particular and inter alia other matters, the courts should be appraised of the distinct possibility that Mitsukiku and Scorpio were used by Barry, being wholly and solely controlled by him, to act as a nominee, fiduciary, trustee, an arranger of investment placement and advice, etc., without having the necessary regulatory licences to do so, and indeed never having bothered to apply for them.

You are fully appraised of the position with the Digger shares, but again, for the record, I will repeat it in writing.  Barry Ching established broking accounts at various stockbrokers in Canada in his name, in the name of Barbara Ching, and for Mitsukiku ..., Scorpio ..., and Bokhara ..., all part of the unlicensed activities referred to above, and all undeclared in Jersey.  He was, and still is the sole signatory on all those accounts.

It has proved extremely difficult to get any of these brokers to agree how to deal with this situation.  We only now appear to be making headway, hence the request for the certified copies of the court order from you.  As the Directors and controllers of the companies concerned, we are still not able to operate these accounts or get any information from them.  As a result, we cannot deal with any of the Digger shares in the names of the companies.

We have a schedule gleaned from the absolutely abysmal records created by Barry, of what we think the Digger share allocations are to the actual owners of them.  Until we are able to take control of the brokers accounts, and reconcile uncertificated holdings (if any), against the physical certificates we hold, and then reconcile this with the registrar of Digger in relation to the capital restructuring that we believe took place after the share certificates we currently hold were issued, we cannot move any further.  Simply, we have no idea as to how many shares the companies actually hold.

Suffice it to say, as things stand at present, we have claims for more shares than we either hold in physical form or believe are in issue to the companies.  Three claims relate to persons who have provided us with correspondence signed by Barry, but about which there was absolutely no mention or record in the company records we got from him.  On the face of it therefore, he took their money, and did not arrange any share allocation or acquisition on their behalf.  Potential theft or fraud.  Further, we cannot execute any stock transfers in any event, because our signatures and authority are not presently recognized by the various brokers.

We believe it would also be apposite to appraise the court of the very real possibility that the person in whose place you now stand allegedly 'arranged' investments for third parties who gave him money for the purpose, and who now have no investments to show for their cash.

In conclusion, as trustees, we must declare that we hold the shares in Digger Resources for the benefit of persons as yet unknown and undefined, and this may or may not include your clients.  As a consequence of this review, and your threat of legal action, we are disinclined to continue making distributions to your clients.  We believe you hold sufficient funds to support these requirements, and as you said, you are obliged to deal with his assets as if they were your own.  They are his assets, so you can pay his rent and support payments from here on.

It is our intention to resolve the issue around the Digger shares at the earliest opportunity, and once achieved, determine the trust, and distribute any remaining balance to you in Barry's stead. This may involve considerable expense, and could result in our having to engage lawyers. Your threat also makes that situation a very real possibility.

Our duty in relation to the shares is clearly to those persons who gave your Interdict money, whilst he was of capacity, in contemplation of receiving these shares.  It must be considered to be a very real possibility that we might have to deal with claims for refunds where shares were not acquired."

63.      On 19 May 2008 Mrs Ching wrote to Mr Killmister asking him to increase her monthly payments.  Mr Killmister responded two days later, enclosing a copy of his letter to Mr Manning of 1 May and saying:-

"I would summarize the situation thus.

Mr Manning has told us that he now represents you as well as Barry.  In that capacity, he has threatened us with court action.

We have received claims, including Barry's, to Digger Resources shares which potentially far exceed the number of shares we believe we hold, but because of the absolutely abysmal records that were kept by Barry, we quite simply do not know.  Additionally, we have written evidence bearing Barry's signature from persons who purportedly were sold Digger shares by Barry, but there is no record of them at all in the papers we received.

Mr Manning holds sufficient funds to support you in the meantime.  As a result of his threat of court action, presumably at your instruction, the Trustees have ceased all payments to you until the situation surrounding the shares is entirely resolved.  This is because we have the right to use the trust funds to pay our legal fees, and also because this situation is entirely caused by Barry's past behaviour.

As soon as we have a resolution to this mess, we will be determining (winding up) the trust, and sending the balance of the funds to Mr Manning as Barry's curator."

64.      On 22 May 2008 Mr Manning wrote to the Chings as follows:-

"I thought I would bring you up-to-date with the following matters generally.

...

2.        With regard to Mrs. O'Sullivan's claim which totals some £30,000.00 or more I have investigated this and it does appear that the money was credited to Barry's HSBC account and unless either yourself or Barry can provide me with [any other] information those funds do not appear to have been invested or repaid.  Could you tell me about this but I believe that we will have to settle this claim.

3.        As far as Mrs. Sheehan's claim is concerned I think now we either ... have to increase our previous offer or the matter will go to Court unless of course Barry can provide me with any other further information."

Mrs Ching responded on 26 May saying that all they now wished was "final closure with all the Trust assets under your control."

65.      On 3 June 2008 the Chings and Mr MacFirbhisigh attended the wedding of a relative in Jersey.  During the reception Mrs Ching told Mr MacFirbhisigh of difficulties which, she said, she and her husband were having with Mr Manning and with the Trust.  This led to a meeting some ten days later, attended by the Chings, Mr MacFirbhisigh and others.  By the end of this meeting the Chings had decided that it would be best to remove Mr Manning as curator.  Mr MacFirbhisigh agreed to take his place. 

66.      On 4 July 2008, the Chings sent Mr Manning a letter asking him to "ensure that no further assets or cash are transferred out of your control".  On 22 July the Solicitor General sent Mr Manning a letter informing him that:-

"I have received a letter from Mr Ching expressing his concern and distress at the failure to produce accounts and what he perceives as a lack of communication between you and him.  He, in consequence, wishes someone else to act as his curator."

Mr Manning responded on 24 July, stating that the curatorship was complex and adding that if Mr Ching really wanted him to resign he would do so.  In his reply of 29 July, the Solicitor General accepted "that this has clearly been a complex matter".  In August Mr MacFirbhisigh applied to become Mr Ching's curator and on 25 November he was so appointed, with Mr Manning resigning the same day. 

67.      On 27 November 2008 there was a meeting between Mr MacFirbhisigh and Mr Killmister.  In the course of this meeting Mr Killmister stated that he wanted to get rid of the Digger shares, close the Trust and transfer the Trust assets to Mr MacFirbhisigh. 

68.      On 20 March 2009 Cripps Harries Hall wrote to CITE saying that they had been instructed by Mr MacFirbhisigh "to assist him with matters relating to the Ching Trust 2006".  The letter posed a number of questions and included the following paragraph (in bold):-

"We therefore require your undertaking not to deal with or dispose of any assets of the Trust or incur any expenditure or take any steps in relation to the affairs of the Trust whatsoever save as expressly authorised by our client and Mrs Ching pending the completion of our enquiries or order of the court."

Mr Killmister responded by email on 23 March declining to give any undertakings.  The email continued as follows:-

"As your client is very well aware, we wish to bring this lamentable situation to a conclusion at the earliest opportunity.  There appear to us to be two ways forward.  Either we seek court directions ...

...

The second option is that we determine the trust now and distribute all the assets to Mr MacFirbhisigh, including Mitsukiku and Scorpio Services Limited.  Mr MacFirbhisigh can then seek to complete the transfer of the shares held by Mitsukiku in the public company to the remaining claimants.  We are prepared to discuss taking that second course of action, because it is obviously in the best interest of the Chings, and it may break the log jam surrounding the re registration of the shares to their beneficial owners."

69.      On 17 September 2009 Sinels, on the instructions of Mr MacFirbhisigh and Mrs Ching, wrote to Mr Killmister in these terms:-

"The property, which according to correspondence authored by you, is now contained within The Ching Trust was never validly transferred to that Trust and is held by whoever now holds it on a bare trust for the rightful owners namely Mr MacFirbhisigh as Curator of Mr Ching and Mrs B M Ching.

...

It follows from the above that you have no right to deal with any of the assets in question, that you have never had any right to deal with the assets in question, and that neither you nor anyone else have any right to charge fees in respect of any of the actions undertaken in relation to any of these assets.

...

We further request that you return forthwith to this firm all of the assets in question.  We note that you have stated in previous correspondence with Cripps Harries Hall that you are agreeable to winding up the purported Trust.  We do not concede that there is a Trust however this does not prevent you from returning the assets in question to this firm forthwith."

70.      On 14 May 2010 Mr Killmister resigned as a director of Mitsukiku and Mr MacFirbhisigh was appointed a director in his stead.  The Trust was determined with effect from 19 December 2010. 

The procedural history

71.      The procedural history up to February 2014 is set out in paras.2 to 16 of the judgment of Master Thompson delivered on 5 February 2014. 

72.      In brief, these proceedings were commenced by an Order of Justice containing injunctions granted on 5 November 2009, the Defendants then being CITE, Beresford Secretaries Limited, Corporate Nominees Limited and Beresford Nominees Limited.  CITE was served on 9 November and filed its Answer on 18 December.  By an order dated 5 May 2010, CITE was ordered to retire as trustee and to transfer all the Trust assets to Mr MacFirbhisigh as Mr Ching's curator and as nominee for Mrs Ching.  By a consent order dated 30 November 2011, the Order of Justice was amended substantially; the amended Order of Justice ran to some 399 paragraphs and some 90 pages including schedules.  At the same time Mr Gidley and Mr Killmister were joined as the then Fifth and Sixth Defendants.  Mr Gidley and Mr Killmister were both served with the Amended Order of Justice on 16 December 2011. 

73.      On 16 May 2013 the then First to Fourth Defendants, together with Mr Killmister, applied to strike out the claims against Mr Killmister.  The summons was initially returnable on 10 July but was adjourned to 17 September.  In the intervening period the Plaintiffs instructed Carey Olsen in place of their former legal advisers.  At the hearing on 17 September Carey Olsen indicated that they were going to look at all the allegations afresh with a view to re-pleading the Plaintiffs' case in its entirety, so Master Thompson gave the Plaintiffs time to gather information from the former lawyers and to reformulate their pleaded claims.  The summons to strike out and the Plaintiffs' summons to re-amend the Order of Justice were eventually heard on 5 February 2014. 

74.      The effect of Master Thompson's judgment was to allow the Plaintiffs to start again.  Towards the end of his lengthy judgment, Master Thompson said as follows (at para.76):-

"In light of my decision I am going to allow the plaintiffs 2 weeks from the date of the delivery of the judgment to formulate its re-amended order of justice in accordance with this decision.  In doing so all allegations of deceit, dishonest assistance other than dishonest assistance against [Mr Killmister] in respect of the AIG bond and piercing the corporate veil should be removed.  There should also be no reference in the pleading to any of the withdrawn assertions namely undue influence, conspiracy or knowing receipt or any factual maters leading to such assertions.  In particular the assertion in paragraph 4.3 that [Mr Gidley, Mr Killmister and Mr Manning] were working in concert and the assertions at paragraph 4.44 that [Mr Gidley, Mr Killmister and Mr Manning] were motivated by a desire to enrich their individual various businesses and personal interests and embarked on a dishonest purpose should also be removed, as should any other references to bad faith or dishonesty.  The allegations that the first plaintiff relied upon the advice of the [Mr Gidley and Mr Killmister] in relation to the transfer [of] the matrimonial home and any interest in [Berkeley] Court should also be removed.  The amended pleadings should be sent to the parties and to me for approval."

Following the hearing the Plaintiffs submitted to the Court a re-draft of their proposed amended Order of Justice.  We were informed that the Substituted Order of Justice in our bundles dated 21 February 2014, which describes itself as being "Served/Filed instead of a Re-Amendment to the Original", is the redraft as approved by Master Thompson. 

The claims in detail

75.      It seems to us that, upon analysis of the parties' submissions, the five heads of claim set out in para.12 above raise the following issues:-

(1)            negligent misstatement;

(2)            breach of fiduciary duty;

(3)            the validity of the Trust;

(4)            the Digger shares;

(5)            the AIG bond;

(6)            improper fees charged; and

(7)            prescription.

Before turning to these issues in detail, we address the matter of the witnesses who appeared before us.

The factual witnesses

76.      The witnesses for the Plaintiffs were Mr MacFirbhisigh, Mrs Ching and Ms Kim Alexandra.  Because of his present ill health Mr Ching was unable to give evidence in person and there was no written statement from him.  We are conscious that the Plaintiffs' inability to call Mr Ching as a witness meant that they were not in a position directly to challenge those parts of the Defendants' evidence which addressed their dealings with Mr Ching to which Mrs Ching was not party; we have sought to make the appropriate allowances for this evidential difficulty. 

77.      During Mr Garrood's opening address the Court expressed two areas of concern regarding the witness statements of the Plaintiffs. 

78.      The first arose from the fact that none of the witness statements served by the Plaintiffs, and originally exchanged in February 2015, was signed or dated.  By an email dated 25 June 2015 the Court directed that signed and dated versions of the Plaintiffs' witness statements should be served by 30 June.  The Plaintiffs' response was to supply the final pages of Mr MacFirbhisigh's two statements, of Mrs Ching's three statements and of Ms Alexandra's statement, each signed and dated 30 June 2015.  This response was clearly unsatisfactory for two reasons.  First, each of the statements had, as we have already recorded, originally been served in February.  Second, it was clear from their contents that the statements of Mr MacFirbhisigh and two of Mrs Ching's statements had originally been prepared at different times and for the purposes of earlier stages of the proceedings.  In due course the Court was informed of the correct dates of the various statements, which we record later in this judgment. 

79.      The second concern was that the statements of, in particular, Mr MacFirbhisigh seemed to range well beyond what was now in dispute in these proceedings.  In response, Mr Garrood helpfully supplied redacted versions of Mr MacFirbhisigh's statements, and of Mrs Ching's first and second statements; the redactions to Mr MacFirbhisigh's statements were significant. 

80.      Whatever may have been the practice of the Court in the past, we make clear that for the future all witness statements served for the purposes of proceedings in the Royal Court should, save in exceptional circumstances, be signed and dated by the witness whose statement it is, and that the contents of witness statements should be confined to matters relevant to the case as pleaded or (if an application to amend the pleadings is envisaged) to matters relevant to the proposed amendment. 

81.      The witnesses for the Defendants were, in addition to Mr Gidley and Mr Killmister themselves, Mr Ernest Hurley and Mr Shepheard.  

82.      Since our decisions in this case turn largely on the evidence, we start by setting out our conclusions in relation to each of the witnesses who appeared before us, in order of appearance.  The statements of each of the witnesses were ordered to stand as the witness' evidence-in-chief. 

Mr MacFirbhisigh

83.      His first witness statement was, so we were informed, originally sworn on 22 October 2009, and his second on 11 April 2011.  Since he did not come on the scene until late July 2006 (and then only in connection with the sale of Granville and of Mr Ching's Austin Healey), and thereafter did not feature again until June 2008, there was little first-hand evidence of any relevance which he was able to give.  In addition, much of what he had to say which was relevant was not controversial.  But in relation to those parts of his evidence which were in dispute, for example relating to prescription, we had two particular concerns about the position of Mr MacFirbhisigh, which have caused us to approach such evidence with considerable caution. 

84.      First, it was clear to us from the totality of his evidence that Mr MacFirbhisigh did not enter on his curatorship with an open mind as to what might have happened in the preceding two years.  This is not altogether surprising; Mr Ching is Mr MacFirbhisigh's mother's cousin and he was selected by the Chings to replace Mr Manning because of the close family relationship between them and Mr MacFirbhisigh.  As Mr MacFirbhisigh said in his first witness statement:-

"[Mr Ching] told the Court he was adamant he wanted me as his Curator, that he had known me all his life and that he trusted me."

We are not suggesting that Mr MacFirbhisigh was not a suitable person to become Mr Ching's curator, not least because the Court was satisfied at the hearing on 25 November 2008 that he was suitable.  We are sure that he meant to do his best for the Chings.  But equally we have no doubt that he viewed the past history of the curatorship, and of the events leading up to the creation of the Trust and to the curatorship, through the distorting prism of the version of events that the Chings, and in particular Mrs Ching, had repeatedly given to him and which he had come to accept.  Thus his second statement, even following the redactions, contained the following assertions:-

(1)       "both [Mr Killmister] and Mr Gidley unduly influenced Barry and Barbara to transfer their assets to Mr Killmister's company, CITE, in order that they could do what they liked with them" (para.19);

(2)       "Mr Gidley and Mr Killmister wished to sell the Digger shares to United Energy Corporation in order that they could orchestrate a takeover of Digger" (para.30);

and

(3)       "I have now come to believe that Gidley and Killmister saw Barry as a 'cash cow'; whilst taking advantage of his extensive client contact base in late 2005, they realised that his shareholdings in Digger were rapidly increasing in value.  They sought to procure all of Barry's assets into a trust, out of the reach of the JFSC or Royal Court's jurisdiction, in order to make a significant profit from either selling the Digger shares or by obtaining them for United Energy Corporation" (para.114).

In short, as he confirmed in answer to the Court, he believed that Mr Gidley and Mr Killmister had set out to line their pockets at the Chings' expense.  That belief was, we suspect, reinforced in Mr MacFirbhisigh's mind by the delays and difficulties which he encountered in his dealings with both Mr Killmister and Mr Manning after he had taken over as curator from Mr Manning.  It was a belief which, in our view, coloured his approach to the curatorship and continues to colour his approach to these proceedings, as exemplified by the entirely opportunistic attempt in his oral evidence to besmirch Mr Killmister's professional reputation without any justification whatsoever.  But Mr MacFirbhisigh's belief was, we have no hesitation in concluding, entirely without any objective foundation.  And, as we have recorded, those parts of the Plaintiffs' Amended Order of Justice which had reflected Mr MacFirbhisigh's views as set out above had been struck out by Master Thompson.  We regret that, despite Master Thompson's order, Mr MacFirbhisigh's mind set continued to be reflected in some of the suggestions made by Mr Garrood in cross-examination of Mr Gidley and Mr Killmister as set out below, and even in the Plaintiffs' final written submissions. 

85.      Second, it emerged in the course of his evidence that Mr MacFirbhisigh had a personal interest in the outcome of these proceedings.  The curatorship inventory as at 25 November 2008 prepared by Mr MacFirbhisigh (but not signed by him until April 2011) contained a note 7 which read, under the heading of contingent liability:-

"Curatorship fees - N MacFirbhisigh

Niall [MacFirbhisigh] agreed to undertake the duties of Curator on the basis that his fees would only be chargeable if they could be recovered from the defendants in the ongoing litigation, as the vast majority of the time spent is a direct result of this litigation.  The contingent fee payable at 25th November 2008 is £36,045."

Mr MacFirbhisigh confirmed that the "ongoing litigation" was the present proceedings.  The next set of curatorship accounts, for the year ended 25 November 2009 (and filed on 19 April 2011), included the figure of £11,025.00 for curatorship fees, accompanied by a note 6 dealing with contingent liability.  The first sentence of note 6 replicated the first sentence of the previous note 7 set out above.  Note 6 continued:-

"However the litigation has taken considerably longer than expected, and on the basis of the successful renegotiation of the claim by Sheehan, and the introduction of additional funding by Mrs Barbara Ching that a portion of the fee would be paid on 'an account basis' [sic].

The amount drawn on account is £11,025 and is shown as a charge in the current year Income and Expenditure Account.  The additional contingent fee payable at 25th November 2009 is £140,985.  (2008: £36,045)."

In the accounts for the year ended 25 November 2010, the amount drawn on account had increased to £20,800 and the additional contingent fee to £194,165.  Mr MacFirbhisigh's oral evidence was that the figure for his contingent fees had now risen to about £400,000.  We take Mr Pallot's point that Mr MacFirbhisigh would require the consent of the Court to payment of his fees but the fact remains that on any view Mr MacFirbhisigh has a very substantial personal stake in the successful outcome of this action.  

Mrs Ching

86.      She provided three witness statements, originally sworn or signed on 22 October 2009, 27 January 2011 and 18 February 2015.  In the absence of Mr Ching, she was the only witness on behalf of the Plaintiffs to the crucial events of late 2005 and early 2006. 

87.      Given the stress that Mrs Ching must be suffering as a result of her husband's present condition, she gave her evidence with great composure.  It may well be that now, some ten years on from the relevant events, she is meek and vulnerable as Mr Pallot suggested.  But clearly she is also an educated and intelligent woman and in 2005 and 2006 she was, in our judgment, more than capable of standing up for herself and fighting her own corner; indeed, as Mr Gidley reminded us, Dr Jackson described her as "forceful" in his letter to Dr Harrison dated 5 April 2006. 

88.      Even after making full allowance for the toll which the past ten years must have taken on her, we did not find Mrs Ching a convincing witness; indeed the longer that her evidence lasted, the less credible she became.  In cross-examination Mr Baxter was able to demonstrate that there were important inconsistencies as between her various statements, and as between her statements and the contemporaneous documents.  We do not criticise Mrs Ching for her failure to make any notes of her meetings or discussions with Mr Gidley, Mr Killmister or Mr Manning but the fact remains that none of her disputed assertions could be supported by any contemporaneous documents.  Last but not least, when asked in cross-examination about matters in which she was allegedly involved, she frequently responded that she could not remember.  Whilst we entirely accept that some ten years later Mrs Ching could not be expected to remember the precise details of who said what to whom and when, we found the extent of her claimed lack of recollection surprising.  Indeed at times she seemed to us simply to be evading the questions asked of her.  But whether she genuinely could not remember, or was using a claimed lack of recollection as a shield to deflect awkward questions, the result is the same; in the absence of any positive testimony from her, then in relation to the matters in question the Plaintiffs are left with no evidence properly so-called to counter the evidence given by the Defendants and their witnesses. 

89.      The most important part of her oral evidence was the one point upon which Mrs Ching was adamant; she repeatedly, and positively, denied that she had had discussions with anyone about her or her husband's financial situation until she spoke with Mr Gidley in March 2006 following receipt of the summons from the JFSC (which was issued on 30 March).  We unhesitatingly reject these denials as wholly untrue, for several reasons. 

(i)        They are contrary to all the other evidence which we heard, and to such contemporaneous documents as exist.

(ii)       They are contrary to the Plaintiffs' own opening skeleton argument which spoke of the advice being "repeated and confirmed on several occasions by each of the Defendants to both Mr and Mrs Ching".  (Emphasis added.)

(iii)      On her own admission Mrs Ching signed undated stock transfer forms in respect of her shareholdings in Bokhara and Scorpio, as did Mr Ching and Mr Ching's mother in respect of their respective shareholdings.  These documents cannot have been signed before it was decided to establish the Trust.  The forms were collected by Mr Gidley and sent by him to Mr Killmister; in due course they were dated 6 April 2015, the date of the Trust deed, so they must have been posted to Mr Killmister on 5 April at the latest.  We cannot, and do not, believe that the discussions between the Chings and Mr Gidley (even if we confine ourselves to these three individuals) about the Chings' financial problems and about the creation of the Trust were compressed into only a few days between the end of March and 5 April 2006, especially given the events of 3 and 4 April to which we have already referred. 

For the sake of completeness we record that Mrs Ching's denials were also inconsistent with the Chronology prepared by Carey Olsen.  Mr Garrood said in relation to this Chronology that he had done his best to make it "as uncontroversial as possible".  But since Mrs Ching may not have seen this document, we do not think it right to hold it against her.  Likewise we reject as untrue Mrs Ching's evidence that she never met anyone else with Mr Gidley and the plea at para.5.8 of the Order of Justice that a meeting in early June 2006 was the first occasion upon which Mr Killmister had ever met with or spoken to her. 

90.      Finally, the Plaintiffs also submitted that Mrs Ching was "a financial ingénue".  In her interview with the JFSC Mrs Ching was certainly keen to portray herself as not financially astute (a description which, we recognise, Mr Gidley endorsed in his remarks to the JFSC).  Thus, although she accepted that it was her signature on at least two brokerage account forms which gave Mr Fiessel trading authority and on a U.S. withholding tax form, she claimed that she simply signed papers when asked to do so by her husband, without seeking any explanation, because she trusted him.  This approach had the obvious advantage of enabling her to deflect the criticisms which, it seems to us, the JFSC would otherwise have pursued.  We are far from sure that Mrs Ching was as much of an ingénue as she claimed.  At the time when she met Mr Ching she was working at ANZ bank checking signatures on mandates and she subsequently assisted him in an administrative capacity at ARC.  But even if she was not financially astute when it came to her husband's investment activities, we have no doubt that in 2005 and 2006 she was, as an intelligent and educated woman, more than capable of understanding, for instance, the essential elements of a trust.

91.      In short, save where her evidence consisted of admissions, or was uncontroversial, we were unable to rely on Mrs Ching's evidence. 

Mr Gidley

92.      He struck us as an honest and convincing witness who was doing his best to assist the Court and we reject the Plaintiffs' criticism that his evidence was contrived.  On the contrary, his evidence was generally consistent and coherent, and was broadly supported by the limited number of contemporaneous documents.  In addition to Mr Gidley's statement dated 17 February 2015, Mr Killmister had on 21 July 2009 written to Cripps Harries Hall.  Attached to this letter was a 12 page document described in the letter as "a comprehensive memorandum, the author of which, for the avoidance of doubt is Steven Gidley"; Mr Killmister added that "We are in possession of all the records appertaining thereto".  Although Mr Gidley did not, he told us in evidence, have his memorandum to hand when producing his statement for this trial, he explained that his statement was drawn from his Affidavit of 2010, which in turn drew on the memorandum.  Although there were some discrepancies between the memorandum and the statement, the discrepancies were limited and, it seemed to us, inconsequential.  The memorandum also had the advantage of supplying some of the dates which were missing from Mr Gidley's statement; Mr Gidley accepted that the memorandum was likely to be more accurate in terms of days, dates and sequences of events.  In those circumstances we have no hesitation in preferring his version of the disputed events of late 2005 and early 2006 to that of Mrs Ching.  In particular we have no doubt that there were a number of discussions and meetings between Mr Gidley, Mr Ching and Mrs Ching between October 2005 and April 2006 with, on occasions, the additional involvement of Mr Killmister and Mr Shepheard, substantially along the lines described by Mr Gidley (and by Mr Killmister and Mr Shepheard). 

93.      There are four particular aspects of Mr Gidley's evidence in cross-examination by Mr Garrood which we address at this stage. 

94.      The first concerns Mr Gidley's role vis-à-vis the credit card companies.  It was Mr Gidley's case that he had procured the cancellation of Mr Ching's credit card debts in accordance with the instruction which Mr Manning had given to him in the letter of 7 November 2006 to which we have referred in para.47 above.  Mr Garrood repeatedly challenged that claim in cross-examination, asserting that Mr Gidley had done nothing at all in this regard.  Mr Gidley was equally emphatic that he had negotiated with the companies.  Indeed earlier in his cross-examination Mr Garrood had suggested that Mr Gidley's evidence about his approach to Mr Ching's credit card debts was

"a fantasy cooked up later, well after the event, as a way of justifying your conduct in creating the Ching Trust."

It seemed to us at the time that this suggestion was so far-fetched as to be nonsensical and we remain of that view; Mr Ching's credit card problems had no direct link with the creation of the Trust.  We have no hesitation in accepting Mr Gidley's absolute denial of the fantasy suggestion, just as we also accept that he did indeed procure the cancellation of Mr Ching's card debts.  We note in this regard that Compliance's invoice number 226 dated 19 March 2007 in the sum of £3,510.00 specifically allocates five hours "to review Credit creditors file and contact credit card providers" and a further two hours to "Contacting Credit card companies".  We see no reason to doubt the accuracy of those entries on Compliance's invoice.

95.      The second point is allied to the first.  Mr Garrood suggested that it was reasonable to infer that what had prompted the financial institutions to forego Mr Ching's indebtedness was letters to them from Mr Manning dated 3 July 2006, which read as follows:-

"I write to inform you that I was appointed as Mr Ching's Curator (the English equivalent being a Court of Protection Order) and enclose herewith a copy of the Acte of the Court regarding my appointment.

....

I understand that Mr Ching may be indebted to you and would be grateful if in the first instance you could provide me with details of such indebtedness."

We do not accept Mr Garrood's suggested inference.  We see no reason why any of the card companies should have been deterred from pursuing Mr Ching simply because he was subject to a curatorship, particularly when Mr Manning's letter specifically asked for details of indebtedness.  Still less do we believe that every one of the financial institutions would en masse have been so deterred. 

96.      The third point arises from the fact that in the trial bundles there was very little documentation relating to the matter of the credit cards.  Mr Garrood drew attention to a letter from Mr Manning to Mr Gidley dated 22 November 2006 in which Mr Manning said that he was enclosing "copies of the most latest [sic] statements I have with regard to Barry's Credit/Debit Card liabilities" and asked to be kept informed as to progress.  Similarly on 17 May 2007 Mr Manning wrote to Mr Gidley asking:-

"Generally, could you provide me with an update on progress with regard to the proposed settlement of all of Barry's credit and debit cards."

(We note in passing that the wording of this request from Mr Manning seems to us to reinforce the conclusions we have reached in the preceding two paragraphs above.)  Mr Garrood put to Mr Gidley that the absence from the trial bundles of any response to these letters, or of any other documents that Mr Gidley said that he had brought into existence, indicated that there had been no such documents.

97.      In an ordinary case we accept that this point might well have had considerable force.  But the documentary history of the present case was unusual.  It was Mr Gidley's evidence that when this action began against CITE in 2010 (before he was joined as a Defendant), he acceded to a request from Mr Killmister and shipped all his documents to Hexham without making copies of any of them.  Mr Gidley's evidence in this regard was confirmed by Mr Killmister, who said during his cross-examination by Mr Gidley:-

"Q.      The first one is in relation to documentation.  Mr. Killmister, do you recall in 2010 when Sinels commenced action [against] CITE that you contacted me, at that time I was an  employee of yours, to ask if I had any archive material from Compliance Solutions relating to the Chings?

A.       Yes, I did.

Q.       Do you recall that I delivered to you some four to five banker's boxes of ring bound documents which purported to be meeting notes, file notes, copies of emails, the tapes from Mrs. Ching's JFSC interviews?

A.       Yes, I do.

Q.       Can you tell me what happened to those after I delivered them to you in Hexham?

A.       Well, after they stayed at our offices they were then sent down to Sinels when we were ordered by the court to send them to, to run all the documents.

Q.       From your examination of the documents did you form the  opinion that they represented a considerable amount of work that had been done by Compliance Solutions on behalf of the Chings?

A.       I would have thought so, yes."

Likewise Mr Killmister confirmed that his/CITE's documents too had been delivered to Sinels in accordance with an order of the Court, although Mr Killmister had copied some of his documents, namely those relating directly to the Trust, before doing so.

98.      Nor is that the end of this document saga.  In his final written submissions Mr Gidley stated:-

"During the course of the trial, Advocate Garrood communicated to Advocate Baxter that Sinels had not released all of the documents held by them to his firm on their appointment due to the fact that the Chings had not paid Sinels' outstanding fees."

In his final oral submissions Mr Pallot said as follows:-

"ADVOCATE PALLOT:  You will not be surprised to hear that when I read that it raised some queries in my mind because, certainly, I was not aware that there had been any form of non-disclosure.  My understanding is that this is a confusion.  When Carey Olsen took on this matter from Sinels, it would be fair to describe the handover process as difficult on  occasions in terms of obtaining the information that had been required.  However, it occurred.  We did obtain all of the information and documents and records.  We are not aware of anything being [retained] by Sinels.  We understand that we are in possession of all of the documents and records.

THE COMMISSIONER:  Right.  Then, obviously, this was, in any event, so far as Mr. Gidley was concerned, secondhand because this is said to be a communication from Mr. Garrood to Mr. Baxter.  I was also, therefore, going to ask Mr. Baxter what his version of this event was.  But, anyway, your instructions, Mr. Pallot, are that all the documents were handed over by Sinels to Carey Olsen.

ADVOCATE PALLOT:  Yes, sir.  It will not surprise you to know that during the course of the weekend I checked that point with Mr. Garrood who confirmed that, as far as he was concerned, that understanding was correct as well."

Mr Baxter's version of this episode was as follows:-

"ADVOCATE BAXTER:  Well, maybe there is some confusion on the part of Mr. Garrood but he told me, categorically, that they had  not had anything from Sinels apart from the affidavits.

THE COMMISSIONER:  That is what he told you?

ADVOCATE BAXTER:  That is exactly what he told me.

....

THE COMMISSIONER:  I see.  So that [seems] to be the recollection which Mr. Gidley records.  Was he listening in on this  conversation or was it something you relayed to him afterwards?

ADVOCATE BAXTER:  It was immediately afterwards, sir, because there was a discussion about these allegations in relation to missing documents.

THE COMMISSIONER:  There had been a discussion about documents, yes.

ADVOCATE BAXTER:  That was when I said, "Actually, it seems that Sinels still have them, so I have just been told", or along those lines.

THE COMMISSIONER: I see.  So that is where Mr. Gidley got his information from.

ADVOCATE BAXTER:  Exactly, sir.

THE COMMISSIONER:  And you got your information to that effect, as you have told me, from Mr. Garrood?

ADVOCATE BAXTER:  Yes, sir."

We are not, of course, in any position to resolve the apparent conflict disclosed by these exchanges; we cannot, and do not, seek to make any findings as to where the underlying truth lies.  But those exchanges simply confirm our view that, given the documentary chain we have already described, the risk that documents might have been lost, mislaid, withheld or destroyed is obvious.  In those circumstances we decline to draw any inferences adverse to either Mr Gidley or Mr Killmister from the absence of their documents from the trial bundles. 

99.      Finally, towards the end of his cross-examination Mr Garrood put it to Mr Gidley that:-

"What you did was put the fear of God into Mr and Mrs Ching and told them the creditors were at the door and that [unless] they sold their properties the bank would foreclose and they would be in penury.  That is what you told them, is it not?"

Not surprisingly Mr Gidley answered "No, absolutely not".  More importantly, in our view Mr Garrood's question went well beyond the Plaintiffs' case, even at its highest, and well beyond anything that Mrs Ching had said in evidence. 

Mr Killmister

100.   As with Mr Gidley, we found Mr Killmister to be essentially an honest and convincing witness and we accept the general accuracy of his testimony.  We do not agree with the Plaintiffs that he was very defensive in his evidence or that he sought to avoid giving straight answers to questions.  Although Mr Killmister was, no doubt, keen to procure for CITE the business of acting as a trustee, we reject the Plaintiffs' suggestion in their final written submissions that he looked on the Ching Trust as a "gravy train".  He did not; indeed in our view the Trust was anything but a gravy train. 

101.   Much of the cross-examination of Mr Killmister by Mr Garrood consisted of suggesting that he completely misunderstood CITE's, and therefore his own, role as trustee and that he simply did not know what he was doing, a theme which Mr Garrood had foreshadowed in his oral opening and to which Mr Pallot returned in his final written submissions.  As the Court repeatedly indicated during Mr Garrood's cross-examination, this line of questioning was of doubtful relevance, at best, to the issues which we had to decide.  As set out below, we do find that in certain respects the drafting of the Trust deed, for which Mr Killmister must bear responsibility, left much to be desired.  We also accept that there seem to have been occasions during the currency of the Trust when Mr Killmister did not, for example, respond to requests for information as promptly as Mr Manning or the Chings may have wished, even allowing for Mr Killmister's bereavement when his father died.  Furthermore the tone of his correspondence could on occasions be somewhat brusque.  And finally Mr Killmister did make some minor mistakes in the course of his evidence.  But we do not regard any such shortcomings in the administration of the Trust or any such mistakes in his evidence as casting any doubt on Mr Killmister's general competence and we entirely reject the suggestion that he misunderstood his, or more accurately CITE's, role as trustee.  On the contrary, the Digger shares in particular proved to be a wholly unexpected can of worms which would have tested the skill and patience of any trustee and we conclude that Mr Killmister cannot properly be criticised for the way in which he, through CITE, handled the affairs of the Trust. 

102.   More particularly, we reject the following suggestions made by Mr Garrood in his cross-examination of Mr Killmister, namely:-

(i)        that the failure to make Mr Ching a director of the Investors in Canada Limited project was "another example of [Mr Killmister] seeking to take advantage of Mr Ching";

(ii)       that Mr Killmister favoured third parties over the interests of the Chings;

(iii)      that Mr Killmister was lying in his letter of 14 May 2009 to Cripps Harries Hall when he spoke of having "records of appointments with [the Chings] over an extended period of time exceeding fifty (50) in number"; and

(iv)      that the choice of 6 April 2006 for the date of the Trust was because Mr Killmister knew about the mental health assessment of Mr Ching and wanted to get the Trust in place before Mr Ching was officially declared to be incapacitated.  (Mr Pallot acknowledged in his final address that he could not pursue a similar allegation made in his final written submissions).  

103.   We also reject the suggestions made (and made for the first time) in the Plaintiffs' final written submissions:-

(i)        that Mr Killmister concocted his written notes of meetings in late 2005 years after the event; and

(ii)       that the Defendants had been "panicked" into establishing the Trust "for their own benefit in fees, commissions and charges".

In fairness to Mr Pallot, he acknowledged in his final oral submissions that he could not pursue either of these contentions. 

Ms Alexandra

104.   Although a witness for the Plaintiffs, Ms Alexandra gave her evidence after Mr Gidley and Mr Killmister.  She is the owner of an independent financial services company, AYP Financial Planning Limited ("AYP").  Her evidence dealt solely with the circumstances in which the AIG bond came to be established and the payment to Mr Killmister associated with it. 

105.   We have no doubt that Ms Alexandra was an entirely honest witness.  She had no personal axe to grind in her testimony and her answers indicated a genuine desire to assist the Court.  That said, we do find (as set out under issue (5) below) that there were some instances where her memory was not entirely accurate.  

Mr Hurley

106.   He is an accountant.  His evidence was confined to his review during June or July 2006, pursuant to a contract with Compliance, of the documents stored in Mr Ching's garage, assisted by Ms Laura Robins of Compliance. 

107.   As with Ms Alexandra, we found that Mr Hurley was an entirely honest witness, who was doing his best to assist the court.  We have no hesitation in accepting his evidence, which was, in summary, to the following effect. 

(i)        When he examined the boxes, it appeared that every single piece of paper ever received by Mr Ching had simply been put into a box, in no particular order and not indexed or categorised, with the result that he had to take every single piece of paper out of every single box, look at it and assess it for relevance. 

(ii)       The end product of his search was various share certificates and various notes written in pencil, he assumed by Mr Ching, "detailing ownership of shares by various individuals or just a name with a number alongside". 

(iii)      When he met Mr Ching at the latter's home, he did not notice any difference in Mr Ching's behaviour or personality; he was "his normal amiable self". 

            Mr Shepheard

108.   He is an English barrister, albeit no longer in practice, having been called to the Bar in 1982.  From mid-2004 to the end of December 2005 he was a director of Compliance, along with Mr Gidley.  Thereafter he returned to England to resume his legal career there. 

109.   We found that Mr Shepheard too was an entirely honest witness, doing his best to assist the Court based on his recollection of the events of late 2005 but without the benefit of any notes.  We do not accept the Plaintiffs' suggestion that he was in any way defensive in his evidence.  He fairly acknowledged that his recollection could be at fault in certain matters of detail.  We accept the following aspects of his evidence to us. 

(i)        He did not recall that Compliance developed any business from Mr Ching's contacts. 

(ii)       Mr Ching first talked about the financial state he was getting into in late October or early November 2005, when it became apparent that there were  reasons for him to be concerned about whether he had enough money to live on. 

(iii)      At the end of November or early December Mr Ching came into the office again, broke down and said that effectively he had run out of credit with both his bank and his credit cards.  He was in great distress because he was not able to have access to funds. 

(iv)      Mr Shepheard's recollection was that at this stage Mrs Ching was not aware of her husband's financial situation, so both Mr Shepheard and Mr Gidley told him that it was best for him to take his wife into his confidence and tell her exactly what the situation was; it was unfair to her to let the present situation continue. 

(v)       Shortly thereafter Mr and Mrs Ching attended Compliance's offices together.  On that occasion there was a "brain-storming session", during which one of the ideas tossed around was that a trust might be the way forward.  During this meeting Mr Shepheard commented that although a trust might well be the right way to go, he had to qualify what he said because he was not a Jersey lawyer and could not advise on Jersey law; he said that he thought that both Mr and Mrs Ching should take separate legal advice. 

(vi)      In relation to the suggestion that Mrs Ching did not learn about her husband's debts until March or April 2006, Mr Shepheard said:-

"I do not think that can possibly be right.  She was certainly made aware of some of the situation at end November/early December 2005 and I did meet her when she and Mr. Ching attended our offices.  I was also involved in the telephone discussion in which she participated.  I may have met her on more occasions than that but I do not now recall them."          

(vii)     Mr Ching was adamantly against selling the Digger shares. 

(viii)    Mr Shepheard met Mrs Ching on at least two occasions, at the end of November or early December 2005, at the offices of Compliance. 

The expert witnesses

110.   Although the parties were granted leave to adduce expert evidence in relation to five potential areas of dispute, in the event the expert evidence was limited to only three witnesses, namely (again in the order in which they appeared), Dr Stefania Bruno who was called by the Plaintiffs in relation to Mr Ching's mental capacity, Dr Desmond Fitzgerald, who was called by the Plaintiffs to deal with the valuation of the Digger shares, and Mr Frank Torchio, who was called by CITE and Mr Killmister likewise to deal with the valuation of the Digger shares.  With the agreement of the parties, Mr Torchio gave his evidence via a video link from the United States.  We defer our views on the experts until later in this judgment. 

111.   Although one of the areas of potential expertise was matters of English law, the parties sensibly agreed that any disputes in relation to English law could be dealt with by way of submission, rather than by expert evidence. 

112.   We now take in turn each of the issues which we have identified in para.12 above. 

(1)        Negligent misstatement

113.   Although this head of claim is pursued by both Plaintiffs, Mr Pallot confirmed in his additional final written submissions that it is pursued by Mr MacFirbhisigh only in respect of the Digger shares.  We address this issue in the following three stages:-

(a)            the law;

(b)            the facts; and

(c)            our conclusions.

(a) The law

114.   Although, as we have recorded in para.12(A) above, the Plaintiffs initially submitted that Mr Gidley and Mr Killmister were both jointly and severally liable for negligent misstatement, in his opening address Mr Garrood conceded (rightly, in our view) that he could not pursue the contention of joint liability and that each individual could be liable only for what he himself had said. 

115.   There was no dispute between the parties that the law of Jersey with regard to negligent misstatement was the same as English law.  As Le Quesne J.A. stated in T.A. Picot (C.I.) Limited v. Michel Crill and Hamon [1995] JLR 33 at pp.46-47:-

"It is common ground that excepting any point upon which a local rule has been established, on questions of liability for negligence the law of Jersey follows the law of England.  This means that on these questions the Jersey courts apply the whole law of England.  It does not mean that they are free, following not any local rules (of which ex hypothesi there are none) but their own preference, to accept some features of English law and reject others."

More particularly, in Riley v Pickersgill & Le Cornu [2001] JLR 471 Commissioner Hamon referred (at p.479) with approval to certain principles of English law relating to negligent misstatement. 

116.   The parties were, not surprisingly, also agreed as to the relevant principles in relation to negligent misstatement, namely

(i)        the existence of a duty of care owed by the defendant;

(ii)       a breach of that duty;

(iii)      reliance by the plaintiff on the negligent misrepresentation; and

(iv)      remoteness and foreseeability of loss.

We say no more at this stage about (ii), which is essentially an issue of fact, or about (iii).  But we address briefly the other two elements.

(i) The existence of a duty of care owed by the defendant

117.   In the context of negligent misstatement, the decision of the House of Lords in Hedley Byrne & Co. Ltd. V Heller & Partners Ltd [1964] AC 465 established that for a duty of care to exist there must be a special relationship between the plaintiff and the defendant.  The Court characterised the special relationship in a variety of ways.  Lord Reid stated (at p.486) that it would arise where:-

"the party seeking the information and advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that and where the other gave the information or advice when he knew or ought to have known that the inquirer was relying on him."

Lord Morris explained the position in this way (at pp.502-503):-

"My Lords, I consider it follows and that it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise.  The fact that the service is to be given by means of or by the instrumentality of words can make no difference.  Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise."

Finally Lord Devlin said (at pp.528-529) that:-

"the categories of special relationships which may give rise to a duty to take care in word as in deed are not limited to contractual relationships or to relationships of fiduciary duty, but also include relationships which ... are "equivalent to contract," that is, where there is an assumption of responsibility in circumstances in which, but for the absence of consideration, there would be a contract."

118.   In Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 Lord Goff identified the governing principle of the Hedley Byrne decision as being assumption of responsibility by the defendant along with reliance by the claimant.  He said (at p.180C-D) that from the speeches in Hedley Byrne:-

"...we can derive some understanding of the breadth of the principle underlying the case.  We can see that it rests upon a relationship between the parties, which may be general or specific to the particular transaction, and which may or may not be contractual in nature.  All of their Lordships spoke in terms of one party having assumed or undertaken a responsibility towards the other.  On this point, Lord Devlin spoke in particularly clear terms ...  Further, Lord Morris spoke of that party being possessed of a "special skill" which he undertakes to "apply for the assistance of another who relies upon such skill"."

He observed (at p.181C) that the concept of assumption of responsibility:-

"...provides its own explanation why there is no problem in cases of this kind about liability for pure economic loss; for if a person assumes responsibility to another in respect of certain services, there is no reason why he should not be liable in damages in respect of economic loss which flows from the negligent performance of those services."

Lord Goff also noted (at p.181B) that:-

"...an objective test will be applied when asking the question whether responsibility should be held to have been assumed by the defendant to the claimant."

119.   Finally, in White v Jones [1995] 2 AC 207 Lord Browne-Wilkinson observed (at p.273H):-

"If the responsibility for the task is assumed by the defendant he thereby creates a special relationship between himself and the plaintiff in relation to which the law (not the defendant) attaches a duty to carry out carefully the task so assumed."

120.   As is clear from the decision in Hedley Byrne itself, a crucial element in establishing the existence of a duty of care in the context of negligent misstatement is that the plaintiff relied on the advice.  Thus in Hunt v Optima (Cambridge) Ltd [2015] 1 WLR 1346 Lord Justice Clarke said (at para.54):-

"In order to recover in the tort of negligent misstatement the claimant must show that he relied on the statement in question ...  It must operate on his mind in such a way that he suffers loss on account of his reliance, eg by buying at too high, or selling at too low, a price, or making an agreement or doing something which he would not otherwise have made or done..."

Such reliance must also be reasonable.

121.   In the present case the issue of a duty of care gives rise to an additional point, namely whether, if a duty of care arose, that duty was owed by Mr Gidley or by Mr Killmister personally, or by their respective companies, Compliance and CITE.  In this regard Mr Baxter relied on the decision of the House of Lords in Williams v Natural Life Foods Ltd [1998] 1 WLR 830, the headnote to which reads as follows:-

"Held, allowing the appeal, that to establish the personal liability of a director or employee there had to have been such an assumption of personal responsibility by him as to create a special relationship between him and the plaintiff; that in determining whether there had in law been such an assumption an objective test was to be applied, the primary focus being on things done or said by the defendant or on his behalf and the question being whether the plaintiff could reasonably have relied and had relied on an assumption of personal responsibility by him; and that the fact that the brochure given to the plaintiffs had held the company out as having the expertise to provide reliable advice to prospective franchisees and had made it clear that that expertise derived from the second defendant's experience in the health food trade was insufficient to render the second defendant personally liable to the plaintiffs."

More particularly, Lord Steyn (with whom the other members of the House of Lords agreed) said (at p.835F-G):-

"The touchstone of liability is not the state of mind of the defendant.  An objective test means that the primary focus must be on things said or done by the defendant or on his behalf in his dealings with the claimant.  Obviously, the impact of what the defendant says or does must be judged in the light of the relevant contextual scene.  Subject to this qualification the primary focus must be on exchanges (in which term I include statements and conduct) which cross the line between the defendant and the plaintiff."

Similarly, in Customs and Excise Commissioners v Barclays Bank plc [2007] 1 AC 181 Lord Bingham (at para.5) agreed that:-

"...the assumption of responsibility test is to be applied objectively ... and is not answered by consideration of what the defendant thought or intended."

122.   Mr Baxter pointed out that in his judgment of 5 February 2014 Master Thompson had already (at paras.53 to 57) struck out any attempt to pierce the corporate veil in respect of CITE.  And as Waite L.J. said in Williams, in a passage cited by Lord Steyn (at p.834A-C):-

"...where representations are made negligently by a company so as to attract tortious liability under the principle of Hedley Byrne, the primary liability is that of the corporate representor.  In the vast majority of cases it is also the sole liability.  The law does, however, recognise a category of case in which a director of the representor will be fixed with personal liability for the negligent misstatement.  It is a rare category, and a severely restricted one.  If that were not so, representees could set at naught the protection which limited liability is designed to confer on those who incorporate their business activities.  The mesh is kept fine by the stringency of the question which the law requires to be asked: do the circumstances, when viewed as a whole, involve an assumption by the director of personal responsibility for the impugned statement?"

The Plaintiffs did not take issue with Mr Baxter's reliance on Williams. 

(iv) Remoteness and foreseeability of loss

123.   As Charlesworth & Percy on Negligence (13th ed.) states (at para.5-45):-

"The claimant must lead either direct or circumstantial evidence tending to establish both the facts necessary to establish a breach of duty and any additional facts required to establish causation of loss ...  If the claimant fails to establish that the defendant caused the harm of which complaint is made, or some part of it, then the action will fail."

Mr Baxter correctly submitted that the Plaintiffs must therefore establish on the balance of probabilities that the alleged misstatements caused them to sustain their pleaded loss.  In other words, they must prove that, but for the alleged misstatements, they would not have suffered such loss.  Their claim will fail if either they would have suffered the same loss even in the absence of the negligent misstatement, or if the true cause of their loss was some other factor.  In addition, for the loss to be recoverable it must have been reasonably foreseeable.

(b) The facts

124.   We now fill in the gaps which we left in our summary of the factual background by stating our findings in relation to the events of late 2005 and early 2006.  These findings are substantially based on Mr Gidley's version of events which, for the reasons we have already given, we regard as reliable in all important respects, as supplemented by the evidence of, in particular, Mr Killmister.  We recognise that there are some discrepancies between Mr Gidley's version of events and Mr Killmister's notes, and between Mr Gidley's evidence and the memorandum to which we have referred in para.92 above, but we do not regard these discrepancies, particularly regarding the precise dates of meetings, as material.  

125.   In October 2005, Mr Ching broke down in tears in Mr Gidley's office, admitting that he had accumulated significant debts that he was now having trouble servicing.  This came as some surprise to Mr Gidley as up to this point Mr Ching had always asserted that he had considerable private wealth in excess of several million pounds, claiming that for the most part this was tied up in a large investment portfolio.  The Chings' lavish lifestyle had seemed to indicate substantial personal wealth; they frequented top London hotels and restaurants (Mrs Ching admitted in her evidence to occasional meals at Le Gavroche), and Mrs Ching spent many weekends at their second home in Eastbourne.  It was apparent to Mr Gidley from Mr Ching's distress that his wife was unaware of their true financial situation and that Mr Ching did not want her to discover the full extent of their combined debts. 

126.   One of the investments to which Mr Ching constantly referred was his shareholding in Digger, a company which he described as involved in "cutting edge oil discovery technology".  He indicated that the shares had a value in excess of £2,500,000 according to the prices quoted on the Toronto TSX Stock Exchange.  Mr Gidley's initial understanding of Mr Ching's financial situation was that he had a cash flow problem that could easily be resolved by liquidating some of his substantial investment portfolio, and Mr Gidley suggested to him that this might be the easiest and quickest solution.  Mr Ching responded that he did not agree since, in his view, his investments stood to appreciate considerably over the coming months.  At about this time Mr Ching negotiated with his personal banking manager at HSBC an increase in his overdraft facility with the bank rather than liquidating any of his share portfolio.  In short, so far as Mr Gidley and Mr Shepheard were concerned, Mr Ching faced serious but surmountable financial difficulties. 

127.   At a meeting in about the third week of November 2005, Mr Ching revealed to Mr Gidley that he had reached his overdraft limit and that he was in serious financial difficulty, being unable to meet his ongoing commitments.  Mr Gidley asked Mr Ching if there was anything he could do to help, particularly in the area of Mr Ching's credit card debts, and Mr Ching accepted this offer of assistance.  During the course of several conversations, and from an examination of Mr Ching's credit card statements, the scale of Mr Ching's financial problems became clearer.  Whilst itemising his creditors, Mr Ching revealed, amongst other things, that he was falling behind with the mortgage repayments on his Jersey property, that he had a significant overdraft with HSBC which had reached its limit and that he had been revolving multiple (more than 12) credit and charge cards to fund his lifestyle over the past three years.  His credit card debts alone were over £120,000 and were increasing monthly due to the high interest rates being applied.  Neither he nor Mrs Ching had any form of private income or pension scheme and their only real assets were the residual equity in their Jersey property, the flat in Eastbourne which had been bought by Mr Ching for his wife and was held in her name, and whatever value could be assigned to Mr Ching's share portfolio.  (Although it seems that the Chings' mortgage on Granville was not technically in arrears in November 2005, we can well understand how Mr Ching might have said that it was, given that the only way in which he was servicing the mortgage was by incurring further debt on his credit cards).

128.   On examining this portfolio, Mr Gidley found that the majority of the shares which Mr Ching held were worthless, either because the companies had ceased trading or because the shares were not being traded for any worthwhile value.  The largest amount of stock held by Mr Ching was in Digger which, on paper at least, did appear to have some value. When Mr Gidley again suggested to Mr Ching that he dispose of his Digger shares to pay off his debts, he was once more extremely reluctant to do so, stating that he expected the shares to increase significantly in value in the future and that he did not wish to lose out on the anticipated profit. 

129.   During his conversations with Mr Ching, Mr Gidley urged Mr Ching to disclose his financial difficulties to Mrs Ching; he pointed out that because she was under the delusion that money was no object, she was placing them in greater debt as each day went by.  Mr Ching was very reluctant to put his wife in the picture, stating that he feared she would leave him if she discovered that their current lifestyle was unsustainable.  Mr Gidley suggested to Mr Ching that she would discover the position sooner or later in any event and that she would respect his being honest with her.  Mr Ching agreed to discuss matters with his wife.  At Mr Ching's invitation, Mr Gidley agreed to visit them both at their home to assist them in any way he could. 

130.   When Mr Gidley arrived at the Chings' home it was obvious to him that Mr Ching had informed his wife of their financial difficulties and Mr Gidley got the impression that strong words had been exchanged between them.  Mrs Ching asked if there was anything Mr Gidley could do to help them and Mr Gidley again agreed to assist them in any way he could.  He suggested that the first priority was to establish a true picture of their debts and, to this end, he helped them review their credit card and bank statements as well as itemising any possible income and liquid assets.  It quickly became apparent that since the demise of ARC, Mr Ching had been living entirely on credit with virtually no income to repay his borrowing.  Mr Gidley identified 14 separate credit cards, each of which was at, or approaching, its maximum authorised limit; the total balance due was approximately £120,000.  (Although Mr Garrood formally challenged this figure during his cross-examination of Mr Gidley, we see no reason to disbelieve it.)  Mr Ching had also exceeded his authorised overdraft limit with HSBC and, as a consequence, he was accruing significant charges on his overdraft.  He also said that they were in arrears on their mortgage. 

131.   Given the Chings' inability to pay their debts, and the likelihood that the bank or credit card companies would commence legal action against them in the very near future, Mr Gidley suggested to the Chings that there were a couple of options open to them.  One was for Mr Ching to dispose of sufficient shares in Digger to clear his debts; this was Mr Gidley's preferred option.  The other was to realise the equity held in the two properties.  A calculation based on the liabilities disclosed by Mr Ching at the time showed that the sale of Mrs Ching's flat in Eastbourne would not alone raise sufficient funds to repay all of their debts and that their main property in Jersey would, therefore, also have to be sold.  Mr Gidley estimated that, if the asking price for both properties could be achieved, the Chings would be left with approximately £600,000 after the discharge of all of Mr Ching's liabilities as disclosed to him at the time.  Mr Ching refused to consider the first option, again giving as his reason that the value of his Digger shares would increase significantly in the near future and that this investment would be their nest egg.  The Chings said that they would discuss their options. 

132.   The next day the Chings contacted Mr Gidley to say that they had considered their options, and had decided to sell both properties and to invest the remaining proceeds to provide them with an income.  Mr Gidley agreed to assist the Chings in negotiations with both the bank and the credit card companies (this falling within his area of expertise) in order to buy them time to put their plans into action.  He pointed out, however, that he was not best suited to advise them in terms of investing their remaining capital to secure a future income and that he would need to refer them to a professional financial adviser.  At this point, Mr Ching suggested that he would be best suited to manage any future investment portfolio given his experience of stock markets. 

133.   The following day Mrs Ching attended Mr Gidley's office alone and voiced her concerns to Mr Gidley that once the properties were sold the remaining balance would represent their total net worth.  She had strong misgivings about her husband taking charge of these funds for the purpose of making investments, bearing in mind his previous history of involvement in high risk (and, for the most part, failed) investments in Canada.  Given his knowledge of Mr Ching's character, Mr Gidley could relate to Mrs Ching's concerns.  Mr Ching was, despite his track record of failed investment schemes, firmly convinced that he was the best person to manage any future investment portfolio and would be unlikely to entrust this role to another person.  Mrs Ching asked if there was any way that Mr Ching could be prevented from taking charge of their remaining funds and Mr Gidley replied that, to the best of his knowledge, the only way this could be achieved would be for them to settle a lump sum into a trust established for the purpose of providing them with a future income.  Mrs Ching asked Mr Gidley to explain how a trust structure would work and both Mr Gidley and Mr Shepheard explained this to her at some length and answered any questions she raised.  Mrs Ching said that she was in favour of setting up a trust as described, saying that it would give her peace of mind if her husband could not control, or have access to, their remaining assets.  It was pointed out to Mrs Ching that both she and her husband would have to agree to the establishment of a trust and Mr Gidley expressed the view that Mr Ching might be less receptive to the idea than herself.  Mrs Ching stated that she would discuss the idea with her husband but that in her own mind it was the only way forward for them both. 

134.   The next time that Mr Gidley met the Chings together, some two days later, both were in agreement that they wanted to progress the idea of a trust further.  Whether Mrs Ching had browbeaten her husband into submitting to the idea Mr Gidley did not know, but Mr Ching was more resigned to the idea than committed to it.  Mr Gidley stated that he was not the best person to advise them on settling a trust, in particular in relation to any tax implications that could arise, and he suggested putting them in touch with one of Compliance's clients, Mr Killmister, whom Mr Gidley regarded as an expert in such matters.  As well as being a longstanding friend of Mr Gidley's whom he trusted to act in the Chings' best interests, Mr Killmister was known to Mr Ching as they had previously been working together on the Investors in Canada scheme (to which we have referred in para.19 above).  In any event, Mr Gidley pointed out to the Chings that there was no urgency attached to the settlement of the trust as, until such time as either or both of the properties had been sold and their creditors repaid, there was nothing to settle into a trust. 

135.   During the three days that Mr Ching, Mr Killmister and Mr Gidley were in Canada at the end of November, they had a number of conversations about discretionary trusts, the way that they operated and the interaction between trustees, settlors and beneficiaries.  Mr Ching appeared very keen to understand how the trust scheme on which they were working would operate, and wanted to inform himself as fully as he could about trusts generally.  These discussions did not relate to Mr Ching's assets or personal situation. 

136.   On his return from Canada and during the remainder of December 2005, Mr Gidley focussed his efforts on stabilizing the Chings' position with their creditors in order to buy time for them to sell their properties.  To this end he secured an agreement from HSBC that it would not take any action against the Chings for their mortgage arrears, and that it would freeze capital repayments and accrue interest until such time as Granville was sold and the mortgage repaid in full.  He took, however, a more aggressive stance with the credit card companies on the basis that they had adopted a careless approach to card issuance. 

137.   Mr Gidley also contacted Mr Killmister by telephone to explain that Mr Ching and his wife intended to establish a discretionary trust; he enquired whether C.I. Accountancy could advise on the practical aspects of establishing such a trust and whether it might be prepared to act as trustee.  Mr Gidley also revealed to Mr Killmister the Chings' financial difficulties.  During the month of December 2005, the Chings attended Mr Gidley's office on several occasions to hold conference calls with Mr Killmister regarding the establishment of a trust; either Mr Gidley or Mr Shepheard was usually present during these telephone conferences. 

138.   The first such meeting was on 7 December 2005 at 4 West Centre, St Helier.  Present were Mr Ching, Mr Gidley and Mr Shepheard; Mr Killmister attended by telephone.  Mr Killmister's handwritten note of the meeting reads as follows:-

"B.C. financial difficulties credit cards.

SG/Comp Sols sorting it out.

BC owns companies with investment shares - states high value

Can $ several m.

Hasn't told wife - too frightened

Scared of divorce?

Owns house Jersey & flat South Coast.

English trust - CITE as presented Montreal. 

Probably early 2006.

Agreed trust - but must tell wife.  Will deal with them & SG/HS to sort."

139.   Six days later, on 13 December 2005, there was a telephone discussion between Mr Killmister, Mr and Mrs Ching and Mr Gidley.  Mr Killmister's note of this discussion reads:-

"--        SG summary for Barbara C to ensure she aware of prior discussion.

--         Mrs C appears controlled v.angry.

--         SG explained approach re credit cards.

--         Propose English discretionary trust to assist dealing [creditors]. NOT protection but control, esp. re investment companies

--         BC does not want shares sold any circumstances - v. Resistant. Will increase price etc.

--         Suggest trust in place, companies settled - sort [investment] shares out - where value lies.

--         Mrs C on board re trust & sort out debts - no option.

--         As work SG & settle trust when debt issues clearer."

140.   Pausing there, the discrepancies to which we have referred in para.124 above are essentially two-fold.  Mr Killmister's note suggests first that Mrs Ching was still in the dark about her husband's financial problems until after 7 December, and second that a trust had been discussed between Mr Ching and Mr Gidley prior to Mrs Ching's involvement.  In the ultimate analysis it seems to us that it does not matter precisely when Mrs Ching came to know of their financial problems, or when or who first mentioned the possibility of a trust to whom.  That said, if it were necessary to choose between the different accounts, we would prefer that of Mr Gidley. 

141.   On 21 December 2005 there was a further telephone conference between Mr Killmister, Mr Gidley and Mr and Mrs Ching.  Mr Killmister's note of this conference read as follows:-

"Mrs C queries on Trust/Trustees & how access, protection etc.

Explained plan to provide income and assist dealing with creditors.  NOT protection from [creditors].

Practice P11.

Companies, 2 Jersey & 1 BVI.

(Check tax position - esp. BVI - has disclosed?)"

(The reference to the companies is to Scorpio, Bokhara and Mitsukiku.)  During this and other telephone calls Mr Killmister confirmed to both the Chings that once their assets were in trust, the trustee would be compelled to deal with any of their creditors who might demonstrate a claim to any of those assets.

142.   During February 2006 Mr Gidley had regular meetings with both Mr and Mrs Ching to discuss their options following the repayment of their debts.  During the course of these meetings, they discussed settling the proceeds of the Chings' properties into the trust to provide them with a monthly income and to cover the cost of renting a property in Jersey.  Whilst neither of the Chings was happy about the fact that they would no longer own their own property in Jersey, they both seemed to accept the situation they found themselves in and seemed determined to make the best of it.  During this period the relationship between Mr and Mrs Ching appeared to Mr Gidley to be one of stoic acceptance of their situation.  Mr Ching in particular gave the impression that a great weight had been lifted from his shoulders now that he had made a clean breast of things with his wife and that his worst fears, namely that his wife would leave him, had not come to pass.  Mr Gidley's view at the time was that they had come through the worst period intact and that there was now some light at the end of the tunnel provided that they could successfully adjust to a more modest lifestyle than they had previously enjoyed. 

143.   During March 2006 discussions took place between the Chings and CITE regarding their requirements from the trust fund and the expected settlement amount following the sale of both properties.  Mr Gidley was present with the Chings during some of these discussions, some of which took place by conference call from his offices.  Neither Mr Gidley nor CITE had any reason at that time to doubt Mr Ching's assertion that he had disclosed all of his liabilities; thus they still believed that Mr Ching was the beneficial owner of all of the Digger shares held by him in their various forms. 

(c) Our conclusions

144.   We set out our conclusions under the following heads:-

(i)        duty of care;

(ii)       breach of that duty;

(iii)      reliance; and

(iv)      remoteness and foreseeability of damage.

(i) Duty of care

145.   As we have already indicated, this point raises two separate questions, namely whether there was a special relationship between the Chings and the Defendants, such as to give rise to a duty of care, and, if so, whether that duty was owed by Mr Gidley and/or Mr Killmister as individuals or by their companies, Compliance and CITE respectively.  We consider the position of each Defendant individually by reference to both questions. 

(1) Mr Gidley/Compliance

146.   It was the Plaintiffs' case as set out in their skeleton argument that Mr Gidley owed a duty of care to the Chings by reason of the following:-

"(a)      "the things said and done by" Mr Gidley (para.3.15);

(b)       "more importantly, the fact that the Defendants having provided the Advice then assumed responsibility for the implementation of the Advice" (para.3.15); and

(c)       the relevant contextual scene, namely that the advice was being given to a vulnerable elderly couple.

We are not persuaded by points (b) or (c) in the case of Mr Gidley.  As to (b), it does not seem to us that Mr Gidley in any meaningful way assumed responsibility for the implementation of the advice.  Once the Chings had decided in late 2005 to establish the Trust, implementation was left to CITE and the mere facts that, for instance, Mr Gidley acted as a postbox in relation to the stock transfer forms in April 2006, and assisted in relation to Mr Ching's credit card debts, cannot alter the position.  As to (c), we do not accept that the Chings can properly be described as being a vulnerable elderly couple as of late 2005.  In particular, for reasons we set out later in this judgment, Mr Ching was not, in our view, mentally incapable in late 2005.  Nor, for the reasons we have already summarised above, was Mrs Ching a vulnerable ingénue. 

147.   Turning, therefore, to point (a), it was Mr Gidley's case as set out in his final written submissions that he/Compliance owed no duty of care to the Chings for a number of reasons, which we can summarise as follows:-

(a)            what he said to the Chings cannot properly be described as advice, because all he did was to suggest possible courses of action for the Chings to consider;

(b)            he and Mr Shepheard made clear that the Chings should take independent legal advice before doing anything;

(c)            many aspects of the so-called advice consisted simply of factual statements of the obvious;

(d)            the purpose of the introduction of the Chings to Mr Killmister was to enable them to take advantage of his expertise in trust matters, which Mr Gidley was not in a position to provide.  

148.   In the light of our factual findings in paras.124 to 143 above, we accept that Mr Gidley did give what can properly be described as advice to the Chings, broadly along the lines pleaded by them.  He did so having made offers of assistance to both Mr and Mrs Ching, which they accepted.  The fact that his advice mentioned more than one option is neither here nor there; nor does it matter that some of what he said may have consisted of statements of the obvious.  Similarly, the facts that both he and Mr Shepheard urged the Chings to take legal advice, and that in relation to the technicalities of establishing a trust the Chings took advice from Mr Killmister, do not, in our view, alter the position.  Finally, in one respect at least, namely negotiating with credit card companies in relation to compliance issues, Mr Gidley had particular knowledge and expertise which was of relevance to the Chings' financial predicament. 

149.   In short we reject Mr Gidley's contentions on this issue. It is clear to us from the evidence that Mr Gidley did take it upon himself to assist the Chings, both as a business colleague and friend of Mr Ching and as an acquaintance of Mrs Ching, and that he thereby assumed responsibility for the advice which he gave them.  That, however, brings us to the question of whether there was reasonable reliance by the Chings on that advice.  

150.   In our view Mr Ching did not rely on any aspect of the advice.  He did not need to be told that he was in serious financial difficulties or in dire financial straits.  (As Mr Baxter pointed out, the wording used in para.3.28(i) of the Order of Justice is that Mr Ching was in "serious financial trouble"; we propose to treat the expressions "dire financial straits" and "serious financial trouble" as synonymous for present purposes.)  He knew that himself, hence his initial approach to Mr Gidley.  He did not rely on Mr Gidley's advice that he and Mrs Ching had to sell Granville (or that Mrs Ching would have to sell Berkeley Court).  We have no doubt that Mr Ching appreciated himself that if he refused to countenance a sale of any Digger shares, a sale of either or both of the properties was the only solution to their financial difficulties. 

151.   Turning to the Trust, Mr Ching would, in our view, have been experienced in the working of discretionary trusts from his lifetime as a stockbroker.  Furthermore, at some time prior to 2004 he had acted as the settlor of a trust known as the Ching Trust for a family of his close acquaintance; the existence of this earlier Ching Trust no doubt explains why Mr Ching was anxious in his letter of 25 September 2007 to Mr Manning to describe the Trust established on 6 April 2006 as "The Ching 2006 Settlement".  It is the Plaintiffs' pleaded case that during the trip to Canada in November 2005 he discussed with Mr Gidley and Mr Killmister "the benefits of using trust structures to organise an individual's finances" and "discretionary trusts".  Prior to February 2006 he had been appointed the protector of a settlement called the Gallo Settlement.  Last but not least, he agreed to the Trust being established because of his wife's insistence.  In those circumstances the Plaintiffs cannot, in our view, sensibly assert that Mr Ching relied on the advice of Mr Gidley, or anyone else, to establish the Trust. 

152.   As for Mrs Ching, she too knew that she and her husband were in serious financial difficulties or in dire financial straits as soon as Mr Ching came clean with her.  Likewise, she realised that given her husband's refusal to sell his Digger shares there was no option but to sell both Granville and Berkeley Court.  In neither of these respects did she rely on Mr Gidley.  We do, however, accept that she relied on Mr Gidley so far as the establishment of the Trust was concerned.  We also accept that it was reasonable for her so to have relied on him. 

153.   But was it Mr Gidley or Compliance who assumed that responsibility to Mrs Ching?  Mr Gidley contended that it was Compliance, on the basis that he was at all times acting as a director of that company.  We do not accept this contention.  In Williams, the plaintiffs were sent the brochure and projections of which they complained by the company, not by Mr Mistlin, the director whom they sought to make personally liable.  Although Mr Mistlin had played a prominent part in the preparation of the documents in question, the plaintiffs had not dealt with him, did not know him and had no material pre-contract dealings with him.  Factually that is a very different position from the present case.  All of the Chings' dealings were with Mr Gidley personally and there is no suggestion, even by Mr Gidley himself, that at any time he spelled out to the Chings that he was giving the advice simply as a director of Compliance.  It seems to us that in those circumstances the things said and done by Mr Gidley meant that the assumption of responsibility to Mrs Ching which we have found in the preceding paragraphs was by Mr Gidley himself, not by Compliance. 

(2) Mr Killmister/CITE

154.   It was the primary contention of CITE and Mr Killmister that Mr Killmister did not become involved with the Chings until after the decision had been reached in principle to establish the Trust, and then only in the context of discussing the technicalities of establishing the Trust, for instance its situs.  At no time, Mr Baxter contended, did Mr Killmister advise the Chings on their financial affairs or financial options.  Thus in his witness statement Mr Killmister said as follows:-

"29.     Following the invitation to CITE to act as trustee for Mr and Mrs Ching, CITE was invited to arrange and attend a meeting with Mr Ching and Mr Gidley at Mr Gidley's offices.  The meeting took place on the 7 December 2005 to discuss Mr and Mrs Ching's financial situation and their proposal to create a trust.  I attended the meeting on behalf of the prospective trustee CITE and its advisor C.I. Accountancy with a view to assisting in discussions regarding the practical issues associated with taking the proposal forward, including the relevant tax implications.

30.      None of C.I. Accountancy, CITE or me were involved in concocting a solution to Mr and Mrs Ching's financial problems, however serious they might have been.  CITE was approached to act as trustee after the solution had been discussed and decided upon.  I was not asked for and did not offer advice on the merits of the proposal to create a trust as a solution to Mr and Mrs [Chings'] financial situation or otherwise.  That decision had already been made in principle."

We record that para.30 of Mr Killmister's statement was not challenged by Mr Garrood but Mr Killmister did add in cross-examination:-

"I was called in because I was a trustee and that decision had already been taken in principle.  I did not advise on whether there should be [a trust] or not."

Indeed Mrs Ching herself accepted in cross-examination that Mr Killmister only became involved when Mr Gidley suggested that he could provide a trustee.  We accept that evidence of Mr Killmister and the submission of Mr Baxter based upon it.   Nor, as Mr Baxter pointed out, did Mr Killmister or CITE hold themselves out as having any special skills in the field of financial or investment advice.  In short, by the time that Mr Killmister came on the scene in about early December 2005 the advice of which the Plaintiffs complain had already been given by Mr Gidley and acted upon, at least in principle, by the Chings.  Although we have no doubt that there were ongoing references to the Chings' financial circumstances after December 2005, we do not consider that Mr Killmister or CITE can properly be described as having assumed any responsibility to the Chings for the advice which Mr Gidley had originally given.  In those circumstances we conclude that no duty of care arose on the part of Mr Killmister or CITE in relation to the advice. 

155.   We add for the sake of completeness that our analysis of the issue of reliance as set out in paras.150 to 152 above applies likewise in relation to Mr Killmister/CITE. 

156.   In those circumstances it is unnecessary for us to decide whether any duty of care would have fallen on CITE or on Mr Killmister personally.  During his opening Mr Garrood categorised Mr Baxter's submission that it would have fallen on CITE and not on Mr Killmister as "not particularly attractive".  But as Mr Baxter rightly pointed out, that alone is not enough to establish personal responsibility on the part of Mr Killmister.  Unlike the position of Mr Gidley, Mr Killmister only came on the scene in December 2005 as the director of the prospective trustee, CITE.  The mere facts that Mr Killmister owned and controlled, and was a director of, CITE and C.I. Accountancy, are plainly insufficient for the Plaintiffs' purposes.  We have seen no evidence to suggest that in any of the exchanges between him and the Chings he ever indicated that he was assuming personal responsibility; nor, viewed objectively, did he do so.  Accordingly, had the point been live, we would have concluded that even if there had been an assumption of responsibility by Mr Killmister/CITE, responsibility was assumed by CITE not by Mr Killmister.  But the Plaintiffs made no pleaded claim against CITE for negligent misstatement. 

(ii) Breach of duty of care

157.   The breach relied on by the Plaintiffs was the giving of the advice summarised in the first sentence of para.9 above.  The Plaintiffs assert that that advice was bad advice for the following reasons (quoting from para.4.1 of their opening skeleton argument):-

"(i)       [the Chings] were not in fact in 'dire financial straits' as advised;

(ii)       there was no necessity to sell either their family home, Granville, or Mrs Ching's property, Berkeley Court, as those debts that they did have could have been addressed in a number of less drastic ways, for example by a straight-forward and partial liquidation of their Digger share portfolio; and

(iii)      there was no need or requirement to establish a trust, thereby surrendering control over their assets to Mr Killmister/CITE."

(We record for the sake of completeness that the Plaintiffs did not pursue the contention pleaded at para.3.30 of the Order of Justice that the Chings "could have managed the credit card debts without liquidating any of their assets".)  We address each of those three reasons in turn.

(1) The Chings were not in fact in 'dire financial straits' as advised

158.   We have no doubt whatsoever that serious financial trouble was an entirely accurate description of the Chings' position in the autumn of 2005.  Mr Ching had credit and bank card debts of some £120,000; in her evidence Mrs Ching frankly admitted that she was horrified when she learned this.  The Chings had no income (save possibly for £8,000 from two directorships held by Mr Ching) with which to meet even their living expenses, let alone the interest on their debts.  Still less could they pay off their indebtedness without recourse to their capital, as Mrs Ching accepted in cross-examination.  Indeed when asked during her evidence whether she accepted that she and her husband were in serious financial trouble, Mrs Ching answered with an unqualified yes.  

159.   It follows, in our view, that Mr Gidley's advice that the Chings were in serious financial trouble or dire financial straits was neither a misstatement nor made negligently.  On the contrary, on the basis of the information provided to Mr Gidley at the time, it was an entirely accurate description of their financial position.  The fact that the credit card companies were subsequently persuaded to forego the Chings' indebtedness to them is, of course, irrelevant in this context.  The same conclusion would apply to Mr Killmister, had he given any such advice. 

(2) There was no necessity to sell either of their properties

160.   In the course of his cross-examination of Mr Gidley, Mr Garrood at the request of the Court clarified the Plaintiffs' case as follows:-

"the case is that the option [to sell the Digger shares] was never put [to the Chings] and the advice given was that they should sell their  properties rather than liquidate the Digger shares."

For the reasons we have already set out, we reject that version of events.  Mr Gidley did not advise the Chings to sell their properties rather than the Digger shares; on the contrary, a sale of the Digger shares was Mr Gidley's preferred option, for what seems to us obvious reasons.  It was Mr Ching who refused to countenance a sale of the Digger shares. 

161.   In this regard we strongly suspect that the reason which Mr Ching gave to Mr Gidley in October and November 2005 for his unwillingness to sell his Digger shares, namely that the shares were likely to increase in price, may not have been the whole story.  On any view there were a number of skeletons in Mr Ching's cupboard regarding the Digger shares, and his investment activities more generally.  In no particular order of importance, although there was a dispute (which we are content to resolve in Mr Ching's favour) about whether the corporate affairs of Scorpio and Bokhara were in order, there is no dispute that Mr Ching had allowed Mitsukiku, which was the company which held some at least of the Digger shares owned by the third parties, to be struck off in the BVI.  Mr Ching's records of the Digger shares held by third parties via Mitsukiku left a great deal to be desired, as witness the hand-written list entitled "DIGGER PLACEMENTS" which he apparently handed to Mr Gidley in 2006, and the state of the boxes of documents in his garage as described by Mr Hurley.  We reject the suggestion by Mr Garrood that this list was "sufficient, accurate and complete" as a list of the third party holdings of Digger shares; it was nothing of the sort.  Mr Ching had mishandled a number of investments by third parties, for instance those of Mrs O'Sullivan and Ms Sheehan; the latter's claim had to be satisfied by the payment to her, so we were told by Mr MacFirbhisigh, of £95,000.  Finally, it seems to us that Mr Ching's activities in handling, via Mitsukiku as a nominee, investments by third parties in Digger shares might well have attracted the attention of the JFSC had it come to light.  For the sake of completeness, for the reasons which we set out later in this judgment we add that we are also not persuaded that a partial liquidation of the Chings' portfolio of Digger shares would have been as straightforward as the Plaintiffs allege.  But whatever Mr Ching's motives may have been, once he had decided that he was unwilling to sell his Digger shares in order to pay off his and Mrs Ching's debts, Mr Gidley's preferred option of such a sale fell by the wayside. 

162.   In those circumstances what other option, we ask ourselves, was there except for a sale of Granville and the flat at Berkeley Court?  Mr MacFirbhisigh suggested that Granville might have been rented out for £3,500 a month, which could have covered the cost of the Chings renting another property and provided them with an income.  Accepting for the sake of argument that Granville could have been let at such a rent (for which there was no other evidence), the Chings would still have been unable even to pay the interest on their debts, let alone pay off their underlying indebtedness.  In cross-examination of Mr Gidley Mr Garrood appeared to suggest yet further alternative courses of action, namely a remise de biens, an individual voluntary arrangement or an equity release, but the Plaintiffs called no evidence to support any of these alternative approaches and we are not persuaded that any of them would have been a practical or desirable solution.  In short, in our judgment, Mr Gidley was entirely correct that there was no feasible alternative, once Mr Ching had refused to sell his Digger shares, but to sell Granville and the flat at Berkeley Court.  Indeed, again Mrs Ching accepted in cross-examination that they had no option but to sell the properties. 

163.   It follows, therefore, that in this regard as well Mr Gidley neither made a misstatement nor was negligent.  His advice was entirely correct.  The same would, of course, apply to Mr Killmister, had he given any such advice.  

(3) There was no need or requirement to establish a trust

164.   Although it had its genesis in the Chings' financial difficulties, Mr Gidley's suggestion of a trust addressed a separate problem, namely control of the Chings' assets, particularly after the sale of their properties.  That was an issue which had been raised by Mrs Ching herself, and in our opinion for good reason.  On the information available to us, Mr Ching's track record as an investor left a great deal to be desired.  To have almost 100% of his and his wife's share portfolio invested in Digger, a small Canadian mining company listed only on the Toronto exchange which was worthless on any conventional basis of valuation, had no income, had no assets, had never paid any dividends and had been accumulating losses ever since its incorporation, does not demonstrate a sound, diversified approach to investment.  Nor does Mr Ching seem to have had any insight into his shortcomings in this regard.  It seems to us that in those circumstances Mrs Ching had every reason to be concerned by her husband's suggestion that he might take charge of investing the proceeds of the sale of their properties.  Indeed when Advocate Baxter put to Mrs Ching in cross-examination that:-

"You didn't trust Barry to look after your finances any more, did you?"

Mrs Ching frankly admitted "Probably not".

165.   Against that background Mr Gidley's suggestion of a discretionary trust seems to us to have been eminently sensible.  It addressed, and provided a solution to, the very problem that Mrs Ching had identified.  As, therefore, with the previous two reasons, we find that Mr Gidley was not guilty of any misstatement, or of negligence.  On the contrary, his suggestion was entirely sensible.  Again the same would apply to Mr Killmister, had he given any such advice. 

(iii) Reliance

166.   We have already addressed the issue of reliance in the context of the existence of a duty of care.  There is, however, one specific aspect of reliance to which we refer at this stage.  At paras.48 to 49 of his judgment of 5 February 2014 Mr Thompson struck out any claim by Mr MacFirbhisigh in respect of the transfer of any interest in Granville or the transfer of any interest that Mr Ching may have had in the proceeds of sale of Berkeley Court, on the basis that Mr MacFirbhisigh did not act in reliance on any of the pleaded misstatements.  This would leave only a claim by Mr MacFirbhisigh in respect of the Digger shares, as we have recorded in para.113 above.  But since, as we have found, none of the Defendants owed any duty of care to Mr Ching in respect of the Digger shares, any claim by Mr MacFirbhisigh in respect of the Digger shares would likewise fail.  

(iv) Remoteness and foreseeability of loss

167.   The Defendants' primary submission is that the Plaintiffs have failed to explain how the alleged bad advice caused the losses claimed and that their case consists in effect of contending that all their losses, however remote, must have flowed from the original advice.  Subject to that overall point, we take in turn each of the three categories of loss claimed by the Plaintiffs, namely:-

(1)            £411,898 in respect of the Digger shares;

(2)            £162,500 in respect of the AIG bond; and

(3)            £169,167.11 paid in respect of fees.

We confine ourselves at this stage of our judgment to considering the recoverability of these sums in principle. 

(1) The Digger shares

168.   As we explain in more detail later in this judgment, the £411,898 claimed under this head represents the amount which, based on the report of Dr Fitzgerald, the Plaintiffs say could have been realised from the sale of 460,945 Digger shares at an average price of C$1.78 per share between 2006 and 2010.  In order to recover that loss the Plaintiffs must, of course, establish not just that that sum could have been realised but that, on a balance of probabilities, it would have been realised if the Defendants had not given the alleged bad advice.  In other words the Plaintiffs must make good the contention that had it not been for the alleged bad advice leading to the establishment of the Trust, Mr Ching (or following the curatorship, Mr Manning) would have sold 460,945 Digger shares as envisaged by Dr Fitzgerald. 

169.   We see no factual basis for any such contention.  As we have already pointed out, in late 2005 Mr Ching himself was adamantly opposed, on more than one occasion, to the sale of any Digger shares.  He remained of that view in the summer of 2006.  Some three years later the Chings expressed the same view again in their letter to Mr Manning of 16 February 2008 (as set out in para.61 above).  Mrs Ching confirmed in her oral evidence that they did not want the Digger shares sold at that point, notwithstanding that the price per share was then C$3.50 (or, according to the Plaintiffs' Chronology, Can$4).  In those circumstances we have no doubt that left to his own devices Mr Ching would not have sold any of his Digger shares. 

170.   We accept that from 9 June 2006 onwards the decision would not have been for Mr Ching to take, but for Mr Manning as his curator.  So we ask ourselves what evidence there is that Mr Manning would have ordered a sale of Digger shares.  The simple answer is that there is none.  Following the discontinuance of the claims against him, Mr Manning took no further part in the proceedings; in particular he was not called by any of the remaining parties as a witness, so we have heard nothing from him.  Although Mr Manning would have had every right to sell the Digger shares in defiance of Mr Ching's wishes, we do not think that Mr Manning would have been sufficiently bold to take that course.  So far as we are aware, Mr Manning never suggested to CITE at any time during the period of his curatorship that any Digger shares should be sold and we have no reason to suppose that he would have adopted any different approach had the Trust not been established.

171.   Finally, there is the issue of ownership of the Digger shares.  Although it was common ground at the trial that Mr Ching owned some 900,000 of the Digger shares himself, the claims by third parties to Digger shares which emerged in 2006 after the curatorship was announced complicated the position for months, if not years; even if the Trust had not been established, Mr Manning would have faced precisely the same problems in this regard as Mr Killmister.  This factor would have been an additional constraint on any sale by Mr Manning of Digger shares, even if he had been minded to sell any. 

172.   Accordingly we have no hesitation in concluding that the Plaintiffs' claim in respect of the Digger shares under this head must fail on the simple basis that they have not established that but for the advice any Digger shares would have been sold at all.  Mr Ching (and Mr Manning) would not have sold the Digger shares in any event. 

(2) The AIG bond

173.   The AIG bond was purchased in early 2007 using £400,000 of the proceeds of the sale of Granville.  By the time that the AIG bond was liquidated in stages from late 2010 to early 2015, there had been a substantial drop in the value of the bond following the credit crunch in 2009, the total loss to the Plaintiffs being £162,500.  At para.49 of his final written submissions, Mr Pallot summarised the Plaintiffs' case as follows:-

"At all material times the Defendants knew that the proceeds of the sale of the Chings' assets would be invested and that the value of investments [goes] up as well as down.  It follows that the loss suffered on the AIG bond was foreseeable (Rubenstein v. HSBC Bank Plc [2013] 1 All E.R. (Comm) 915) and the Defendants are liable to compensate the Plaintiffs for the loss in value on the AIG bond."

174.   The headnote to the Rubenstein case reads:-

"(2) What connected the erroneous advice given to the claimant and his loss was the combination of putting the claimant into a fund which was subject to market losses while at the same time misleading him by telling him that his investment was the same as a cash deposit, when it was not.  The correct selection of the cause of the claimant's loss was the loss in the assets in which the [enhanced variable rate fund] was invested.  It had been the bank's duty to protect the claimant from exposure to market forces when he made clear that he wanted an investment which was without any risk.  It was wrong in such circumstances to say that when the risk from exposure to market forces arose, the bank was free of responsibility because the incidence of market loss was unexpected."

175.   In the course of his judgment in Rubenstein, Rix L.J. said as follows:-

"102    Much reference was made ... to Lord Hoffmann's example of the mountaineer in his speech in SAAMCO (at 213).  The importance of that example is that it illustrates the significance of the scope of a defendant's duty for the purpose of questions of causation and remoteness.  A mountaineer is told by his doctor that his knee is fit for a mountain climb, but the doctor is negligent, ie the knee is not fit.  If the mountaineer had been told that his knee was not fit, he would not have gone climbing.  On the climb the mountaineer suffers an accident which, however, had nothing to do with the knee.  Is the doctor liable for the consequences of the mountaineer's injury?  No, suggested Lord Hofmann, even though the injury would not have happened but for what Lord Hoffmann called both "information" and "advice".  The reason is: "The injury has not been caused by the doctor's bad advice because it would have occurred even if the advice had been correct" (at 213F).  The importance of the example, as it seems to me, is that it illustrates the manner in which we think naturally of causation and responsibility.  Ex hypothesi, the injury was caused by something else entirely, for which the doctor had no responsibility.  Although the mountaineer would not have gone on the mountain unless he had been given the all clear from the doctor, we would not select the doctor's negligent advice as the cause of the mountaineer's injury unless the injury had been contributed to in some material way by the unfitness of the knee.  This is despite the fact that an accident on the mountains - whether it is due to something entirely fortuitous such as an avalanche, or is the result of some faulty piece of equipment, or of the weather, always unpredictable but inherently so - is always, more or less but readily, foreseeable. However, the doctor is responsible for the mountaineer's knee, but not for the weather, the equipment, or sheer bad luck.

103     But what does the mountaineer's example teach us in the present case?  An investment adviser, with his statutory duties of various kinds, owed to a consumer as a result of the latter's statutory status as a private person, who as adviser recommends a particular investment, which he must take care to be suitable for his client and, if a packaged investment, to be the "most suitable" on the adviser's menu, may well be responsible if some flaw in the investment turns out materially to contribute to some investment loss.  The doctor did not advise, let alone recommend, his patient to go mountaineering: he merely told him that his knee was in good shape.  Mr Marsden, however, not only advised Mr Rubenstein on the investment of his capital, he recommended a particular investment.  He, so to speak, put him in it.  If such an investment goes wrong, there will nearly always be other causes (bad management, bad markets, fraud, political change etc): but it will be an exercise in legal judgment to decide whether some change in markets is so extraneous to the validity of the investment advice as to absolve the adviser for failing to carry out his duty or duties on the basis that the result was not within the scope of those duties."

176.   Advocate Baxter also relied on the following passage from the judgment of His Honour Judge Gosnell in Bateson v Savills Private Finance Limited [2013] EWHC 719 (QB):-

"26     In South Australia Asset Management Corp v York Montague Ltd [1997] AC 191 the House of Lords held that someone under a duty to advise on what is the appropriate course of action will be liable for all the foreseeable consequences of action taken in reliance on that advice, but a person under a duty to take reasonable care to provide information on which someone relies will generally be regarded as responsible for the consequences of the information being wrong, and not all the consequences from the reliance on it."

177.   It is clear to us that the alleged bad advice relied on under this head of the Plaintiffs' claim fell into the second category in Bateson.  The bad advice relied on by the Plaintiffs under this head was given in late 2005; the Plaintiffs do not rely under this head on any bad advice given specifically in relation to the correctness or otherwise of investing in the AIG bond in early 2007.  All that Mr Gidley did in 2005 and 2006 was to advise the Chings on the options open to them to resolve their financial problems.  Even if, which we doubt, Mr Gidley could be said to owe the Chings any duty at all in respect of the investment in the AIG bond, his only responsibility would be for the consequences of the advice which he gave in 2005 and 2006.  His responsibility in the tort of negligent misstatement would not extend to the consequences of the credit crunch.  The facts that, as the Plaintiffs assert, Mr Gidley should have foreseen that the proceeds of the sale of Granville might be invested, and would have known that the value of investments can go up as well as down, are not sufficient to make him liable for such consequences. 

178.   The Plaintiffs made no attempt to distinguish between the losses which, they alleged, resulted from the AIG bond being an unsuitable investment for the Chings and the losses on the bond which were attributable to the credit crunch, notwithstanding that they had been given leave to adduce expert evidence in respect of the AIG bond.  The result is that the Plaintiffs have not even identified, let alone called any evidence to support, the amounts attributable respectively to the bond being unsuitable (which might, arguably, be recoverable) and to the effect of the credit crunch (which is plainly irrecoverable).  It is not for the Court to try to fill that lacuna in the Plaintiffs' case by substituting our own assessment, even if we were in any position to do so (which we are not).  In those circumstances we conclude that the Plaintiffs have simply failed to prove any foreseeable loss in respect of the AIG bond. 

(3) Fees

179.   The £169,167.11 claimed in respect of fees comprises, as pleaded:-

(a)       £81,496.97 paid to Mr Manning;

(b)       £28,245 paid to Mr Gidley; and

(c)       £59,425.14 paid to Mr Killmister.

There is no claim under this head in respect of CITE's fees.  In answer to questions from the Court about this apparent omission, we were told by Advocate Garrood that the fees incurred by CITE did not flow directly from the negligent misstatement because they provided the service which they were required to provide under the Trust deed.  We confess that we find this concession puzzling.  It seems to us that the one aspect of the Plaintiffs' damages claim for negligent misstatement which both flowed directly from the advice to establish the Trust and was foreseeable by Mr Gidley (and/or by Mr Killmister) was the fees which would be charged by CITE.  Turning therefore to the point that CITE provided a service in return for their fees, the same would apply to Mr Manning, Mr Gidley and Mr Killmister, but the Plaintiffs do claim their fees as damages.  That said, the decision not to claim the fees of CITE under this head was, of course, a matter for the Plaintiffs. 

180.   We record that the Plaintiffs' claims in respect of these fees were on an all or nothing basis.  The Plaintiffs made no attempt to analyse the figures claimed by Mr Manning, Mr Gidley or Mr Killmister.  Likewise the Plaintiffs did not suggest that any of the fees charged were unreasonable.  On the other hand the Defendants submitted, rightly in our view, that the Plaintiffs could not recover under this head in respect of fees that the Chings would have had to pay in any event, i.e. even if the Trust had not been established.  Into this category would fall fees incurred in what Advocate Baxter described as sorting out "the mess of the Digger share ownership".

181.   Again we take each of the three claimed heads in turn.

(a) £81,496.97 paid to Mr Manning

182.   These are the fees charged by Mr Manning for his services as Mr Ching's curator, which the Plaintiffs continued to claim even after discontinuing their proceedings against him.  The Plaintiffs did not explain, in either their written or their oral submissions, the basis upon which they were entitled to recover these fees as damages for negligent misstatement.  It seems to us that this part of the Plaintiffs' damages claim must fail for at least three reasons.  First, the loss to the Plaintiffs in terms of these fees was not caused by the alleged bad advice or by the establishment of the Trust in reliance on that advice; the liability to pay Mr Manning's fees arose from the Chings' decision in the summer of 2006 to appoint him as Mr Ching's curator.  Second, we fail to see how the incidence of such fees could possibly have been foreseeable by Mr Gidley (or by Mr Killmister) in late 2005 or early 2006, long before a curatorship for Mr Ching had ever been suggested.  Third, Mr Manning's fees would have been incurred irrespective of the alleged bad advice or of the creation of the Trust and they would have had to have been paid by the Chings, directly or indirectly, in any event.  In our judgment this head of damages is, therefore, entirely misconceived. 

(b) £28,245 paid to Mr Gidley

183.   This sum comprises £21,135 paid to Compliance by Mr Manning out of the curatorship account, and £7,110 paid to Compliance by CITE.  So far as the £21,135 is concerned, it seems to us that, absent any additional factor, the same points apply as we have just discussed in relation to the fees of Mr Manning himself; fees paid by Mr Manning are for this purpose indistinguishable from fees paid to him.  Accordingly we see no basis upon which the Plaintiffs could recover the £21,135 as damages for the Defendants' negligent misstatement. 

184.   Turning to the £7,110 paid by CITE, it seems to us that the starting point must be Advocate Garrood's concession recorded in para.179.  If the Plaintiffs accept that they cannot recover as damages for negligent misstatement the fees paid to CITE, we fail to see upon what basis they can claim the fees paid by CITE to Mr Gidley.  That point aside, the balance of £7,110, is made up of £3,600 paid by CITE on 6 November 2005 and £3,510 paid on 20 February 2006.  Compliance's invoice in respect of the £3,510 listed attending meetings with Mr Ching and Mr Manning, reviewing the credit card file and contacting the credit card companies, research in relation to the Digger shares and reviewing Ms Sheehan's claim.  So far as we can tell (and we did not have the benefit of any submissions from the Plaintiffs in this regard), each of these activities would have been required even if the allegedly bad advice had not been given, so that the "but for" test is not satisfied in respect of them.  Each of the services was also for the benefit of the Chings.  We were not directed by the Plaintiffs to any document evidencing the services performed by Mr Gidley for which he charged the £3,600; in the absence of any such document, we infer that these services were similar to those for which Mr Gidley charged the £3,510 so that again the "but for" test is not satisfied.  Accordingly the Plaintiffs have not persuaded us that the balance of £7,110 is recoverable either. 

(c) £59,425.14 paid to Mr Killmister

185.   In fact, as the Order of Justice makes clear, the sum of £59,425.14 represents the total sum said by the Plaintiffs to have been received by companies wholly owned by Mr Killmister.  Leaving aside CITE itself, the breakdown is as follows:-

CI Accountancy: £3,119 invoiced and £1,996.19 paid

Beresford Trust Corporate Services: £14,207.50 invoiced and £14,620.73 paid

Beresford Secretaries Limited: £5,061 invoiced and £5,385.09 paid.

(Why CI Accountancy should have been paid less than it claimed, and the two Beresford companies more than they claimed, was unexplained.)  This breakdown shows that the total paid to the three companies was £22,002.01.  That leaves a balance of £37,423.13.  The Plaintiffs did not provide any explanation for this balance and did not question Mr Killmister about it.  In those circumstances we decline to treat the £37,423.13 as part of the fees paid to Mr Killmister and we reject the Plaintiffs' claim to recover that sum as fees. 

186.   As for the balance of £22,002.01, we see no reason why Advocate Garrood's concession in relation to the fees charged by CITE as recorded at para.179 above should not extend also to companies owned by Mr Killmister.  It seems to us that these three other companies supplied services to the Trust, and to the Chings, just as much as CITE did.  Again, so far as we can tell from the invoices in our bundles (as to which again we had no detailed submissions from the Plaintiffs), the services rendered by these three companies would have been required even if the allegedly bad advice had not been given.  The "but for" test is not, therefore, satisfied in respect of them. 

187.   It follows that none of the fees claimed by the Plaintiffs would be recoverable in negligent misstatement. 

Conclusion on issue (1)

188.   For the reasons we have set out above, the Plaintiffs' claims in negligent misstatement fail in their entirety against all the Defendants. 

(2) Breach of fiduciary duty

189.   This aspect of the Plaintiffs' claim was finally clarified by Mr Pallot in his additional written closing submissions when he confirmed (at para.D.1) that the Plaintiffs' position was as follows:-

"(ii)      Breach of Fiduciary Duty - claim made by both Plaintiffs against CITE, Gidley and Killmister arising from the initial bad advice provided."

The significance of this head of claim was said to be two-fold.  First, the Plaintiffs relied on the existence of a fiduciary duty as a ground for alleging an assumption of responsibility on the part of Mr Gidley and Mr Killmister for the purposes of their negligent misstatement claim.  Second, they relied on breach of fiduciary duty on the part of Mr Gidley, Mr Killmister and CITE as a ground of recovery in its own right; in this context the damages claimed under this head included the fees paid to CITE which did not form part of the negligent misstatement claim. 

190.   As with issue (1), we address this issue in three stages:-

(a)       the law;

(b)       the facts; and

(c)       our conclusions.

(a) The law

191.   Again it was common ground between the parties that the law of Jersey is the same as the law of England in this area. 

192.   In In the matter of the E, L, O and R Trusts [2008] JRC 150, the Deputy Bailiff said as follows (at para.26):-

"A convenient summary of certain key aspects of [a fiduciary] duty is to be found in the judgment of Millett LJ in Bristol & West Building Society v Mothew [1996] 4 All ER 698.  The passage at 710 - 715 repays reading in full.  The following summary is drawn from Millett LJ's observations which, in our judgment, are equally applicable under the law of Jersey.

(i)        The expression 'fiduciary duty' is properly confined to those duties which are peculiar to fiduciaries and the breach of which attracts legal consequences differing from those consequent upon the breach of other duties.  For example, the obligation of a trustee (who is undoubtedly a fiduciary) to use proper skill and care in the discharge of his duties is not a fiduciary duty nor is the duty of a director (who undoubtedly owes fiduciary obligations to his company) to exercise skill and care in the performance of his duties.

(ii)       A fiduciary duty is one which is special to fiduciaries which attracts those remedies which are peculiar to the equitable jurisdiction and are primarily restitutionary or restorative rather than compensatory.  A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.

(iii)      The distinguishing obligation of a fiduciary is the obligation of loyalty.  The principal is entitled to the single-minded loyalty of his fiduciary."

193.   As Ribeiro PJ said in Libertarian Investments Limited v Hall 17 ITELR 1 (at para.53):-

"Certain relationships have traditionally been accepted as fiduciary in nature, namely the relationships between trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and between partners."

But, as Underhill and Hayton's Law of Trusts and Trustees (18th ed.) explains (at para.1.50), apart from the archetypal fiduciary relationship of trustee and beneficiaries:-

"a fiduciary relationship exists as Ford and Lee have indicated where:

(a)       one person, the fiduciary, has undertaken to act in the interests of another person, the principal, or in the interests of the fiduciary and another person;

(b)       as part of the arrangement between the fiduciary and the principal the fiduciary has a power or discretion capable of being used to affect the interests of the principal in a legal or practical sense;

(c)       the principal is vulnerable to abuse by the fiduciary of his or her position; and

(d)       the principal has not agreed as a person of full capacity who is fully informed, to allow the fiduciary to use the power or discretion solely in his or her own interests."

(b) The facts

194.   The facts relevant to this claim are the same as those under head (1), as set out in paras.124 to 143 above. 

(c) Our conclusions

195.   As spelt out by the Plaintiffs in their final written submissions, the grounds upon which they alleged that the Defendants were subject to a fiduciary duty towards the Chings were as follows:-

(i)        (para.52)

"the things [Mr Gidley and Mr Killmister] said, the assurances they gave and the actions they took";

(ii)       (para.53)

"Mr Gidley takes the role of an advisor and becomes part of the decision-making process, either by volunteering original advice, or by refining and supporting prospective future conduct of the Chings in respect of their property";

(iii)      (para.54) Mr Killmister

"was or was the representative of an intending Trustee and owed duties of a fiduciary nature by the very act of becoming involved in the creation  of the Trust and the taking on of responsibilities in respect of dealing with the Chings' property";

(iv)      (para.58)

"Given the level of 'trust and confidence' placed in the Defendants by the Chings and given the extent of their reliance on the Defendants, such reliance being unconditional, it is plain that the Defendants each 'undertook to act for and on behalf' of the Plaintiffs";

(v)       (para.59)

"It is clear that the Chings did not countenance that they would enjoy anything but the 'single-minded loyalty' of the Defendants";

and

(vi)      (para.61)

"Clearly the Defendants were in a position to affect the financial interests of the Plaintiffs, which they did with such a devastating effect.  It is also abundantly clear that the Plaintiffs were vulnerable to the Defendants abusing their positions as fiduciaries".

Clearly, however, those assertions must be read in the light of the clarification to which we have referred in para.189 above.

196.   We are not persuaded by any of the points summarised in the preceding paragraph.  As for Mr Gidley, applying the tests propounded in Underhill to the facts as we have found them:-

(i)        all he did in 2005 and early 2006 was to offer the Chings advice.  He did not undertake to act in the best interests of the Chings;

(ii)       likewise he had no power or discretion capable of being used to affect the interests of the Chings in a legal or practical sense; and

(iii)      neither Mr nor Mrs Ching was vulnerable to abuse by Mr Gidley of his position. 

Accordingly he did not owe the Chings any fiduciary duty in relation to the alleged bad advice.  By the same token, but for the additional reason that he did not come on the scene until after the Chings had decided in principle to establish the Trust, Mr Killmister likewise owed the Chings no fiduciary duty in relation to the alleged bad advice. 

197.   That leaves only CITE.  As Mr Baxter rightly conceded, CITE became subject to a fiduciary duty in favour of the Chings as soon as the Trust was established but, as Mr Garrood accepted, not before.  It follows that CITE also owed the Chings no fiduciary duty in relation to the alleged bad advice. 

198.   Accordingly we conclude that the Plaintiffs' claim based on breach of fiduciary duty, like their negligent misstatement claim, fails in its entirety.  There was no fiduciary duty on Mr Gidley or Mr Killmister such as to give rise to an assumption of responsibility for the purposes of the negligent misstatement claim, or on Mr Gidley, Mr Killmister or CITE such as to give rise to a claim for breach of fiduciary duty in its own right against any of the Defendants. 

199.   In the light of that conclusion the issue of damages is academic.  Nonetheless we express our views in relation to it.  Neither party suggested that the principles relating to the recoverability of damages for breach of fiduciary duty were different from those which we have discussed in the context of negligent misstatement.  Accordingly we simply repeat our conclusions in paras.167 to 187 above that the alleged losses on the Digger shares and on the AIG bond, and the fees paid to Mr Manning, Mr Gidley and to Mr Killmister are irrecoverable. 

200.   That leaves only the matter of the fees paid by CITE, claimed in the sum of £66,535.14.  In his additional written closing submissions, Mr Pallot explained that this figure was the total of the £59,425.14 paid by CITE to Mr Killmister's other companies and the £7,110 paid by CITE to Mr Gidley.  We have already dealt with these sums in paras.185 to 186, and 184, respectively.  For the same reasons as set out in those paragraphs, we conclude that just as these fees cannot be recovered as fees paid to Mr Gidley and Mr Killmister, so also they cannot be recovered as fees paid by CITE. 

Mr Gidley

201.   Since our findings thus far mean that all the Plaintiffs' claims against Mr Gidley must fail, this is an appropriate point at which to make a general comment on his position.  We do so more in the hope than in the expectation that anything we say will cause the Plaintiffs to change their minds about him.  Mr Gidley made no secret during the hearing that he felt aggrieved by the fact that the Chings had chosen to issue proceedings against him and to blame him for being the author of their misfortunes.  In our view that feeling of grievance on Mr Gidley's part was both understandable and entirely justified.  He had given the Chings advice on their financial position which, as we have found, was entirely sound in the light of the information they had provided to him.  He had been instrumental in enabling Mr Ching to avoid questioning by the JFSC about Mr Fiessel and the Greyfield affair in circumstances where, on the basis of the matters raised by the JFSC with Mrs Ching at her interview in June 2006, we think that Mr Ching would have been hard pressed to escape serious criticism.  Mr Gidley had, as we have found, managed to persuade the credit card companies to forego the entirety of the £120,000 or so of indebtedness that Mr Ching had accumulated.  Finally, he had assisted in extracting Mr Ching from a £250,000 guarantee which Mr Ching had given to Mr Lazarou, a former client of ARC, and of the associated lien on Granville.  In short, had it not been for Mr Gidley, the Chings would have found themselves in an even worse financial position than they are now.  In those circumstances it seems to us that the Chings, far from having any legitimate complaint against Mr Gidley, owe him a considerable debt of gratitude for his efforts on their behalf. 

(3) The validity of the Trust

202.   The Plaintiffs assert that the Trust was invalid, and therefore failed, on four separate grounds, namely:-

(a)       the mental incapacity of Mr Ching;

(b)       the mistakes of fact and law under which Mrs Ching was operating;

(c)       uncertainty arising out of the provisions of the trust Instrument; and

(d)       failure for certainty of subject matter.

The parties were agreed that the validity of the Trust was to be determined in accordance with English law as the proper law of the intended trust.

203.   We first address in turn each of the four grounds on which the Plaintiffs assert that the Trust was invalid.  We then turn to the consequences of our conclusions in this regard. 

(a) The mental incapacity of Mr Ching

204.   We start by addressing two preliminary points, namely:-

(i)        the true issue under this head; and

(ii)       the correct legal test to be applied,

before turning to the evidence.

(i) The true issue under this head

205.   The Plaintiffs stated at para.6.2.1 of their opening skeleton argument that:-

"As to mental capacity the essence of the Plaintiffs' case is simple.  On 6 April 2006, when the Trust was executed, Mr Ching did not have the capacity to effect that transaction."

The Defendants, however, contended that since the Trust deed was executed by CITE, and since neither Mr nor Mrs Ching was a party to the Trust deed, the initial validity of the Trust did not depend upon the capacity or understanding of Mr Ching; accordingly the issue of Mr Ching's capacity was relevant only to the transfers made by Mr Ching into the Trust.  Since the transfer into the Trust of Mr Ching's share of the proceeds of the sale of Granville was effected by Mr Manning as his curator, clearly that transfer was not open to challenge and the Plaintiffs did not suggest otherwise.  Similarly the transfer into the Trust by Mrs Ching of the bulk of the proceeds of the sale of Berkeley Court could not be challenged on this ground.  The only transfers made by Mr Ching himself were of his shareholdings in Scorpio, Bokhara and Mitsukiku.  

206.   We agree with the Defendants' analysis.  It was not the Chings who established the Trust; it was CITE.  Neither of the Chings signed any document bringing the Trust into existence.  In those circumstances we do not see how, even if Mr Ching had been mentally incapable on 6 April 2006, that could affect the validity of the Trust itself.  The nearest that the Plaintiffs can come to involving Mr Ching in the establishment of the Trust is to suggest that it was he, or he and his wife, who gave Mr Killmister the instructions to establish the Trust.  One of the many curious features of this case is that there was no evidence as to precisely when, and from whom, CITE received such instructions.  But assuming that it was Mr Ching who gave the instructions, unless and until the Chings actually transferred any property into the Trust, the mere existence of the Trust did not affect them in any way.  In those circumstances we conclude that the Defendants are correct.  What would, in principle at least, be susceptible to challenge on the grounds of Mr Ching's incapacity would be the transfers into the Trust of his Digger shares in April 2006. 

(ii) The correct legal test to be applied

207.   In their opening skeleton argument the Plaintiffs submitted that, allowing for the absence of any Jersey statute comparable to the English Mental Capacity Act 2005 ("the MCA"), the law of Jersey in this area was materially identical to English law.  The Defendants did not dispute that submission.  We are content to proceed on that basis.  

208.   Mr Pallot used as his starting point the following passage from Lewin on Trusts (19th ed.) (at para.2-008):-

"A voluntary settlement inter vivos made by a person who at the time it was made was not a patient with a receiver appointed, or subject to a subsisting order, under the provisions of the 1983 Act or the [MCA], but who is of unsound mind, is void or voidable unless made during a lucid interval. For these purposes a person is of unsound mind in relation to a particular transaction if he does not have the capacity to understand the transaction when explained to him, and the extent of understanding required is relative to the particular transaction which it is to effect and varies with the circumstances of the transaction."

We refer to this approach as the common law test.  Despite the Plaintiffs espousing this approach, Dr Bruno (as we explain in more detail below) adopted a test of incapacity based upon the MCA.

209.   In In re Smith [2014] EWHC 3926 (Ch), the High Court was concerned with the validity of an inter vivos gift.  The judge, Mr Stephen Morris Q.C., analysed the legal position both at common law and under the MCA.  His analysis of the position at common law was as follows:-

"27.    At common law, the principles to be applied in relation to mental capacity to make an inter vivos gift are set out in the judgment of Martin Nourse QC (as he then was) in Re Beaney.  The learned judge first stated (at 773A-B) the test in general terms as follows:

"the question is whether the person making it was capable of understanding the effect of the deed when its general purport has been fully explained to him".

Thus the overall test is one of ability to understand, rather than actual understanding.  If the maker of the gift does not in fact understand the transaction, in circumstances, where its general purport has not been fully explained, that does not establish lack of capacity.  The test is whether he or she would have understood it, if the consequences had been fully explained.

28.      As to the degree of understanding required, Martin Nourse QC cited and approved the following statement from the Australian case of Gibbons v Wright that the principle is

"that the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument and may be described as the capacity to understand the nature of that transaction when it is explained"

and he then continued (at 774D-F):-

"In the circumstances, it seems to me that the law is this.  The degree or extent of understanding required in respect of any instrument is relative to the particular transaction which it is to effect.  In the case of a will the degree required is always high.  In the case of a contract, a deed made for consideration or a gift inter vivos, whether by deed or otherwise, the degree required varies with the circumstances of the transaction...."

29.      On the facts, in Re Beaney, there was expert evidence from a professor of clinical neurology and from a consultant psychiatrist.  The deceased suffered from senile dementia in a very advanced stage and it was getting worse.  It was not possible for her to have a lucid interval.  The deceased was not capable of understanding that she was even making an absolute gift.

30.      The common law test for mental capacity to make a will (testamentary capacity) is to be found in Banks v Goodfellow (1870) LR 5 QB 549.  The key passage is in the judgment of Cockburn CJ at 565:-

"It is essential to the exercise of a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his [sense] of right, or prevent the exercise of his natural facilities - that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made."

210.   The judge went on to consider the question of the burden of proof at common law, concluding (at para.67) that:-

"the authorities all seem to support the proposition that whilst the legal burden is on the party asserting the incapacity, if that party adduces evidence to raise a sufficient doubt from which incapacity can be inferred, then the evidential burden shifts to the opposing party ..."

Since this burden of proof issue has not affected our conclusions, we say no more about it.

211.   We have also found the decision of the Court of Appeal in Masterman-Lister v Brutton & Co [2003] 1 WLR 1511 to be of assistance. In that case Chadwick L.J. explained the position in this way:-

"58     The authorities are unanimous in support of two broad propositions.  First, that the mental capacity required by the law is capacity in relation to the transaction which is to be effected.  Second, that what is required is the capacity to understand the nature of that transaction when it is explained...

....

60       The broad propositions are not in doubt.  The question of difficulty in any particular case is likely to be whether the party does have the mental capacity, with the assistance of such explanation as he may be given, to understand the nature and effect of the particular transaction. In In re C [1994] 1 WLR 290, 295 Thorpe J rejected what had been described as "the minimal competence test" - the capacity to understand in broad terms the nature and effect of the proposed treatment - in favour of a more specific test.  As he put it:-

"the question to be decided is whether it has been established that C's capacity is so reduced by his chronic mental illness that he does not sufficiently understand the nature, purpose and effects of the proffered amputation."

....

62       The authorities to which I have referred provide ample support for the proposition that, at common law at least, the test of mental capacity is issue-specific: that, as Kennedy LJ has pointed out, the test has to be applied in relation to the particular transaction (its nature and complexity) in respect of which the question whether a party has capacity falls to be decided."

As Kennedy L.J. also commented (at para.29):-

"29     The conclusion that in law capacity depends on time and context means that inevitably a decision as to capacity in one context does not bind a court which has to consider the same issue in a different context.  A person may be a patient for purposes of Ord 80, r 1 or CPR r 21.1, but not for the purposes of section 94(2) [of the Mental Health Act 1983], and any medical witness asked to assist in relation to capacity therefore needs to know the area of the alleged patient's activities in relation to which his advice is sought.  The final decision as to capacity, it is agreed, rests with the court but, in almost every case, the court will need medical evidence to guide it." (Emphasis added.)

212.   In the light of those authorities we conclude that the Re Beaney test is the correct test to apply in the present case.  It follows that in applying a test based on the MCA, Dr Bruno erred in law. 

213.   Notwithstanding our conclusions on these two preliminary points, we start by addressing the Plaintiffs' preferred approach to the issue of Mr Ching's mental incapacity.  In this respect the Plaintiffs relied on two matters, namely Dr Jackson's diagnosis on 4 April 2006 and the expert opinion of Dr Bruno.  Both these matters involve an examination of Mr Ching's medical history, which was as follows. 

(i)        In May 2003 Mr Ching presented to Dr Jackson complaining of problems with procrastination, poor concentration and poor memory (forgetting a meeting in Switzerland the week before) but, as Dr Jackson recorded in his referral letter to Dr Harrison of 5 April 2006:

"It was clear that the major [precipitating] factor at that time was a legal confrontation with the [JFSC].  Over the following 6 months he improved, partly because events were going his way and partly I guess because of the [citalopram].  Memory was not mentioned again as a problem and never appeared to be one during follow-up consultations."

(ii)       An entry in Mr Ching's medical notes dated 8 April 2004 recorded that work pressure was resolving and that Mr Ching was feeling "much happier" but he was advised to continue on antidepressant medication until full resolution of his symptoms. 

(iii)      At a follow-up consultation on 21 December 2004 Mr Ching is recorded in his notes as being well, with the stress having been taken off him. 

(iv)      Some 11 months later, an entry in Mr Ching's notes dated 24 November 2005 recorded:-

"Patient's condition improved - is tailing off cipralex as per written instructions."

(v)       On 10 January 2006 Mr Ching's notes recorded him as being better, that he had virtually completed the tail off of his medication and that he felt very well. 

(vi)      On 7 March 2006 Mr Ching went to Dr Jackson again, complaining of stress which he attributed to marital difficulties.  The following day he completed a Beck Depression Inventory, which he took to Dr Jackson on 9 March.  Mr Ching's score was 21, indicating moderate depression and he was advised by Dr Jackson to reduce his alcohol intake.  At the same time Dr Jackson talked with Mr Ching about a business trip to India, which Mr Ching subsequently completed without apparent difficulty. 

(vii)     Dr Jackson's referral letter of 5 April 2006 (written following his visit to Granville on 4 April, to which we have referred in para.25 above) began as follows:-

"PROBLEM:    Stress related emotional instability in assoc chronic depression

Hx short term memory loss

Alcohol overuse - but normal lfts & MCV

Acute professional regulatory body (Financial Services commission) major stresser

REASON FOR REFERRAL:     Assessment -

a)        Memory Loss ? mood dependent or early manifestation of dementia

b)        ? Optimal management of current emotional state

c)        ? Formal statement to say currently mentally incapable of giving evidence to Financial Services Commission."

Under the heading "H.P.C." Doctor Jackson wrote as recited in subpara.(i) above and continued:-

"Despite apparently doing very well we maintained ongoing citalopram Rx until about 6 months ago when the legal proceedings were finally resolved and he weaned off without problem.

In the last 6 months I have seen him for follow up in respect of BP and cholesterol monitoring, his mood was reasonable and again there was no suggestion of memory problems, either from his complaints or his observed behaviour.  He did report problems at home in relation to his [wife's] emotional volatility; this was something he wasn't used to having married for the first time (10 yrs ago) late in life."

Dr Jackson went on to describe the events of 3 and 4 April as follows:-

"On Monday this week I received a tearful call from his wife who was with [Barry's] business partner/friend, saying that the [JFSC] had just launched (7 [days] prior) a major new investigation, with potentially [very] serious consequences.  Barry had been unable to help get matters in order because in order to counter allegations he needed to produce or do reconciliations on accounts going back 10 years, but couldn't remember enough in the absence of notes made at the time to do this.  Clearly acutely distressed he is once again weepy and exhibiting sleep disturbance, and has poor concentration and a tendency to repeat questions answered only a few minutes earlier.  Earlier in the week there had been episodes of over drinking, but on the day I saw him he had had no alcohol for 24 hrs.  After some time at interview he became much calmer and I performed a [MMSE].  He scored 28 out of 30 on this making errors in the recall and word spelling section.

I had arrived at his house wondering if this was going to be an Ernest Saunders type defence but in fact talking to his wife and business partner they both say that in fact he has had consistent memory problems which this episode has now brought into sharp focus and they regard the fact that he cannot recall facts of great importance to his own defence as a seminal indication that he has a major genuine underlying problem.  Clearly on going stress is going to be a major confounding factor.  He doesn't necessarily drink alcohol every day and has never had withdrawal problems, I've asked him not to drink at all now.  He has been started on thiamine and folic acid but I haven't started any psychotropic medication pending your evaluation.  He has a good [background] diet and has had several courses of thiamine over the past 3 years (assuming he has taken them)."

(Emphasis is as in the original.)  The score achieved by Mr Ching in his MMSE met the cut-off score of 28 for a man of his age.

(viii)    On 6 April 2006 Mr Ching visited Dr Harrison at his private consulting rooms in Little Grove.  Dr Harrison wrote to Dr Jackson on 10 April 2006, in these terms:-

"Barry stated his main concern was that his memory was a big problem.  He is devising strategies to overcome this; writing things down in lists and making associations to remember people's names.  He stated that he has noticed his memory becoming a problem over the last four years and now finds difficulty orientating himself around town, is forgetting names of long term colleagues and forgetting why he enters a room.  His wife stated that she too has been concerned about this problem for quite a while now, saying that he has become much more disorganised, spending a lot of time sifting through papers at home and in effect, just rearranging them and not dealing with any issues.  She reported that although he is going out to work each day, nothing productive is being done.  Barry himself said that he makes a few phone calls and gives a hand.  There seems to have been a significant deterioration in his work capacity

A second problem that was identified was Barry's mood.  I understand that it was felt that he was depressed three years ago and you prescribed him Citalopram which he reports being of some help, however his wife said it made no difference.  More recently, his wife reported that she had spoken to you three or four months ago concerning Barry's mood.  He admitted to getting very easily upset and tearful, indeed crying two or three time each day over this period.  This is reflected in the Beck's Inventory score of 21 that you obtained six weeks ago, scoring as moderately depressed.

The situation has deteriorated markedly in the last ten days in reaction to increased stress.  Barry and his wife reported that this has arisen as the local regulator from [JFSC] is requesting to interview him.  He reported that he was investigated by the [JFSC] for a three year period and exonerated one year ago and now perceives that similar problems have arisen.

He feels that he is unable to cope with the process again and worries that he does not have the ability to gain the information required and answer the questions that might be put to him at the interview with the [JFSC] which they say is due at the end of May.

He reported that he has been sent a list of people that he supposedly has dealt with but he cannot remember this.  He is confused about his role in the affair.  His wife reported that he has been trying to obtain this information from his papers at home but is not making any headway with this.  He reported "I can't get a grip on it".

Barry has a long term history of heavy alcohol intake.  He reported that in the seventies and eighties he used to drink a lot but did not perceive it to be a problem.  He realised that it has become more of a problem over the last four years.  He said that in response to a feeling that he [was] losing his grip and the stresses of the investigations, he began drinking more.  His wife reported regularly finding him in the early hours of the morning continuing to drink.  His daily consumption was in excess of two bottles of wine and several spirits.  He reported that he stopped drinking completely three days ago as he realised that his drinking had got out of control.  He denied suffering any withdrawal symptoms and at interview did not appear to be having withdrawal symptoms.  I also note that [liver function tests] and [mean cell volume] were normal.

He denied any previous psychiatric history other than the episode when he was treated with antidepressants three years ago.  He also reports no family history of depression.  He denied any past medical history of hypertension or strokes.  He stated he smokes about twenty cigarettes per day.

On assessment of his mental state, at the interview he appeared anxious.  His mood was very labile and he was at times tearful during the interview.  He described his mood as down and anxious.  His sleep pattern has deteriorated recently with a degree of initial insomnia; previously he used to drink to help him sleep.  His sleep is also broken and he has early morning wakening.  His appetite is poor, and states that he has lost one and a half stone in weight in the last ten days.  His concentration has deteriorated and he reports difficulties in focusing.  He is not enjoying anything in his life and his usual interests are diminished.  His self-esteem is low and he noted that his self-confidence is poor.  At the moment he has no ideas of self-harm or suicidal intent and has some hope that things will improve in the future.  His thought content however at present is very negative.  There is no evidence of any psychotic symptoms for example; delusional beliefs or hallucinatory experiences.

I note the result of the recent mini mental state at 28 out of 30 and a brief assessment of his cognitive state at interview revealed that he is fully orientated in time, person and place.  There were some deficits in attention and concentration on the Serial Sevens assessment.  He also showed a poor level of knowledge in current events.  His remote memory was reasonably intact however there were some deficits in his recent memory.  He stated that he looks at the Teletext to remind him of the date and makes a note by his bedside to tell himself where he is when he is travelling.

My initial impression is that he is exhibiting symptoms of a depression although this is complicated by his recent heavy alcohol intake.  I did think that it would be worthwhile giving him a trial of an antidepressant and suggested Fluoxetine 20mg [morning].

In addition to the depression, I do feel that there is evidence of cognitive decline and do not think that this [is] pseudo dementia.  To achieve a more formal assessment of this I will refer him for a MRI head scan and also to the Memory Clinic.  I discussed this with Barry and also the possibility of medication in the future for his memory problems.

His wife in particular was concerned about Barry's competence to manage his affairs and face the oncoming interview with the Jersey FSC.  I have indicated to her that the above assessments will give us a more strong and definite decision as regards this issue and have arranged to see them at the Little Grove Clinic in two weeks time.  I will keep you informed of his progress."

Unfortunately the referral to the Memory Clinic was not accepted due to Mr Ching's age; at the time the service accepted only patients over the age of 65.

(ix)      On 18 April 2006 Mr Ching, along with Mrs Ching, saw Dr Harrison again.  In a letter to Dr Jackson dated 20 April, Dr Harrison wrote as follows:-

"Barbara seemed very stressed by the present situation and Barry's behaviour and mental state.  She reports that he continues to spend the majority of each day sifting through papers and not making headway towards resolving his issues or the information he needs for the [JFSC].

It is clear that there has been no improvement in his cognitive state as yet and that he has impaired concentration and recent memory.  Concerns were expressed about him continuing to work and after consideration, I am recommending an application of curatorship."

(x)       Mr Ching's medical notes include two entries for 19 April 2006:-

"19/04/2006      Counselling

wife yesterday; no better if anything worse - confirms off alcohol completely - she is concerned that he may try to continue to advise clients - he does sound [very] normal on the phone - she [won't] leave him alone in the house therefore

19/04/2006       Telephone encounter

Dr Harrison - seen him last night he agrees that there are now grounds for curatorship application at least on a temporary basis both to protect [Barry] and possibly others - whilst awaiting completion of formal investigations - this shaped by the increasing impression that this is less likely to be 'functional memory loss and more likely to be a [permanent] problem' Dr H will [communicate] with [Advocate Sharpe] and send in the mental incapacity form."

(xi)      On 20 April 2006 Dr Harrison signed the Statement described in para.31 above.

(xii)     On 5 May 2006 a CT head scan of Mr Ching was performed.  The report of the scan was:-

"There is evidence of an old left deep parietal white matter lacunar infarct but no other significant abnormality to account for his increasing memory loss".

(xiii)    On 4 July 2006 a formal neuropsychometric test was carried out.  Ms Moignard, an assistant clinical psychologist, wrote to Dr Jackson a week later, as follows:-

           "Memory functioning

           A WMS - III Wechsler Memory Scale was administered and the scores overleaf show quite a wide range of recall ability.  Mr. Ching's verbal recall is extremely low both immediately after presentation and following delay.  However, visual recall is in the average range following delay suggesting that there is a significant interval in Mr. Ching's ability to process information.

His attention is not, however, an issue at this stage as working memory is in the average range.  These scores are patchy and it is surprising that he [has] been able to function as well as he has if this is a true indication of his memory capacity.  However, it must be taken into account that this may well have been affected by his current stresses and mood as well as his alcohol intake over the years, which is likely to have had a detrimental affect on his functioning."

The scores recorded were extremely low for immediate memory, borderline for general memory and average for working memory.  The letter continued:-

"Further recommendations

It is not possible to say with only one assessment what degree of his memory functioning is due to dementia, depression, alcohol or other.  If these results are in part due to alcohol and his recent abstinence we may see improvement in his next assessment, it may also be worth considering Thiamine if you felt this appropriate as it may further improve his cognition over time.  We also have a copy of his recent MRI which showed an old infarct but no other significant abnormality.

We would therefore recommend a three month repeat memory assessment to ascertain any further change in Mr. Ching's functioning and will also make the Memory Clinic aware of these scores should a decline indicate that dementia may be present."

(xiv)    Although there was no copy of any repeat assessment in the bundles before the Court, Dr Bruno confirmed that such a repeat assessment had taken place and that it showed a very mild improvement although overall the memory deficits were confirmed. 

(xv)     An entry in Mr Ching's medical notes dated 29 August 2006 read:-

"presents v well no stress off him".

(xvi)    A further entry in Mr Ching's medical notes dated 12 December 2006 read:-

"Patient's condition the same".

(xvii)   Thereafter Mr Ching underwent no medical intervention for over six years. 

214.   Taking first Dr Jackson's diagnosis, the Plaintiffs pleaded that Dr Jackson had diagnosed Mr Ching as "having a formal mental incapacity on" 4 April 2006.  This, they contended in their final written submissions, was:-

"an ample basis upon which to conclude that Mr Ching did not have capacity effectively to set up a structure under which he purportedly gave away his property 2 days later".

This assertion of a formal diagnosis was based on correspondence in January 2009 between Mr MacFirbhisigh and Dr Jackson.

215.   On 14 January 2009 Mr MacFirbhisigh wrote to Dr Jackson asking a number of questions, to which Dr Jackson responded a week later by a letter dated 21 January.  Mr MacFirbhisigh's questions were as follows:-

"1.       Could you please state the date that Mr Ching first visited you with regard to his mental capacity.

2.        Could you please confirm the date, if it differs, that you referred him (I am assuming this was you) to Dr Harrison.

3.        Were you aware, either because of conversations with Mrs Ching or any other person, of Mr Ching's deterioration prior to this date.  If so, could you please state or estimate how long prior to the first visit.

4.        Are you able to say whether or not it is likely or indeed a fact, that Mr [Ching's] condition had been deteriorating for a period of time prior to his first visit.

5.        Can you provide any other information that may be helpful in establishing ... how long Mr Ching was incapacitated prior to this visit."

Dr Jackson's answers were these:-

"1)       Barry was declared by me to have a formal mental incapacity problem on a home visit 4th April 2006 and this was later verified by Dr Dale Harrison in a clinic on the 6th April and confirmed by Psychometric testing in the Psychology Department 11th July 2006.

He had however exhibited poor concentration and variable attention span from the first point at which I met him 6/5/03 secondary in my opinion, to excess alcohol consumption and depressive illness, but without reaching the point where incapacity might be a consideration.  These aspects of his functioning varied  with stress reduction and his lifestyle, but seemed to improve with moderation of alcohol consumption and antidepressant medication up until January 2006.

2)        He was referred to Dr Harrison 5/4/06.

3)        Mrs Ching alerted me to a serious deterioration by mobile telephone on Monday 3/4/06.

4)        It is likely deterioration was taking place between his last visit to me on 9/3/06 and the assessment on 4/4/06.  On Brain MRI scanning arranged by Dr Harrison a small stroke was evident (lacunar infarct).  With his heavy smoking and high blood cholesterol (on treatment), though young he was at risk from blood vessel occlusive events ie stroke and I think the mechanism by which a slower process of declining function engendered by excess alcohol consumption working directly on the brain and mood secondarily reducing functionality (but in a manner where capacity was retained) was converted into an acute problem where capacity was lost, was through the small stroke.

5)        He did not in my opinion manifest formal signs of mental incapacity as defined above before 9/3/06.  He had however self-reported variable concentration and attention problems since 6/5/03 but falling short of formal incapacity."

216.   Notwithstanding the assertion in para.(1) of Dr Jackson's letter of 21 January 2009, we reject the Plaintiffs' contention for the simple reason that we have seen nothing to suggest that Dr Jackson (who, as Dr Bruno pointed out, is in any event a general practitioner and not a psychiatrist) ever did make any diagnosis of formal incapacity on 4 April 2006.  Dr Bruno accepted in cross-examination that Dr Jackson's referral letter of 5 April 2006 contained no such diagnosis.  Dr Jackson's letter to the JFSC later the same month (see para.25 above) likewise contained no suggestion of such a formal diagnosis.  Nor, for the sake of completeness, did Dr Harrison verify on 6 April that Mr Ching had a formal incapacity problem.  In those circumstances we are driven to conclude that Dr Jackson's memory was at fault in the first sentence of his letter of 21 January 2009. 

217.   We add that Advocate Garrood accepted during his oral opening that it would not automatically follow that just because Mr Ching was unfit to be interviewed by the JFSC in relation to the Greyfield matter (which is what Dr Jackson did say in his letter to the JFSC), he was therefore incapable of establishing the Trust.  Mr Garrood, rightly in the light of the observations of Kennedy L.J. in the Masterman case to which we have referred in para.211 above, accepted that these were separate issues. 

218.   Turning to Dr Bruno, she is a consultant psychiatrist at the Overdale hospital in Jersey.  Her conclusions as set out in her medical report of 15 April 2015 began as follows:-

"Mr Ching has a current diagnosis of Probable Alzheimer's Disease with early onset (onset before the age of 65).  The diagnosis of Probable Alzheimer's Disease was formulated in June 2013 based on his history, examination and review of the brain CT scan carried out in May 2013."

Having set out a chronology of the relevant medical history by reference to the contemporaneous documents, her report concluded:-

"OPINION

I have been asked to comment on the matter of Mr Ching's mental capacity at the material time 6th April 2006, primarily in relation to his ability to establish a Trust.

Before addressing individually the points raised in my instructions I think it is worth defining the issue of Mental Capacity, in the absence of a Jersey equivalent of the Mental Capacity Act 2005, as in my opinion I will refer to its principles, in accordance to current guidelines for medical practice in Jersey.

According to the Mental Capacity Act 2005, a person lacks capacity in relation to a matter if at the material time he is unable to make a decision for himself in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain.  It does not matter whether the impairment or disturbance is permanent or temporary.  A person is unable to make a decision for himself if he is unable

"(a)      to understand the information relevant to the decision,

(b)       to retain that information,

(c)       to use or weigh that information as part of the process of making the decision, or

(d)       to communicate his decision (whether by talking, using sign language or any other means).

a)        Was Mr Ching capable at the material time? On the balance of probabilities I feel that at the material time Mr Ching was unlikely to have the capacity to take important financial [decisions], as he had severe memory deficits and therefore would have been unable to retain information, and use it as part of the process of making the decision.

b)        If Mr Ching was incapable at the material time, the point at which he became incapable.  I do not feel I am able to give an accurate estimate of this as the cognitive decline in Alzheimer's disease is slowly progressive over years.  It is likely that Mr Ching's cognitive functions would have been significantly impaired for several months prior to his neuropsychometric assessment in July 2006, which placed him in the extremely low range for memory functions.  Therefore, it is likely that he would have been incapable of making complex financial decisions for a period at least in the order of months prior to the formal statement of incapacity.

c)        The likely cause of Mr [Ching's] incapacity.  I believe that the likely cause of Mr Ching's incapacity was Alzheimer's Disease.  The cognitive dysfunction was probably exacerbated by stress, depression and excessive alcohol intake.

....

f)         I do not feel able to comment on the positions advanced by the defendants in terms of being an accurate reflection of Mr Ching's health at the material time, or if a decline in Mr Ching's mental welfare immediately preceding the material time would have been noticeable to persons other than medical professionals, as this would have depended on the perceptiveness of others, and the extent/modality of their contact with Mr Ching.  As to the point raised by the First and Third Defendants, that Mr Ching was fully orientated in time, person and place, that would not in itself represent an indication that Mr Ching possessed legal capacity on the 4th April or on the 6th April 2006."

(Emphasis is as in the report itself).

219.   We record that before he even called Dr Bruno to the witness box Advocate Garrood applied to limit Advocate Baxter's cross-examination in the light of the fact that the Defendants had not themselves served any expert evidence.  Advocate Garrood submitted that Advocate Baxter was limited to pointing out any inconsistencies in Dr Bruno's report, or any flaws in the factual premises of her report, but that he was not entitled to challenge her conclusions other than by reference to any such inconsistencies.  This contention, to which Advocate Garrood returned on a number of occasions during Advocate Baxter's questioning, was plainly misconceived.  As Kennedy L.J. said in the Masterman case, it is for the Court to determine the issue of incapacity.  The fact that the Defendants had not themselves served medical evidence meant, as Advocate Baxter accepted, that they were not entitled to assert their own, positive expert case.  But Advocate Baxter was clearly entitled to challenge the conclusions in Dr Bruno's report by reference either to the materials upon which she had herself relied, or by reference to any other relevant materials, including Mr Ching's medical history and the contemporaneous documents. 

220.   We do not in any way doubt Dr Bruno's competence or experience in the field of cognitive disorders, especially dementia and Alzheimer's disease; nor do we doubt that she was doing her best to assist the Court.  We have no hesitation in accepting her diagnosis that Mr Ching is now in the late stages of early onset Alzheimer's disease.  But Mr Ching did not become her patient until June 2013, something over two years ago and more than seven years after the events in question.  (He ceased to be her patient in March 2015.)  Indeed Dr Bruno repeatedly confirmed that the main element in her conclusion that Mr Ching lacked capacity in April 2006 was her diagnosis of Alzheimer's disease in June 2013, based in particular on a CT head scan which had been performed on Mr Ching on 13 May 2013. 

221.   We also accept Dr Bruno's evidence that by the spring of 2006 Mr Ching may, as Dr Harrison suspected, have been showing early signs of the cognitive decline which is such a distressing feature of Alzheimer's disease.  That decline is, as medical science presently stands, progressive and irreversible.  But, as Dr Bruno was at pains to stress, the degree to which the changes in the brain which cause Alzheimer's disease manifest themselves was "very variable from individual to individual".  In those circumstances it seems to us to be of particular importance to examine Mr Ching's contemporaneous medical history to see whether, and if so to what extent, it supports her view of Mr Ching's mental incapacity in April 2006. 

222.   Dr Bruno relied in particular on two matters arising out of the history that we have just recited.  First, she referred to the third page of the MMSE which Mr Ching had completed in early April 2006.  As part of this test Mr Ching had been asked to reproduce a drawing of two pentagons; she described him as not doing well on that test.  She accepted, however, that the MMSE, although designed as a screening tool to identify individuals at risk of Alzheimer's disease, was not in itself a test for mental incapacity.  More importantly she referred to the formal neuropsychometric test of July 2006 and to Mr Ching's memory scores.  She confirmed that the statement in her report that Mr Ching had "severe" memory deficits in April 2006 was based on the July 2006 test but she accepted that there that there was no medical record in April 2006 which used the word severe.  She also said, however, that she did not personally use this kind of neuropsychometric test and that the way in which the scores worked was not her area of expertise.  We also remind ourselves that in his letter to Dr Jackson of 20 April 2006 Dr Harrison described Mr Ching's concentration and recent memory simply as "impaired".

223.   Towards the end of his cross-examination Advocate Baxter put to Dr Bruno a number of documents, as follows:

(i)        an email dated 7 March 2006 from Mr Ching to Ms Elizabeth Bennett, which read:-

"I have now had the reply from North Star.  You hold 691.747 shares in the Bond and Mortgage Fund which is priced in Danish Kroner.  The price of the fund is at present DKK 107, which gives a value of DKK 69,100 and converted to sterling at a rate of 10.85 gives a value of £6,816";

(ii)       an exchange of emails between a gentleman called Malcolm, Mr Ching and Mr Gidley, in which Malcolm emailed Mr Ching on 25 May 2006 as follows:-

"I have received no communication from you; which is regrettable and likely to make life unnecessarily difficult.

1.  Les Arbres Link Limited: In December 2005 you were instructed to realise £25K out of the holding of Digger Resources holding for the account of Les Arbres Link Limited for whom you originally purchased these shares.  You indicated at that time sales could not be made pending a [Directors'] announcement to shareholders and the Toronto Exchange.  This came in January and we discussed it when again you were instructed to act and you stated you would wish to sell into the expected rising market.  The stock traded higher but the administrators of Les Arbres Link Limited, Alex Picot and Sons in Jersey, confirmed to me in April that they have received no proceeds of sale or details of the transaction and this remains the situation.  What is the current status?

2.  Arc Capital Management Limited: If S Gidley's statement to me has any validity 'that you and/or ARC ceased to act for clients in 2003 following upon receipt of the JFSA directive' (a copy of which I have never seen).  Then please confirm to me the status of the portfolio of ARC clients transferred to 'other' brokers - was this client portfolio potential income stream sold for value?  If so for [whose] benefit?  If not why not?  When were these decisions placed before the ARC Directors and when did they reach their decisions?

3.  I await your reply to my email of the 17 May 2006",

and which Mr Ching forwarded to Mr Gidley the following day, adding:-

"Welcome back!!  I hope you had a great time in the Med.

Malcolm has been very quiet over the last two weeks.  This arrived yesterday almost as if he knew you were about to return.  His statement is not accurate all he did was ask how things were going and I said that there were a number of developments pending which will result in announcements in due course.  I have not responded to this and clearly you have much to catch up on so we can have a chat sometime next week";

(iii)      Mr Ching's two letters dated 20 September 2007 to Mr Manning (as set out in para.57 above);

and

(iv)      Mr Ching's letter dated 25 September 2007 to Mr Manning (as set out in para.58 above). 

There was no suggestion, and no evidence, that these documents were written other than by Mr Ching himself.  When Mr Baxter put it to Dr Bruno that these communications did not appear to be the product of a confused mind, she replied that it was very difficult for her retrospectively to make that judgment but added that:-

"Taking them at face value now, they appear entirely reasonable".

Finally, there was this exchange with the Court:-

"THE COMMISSIONER:  Would you regard these letters and e-mails that we have been looking at as involving important financial decisions, Dr. Bruno?

A.       Yes, well, if somebody showed me these letters and said to me, "... [I]s there any sign of mental illness through these letters", I would not be able to say there is an indication of mental illness."

Indeed Advocate Garrood in his oral opening described Mr Ching's letter of 25 September as "clearly ... cogent"; we endorse that description. 

224.   We add that in the same vein Advocate Baxter could also have put to Dr Bruno the exchange of emails between Mr Ching and a Mr Robert Sharp of Herald Trust Company Limited ("Herald") in February 2006 regarding the appointment of Herald as trustees of the Gallo settlement and the establishment of pension schemes generally in Jersey and Guernsey, his letter of 5 April 2006 to CITE (as set out in para.26 above) and his visit of the same day to London.  Advocate Baxter did put to Dr Bruno Mr Ching's successful completion of his trip to India in March 2006 but she dismissed that as irrelevant; we disagree. 

225.   In addition we bear in mind the evidence of Mr Gidley, Mr Hurley and Mr Shepheard that they observed nothing to suggest that Mr Ching's decision-making was in any way impaired in the period from late 2005 to the summer of 2006.  Although we recognise the caveat registered by Dr Bruno in this regard at para.(f) of her report, we do not consider that these personal observations can be discounted altogether.  Likewise, although Dr Jackson is not a psychiatrist, we have regard to the comment in his letter of 21 January 2009 that Mr Ching did not manifest any formal signs of mental incapacity before 9 March 2006. 

226.   With those points in mind, we return to Dr Bruno's report and to the statement at para.(a) of her opinion that Mr Ching was "unlikely to have [had] the capacity to take important financial [decisions], as he had severe memory deficits".  We note, however, that at para.(b) she used the different expression "incapable of making complex financial decisions".  Whilst we accept that establishing the Ching Trust was an important decision in principle, it did not have any financial implications for the Chings unless and until they took the further decision to transfer their assets into the Trust.  Accordingly we have difficulty with the concept that establishing the Ching Trust was in itself an important financial decision.  In addition, we do not think that the establishment of the Ching Trust, which Mr Ching himself described in his letter of 25 September 2007 as "a simple basic UK trust", can properly be described as involving a complex financial decision.  In this regard the subject matter of the JFSC investigation, which raised its head again at the end of March 2006, provides an illuminating contrast.  That investigation, which was causing Mr Ching so much concern and which was the trigger for the medical interventions in early April 2006, would no doubt have involved detailed analysis of a number of different transactions in the shares of Greyfield, and of the handling of the proceeds, all of which might well have taxed Mr Ching's memory.  But the decision whether or not to establish a trust involved no such detailed recall of past events and we have already recorded our view that the decision to establish the Ching Trust had been taken in principle by the end of 2005. 

227.   In those circumstances, whilst giving anxious consideration and due credit to the views expressed by Dr Bruno, we are not persuaded that her views are supported by the events of 2005 and 2006 or by Mr Ching's medical history during that period.  The mere fact that Mr Ching may have been demonstrating in April the early symptoms of cognitive decline, in particular an impairment of his memory, is not of itself sufficient for the purposes of the test under the MCA adopted by Dr Bruno.  The Plaintiffs have not satisfied us that, even adopting their approach to this issue, Mr Ching lacked the capacity to establish the Ching Trust in April 2006. 

228.   Thus far we have addressed Dr Bruno's report on its own terms.  But there are further difficulties with her report. 

229.   First, as Kennedy L.J. said at para.29 of the Masterman case:-

"any medical witness asked to assist in relation to capacity therefore needs to know the area of the alleged patient's activities in relation to which his advice is sought".

Dr Bruno records in her report that she was asked to comment on Mr Ching's mental capacity "primarily in relation to his ability to establish a Trust".  But it became clear in cross-examination that Dr Bruno did not understand what was involved in establishing a trust.  That is no fault of hers; it was for those instructing her to explain the essential ingredients of a trust which, on the Plaintiffs' case, Mr Ching would have needed to, but could not, understand.  In those circumstances it is perhaps not surprising that nowhere in her report did she comment on Mr Ching's ability to establish a trust.  For this additional reason we conclude that the Plaintiffs have not established the requisite mental incapacity on the part of Mr Ching even by reference to their formulation of this issue. 

230.   Second, we have already commented that Dr Bruno adopted a test of mental capacity based upon the English MCA.  But for reasons we have set out earlier in this judgment, that is not the correct test in Jersey law; the correct test is that set out in Re Beaney as approved in In re Smith.  (Again that is no criticism of Dr Bruno herself; it was for those instructing her to explain the test that she should apply.)  As Mr Nicholas Strauss Q.C., sitting as a deputy High Court judge, commented in Walker v Badmin [2014] EWHC 71 (Ch), applying the MCA test and the common law test will not necessarily produce the same result.  That said, we are satisfied that in the present case both tests would produce the same result. 

231.   Third, as Advocate Baxter pointed out during his cross-examination of Dr Bruno, she had not in her report referred to the qualification in s.3(3) of the MCA, which reads:-

"The fact that a person is able to retain the information relevant to a decision for a short period only does not prevent him from being regarded as able to make the decision."

Given her approach based on the MCA, and given her emphasis in that context on Mr Ching's memory deficits, in particular deficits in his short-term memory, it seems to us that Dr Bruno ought to have factored this qualification into her expert opinion and explained how it impacted on her views.  We therefore find it surprising that Dr Bruno's response to Mr Baxter's question was that this qualification was irrelevant to her opinion.

232.   More generally, when asked to identify in this respect what, on the Plaintiffs' case, Mr Ching needed to understand but was incapable of understanding, Mr Pallot's only response was that Mr Ching:-

"was being asked to make the single most fundamental decision of his life: he was being asked to surrender control of all of his assets to another.  This is not just some discrete gift, but the entirety of his assets, accrued over his entire working life."

We doubt that the decision to establish the Trust can properly be described in such exaggerated terms.  But, even taking Mr Pallot's response at face value in eliding the establishment of the Trust with the transfer of Mr Ching's assets into the Trust, we have no doubt that in late 2005, when it was decided in principle to establish the Trust, Mr Ching was both capable of understanding, and did in fact understand, what the establishment of the Trust involved for the reasons which we have already set out in para.151 above.  In particular, he was both capable of understanding, and did understand, that he was surrendering to CITE's control such of his assets as he transferred into the Trust.  And even allowing for some deterioration in Mr Ching's memory between late 2005 and April 2006, we conclude that Mr Ching remained capable of understanding, and continued to understand, what the establishment of the Trust involved as at 6 April 2006. 

233.   Finally, therefore, we turn to what we have already held, in agreement with Advocate Baxter, is the correct issue, namely Mr Ching's capacity to sign the transfer forms in respect of his holdings in Scorpio, Bokhara and Mitsukiku in late March or early April 2006.  For the same reasons as we have already given, we conclude that Mr Ching was capable of understanding, and did understand, the implications of his transferring these holdings into the Trust.  In particular, he was capable of understanding, and did understand, that he was thereby transferring ownership and control of these holdings to the Trust, with the result that thereafter it would be for the trustees, not for him, to decide how the holdings were to be dealt with.  That, of course, was what Mrs Ching had required of him and he had taken the conscious decision to accede to her wishes.  

234.   Accordingly we conclude that this ground for alleging that the Trust was invalid fails. 

(b) The mistakes of fact and law under which Mrs Ching was operating

235.   In their opening skeleton argument the Plaintiffs identified these mistakes in the following terms:-

"6.3.2 The relevant mistake of fact affecting the validity of the Trust was the Advice.  Mrs Ching believed, mistakenly, that she and Mr Ching were in dire financial straits, had no option but to liquidate all of their assets and then place them into a discretionary trust.  The Advice was not correct and Mrs Ching therefore, in relying on the advice had no understanding as to the true state of affairs.  Had she known that in fact she and Mr Ching were not in dire financial straits and that other options were open to her and Mr Ching she would not have settled her assets into trust;

6.3.3   The relevant mistake of law was that Mrs Ching did not understand that by settling her assets into the Trust, she would effectively be surrendering control of her assets to CITE.  Mrs Ching did not appreciate that she would no longer hold legal title to her assets, that access to her assets would be at the discretion of CITE and that one consequence of this could be that she could lose access to her assets.  Mrs Ching did not want to be subject to such a situation and had she fully (or at all) understood the real implications of settling her assets into the Trust she would not have done so."

We record that there was, rightly, no suggestion by the Plaintiffs that Mr Ching was under any mistake of fact or of law regarding the advisability of creating the Trust.

236.   All parties were agreed that the relevant legal principles were to be found in the decision of the Royal Court in In the matter of the Strathmullen Trust [2014] (1) JLR 309, and in the decision of the Supreme Court in Pitt v Holt [2013] 2 AC 108 which was to the same effect.  The headnote to the Strathmullen case reads that a trust may be set aside for mistake:-

"if (i) there were a mistake on the part of the donor or settlor (whether of  fact or law); (ii) the donor or settlor would not have entered into the transaction "but for" the mistake; and (iii) the mistake was of so serious a character as to render it unjust on the part of the donee to retain the property."

237.   We first address the mistakes of fact alleged in para.6.3.2 of the Plaintiffs' opening skeleton argument.  For the reasons we have already explained under head (1):-

(i)        Mrs Ching's belief that she and Mr Ching were in dire financial straits was not mistaken;

(ii)       in the light of Mr Ching's refusal to contemplate a sale of the Digger shares, the Chings did indeed have no option but to liquidate their remaining assets; and

(iii)      the decision to place their assets into a discretionary trust was a response to Mrs Ching's stated, and justifiable concern, that Mr Ching might resume his unsuccessful investment activities and was a decision that met with her unqualified endorsement. 

In short, Mrs Ching fully understood the true state of her and her husband's affairs and specifically approved the settlement of her, and of Mr Ching's, assets into the Trust.  Mrs Ching was not under any mistake of fact as alleged by the Plaintiffs. 

238.   As for the alleged mistake of law, we have no doubt that Mrs Ching had the implications of a trust fully explained to her, in particular by both Mr Shepheard and Mr Killmister.  We note that on 20 March 2009 Cripps Harries Hall wrote to CITE referring to the Trust deed and asking:-

"Please confirm who drafted this document, the circumstances in which it was drafted, whether its content was explained to Mr and Mrs Ching and in what circumstances."

Mr Killmister replied on 14 May 2009 as follows:-

"The document was drafted by us.  The circumstances in which it was drafted was under instruction from Barbara and Barry Ching.  Its content was explained ad nauseam to Mr & Mrs Ching."

In fact, as Mr Killmister explained in his oral evidence, the Trust deed had originally been drafted by Charles Russell for the purposes of the Investors in Canada scheme.  The reason why CITE used it for the Ching Trust was that it was a deed with which Mr Ching was familiar, having seen it and been through it with Mr Killmister in the course of their visit to Canada in November 2005.  Subject to that clarification, we accept the accuracy of Mr Killmister's reply of 14 May 2009, and in particular of the final sentence which we have quoted as confirmed by him in cross-examination. 

239.   In those circumstances we have no hesitation in concluding that, contrary to the suggestions in para.6.3.3 of the Plaintiffs' opening skeleton argument, Mrs Ching fully understood:-

(i)        that by settling her assets into the Trust she would effectively be surrendering control of her assets to CITE;

(ii)       that she would no longer hold legal title to her assets;

(iii)      that access to her assets would be at the discretion of CITE; and

(iv)      that one consequence of this state of affairs could be that she could lose access to her assets.

Far from not wanting to be subject to such a situation, Mrs Ching positively espoused the creation of the Trust in order to shield her, and her husband's, assets from any continuation of his investment activities.  She fully understood the real implications of settling her assets into the Trust and she settled them in such full understanding.  Mrs Ching was not suffering from any mistake of law.

240.   We therefore conclude that the Plaintiffs fail at hurdle (i) in the headnote to the Strathmullen case.  This makes it unnecessary for us to consider hurdles (ii) or (ii).  The Trust was not invalid by reason of any mistake of fact or law on the part of Mrs Ching. 

(c) Uncertainty arising out of the provisions of the trust Instrument

241.   The Plaintiffs' case on this point at para.6.4.1 of their opening skeleton argument was as follows:-

"It is submitted that Trust also must fail for uncertainty as the term 'Grantor', although purportedly being a defined term, is not in fact defined in the Trust Instrument.  In In the Matter of the Double Happiness Trust [2002] JLR Note 48 (9) the Royal Court ruled as follows:-

"Although the court will endeavour to uphold the validity of a trust by interpreting it, as far as possible, to give effect to the intention of the settlor, it will reluctantly be compelled to allow the trust to fail if the subject-matter, beneficial interests or beneficiaries are uncertain, or the trust deed is incoherent."

The Plaintiffs contended that this made the Trust deed "plainly incoherent and unworkable on its face", because it created uncertainty with reference, in particular, to:-

(i)        the date upon which the Trust would come to an end in accordance with clause 1(a);

(ii)       the granting of consent to distributions of income and capital under clause 4(a); and

(iii)      clause 9(b), which precludes the Grantor from being an excluded person.

242.   The Defendants, on the other hand, argued that a grantor is one who grants or has granted, more commonly described as a settlor.  The Trust deed itself recites:-

"A.      Barry Lionel Ching and Barbara Mary Marvell Ching own beneficially the property specified in the First Schedule and described therein as the initial settled property and has [sic] transferred the same to the Original Trustee with the intention of establishing the Trust."

This, said the Defendants, made clear that the word "Grantor" in the Trust deed means the Chings.  In support of this submission, the Defendants relied on the following passages from The Law of Trusts (2nd ed.) by Thomas and Hudson, which reads:-

"4.15   However, the search for 'conceptual certainty' has not generally been regarded as an abstract, philosophical exercise.  The court usually seeks to find an acceptable workable meaning or sense for a particular word or description, one based on a sufficient degree of probability as to what or whom the settlor had in mind, and bearing in mind that what is sufficient may well vary according to  the nature of the disposition, the context in which it appears, and the circumstances of the case.  Wherever possible, resolving a question of certainty will be guided by pragmatism.  As Lord Wilberforce stated in Blathwayt v. Baron Cawley [1976] A.C.397, 425 (in relation to a condition subsequent) a judge should 'judge the degree of certainty with some measure of common sense and knowledge and without excessive astuteness to discover ambiguities'.  ...  Pragmatism will generally not be sacrificed to theory....

....

4.16    The Court will generally adopt a benevolent construction of any provision, if it can, in order to save it from invalidity.  The approach outlined by Megarry J. In Re Lloyd's Trust Instruments [unreported but cited in Brown v. Gould [1972] Ch. 53, 56-57] applies to trusts and powers as much as anything else.  What is required is that some 'fair meaning' be put on the phrase used.  The difficulty must simply not be so great as to make it impossible to  give meaning to the expression."

243.   We have no hesitation in preferring the Defendants' submissions on this point.  The omission from the Trust deed of any definition of the word "Grantor" was, on any view, sloppy administration on the part of Mr Killmister when he decided to adopt the Charles Russell draft for the purposes of the Ching Trust.  But we agree that the "Grantor" is, and can only be, a reference to Mr and Mrs Ching; indeed in his final submissions Mr Pallot said in terms that:-

"what we have here in fact is that [Mr and Mrs Ching] are the settlors".

We also note that no objection to the validity of the Trust on this ground was taken by anyone at the time.  This plea of uncertainty appears to be an afterthought on the part of the Plaintiffs' legal advisers and we reject it.

(d) Failure for certainty of subject matter

244.   For this ground, which again was never raised at the time, the Plaintiffs relied on Recital A of the Trust Deed which we have already set out in para.242 above and on the First Schedule, which reads:-

"The Initial Property

£100."

As they explained in para.6.5.3 of their opening skeleton argument:-

"The essential factual issue is whether or not the 'Initial Property' of the Trust (£100) was ever actually transferred by the Plaintiffs to CITE.  It is common ground on the face of the pleadings that it was not.  The First and Third Defendants specifically aver (see paragraph 23 of their Answer) that the 'Initial Property' was "funded" by "a loan to Mr and Mrs Ching from CITE" and that they "settled the initial settled fund by acknowledging a debt due by them to CITE of £100". This is expanded somewhat in Part 3, paragraph 4.16:

"It is denied that no transfer of £100 took place between Mr and Mrs Ching and CITE.  A book entry was made recording the existence of a debt of £100 due by Mr and Mrs Ching to CITE as trustee of the Ching Trust.  Further or in the alternative in March 2006, in anticipation of the execution of the Deed, stock transfers were approved or executed by Mr and Mrs Ching in respect of Scorpio, Bokhara and Mitsukiku.  In the premises it is denied that the Ching Trust was void from its beginning for failure of certainty of subject matter.  Accordingly the initial property was settled and it is denied that the Ching Trust was void...""

In short, the Chings never did transfer £100 to CITE as asserted in Recital A.

245.   In para. 41 of his statement Mr Killmister explained the position as follows:-

"The initial settled fund was £100 funded by a loan to Mr and Mrs Ching from CITE.  They settled the initial settled fund by acknowledging a debt due by them to CITE of £100.  A book entry was made recording the existence of a debt of £100 due by Mr and Mrs Ching to CITE as trustee of the Ching Trust."

In his oral evidence Mr Killmister accepted that the £100 was "a notional figure".  As Advocate Baxter conceded in his final written submissions, and in his final address, CITE could not create a debt due from the Chings simply by generating a book entry to that effect.  In this respect too, therefore, the drafting of the Trust deed left much to be desired.

246.   Advocate Baxter rightly accepted that for a trust to be valid in English law there must be certainty of subject matter (see Knight v Knight (1840) 3 Beav. 148 and Hunter v Moss [1994] 1 WLR 452).  His primary submission was that this requirement of certainty of subject matter was satisfied by the transfer of the Chings' shares in Scorpio, Bokhara and Mitsukiku on the same day as the Trust was established.   Alternatively he submitted that the requirement of certainty was met in either of two ways, namely because the first £100 worth of shares transferred into the Trust could be treated as the £100, or simply by virtue of the First Schedule to the Trust deed itself.  We take those three submissions in reverse order. 

247.   The Plaintiffs asserted that CITE were bound by the terms of the Trust deed which it executed and that it was estopped from denying its terms (see King v King [1931] Ch. 294).  Those terms include both Recital A and the First Schedule.  It follows, it seems to us, that CITE were bound by those provisions, whether they were factually correct or not.  We have, therefore, a position in which CITE acknowledged that £100 was the property of the Trust, irrespective of whether it was entitled to claim that £100 from the Chings as a so-called debt.  As the only beneficiaries of the Trust, it was the Chings who, one way or another, were going to enjoy the benefit of that £100.  In those circumstances it seems to us that the Trust was validly created by CITE for the benefit of the Chings, as indeed CITE intended.  The result of the poor drafting of the Trust deed would simply be that CITE would be unable to recover the initial £100 from the Chings; it would not invalidate the Trust itself. 

248.   We are not persuaded by Advocate Baxter's alternative submission that the £100 specified in the First Schedule can in some way be equated with the first £100 worth of the shares transferred by the Chings on the same day.  The First Schedule refers simply to £100, not to shares with a value of £100.  This alternative submission would not, therefore, have saved the Trust. 

249.   That leaves Advocate Baxter's primary submission based upon the transfer into the Trust on 6 April 2015 of the Chings' shares in Scorpio, Bokhara and Mitsukiku.  This submission has obvious attractions, not least because it reflects the intention of all concerned at the time.  As Advocate Baxter rightly observed, when the Chings signed the transfer forms, they did so with the intention of transferring the shares in question to CITE to hold on the terms of the Trust deed, not as bare trustees, and CITE completed the transfers on the same basis.  The only problem with this submission is a purely technical one; as the Plaintiffs contended, if the Trust was not validly constituted in the first place, the power to accept further assets never came into existence and there was no Trust into which the shares could be transferred, even the same day.  We see the force of this argument.  In the light of our conclusion in para.247 above, we do not need to address it.  If, however, the validity of the trust had turned on this primary submission, we would not have allowed that technical difficulty to stand in the way of our upholding the validity of the Trust which, we repeat, all concerned at the time intended to establish.  

250.   It follows that we reject all four grounds on which the Plaintiffs challenged the validity of the Trust. 

The consequences of the Trust being valid

251.   Advocate Baxter accepted that CITE was subject to the duty of care summarised in s.1 of the Trustee Act 2000 ("the 2000 Act"), which provides that a trustee:-

"must exercise such care and skill as is reasonable in the circumstances, having regard in particular -

(a)       to any special knowledge or experience that he has or holds himself out as having,

and

(b)       if he acts as trustee in the course of a business or profession, to any special knowledge or experience that it is reasonable to expect of a person acting in the course of that kind of business or profession."

The Plaintiffs did not suggest that CITE had, or held itself out as having, or was to be expected to have, any special knowledge or experience within the meaning of either of those subsections.

252.   More importantly, the Plaintiffs accepted that if the Ching Trust was valid, CITE and Mr Killmister would be entitled to rely on the provisions of the Trust Deed, in particular the following provisions:-

(i)        clause 14, which sets out CITE's general powers of investment;

(ii)       clause 15, which is entitled "Additional Powers of Investment" and which provides:-

"Without hereby limiting the power contained in the previous clause or any general power herein contained the Trustees shall have power to invest or lay out moneys comprised in the Trust Fund in the purchase of ... stocks funds shares securities or other investments or property of whatever nature and wheresoever situate ... as the Trustees shall in their absolute discretion think fit  ... to the extent that the Trustees shall have the same full and unrestricted powers of investing and transposing investments and laying out moneys in all respects as if they were absolutely entitled thereto beneficially and without regard to the requirements of the Proper Law (save to the extent that these are obligatory) and in the professed exercise of this power the Trustees shall not be liable for any loss to the Trust Fund arising from any investment or purchase made in good faith ...";

(iii)      the following specific additional powers in clause 15:-

"(a)      To leave any assets subject to any of the trusts of this Trust in the state of investment in which they may be from time to time.

(b)       At any time or times to sell or call in any investment or property for the time being comprised in the Trust Fund or transpose or convert the same into any other investments or property the acquisition of which is hereby authorised";

(iv)      clause 29, which is entitled "Trustees' Indemnity" and which reads:-

"In the professed execution of the trusts and powers hereof no Trustee shall be liable for any loss to the Trust Fund arising in consequence of the failure depreciation or loss of any investments made in good faith or by reason of any mistake or omission made in good faith or of any other matter or thing except wilful and individual fraud and wrongdoing on the part of the Trustee who is sought to be made liable";

and

(v)       clause 30, which is entitled "Power of Trustees to Charge" and which reads:-

"(b)      Any Trustee hereof which is a company shall be entitled in addition to reimbursement of its proper expenses to remuneration for acting as a Trustee hereof in accordance with its scale of charges as published from time to time if any or in the absence of such published scale as aforesaid shall be entitled to reasonable remuneration for so acting and such remuneration may be payable to the corporate Trustee or to any individual or individuals associated or beneficially interested in or in any way connected with such Trustee ...

(c)       No Trustee hereof or a director or other officer of any company which is a Trustee hereof shall be liable to account for any remuneration or other profit received by him in consequence of his acting as or being appointed to be a director or other officer or servant of any company ..."

The Plaintiffs did not allege that CITE had been guilty of a want of good faith for the purposes of clause 15, or of fraud or wrongdoing within the meaning of clause 29.

The consequences of the Trust being invalid

253.   In the light of our conclusions thus far, this point does not arise.  But since it was argued before us, we think it right to express our views on it, albeit more shortly than if the point had been live. 

254.   The Defendants conceded that if the Trust had been invalid on ground (c) (the Grantor point) or ground (d) (the £100 point), the consequence would have been that the Trust was void ab initio.  Conversely the Plaintiffs accepted that if the Trust had been invalid on ground (b) (mistake), the Trust would have been only voidable, not void.  The parties were not agreed, however, as to the consequences of Mr Ching's mental incapacity (ground (a)). 

255.   It was the Plaintiffs' submission that the consequence of the Trust being invalid on ground (a) was, again, that the Trust would be void.  They relied for this proposition on the four English cases of Re Beaney [1978] 1 W.L.R. 770, Re Morris [2001] WTLR 1137, Williams v Williams [2003] WTLR 1371 and Quth v Hussain [2005] EWHC 157 (Ch).  The Plaintiffs contended that the decision of the Royal Court in Deacon v Bower [1978] J.J. 39 showed that the law of Jersey was the same in this regard. 

256.   The Defendants contended, mainly in reliance on what they described as "the discussion" in the English case of Sutton v Sutton [2010] WTLR 115, that mental incapacity only rendered the relevant transaction voidable.  In that case both parties sought a declaration that the challenged transfer (which they conditionally agreed should be set aside) was void ab initio.  As the headnote records:-

"6.      There were four English decisions which proceeded on the basis that lack of capacity makes a gift void rather than voidable, but in none of those decisions was the point fully argued, nor would it have made a material difference to the result.  These cases were Re Beaney, Re Morris ..., Williams v Williams ... and Quth v Hussain ....  There were, however, two Australian decisions, in which the point was considered in more detail and which suggested that the correct answer was that the transaction would be voidable: Gibbons v Wright (1954) 91 CLR 423 and Craig v McIntyre (1976) 1 NSWLR 729.

7.        The debate in this area was somewhat reminiscent of the debate about whether a decision of trustees impugned by the principle in Re Hastings-Bass [1975] Ch 25 was to be regarded as void or merely voidable.  No conclusion was reached on this question in the leading authority of Sieff & ors v Fox & ors [2005] WTLR 891 as it made no difference but that was not the case in Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409.  There Lightman J preferred the view that the decision would be voidable, as this would enable equitable defences such as delay and acquiescence to be taken into account.  It had been suggested that such defences would be available in any event if the transaction was void, as the granting of a declaration was discretionary, but this was doubtful: Sieff & ors v Fox & ors and Fisher v Brooker [2009] 1 WLR 1764 were considered."

The judge, Mr Christopher Nugee Q.C., then continued:-

"[46] Where does this survey of the cases leave the position?  In my judgment, despite the recent English cases, there is real doubt whether as a matter of law incapacity makes a voluntary transaction such as a gift void rather than voidable....

[47] If it were necessary to resolve the rights of the parties before me, I would of course have to form a view one way or the other.  But I have already said that it does not seem to me to make any difference to the position of the parties as between themselves.  The only suggested consequence is that it might make a difference for tax purposes....

...

[49] In the present case I do not think that justice to the claimant or the defendants requires me to do more than resolve the position between them, which is adequately done by declaring that the 1997 transfer is invalid for lack of capacity and should be set aside....

[50] But the overriding consideration in my judgment is that the true position in law is quite obscure, and one on which I have not heard true adversarial argument....  If I had reached a clear view of the law, I would have said so and then made a declaration accordingly, but in circumstances where I am left in real doubt as to what the law is or ought to be, I do not think it either necessary or appropriate to resolve those doubts and make a declaration for the purpose of strengthening the arguments of the parties against HMRC."

257.   Given that we do not need to decide this point, we do not think that it would be right for this Court to determine on the basis of the discussion in Sutton v Sutton that the four cases upon which the Plaintiffs relied no longer represent English law, especially where the true position is, as Mr Nugee acknowledged, quite obscure.  Accordingly we proceed on the basis that the position in English law remains that mental incapacity renders the relevant transaction void, not voidable.  But on the basis of our analysis of the true issue in relation to ground (a), had Mr Ching been mentally incapable on 6 April 2005, the only result would have been that his transfer (via Scorpio, Bokhara and Mitsukiku) of his Digger shares to the Trust would have been void.  The validity of the Trust itself would not have been affected. 

258.   Finally, therefore, we turn to the legal implications of the Trust being voidable or void.  The parties were agreed that whether this issue was to be determined by English or by Jersey law did not matter because the relevant principles were the same. 

The Trust being voidable

259.   This applies only to ground (b).  Advocate Garrood effectively accepted that if the Trust was only voidable, the Chings and Mr Manning had taken no steps to avoid the Trust until late 2009.  Indeed it is clear to us that, far from seeking to avoid the Trust, the Chings and Mr Manning did not just acquiesce in the continuation of the Trust but positively affirmed its existence in the form of the transfer by the Chings of £1,519 into the Trust in June 2007. 

260.   Advocate Baxter submitted that in those circumstances the administration of the Trust by CITE continued to be subject to the terms of the Trust Deed, including in particular the clauses set out in para.252 above.  The Plaintiffs, rightly in our view, did not contend to the contrary.  It follows that even if Mrs Ching had been under a mistake of fact or of law as alleged by the Plaintiffs, the Trust would have remained valid and the Defendants would have been entitled to the protection afforded by the express terms of the Trust deed. 

261.   Accordingly when hereafter in this judgment we refer to the Trust being valid, we include in that description the situation in which the Trust was voidable. 

The Trust being void

262.   It was the Plaintiffs' case that if the Trust was void ab initio (as would have been the case on grounds (a), (c) or (d)), all the assets of the Trust were held by CITE on a resulting trust in favour of the Chings.  More particularly the Plaintiffs contended that in those circumstances CITE was under an overriding duty to return the assets of the Trust to the Chings as soon as practicable and in the meanwhile was under duties (a) to follow the wishes of the Chings in relation to the assets of the Trust; and (b) to take care that the assets of the Trust were not devalued by any act or omission. 

263.   Advocate Baxter accepted that if the Trust was void, CITE could not rely on the protective provisions of the Trust deed.  He also accepted that where a resulting trust arises, the trustee holds the property on bare or simple trusts for the donor, so that the donor has an absolute right to call for the property and, when he does so, the trustee has a duty to return it.  He further contended, however, as follows:-

(a)       that any resulting trust could not arise until such time as CITE was informed that the Trust was void and the Chings (and/or Mr Manning) required CITE to return the Trust assets to them;

(b)       that in the meanwhile CITE, with the acquiescence of the Chings and Mr Manning, continued to hold the Trust property on the terms of the Trust; and

(c)       that in the meanwhile CITE remained entitled to its remuneration and to be indemnified for expenses properly incurred in the administration of the Trust.

Unfortunately the Court did not have the benefit of any detailed submissions to the contrary from the Plaintiffs. 

264.   As to (a), we accept the basic proposition that CITE could not become liable as a resulting trustee unless and until it was aware that it had become a resulting trustee.  As Lord Browne-Wilkinson said in Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 (at p.705D):-

"Since the equitable jurisdiction to enforce trusts depends upon the conscience of the holder of the legal interest being affected, he cannot be a trustee of the property if and so long as he is ignorant of the facts alleged to affect his conscience, i.e. until he is aware that he is intended to hold the property for the benefit of others in the case of an express or implied trust, or, in the case of a constructive trust, of the factors which are alleged to affect his conscience."

It is clear from the summary in paras.60 and following above that CITE repeatedly indicated a willingness to return the assets of the Trust to Mr Manning and Mrs Ching from at least May 2008 onwards, but it was not until 17 September 2009 that Sinels wrote to CITE that it held the Trust property on a bare trust for the Chings, and requesting CITE to return the Trust property.  It follows, in our view, that no resulting trust could have come into effect until CITE received that letter.

265.   Turning to Advocate Baxter's points (b) and (c), he referred us to the interesting discussion in Lewin on Trusts (at para.1-040), where it is suggested that a trustee holding property for a beneficiary absolutely (such as a resulting trustee) has, in effect, some at least of the powers and duties conferred by the 2000 Act.  Again, without reaching a definitive conclusion on this point, we would be minded to accede to Advocate Baxter's submission that CITE could rely upon ss.3(1), 28 and 32 of that Act (or equivalent powers as a matter of Jersey law).  We also accept that in principle CITE could rely on the defence of acquiescence on the part of the Chings and Mr Manning; we leave until later in this judgment the application of acquiescence to the Plaintiffs' individual claims.  Finally, we accept that CITE remained entitled to its remuneration and to be indemnified for expenses properly incurred in the administration of the Trust until such time as the resulting trust came into existence. 

266.   In relation to ground (a), the only consequence of Mr Ching's mental incapacity (if he had been mentally incapable) would, for the reasons we have already explained, have been that the transfer of Mr Ching's Digger shares into the Trust was void.  Any resulting trust would, therefore, have applied only to those shares (or more accurately to the transfers of his shareholdings in Scorpio, Bokhara and Mitsukiku).  The transfer into the Trust of the proceeds of the sale of Granville, which in turn funded the purchase of the AIG bond, would have been unaffected. 

Conclusion on issue (3)

267.   For the reasons we have already given, we dismiss the Plaintiffs' contention that the Trust was invalid on any of the grounds which they suggested. 

(4) The Digger shares

268.   We approach this issue on the alternative bases:-

(a)       that, as we have decided, the Trust was valid; and

(b)       that, as the Plaintiffs contended, the Trust was invalid.

(a) The Trust was valid

269.   The Plaintiffs' case based upon this hypothesis was pleaded as follows at para.8 of the Order of Justice:-

"Alternatively, if, which is denied, the Ching Trust was not void CITE remains liable to the Plaintiffs for losses incurred by reason of its breach [of] duties as trustee to preserve and enhance the value of the fund by reason of the losses caused by its failure to deal [with] the Digger shares properly.  The particulars of breach include:

i.         failure to deal with the claims relating to nominee holdings expeditiously,  efficiently and professionally thereby contributing to the losses.  CITE failed to act expeditiously in resolving the claims.  This contributed irretrievably to the loss in share value as it served to discourage investors from purchasing the shares thereby exacerbating any loss in share value in a small alternative investment opportunity; and

ii.        failure to sell some or all of the shareholding to diversify the investments of the fund in order to preserve income and capital for the beneficiaries.  Failing to sell a proportion of the Digger shares to realise profits, moderate and diversify the risk profile of the investments held by the fund for the benefit of the Plaintiff beneficiaries."

270.   In the course of his opening address Advocate Garrood conceded, rightly in our view, that there was no evidence to support the plea in the third sentence of para.8(i) and that we could treat that allegation as abandoned.  In addition we conclude that the allegations in the first two sentences of para.8(i) are factually misconceived.  Accordingly we reject the claim formulated in para.8(i) in its entirety. 

271.   As to para.8(ii), the Plaintiffs have not, in our view, established that there was any failure by CITE to exercise reasonable skill and care as required by the 2000 Act in failing to sell any of the Digger shares.  The Plaintiffs called no expert evidence to that effect.  Mr Killmister's witness statement contained the following passages:-

"67.     ...  No attempt was made by the trustee to sell the Digger shares.  I believe that this was reasonable in all the circumstances ... and in accordance with the instructions of Mr and Mrs Ching.

68.      Pursuant to the terms of the trust deed, CITE was entitled to hold rather than sell some or all of the Digger [shares], even once ownership was resolved.  It was also entitled to take account of Mr Ching's wishes not under any circumstances to sell the Digger [shares]."

Advocate Garrood did not challenge that evidence in his cross-examination of Mr Killmister.  We have already referred to the problems faced by CITE in the months, if not years, following the establishment of the Trust caused by claims by third parties to Digger shares held by Mitsukiku and Scorpio.  The claim formulated in para.8(ii) is likewise misconceived. 

272.   Last but not least, CITE contended that it was in any event entitled to rely on the protection afforded by clauses 15(a) and 29 of the Trust deed.  Mr Pallot frankly conceded that these clauses presented the Plaintiffs with a difficulty.  That difficulty is, in our view, clearly insuperable.  Accordingly if, as we have found, the Trust was valid, the Plaintiffs can have no claim in respect of the Digger shares.   

(b) The Trust was invalid

273.   On this basis, the Plaintiffs alleged at para.7.2 of the Order of Justice that CITE was in breach of its duty as a resulting trustee in failing to return the Digger shares to the Chings, in failing to take reasonable care to ensure that the shares were not devalued and in failing to follow the wishes of Mr and Mrs Ching.  In reality, as Advocate Garrood confirmed during his opening, the thrust of the Plaintiffs' case was that by failing to return the Digger shares CITE deprived the Chings of the sums which they would have made on sales of such shares.  At para.7.5 of the Order of Justice the Plaintiffs quantified their loss as £1,233,000, on the basis that the Chings would have sold their entire shareholding between April and June 2006 at an average price of C$2.80 per share.  In their opening skeleton argument the Plaintiffs reduced their claim to £411,898, that being the figure in Dr Fitzgerald's report.  The arithmetic of this revised claim is that £411,898 is the sterling equivalent of C$824,249 and that C$824,249 would be the proceeds of selling 460,945 Digger shares in the years 2005 to 2008 at an average price of C$1.78 a share.  Accordingly, as Advocate Garrood accepted in his opening, the Plaintiffs' case as now formulated involves their establishing two propositions, namely:-

(i)        that if CITE had returned the Digger shares, 460,945 of those shares could and would in fact have been sold; and

(ii)       that those 460,945 shares would in fact have been sold at an average price of C$1.78 per share. 

274.   There are, in our view, two immediate problems faced by the Plaintiffs in this recalculation of their claim. 

275.   First, the Trust was not established until 6 April 2006, so we fail to see how potential sales of Digger shares during 2005 and the first three months of 2006 (a period during which Mr Ching could have sold his Digger shares anyway if he had chosen to do so) can be of any relevance.  Furthermore any resulting trust did not, as we have found in para.264 above, come into being until September 2009.  Accordingly potential sales of Digger shares prior to that date are likewise irrelevant.  In short, during the period when the 460,945 shares in Digger could have been sold, either the Trust had not come into existence, or the resulting trust had not come into existence, so the Plaintiffs' claim under this head must fail in limine.  Second, in the light of our conclusions in paras.169 and 170 above, neither Mr Ching nor Mr Manning would, we find, have sold any Digger shares even if they had been returned to them by CITE; for this reason too, the Plaintiffs' claim under this head must fail. 

276.   That renders academic the evidence of the experts as to what sales could have been achieved but we nevertheless proceed to examine that issue. 

277.   The joint Memorandum of Dr Fitzgerald and Mr Torchio dated 28 April 2015 listed the following areas of agreement between the experts:-

"1.1     The experts agreed that it was not possible to determine, with a reasonable degree of certainty, the price the [Plaintiffs] could have obtained from a sale of approximately 900,000 shares of Digger from the Trust in June 2006.

1.2      The experts agreed that the market for Digger shares was very illiquid, and observed that the total traded volume in June 2006 was only 27,330 shares.  Hence the experts agreed that it would be impossible for the market to have absorbed a sale of 900,000 shares without a major reduction from the average prices traded in June 2006.

1.3      The experts agreed that there was no reasonable basis for assessing what the price impact of attempting to sell 900,000 shares in June 2006 would have been, save that it would have been very substantial.

1.4      The experts agreed that it was not reasonable for the [Plaintiffs] to estimate purported losses of £1,333,334, as stated in the Order of Justice, being the difference between the value of 900,000 plus shares at a price of C$2.80 and a final price of only C$0.25 in 2010/2011.  The experts agreed that this calculation would substantially overestimate the true potential loss.

1.5      The experts agreed that the best, and only, consistent approach to liquidating a holding of up to 900,000 shares of Digger from April 2006 onwards was what has been termed by Mr Torchio "patient trading", namely the selling of relatively small amounts of stock over time to reduce the price impact of high levels of sales.  The experts agreed that the potential risk from subsequent price movements would be less than the price impact of attempting to sell 900,000 shares over a short period of time.

1.6      The experts noted that Dr Fitzgerald had been asked in his Expert Report to consider how many shares of Digger could reasonably have been sold in the period April 2006 to September 2006, and over the period April 2006 to mid-2010.  As a reference, the experts agreed that a total volume of 547,987 shares of Digger were traded between April and September 2006, and that a total volume of approximately 3.16 million [Digger] shares had traded between April 2006 to June 2010.

1.7      The experts agreed that establishing a "fundamental" value for the Digger shares during the relevant period of April 2006 to April 2011 would be very difficult given the financial performance of the company, and the auditors' warnings about Digger as a "going concern".  The experts agreed it was not possible to analyse the relationship between the observed trading prices for Digger shares and the "fundamental" value of the company, on the information available."

278.   The joint Memorandum then listed the areas of disagreement, as follows:-

"2.1     The experts disagreed about the number of Digger shares that could reasonably have been sold on the basis of "patient trading".  Dr Fitzgerald took the view that it is reasonable, even in an illiquid market such as Digger, to assume that the equivalent of 10-15% of the actual shares traded could have been sold on behalf of the [Plaintiffs].  It was on that basis that Dr Fitzgerald concluded that £62,750 to £75,000 of Digger shares could have been sold in the April 2006 to September 2006 period (paragraph 2.12 of Fitzgerald), and around £411,898 of Digger shares in the April 2006 to June 2010 period (paragraph 2.14 of Fitzgerald).  Mr Torchio took the view that there is no empirical basis or authoritative citation to support an assumption that 10% to 15% of actual volume could have been sold in the April 2006 to June 2006 period.  Mr Torchio's view is that even if 10%-15% is a rule of thumb assumption used by some practitioners, it is likely to be an overestimate for Digger because of the significant illiquid market in Digger Shares.  It is also Mr Torchio's view that a hypothetical analysis of patient trading should be based on each day's bid price and not the closing transaction price because it is more likely that Digger's illiquid market would result in some market impact and thus using the generally lower bid prices is more appropriate.

2.2      The experts did agree that any estimate made as a percentage of total market trading volume would need to assume that all the recorded trades in Digger were legitimate and authentic trades made between actual market counterparties.

2.3      The experts disagreed as to whether it was likely to be the case that the market in Digger shares was susceptible to market manipulation.  Mr Torchio took the view that the relative illiquidity of Digger common stock combined with its relatively small capitalisation was consistent with a security that could have been manipulated.  Dr Fitzgerald took the view that any evidence of market manipulation would require identification of the individuals who were trading the Digger shares, and no information was available on this.  Mr Torchio agrees that there is no evidence of market manipulation, but that the characteristics of Digger allow it to be susceptible to market manipulation."

Dr Fitzgerald clarified in his oral evidence that his conclusion recorded in the third sentence of para.2.1 was based on a figure of 12.5%. 

279.   We found both Dr Fitzgerald and Mr Torchio to be impressive witnesses, doing their best to assist the Court.  Accordingly we choose between them simply by reference to what we perceive to be the relative strengths of their views, point by point. 

280.   At para.2.1 of his report, Dr Fitzgerald stated as follows:-

"In my view, it is clear that from 2005 onwards, it was not possible to carry out a conventional valuation process for Digger Resources.  By the year ending January 31, 2007 the company had lost -C$303,802, following a modest profit of C$26,934 in the previous year.  During the same year the deficit on shareholder equity had increased from -C$4,429,548 to -C$5,895,861.  The revenue in that year was only C$31,800 whereas expenses amounted to C$334,602.  By July 2010 the deficit on the shareholders equity has increased further to -C$6,598,612."

Para.24 of Mr Torchio's report was to the same effect:-

"During fiscal year ending July 31, 2006, Digger reported a net loss of C$1.14 million, on sales of C$78,400.  Digger continued to report net losses for each of the next four years until 2011, when it reported net income of C$34,174 on revenues of C$124,800."

In addition, for each of the years from 2002 onwards, Digger included a going concern qualification in its financial statements.  In its 2006 accounts the qualification was in the following terms:-

"These financial statements have been prepared using generally accepted accounting principles that are applicable to a going concern.  However, the use of such principles may not be appropriate because there is doubt surrounding the ability of Digger ... to continue as a going concern as the company has a working capital deficiency, a loss from operations, deficit and negative cash flow from operations at July  31, 2006."

In short, what Mr Ching had in October 2005 described as Digger's "cutting edge oil discovery technology" (which by then was already ten years old) had plainly left the oil industry unimpressed.  Finally, when asked by the Court whether Digger was of any value at all, Dr Fitzgerald responded:-

"I would have said from a pure economic and accounting point of view, no."

That is the premise from which we start.

281.   On the assumption set out in para.2.2 of the joint Memorandum (to which we return below), the principal difference between the experts was that recorded in para.2.1 of the Joint Memorandum.  Dr Fitzgerald accepted that the illiquidity of Digger shares was "at the extreme end".  He also accepted that there was no empirical evidence or authority to support his 10% to 15% estimate.  Mr Torchio's rival figure was 5%.  Mr Torchio explained in examination-in-chief how he had reached that figure, as follows:-

"A.      ...  I testified in probably three court cases here in the United States on trusts where one of the issues in those cases had to do with the orderly liquidation, the hypothetical orderly liquidation of stock in all three of these cases.  I did not have any empirical evidence either.

My kind of rule of thumb was 5% but again there is no real basis for that other than that I was on the plaintiff side of those matters and I wanted to add an opinion that would survive cross-examination.  I felt that 5% was a very reasonable amount of shares to assume to be traded on a given trade date.

Q.       Would that be in an illiquid market or a liquid market?

A.       Yes.  All three cases that I testified in were cases involving a Kodak stock where the hypothetical liquidation would have taken place some time during the 1970s, at which time Kodak was a highly liquid market, one to two million shares traded a day."

282.   Having listened with care to the testimony of both experts, we conclude that in such an illiquid market as that for Digger, Dr Fitzgerald's figures of 10% to 15% (or 12.5 %) were unrealistically optimistic.  We accept that Mr Torchio's 5% may be on the low side but we decline to try to reach our own happy medium.  Faced with a choice between the rival figures, therefore, we accept Mr Torchio's 5%.  That conclusion alone would reduce the Plaintiffs' claim from £411,898 to £164,759.   

283.   Turning to the question of price, Dr Fitzgerald's approach was to assume that the additional 12.5% of shares could be sold for the same as the market price.  Two points arise in this regard.  First, until July 2006 Mr Ching was a director of Digger.  Dr Fitzgerald assumed that that directorship was something that would that have had to have been disclosed in any Digger trades; he also accepted in cross-examination that the impact on the price of sales by a director who held 10% of the stock would be substantial.  Later he added:-

"I am sure that if a connected party was seen to be selling a very large number of shares this would clearly have an impact on people's willingness to take delivery of them."

More particularly, he accepted that if Mitsukiku, which held approximately one third of the entire issued share capital of Digger, was seen to be continuously offloading its holdings, that might have had a significant effect on the price.  We appreciate that the hypothetical sales relied on by the Plaintiffs would, at any rate after 9 June 2006, have been ordered by Mr Manning rather than by Mr Ching.  In our view, however, that is a distinction without a difference.  Potential buyers would not, in our view, have adopted a different approach to the price that they were prepared to pay because the sales were being ordered by a curator.  Second, Dr Fitzgerald conceded that it would be:-

"perfectly fair if somebody said, "No, the extra 10% in and of itself as an extra sell will force the price down"."

For these reasons we are unable to accept Dr Fitzgerald's assumption that the 12.5% of Digger shares could have been sold for the same as the market price; in our view the price would have been depressed.  On this ground too, the Plaintiffs' claim would be reduced. 

284.   In our view, however, there is a more fundamental problem with the Plaintiffs' claim, which arises out of para.2.2 of the joint Memorandum.  As both the experts accepted, there is no evidence either way that "all of the recorded trades in Digger were legitimate and authentic trades made between actual market counterparties".  As summarised in para.2.3 of the joint Memorandum, Mr Torchio, while agreeing that there was no evidence of market manipulation, took the view that the relative illiquidity of the Digger shares combined with its relatively small capitalisation meant that it was susceptible to market manipulation.  Dr Fitzgerald's response in cross-examination to this point was:-

"Q.      Mr. Torchio opines that Digger was susceptible to manipulation  but you do not agree, do you?

A.       Well, I do not disagree.  I think, you know, obviously you could argue, if you are going manipulate a market it is good to choose a stock that is illiquid, does not trade much because it is a lot easier to manipulate that kind of market.  All I was saying in the joint statement was that I had seen no evidence that that was happening."

There was also the following exchange between Dr Fitzgerald and the Court:-

"Q.      Let us assume, for the [sake] of argument, that not all of the recorded trades in Digger were legitimate and authentic trades made between actual market counterparties, would that mean that the entirety of the views which you have expressed would fall or what would the consequence be?

A.       No, I think, well the volumes which I have seen would suggest  that there are, you know, simple legitimate trading going on, even if 50% of it was not, because the volumes were quite large, in certain cases well over 100,000 but I would not like to say, you know, whether ... Was there a degree of manipulation of non-legitimate trades which made all the trading information useless to analyse?  I have no idea."

Last but not least, we return to the premise set out in para.280 above that Digger as a company had no value.  

285.   The burden of establishing that there was a genuine market in Digger shares such as to provide the foundation for the view expressed by Dr Fitzgerald lies on the Plaintiffs.  In the light of all the evidence that we have read and heard, we are not persuaded that the Plaintiffs have discharged that burden.  For this additional reason their claim under this head fails. 

286.   Finally, on any view the Plaintiffs would have to give credit for the value of the unsold Digger shares, as Advocate Baxter pointed out in his opening.  The Plaintiffs called no evidence to address this issue, Mr Pallot's explanation being that he had been proceeding on the assumption that it was agreed that the Digger shares were now worthless.  There was, however, no formal admission to that effect.  Accordingly Mr Pallot was forced to rely in his final oral address on a screen print-out of Bloomberg giving a value of ten Canadian cents (or five pence) per Digger share.  Whilst this was plainly an unsatisfactory approach, in the particular circumstances of the present case we would have been prepared to accede to it.  On this basis £23,047.25 would fall to be deducted from the Plaintiffs' claim. 

287.   As it is, the Plaintiffs' claim in respect of the Digger shares based upon the Trust being invalid fails in its entirety in any event. 

(5) The AIG bond

288.   The Plaintiffs' claim under this head as pleaded had two limbs, namely:-

(a)       a claim against CITE for breach of trust in purchasing the bond; and

(b)       a claim against Mr Killmister personally for dishonestly assisting that breach of trust by CITE. 

We take each limb in turn.

(a) Claim against CITE for breach of trust in purchasing the bond

289.   As with the Digger shares, we consider this claim on the alternative bases:-

(i)        that the Trust was valid; and

(ii)       that the Trust was invalid. 

We then address separately the issue of damages. 

(i) The Trust was valid

290.   The Plaintiffs' case was, as they asserted at para.177 of their final written submissions, that the AIG bond was "a wholly unsuitable investment product".  But although they complained (unjustifiably, as we find below) about the information that, on their version of events, Mr Killmister gave to Ms Alexandra, they called no evidence, in particular no expert evidence, to support their fundamental proposition that the AIG bond was in fact  wholly unsuitable for the Chings.  Nor, looking at Ms Alexandra's summary of the objectives of the investment as set out in her letter of 22 February 2007 (see para.53 above), can we see anything to suggest that the AIG bond as recommended by her to Mr Killmister was in fact unsuitable in early 2007.  Indeed in her witness statement Ms Alexandra asserted that based on the information provided to her by Mr Killmister, the AIG bond would have been "an entirely suitable policy" for the Chings to have invested in.  The only specific alternative to the bond suggested by anyone was Ms Alexandra's comment in cross-examination that had the Chings been less wealthy than she had been led to believe she would have advised them to keep their money in cash.  We are not at first blush attracted by that suggestion; it seems to us that an investment portfolio which consisted only of the Digger shares and cash would not achieve the objective of providing the Chings with a secure future in retirement.  In those circumstances we see no basis upon which it can be said that CITE, having taken and acted on the advice of AYP in the purchase of the AIG bond, was in breach of its duties under s.1 of the 2000 Act. 

291.   In addition, CITE again contended that it was in any event entitled to rely on the protection afforded by clauses 15(b) and 29 of the Trust deed.  In this regard we repeat our comments in para.272 above.  Accordingly if, as we have found, the Trust was valid, the Plaintiffs can have no claim in respect of the AIG bond. 

(ii) The Trust was invalid

292.   At the time when CITE invested in the AIG bond, no resulting trust had, we repeat, yet arisen; on the contrary, all parties were acting on the basis that the Trust was valid.  In those circumstances, although CITE would not be entitled to the protection of clauses 15(b) and 29 of the Trust deed, the position would remain that CITE were not in breach of their duties as trustee under s.1 of the 2000 Act.  Furthermore, in his letters of 20 February 2007 to Mr Manning and the Chings as set out in para.52 above, Mr Killmister had informed them of the proposed investment in the AIG bond, and although in their letter of 26 February 2007 (see para.54 above) the Chings complained about certain aspects of the AIG bond, at no time did they, or Mr Manning, object in principle to CITE investing part of the Trust's monies in such a product.  In those circumstances it seems to us that the Chings and Mr Manning in any event acquiesced in the investment in the AIG bond.  

293.   It follows that even if the Trust had been invalid, the Plaintiffs' claim against CITE for purchasing the AIG bond would still have failed. 

Damages

294.   The calculation of the Plaintiffs' loss under this head was agreed, as follows:-

Amount invested	£400,000
Less proceeds of sales
9 September 2010	£84,192.74
2 November 2010	£100,214.25
19 February 2015	£53,092.70
	£162,500.31

295.   In his opening skeleton argument, Advocate Baxter made two submissions with regard to this aspect of the Plaintiffs' claim, namely:-

(i)        that they were the authors of their own misfortune in choosing to surrender the bond when they did; and

(ii)       that the proper measure of their loss would be the difference between what was realised from the AIG bond and what would have been realised had the monies been otherwise invested, which the Plaintiffs had not sought to quantify. 

We take each submission in turn

(i) The Plaintiffs were the authors of their own misfortune

296.   On 13 August 2010 Mr MacFirbhisigh sought authorisation from the Court to liquidate the AIG bond; the Court acceded to his application.  He confirmed in cross-examination that he was advised by Advocate Sinel to liquidate the bond but that he did not take independent financial advice in this regard.  He explained that he needed to liquidate the bond in order to raise cash to pay the Chings' living expenses and legal fees at a time when the funds in the curatorship were being ring-fenced to meet the claims of third parties, in particular Ms Sheehan. 

297.   Since the AIG bond was intended as a five year investment, early surrender charges applied to Mr MacFirbhisigh's liquidation of the bond.  In addition there was the impact of the credit crunch to which we have referred in para.173 above.  We do not, however, consider that in the circumstances described in the preceding paragraph Mr MacFirbhisigh can validly be criticised for liquidating the AIG bond as he did.  Accordingly we reject this first submission of Advocate Baxter. 

(ii) The proper measure of the Plaintiffs' loss

298.   It was the Plaintiffs' submission that since, on their case, the investment in the AIG bond was an unauthorised, rather than a negligent, investment, CITE was liable for the entirety of the loss suffered by them in respect of the AIG bond.  This was not a point on which the Court had the benefit of detailed argument, so we prefer not to express a decided view on it.  Our provisional view is, however, that the Plaintiffs' submission is correct in the context of a breach of trust, as opposed to the position in negligent misstatement which we have addressed earlier in this judgment. 

(b) Claim against Mr Killmister for dishonest assistance

299.   The law of dishonest assistance is as set out in Nolan v Minerva Trust Company Limited [2014] JRC 078A at para.142.  Accordingly the Plaintiffs must establish the following:-

(i)        the existence of a trust in their favour;

(ii)       a breach of that trust;

(iii)      that Mr Killmister assisted in that breach of trust; and

(iv)      that in rendering that assistance Mr Killmister acted dishonestly. 

300.   Whether the Trust itself was valid or not, it is clear that in early 2007 there was a trust of some kind in favour of the Chings, of which CITE was the trustee.  But for the reasons we have set out above, there was no breach of any such trust in respect of the AIG bond.  That, of course, is sufficient to decide this issue in Mr Killmister's favour.  But given the allegation of dishonesty which the Plaintiffs have made against him, it is obviously right in fairness to Mr Killmister that we should examine and reach a conclusion on that issue. 

301.   The assistance relied on by the Plaintiffs is what they said were Mr Killmister's misstatements to Ms Alexandra during their discussions which led to CITE entering into the AIG bond.  In the course of Advocate Garrood's opening we indicated our view that this aspect of the Plaintiffs' claim was inadequately pleaded against Mr Killmister, in that the substitute Order of Justice did not identify which of the statements pleaded in para.9.3 of the Order of Justice were alleged to be misstatements, and did not particularise the dishonesty alleged in respect of each alleged misstatement.  The Plaintiffs responded by producing an amended version of para.9.3 which the Court granted leave to substitute for the previous version. 

302.   The relevant parts of the substitute pleading read as follows:-

"9.3     At the 31 January 2007 meeting, Killmister made the  following statements to Ms [Alexandra]:

...

(iii)      Mr and Mrs Ching were extremely wealthy with substantial assets in Jersey and Canada and that Killmister held at that time an amount of approximately £560,000 in cash on behalf of the Ching Trust; it is averred that this was incorrect and as a matter of fact the Chings were not extremely wealthy nor did they have substantial assets in Jersey or Canada, and that at all material times the said incorrectness was known to Mr Killmister;

(iv)      that Mr and Mrs [Chings'] assets included a share portfolio valued between £750,000 to £1,000,000; it is averred that Mr Killmister did not have a genuine belief that this was true although it was in fact correct to say that the share portfolio had a significant value; further it tended to give a misleading impression insofar as by that statement Mr Killmister suggested that the share portfolio was an alternative source of income;

(v)       that the relevant cash for the proposed investment, being an amount of £450,000 at Mr Killmister's suggestion, was already held in the UK and was the proceeds of the sale of a Jersey property owned by Mr and Mrs Ching; it is averred that this is accurate but misleading by being an unqualified statement in that Mr Killmister did not disclose that this sum comprised the entire sale proceeds of the former matrimonial home, a matter of fact which Mr Killmister knew was relevant to the investment decision making process;

(vi)      Mr Ching was subject to curatorship and that CITE had been appointed by the Court in  Jersey to oversee all of Mr and Mrs Ching's financial needs, to make all financial decisions on behalf of Mr and Mrs Ching, and to ensure that Mr and Mrs Ching's assets were looked after such that an income from those assets could be provided in the future to Mr and Mrs Ching from CITE as their trustee; save as to Mr Ching's curatorship, it is averred that this is inaccurate and was misleading;

(vii)      that, at that time, Mr and Mrs Ching had sufficient liquid assets from which they could derive an income for, at least, the next two to three years; it is averred that this is inaccurate and misleading;

...

(ix)      that CITE had otherwise been given permission by the Court in Jersey to take whatever action it deemed appropriate in relation to Mr and Mrs Ching's affairs; it is averred that this was inaccurate.

9.3A    Mr Killmister knew that his representations at 9.3(iii), (vi) and (ix) were incorrect, that he did not genuinely believe his representations at 9.3(iv) and that his representations at 9.3(iv), (v) and (vii) were misleading.

9.3B    Mr Killmister had no legitimate reason for making the said incorrect,  negligent and/or  misleading representations and those representations are only consistent with the intention of Mr Killmister to purchase an investment product for the Ching Trust which carried with it the payment of an introducer's commission, in order to procure the payment of that introducer's commission for himself or for CITE, and that he did so procure the payment of an introducer's commission by purchasing the AIG Bond.

9.3C    Mr Killmister's knowledge was such as to render the purchase of the AIG Bond contrary to acceptable standards of honest conduct and Mr & Mrs Ching have thereby suffered loss and damage."

The Plaintiffs claimed as damages for this dishonest assistance the whole of their loss on the AIG bond.

303.   By way of background, Mr Killmister told us, and we accept, that the reason he approached AYP was that he had known Ms Alexandra for some 18 months previously.  He had met her on a number of occasions at local business networking groups and in the summer of 2005 AYP had handled a similar investment for his youngest daughter in relation to her inheritance from her deceased mother's estate.  So he already had a favourable experience of working with AYP. 

304.   Ms Alexandra's note of the meeting on 31 January 2007 reads as follows:-

"Nil exposure to equities

Need p[er]month £3,500

£560,000 IN CASH IN HSBC (UK)

Income will be rolled up initially (possibly 2 years)

Share portfolio £750/1m (sell and return to UK)

Max commission - bond.

-- Do a split on illustration

Gary will tell us about allocation."

Mr Killmister made no equivalent note but he did not dispute the accuracy of Ms Alexandra's note.  As he said in his statement:-

"70.     ... I explained to Ms [Alexandra] that CITE would wish to invest the cash available to it as part of the trust fund.  At the time of this meeting, I was labouring under the impression (not least because of the quoted share price and Mr Ching's representations concerning the value of the Digger Shares) that the Digger Shares had significant value and were substantially owned by Mr Ching.  I would have attempted to explain the financial position of the trust as accurately as possible to Ms [Alexandra] based on the information available to me at the time.

71.      CITE was contemplating an investment with a cautious to moderate risk profile and I told Ms [Alexandra] that CITE was aware of the respective tax positions of the beneficiaries and the trustee."

He added in cross-examination that he had to explain the whole situation right the way through for Ms Alexandra, most particularly with respect to the source of the Trust's funds and the anti-money laundering compliance that needed to be done. 

305.   We now take each of the alleged misstatements in turn. 

Para.9.3(iii): Mr and Mrs Ching were extremely wealthy with substantial assets in Jersey and Canada

306.   Mr Killmister himself described the Chings to Ms Alexandra as wealthy.  The expression "extremely wealthy" is, however, the Plaintiffs'; the words used by Ms Alexandra in her statement were "very wealthy".  More importantly, Ms Alexandra accepted in her oral evidence that it was not Mr Killmister who used the words "very wealthy"; that was merely her summary of the financial information which Mr Killmister had given to her.  That financial information comprised essentially the £560,000, which the Trust did indeed have in cash, and the share portfolio, which, for the reasons set out below, we consider that Mr Killmister was justified in valuing at between £750,000 and £1,000,000 in January 2007.  Those assets, it seems to us, could quite properly be described as substantial; indeed it is the Plaintiffs' own pleaded case in para.9.3(iv) that the Chings' share portfolio "had a significant value".  On the basis of that correct information as to the assets of the Trust, it also seems to us that Ms Alexandra was justified in concluding that this made the Chings "very wealthy".  But, we repeat, that was her description, not Mr Killmister's.  In those circumstances we are not satisfied that Mr Killmister made any misstatement to Ms Alexandra as suggested in subpara.(iii). 

Para.9.3(iv): Mr and Mrs [Chings'] assets included a share portfolio valued between £750,000 to £1,000,000

307.   We have difficulty with the proposition inherent in the Plaintiffs' first criticism that:-

"Mr Killmister did not have a genuine belief that this was true although it was in fact correct to say that the share portfolio had a significant value".

That proposition is that if X says something that is in fact true but which X does not believe to be true, X is guilty of misstatement.  X may be open to criticism on other grounds, but if what X says is in fact correct then X is not guilty of misstatement.  Leaving that point aside, the simple answer to the Plaintiffs' first criticism is that Mr Killmister did, as we find, genuinely believe in January 2007 that the Chings' Digger shares were worth the figures that he mentioned.  He believed that the Chings owned some 900,000 shares, that being the figure upon which everyone concerned with the Chings' affairs was working at that time.  His evidence was that he checked the value of the shares on the internet, which seems to us an entirely proper approach, and that the end result was the figures he mentioned to Ms Alexandra.  The graph of Digger share prices provided to us is consistent with his evidence. 

308.   As for the Plaintiffs' second criticism, namely that Mr Killmister's figures "tended to give a misleading impression ... that the share portfolio was an alternative source of income", again the simple answer is that Mr Killmister never intended to give any such impression.  Nor, as Ms Alexandra confirmed in cross-examination, did she understand that that was the impression which Mr Killmister was seeking to give. 

309.   Accordingly the criticism in subpara.(iv) also fails. 

Para.9.3 (v): the relevant cash for the proposed investment, being an amount of £450,000 at Mr Killmister's suggestion, was already held in the UK and was the proceeds of the sale of a Jersey property owned by Mr and Mrs Ching

310.   It is important to recognise that the Plaintiffs accept that this statement was accurate.  They contend, however, that it was misleading because Mr Killmister did not disclose that the £450,000 comprised the entire sale proceeds of the former matrimonial home.  In short, the complaint is not what Mr Killmister said, but what he failed to say; we doubt whether such a complaint can properly be described as a misstatement but we proceed to consider it nonetheless. 

311.   We suspect that the origin of this complaint lies in para.23 of Ms Alexandra's statement which read:-

"However, if I had been aware that (i) the Chings were not as wealthy as Mr Killmister suggested; (ii) that save for a shareholding (potentially significant) in Canada, £560,000 represented the sum total of the Chings' assets; or (iii) that the proceeds of sale of a property comprising the cash invested came from the sale of Mr and Mrs. Ching's only home, I would not have given the same advice."

The Court investigated Ms Alexandra's point (iii) with her.  It emerged that the potential relevance of the sale proceeds coming from the sale of an investor's only home would lie in her concern for the investor's general financial position.  The questioning by the Court concluded as follows:-

"Q.      If [the Chings] did have another property that they lived in, albeit a rented property, would it matter that the sale proceeds came from the sale of their only home?

A.       No, as long as their needs were fully catered for."

That response by Ms Alexandra seems to us entirely sensible and we apply her reasoning to the Plaintiffs' complaint under subpara.(v). 

312.   The Plaintiffs make no pleaded case that the Chings' needs were not fully catered for as at January 2007.  More importantly, the £160,000 which Mr Killmister had retained from the proceeds of the sale of Granville would, barring unforeseen events, have been sufficient to cater for the Chings' need for a monthly income of £3,500 a month (the figure mentioned in Ms Alexandra's note) for nearly four years.  In those circumstances it seems to us that the criticism of Mr Killmister in subpara.(v) is likewise unjustified. 

Para.9.3(vi): CITE had been appointed by the Court in  Jersey to oversee all of Mr and Mrs Ching's financial needs, to make all financial decisions on behalf of Mr and Mrs  Ching, and to ensure that Mr and Mrs Ching's assets were looked after such that an income from those assets could be provided in the future to Mr and Mrs Ching from CITE as their trustee

313.   It was Ms Alexandra's evidence in her witness statement that Mr Killmister had made these statements.  If made, the statements were clearly incorrect.  It was Mr Killmister's evidence that at the meeting on 31 January 2007 he explained to Ms Alexandra both the concept of a curatorship in Jersey law and that CITE was acting as the trustee of the Trust.  In the context of a curatorship, his evidence was that he explained to her that Mr. Manning was Mr Ching's curator, that he had been appointed by the Royal Court and that through his appointment he would have got approval to transfer the funds to the Trust.  But Mr Killmister denied making the remarks ascribed to him in the context of the Trust, suggesting that Ms Alexandra had confused what he said. 

314.   In cross-examination Ms Alexandra accepted that she might have confused the two aspects of what Mr Killmister had said to her and we find that that is indeed what happened.  We are fortified in that conclusion by the consideration that Mr Killmister is unlikely to have lied about something like the appointment of CITE by the Court in circumstances where Ms Alexandra, had she been minded to do so, could have checked the information for herself.  Finally, we record that Ms Alexandra accepted in cross-examination that this information would in any event have been irrelevant to any investment decision. 

315.   Accordingly we are not satisfied that Mr Killmister was inaccurate or misleading in respect of the matters mentioned in subpara.(vi). 

Para.9.3(vii): At that time, Mr and Mrs Ching had sufficient liquid assets from which they could derive an income for, at least, the next two to three years

316.   As Mr Killmister explained in his evidence, he did indeed make this statement and it was true.  He was proposing to hold back £160,000 (the difference between the £560,000 in cash that he had mentioned to Ms Alexandra and the £400,000 he was proposing to invest) so as to ensure that he had funds to pay for the Chings' living expenses over the initial period.  In addition, he knew that Mr Manning still held funds in Jersey.  We see no basis upon which the statement in subpara.(vii) can be said to be inaccurate or misleading in any way. 

Para.9.3(ix): CITE had otherwise been given permission by the Court in Jersey to take whatever action it deemed appropriate in relation to Mr and Mrs Ching's affairs

317.   This seems to us simply to be a variant of the allegation in subpara.(vi), which is no doubt why Mr Garrood did not cross-examine Mr Killmister separately about it.  Accordingly we dismiss this allegation for the same reasons as we have already given in respect of subpara.(vi). 

318.   It follows from our conclusion that Mr Killmister made none of the misstatements alleged by the Plaintiffs that the plea of dishonest assistance must fail on that ground alone.  And if the alleged misstatements were never made, then by definition they were not made dishonestly. 

319.   There is no allegation by the Plaintiffs that the payment of the £7,200 (which, we record, the Plaintiffs do not claim from Mr Killmister in this action) amounted to dishonest assistance simpliciter.  The Plaintiffs' case is simply that the payment of that introducer's commission was the motive for Mr Killmister's dishonest misstatements.  But for the sake of completeness we proceed to examine the allegation against him of dishonesty as pleaded in paras.9.3B and 9.3C of the Order of Justice as amended. 

320.   It emerged from Ms Alexandra's evidence in cross-examination that the commission of £7,200 was paid to Mr Killmister pursuant to an introducer's agreement which had been drawn up by AYP.  In his statement Mr Killmister explained the position as follows:-

"76.     It was explained to me by Ms [Alexandra] that there were ... two options regarding AYP's commission.  Either they would take 3% up front and 0.5% annually thereafter, or they could take a 6% commission upfront.  CITE chose the latter as it seemed to be in the best interests of the beneficiaries, who incidentally had been consulted on the choice of investments."

AYP's commission was, therefore, £24,000 but this was partially mitigated by an enhanced allocation to the bond of 3% of the commission charge, amounting to some £12,000.  Mr Killmister's statement continued:-

"77.      It was agreed between CITE and AYP that the commission would be split.  As a matter of course, the two companies paid referral fees for business introductions to one another.  I can no longer recall whether it was offered or CITE requested it.  In any event, CITE was paid £7,200 out of the 6% for AYP as an 'introducer's fee'.  Both AYP's commission and therefore CITE's receipt are recorded in the relevant accounts for the [Trust]."

In examination in chief Mr Killmister added the following comment:-

"The commission was a relatively small amount of money.  It is common practice for introductory commissions to be paid between businesses and the amount that is involved was actually probably less than the amount that I personally lent to the trust at the outset to reinstate Mitsukiku and bring the other two companies back into good standing.  I can't imagine why I would do that for the sake of £7,200."

321.   In the light of that evidence, which we accept, we find that it was not commercially unacceptable, or dishonest, for Mr Killmister to have accepted the sum of £7,200 from AYP in connection with CITE's investment in the AIG bond. 

322.   Furthermore, given our conclusion that the Trust was valid, Mr Killmister would be able to invoke clause 30(c) of the Trust deed as relieving him of any liability to account for the receipt of the £7,200.  As Advocate Garrood rightly accepted, Mr Killmister could not be guilty of dishonesty if the payment was excused by that clause.  For this additional reason it was not, in our view, dishonest of Mr Killmister to have accepted the £7,200. 

323.   Finally, as Mrs Ching accepted in her second witness statement:-

"I also wrote to Mr Killmister in early 2007 (see [para.54 above]) advising that I was concerned regarding the commission received by CITE in relation to the AIG investment policy."

In cross-examination, however, Mrs Ching said that she did not remember this letter.  There is no suggestion that she or Mr Ching (or Mr Manning) pursued this concern further with CITE or Mr Killmister.  In those circumstances it seems to us that the Chings and Mr Manning in any event acquiesced in the payment to, and receipt by, Mr Killmister of the £7,200.

324.   It follows that the Plaintiffs' claim against Mr Killmister based upon dishonest assistance in a breach of trust fails on all counts. 

(6)        Improper fees charged

325.   The Plaintiffs contend that CITE is liable to compensate them for the improper payments that each of the Defendants received in their respective capacities.  The sums claimed by the Plaintiffs under this head can be summarised as follows:-

(a)       the total of £59,425.14 received by companies wholly owned by Mr Killmister; and

(b)       the total of £28,245 received by Mr Gidley.

The Plaintiffs no longer pursue under this head the fees paid to Mr Manning. 

326.   We have already addressed at paras.179 to 186 above the issue of the fees claimed by the Plaintiffs as damages for negligent misstatement, and at paras.199 and 200 as damages for breach of fiduciary duty.  We do not, therefore, repeat under this head our comments in those paragraphs. 

327.   Again, and for the final time, we approach this issue on the alternative bases:-

(a)       that the Trust was valid; and

(b)       that the Trust was invalid.

(a) The Trust was valid

328.   Mr Pallot accepted that if the Trust was valid, the effect of the Trust deed was that these fees had been properly charged.  Accordingly this claim must fail. 

(b) The Trust was invalid

329.   For the reasons set out in para.265 above, we have already accepted that CITE remained entitled to be indemnified for expenses properly incurred in the administration of the Trust until such time as the resulting trust came into existence.  In those circumstances, for the same reasons mutatis mutandis as set out in paras.185 and 186 above we conclude that the Plaintiffs are not entitled to recover from CITE the £59,425.14 claimed in respect of the payments to Mr Killmister's companies, and for the same reasons mutatis mutandis as set out in paras.183 and 184 above we reach the same conclusion in respect of the payments to Mr Gidley. 

330.   In addition, we have no doubt that both Mr Ching and Mr Manning as professional men familiar with the operation of trusts would have realised from the outset that both Mr Killmister (and/ or his companies) and Mr Gidley would be entitled to, and would, charge fees for their services to the Trust.  In Mr Ching's case, this is confirmed by his letter of 25 September 2007 (see para.58 above).  As for Mrs Ching, in the light of Mr Killmister's note of their meeting on 28 April 2006 (see para.33 above), of Mr Manning's letter to the Chings of 7 November 2006 (see para.47 above) and of the Trust accounts, we are likewise satisfied that she too knew that Mr Killmister and Mr Gidley would be charging for their respective services; she did not object to this state of affairs.  Again, therefore, it seems to us that the Chings and Mr Manning in any event acquiesced in the payment of the fees set out in para.325 above. 

(7) Prescription

331.   In the light of our findings thus far, the issue of prescription does not arise.  Nevertheless we proceed to consider it.  This issue arises only in respect of Mr Gidley and Mr Killmister. 

332.   Mr Gidley and Mr Killmister were joined as Defendants on 30 November 2011 and the Amended Order of Justice was served on them on 16 December 2011.  Both of them contended that all the causes of action against them were prescribed on the basis that they had arisen more than three years before 16 December 2011.  It was common ground between the parties at the strike out hearing before Master Thompson (to which we refer further below) that for the purposes of the Defendants' limitation defence the relevant date was the date upon which the Defendants were served. 

333.   The Plaintiffs did not argue that any of the causes of action had accrued later than 16 December 2008.  Their case on prescription as set out in their final written submissions and in the additions thereto was as follows:-

(a)       While they accepted that the limitation period in respect of all the causes of action except breach of fiduciary duty was three years, the limitation period in respect of the claim for breach of fiduciary duty was ten years, so that that cause of action was not prescribed at all.

(b)       Mrs Ching was at all times under an empêchement de fait in respect of all the causes of action until some time after December 2008, more particularly until shortly after the Court's order of 5 May 2010. 

(c)       As for Mr Ching:

(1)       he was under an empêchement de droit vis-à-vis both Mr Gidley and Mr Killmister until 25 November 2008 (when Mr MacFirbhisigh replaced Mr Manning as his curator) and thereafter was under the same empêchement de fait as his wife; alternatively

(2)       he was at all times under the same empêchement de fait as his wife.

334.   We take first the question of the limitation period in respect of claims for breach of fiduciary duty.  This issue was not the subject of any oral argument by the parties but was addressed in the written submissions.  The Plaintiffs' written closing submissions read as follows.

"163.   The Plaintiffs say that it is settled law that:

(i)        an action [personelle] mobiliere has a prescription period of 10 years - In the Matter of Northwind Yachts Limited [2005 JLR 137]...;

(ii)       an action in tort has a prescription period of 3 years - Article 2 Law Reform (Miscellaneous Provisions) (Jersey) Law 1960 ...; and

(iii)      an action for breach of trust has a prescription period of 3 years on the terms of Article 57 Trusts Jersey Law 1984.

164.    An action for breach of fiduciary duty is a personal action, "une action personelle".  It is also an action that does not relate to an immoveable and is therefore "une action mobiliere".  An action for breach of fiduciary duty is not an action in tort nor is it an action [for] breach of trust such that either of Article 2 of the Miscellaneous [Provisions Law] [or] ... Article 57 of the Trusts law displaces the customary period of 10 years.  In addition, when we look at Paras 30-33 of Northwind, Sir Michael Birt makes it clear his view is that the period is a 10 year period.  The Plaintiffs submit that in the absence of express statutory intervention, such as there has been for tort and breach of trust, the customary period in respect of an action personelle mobiliere must apply: it must be 10 years in any event."

335.   In the Northwind case the respondent director of a company, who was alleged to have been in breach of his fiduciary duty to the company, resisted an application by a co-director for leave to bring a derivative action in the company's name.  One of the grounds upon which he resisted the application was that it was prescribed, his contention being that the relevant limitation period was three years under Art. 53 of the Trusts (Jersey) Law 1984 ("the 1984 Law").  The Court decided on other grounds to stay the application but also addressed the prescription point.  The Court held that Art.53 could not apply directly to breaches of fiduciary duty by a director because of the particular definition of various terms in the 1984 Law.  As for the alternative argument that Art.53 applied by analogy, the Court declined to express a decision as they had not heard full argument and it was not necessary for their decision.  Accordingly the Court concluded (at para.35):-

"For these reasons, had we not ruled that there was an alternative remedy, we would not have held at this stage that the action proposed on behalf of the Company ... was not well founded because of difficulties over prescription."

336.   The Court referred to Gwembe Valley Development Co Ltd v Koshy (No.3) [2004] 1 BCLC 131 where the English Court of Appeal held that, although personal claims against fiduciaries would normally be subject to limits by analogy with claims in tort or contract, by contrast, claims for breach of fiduciary duty against a director would normally be covered by s.21 of the Limitation Act 1980 which dealt with time limits for actions in respect of trust property.  In the Gwembe case Mummery L.J. referred (at para.85) to Bristol and West Building Society v Mothew [1996] 4 All ER 698, in which Millett L.J. provided authoritative guidance as to the proper use of the term fiduciary duty and

"distinguished duties, such as the duty of care, which, though owed by fiduciaries, are no different in principle than equivalent duties in common law".

337.   In In re Esteem Settlement [2002] JLR 53 the Court said (at para.257):-

"We think that the time has come to hold that the 10-year period referred to by Le Geyt is a general period which should be taken to apply to all personal actions and all actions concerning movables, save to the extent that they have already been held to be subject to a different period, e.g. tort, actions concerning estates etc., or that some other period is, by analogy, clearly more applicable."

In the circumstances of the present case it seems to us that some other period, namely the three year period in respect of claims in tort, is clearly more applicable.  The claim against Mr Gidley and Mr Killmister for breach of fiduciary duty was a personal claim; it alleged a duty which was, in effect, simply a duty of care, hence the reliance by the Plaintiffs on the same facts in support of their claims both in negligent misstatement and for breach of fiduciary duty.  It would, in our view, do a disservice to the law of Jersey for the limitation period in respect of the negligent misstatement claim to be three years, and for that in respect of the identical fiduciary duty claim to be ten years.  In this context we do not find the decision in Northwind, where the alleged fiduciary duty was very different from that alleged in the present case, to be of any assistance. 

338.   Accordingly we conclude that all of the causes of action relied on by the Plaintiffs are subject to a three year limitation period. 

339.   We now address in turn the two forms of empêchement relied on by the Plaintiffs. 

(a) Empêchement de droit

340.   As we have already recorded, there is no suggestion that Mrs Ching was ever under an empêchement de droit; this limb of the empêchement doctrine is relied on solely on behalf of Mr Ching. 

341.   In his judgment delivered on 18 December 2014 dismissing the Defendants' application to strike out the Plaintiffs' claims on the basis that they were prescribed, Master Thompson dealt with the Plaintiffs' empêchement de droit argument as follows (at para.37):-

"Firstly, I am not satisfied that an empêchement de droit exists as against the second and third defendants.  Any empêchement de droit can only operate in respect of a claim against i.e. the fourth defendant Mr Ching's curator.  This is because Mr Ching was able to act through Mr Manning.  His inability to act was limited to an inability to replace or sue Mr Manning as his curator.  An empêchement de droit in my judgment therefore only operates as between an interdict and a curator and not against the world at large."

It seems to us that it is not now open to the Plaintiffs to reargue this point and on that ground alone we reject their case based on empêchement de droit.  We add that the conclusion reached by Master Thompson on this issue is, in our view, plainly correct in any event.

(b) Empêchement de fait

342.   The Plaintiffs rely on this limb of the empêchement doctrine either in addition, or in the alternative to, empêchement de droit.  Not surprisingly, all parties were agreed that the relevant legal principles were to be found in two decided cases, namely Public Services Committee v Maynard [1996] JLR 343 and Boyd v Pickersgill and Le Cornu [1998] JLR 305.  In Boyd, Beloff J.A. said (at p.290):-

"In Maynard, this court recognized that the maxim upon which the Appellant relies was part of the customary law of Jersey.  A comprehensive analysis was made of such classic commentators as Terrien in Commentaires du Droict Civil 91578) and Poingdestre in Les Lois & Coutumes de Jersey (1928).  Southwell JA. said (1996 JLR at 354):-

"We can summarise our conclusions so far on the application of the maxim in Jersey law in this way:-

(a) It is common ground that the maxim can apply to the customary law of prescription of claims in contract after 10 years, and is preserved by art.2 of the 1960 law in relation to prescription of claims in tort after 3 years.

(b) The principle underlying the operation of the maxim in Jersey law is the practical impossibility of the plaintiff being able to exercise his rights.

(c) Mere ignorance does not bring the maxim into operation.

(d) Where there is an impediment creating such a practical impossibility, of which ignorance is part, then the maxim may come into operation and prevent time running."

In those circumstances I see no reason, even were it open to us to do so, to review the authorities further."

343.   Beloff J.A. then discussed what was meant by a practical impossibility (at p.291):-

"In my view, the epithet "practical" deployed in Maynard softens rather than strengthens the concept of impossibility.  It requires a consideration of what is in fact, not in theory, possible.  While ignorance of a cause of action does not per se trigger a suspension of the limitation period, it may, in appropriate circumstances, constitute or create a relevant impediment.  The issue before us is of what those circumstances may consist.

The test, as it seems to me, is whether the ignorance of the cause of action is reasonable in all the circumstances, reasonable, that is, both in respect of the facts giving rise to the cause of action and that a cause of action arises in such circumstances.  While ordinary cases of professional negligence, as in this case, may be against a lawyer for advice unconnected with court proceedings, it is difficult to see how it could ever be reasonable to assert that one was unaware that a lawyer owed obligations in contract.  There may be cases, however, where the law is uncertain, e.g. in respect of an advocate's conduct connected in some way with court proceedings, where ignorance even of the possibility of a cause of action may be reasonable."

344.   Southwell J.A. (at p.295) clarified that:-

"the test is to be applied objectively to a reasonable person in the particular circumstances in which the plaintiff was placed.  It is not a subjective test."

Finally Sumption J.A. stated (at p.295):-

"I am satisfied that the law regards ignorance as reasonable as a matter of legal policy where there was no means by which the particular plaintiff could reasonably have been expected to discover the facts on which her cause of action was based."

345.   In his strike out judgment to which we have already referred, Master Thompson also said as follows:-

"38.    However, I am of the view that it is arguable that Mr Ching was under an empêchement de fait as against the second and third defendants for so long as Mr Manning was acting as curator.  This is because I accepted it was arguable, as Advocate Jones contended, that because the fourth defendant was appointed as curator on the recommendation of the second and third defendants, that he was not going to act contrary to their advice or to take steps to pursue them for such advice being negligent.  I accepted such a failing may give a rise to a claim against the fourth defendant.  However, I did not consider it appropriate to determine on a strike out application that the scenario advanced by Advocate Jones on behalf of the plaintiffs of an empêchement de fait as between the plaintiffs and the second and third defendants could not succeed.  In my judgment whether an empêchement arises and therefore whether or not the defence will succeed can only be properly determined at a trial having heard evidence from each of the second, third and fourth defendants and the plaintiffs as well as legal submissions on the limits of any empêchement doctrine.

39.      Once Mr MacFirbhisigh was appointed as curator, again I consider it a matter for trial for the Jurats to determine when a reasonable man in the position of Mr MacFirbhisigh had sufficient information in order to commence proceedings.  In particular, I consider it is a matter for the Jurats to evaluate when there was sufficient information known to the plaintiffs or which ought reasonably to have been known to enable them to conclude that the advice of the second and third defendants was wrong.  While it is clear that the plaintiffs were seeking information about the trust assets, including why an English Law trust had been set up and what had happened to the trust assets, it is a matter for the Jurats as to whether it was practically possible for a person in the position of the plaintiffs to evaluate the advice that had been given.  I am not therefore satisfied that the second and third defendants, despite the potential force of the rhetorical question asked in reply by Advocate Baxter, have reached the required threshold to enable me to strike out the plaintiffs' claims against the second and third defendants on the basis that such claims, other than dishonest assistance, are prescribed.  I do not consider it possible to answer what the plaintiffs knew or ought to have known about the advice that they received and what had happened in relation to assets without hearing from all the witnesses and without seeing all relevant documents.  The epithet of practical impossibility softens rather than hardens the test for an empêchement to apply.  There is also a danger of looking at matters through the prism of hindsight rather than the actual context in which individuals were operating.  The history of this litigation and matters leading to the proceedings is reasonably complicated and in my judgment not one that can be determined on a strike out application.  Rather it is best left for consideration at trial."

346.   Given the broad brush approach that the Plaintiffs had adopted in their opening skeleton argument, the Court raised with Advocate Garrood what we expected of the Plaintiffs' final written submissions in this context, in the following terms:-

"THE COMMISSIONER: ...

The second main area is the issue of prescription which of course only runs against Mr. Gidley and Mr. Killmister.  It is not raised by CITE.  I appreciate that we have your argument that the prescription period for the breach of fiduciary duty claim is, I think you said it is ten years.

ADVOCATE GARROOD:  Ten years.

THE COMMISSIONER:  Obviously we will wait to see your submissions about that.  In relation to the other heads of claim, I understand it to be common ground that the limitation [or] prescription period is three years.

ADVOCATE GARROOD:  For the tortious claims, yes.

THE COMMISSIONER:  If there are any other claims which are not three-year claims then you will identify them.  That, of course, brings us to the empêchement point and empêchement de fait where, understandably, I think the parties are agreed on the principles as set out in the relevant Jersey authorities.  I assume, you may tell me otherwise, that the evidential burden is on you as the person seeking to raise empêchement de fait to establish it.  As I understand it, the substitute Order of Justice was served on Mr. Killmister and Mr. Gidley on 16th December 2011,  so winding back the relevant period for a three-year prescription period will be 16th [December] 2008.  What I think we are looking for in your final skeleton is your detailed submissions in relation to each of your heads of claim on essentially two questions, and this is my attempt to pose as questions the legal test.  If it is a slightly inaccurate reflection of the legal test then you can tell me so in due course.

Point one is: What information did the plaintiffs not have and could not have reasonably obtained prior to 16th December 2008 which they needed in order to be able to bring the claim in question?

Second:  What is the evidence, oral or written, to prove that or to establish that the [plaintiffs] did not have and could not reasonably have obtained that information which you say that they required and could not have done that prior to 16th December 2008?

Then I think we will understand precisely how it is that you put your case on prescription and what the evidence is upon which you rely to establish it.  Does that make sense?

ADVOCATE GARROOD:  Yes, I understand that."

347.   Unfortunately the Plaintiffs' final written submissions did not condescend to the degree of detail that the Court had indicated.  Accordingly we raised the issue again during Mr Pallot's final oral address, as follows:-

"The problem is, Mr. Pallot, that you have not, with respect, spelt out in relation to each of the heads of claim what the information is that you did not have and could not reasonably have obtained prior to 16th December 2008, that being three years before service on Mr. Gidley and Mr. Killmister, nor have you identified for us the evidence oral or written in relation to those points which you say you did not know and could not reasonably have found out.

I will certainly in the circumstances give you one last chance to do that.  May I take an example and I am not expecting you to answer on the hoof, let us simply take the negligent misstatement claim.  Your clients knew, they say, what advice they had been given and they knew that by April 2006.  If that advice was wrong they knew by April 2006 that it was wrong.

So, I am just putting this [hypothesis] to you.  They knew well before December 2008 that the AIG Bond had been taken out.  They knew well before, sorry, just while I am passing, and of course they could always have gone to Ms. Alexandra and asked her what had happened in relation to the bond.  So far as the Digger shares were concerned they knew that they had not had the Digger shares back.  They knew from the trust accounts that [the] trustees had been charging commission.  Now, again, you may tell me that factually that is wrong but I am simply putting that to you.

So in that case I ask rhetorically what else did your clients need to know about the negligent misstatement claim that they did not know by December 2008 to bring this claim?  That is the sort of detail which I [envisaged] that you were going to provide in your final submissions following what I said to Mr. Garrood in [the] passage which I have just cited.  That is at the moment what we lack.  That, I am afraid, is what the court needs to know if you are going to persuade us that your empêchement plea stands examination."

The Plaintiffs' response took the form of the additions to their final written submissions.  That response, however, still lacked much of the detail that the Court had requested. 

348.   The essence of the Plaintiffs' case on empêchement de fait as set out was as follows:-

(i)        Mrs Ching suffered a practical impossibility of knowing what had been occurring to enable her to bring a claim because she had reposed complete confidence and faith in Mr Gidley, Mr Killmister and Mr Manning.  This remained the position until such time as she was rid of the control of these individuals, which was not until Mr MacFirbhisigh was appointed in Mr Manning's stead. 

(ii)       Mr MacFirbhisigh could not have brought any claims prior to his appointment as curator on 25 November 2008.  It was not practically possible for him to have evaluated the information that he had, or ought reasonably to have been able to review, by 16 December 2008.  Indeed it was not until February 2009 that for the first time he started to receive information and documentation from Mr Manning. 

We take first the negligent misstatement and breach of fiduciary duty claims (issues (1) and (2)), taking in turn the position of each Plaintiff, adopting the two stage approach of Master Thompson.

(i) Mrs Ching

349.   As for the period of Mr Manning's curatorship, we accept that, at least initially, she trusted Mr Gidley, Mr Killmister and Mr Manning.  We do not, however, consider that she was in any way under the control of these individuals.  On the contrary, we conclude that during the relevant period she was her own woman.  More particularly, she was able to, and did seek the advice of Mr MacFirbhisigh in July 2006 regarding the sale of Granville.  She consulted him again in June 2008 regarding the difficulties that, she said, she and Mr Ching were having with Mr Manning and the Trust although, as we have recorded in para.48 above, she had originally voiced concerns about Mr Manning to Mr Gidley some 20 months earlier.  If she felt dissatisfied with what Mr Gidley and Mr Killmister had told her and her husband, the onus was on her to seek legal advice; nor was there any obstacle to her doing so. 

350.   More particularly, we return to the factual scenario which the Court put to Mr Pallot as recorded in para.347 above.  In the absence of any detailed response from the Plaintiffs, we remain of the view provisionally indicated in the transcript.  Mrs Ching knew by April 2006 what advice she and her husband had been given and if that advice was wrong, she knew, or could have discovered, that by the same date.  She knew that the Digger shares had not been returned to them.  She knew by early 2007 that CITE had invested in the AIG bond; if she had wanted more detail about what had been said at the time that the investment had been made, she had only to ask Ms Alexandra.  Finally, she knew that CITE, Mr Gidley and Mr Manning had been charging fees.  So we return to the fundamental question; what information was it that Mrs Ching did not know, or could not reasonably have obtained, during the period up to 25 November 2008 that she needed to know in order to bring proceedings against Mr Gidley or Mr Killmister for negligent misstatement or breach of fiduciary duty?  The Plaintiffs have not answered that question and on the information available to us, we cannot identify any such missing information.  Accordingly Mrs Ching was not, in our judgment, under any empêchement de fait in respect of this first period.  

351.   As for the second period after Mr MacFirbhisigh had taken over as curator, for the reasons set out later in this judgment we find that there was no empêchement de fait so far as Mrs Ching was concerned in respect of this period either. 

(ii) Mr MacFirbhisigh

352.   Taking first the period of Mr Manning's curatorship, it seems to us that there are two reasons why no empêchement de fait arose as regards Mr Ching or Mr Manning. 

353.   First, we recognise the force of the argument summarised by Master Thompson at para.38 of his strike out judgment that since Mr Manning was appointed on the recommendation of Mr Gidley, it was unlikely that he would turn on Mr Gidley and pursue him (or Mr Killmister) for giving the Chings bad advice.  Understandably, Master Thompson expected that at trial the Court would have the benefit of evidence from all three individuals on this issue.  In fact, for the reasons we have already explained, Mr Manning did not give evidence at all; nor were either Mr Killmister or Mr Gidley cross-examined to the effect that they pulled the strings and Mr Manning simply danced to their tune.  In the absence of any evidence to that effect we decline to find that Mr Manning did anything other than exercise his own judgment in relation to Mr Ching's affairs.  In particular, we decline to find that he shut his eyes to the possibility of a claim by Mr Ching against Mr Killmister or Mr Gidley simply because of the circumstances of his appointment.  It seems to us that Mr Manning's apparent failure to contemplate proceedings against Mr Killmister or Mr Gidley arose from the fact that, despite his being in the best position to evaluate Mr Ching's position, he saw nothing for the Chings to complain about in relation to the advice that they had been given, a view which, for the reasons we have already given, we entirely share.  And there was, of course, no suggestion that Mr Manning was under any empêchement de fait. 

354.   Second, it was open to Mr Ching (with the assistance, if necessary of his wife or Mr MacFirbhisigh) to apply at any time to remove Mr Manning as curator and to replace him with someone more amenable.  That was, indeed, the course that was eventually adopted when Mr MacFirbhisigh replaced Mr Manning. 

355.   Turning to the second period, Mr MacFirbhisigh had until at least early April 2009 (three years after the establishment of the Trust and the transfer by the Chings into the Trust of their Digger shareholdings, which was the earliest act of reliance by them on the allegedly bad advice) to commence proceedings within the limitation period, i.e. something over four months from his appointment.  In fact proceedings were not commenced until November 2009, and then not against either Mr Killmister or Mr Gidley.  

356.   We accept the Plaintiffs' contention that Mr MacFirbhisigh could not have brought any claims prior to his appointment as curator on 25 November 2008.  But in considering the submission that it was not practically possible for him to have evaluated the information that he had, or ought reasonably to have been able to review, by 16 December 2008, it is important to bear in mind that, contrary to the Plaintiffs' suggestion that he had only 23 days to form a view, Mr MacFirbhisigh did not begin from a standing start on 25 November. 

357.   Thus it became clear during the oral evidence of Mr MacFirbhisigh that he had been actively involved during Mr Manning's curatorship in preparing for what came to be the present proceedings.  Towards the end of his cross-examination Mr Baxter took Mr MacFirbhisigh to the curatorship inventory as at 25 November 2008 to which we have referred in para.85 above, and in particular to the references to the contingent fee of £36,045 then payable to Mr MacFirbhisigh and to the "vast majority" of Mr MacFirbhisigh's time having been spent as "a direct result of this litigation".  Mr MacFirbhisigh confirmed that this showed that the present litigation had been in contemplation prior to his appointment.  (We note in passing that any agreement that Mr MacFirbhisigh should be entitled to his fees if they were recoverable from the Defendants in this litigation is an agreement that he must have made with Mrs Ching; Mr Ching, as an interdict, would have had no authority to make such an agreement.)  We infer that Mr MacFirbhisigh had been working on these proceedings for much of the five months since his meeting with Mrs Ching at the wedding in early June 2008.  In short, Mr MacFirbhisigh hit the ground running on 25 November.  

358.   As one would expect, in cross-examination Mr Baxter investigated the question of Mr MacFirbhisigh's state of knowledge.  Mr MacFirbhisigh's evidence was to the following effect:-

(1)       He knew in the summer of 2006 that Mrs Ching was settling the proceeds of the sale of Berkeley Court into the Trust.

(2)       He had been told that the Trust was for the benefit of Mr and Mrs Ching, his basic understanding being that the Trust would pay their rent and living expenses.

(3)       He himself had transferred the £10,000 proceeds of the sale of Mr Ching's car into the Trust.

(4)       He accepted that:-

"all of this is happening because, as far as you know, Mr. and Mrs. Ching had been told they needed to liquidate their assets and settle the Trust".

(5)       His impression when he came on the scene again in 2008 was that:-

"It was apparent that the Chings had entirely rested on the advice of SG as regards the Trust".

(6)       The nature of the problems that he was told about in June 2008 included serious problems with the Trust, problems with the Digger shares/Mitsukiku and complaints by third party shareholders in Digger who were trying to get their shares back. 

(7)       By this time the Chings had a copy of the Trust deed.

(8)       In broad terms he knew by June 2008 that the Chings had been advised to sell their assets and settle them into the Trust.

359.   In response to Mr MacFirbhisigh's comment that it was important to understand the depth of his knowledge in 2008, the cross-examination continued:-

"Q.      This is what I am trying to establish.  What exactly did you know at that time?  So, first of all, you knew what [the Chings] had been advised to do?

A.       In broad terms, yes.

Q.       As we know, and that was to sell assets and put them in a Trust; yes?

A.       Yes.

Q.       And you knew that they had sold their properties; yes?

A.       Yes.

Q.       And you knew what they had sold those properties for; yes?

A.       Yes.

Q.       And you knew that they had put the proceeds in a Trust to provide at least for their rent and living expenses?

A.       That was my understanding.

Q.       Yes.  You also knew that the trustee had the Digger shares, did you not?

A.       At this meeting now, in 2008?

Q.       Yes.

A.       Yes.

Q.       And you knew that those shares had a value; yes?

A.       That was my understanding, yes.

Q.       And you also knew what the terms of the Trust were?

A.       No.

Q.       Well, you did see a copy of the Trust Deed at that meeting?

A.       I did, indeed, but I was certainly not in a position to understand that.

Q.       But you had at least seen the Trust Deed at that point?

A.       I had seen the Trust Deed, yes".

360.   The relevant part of the cross-examination concluded as follows:-

"Q.      Just to summarise then.  By your appointment, which is 25th November 2008, you knew who had advised the Chings, yes?

A.       Indeed.

Q.       What they had been advised?

A.       Broadly.

Q.       What they had sold as a result?

A.       Yes.

Q.       What they had settled on the trust?

A.       Broadly.

Q.       And what expenses they had had to meet in the first year of the curatorship?

A.       When you say expenses?

Q.       The expenses listed in the accounts.  If we assume those are  correct, that is what you would see.

A.       As you say, assuming these are correct.

Q.       So you had all the information you needed to bring this claim in negligent misstatement, did you not?

A.       Not at all."

361.   We do not accept that final answer of Mr MacFirbhisigh.  It does not bear examination in the light of all the other points which we have summarised in the preceding paragraphs.  As for the Plaintiffs' submission that it was not until early 2009 that Mr MacFirbhisigh started to receive detailed financial information from Mr Manning, the simple answer is that he did not need such information in order to commence proceedings against Mr Gidley or Mr Killmister for negligent misstatement or breach of fiduciary duty.  Similarly the fact that Mr MacFirbhisigh may not have had in his possession all the relevant documentation is immaterial; the process of discovery would have produced any material documents.  As Le Quesne J.A. stated in Minories Finance Limited v. Arya Holdings Limited [1994] JLR 149 (at p.167):-

"As I have indicated, Advocate Michel argued that even if Arya could in theory have taken either or both of these steps, in practice Arya could not effectively take either step until it had been put into possession of the necessary documents and information, which were in the possession of the receivers.  In my judgment, this is misconceived.  Periods of prescription do not cease to run, in the absence of specific provision to that effect, merely because a potential plaintiff may not have all the information or documents needed to press home his cause of action.  A patient wishing to sue a hospital would find himself prescribed unless he brought his action within the relevant prescriptive period, even though all relevant information and documents are held by the hospital."

Accordingly we conclude that Mr MacFirbhisigh was not subject to an empêchement de fait during Master Thompson's second period. 

362.   It follows that we would have held that the claims by both Plaintiffs for negligent misstatement and breach of fiduciary duty (issues (1) and (2)) against both Mr Gidley and Mr Killmister were prescribed. 

363.   For the purposes of the remaining heads of claim, we do not need to distinguish between the Plaintiffs. 

364.   As for the claim based on the invalidity of the Trust (issue (3)), both Mrs Ching and Mr MacFirbhisigh could have investigated the issue of Mr Ching's mental capacity (the Plaintiffs' ground (a)) long before 25 November 2008.  Most obviously, Mrs Ching could have addressed this issue as soon as Dr Harrison signed on 20 April 2006 the relevant statement for the purposes of the curatorship proceedings.  In addition, she or Mr MacFirbhisigh could have written to Dr Jackson much earlier than Mr MacFirbhisigh eventually did on 14 January 2009.  So far as the Plaintiffs' grounds (b), (c) and (d) are concerned, both Mrs Ching and Mr MacFirbhisigh had copies of the Trust deed long before 25 November 2008 and both could have sought legal advice on the validity of the Trust deed had they wished to do so.  Accordingly neither Mrs Ching nor Mr MacFirbhisigh were under any empêchement de fait in respect of issue (3). 

365.   As for the Digger shares (issue (4)), both Mrs Ching and Mr MacFirbhisigh knew from the very start that the Digger shares had not been returned to them.  Accordingly neither Mrs Ching nor Mr MacFirbhisigh were under any empêchement de fait in respect of this issue.

366.   Turning to the AIG bond (issue (5)), we accept that it would have been necessary for someone to write to Ms Alexandra to discover what had passed between her and Mr Killmister before CITE invested in the bond.   But this is something that either Mrs Ching or Mr MacFirbhisigh could have done at any time after the investment had been made in early 2007.  It follows that neither Mrs Ching nor Mr MacFirbhisigh were under any empêchement de fait in respect of issue (5). 

367.   Finally so far as issue (6) is concerned, both Mrs Ching and Mr MacFirbhisigh knew before 25 November 2008 that Mr Gidley and Mr Killmister had charged fees.  Again, therefore, neither Mrs Ching nor Mr MacFirbhisigh were under any empêchement de fait in respect of this issue. 

368.   We therefore conclude that all of the Plaintiffs' claims against both Mr Gidley and Mr Killmister would have failed in any event on the ground that they were prescribed.  On this additional ground, therefore, we would have dismissed all the Plaintiffs' claims against Mr Gidley and Mr Killmister. 

Conclusions

369.   It follows that all the Plaintiffs' claims against all the Defendants fail and are dismissed.  We recognise that our decision will have serious financial repercussions for the Chings.  Nor is it pleasant for the Court to have to criticise Mr Ching given his present medical condition and in circumstances where he has not been able to defend himself.  But the Court's duty is to follow the evidence wherever it may lead.  The truth is that Mr Ching was a spendthrift with a misplaced belief in his abilities as an investor.  He, and he alone, was responsible for the financial difficulties that he first disclosed to Mr Gidley, and only later to his wife, in late 2005.  The subsequent deterioration in the Chings' finances was the direct result of those initial difficulties, and of the problems associated with the Digger shares (including his refusal to sell any of his Digger shares) for which he again was responsible, coupled with the effect of the credit crunch.  We can well understand Mrs Ching's feelings of anger when she learnt of their predicament in late 2005, and her disappointment that their finances continued to deteriorate thereafter.  Sadly Mrs Ching has come to believe, or has been persuaded, (we know not which) that that subsequent deterioration was the fault of Mr Killmister or Mr Gidley.  It is not, and it never was.  In addition the Plaintiffs' claims in this action were, as we have found earlier in this judgment, riddled with serious errors.  All that these proceedings have done is to make the Chings' bad financial position worse. 

370.   Nor should one overlook the impact of these proceedings on the Defendants, particularly in terms of their professional reputations.  CITE has had these proceedings hanging over its head for nearly six years, while Mr Killmister and Mr Gidley (and, of course, Mr Manning) have been in the same position for nearly four years.  For more than the first two of those four years the individual Defendants faced claims of conspiracy, dishonesty and deceit, and Mr Killmister faced an allegation of dishonest assistance until the very end of the trial.  Whilst Mr Killmister and Mr Gidley will no doubt be relieved that we have acquitted them of all these accusations made against them by the Plaintiffs (and Mr Manning will likewise be relieved that the Plaintiffs discontinued all their claims against him), the reality is that none of the Defendants should have been subjected to the stresses and strains of these accusations, or of these proceedings, in the first place. 

371.   Finally we would wish to repeat our gratitude to the advocates and their teams for the assistance which they provided to the Court.  In this regard we recognise the particular burden which fell on Advocate Garrood in having to take over the main burden of the case for the Plaintiffs at the eleventh hour. 

Costs

372.   Unless the parties are agreed on the appropriate costs order, we will hear submissions on this issue when this judgment is handed down. 

Authorities

Financial Services (Jersey) Law 1998.

Mental Health (Jersey) Law, 1969.

T.A. Picot (C.I.) Limited v. Michel Crill and Hamon [1995] JLR 33.

Riley v Pickersgill & Le Cornu [2001] JLR 471.

Hedley Byrne & Co. Ltd. V Heller & Partners Ltd [1964] AC 465.

Henderson v Merrett Syndicates Ltd [1995] 2 AC 145.

White v Jones [1995] 2 AC 207.

Hunt v Optima (Cambridge) Ltd [2015] 1 WLR 1346.

Williams v Natural Life Foods Ltd [1998] 1 WLR 830.

Customs and Excise Commissioners v Barclays Bank plc [2007] 1 AC 181.

Charlesworth & Percy on Negligence (13th edition).

Bateson v Savills Private Finance Limited [2013] EWHC 719.

In the matter of the E, L, O and R Trusts [2008] JRC 150.

Libertarian Investments Limited v Hall 17 ITELR 1.

Underhill and Hayton's Law of Trusts and Trustees (18th edition).

Lewin on Trusts (19th edition).

In re Smith [2014] EWHC 3926 (Ch).

Masterman-Lister v Brutton & Co [2003] 1 WLR 1511.

Walker v Badmin [2014] EWHC 71 (Ch).

In the matter of the Strathmullen Trust [2014] (1) JLR 309.

Pitt v Holt [2013] 2 AC 108.

The Law of Trusts (2nd ed.) by Thomas and Hudson.

Knight v Knight (184) 3 Beav. 148 and Hunter v Moss [1994] 1 WLR 452.

King v King [1931] Ch. 294.

Re Beaney [1978] 1 W.L.R. 770.

Re Morris [2001] WTLR 1137.

Williams v Williams [2003] WTLR 137.

Quth v Hussain [2005] EWHC 157 (Ch).

Deacon v Bower [1978] J.J. 39.

Sutton v Sutton [2010] WTLR 115.

Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669.

Nolan v Minerva Trust Company Limited [2014] JRC 078A.

Trusts (Jersey) Law 1984.

Gwembe Valley Development Co Ltd v Koshy (No.3) [2004] 1 BCLC 131.

Limitation Act 1980.

Bristol and West Building Society v Mothew [1996] 4 All ER 698.

In re Esteem Settlement [2002] JLR 53.

Public Services Committee v Maynard [1996] JLR 343.

Boyd v Pickersgill and Le Cornu [1998] JLR 305.

Minories Finance Limited v. Arya Holdings Limited [1994] JLR 149.