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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> In the matter of the Saisies Judiciaires of Robert Tantular 18-Jun -2019 [2019] JRC 114 (18 June 2019) URL: http://www.bailii.org/je/cases/UR/2019/2019_114.html Cite as: [2019] JRC 114 |
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Saisie - reasons for declining to vary the saisies
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Before : |
J. A. Clyde-Smith O.B.E., Commissioner, and Jurats Ramsden and Pitman |
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Between |
Tan Chi Fang |
First Applicant |
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And |
Jason Ray Tan |
Second Applicant |
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And |
Sandy Tantular |
Third Applicant |
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And |
Michelle Tantular |
Fourth Applicant |
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And |
Her Majesty's Attorney General |
First Respondent |
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And |
The Viscount |
Second Respondent |
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And |
H1 Trust Company Limited |
Third Respondent |
IN THE MATTER OF SAISIES JUDICIAIRES IN RESPECT OF THE REALISABLE PROPERTY OF ROBERT TANTULAR
AND IN THE MATTER OF A SUMMONS OF THE BENEFICIARIES SEEKING A DECLARATION OR VARIATION
A. J. Belhomme Esq., Crown.Advocate.
Advocate T. V. R. Hanson for the Applicants.
Advocate M. W. Cook for Third Respondent/
judgment
the COMMISSIONER:
1. The Applicants apply by way of summons for:-
(i) A declaration that the two saisies judiciaires ("the saisies") imposed upon the realisable property of Mr Robert Tantuler do not prevent Credit Suisse AG ("the Bank") assigning to a third party its rights under the credit facility dated 9th June 2008 and a legal mortgage dated 24th November 2008 ("the Mortgage") secured on the property located at Cuscaden Residences, 26 Cuscaden Road, Singapore ("the Property"); or alternatively
(ii) In the event that the Court declines to grant such declaration, to make such orders and give such directions as may be required so as to permit the proposed assignment or transfer, including the variation of the saisies, as may be required.
2. This application follows on from the application made by the Bank for a variation of the saisies so as to permit the Bank to exercise its power of sale as mortgagee in respect of the Property. That application was unopposed and the relief was granted for the reasons set out in the Court's judgment of 4th September 2018 (Representation of Credit Suisse re Jasmine Investment Trust [2018] JRC 161). That judgment sets out the background, but for ease of reading, we set out the background again, adopting very much the same wording.
3. The Property is owned by a BVI company called Jonzelle Limited ("Jonzelle"). The shares in Jonzelle are a wholly owned asset of the Jasmine Investment Trust ("the Trust") of which the third respondent ("the Trustee") is the current trustee. The Trust was established by Mr Tantular ("the Settlor") on 17th June 2004. It is a discretionary trust governed by Jersey law. The class of beneficiaries comprises the Settlor and the Applicants, who are all members of the Settlor's family. The Applicants reside in the Property. The Settlor resides in Indonesia where he is on parole.
4. The Settlor has been prosecuted in two separate sets of proceedings in Indonesia. The first is referred to as the 1631 proceedings. On 9th August 2013, the Court granted a saisie judiciaire in respect of those proceedings. Following the judgments in two earlier cases, namely Re Tantular [2014] (2) JLR 25 and Tantular v AG [2014] JRC 243, the first saisie was restricted to US$ 1.7m in respect of four gifts to the Trust alleged to have been made by the Settlor after the commencement of the criminal conduct in Indonesia which gave rise to the 1631 proceedings.
5. The Settlor has also been prosecuted in Indonesia pursuant to what are known as the 210 proceedings. The criminal conduct in that case is said to precede the date of the Trust with the consequence that all gifts by the Settlor to the Trust fall within the definition of "realisable property" in the Proceeds of Crime (Jersey) Law 1999 as it applies to external confiscation orders pursuant to the Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 ("the Modified Law"). Accordingly all the assets of the Trust are potentially liable to confiscation in relation to the 210 proceedings. This Court granted a further saisie in support of the 210 proceedings on 3rd September 2014. In Re Tantular (No 2) [2015] 1 JLR 97, the Court rejected an application that it was an abuse of process to seek the second saisie in reliance upon the 210 proceedings. The upshot is that there are at present two saisies which cover the Property.
6. On 9th June 2008, Jonzelle entered into the credit facility with the Bank in the sum of S$7,475,000, secured by the Mortgage which is governed by the law of Singapore. It is not in dispute that Jonzelle is in default, with the result that the amount outstanding pursuant to the credit facility is payable in full. The information before this Court is that the outstanding liability is some US$4.6m. Jonzelle appears to have been in default since December 2013, and in its application last year, the Bank wished to exercise the powers which were available to it under the law of Singapore, in order to realise its security and obtain repayment of the amount owed to it by Jonzelle. It appears from the Mortgage documents that, in the event of default, the Bank is given power to sell the Property. It is not clear whether the power to sell can be exercised without application to the Singapore Court.
7. The application is supported by an affidavit from the Second Applicant, Mr Jason Ray Tan, in which he says that he lives in the Property with the other Applicants, namely his mother and his two sisters, and that it has been the family home since July 2006. They have been made aware that the Bank had issued a Notice under section 75 of the Singapore Land Titles Act to enter into possession of the Property, which could result in them being evicted. In the face of this, he deposed that they had approached a family friend, Mr Herman Guntur Koswara, a resident of Indonesia, who is willing to assist the family by taking over the credit facility, by paying all monies owed by Jonzelle to the Bank in exchange for an assignment of the rights under the Mortgage. Mr Tan deposed that Mr Koswara had indicated a willingness to be flexible in terms of repayment of the monies owed, at least pending final resolution of these proceedings.
8. Advocate Hanson, for the Applicants, had provided the Attorney General, the Viscount and the Trustee with a copy of Mr Koswara's CV. He was born in 1962, and has had a career in the oil and gas industry. Since 2016 he has had his own electronic trading and distribution company in LED products. He gives these reasons for taking over the Bank's loan:-
"I want to help an old friend out.
From a commercial perspective, the proposed transaction is also a good investment to me. The loan is paying interest at default rate of 4.65% p.a. and has the benefit of the collateral support (mortgage and charge over assets) which is better than the most international/Indonesian corporate bond without collateral support) with a tenor of 3 - 4 years, paying only 3+%."
Advocate Hanson also produced for discussion a number of documents for the assignment of the Mortgage.
9. The Trustee supports an assignment of the Mortgage as a matter of principle, if it would avoid a forced sale of the Property and associated loss that may well bring with it. The Viscount's position is neutral. The Attorney General, representing the Government of Indonesia, is opposed. The position of the Bank is that it will only consider entering into an assignment of the Mortgage provided that the full terms of the proposed transaction are disclosed to all the parties and the assignment is approved by the Court.
10. Whilst the draft documentation put forward by Advocate Hanson for discussion actively involves Jonzelle, for example in giving confirmations that it has not received notice of the interest of any third party in the assets being assigned, the Bank, through its lawyers in Singapore, has provided a summary of the process of transfer of the Mortgage from which it can be seen that the legislation in Singapore does not require the involvement of Jonzelle in the transfer and that there is no contractual provision under the Mortgage that requires Jonzelle to consent to the transfer. Accordingly, the Bank is not obliged under Singapore law or under the law of contract to obtain the consent of Jonzelle and would not seek such consent if it entered into the transfer of the Mortgage. However, as stated above, it would not do so without the approval of the Court.
11. A number of points arise from the judgment of the Court of 4th September 2018 which are relevant to the issues before this Court, none of which were challenged by the parties:-
(i) The Mortgage does not fall within Article 16(5) of the Modified Law, which provides:-
As the Court found the Mortgage is not a hypothec, which is an expression clearly limited to a hypothec under the Loi (1880) sur la Propriété Foncière, and similarly, the expression "security interest" is clearly intended to refer to a security interest over intangible moveable property created pursuant to the Security Interests (Jersey) Law 2012 or its predecessor, the Security Interests (Jersey) Law 1983. The Court assumed therefore, that the whole of the Property is caught by the saisies and the application by the Bank to exercise its power of sale as mortgagee required a variation of the saisies under Article 16(6) of the Modified Law.
(ii) The principle underlying Article 16(5) is clear. Quoting from the judgment of Sir Michael Birt, Commissioner, at paragraphs 18 and 19:-
(iii) It was agreed that it was in the interests of all parties that the highest possible price for the Property should be obtained, and that the following comfort should be given to any potential purchaser:-
12. There are three aspects of the saisies which are also relevant for the purposes of this application:-
(i) The saisies were granted over the "realisable property" situated in Jersey of the Settlor specifically including the assets of the Trust and its underlying companies.
(ii) The Trustee was prohibited from "dealing" with the realisable property.
(iii) The Viscount was directed to take possession of the realisable property pursuant to 16(4) of the Modified Law and to manage or otherwise deal with the same in accordance with the Court's directions. Article 16(4) is in the following terms:-
In practice, vesting has been achieved by the Trustee holding the shares in Jonzelle to the order of the Viscount and agreeing to administer the company in accordance with the Viscount's directions.
13. The central case put forward by Advocate Hanson is that the Mortgage does not form part of the realisable property of the Settlor and, he said, the Bank is free to dispose of it as it wishes. It can do so without reference to Jonzelle or to the Court.
14. The application by the Bank to the Court last year was required because the Bank intended to exercise its powers of sale over the Property which did form part of the realisable property of the Settlor. There is no sale proposed here, merely a change in the identity of the lender. The Court had been satisfied last year that the Mortgage had been created by the Bank bona fide and at arm's length and its assignment of that security would not change its status in that respect.
15. In any event he submitted that, as with any injunction, the word "dealing" should be interpreted restrictively, citing by way of authority the House of Lords decision in JSC BTA Bank v Ablyazov (No 5) [2016] 1 All ER 608, a case concerned with the construction of a freezing order, where Lord Clarke said this at paragraph 19:-
16. The process of assignment in Singapore as described by the Bank was, he said, strikingly similar to the legal principles applicable to an assignment in Jersey (see Kells v Cashback Limited [2012] 2 JLR 16) and in England (see Halsbury's Laws of England, Volume 13 [2017] Choses in Action at paragraph 72). The reason for this was explained by Lord Millett in Mulkerrins v PricewaterhouseCoopers (a firm) [2003] 4 All ER 1, where he said at paragraph [15]:-
Furthermore, he submitted that this injunction should be construed in a manner consistent with the Human Rights (Jersey) Law 2000 that applies the Human Rights Convention on Human Rights, in respect of which Article 1 of the first protocol "the protection of property" was relevant. It was disproportionate for the order of the Court under the saisies to extend to controlling the rights of the Bank when the saisies were intended to catch only the equity in the Property, not to prejudice the position of a bona fide lender, such as the Bank.
17. If the Court was not prepared to give the declaration sought, then Advocate Hanson submitted that the saisies should be varied to grant permission for the assignment of the mortgage to Mr Koswara. He referred to the Article 8 Convention rights of the Applicants to respect for their private and family life. They are not guilty of any wrongdoing and are on the brink of losing their home. It is disproportionate to prevent an assignment of the Mortgage at this interim stage, when this would prevent a forced sale and save the home for the Applicants, even for a limited period. A saisie was equivalent to an injunction, intended as a mere holding position, pending any registration of an external confiscation order, and accordingly, it was wrong in principle to ensure that losses are sustained by the Trust and interfere in its operation, when an assignment of the Mortgage would not affect the underlying equity available, even should a confiscation order be registered later.
18. There had been delays in the prosecution of these proceedings of some six years since inception, combined with the earlier pre-action delay. There was no cross-undertaking in damages, but even if there were, the loss of a home cannot easily be compensated by a monetary amount. He accepted that cross-undertakings in damages have no application to the powers being exercised under the Modified Law (see In the matter of Batalla-Esquival [2002] JLR 192), but he argued that the ambit of the saisies should be applied and interpreted restrictively given that it represented such a draconian piece of legislation. It should not be rendered more draconian by applying an extended meaning to "realisable property" or "dealing".
19. The application for the registration of external confiscation orders would in any event be opposed by the Applicants. Despite having been on notice as to the proposed assignee, Mr Koswara, since the start of April 2019, no evidence had been produced by the Government of Indonesia as to his unsuitability or as to any wrongdoing on his part at any time.
20. Advocate Hanson posed the following questions and gave the following answers:-
(i) Who enjoys the rights under the Mortgage? The answer is the Bank.
(ii) Can the Bank assign the Mortgage without the involvement of Jonzelle? The answer is it can.
(iii) Do the rights under the Mortgage constitute the property of the Bank? The answer is they do.
(iv) Do the rights under the Mortgage fall outside the realisable property of the Settlor, as defined in Article 2(1)(b) of the Modified Law? The answer is they do. Article 2(1)(b) is in these terms:-
21. It was manifest, he said, that we were dealing with the property of the Bank and this was fatal to the Attorney General's case.
22. The position of the Government of Indonesia is contained in the third affirmation of Mr Cahyo Rahadian Muzhar, the Director General of Legal Administrative Affairs in the Ministry of Law and Human Rights of the Republic of Indonesia, dated the 16th May 2019:-
"16 The prospect of Credit Suisse assigning the credit facility and mortgage secured on the Cuscaden Property to Mr Koswara is a matter of grave concern to the Government of Indonesia. In view of Mr Koswara's long-standing friendship with Mr Robert Tantular and his willingness to be 'flexible' in his dealings with the Beneficiaries, the Government of Indonesia does not consider it unreasonable to suspect that Mr Koswara is no more than a nominee or 'front man' for Mr Robert Tantular and his family and that Mr Koswara could seek to, or will at the very least be in a position to, hinder or even thwart the restraint and confiscation process in respect of the Cuscaden Property.
17 The fact that the title deeds for the Cuscaden Property are to be transferred to Mr Koswara upon completion of the proposed assignment is of particular concern to the Government of Indonesia (see the draft assignment documentation at pages 32 to 45 of JRT-1), as this would mean that he would acquire effective control over the Cuscaden Property and would even be able to sell it from under the nose of the Viscount in breach of the saisies judiciaires.
18 As is evident from the Tan Affidavit, the Beneficiaries seek to portray the Government of Indonesia's concerns about the proposed assignment as unsubstantiated and unspecified. The Beneficiaries also seek to assert that Credit Suisse's rights under the mortgage secured on the Cuscaden Property are an asset belonging to Credit Suisse and that Mr Koswara should be allowed to merely 'step into its shoes' without interference from the Government of Indonesia (see for example paragraphs 17 and 18 of the Tan Affidavit).
19 Whilst the Government of Indonesia does not dispute that credit Suisse's rights under the mortgage secured on the Cuscaden Property are an asset belonging to Credit Suisse, it does not follow that Mr Koswara, a person who is connected with Mr Robert Tantular, should be permitted to acquire those rights if doing so may be to the detriment of the saisies judiciaires as is clearly the case. In fact, the Government of Indonesia's position is that it would be contrary to the purpose and intention of the saisies judiciaires if Mr Koswara were permitted to exercise any form of control over the Cuscaden Property or any other realisable property of Mr Robert Tantular, given that Mr Koswara is not an arm's length party.
20 Although the Beneficiaries assert that Mr Koswara should be allowed to replace or simply 'step into the shoes' of Credit Suisse, the differences between Credit Suisse and Mr Koswara could not be more clear-cut. Credit Suisse is a regulated global financial institution acting at arm's length to Mr Robert Tantular and the Beneficiaries, which has scrupulously sought to comply with the saisies judiciaires, and which can be expected to preserve the net proceeds of the sale of the Cuscaden Property after discharge of the mortgage. In contrast, Mr Koswara is a 'family friend' of the Tantulars, who has no regulated status, and who wants 'to help an old friend out' by being 'flexible' in his dealings with the friend's family (i.e. the Beneficiaries). Given that Mr Koswara is resident in Indonesia (see Exhibit JRT-1 at page 21), there would be significant difficulties in bringing enforcement proceedings against him should he breach the saisies judiciaires."
23. He refers at paragraph 15 to the mortgage deeds, but we note that reference has been made elsewhere to this being registered land. As matters stand we have no advice as to the importance of title deeds in Singapore and whether possession of title deeds would, as feared by Mr Muzhar, give Mr Koswara effective control of the Property and enable him to sell it under the nose of the Viscount, in breach of the saisies. What is clear is that the Mortgage gives the Bank, and therefore any assignee, the right to sell the Property.
24. Mr Muzhar doubted that the Applicants would become homeless as this was not a family of limited means. The Property is a luxury duplex penthouse condominium situated in a prestigious residential area worth in the range of S$15 million, based on published transactional information available online. The Settlor's wife, the First Applicant, owns another luxury property in Singapore and is the daughter of a wealthy Indonesian tycoon and business leader. Advocate Hanson complained that there was no independent evidence to support these assertions and Mr Muzhar had not set out the precise source for his opinions and his assertions as to the law of Singapore. In the short time available, he had limited instructions on these points.
25. Crown Advocate Belhomme reminded the Court that the granting of declaratory relief was a jurisdiction which should be exercised sparingly, (see In the matter of the Curatorship of X [2002] JLR 259), and it was trite to observe that an application to vary a saisie judiciaire would be required where a party (including the Viscount) proposes to take any action which will or may materially affect the realisable property held under restraint. This basic principle, he says, underpins all saisies judiciaires.
26. Under Section 82(2) of the Criminal Justice Act 1988 and Section 31(2) of the Drug Trafficking Act 1994, it is expressly provided that the powers conferred on the High Court "should be exercised with a view to making available for satisfying the confiscation order or, as the case may be, any confiscation order that may be made in the defendant's case, the value for the time being of realisable property held by any person, by means of the realisation of such property."
27. There is no such express provision in the Modified Law, but it is echoed in the preamble to the Proceeds of Crime (Jersey) Law 1999:-
28. The Court, in the case of Representation of O'Brien [2003] JLR 1 held that a general comparison between a saisie judiciaire and a Mareva injunction was not necessarily apt. Quoting from the judgment of Bailhache, Bailiff, at paragraphs 15 - 18:
29. Crown Advocate Belhomme argued that the concept of dealing should be given a wide meaning, referring the Court to this passage from Confiscation and the Proceeds of Crime by Mitchell and Talbot:-
30. In the context of a Mareva injunction, he referred to the English Court of Appeal decision in Z Ltd v A-Z and AA-LL [1982] QB 558, where it was held at page 571, in the context of an injunction restraining a party in removing from the jurisdiction of the High Court or otherwise dealing with assets located within the jurisdiction, the words "otherwise dealing with" were to be given a wide meaning, and were not to be construed as ejusdem generis with "removing from the jurisdiction".
31. Whilst he accepted that Jonzelle would not itself be a party to the assignment of the Mortgage, the draft documentation submitted by Advocate Hanson showed that it will be required to consider and receive documentation and to give confirmations. It followed, he said, that a variation was required, and that should be refused, for the reasons put forward by Mr Muzhar. The proposed assignment was not an arm's length transaction by the Bank with an independent third party. The basic concept of dealing with a bona fide third party made clear in the judgment of the Court of 4th September 2018 should be read across to any proposed assignment of the Mortgage.
32. The only asset in the Trust is the Property and it is the equity in that asset that should be available to meet any confiscation order that may be registered. We agree that in the exercise of its powers the Court is concerned with the preservation of the value of that equity in order to satisfy any such order. Crown Advocate Belhomme informed us that an application to register a confiscation order(s) was imminent.
33. Whilst acknowledging the differences between a Mareva injunction and a saisie judiciare as explained in O'Brien, we agree that the prohibition against dealing addressed to the Trustee, and which is binding on those with notice of it such as the Bank, should be construed strictly as per JSC BTA Bank v Ablyazov (No 5), because that part of the process (which is separate from the vesting of the property in the Viscount) does constitute an order of the Court issued against third parties analogous to an injunction in its effect upon them. There would be a risk of oppression if it were to be otherwise. However, as Lord Clarke said in JSC BTA Bank v Ablyazov (No 5) at paragraph [17] the question is what is meant by that prohibition.
34. In its judgment of the 4th September 2018 the Court found, and the parties agreed, that the saisies extended to the whole of the Property and that for the Bank to exercise its power of sale over the Property would be to deal with it; hence the need for a variation. In our view any assignment of the Mortgage, which brings with it the power to sell the Property, is equally to deal with it. We agree with Crown Advocate Belhomme's submission that to take any action which will or may materially affect the realisable property held under restraint is to deal with the same. Accordingly the saisies do prevent the assignment of the Mortgage and we are unable to make the declaration sought.
35. Turning to variation, the Court felt able in the 4th September 2018 judgment to vary the saisies so as to allow the Bank to exercise that power, because it was a bona fide arm's length third party, and indeed, as Mr Muzhar points out, a regulated global financial institution that would be acting at arm's length to the Settlor and the Applicants. What is now proposed is that this same power will be assigned to Mr Koswara, an old friend of the Settlor, who resides in Indonesia (where the Settlor also resides) outside the jurisdiction of both this Court and the courts of Singapore. There has been no disclosure of the communications between the Settlor and Mr Koswara, or between Mr Koswara and the Applicants, or as to the source of the $4.6m that would be used to acquire the Mortgage. The Court has no confidence that it knows the full terms of the arrangements and it is manifest that placing Mr Koswara into that position of power over the Property could be highly prejudicial; Crown Advocate Belhomme described such a possibility as "unconscionable".
36. The underlying rationale of the decision of the Court of 4th September 2018 was that both the entities selling the Property and any prospective purchaser (using untainted funds) were and would be bona fide third parties and we agree that this requirement should be read across to any proposal to assign the Mortgage, which brings with it the power to sell the Property, and we are not satisfied that Mr Koswara is a bona fide third party for this purpose.
37. There is no prejudice to the rights under the Mortgage being exercised by a bona fide arm's length third party, such as the Bank, but there is prejudice to such rights being exercised by a friend of the Settlor, a convicted fraudster. As the Court held in Tantular No 2, there is an important public interest in depriving criminals of the proceeds of their offending, and the legislature and Island has placed importance on offering assistance in that regard in respect of enforcing confiscation orders made in foreign jurisdictions. What would be available here to meet any confiscation order is the net equity in the Property, but the amount of that equity would be dependent in large measure on those who control the realisation process. What is contemplated here is handing over the control of the realisation process to a friend of the criminal concerned. Using the Court's powers to prevent that happening by refusing a variation is consistent with the purpose of the Modified Law and not in our view disproportionate in terms of the Convention rights of the Applicants or of the Bank. The latter has not asserted any breach of its Convention rights and indeed has asked for the Court's approval to the assignment, approval which will not be forthcoming.
38. For all these reasons, we conclude that the saisies do prevent the Bank from assigning the Mortgage and we decline to vary the saisies to permit the same.