Neutral Citation Number: [2015] ewhc 2507 (Fam)

Download 333 Kb.
Size333 Kb.
1   2   3   4   5   6   7

The 1928 Bentley

  1. The 1928 4.5 litre Bentley racer was purchased by H for £395,000 in October 2009. This H maintains was the only motor vehicle of significant value in his personal beneficial ownership as opposed to the significant number of others in the Car Portfolio (many of them of significantly more considerable value) which were just registered in his name but which never belonged to him. He apparently drove the Bentley regularly when at Château T. I have formed the distinct impression over the course of my dealings with H and this car that it was high in his affections, although not sufficiently in his mind when in May 2013 he failed to include it in a list of his worldwide assets worth more than £100,000, nor in July 2013 when he omitted to mention it in his Form E: an error however soon corrected on his behalf the following month.

  1. In December 2011 EFG made £175,000 available to H via a personal loan facility "to assist with the ancillary costs related to your separation/potential divorce from [W]." The loan was to be secured by the deposit with the bank of the vehicle's registration certificate. This had the effect, while the loan subsisted, of reducing the realisable value of the vehicle to H, or indeed to W were she to seek to enforce any award against it. Yet it would have been open to H simply to make equivalent provision for this contingency from that very US$1m contingency fund which he had explained was covered by his own US$2.1m deposited back-to-back to secure his overdraft at EFG.
  1. When EFG cashed out in November 2013 amongst other loans and accounts they recouped this one. Once EFG had called in the loan and repaid itself from NHT assets the full value of the Bentley once more became available to H. That was apparent to Withers who on 28 November sent a fax pointing out that "since we assume that your client's Bentley is no longer pledged to EFG and is a free asset, it is incumbent upon him to take all steps to sell the vehicle. We await hearing from you that this is in hand and by way of moving matters forward will have joint conduct of the sale. Although your client has valued the car at £400,000, we have evidence to suggest that it is worth closer to £1m." This was the same month that for H it had been written that he was "now taking steps to find liquidity." The suggestion was never taken up nor substantive response at that stage provided. That the Bentley was "free" seemed also clear to RFG as it features in the list of to-be-pursued assets referred to in correspondence and at the 3 December meeting.

  1. On the same day, 27 November 2013, that word of H's permanent exclusion from the trust arrived from Hong Kong during the course of a consultation with Mr Pointer an oral agreement was reached whereby H charged the Bentley in Beckmans' favour, to secure his costs to date and his continuing costs of these proceedings. It matters not whether that arrangement was immediately effective, but on 13 December 2013 it was formalised by a deed between H and Beckmans. None of this was disclosed to W or her solicitors until the existence of the charge was, I must say inappropriately casually, described in a letter dated 31 January 2014. A copy of the deed was supplied on 3 February 2014.

  1. By then events had moved on. On 23 January 2014 ST sought and obtained from Cobb J at a without notice hearing orders restraining dealings with the Bentley (and for that matter with the Piper Archer aircraft, with which I will deal separately). He also ordered delivery up of the Bentley to agents for W for the purpose of preserving the vehicle pending any further order which might be made at an on notice hearing before me which in the event stretched over a number of days in early February and early March 2014. It was thus just only shortly before the first day of those hearings on 5 February that W and ST were made aware of the charge H and Beckmans asserted the firm held over the Bentley.
  1. At the February hearing I adjourned what by now had become a clutch of interlinked applications until early March, continued meanwhile the restraint against dealings but suspended the requirement to deliver up the car which Cobb J had ordained. When the question was again canvassed, on 5 March 2014 I reimposed the obligation to deliver up the vehicle. That led H to apply to the Court of Appeal for permission to appeal and he initially obtained a stay ordered on 11 March 2014 upon consideration by Patten LJ of the papers H lodged in support. On reconsideration at an inter partes hearing on 28 March 2014 he conditionally lifted the stay: the judgment he then gave is reported at [2014] EWCA Civ 520. By then, as recited at [8] and [12] of that judgment,

"… a more complicated issue is the intervention into the timetable of a claim by the New Huerto Trust (which I will refer to for convenience simply as "the Trust"), which took place on 19 March, after I had granted the stay, by the initiation of proceedings in the court in Aix-en-Provence as part of an attempt by the trustees to recover a debt from the husband … The judge in Aix on 20 March put in place a saisie conservatoire (which, so far as I can judge from the translation of the order, seems to be something either in the nature of an injunction or some form of attachment) over the car, which, according to the terms of the order, requires the vehicle to be seized within three months of the making of the order. Mr Pointer QC has told me this morning that there has been some form of walk-in [walking?] possession, but that the car physically remains at the husband's house in Provence."

  1. If the appeal is ever pursued then, subject to permission being granted, the principal issue it raises is the extent of the court's powers to grant interim remedies under FPR 2010, rule 20.2: but the outcome of the appeal is unlikely to have any impact on matters now under consideration, in the light of subsequent events.

  1. The French saisie conservatoire proceedings similarly attached H's interests in the SCI and in the Piper Aircraft.

  1. Over six days from 25 March 2014 I heard (amongst other applications) and decided against W's application under section 37 of MCA 1973 to set aside the Beckmans charge. Those proceedings are more particularly described in a judgment [2014] EWHC 3769 (Fam) which I handed down on 15 April 2014.

  1. One might have thought that there would have been lively litigation in France to establish the priorities in relation to the Bentley as between Beckmans' charge and NHT's saisie. If H is accurate in his evidence that his oral communications with TB since he learned of his exclusion have been limited to the two occasions when, with SDM, in December 2013 and more recently in April 2014 they attended meetings with him in Hong Kong, then it would appear that the first TB learned of Beckmans' arrangement with H over the Bentley was at the very end of that second meeting on 10 and 11 April 2014, according to the Notes which TB prepared. On its final page TB "reminded SDM that the Trustees had recently secured injunctions in the French Courts (saisie conservatoire) over H's assets in France." He made plain, according to the Note, that RFG would continue vigorously to pursue enforcement in respect of the losses suffered by the trust at the time of "the EFG melt-down." The Note continues "SDM also informed the Trustees that the Bentley was already charged to Beckmans by way of a chattel mortgage against legal fees since November 2013."

  1. But in fact what happened was that, five months later, H and Beckmans and NHT agreed a deal on 10 September 2014 whereby the vehicle passed into trust ownership for £650,000, payable as to £550,000 to Beckmans to release their charge (and pay H's outstanding and some of his prospective legal fees) and by an in effect notional payment of £100,000 to H by way of a £100,000 reduction in NHT's claims against him. ST were not informed that this second arrangement was being negotiated nor when it was concluded
  1. I am at a loss to understand how H and Beckmans can have overlooked the fact that the Bentley was at this juncture still subject to the order I had made in March 2014, restraining H from disposing of or dealing with the vehicle. But I will say no more on that score having regard to the fact that W and her advisers at the pre-trial review on 26 September 2014 agreed not to pursue applications for committal against either H or SDM, and SDM in turn agreed to swear an affidavit about the sequence of events leading up to the agreement with NHT.

  1. In that affidavit sworn on 17 October SDM to the following extent and in the same terms reiterated what she had previously included in an earlier statement she had made on 17 September 2014. In both documents she described her understanding as being that in communications between the lawyers acting in France for H and their counterparts acting for NHT the latter were informed of Beckmans' prior charge. She continued that following that, in August 2014 "I was contacted by TB on behalf of the Trustees who informed me that they had been unaware of my firm's prior charge and therefore they had been actively looking for and have found a buyer for the Bentley at a price that exceeded the market value." Such an assertion as to the duration of TB's and RFG's state of ignorance of the Beckmans' charge would have been untrue, and moreover untrue to the knowledge of SDM, given what TB's own Notes of the April 2014 Hong Kong meeting recorded her as having then told him.

  1. She then (unaccompanied by H on this occasion) for the third time travelled to Hong Kong for a meeting with TB. At that stage the negotiations related to the price at which RFG would buy out Beckmans' charge, but they became tripartite and H was necessarily involved when it emerged that the trustees were saying they had a buyer to whom they could sell on the vehicle and still make a profit over and above the ultimately agreed effective price £650,000. SDM in her affidavit said that the trustees were not prepared to disclose exactly how much they had been offered for the Bentley, and that she does not know the identity of the purchaser or the selling price. None of this was probed with SDM in oral evidence at the hearing, I should make it clear. The documentation in relation to the purchase by NHT was concluded on 10 September.
  1. On 16 September 2014 it appears that the vehicle was collected from Château T by a garage in Antibes. The previous day as appears from a copy invoice from Anthology the Bentley was sold to a purchaser in New Jersey for US$1.06m, which may have provided the trust with some minimal profit. That document (and others previously withheld by TB) only became available at the beginning of December on the day before final submissions were to be made. The financial outturn for H and his solicitors was that Beckmans were able to take payment for outstanding liabilities from H amounting to over £192,000; to pay disbursements to counsel and others of just under £340,000; and to remit just under £17,000 to H. He does however have the additional benefit of knowing that he owes NHT £100,000 less than he otherwise might.

The Piper Aircraft

  1. I have mentioned in passing a Piper Archer aircraft owned by H. It is in fact registered in the name of a foreign corporation which customarily holds title to such planes, Aircraft Guaranty Trust. H's case has for some time been that he wishes to sell it and hopes to carry forward discussions with a prospective purchaser, most likely the French company Busiflight to which it is currently chartered. The holding order agreed after the 6 February hearing provides that H may use the airplane to discharge existing contractual obligations and that he may enter into negotiations with the prospective purchaser in relation to its sale provided (i) no concluded agreement for its sale is made by him without either W's written consent or further order and (ii) H shall keep W informed of any offers made in respect of the airplane and of the gist of any negotiations for its sale. Nothing of substance had emerged, it seemed, by the time of the final hearing.

  1. There must be some doubt whether the saisie
     ordered by the French court is effective, and thus whether RFG will be able to take this aircraft and to put its proceeds towards the asserted US$7.08m which H is said to owe the trust. In his Form E in August 2013 H gave its value in sterling as £185,794.64 and submitted in support of that a document suggesting an asking price of US$285,000 for just such an aircraft.
  1. While on the topic of aircraft, I should mention that H shows as an illiquid asset US$250,000 which he has paid as a deposit against the much delayed delivery of a Honda Jet. The balance of the purchase price is US$4m. H expressed no anxiety in his current parlous circumstances (another global economic meltdown apart) in coping with this liability when it falls due. In evidence he said that the latest estimated delivery date was probably the first or second quarter of 2016, and that he had "set up a multi-billion dollar empire with very little capital. It is a question of leverage and investing partners." Asked whether he regarded operating a single jet as a viable source of income and livelihood he was optimistic describing it as "a big growth area of business especially if you have the latest jet technology."

The Swiss arbitration

  1. In February 2014 lawyers in Switzerland instructed by RFG on behalf of NHT launched a claim against H for US$7.06m. In March Swiss seizure orders were served on H. In April H acceded to RFG's suggestion that the claim be referred to arbitration and on 13 October, 2 weeks before the commencement of the final hearing in London, the arbitration award became available requiring H to pay the amount claimed, plus interest from 6 December 2013, and costs. The advocate for the trust thereupon applied to seize the Zermatt land and it is likely by now, if as predicted the sale was completed at the end of the year, that the proceeds will have passed to RFG. H gave as his reasons for agreeing to arbitration that the process would be speedier, and cheaper, than being pursued through the courts.

  1. I regard it as not without significance that on a number of occasions during the course of the award the arbitrator makes clear that the stipulated amount of US$7.06m is neither necessarily the be all nor more particularly the end all of NHT's claims against H. This first emerges from the way in which the claim is formulated at paragraph 10 of the document, not only for that amount and interest, but that H "should also, in this regard, be expressly liable to continue paying additional claims." The same words appear at paragraphs 2 and 44, and it is clear from paragraph 86 and from the even more recent letter from the Swiss lawyers dated 17 November 2014 (see below at paragraph 80) that RFG did and do indeed contemplate making further claims.
  1. The arbitrator noted that the facts of the case were uncontested. In particular it is clear that the trust was not put to proof of the amount claimed, for instance as to how it was calculated. Nor did H contest that in November 2013 "EFG used assets that had been pledged by NHT in the amount of US$18.9m in total."

  1. Paragraph 59 records that "according to the understanding of the trust, H promised that the trust would not incur any damages with regard to payments to EFG for 'all existing obligations between the Trust and EFG arising from the security agreement' with EFG. For the trust, the guarantee event covers all the amounts that the claimant has to pay to EFG on the basis of the guarantee." H's response to this is recorded in paragraph 61 as being that he did not foresee a situation such as has occurred, and that he could not nor should he be expected to have assumed that on the basis of the pledge given to EFG he should be encumbered with any demand whatsoever from the trust as if he were a guarantor, because in that case the trust would be able to enter into transactions of any arbitrary amount at his expense.

  1. Paragraph 86 is in these terms:

"[NHT] has limited the actual amount it is claiming from [H] to US$7.06m with the reservation that it may make further claims. This is justified by NHT for the reason that this amount corresponds to the value of the still demonstrably existing assets in which [H] has invested. This is not contested by [H]. Such a contestation would, however, not be relevant because [NHT] its free to claim even just part of its total claim."
  1. RFG's stance in the Swiss arbitration in leaving open a claim above and beyond US$7.06m requires consideration in the context of the confusion and imprecision, as I shall describe them, as to the method of calculation of that very precise amount, arrived at so rapidly (but "approximately … the exact amount will be confirmed") by the time of the 3 December Hong Kong meeting and since maintained as the loss which NHT is entitled to reclaim, and moreover with the casual if not indeed supine reaction of H to the amount claimed and whether or not it is the correct sum on any view.

  1. The translation of the Swiss arbitration award into English took some time, and it only became available for distribution at a late stage of the oral evidence in November 2014. The translation confirmed what I suspected from looking at the German language original which had earlier been produced, namely that (as described above) NHT's claim against H in the arbitration proceedings was not limited to US$7.06m, but clearly contemplated additional claims. Questions were put to H to ascertain why not only the original US $7.06m had been unchallenged as a specific loss at that stage claimed, but also why it appeared that no point had been taken about the additional claims contemplated.

  1. In the weeks between those questions being posed and the commencement of submissions NHT's Swiss lawyers wrote a letter to their counterpart acting for H on 17 November 2014 which, after confirming their intention to proceed to the seizure of the Zermatt land, included yet another formulation of NHT's claim and its intentions:

"Additionally, we wish to notify you that our client also intends to enforce the award decided upon by the sole arbitrator on 13 October 2014 in France, by claiming the assets which originally triggered the proceedings against your client. These are the assets listed below, which your client acquired using the financial resources granted by EFG and for which our client provided securities:

    • Land in Zermatt (2.5 million CHF)

    • Château T (2.7 million euros)

    • Loan account (2.7 million euros)

    • Motor vehicle produced by Bentley (400,000 GBP)
    • Aircraft produced by Piper (317,000 USD)

We assume that you are aware that the claim of our client asserted so far (regarding which the announced award was in excess of 7,060,000 USD) covers only the expenditure for 10% of the shares in Château T, as the residual financial resources went to the children for the purposes of acquiring the castle. However all of the resources from the acquisition of the castle belong to our client, pursuant to the Counter-Indemnity Letter dated 30 August 2010. [My emphasis]

At the moment our client is still minded to seek a pragmatic solution, as he does not wish to cause any harm to your client if this can be avoided. Our client's sole priority is to fulfil his obligations as trustee of NHT; specifically, to cover the losses to the Trust from which your client financially benefited to a corresponding level in return."

  1. Mr Pointer submits that the use of those words "so far" cannot be stretched to imply any wider claim against the children's shareholding, or against H in respect of their value. But to me this does appear to represent, in the final weeks of this hearing, a significant upping of the ante on the part of TB and the trust. Until this letter only the value of H's 10% shareholding in the Château T SCI (but not the children's 90%) was being pursued. One can only speculate how H has reacted to what he must necessarily regard as a further stab in the back from TB, bearing in mind his hope to be able to retain that property long-term as a home for the children. I must of course ask myself which is more likely: further evidence of H being sidelined, or window-dressing.
  1. Using the same conversion rates as Mr Wilkinson employed in creating an asset schedule for the final hearing, I worked out the US dollar equivalent of the amounts stated, converting CHF and euros into sterling, and then the sterling total into dollars. The aggregate amount is US$10,174,718 or thereabouts: in any event a far cry way and above the US$7.06m until that point consistently (save in the Swiss Award) advertised by TB and RFG as the amount that NHT was entitled to reclaim from H.

The net effect of NHT's claim on H

  1. On the face of it, H has been wiped out. Unless he manages to sell the Piper aircraft and
     to keep the proceeds immune from attack by the trustees he is left with no free assets of any substance but only a variety of more or less pressing liabilities. His income situation is as dire. That at least could be ameliorated were he willing and able to take up employment, but a number of obstacles stand in his way which he says prevent that from happening in the immediate future. Meanwhile he hopes to be able to continue living at Château T with the children, it would seem indefinitely, and spoke in terms of retaining it as the family home long-term, even though for fiscal reasons he might be spending more than half the year based in Switzerland or in Monaco or wherever, while the children in three years time also might be boarding full-time at schools in England. Quite how this scenario might be achievable without being underwritten, one way or another, from trust resources it is difficult to contemplate. As stated at the outset, I must decide whether this presentation represents reality. Along the way to my conclusion a number of issues both of fact and of law fall for decision.

The state of the parties' relationship before their marriage
  1. This was keenly disputed. W claimed that they were more or less immediately committed to each other long-term after their first meeting in Bequia in April 2001, or at least at a very early stage thereafter, and that both from then on contemplated marriage. H on the other hand says that for his part he did not regard their relationship as potentially enduring until at least two years later after Easter 2003 (when together they visited his parents who were then staying in Miami) and after he says they commenced living together on a regular basis from (he puts it at) September 2003. They did not in fact marry until February 2006. The significance to each of them of this particular area of contention is twofold. W's prospects of establishing that NHT is an ante-nuptial settlement susceptible to variation in these proceedings might be enhanced if marriage was truly in contemplation when the trust was incorporated in December 2002; whereas if H is correct that proposition becomes less tenable. Furthermore, W must apprehend her case to share in the wealth produced by H is greater (were I to find that it is indeed wealth to which I can have regard in these proceedings) on her presentation of the relationship's history, whereas conversely he might hope to demonstrate that she was not for him a significant adult in the early stages of his wealth generation once LCAL, incorporated in June 2004, started business towards the end of that year.

  1. In reaching any conclusion upon these divergent retrospectives I must of course form a view about the credibility of the parties, they being the only witnesses to the events to whose evidence I propose to pay regard, and there being nothing by way of documentary evidence to help establish the truth of their situation as it developed.

Share with your friends:
1   2   3   4   5   6   7

The database is protected by copyright © 2019
send message

    Main page