Did any property since acquired by NHT import a nuptial element?
This question arises as a result of the submission made by Mr Bates that one or more ingredients of the trust corpus may be susceptible to the variation of settlement provisions of MCA section 24 (1)(c) because of their own separate nuptial element. He invites me to decide that the acquisitions by NHT of Alta Vista and the London Properties were nuptial in character and thus that the trusts affecting them are variable under that provision.
As to Alta Vista, acquired by NHT in 2008 and held in Blue Orchid, the proposition adopts the conclusion reached by Coleridge J in N v N and F Trust  EWHC 2908 (Fam),  1 FLR 856 which was considered and approved by Munby J (as he then was) in Ben Hashem v Al Shayif & Anor  EWHC 2380 (Fam),  1 FLR 115. The question does arise whether that route to variability is open in the case of an asset held within a company, having regard to the impact of the Supreme Court decision in Prest v Petrodel Resources Ltd & Ors  UKSC 34,  2 AC 415]. But it is not a question which I need resolve for present purposes. In Ben Hashem the element of the property which was arguably a nuptial settlement that was settled was not the property itself but only the husband's revocable right to occupy it. That as I have outlined earlier in this judgment seems also to be the only basis of H's ability to use this trust property as the family's principal and later its secondary home. The likelihood is that NHT's trustees have already terminated that licence, but even if not they have the ability to do so with relatively short-term and conclusive effect. No contemplable variation of settlement in relation to that (at best) transient and distant interest would hold realisable value for W even if firewall provisions in section 83A(13) and (19) of the (BVI) Trustee Ordinance did not frustrate the intent of any such order by restricting enforcement of foreign judgments arising out of matrimonial proceedings (as is the effect of those provisions according to Mr Pointer's final submissions).
As to the two London Properties, it would I believe be a reasonable assumption that Milner Street acquired in 1999 passed within the ownership of GPH Ltd from HT to NHT on the occasion of or soon after the latter's institution in December 2002, and thus for the reasons already stated would not then have qualified as nuptial in any event. But there was never on the evidence any way in which either property could be said to have benefitted the parties qua spouses. I can see no avenue for making any order from which W might derive benefit from these properties and thus rule that no jurisdictional basis has been established for me to charge them with payment of any lump sum awarded to her, one of the suggestions made on her behalf.
Is (or was ever) the Car Portfolio owned by H?
H and TB/RFG say none of the Car Portfolio cars were ever owned by H and that none now is. If that is so then clearly I cannot declare them to be his, nor can I order their sale to provide a source for a lump sum for W or transfer them to her as part of her award. Moreover that would dispose in limine of the question whether any disposals by H might be reviewable under Matrimonial Causes Act 1973 section 37.
First however a few observations about this collection of very collectable classic cars.
• Although described at various stages of these proceedings as numbering 35, their total has fluctuated over the years since about 2009 when H says the process of acquisition seriously commenced.
• For present purposes neither the Bentley nor some more modest vehicles which H identified as personally owned either by him or by W are included in the generic description.
• No distinction is taken for present purposes between the earlier days when ownership may have been attributable to NHT, the middle period when cars purchased may have been attributed to the ownership of LCAL, and the more recent period since the incorporation of Anthology which is said to be the current beneficial owner of the entire Car Portfolio.
• Much time and energy was expended before and during the hearing in an attempt to establish more precisely the details and whereabouts of cars within the collection, but in light of what will be my findings I need say no more than that on that topic.
Investment in these vehicles has proved very profitable for their owner: H in his evidence clarified in relation to a list he had compiled at the beginning of October 2014 that the total of €22.2m was their cost price rather than, as he had put in this document, their "approximate value." In one case (which clearly would not be typical of the collection as a whole) a vehicle shown on the list at €2m had in fact by then already been sold for US$5.8m (equivalent at the date of sale to approximately €4.5m). A single vehicle, a particular Ferrari, bought in September 2012 cost US$8.5 million, and was the most expensive in the collection, according to H.
In the quest for evidence to assist in the attribution of ownership some factors must be regarded as neutral. In the case of vehicles registered in this jurisdiction (and so it is in some others) the fact that a car is registered to a particular individual expressly does not denote ownership: in England it is the keeper of the car whose details are kept by DVLA.
Other factors require an explanation to discharge the presumption to which the exercise of the indicia of ownership may give rise. In the context of this case those considerations might be thought to apply to a whole range of factors.
For instance, in his evidence in the domicile proceedings H accepted in answer to questions from counsel then acting for W that the car collection was his, and he later at the beginning of May 2013 included €40,000 per month costs incurred on the cars in the amount of expenditure he would need to be free to make from the EFG facility while the freezing injunctions were in place. These answers too were unambiguous:
MR. LEECH: You accept, do you, that what is owned by the New Huerto Trust via companies is in reality yours?
A It was up until I moved to France, my Lord.
Q Okay. So for tax reasons ----
SIR PETER SINGER: "It was until I moved to France"?
A That is correct, my Lord. Until just prior to moving to France.
MR. LEECH: You will explain in a minute what you did when you got to France, but up until that point they were your assets?
A That is correct, my Lord.
… you own a huge car collection, do you not?
A I would not say "huge". I do have a car collection.
Q In terms of value it is huge.
A I do have a car collection, yes.
Q How many cars?
A About 35.
Q They are owned through companies that are owned in turn by the [New] Huerto Trust?
A That is correct. Yes, my Lord.
He gave that evidence in April 2013, but as recently as at the final hearing he was still making comments in ownership mode, from which one might conclude that he continued to regard the Car Portfolio as very much his collection:
MR. BATES: And this particular Alfa Romeo, whilst we are on it, was a very special car for you, was it not?
A Not particularly. It was a very pretty car. It's one of the best cars to own. But it wasn't owned very long, so, if it was very particular, it would have stayed in the collection.
A You don't get rid of things if you're collector, if you love them. They would still be in there, which it seems it's not - been sold.
and he seemed not too downcast, just sour, at the effective expropriation and sale by RFG of his 1928 Bentley, remarking sanguinely in the course of his final recall for cross-examination on 2 December that although he was disappointed to lose it, he knew that TB and others at RFG had been looking to acquire a rather better and more authentic Bentley for some time, and indeed had in June 2014 purchased a 1930 model for £1.25m. He had not been aware of that until he saw documentation produced in the course of the proceedings, it was not of interest to him, it had nothing to do with him, and it would be wrong to suggest that when things between him and TB were patched up he might be able to use it as a replacement for his own.
Two of the particularly rare and exceptional vehicles in the collection, a McLaren F1 and a McLaren P1, sport the registration numbers F 1 JOY and P 1 JOY. At the beginning of October H showed their value (by which he explained he meant cost) at €2m and €1m respectively
It is clear from his evidence and from documentation gleaned from the internet that H is an extremely enthusiastic participant, both as a wheeler and a dealer, at each season's Grand Prix and Concours d'Elégance meetings in Europe and elsewhere. He is usually accompanied by a selection of wheels from the collection, and he prospects to find both potential sellers of desirable vehicles and possible purchasers at the right price of those which are for sale. He was until it was closed in a position via the EFG facility to put down deposits or to conclude transactions. It is also very clear that, even if not exclusively, he is the person who largely organised car movements, maintenance and the logistics of their necessary paperwork. Château T is at least from time to time the arrival departure and storage point of vehicles on their way to and from their destinations. He is absolutely without a doubt centrally involved in this multi-million pound activity, or has been until recently (by which I mean to include much of the period since his November 2013 permanent exclusion from trust benefits). Indeed it is unclear to me how many of the transactions necessary for this business to continue could be taken over by someone else.
When considering what weight to give to such factors as these I must keep in mind that it is far from uncommon for businessmen and entrepreneurs to refer to their house, their car, their plane, their helicopter, their yacht, their racehorses and polo ponies … as "mine" whereas such items then turn out to belong to the company, the anstalt or the trust.
Such laxity of expression may simply reflect self-aggrandisement, but can also prove revealing when one comes to assess the underlying realities, and to look (in this case) to find whether the cost of those cars which were paid for with the use of the EFG facilities (and it seems clear that most of them were, according to H) have been appropriately put down, as it were, as trust expenditure clearly distinct from the US$7.06m claimed back from H in the wash of the EFG meltdown.
Inferences may similarly be drawn from the lack of specificity and even more strikingly of differentiation with which schedules listing vehicles or worldwide assets have been drawn. H has always maintained that he does not have in his possession or have access to trust documentation, and asserts that he has been astute to have nothing available, even via his computer, in France which might link him with the trust or its assets. However, I have been shown documents put in evidence in the French proceedings some of which may well have been prepared before the move to France imposed such precautions. Some of them bear H's handwriting. They are:
• A typed schedule dated 16 January 2010 headed "Car Collection-Progress List" and bearing annotations H accepts he made. As well as 20 Classics the list shows vehicles said to be on order which include two shown as on order for the parties, and a range of what are described as utility vehicles which H confirmed belonged personally to the family and not to the trust, including a quad bike in Bequia.
• From the same period in early 2010, a typed and unannotated list spreading over two pages entitled "World Wide Property." It includes properties both owned and rented and their contents, vehicles, the sloop already referred to and its dinghy, without distinction between trust and personal property. It shows a total "value" of €23.3m
• An email in March 2010 from a private banking assistant at EFG addressed to Clive. She thanks him for sending photos of the most recent acquisition but warns him that he should be careful as "it does bear an uncanny resemblance to Mr Toad's car." She sets out balances on current accounts, deposits and loans at EFG in Guernsey and in London which H has (in his notes on the document) broadly converted to US dollars and then totalled to show the credit balances exceeding the debits by US$1.5m, "so US$1.5m still available." The lady at EFG ended her email with the question "Would you like the NHT and [GPH Ltd] as well?"
• Dating from December 2010 is an insurance schedule addressed to H at his Swiss residence. It lists 34 vehicles of which most but not all are within the Car Portfolio, the few others being those which H accepts belong to the family, including the Bentley. The insured value of all these vehicles together comes to some CHF24m. There is no reference to the trust or to any company on the document. H is described as the "Besitzer"of the vehicles, which I take in this context to signify no more than that he has an insurable interest in them. On the assumption that this document was issued on renewal of the insurance in October 2010 one would have expected some differentiation at least in the attribution as between H and NHT of the premium, bearing in mind that at this point neither he nor the children were entitled to benefit from the trust. This would be so whether or not the premium was paid from the EFG facility standing to H's credit. The amount due from H in respect of family vehicles would not have been inconsiderable, totalling roughly CHF1500.
• A similar insurance schedule, but dated 1 March 2011, bears H's annotations. The differences between this and the earlier version are immaterial for present purposes: the indiscriminate blending of trust and non-trust assets is repeated.
H did in his evidence proffer an explanation for the universal format of the global "World Wide Property" document:
Q There is apparently no distinction between cars or property which you say you own personally, as against those which you say are owned by LCAL Anthology or LCAL.
A Yes, not specifically on this document, but they're covered with an oral agreement that I had.
Q The very obvious inference is that it is all yours, with the possible exception of item 6 where Orchard Inc. is said to be the owner [of the sloop].
A That's not correct. That's not the reason this document was set up. This document was prepared to study what would be our exposure to maximum damage when we moved to France, so what could the French Fisc determine to be possibly our maximum damage and that's why it was prepared and it was prepared in conjunction with the insurance. …
SIR PETER SINGER: … This is not a list of what is in the trust, is it?
A It's not.
Q No, it is not a list of what is in LCAL. It is not a list of what is in LCAL Anthology. It is a list of what is in the Joy family, is it not?
A No, it's a list of all items that would have had my name attached to it because, remember, I was the registered keeper of quite a lot of these vehicles and, therefore, they were to be included as part of the risk. Funds held by the trust in America would not be here because the French Fisc wouldn't have visibility on them, but this is what I was asked to prepare for that task, my Lord.
So far, taking all this together, one might be forgiven for beginning to think that the lack of appropriate boundaries between H's "mine" and NHT's "thine" could indicate that TB/RFG may not have been adopting normal trustee-like principles in their tutelage of the trust assets for the long-term primary benefit of the Class B beneficiaries, the children. I confess that the word sham does spring to mind, at least in the non-technical sense of things not being quite what they appear. But for what I judge to be understandable legal reasons Mr Bates did not run W's case on this basis; and indeed, were I to make a finding of sham in the technical fiduciary-related sense, the BVI Court (not least having regard to the firewall provisions of the BVI Trustee Ordinance to which I was and to which I have referred) might not be as accepting of so exorbitant a conclusion as was the Jersey Court in the Fountain Trust case  JRC 099, agreeing to enforce the orders I had made consequent upon just such a finding in the case of Minwalla v Minwalla EWHC 2823 (Fam),  1 FLR 771.
However, by the onset of the final hearing TB had made available via SDM the key documents whereby the acquisition procedures for vehicles H acquired for the Car Portfolio became apparent. The documents in question are:
• What are described as Special Agency Agreements, dated 31 August 2010 and 8 April 2013
• Purchase Confirmation documents for completion and signature by H, and addressed to LCAL/Anthology
• Sale Confirmation documents to be completed and signed by H, similarly addressed to LCAL/Anthology.
By the conclusion of the hearing uncontested evidence had been supplied by the witness to H's signatures to support the proposition that the Special Agency Agreements were signed on the dates they bear.
It may help to illustrate the difficulties created by TB's late disclosure of documentation, and the degree of suspicion inevitably (as it seems to me) to which such unhelpful conduct gives rise, just to spell out that it was only in H's final statement of 10 October 2014 that there came the very first mention of such a thing as a Special Agency Agreement with LCAL/the Trust. On 13 October 2014 H's solicitors sent a document to W's solicitors under cover of a letter saying simply: "We attach copy documentation we received on [11 October 2014] which are relevant to your clients S37 application." This document was the Special Agency Agreement dated 8 April 2013 which appoints H as its special agent in relation to a new classic car business, Anthology. No annexures A or B were made available. Then on 21 October 2014, three working days before the hearing was due to commence, H's solicitors sent a further document, the earlier Special Agency Agreement dated 31 August 2010 whereby LCAL had appointed H as its special agent, this time with pro-forma Annexures A and B (the template purchase and sale confirmation documents). Also enclosed were two letters dated 8 April 2013 and signed by H referring inter aliato all UK registered and Swiss registered cars which previously belonged to LCAL as belonging henceforth to Anthology LCAL.
I shall ignore when I come to deal with them the complications that the Special Agency Agreement was signed twice over, once in relation to LCAL and later repeated in relation to Anthology; and the further refinement that different versions of the Purchase and Sale documents were to be completed depending on the country where the transaction took place.
The Purchase Confirmation recites:
"In accordance with my agency Appointment I hereby confirm that all legal and beneficial interests in and to the above car are held for and on behalf of LCAL Inc [or Anthology, or NHT] and that I am a nominee and bare trustee in respect thereof. Furthermore I hereby confirm that I will henceforth only deal with the above car as requested or directed by […], and in the interim I do hereby formally pledge covenant and guarantee the foregoing."
The intended purposes of this documentation were, it seems to me, clear. It would enable H to demonstrate that in making such acquisitions he was acting as agent for NHT/LCAL/Anthology, rather than as principal on his own account, even though the vehicles might after acquisition be registered in his name (and for that matter, as appears to have been the case, insured in his name). The documentation might also serve to dispel any suspicion which could arise from the fact that purchase funds would in the majority of cases be drawn from a facility in his own name at EFG. No doubt one thought in the mind of the person who drafted these documents (it may have been TB, who is a qualified English solicitor) could be that they would help get round potential potholes along the roadmap's route as well as serve to get round any roadblocks should the French fiscal authorities pay a call and find Château T's forecourt filled with hyper-valuable classic and racing cars.
But the documentation might also be in this form because it genuinely reflects what the parties intended the ownership structure to be.
On 28 November 2014, just a working day away from the two days set aside for final submissions, an application was submitted on behalf of H to admit in evidence a bundle containing a further 300 pages of documentation in relation to the applications concerning the car collection which, his solicitors wrote, they had "prevailed" upon RFG to provide to them. These documents, produced very much at the last minute of the final hour, do support the proposition that the agency documentation was in fact used in relation to the purchase and sale cars in the collection.
Quite why there was such reticence and obfuscation in drip feeding and then deluging these documents into the court proceedings must be a mystery, but does very amply demonstrate the length and complexities to which TB will go in his mission to preserve NHT from attack by W and indeed the English Family Court. Yet these were documents (at least in the case of the purchase and sale documentation) of which he had twice in Hong Kong offered copies but then declined to do so.
So in the end I unhesitatingly conclude that notwithstanding the loose description by H of the Car Portfolio as "mine" and all the other indicia supportive of its ownership by him which I have described, these vehicles are owned by NHT via the company Anthology. But that finding gives rise to a very significant corollary. If a distinction was ever going to be drawn between the use made by H of the EFG accounts backed by the NHT guarantee/deposit arrangements which was for the benefit of the trust on one hand; and those funds drawn down against that facility which were used for Joy family acquisitions or expenditure: then one would have expected that as a matter of internal accounting an audit trail would have been established to maintain what in effect would have been the state of account as between H the individual, and H the special agent disbursing funds on behalf of and for the benefit of NHT.
A ledger maintaining a running loan account of this sort is commonplace for partners in practices and directors in businesses around the globe. Such an account would, one would suppose, be maintained on a running or periodic basis and would include not just the funds expended through H's NHT-backed EFG account on car purchases but also his more modest reimbursable expenditure in connection with travel and attendance at race meetings, and any bills met from the account for the general maintenance and upkeep of the vehicles (such as the €40,000 per month which in May 2013 H asked the court to allow him to continue to draw from this account). It is in such an account that one would expect to see the appropriation of vehicle insurance premiums between the Joy family and the Trust.
Indeed, once H had, to fend off any French tax invasions, been temporarily excluded from benefit from the trust in August 2010 (and the children similarly the following month) it would surely in a properly conducted trust have been imperative to ensure that neither H nor the children received any further benefits. The necessary degree of supervision and control would in turn have made it essential for proper accounts to be maintained and, when necessary, for H to reimburse the trust for any of his personal expenditure facilitated by the trust back-to-back arrangements with EFG. He could have done so from the US$2.1m of his own money on similar back-to back deposit which he told me was an amount largely sufficient to meet his and the family's necessary expenditure, and contingencies, over their anticipated seven-year stay in France.
The need to maintain such an account to differentiate between trust and personal expenditure was all the more imperative in view of the provisions of the Special Agency Agreements. Clause 5.1, (under the rubric Responsibility and Indemnity) provided:
"The Company shall act as the funder and financier of all Purchases and of any commissions or fees relating thereto. It is acknowledged and agreed that from time to time and depending upon the circumstances it will be expedient for [H] to use his own resources (including his personal banking facilities outside France) to make any deposits, down payments or other payments and expenses,but strictly on the basis that his counter-indemnity dated 30 August 2010 shall not apply to those funds."
(The counter-indemnity there referred to is the one relied upon by NHT as the basis for the claim made in the Swiss arbitration proceedings, and is referred to at paragraph 51 above. That document, it will be recalled, on its face makes H liable for all losses sustained by the trust, namely the whole of the US$18.9m.)
I presume that it was in order to provide a sanitary cordon proof from prying eyes that the funds which it was envisaged H might use were described in this Agency Agreement as his "own resources" whereas in fact they were only available to him because NHT had guaranteed his liabilities under the facility and backed them with the deposit of trust resources.
If TB/RFG did maintain such an account then two things would have been possible. It could have been produced to demonstrate that there was no element of fiction or fluidity about any impermissible private expenditure by H of, in effect, trust funds once he was debarred from benefit on the move to France. But it would also have provided a much more logical and accurate method of assessment of the loss in fact incurred by the trust, properly recoverable from H, as a result of the EFG débâcle.
The significant doubt about the accuracy and method of calculation of US$7.06m as the measure of the trust's loss which H should reimburse was well advertised by the time the evidence on 7 November drew to its conclusion. The apportionment issue just described had been discussed and, in my judgment, H's evidence had not been at all effective in dispelling the mystery of how that amount was arrived at. TB proved willing and able to provide through SDM documentation which has indeed been helpful in support of the case presented as to ownership of the Car Portfolio. In view of the documents which were produced as to car ownership I do not regard it as an adequate explanation for the failure to disclose anything to establish the extent of H's liability that RFG were entitled to produce nothing as a result of the order made by Bannister J. It would have been very much in the interests of the trust to demonstrate propriety and accuracy in relation to the claims it has pursued against H which have had the effect of leaving him bereft of capital.
No one has satisfactorily shown how that very specific amount (even though it was said to be approximate in the 3 December 2013 Hong Kong meeting Note, and even though it was said "the exact amount will be confirmed" - which it never was) of US$7.06m can be derived from looking at the total value of those assets in H's ownership which TB said the trust would pursue. H during the course of evidence regularly referred when questioned on this topic to a schedule of assets he had produced back in May 2013. This document is of no help in arriving at US$7.06m, not least because it omits reference to the Bentley altogether, and overlooks the £2 million loan due to him from the Château T SCI.
In their skeleton argument for the final hearing Mr Pointer and Mr Wilkinson advanced the following proposition:
"the trustees [were] obliged to pay up under the guarantee: so that, it was said, H personally benefited to the sum of approximately $7m. It is understood that this has been calculated from the following assets:
If this is an attempt to demonstrate US$7.06m as the value of the personal assets acquired by H's use of the facility, then it fails. The list totals £4,907,000. In November 2013 the monthly spot rate for the dollar was 1.6383, so that sum then amounted to just short of US$8.04m.
H attempted a different formulation in his oral evidence. He suggested that the cost of purchases for the Car Portfolio made up "the bulk" of the US$18.9m which TB said was the extent of the loss sustained by NHT when EFG enforced its guarantee. Asked to estimate how much that component of the loss was, he replied about US$12m, and then agreed that he had arrived at that amount by deducting 7 from 19. He also claimed that at the December Hong Kong meeting he had been shown some paperwork demonstrating how the amount claimed from him was calculated, but that he had not paid attention to it. He was, I have to say, surprisingly relaxed about the way in which what was said to be his liability had been established both as to the method and as to the amount. RFG, he said, were very good at maintaining records. He was unable to say whether amounts other than for car purchases expended by him on or in connection with the Car Portfolio had been taken into account, but seemed to wave that aside on the basis it would only amount to some $5000 or so.
Indeed this lacuna in the evidence was fully evident to H and to his advisers by the collapse of the domicile proceedings in April 2013, yet the gap was no more satisfactorily plugged in the intervening 18 months or at the final hearing than then. This was because Mr Pointer in re-examination of H on 26 March 2014 had afforded him an earlier opportunity to explain how the US$7.06m was composed, which it must be said H similarly lamentably failed to clarify. Nor could he explain to Mr Leech how a number of very obviously car-related and large debits to the account secured against the deposit of his own funds were treated, if at all, by any process of accounting, other than to say he thought that "some of the items [and individual items totalling more than £250,000 had been identified] ought to be invoiced back to the trust." It was therefore obvious to all in court that H recognised that he should be given credit at some point against what he might otherwise owe in relation to the NHT-backed accounts. I asked him "how am I to know how much the trust owes you in relation to these huge amounts of money that they have never repaid you?" To which he replied "You could require me to do an exercise for you, my Lord, of analysis." But analysis came there none.
I am left with no alternative but to conclude, and I do, that the reason no breakdown of expenditure through the account was produced is because none had historically been maintained.