CLAIM NO. AXAHCV 2002/20 IN THE EASTERN CARIBBEAN SUPREME COURT IN THE HIGH COURT OF JUSTICE ANGUILLA CIRCUIT (CIVIL) A.D. 2003 BETWEEN: SINEL TRUST ANGUILLA LTD. AND Claimant THE ATTORNEY GENERAL OF ANGUILLA JOHN FELIX BENDER ANN MAXINE PATTON JOHN KOONMEN Defendants Appearances: Mr. James Corbett QC, Mr. Lynton Tucker QC, Mr. Kenneth Porter and Mrs. Cora Richardson Hodge of Counsel instructed by Keithley Lake and Associates, Solicitors for the Claimants; Mr. Mark Brantley, Counsel for the 2 nd and 3 rd Defendants; Mr. Robert Hildyard QC with Mr. Jonathon Wheeler and Solicitor Mr. Harry Wiggin, instructed by Webster Dyrud Mitchell, Solicitors for the 4 th Defendant; The 1 st Defendant having been given notice of the application but not appearing nor being represented. --------------------------------------------------- In Chambers 17 th and 30 th June 2003 27 th August 2003 -------------------------------------------------------- SEALED DECISION [1] EDWARDS J: This is a determination of the Application by a Trustee brought under Part 67.4 of the CPR 2000, seeking the Court s approval of the Trustee s compromise of legal proceedings, and the surrender of its discretion to the Court. Because of the nature of the proceedings this decision is to be sealed. [2] The Claimant, Sinel Trust Anguilla Limited (STAL) is the Trustee of a settlement known as the AMBER EMPLOYMENT BENEFIT TRUST (AEBT.)
[3] The 1 st Defendant, The Attorney General of Anguilla, ceased being a party to these proceedings by a ruling of this Court on the 11 th April, 2002. [4] The 2 nd and 4 th Defendants, Mr. John Felix Bender and Mr. John Koonmen are the two principal beneficiaries to the AEBT fund. The 3 rd Defendant, Ms. Anne Maxine Patton is the wife of Mr. Bender, and also a beneficiary of the AEBT. Both Mr. Bender and Mr. Koonmen are American citizens, but Mr. Bender resides in Costa Rica and Mr. Koonmen in Japan. [5] As a result of differences between Mr. Bender and Mr. Koonmen, concerning, among other things, the proportion of their interests in the AEBT fund, Mr. Koonmen commenced proceedings in the Jersey Royal Court of the island of Jersey against eight Defendants including Mr. Bender and STAL on the 30 th November, 2001. [6] The settlement of the AEBT was established under the laws of Anguilla. The forum of administration is Anguilla. [7] On the 20 th December, 2001 Mr. Koonmen applied for and obtained an Order for service of the proceedings outside of the jurisdiction on five Defendants including STAL and Mr. Bender, requiring their appearance before the Jersey Royal Court on the 8 th February, 2002. [8] By a fixed date claim filed on the 27 th March, 2002, pursuant to Sections 57 and 58 of the Trusts Act Revised Laws of Anguilla; Cap. T70, Part 67.4 of the CPR 2000, and the inherent jurisdiction of the court, STAL sought directions as to how to address the issues raised by and in the Jersey proceedings. 2
EVENTS PRECIPITATING COMPROMISE [9] STAL and another Anguilla Defendant, Amber Investment Advisors Ltd. (Anguilla) (AIA) having been served with the Jersey process, issued a summons on the 25 th February, 2002 seeking leave from the Royal Court to set aside service out of the jurisdiction or a stay on grounds of forum non conveniens. [10] STAL sought and obtained directions from the Anguilla court on the 30 th April, 2002 concerning the Jersey proceedings. [11] On the 19 th June, 2002 the Jersey Royal Court dismissed the Summons dated 25 th February, 2002. [12] The Anguilla court again gave directions to STAL on the 18 th September, 2002, authorizing STAL to pursue an appeal against the decision of the Jersey Royal Court. [13] The Jersey Court of Appeal allowed the appeal on the 14 th November, 2002, set aside the Order granting leave to serve STAL out of the jurisdiction, and stayed the Jersey proceedings. Mr. Koonmen was ordered to pay the costs of STAL and the other defendants in the Jersey action. [14] Settlement discussions subsequently took place between Mr. Koonmen and Mr. Bender, resulting in a settlement letter dated 30 th December, 2002 signed by both of them. [15] The substance of this letter in summary, states that they wish to bring the Jersey and the Anguilla proceedings speedily to an end on the proposed terms, with provision for release of all claims between them. That upon the execution of a settlement agreement and any other necessary and appropriate agreements and documents by the other parties to the Jersey and Anguilla proceedings, both proceedings will come to an end. They express their intention for the letter to be legally binding on both of them. Their wishes have been 3
communicated to STAL and all the other seven Jersey Defendants, who have been involved in the discussions regarding the proposed terms of settlement. APPLICATIONS AND FIRST HEARING [16] As a consequence of the settlement letter and other settlement arrangements, and proposals in the spirit of compromise, STAL approached this Court on the 11 th June, 2003, seeking, among other things, to amend the Fixed Date Claim. [17] The amendment which was granted on the 17 th June, 2002 addressed STAL S need for further directions from the court regarding the compromise settlement. [18] At the hearing of the Ammended Fixed Date Claim, the Court heard submissions from Mr. Corbett QC, who amplified the skeleton arguments filed on the 17 th June, 2003. Counsel for the other parties, QC Mr. Hildyard and Mr. Brantley were supportive of STAL s Application. Since negotiations were still in progress concerning the draft Settlement Agreement, the Application had to be adjourned. [19] The matter was part heard and adjourned for the 8 th Affidavit of Mr. Joseph Brice to be filed, along with further written submissions from Counsel for STAL. [20] The final draft Settlement Agreement was filed on the 2 nd July, 2003, with some revised terms. This has necessitated the filing of another application, requesting further amendment of the Amended Fix Date Claim form, and the validation of Mr. Joseph Brice s 9 th Affidavit filed on the 2 nd July, 2003. [21] The further amendment is necessary so that the directions sought by way of relief will reflect the relevant changes in the terms of the Settlement Agreement. Paragraph (3A) (f) of the Ammended Claim has been further amended, and a new paragraph (3B) has been added. 4
[22] I also have before me the Affidavits of Counsel, Mr. Mark Brantley and Solicitor Mr. Harry Wiggin who support this Application. [23] Although the draft Re-ammended Fixed Date Claim Form has not been verified by the Claimant, I have permitted the Ammended Claim Form to be further amended in terms of the draft Re-ammended Claim Form filed on the 30 th June, 2003. The Re- amended Claim Form duly verified, is to be filed and served within five days from the date of the delivery of this decision. [24] The 9 th Affidavit of Joseph Brice sworn to on the 30 th June, 2003 and filed on the 2 nd July 2003 is deemed to have been validly filed. [25] I turn now to consider the Order requested in the unsigned draft Fixed Date Re-ammended Claim. THE RELIEF SOUGHT [26] By paragraphs (3A) STAL has basically asked this Court to allow STAL to surrender its discretion to the Court regarding the matters set out at paragraphs (3A) (a) to (f). If I accede to this request, then I will be exercising the discretion which the law gives to Trustees. [27] The powers of the Trustee under Section 32 and Schedule 2 paragraph 4 (14) of the Trusts Act Cap T 70 (Anguilla), include the power to institute, prosecute and defend any suits or other proceedings affecting the Trustee or the Trust Fund, and to compromise any matter of difference. [28] Section 56 (1) (a) (i) of Cap. T 70 gives the Court power to make an order concerning the execution, administration or enforcement of the trust on the application of the Trustee. 5
[29] Part 67.4 (1) (b) and (2) (b) of the CPR 2000 permits a Trustee to issue a claim for the determination of any question arising in the execution of or under a trust. [30] Part 67.4 (1) (a) and (3) (a) of the CPR 2000 allows the Trustee to apply for an order approving any compromise or other transaction. [31] Under Part 67.4 (1) (a) and (3) (b), the Court can make an order directing any act to be done in the execution of a trust which the Court could order to be done if the trust was being administered or executed under the directions of the Court. [32] Although the Trusts Act and the CPR embody the present proceedings, it is the common law that establishes the guidelines regarding the surrender of the Trustee s discretion to the Court. [33] It is most unlikely that the Court will be persuaded to accept the surrender of the Trustee s discretion in the absence of special circumstances, and where the Trustee is in a better position than the Court to know what is in the best interest of the beneficiaries. The Court will be persuaded to accept the Trustee s surrender of its discretion in special circumstances, or for a good reason where the trustee is disabled because of conflict of interest (Per Hart J. in Public Trustee v. Cooper [2001] WILR 901, 922 para G.) [34] As the law requires, STAL has put this Court in possession of all the material necessary for me to determine whether such special circumstances exist, and in what manner I should exercise the discretion on behalf of STAL (Per Lord Oliver in Marley v. Mutual Security [1991] 3 ALLER 198, 201) [35] From the material submitted to the Court, and the Affidavit evidence of Mr. Joseph Brice it appears that there are at least five reasons for requesting the Court to accept STAL s surrender of its discretion. They are as follows:- 6
(a) The background of the dispute, and the litigation in which STAL has been involved, and the nature of the claims made in the Jersey Proceedings; (b) The character and terms of the Settlement Agreement; (c) The connection between the terms of the Settlement Agreement and the exercise of the powers which will bring it into operation; (d) The need for STAL and the beneficiaries to be protected, particularly in light of the risk of attack on the trust structure by Eifuku and Silvermen Claimants; (e) The need for STAL to maintain neutrality in the event of future claims. [36] I am satisfied that the reasons advanced are good and compelling reasons. They have established the special circumstances necessary for the Courts acceptance of the surrender of the Trustee s discretion. I will accept the proposed surrender of the Trustee s discretion to the extent indicated in the Application. THE COURT S EXERCISE OF THE DISCRETION [37] I must now determine the appropriateness of STAL agreeing to the final draft Settlement Arrangements arrived at between the beneficiaries of the trust, Mr. Koonmen, Mr. Bender and Ms. Paton, and taking the steps set out in the Agreement. [38] Before making this determination, I must bear in mind the statement of Nicholls V. C. in Thrills Ltd. v. Lomas [1993] 1 WLR 456 at 467 I must act in the manner a reasonable trustee could be expected to act having regard to all the material circumstances. I must do what is just and equitable. 7
[39] I must also exercise the Court s discretion with due regard for the interests of the beneficiaries. [40] I am guided also by the decision In Re Earl of Strafford, deceased [1980] CL 28 (C. A.)., where it was held Where the Court accepts surrender it has power to accept a compromise if satisfied that it is desirable and fair to all the beneficiaries, and it is not necessary for all the beneficiaries to consent before the trustee accepts the compromise. [41] I must also heed the decision In Re Ezekiel s Settlement Trusts [1942] CL 230 (CA). It was held in this case that the Court has jurisdiction to exercise the discretion on behalf of the trustees and to sanction the compromise. When assisting trustees in such a case, the court must pay full attention to the views put before it on behalf of beneficiaries. The court is deciding what ought to be done, having regard to the interests of everybody concerned. [42] The matters which are the subject of the surrender of discretion for the court s consideration are as follows (1) Whether the Court is satisfied that it is right and proper for the Trust Fund as a whole including the proposed additions to it, to be made available for the benefit of Mr. Bender and Mr. Koonmen in accordance with the Settlement Agreement Clause 3.1 (a) and (b). (a) (b) I must consider whether there should be a split of the Trust Fund into two funds, one primarily for the benefit of Mr. Koonmen, the other primarily for the benefit of Mr. Bender and his wife Ms. Patton. If yes, then what should the proportions be and in what manner should the splitting occur. 8
(c) I must consider further whether the particular terms of the proposed appointment in favour of Mr. Koonmen are appropriate and fit for the approval of the Court. [43] In determining all of these matters I have taken into account the 7 th, 8 th, and 9 th affidavits of Mr. Joseph Brice, the documents exhibited, and the submissions of Counsel. I have focused on the evidence regarding the manner in which the splitting will take place, and the proportions for the splitting. In particular I have considered the US Tax Advice Memoranda dated 13 th June, 2003 and its revision dated 30 th June, 2003 Exhibit JB46. I have also considered the US Tax Advice Memorandum dated 30 th June, 2003 Exhibit JB47. [44] I am satisfied that neither STAL nor AIA will be liable to pay any United States Federal income tax or file any return or make any disclosure to the US Internal Revenue Service as a consequence of the proposed Agreement. [45] I am also satisfied that there appears to be no inherent defect in the proposed arrangement regarding Mr Koonmen s assets, provided that the claims of any general unsecured creditors of AIA are enforceable under the law of Anguilla. [46] I have also focused on the evidence of Mr. Brice regarding the sale of the Remus shares by STAL to AIA (Anguilla) and the Deed of Addition of Property. I have paid attention to the Supplemental Deeds. [47] These Deeds disclose that Mr. Koonmen and Mr. Bender have finally resolved between themselves and other persons benefiting under Deed 1, any questions as to the status of AEBT and the character and effect of the trusts. Given the allegations raised in the Jersey action about the Virginia Agreement and the validity of the AEBT, the Supplemental Deeds seem to put an end to such allegations. 9
[48] The Deeds also put an end to litigation between the parties to the Jersey action and these proceedings. Most importantly, Mr. Koonmen has released STAL and STAL has released Mr. Koonmen. [49] The Deeds appear to have effectively dealt with the Jersey action issues concerning the bonus payments in favour of BET-UK employees. [50] Regarding costs, I note that the Settlement Agreement apart from providing for termination of the Jersey action, also provides that the costs order made therein will not be enforced against Mr. Koonmen. [51] I also note Clause 9 and 11 of the Settlement Agreement which sets out the Arrangement regarding costs of these proceedings, and costs prior to the Settlement Agreement. [52] I am therefore satisfied that the purpose of the splitting of the Trust Fund and the proposed terms of the Settlement Agreement is to benefit the beneficiaries Mr. Koomen, Mr. Bender, Ms. Patton and any other potential beneficiaries under the AEBT. STAL has the power to compromise and settle differences relating to the AEBT in the manner outlined by the draft Settlement Agreement. [53] STAL could have entered into the agreement which this court is asked to approve without coming to Court. Since STAL has surrendered its discretion to the Court it appears to me that I should approve the final draft Settlement Agreement since it is in the best interest of Mr. Koonmen, Mr Bender and Ms. Paton to do so. Accordingly, I so approve it. [54] Regarding the directions sought in Paragraph (3B) of the unsigned Re-ammended Fixed Date Claim, I shall make that order also. 10
[55] THE COURT HEREBY ORDERS: 1. The Claimant is given permission to re-amend the said Claim Form in the terms of the draft Re-amended Claim Form annexed to the Application filed herein on 30 th June, 2003. The Re-amended Claim Form is to be duly verified and filed and served within five days from the date of delivery of this Judgment. 1A. The 9 th Affidavit of Joseph Brice is deemed to be validly filed. 2. The Claimant is hereby authorized, and pursuant to the surrender of discretion directed, to exercise the powers conferred by paragraphs 1, 2 and 16 of the First Schedule to the Settlement and all other relevant powers to sell a 100% shareholding in Remus Investments Limited ( the Remus Shares ) comprised in the Trust Fund of the Settlement to Amber Investment Advisors, Limited (a company incorporated under the laws of Anguilla) ( AIA Anguilla ) even though all the issued shares in AIA Anguilla are wholly owned beneficially by the Claimant, at the price and upon the terms set out in Part One of the First Schedule to a conditional Settlement Agreement executed in the terms of a final draft Agreement which is exhibit JB44 to the said Ninth affidavit of Joseph Brice ( the Settlement Agreement ). 3. The Claimant is hereby authorized, and pursuant to the surrender of discretion directed, provided that the powers referred to in paragraph 2 of this Order have previously been exercised pursuant to that paragraph in the way described in that paragraph, and that certain requirements referred to in the Settlement Agreement (being requirements referred to in clause 3 and 4 of the Settlement Agreement as the Relevant Remus Requirements ) are satisfied, to exercise the powers conferred by clause 3(1) 0f the Settlement and all other relevant powers to accept from AIA Anguilla as additions to the trust fund of the Settlement the cash sum specified in clause 4.2(b)(ii) of the Settlement Agreement and the Remus Shares 11
in the terms of the draft Deed of Addition of Property set out in Part two of the First Schedule to the Settlement Agreement. 4. The Claimant is hereby authorized, and pursuant to the surrender of discretion directed, to exercise the powers conferred by clause 9 of the Settlement and all other relevant powers to adopt the rules (such rules to be binding on the Claimant) with respect to a plan in the terms of the draft Deed of Adoption of Plan and Rules set out in Part three of the First Schedule to the Settlement Agreement. 5. The Claimant is hereby authorized, and pursuant to the surrender of discretion directed, provided that the powers referred to in paragraphs 2, 3 and 4 of this Order have previously been exercised pursuant to those paragraphs in the way described in those paragraphs, and that certain requirements referred to in the Settlement Agreement (being requirements referred to in clause 3 and 4 of the Settlement Agreement as the Relevant Remus Requirements ) are satisfied: (1) to exercise the powers conferred by the rules referred to in paragraph 4 of this Order and by clause 6(1) of the Settlement and all other relevant powers to appoint a part of the trust fund of the Settlement specified in Appendix B to the draft Deed of Appointment set out in Part Four of the First Schedule to the Settlement Agreement ( the Appointed Fund ) in the terms of that draft Deed of Appointment; and (2) to exercise the powers conferred by clauses 11(1)(a) and 18 of the Settlement and all other relevant powers in the terms of the draft Deed of Exclusion and Restriction of Powers set out in Part Four of the First Schedule to the Settlement Agreement. 6. The Claimant is hereby authorized, and pursuant to the surrender of discretion directed, to do all such things as on its part may be required to allow certain supplemental Deeds in the terms of the draft Deeds set out in the Second 12
Schedule to the Settlement Agreement and delivered by the Claimant in escrow (so far as concerns the Claimant and the Settlement) to come into effect and be delivered unconditionally if and when the Operative Date as defined in the Settlement Agreement ( the Operative Date ) occurs. 7. The Claimant is hereby authorized, and pursuant to the surrender of discretion directed, as trustee of the Settlement to do or omit, and allow or suffer any company in which it has a direct or indirect interest as trustee of the Settlement to do or omit, all such other things as are required to be done or omitted by it or any such company pursuant to the Settlement Agreement on or after the Operative date. 8. If the Operative date occurs, the Claimant shall file with the Court an Affidavit stating that the Operative date has occurred and upon filing such affidavit: (1) there shall be no order as to the costs of the 1 st, 2 nd and 3 rd Defendants of or incidental to these proceedings down to the date of this Order (so that they bear their own respective costs); (2) the costs of the Claimant of and incidental to these proceedings (including the legal and related costs, charges, expenses and disbursements relating or incidental to the negotiation and preparation of the Settlement Agreement and the documents contained in the Schedules to it) are to be assessed by a detailed assessment of costs on the indemnity basis (if not agreed by the 1 st, 2 nd and 3 rd Defendants) and retained or paid so far as attributable to preparation of, or advice in respect of, or approval by this Court of the deeds in the terms of the draft Deed of Adoption of Plan and Rules and the draft Deed of Appointment contained in Parts Three and Four of the First Schedule to the Settlement Agreement by the Appointed Fund or property representing it, and subject to that equally by the 13
Appointed Fund or property representing it and the rest of the Trust Fund of the Settlement; (4) the 4 th Defendant shall be removed as a party to these proceedings with no order as to his costs; (5) the Claimant is to be at liberty to apply to the Court in these proceedings concerning the exercise of powers of appointment and variation, or any other powers, as it may be advised, in relation to the Trust Fund of the Settlement other than the Appointed Fund or property representing it and/or in relation to the termination of these proceedings. 9. If the Operative Date does not occur and ceases to be capable of occurring in accordance with the terms of the Settlement Agreement, the Claimant shall file with the Court an affidavit stating that the Operative Date has not occurred and has ceased to be capable of occurring, and explaining why that is so, and upon filing such affidavit any of the parties is to be at liberty to apply as to the costs of these proceedings (without prejudice to or affecting any cost awards already made in favour of the Claimant in these proceedings). Dated this 27 th day of August 2003. Ola Mae Edwards High Court Judge 14