Stephen Baker, Simon Thomas and James Sheedy of Baker & Partners have secured a significant victory for the beneficiary in the case of Dick-Stock v PanTrust International SA, Wigley & Wigley 2015 JRC 223, with the Jersey Royal Court accepting jurisdiction to remove and replace the Panama-based trustees. Two trusts in question will now be transferred to Jersey-based G.B. Trustees by court order.
The trusts were originally established in Jersey in the late 1970s and administered from the mid-1980s by Jersey corporate trustee La Hougue Böete, run by Richard Wigley. In 2007 Richard Wigley uprooted the administration of the trusts to Panama under a new trustee he established, PanTrust, and the proper law of the trusts was ostensibly changed from that of Jersey to Panama under two Deeds of Appointment and Retirement of Trustees (“the 2007 DORAs”).
Following an investigation by the Panamanian authorities in 2013 and 2014, PanTrust was banned by the Panamanian regulator (the Superintendence of Banks) from conducting trust business from February 2015. The two directors of PanTrust, Richard Wigley and his son James Wigley, then purported to transfer trusteeship from PanTrust to themselves without the consent of either the Settlor or the beneficiaries, contrary to the order of the Superintendence of Banks.
Following these developments, the Settlor’s daughter, Tanya Dick-Stock, commenced proceedings to remove PanTrust and replace them with a regulated Jersey trustee. PanTrust, contended that provisions in the trust deeds and the 2007 DORAs amounted to exclusive jurisdiction clauses in favour of Panama. However, the Royal Court disagreed and held it had jurisdiction over the trusts under Article 5(c) Trusts (Jersey) Law 1984, as they held Jersey companies that held Jersey immovable property in St Helier and the parish of St John. Based on the documentary evidence and expert foreign law evidence before it, the court also deemed the beneficiary had ‘the better of the argument’ that the 2007 DORAs failed to properly change the trusts’ proper law from Jersey to Panama giving rise to the possibility that the trusts were still Jersey law trusts, over which the court had jurisdiction under Article 5(a) Trusts (Jersey) Law 1984.
The respondents denied that the true nature of the legal relationships was that of discretionary trusts, instead asserting that the family in question was perpetrating a fraud and the trusts were in fact shams. The Court was unmoved by that argument and proceeded to assume jurisdiction and order the expedited removal of PanTrust. The trusts were presumed valid until proved conclusively to be shams.
The Court ruled that the position of the respondents continuing to be trustees was untenable, not least because they denied the trusts were trusts at all. GB Trustees have been authorised to change the proper law of the Trusts back to that of Jersey law.
James Sheedy, Associate at Baker & Partners, commented:
“We are very pleased with the Royal Court’s decision. The case will be of comfort to beneficiaries of Jersey trusts, as it demonstrates that where there are exceptional circumstances, the Jersey court can and will exercise its supervisory jurisdiction (and quickly) to intervene and protect the interests of beneficiaries and trust property.”