ROYAL C T. IN RE M ALABRY I NVESTMENTS L TD . 1982 J.J. 117 [1982 J.J. 117]

(source: Legal Information Board - © JLIB 2001-2007)

In the matter of Malabry Investments Limited ROYAL C OURT (Crill, Deputy Bailiff): April 7th, 1982 Bankruptcy—désastre—property available for distribution—funds in company’s bank account subject to trust in favour of named persons not available for distribution to general body of creditors Courts—Royal Court—jurisdiction—general equitable jurisdiction—enables court to consider principles of English trusts if no Jersey authority Jurisprudence—reception of —trusts—general equitable jurisdiction of Royal Court enables consideration of English principles on creation of trusts if no specific Jersey authority Trusts—creation—certainty—must be certainty of subject-matter held on trust, of beneficiaries, and of extent of beneficial interests in subject-matter—no specific form of words necessary if sufficient intention to create trust manifested Trusts—creation—law applicable—general equitable jurisdiction of Royal Court enables consideration of English principles if no specific Jersey authority F.J. Benest for the Viscount; J.C. Clyde-Smith for Lep Transport Ltd.; D.F. Le Quesne for Dr. F. Coningsby, an intervening creditor.

CRILL, DEPUTY BAILIFF: Malabry Investments Limited, hereinafter called “the Company”, carried on the business of supplying and the marketing of mobile homes. Included in its business was the supply of such homes to certain caravan sites in France. On the 13th July, 1979, the property of the Company was declared en désastre. Arising out of those proceedings the Viscount has brought two Representations to the Court asking for directions. In both cases the question for me to decide is whether in each of the circumstances set out in the Representations a Trust of certain monies had been created which meant that the funds represented by such Trust were not available for distribution to the general creditors. None of the three counsel involved in the Representations was able to draw my attention to any Jersey case on the subject of Trust. I am satisfied, however, that the general equitable jurisdiction which the Royal Court has exercised particularly in recent years enables me to take note of the English and to find that if the concept of a Trust of the nature propounded by the Viscount is known to the then the Court may have regard to the principles creating such a Trust which apply under English Law. I was referred to In re

ROYAL CT. IN RE M ALABRY I NVESTMENTS L TD . 1982 J.J. 119

Kayford Ltd. , [1975] 1 W.L.R. 279. The most helpful passage is to be found at 282 and it is as follows:— “There is no doubt about the so-called ‘three certainties’ of a trust. The subject- matter to be held on trust is clear, and so are the beneficial interests therein, as well as the beneficiaries. As for the requisite certainty of words, it is well settled that a trust can be created without using the words ‘trust’ or ‘confidence’ or the like: the question is whether in substance a sufficient intention to create a trust has been manifested. In In re Nanwa Gold Mines Ltd ., [1995] 1 W.L.R. 1080 the money was sent on the faith of a promise to keep it in a separate account, but there is nothing in that case or in any other authority that I know of to suggest that this is essential. I feel no doubt that here a trust was created. From the outset the advice (which was accepted) was to establish a trust account at the Bank. The whole purpose of what was done was to ensure that the moneys remained in the beneficial ownership of those who sent them, and a trust is the obvious means of achieving this. No doubt the general rule is that if you send money to a company for goods which are not delivered, you are merely a creditor of the company unless a trust has been created. The sender may create a trust by using appropriate words when he sends the money (though I wonder how many do this, even if they are equity lawyers), or the company may do it by taking suitable steps on or before receiving the money. If either is done, the obligations in respect of the money are transformed from contract to property, from debt to trust. Payment into a separate bank account is a useful (though by no means conclusive) indication of an intention to create a trust, but of course there is nothing to prevent the company from binding itself by a trust even if there are no effective banking arrangements.” In the first of the Representations the Company employed Lep Transport Limited hereinafter called

ROYAL C T. IN RE M ALABRY I NVESTMENTS L TD . 1982 J.J. 120

“Lep” to transport the mobile homes to some sites in France. In 1976 a dispute arose between the Company and Lep about the extent of their respective rights and obligations under the contract for the transport of the homes. Lep claimed certain monies from the company for its services but as the Court was not called upon to determine those issues accordingly it has not done so, and I am not able to say precisely what amounts, if any, were due. On the 6th December, 1976, Lep sent a telex to the company claiming a total of £9,049.02 but requesting an immediate payment of £6,949.02 leaving a balance of £2,100 to be paid when six caravans then at Le Havre had been delivered to St. Tropez. On the 17th December, Lep took out an Ordre Provisoire against the company and attached its bank account at Barclays Bank, Library Place, St. Helier. The action came before the Royal Court on the 24th December, 1976 and was placed on the pending list. On 6th January, 1977, Perrier & Labesse, who were then acting for the company, wrote to du Feu & Jeune who were then acting for Lep about the matter. The relevant part of the letter reads: “This is not the place or time to get into the ‘nuts and bolts’ of this matter, and I would suggest that the following be done:— 1. That you should withdraw your action; 2. That I will undertake to you to have under my control the sums of your Client’s claim namely £6,949.02 pending clarification of the action between Malabry and LEP in London during the continuance of negotiations to bring the present Jersey action/negotiations to a timely end.” On the 27th January, 1977, Lep sent a copy of a telex of the 21st January it had sent to its (English) Solicitors to the company. In it it submitted a qualified claim for the £2,100 inasmuch as that item might not become payable if the company would confirm that the amount had been or would be paid direct to a French firm called Loisel, or to the actual haulage contractor involved. Because the sum of £9,049.02 set out in the telex of the 6th December, 1976, included some French duty TVA it

ROYAL C T. IN RE M ALABRY I NVESTMENTS L TD . 1982 J.J. 121 follows that, at the time of the telex of the 21st January, 1977, there were at least two matters in dispute, namely: the question of the duty itself and the cost of the transport of the six caravans to St. Tropez. On the 1st February, 1977, Mourant du Feu & Jeune wrote to Perrier & Labesse as follows:— “Dear Labesse, Re: Lep Transport Limited v. Malabry Investments Limited Further to our discussions this morning, I have spoken to Mr. Leeper of Lep Transport Limited. I have instructed the Viscount to release the arrest by requesting Barclays Bank Limited to account to you for the funds set aside as a result of the Ordre Provisoire, together with interest, as a matter of urgency. My clients agree to accept payment from you in the sum of £5,400.00, this payment to be made as a matter of urgency, in order that the caravans can be shipped today. I have arranged with my clients that I will advise them as soon as we are in possession of this sum. In relation to the balance of £2,500.00 I accept your professional undertaking given on the telephone that you will not release this sum without receiving the joint instructions of Malabry Investments Limited and Lep Transport Limited, this sum to be held by you pending clarification of the matter of duty payable in France. Ideally, my clients would wish to hear from me as soon as possible that we are in possession of these monies and I would be grateful if you could deal with this matter at your earliest convenience. Yours sincerely,

MOURANT DU F EU & J EUNE .” Only the matter of duty is referred to and it could be said that at this stage it might be a fair inference that that was the one remaining matter to be resolved. That inference is supported by a letter from Lep’s Solicitors, Cove and Company, to Perrier & Labesse of 10th

ROYAL C T. IN RE M ALABRY I NVESTMENTS L TD . 1982 J.J. 122

February, 1977. It is as follows:— “Dear Sirs, Lep Transport Ltd. v. Malabry Investments Ltd. Further to correspondence in this matter we have now received from our Agents, Messrs. Mourant du Feu & Jeune a remittance of £5,400.00 (less, of course, certain costs). This leaves outstanding the sum of £2,500 in respect of duty which it may well be that our clients will not claim but equally will have to claim if a claim is formally lodged against them. This being the position therefore we would be glad to have your comments and your confirmation that this sum is still being held pending resolution of this aspect of the dispute. This is most urgent and a copy of this letter is being sent to Mourant du Feu & Jeune. Yours faithfully”. It is true that Perrier & Labesse’s reply to that letter on 14th February, 1977 refers to “this dispute” but I read those words as governed by the earlier letters. Cove & Company’s further letter to Perrier & Labesse of 5th April, 1977, in which they refer only to “charges” reinforces my understanding of how matters stood on the 1st February because on 18th May, 1977, Lep in writing direct to the company, whilst disclosing that the matter of duty had been resolved then made a further claim concerning the transport of the six caravans to St. Tropez. The dispute about the six caravans and the delivery charges was not resolved on 13th July, when the property of the company was declared en désastre. There is now some £2,700 in the hands of Perrier & Labesse and the Viscount asks for a declaration that the money is the subject of a Trust in favour of Lep. I was told that of the monies held by Messrs. Perrier & Labesse £400 had been repaid in respect of some French duty. Mr. J. Clyde-Smith for Lep submitted that the balance of £2,100 (which he said should have been £2,200 as it appears £100 was unaccounted for) was held in Trust for Lep as is evidenced by some correspondence in the latter part of 1977 between Perrier & Labesse and Mourant du Feu & Jeune. Mr. Le Quesne, who

ROYAL C T. IN RE M ALABRY I NVESTMENTS L TD . 1982 J.J. 123 appeared for an ordinary creditor, submitted that I should confine myself to the five letters I have mentioned, namely those of 1st, 10th and 14th February, that of the 5th April and that of the 18th May, 1977. The letters, he submitted, are plain and restrict the Trust, if such it was, to the matter of the French duty only. Both counsel agreed with the three certainties referred to in the Judgment of Megarry, J. in In re Kayford Ltd . to which I have referred. I am satisfied that there was a sufficient intention to create a trust in the hands of Messrs. Perrier & Labesse but only to cover the dispute between the parties in respect of the French duty TVA. It may be that, at the time Messrs. Mourant du Feu & Jeune wrote their letter of the 1st February, 1977, Mr. Mourant did not record exactly what was said between him and Mr. Labesse as to what had been agreed, but as neither he nor Mr. Labesse were called to give evidence I must take the letter as I find it. In my opinion the five letters I have already mentioned make it plain that the question of the £2,500 (whether it should have been £2,600 I am unable to say) was, as I have already found, in respect of the dispute over the French duty only to that extent there was a trust but it cannot be extended by later implication to include other matters, such as the cost of transport of the six remaining caravans. Accordingly, I rule that the money in the hands of Messrs. Perrier & Labesse shall be handed over to the Viscount to be paid out by him in the ordinary way during the administration of the désastre. The second Representation is somewhat different and concerns the setting aside of monies by the company to the extent of £6,194.17 from its other funds with the purpose to protect the interests of some purchasers of mobile homes who had taken sub-leases of some plots on a number of caravan sites. Applying the principles set out in In re Kayford Ltd. , I rule that any monies received by the company before they decided to set up a separate bank account cannot form the subject of a trust in favour of the sub-lessees but any monies received after the decision was made by the company to set up a separate trust fund may, if proved to have been received by the

ROYAL C T. IN RE M ALABRY I NVESTMENTS L TD . 1982 J.J. 124 company, be the object of a trust fund in favour of the named persons. However, the beneficiaries must be identifiable as well as the amounts of their respective beneficial interests. The costs of both Representations will be paid for out of the general funds in the hands of the Viscount for the purposes of the désastre.