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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Geneva Trust v Tchenguiz (Royal Court : Hearing (Civil)) [2025] JRC 046 (17 February 2025) URL: https://www.bailii.org/je/cases/UR/2025/2025_046.html Cite as: [2025] JRC 46, [2025] JRC 046 |
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Before : |
Sir Michael Birt, Commissioner, sitting alone |
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Between |
Geneva Trust Company SA (Formerly known as Rawlinson & Hunter Trustees SA) |
Plaintiff |
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And |
Robert Tchenguiz |
Defendant |
Advocate J. S. Dickinson for the Plaintiff.
Advocate D. James for the Defendant.
judgment
the COMMISSIONER:
1. In this long running litigation, the Defendant has applied for an order that there should be a trial of a preliminary issue. The main trial, listed for five days, is due to commence on 10 March 2025 and the suggestion from the Defendant is that the preliminary issue should be heard and resolved either before 10 March or on the first day of the trial.
2. As can be seen, there is a need to reach a decision on the Defendant's application as a matter of urgency and the parties have agreed that I should resolve the matter on the papers following a skeleton argument from the Defendant, a response from the Plaintiff and a reply skeleton from the Defendant which was filed on 29 January. Given the urgency, I have committed to issuing my decision before I leave the island for a period on 5 February.
3. The parties are of course very familiar with the factual background. In addition, the background was very helpfully and fully set out in the judgment of Master Cadin dated 31 October 2023, to which recourse may be had. In his judgment, the Master in turn referred to a detailed summary of the complex history of the Guernsey aspect of this matter by Marshall, Lieutenant Bailiff, in ITG Limited and Bayeaux v Glenalla and Others [2023] GRC 046 in proceedings which were referred to as the "Proof Proceedings". In view of the time constraints, I propose to give only a very brief description of the factual background.
4. The Plaintiff was the trustee of the Tchenguiz Discretionary Trust ("the TDT") from July 2010 to October 2017. The Defendant is a beneficiary of the TDT. There has been lengthy and complex litigation in Guernsey concerning the TDT and other trusts both before, during and after the time that the Defendant was the trustee of the TDT.
5. The Plaintiff claims that, by a deed of indemnity dated 14 April 2014, the Defendant agreed to indemnify the Plaintiff against any legal costs incurred in connection with what were described as "the Guernsey Proceedings". The Guernsey Proceedings were in turn defined as including a number of legal proceedings in Guernsey including proceedings described as "the Loans Proceedings". I shall refer to the deed of indemnity as "the Indemnity" whilst of course acknowledging that its validity is strongly disputed by the Defendant as set out below.
6. The relevant part of the Indemnity, which is expressed to be governed by English law, is at clause 2.1.1 which, so far as relevant, is in the following terms (RT being the Defendant and R&H being the Plaintiff):
"RT agrees and undertakes to R&H that he will at all times indemnify and keep indemnified R&H in its personal capacity, in its capacity as trustee of the TDT, and in any other fiduciary capacity in relation to the TDT, from and against:
2.1.1 all liability for legal costs in relation to all and any of the Guernsey Proceedings irrespective of whether such liability was incurred prior to or after the date of this Deed including:
A. the legal costs of any other party to any of the Guernsey Proceedings to which R&H has been or may be found liable ;
B. any legal costs which R&H has incurred or will or may in the future incur in relation to any of the Guernsey Proceedings (irrespective of whether or not Beddoe relief has previously been, or is or may in the future be, obtained) "
7. The Plaintiff claims under the Indemnity against the Defendant in the current proceedings. It asserts that the Indemnity was executed by or on behalf of the Defendant or, that if he did not execute it, he is estopped from denying that he is bound by it. The Defendant, on the other hand, denies that he executed it or that he is bound by it. These claims are hotly contested and, Master Thompson said in an earlier hearing that "neither party has taken a proportionate approach to this litigation".
8. Until fairly recently, the issues which would require resolution at trial were therefore whether the Indemnity was binding on the Defendant and, if so, what sum was payable to the Plaintiff thereunder by reference to its legal costs. However, there is now a further issue for resolution which has arisen in the following circumstances.
9. It became clear some time ago that the assets of the TDT were insufficient to meet all the claims being brought by or through the previous trustees, the Plaintiff and the subsequent trustees. Pursuant to an earlier order of the Royal Court of Guernsey ("the Guernsey Court"), the assets of the TDT have been held by Receivers appointed by the Guernsey Court. Directions were given to enable potential claims on the assets to be identified by the Receivers calling for -�proofs' of such claims to be submitted to them. The Proof Proceedings are concerned with how the assets of the TDT should be allocated amongst the various creditors.
10. The Plaintiff submitted a proof in the sum of approximately £2.122m, consisting of £854,055 in respect of its own fees and £1,268,077 in respect of legal fees incurred in relation to the TDT.
11. On 9 July 2024, all the parties to the Proof Proceedings, which included the Plaintiff and the Defendant, agreed to an order being made by the Guernsey Court ("the Consent Order") whereby the Plaintiff agreed to settle its claim for £1.2m. The recital to the Consent Order provides:
"AND WHEREAS GTC has agreed in principle to accept a sum of £1.2m to be paid out of the relevant Blocked Account, in full and final settlement of the amounts claimed in the Updated GTC Proof of Debt (the GTC Settlement Sum) and for the avoidance of doubt without prejudice to any sums due and claimed against the current trustee of the T S Settlement by GTC as former trustee of the T S Settlement ."
12. Following the Consent Order, the Defendant filed a Re-Re-Amended Answer in the present proceedings on 22 November 2024 in which, inter alia, he pleaded that the Plaintiff had no costs liabilities in respect in respect of any of the Guernsey Proceedings except the Loans Proceedings and that these had been compromised pursuant to the Consent Order as GTC had accepted the settlement sum in full and final settlement of its claims. Accordingly it was pleaded that, even if, contrary to the Defendant's case, the Indemnity was valid, there was no liability under the Indemnity in respect of the amounts claimed in the Proof Proceedings.
13. In response to this, the Plaintiff filed a Re-Re-Amended Reply. It asserted that, of the sum of £1.2m paid to it under the Consent Order, it had applied £854,055 towards its own fees and it now claimed the shortfall of some £904,723 under the Indemnity. It also claimed some legal costs payable to Bedell Cristin in relation to proceedings in Guernsey and these have since been quantified at approximately £353,000. The Plaintiff denied in the pleading that the Consent Order had the effect of precluding it from claiming for the shortfall. Thus the total claim on the Indemnity was over £1.2m.
14. It is in these circumstances that the Defendant applies for determination of the preliminary issue, which he formulates as:
"What is the effect of the Guernsey Consent Order?"
15. Before turning to consider that application, I should briefly summarise the history of these proceedings. They were commenced by the Plaintiff in September 2018. They were originally listed for trial on 9 March 2020 with an estimate of five days but this was vacated by consent on 3 February 2020. It was relisted for hearing on 19 October 2020 but that date was vacated on 17 September 2020 and the trial relisted for 5 July 2021. In March 2021 the parties filed a consent order seeking to vacate that hearing and refix it. Master Thompson vacated the hearing but ordered a stay pending determination of the Proof Proceedings in Guernsey. Over the objection of Defendant, that stay was listed by Master Cadin in his judgment of 31 October 2023. As previously stated, the final hearing is now listed for five days commencing 10 March 2025.
16. I have been referred to a number of cases concerning the circumstances in which it is appropriate to order the trial of a preliminary issue. These includes Berry v BT Trustees (Jersey) Limited [2000] JLR 293; Stock v Pantrust [2015] JRC 268; Cohen v Arbitage Research Trading Limited [2009] JRC 229; Steele v Steele [2001] C.P. Rep 106. Ultimately, I do not think there was any material difference between the parties as to the correct approach.
17. In Berry, the head note at 294 accurately summarises the judgment in the following terms:
18. Further assistance can be derived from the decision of Master Thompson in Stock where, at [14] and [15] he approved the following extract from the decision of the English Court of Appeal in McLoughlin v Grovers [2001] EWCA Civ 1743 where it said at [65]:
19. Naturally, in deciding whether to order the hearing of a preliminary issue, the court must apply the Overriding Objective, including the objective of dealing with cases expeditiously and fairly and at proportionate cost.
20. I would summarise Advocate James' key submissions as follows:
(i) The trial will be a costly and complex hearing with witnesses of fact and expect witnesses on English law and handwriting. There is a risk that it will overrun the five days allocated to it.
(ii) If the preliminary issue applied for is resolved in favour of the Defendant, it will resolve the whole case or at least significantly narrow the remaining issues and will therefore save substantial costs. On the Defendant's case, the effect of the Consent Order is that there will be no liability under the Indemnity (even if enforceable). Even if the true effect of the Consent Order were to be that the compromise was limited to the sums claimed by the Plaintiff in the Updated Proof of Debt, that would dispose of the vast majority of the Plaintiff's claim leaving in effect only the claim for the Bedell and Cristin costs of some £350,000.
(iii) The proposed preliminary issue involves a short question of construction of the order of the Guernsey Court. It is not a case where evidence as to the factual matrix is required, particularly bearing in mind that it is a court order, not simply a contract. Trial of the preliminary issue will simply involve a matter of interpretation of what the Defendant contends to be a clear and unambiguous order. He submits that it would only take half a day to hear.
21. This is only a brief summary and I have carefully considered all of Advocate James' submissions both in his skeleton and reply skeleton. However, I am of the clear view that it would not be consistent with the Overriding Objective to order the trial of this preliminary issue at this point. I would summarise my reasons as follows:
(i) Unless the court resolves the issue completely in the Defendant's favour, it will still be necessary for the trial to determine the Plaintiff's claim to the remaining costs of £350,000. Given that this sum was not included in the Plaintiff's Updated GTC Proof of Debt referred to in the Consent Order, there must at least be a real possibility that this may be the outcome.
(ii) In that event, there would have been no saving of costs by holding the preliminary issue because the remaining issues as to the validity of the Indemnity would still need to be resolved with the need for the same witness and expert evidence. In his reply skeleton, Advocate James submitted that, in such circumstances, the case would be ripe for settlement because of the size of the costs incurred in this litigation compared with the remaining claim of £350,000. However, I do not think one can proceed on that basis. The fact remains that there will still be a claim for a not insubstantial sum which the court will need to determine unless it is settled. I do not think it would be right to determine whether the hearing of a preliminary issue will save costs by assuming the likelihood of a settlement.
(iii) Contrary to Advocate James' submissions, I consider that some evidence will be required in order to determine the factual matrix surrounding the Consent Order. I would not feel comfortable in interpreting the Consent Order without getting a proper feel for what was involved in the Loans Proceedings and the Proof Proceedings (which appear to be under the case reference of the Loans Proceedings). Naturally, no evidence as to settlement discussions etc would be admissible but the context and background to the Consent Order might well be relevant to determining the correct construction of the Consent Order. This would require parties to agree on what evidence should be admitted or for the court to determine that issue. This does not seem realistically achievable given the very short time until the trial.
(iv) I fully understand that it was only following the Consent Order in July 2024 that the possibility of the preliminary issue arose. Nevertheless, given that the trial is fixed to start on 10 March, it is now very late in the day to order the trial of a preliminary issue. These are normally identified and heard well ahead of any anticipated trial. Following the pre-trial review on 13 January, there is much work to be done by the parties before the beginning of the trial and it seems to me that much of this will have to carry on in any event.
(v) Given the approach of the parties to this litigation described by Master Thompson in the passage quoted at para 7 above, I consider that, if I were to order a hearing of the preliminary issue before the commencement of the trial, there would be a real risk that whichever party lost on the preliminary issue would seek to appeal. In those circumstances, there would be a substantial risk of the trial having to be put off pending the hearing of such an appeal. As stated in the passage from McLoughlin v Grovers quoted at para 18 above, full allowance for the implications of any possible appeal should be considered when considering the question of delay which might be caused by the trial of a preliminary issue.
(vi) In my judgment, the risk of the trial date having to be vacated should be avoided as far as possible. This litigation has been going on for many years with many false starts for the hearing of the trial. There are witnesses of fact who will be giving evidence about matters as long ago as 2014. In my judgment, it is vital that the trial date be held to and that any step which increases the risk of the trial date having to be vacated should be avoided.
(vii) Nor do I consider that it is realistic to suggest that the preliminary issue should be heard on the first day of the trial. As already discussed, I consider that some evidence would be necessary. Furthermore, the parties will have to undertake all the preparation which they would otherwise undertake in case the preliminary issue is not resolved wholly in the Defendant's case. There would therefore be no saving of preparation costs. Advocate James' submission also assumes that the court would be in a position to give an immediate decision which might not necessarily be the case. All in all, I do not consider that it is a realistic or appropriate way forward.
22. Putting all these matters together, I do not consider that the Overriding Objective would be served by ordering the hearing of this preliminary issue at this point. In my view, the best method of proceeding is for all the issues, including any effect of the Consent Order, to be dealt with during the trial commencing on 10 March. I therefore dismiss the application.