This is the latest judgment in the now long running proceedings between the Heinrich family and their former trustees and trust administrators, Pantrust International SA, based in Panama.
The background includes a complex and intriguing history of a trust named the Brazilian Trust which dates back to 1977 and was at one stage administered and provided trustee services by La Hogue Boete; the private trust company then based at St John’s Manor and seemingly connected to the Seigneur of St John, John Dick. At the centre of the story is a Mr Richard Wigley, formerly of La Hougue Boete and more recently principal of Pantrust, together with his son and business partner, James Wigley. Richard and James Wigley were the subject of claims in these Royal Court proceedings, and in related proceedings elsewhere around the world, brought by the Heinrichs family, including Mr Werner Heinrichs, the economic settlor and originator of the assets of the Brazilian Trust. Mr Heinrichs alleged that Mssrs Wigley had committed criminal acts with the effect of defrauding he and his family of substantial sums of money through their deliberate misadministration of the Brazilian Trust, and through a ‘complex and sophisticated operation’ involving secret interest turns, false loans and illicit transfers.
One of the more surprising elements of the background story is the alleged existence of a second, or replacement trust, also called the Brazilian Trust, but settled in 1984. The Court heard evidence that in fact the documents purporting to be a settlement made in 1984 in fact came into existence in 1995 and were accordingly false. Indeed, the Royal Court received before it several alleged instances of Richard Wigley producing false documentation in his administration of the trust, and indeed also in the course of the court proceedings themselves. The Royal Court also heard that the trusteeship of the Brazilian trust (in whichever guise) had been transferred from La Hougue Boete to Pantrust in Panama when Richard Wigley moved there in 2007 ‘to avoid the tightening regulatory regime in Jersey’. This move will have provided only temporary relief from the burden of financial regulation, however, as in 2014 the Panamanian Regulator cancelled Pantrust’s licence to conduct trust business in that jurisdiction. The Panamanian Superintendent of Banking’s report into the business operations of Pantrust was said to be damning, and included conclusions that it had refused to provide information to its inspectors using ‘all sorts of subterfuges and excuses’ and was conducting its business ‘in a harmful manner, hazardous to the public interest, its customers and to the detriment of the good name of the financial centre … in this jurisdiction [of Panama]’. When Pantrust lost its licence and its ability to act as trustee of the Brazilian Trust, it took the surprising step of retiring in favour of Richard and James Wigley, in their personal capacities, and with a change of the law of the trust to England.
The present application was for declarations from the Court as to whether the 1977 Brazilian Trust was valid, and how the (by then) newly appointed trustees, GB Trustees, should approach the administration of the 19977 trust, and the alleged 1984 trust. The Court, having heard the parties, reached the following decision:
1. Trusts are presumed to be valid until a court of competent jurisdiction determines otherwise, and in the absence of any obvious allegation from any party that the 1977 Brazilian Trust was invalid, there was no evident need or justification for the Royal Court to declare so now.
2. Moreover, it was not clear what effect such a declaration would have on the related proceedings going on in Ontario, and accordingly the Court had to approach the application with considerable caution.
3. This stance was informed by the approach of the Jersey Court being to exercise such a jurisdiction with caution, and only were necessary to do justice between the parties. In all of the circumstances, the Court declined to formally make the declaration sought, although it did highlight the factors which support the presumption of validity of the Trust.
4. The Court went on to assist the new trustee by providing practical directions as to its administration of the 1977 Trust, and how it should treat the alleged 1984 Trust.
Jean-Marie says:- “This is a case with an extraordinary factual background setting the scene for a battle between these parties which is likely to continue for some time, whether in Jersey and/or elsewhere. The technical assessment of the need (or lack thereof) for the declaratory relief sought by the Representors led the Court to decline to exercise its jurisdiction to do so on this occasion. However, the Court showed its willingness again to provide pragmatic assistance to parties in difficulty by giving its directions to the newly appointed trustees.”