Rawlinson & Hunter Trustees SA v ITG Ltd

The Chief Master, as I say, set that permission aside. He refused permission to appeal but permission to appeal, limited to two points only, was subsequently granted by Arnold J on 24 June 2014. The two points on which he allowed the claimants to appeal were articulated as grounds (d) and (e) of proposed grounds of appeal. Ground (d) relates to the claimants’ claim based on a loan agreement dated 21 May 2009 which I will have to describe in more detail in due course and which I will call “the Loan Agreement”. Ground (e) related to some comments by the Master at the end of his judgment to the effect that there had been material non-disclosure on the ex parte application by the claimants and that, had it been material, he would have set aside the permission on that ground too.

The underlying facts relate to a number of settlements for the benefit of the Tchenguiz family. There are two settlements in particular which are central. One is called the Tchenguiz Settlement (“the TS”) which was established on 11 March 1986 by a transfer of assets by Victor Tchenguiz to a trust corporation in Guernsey then called Guinness Mahon Trust Corporation Guernsey Limited which after a succession of changes of name is now the first defendant, ITG. That trust is a discretionary trust governed by Guernsey law, the beneficiaries of which are Victor Tchenguiz, his wife Violet and their issue, namely three children, Vincent, Robert and Lisa, and no doubt, their children as well. ITG remained the trustee of the TS until 9 April 2010 when by a Deed of retirement and appointment the first claimant, Rawlinson and Hunter Trustees SA, a Swiss trustee, (“R&H”)was appointed as trustee of the trust and ITG resigned its office as trustee of the trust.

The second trust which is central to these proceedings is one called the Tchenguiz Discretionary Trust (“the TDT”) which is a discretionary trust governed by Guernsey law which was established on 26 March 2007 with assets appointed by a third trust which I need not refer to. The beneficiaries of the TDT are Robert Tchenguiz, his children and remoter issue and since a date shortly after the establishment, Robert’s sister Lisa. The two defendants, that is ITG and Bayeux Trustees Limited were trustees of the TDT up until 1 July 2010 and by a notice of removal and instrument of appointment dated 1 July 2010, those two defendants were removed as trustees of the TDT and R&H was appointed as the new trustee.

It is not necessary for the purpose of the claim with which I am concerned to deal with the position of the second claimant which relates to a claim which is no longer able to be pursued in these proceedings.

The TDT owed money to an Icelandic Bank, Kaupthing, and in 2009 Kaupthing were pressing for payment and indeed, I believe, took proceedings to recover a sum of £5 million which was owed by the trustees of the TDT to the bank. It appears that TDT did not have liquid resources with which to pay that claim, although it did have a significant asset namely the shares in an Isle of Man company known as Iver Resources Limited (“Iver”) which in turn held a long leasehold title to a property in London known as the Royal College of Organists in Kensington, or the RCO, which was occupied by Robert Tchenguiz and his family as their London residence and had a value of many millions of pounds.

The primary claim brought in these proceedings is that in 2009 the trustee of the TS, being then ITG, agreed with the trustees of the TDT, being then ITG and Bayeux Trustees, to provide a sum of initially £5 million later, I think, amended to £6 million, to the TDT in connection with arrangements under which the TDT would sell the shares in Iver to the TS. The primary claim in these proceedings which was sought to be brought was a claim for specific performance of what was said to be a contract to sell those shares. It is not necessary to look at that claim in any detail. The Chief Master refused to allow that claim to be served out of the jurisdiction, finding that the defendants had much the better argument as to whether a binding oral agreement was made to that effect. In those circumstances it was not appropriate to grant permission to serve out.

There was a fall back claim based on proprietary estoppel and the Chief Master also found there were considerable difficulties with that cause of action, the fundamental problem being the same as the claimant’s difficulty with the contract claim. The second fall back claim is based on the Loan Agreement. The Loan Agreement was entered into in May 2009. I should have said that it is not disputed that on 26 March 2009 the TS did provide £6 million to the TDT which was no doubt used by the TDT to pay Kaupthing’s claim. On 21 May 2009 the Loan Agreement was entered into. The parties are Investec Trust Guernsey Limited, in its capacity as trustee of the TS, as Lender, and Investec Trust Guernsey Limited and Bayeux Trustees in their capacity as trustees of the TDT as Borrowers. It recites that the Lender advanced the sum of £6 million on 26 March 2009 to the Borrowers. It recites that the Lender and Borrowers have agreed to document their Loan Arrangements and wished to confirm the terms on which the loan had been made. It provides for the payment of interest. Under clause 4 it provides as follows:

“4.1

Subject to clause 4.2 the loan is unsecured

4.2

The Borrowers will, at the request of the Lender (or its successor or assigns), execute any document, deed or agreement to provide security for their obligations under this Deed.”

It provides for the loan to be repayable on demand. It provides at clause 8.1 that,

“8.1

The terms of this Deed shall bind and enure for the benefit of the Borrowers and the Lender and their respective successors and permitted assigns.

8.2

The Borrowers may not assign or transfer any part of their rights or obligations hereunder without the express written consent of the Lender.

8.3

The Lender shall have the right at any time to assign his rights pursuant to this Agreement.

10.

Law and Jurisdiction

The Agreement shall be governed by, and interpreted and construed in accordance with, the laws of England and Wales.

11.

Enforcement

The claim which is brought on the Loan Agreement is pleaded at paragraph 50 of the particulars of claim as follows:

“50.

Further if the defendants contend that the Cash payment [which is a reference to the £6 million that was paid by the TS to the TDT] was a loan then the Defendants were and are subject to a binding agreement to repay the loan on demand pursuant to clause 5.1 of the Loan Agreement and to give security on request for that loan pursuant to clause 4.2 of the Loan Agreement. By this Claim, the Claimants request the Defendants to provide security in the form of a legal charge (in terms which are to the reasonable satisfaction of the Claimants) over the Iver shares.”

On the basis of that, there is sought in the relief at paragraph (9) an order that the defendants do provide security for the loan of the cash payment in the form of a legal charge over the Iver shares.

That pleading, which as I say is a fall back claim to the primary claims in contract and proprietary estoppel does not in terms explain how a Loan Agreement made between ITG and ITG and Bayeux can be enforced by R&H. That is explained by reference to a Deed of Novation dated 9 April 2010, being the same date as the date on which R&H replaced ITG as trustee of the TS. I was told by Ms Weaver who appears for the claimants that her understanding of Guernsey law is that the mere appointment of a new trustee does not by itself vest a cause of action on a contractual obligation owed to the old trustees in the new trustees and this Deed of Novation was clearly intended to supplement the appointment of the new trustee which had itself at recital (G) referred to the fact that it is intended that as soon as is practicable, the property now subject to the trusts of the settlement should be transferred or placed under the control of the new trustee.

I will have to refer to virtually the whole of the Deed of Novation. It is made between ITG as Transferor, R&H as Transferee and ITG and Bayeux Trustees Limited in their capacity as trustees of the TDT as Vorrowers. The recitals are as follows:

“A.

Prior to the date of this Deed, the Transferor (in its former capacity as trustee of the Settlement [which is a reference to the TS]) has advanced amounts to the Borrowers by way of loan or loans (the Loan Arrangements)”.

B.

The Loan Arrangements have been partially documented by way of a Loan Agreement (“The Loan Agreement”) dated 21 May 2009 and entered into between the Transferor (in its former capacity as trustee of the Settlement) and the Borrowers

C.

By a deed of retirement and appointment made between the Transferor and the Transferee and dated on or about the date of this Deed, the Transferor was appointed as the trustee of the Settlement in the place of the Transferor.”

The body of the Deed is headed, “Agreement”. Clause 1 is headed, “Novation” and provides as follows:

“With effect from the date of this Deed:

1.1

In consideration of the Borrowers’ release and discharge of the Transferor pursuant to clause 1.2 below, the Transferee hereby assumes all rights, obligations and liabilities of the Transferor under or in respect of the Loan Arrangements, (including for the avoidance of doubt, under the Loan Agreement);

1.2

In consideration of the Transferee’s agreement in clause 1.1 above, the Borrowers hereby agree that the Transferor shall be released and discharged from all obligations and liabilities which are owed by the Transferor under or in respect of the Loan Arrangements (including, for the avoidance of doubt, under the Loan Agreement);

1.3

In consideration of the Transferees’ Agreement in clause 1.1 above, the Borrowers hereby agree with the Transferee that they will duly perform (including in accordance with the terms of the Loan Agreement) all obligations and liabilities under or in respect of the Loan Arrangements, (including for the avoidance of doubt, under the Loan Agreement) in favour of the Transferee and that the Transferee shall be entitled to all rights which the Transferor has under or in respect of the Loan Arrangements; and

1.4

The Loan Agreement shall be read and construed and have effect as if the Transferee were named therein instead of the Transferor in each place where the Transferor’s name appears.

2 Continuing effect

2.1

Except insofar as amended or supplemented hereby, the Loan Agreement will remain in full force and effect and (subject to clause 1.4 above), in the form set out at Schedule 1 to this Deed.

2.2

References in the Loan Agreement to “this Agreement”, “hereof”, “hereunder” and expressions of similar import shall from the date of this Deed, be deemed to be references to the Loan Agreement as amended by this Deed.”

Clause 3 provides that the Deed may be executed in any number of counterparts. Clause 4 deals with the Deed’s effect as a deed, and then clause 5, under the heading, “Law and jurisdiction” provides as follows:

“5.1

This Deed shall be governed by and interpreted and construed in accordance with English law.

5.2

Notwithstanding the above, the Borrowers, the Transferor and the Transferee submit to the exclusive jurisdiction of the courts of Guernsey and agree that any dispute whatsoever as to the liability of any party to this Deed to any other party to this Deed which might in any way relate to the subject matter of this Deed howsoever arising, shall be determined solely by the courts of Guernsey.”

There is a “Schedule 1” attached headed, “Form of Loan Agreement” but it is completely blank.

Those are, I think, all the materials which I need to refer to. The decision which the Chief Master had to decide was whether the claim which is sought to be brought by R&H under the Loan Agreement is one which in accordance with clause 11 of the Loan Agreement, the parties have agreed that the courts of England and Wales shall have exclusive jurisdiction to settle and in respect of which they have further agreed that they will not argue that such courts are inappropriate and inconvenient courts to settle that dispute; or alternatively, whether the effect of clause 5.2 of the Deed of Novation is to displace clause 11.1 of the Loan Agreement, the result being that the parties have agreed that the claim is to be submitted to the exclusive jurisdiction of the courts of Guernsey. That, on analysis, comes down to a question of construction of the Deed of Novation and in particular of clause 5.2 of it, although the whole of the parts which I have read are relevant to the question. What the Chief Master said about that was as follows. At paragraph 56, he says “I turn to deal with the Loan Agreement” and then he sets out the jurisdiction clause in the Loan Agreement and then the Deed of Novation and the relevant provisions of the Deed of Novation. At paragraph 60 he says:

“60.

I have to consider whether this very wide-ranging jurisdiction clause has the effect of overriding clause 11.1.1 of the Loan Agreement or whether the jurisdiction clause in the Deed of Novation was intended to have a more limited effect. The answer to that question is largely provided by considering what “the subject matter of this Deed” in clause 5.2 is intended to mean. Is the subject matter merely the novation arising on a change of trustee, or is the subject matter the Loan Arrangements and the Loan Agreement?

61.

The context in which the Deed of Novation was entered into is significant. The first claimant, an entity based in Geneva, had been appointed in place of Investec, an entity based in Guernsey, to act as the sole trustee of the TS trust, a Trust subject to Guernsey law. It would not be surprising in such a context that further consideration was given to the appropriate jurisdiction for claims. The recitals put forward both the Loan Arrangements and the Loan Agreement as the central focus of the Deed. Only the Loan Agreement was subject to an express jurisdiction clause. The Loan Arrangements, (whatever they might be), were not subject to a choice of jurisdiction. The opening words of clause 2.1 clearly contemplate the possibility that the Deed of Novation might make an amendment to, or supplement, the Loan Agreement. Subject to any such changes or supplements the Loan Agreement was to remain in full force and effect. Furthermore, the jurisdiction clause at 5.2 in the Novation Deed is expressed in very wide terms: “any dispute whatsoever which might in any way relate to the subject matter of this Deed howsoever arising…”

62.

It seems to me that whether by analysis of the wording of the Deed or stepping back from the detail and considering the issue as a matter of impression, the subject matter of the Deed of Novation was not just the novation itself but the novation and the Loan Agreement and the Loan Arrangements. A claim made under the Loan Agreement is related to the subject matter to the Deed. In short, I consider that the effect of clause 5.2 of the Loan Agreement is to vary clause 11.1.1 of the Loan Agreement and that there is now an express choice of jurisdiction in respect of claims under the Loan Agreement reserved to the Courts of Guernsey. It follows that England is not an appropriate forum for the determination of claims under the Loan Agreement.”

It is, I think, common ground between counsel that on this question the answer to whether permission should be granted to serve this claim out of the jurisdiction turns solely on the question of construction which the Master has there addressed, and that that question is one which I should decide. Ms Weaver has, in essence, argued that the Deed draws a distinction between amendments to the Loan Agreement and other matters and that the only amendment which has been made is that specifically referred to at clause 1.4, where the Deed of Novation provides that the Loan Agreement shall be read and construed and have effect as if the Transferee were named therein instead of the Transferor. Apart from that amendment, clause 2.1 confirms that the Loan Agreement shall remain in full force and effect and she submits that in those circumstances, the jurisdiction clause in clause 11 and the service provisions in clause 11.2 remained un-amended and therefore, the claims under the Loan Agreement are still subject to that jurisdiction clause. When one comes to clause 5.2, one has to read the words, “The subject matter of this Deed” as being limited to what the Deed does which is to substitute the Transferee, R&H, for the Transferor, ITG, as the person entitled and bound by the Loan Agreement. That means that all that clause 5.2 is dealing with is disputes which arise as to the effect of the Deed and in relation to the substitution of the Transferee for the Transferor leaving untouched the jurisdiction clause in the Loan Agreement which confers on the courts of England and Wales exclusive jurisdiction in relation to claims under the Loan Agreement. In these proceedings the dispute is as to the effect of clause 4.2 of the Loan Agreement and is not as to the effect, at all, as to the Deed of Novation. That is a brief summary of her argument.

Mr Stanley who appears for the defendants, points out that clause 5.2 goes out of its way to use conspicuously broad language. It refers to, “any dispute whatsoever”, it refers to “the liability of any party to this Deed to any other party to this Deed which might in any way relate to the subject matter of this Deed” and then for good measure adds, “howsoever arising”. The draftsperson has therefore gone out of their way to try and make this clause expansive rather than restrictive. He says that the subject matter of the Deed is as the Chief Master found, namely the Loan Arrangements and Loan Agreement which are referred to throughout the Deed; and that the claim which is sought to be brought to enforce clause 4.2 of the Loan Agreement is therefore a claim which relates to the subject matter of the Deed. He also says that even if that is not right and that the subject matter of the Deed is limited to the substitution of the Transferee for the Transferor, that is something which in itself is a necessary part of the dispute which is brought. He pointed out that technically speaking, the claim in the particulars of claim is demurrable because it does not plead how R&H have obtained title to sue on the Loan Agreement and that in fact, they have obtained title to sue as a result of the Deed of Novation which substituted them for the Transferor. He says therefore that even if one reads the words, “The subject matter of this Deed” in clause 5.2 as limited to the novation, nevertheless, the claim is one which relates in some way to that subject matter.

Then he dealt with a number of earlier cases at paragraph [11] which had drawn distinctions depending on the precise wording of clauses and at paragraph [12] he said:

“I do not propose to analyse these and other such cases any further because in my opinion the distinctions which they make reflect no credit upon English commercial law… The time has come to draw a line under the authorities to date and make a fresh start…

13.

In my opinion the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction. As Longmore LJ remarked, at para 17, “if any businessman did want to exclude disputes about the validity of a contract, it would be comparatively easy to say so.”

On that basis he held that the arbitration clause in that case included disputes about the validity of the contract, whether on the grounds that it was procured by fraud, bribery, misrepresentation or anything else. Lord Hope who gave a concurring judgment said much the same thing at paragraph [28], making the extra point that unless the arbitration clause did apply, the parties had not stipulated at all where the disputes were to be decided. That latter point has no bearing on the present case, but the general principle that rational commercial people intend all their disputes arising out of one transaction to be decided in one place is one that Mr Stanley places some reliance on. Ms Weaver says that given the trust background to this case, one can sensibly distinguish the Fiona Trust principle. It is a common place of trust practice that the relationships between a trust and outsiders or what are called external transactions, may give rise to a quite different type of dispute from disputes of an internal nature which refer to the administration of the trust and relations between trustees and beneficiaries or as in this case, former trustees and present trustees and that that may be a reason why less weight should be given to the general principles endorsed by Lord Hoffman in the Fiona Trust case than in other areas of practice.

As with most questions of construction, in the end it is largely a matter of impression which is not capable of lengthy elaboration but I will say straight away that I prefer the submissions of Ms Weaver on the question of construction. It does seem to me that one starts with the position that although clause 5.2 does go out of its way to extend the nature of disputes which are caught by it and does for that purpose use quite wide language, “any dispute whatsoever” “which might in any way relate to” and “howsoever arising”, that is not the real question. The real question is, what is the subject matter of this Deed?

In one sense, of course, the subject matter of the Deed is the Loan Arrangements and the Loan Agreement, the view which appealed to the Chief Master. However, in another sense, the subject matter of the Deed is not the underlying arrangements which are governed by the Loan Agreement but is the substitution of the Transferee for the Transferor. When one looks at what the Deed actually does it seems to me that everything that the Deed does is directed to substituting the Transferee in place of the Transferor and that the Deed displays no intention to change the underlying rights in the Loan Arrangements or Loan Agreement at all. Clause 1 under the heading, “Novation” sets out in elaborate detail, far more elaborate than was to my mind actually necessary, precisely how the Transferee was to be substituted for the Transferor, first, in clause 1.1 putting the Transferee in the place of the Transferor, secondly in clause 1.2 releasing the Transferor and thirdly, for good measure, in clause 1.3 providing that the Borrowers would now perform their liabilities in favour of the Transferee and that the Transferee should be entitled to all the rights which the Transferor had. That is then supplemented by clause 1.4 which provides that the Loan Agreement should be read and construed as if the Transferee were named there. The entirety of that clause 1, which is the substantive provision of the Deed, achieves one thing, which is to substitute the Transferee for the Transferor in the Loan Arrangements and in the Loan Agreement. There is no suggestion in that clause 1 that the underlying obligations, rights and relations between the parties as set out in the Loan Agreement should be changed at all.

Then one has clause 2 which to my mind is more belt and braces and which simply provides that the Loan Agreement will remain unchanged, save insofar as amended or supplemented. The only amendment which has by that stage been referred to in the Deed is that in clause 1.4 which changes the name by substituting the Transferee’s name for that of the Transferor. When one reads clause 2.1 of the Deed, it does not tend to suggest to the reader that there are other amendments, as yet unheralded, which are still to come. What it tends to do instead is to suggest that the purpose of the Deed is not to affect the rights of the parties under the Loan Agreement, save insofar as expressly referred to. By this stage, as I say, when reading the Deed the only change which has been made is the substitution of the party. Once one gets to the end of clause 2, the reader who is used to reading deeds would have thought that the substantive effect of the Deed had largely been achieved. The remainder are provisions which come towards the end of the Deed. Thus, clause 3 deals with execution, clause 4 deals with its effect as a deed, and clause 5 with law and jurisdiction.

Mr Stanley said that one should not place too much weight on the structure of the Deed and it would be wrong to distort the meaning of clause 5.2 by reference to the fact that the jurisdiction clause came at the end rather than before clause 2. As Ms Weaver said in reply, that rather understates the point that she made which is that what one expects to find in a clause such as clause 5 is something which tells you where a Deed and the rights under it are to be enforced. What one does not expect to find in a provision at the end of a Deed is something which amends a previous document, without that being said expressly. I accept entirely that clause 2.1 as a matter of language confirms the Loan Agreement, “except insofar as amended or supplemented hereby” and if the effect of clause 5.2 is to amend the Loan Agreement, then clause 2.1 gives effect to that amendment. The point is a slightly different one which is that clause 5.2 does not expressly amend the jurisdiction clause of the Loan Agreement. Given its position in the Deed of Novation, it would be a surprising place to find an amendment if it was a consciously intended amendment to clause 11 of the Loan Agreement. If the parties had sat down and decided that, instead of the exclusive English jurisdiction clause found in the Loan Agreement, with its accompanying provision of appointment of Macfarlanes as service agent, there should be a new regime for jurisdiction under the Loan Agreement, one would expect to find an express provision, in the body of the Deed rather than in the tail-piece to it, specifically dealing with that provision.

As Mr Stanley said, it is true that the argument that things could have been drafted differently is one to which one cannot attach very much weight because it is always the case that documents could have been better drafted and if they had been, they no doubt would not have to be construed. Nevertheless, it does seem to me that Ms Weaver is right. The structure of the Deed does not give one any real sense that what the parties were seeking to do was to change or amend the jurisdiction clause of the Loan Agreement or as I say, to amend or change the rights of the parties under the Loan Agreement at all save for the substitution of R&H, the Transferee, as the Lender in the place of the Transferor. If on its true construction clause 5.2 does extend to disputes under the Loan Agreement then I would accept that one would have to give effect to that; but, as I say, the structure of the Deed does not give one any impression that that is what the parties were trying to do.

When one comes to clause 5.2, the striking thing is that, although using expansive language to deal with the types of dispute that might arise, when the parties come to what the disputes are related to, they simply say, “The subject matter of this Deed”. As Ms Weaver has pointed out the draftsman is not shy of referring in the rest of the document to “the Loan Arrangements (including for the avoidance of doubt the Loan Agreement).” . Those words appear three times in clauses 1.1, 1.2 and 1.3 and had it been the intention that claims under the Loan Arrangements, including the Loan Agreement, should be subject to this jurisdiction clause, again, one would have expected this draftsman to have made some reference to that. I do regard it as significant that instead of using that repeated phrase which looks to the underlying Loan Arrangements and Loan Agreement, the draftsman has instead referred to “the subject matter of this Deed”. This causes one to ask what was it that the draftsman intended by “the subject matter of this Deed” and that then causes one to go to look at what the Deed actually does. As I have said, what the Deed does is to substitute the Transferee for the Transferor.

I find as a matter of construction, and with all respect to the Chief Master’s carefully expressed view, that the words “the subject matter of this Deed” refer to the substitution by clause 1 of the Transferee for the Transferor, and do not extend to all claims arising under the Loan Arrangements and Loan Agreement.

There remains Mr Stanley’s argument that even if clause 5.2 is to be limited to claims in relation to the subject matter of the Deed in the sense that I have expressed, then this claim which is sought to be brought does relate to the subject matter of the Deed in this way. That does not seem to me to be right. What clause 5.2 relates to is disputes “as to the liability of any party to this Deed to any other party to this Deed which relate to the subject matter of this Deed.” As I understand it, there is no dispute as to the effect of the Deed of Novation; it is not in issue that it will carry to R&H all such rights as ITG had. What is in issue, if the claim proceeds, will be the nature and effect of clause 4.2 of the Loan Agreement which as I said appears on its face to oblige the Borrowers to “execute any document, deed or agreement to provide security for their obligations under this Deed”. That does not seem to me to be a dispute “as to the liability of any party to this Deed to any other party to this Deed” which relates to the substitution of R&H for ITG. I therefore do not think it falls within clause 5.2.

As far as Fiona Trust is concerned, I can see that there is some force in Mr Stanley’s submission that this might, although it does not necessarily in the present case, lead to a rather inconvenient situation in which a claim which did involve both a dispute as to the underlying obligations in relation to the Loan Agreement, and a dispute as to the title of R&H to sue, would be one which appears to be caught by two different jurisdiction provisions. I do not regard that consideration as sufficient to overcome what I regard as the message to be gleaned from the language and structure of the Deed the draftsman has chosen to draft.

For those reasons I find that the claim in paragraph 50 of the particulars of claim is one which is subject to an English law jurisdiction clause and in those circumstances it is not suggested that any forum conveniens point arises, clause 11.1.2 precluding the defendants from taking the point that the courts of England and Wales are not the most appropriate and convenient courts to settle disputes.

That then leaves the question of non-disclosure. The Chief Master found that there was material non-disclosure in two respects. One was that the Deed of Novation itself was not referred to at all in the evidence on the application made ex parte for permission to serve out. In relation to that, he said the failure to refer to it, to provide the court with a copy of it, and to raise the possibility that the express choice of jurisdiction of the Loan Agreement might be affected was a significant failure. Before me, Ms Weaver was constrained to admit that it was a material non-disclosure and that it should have been disclosed. The other non-disclosure has no direct relevance to this claim but was relevant to the other claims which the claimants were seeking permission to serve out for, namely the contract and proprietary estoppel claims. It was the fact that there had been and are ongoing extensive proceedings in Guernsey brought by the trustees of the TDT which to some extent involved questions as to what should happen to the assets of the TDT including the Iver shares and the future of the property which is held by Iver, namely the RCO. What the Chief Master said about that is as follows:

“Mr Wessels [the defendants’ witness] points to five sets of proceedings in the Royal Court of Guernsey. It is unnecessary to set out his summary of those proceedings in this judgment. It suffices to say that the second application (as described by Mr Wessels) directly related, in part, to the RCO concerning whether a rent was to be charged for the occupation of the property, the refinancing of the loan facility and whether the directors of Iver should seek to challenge a notice of registration against the title by Robert Tchenguiz’s wife. Furthermore, Investec and Bayeux have given undertakings to the Guernsey Court which prevent them from dealing with the assets of the TDT. The undertakings preclude a transfer of the shares in Iver without the permission of the Guernsey Court. It seems to me that in the context of proceedings for specific performance in respect of an alleged agreement for the transfer of those shares, the existence of issues being litigated in Guernsey concerning the RCO and undertakings in relation to the shares themselves, were plainly issues that would have been of interest to the Deputy Master in considering the application for permission to serve out of the jurisdiction.”

Ms Weaver was not so ready to accept that that was a material non-disclosure but I am not prepared to disagree with the Master’s view that the Guernsey proceedings were matters which were material. They were briefly referred to in the witness statement of Ms Rickard of the claimants’ solicitors on the application to serve out as follows:

“I understand that the Defendants, in their capacity as former trustees of the TDT, are involved in ongoing legal proceedings in Guernsey in relation to, amongst other things, disputes concerning assets held by the TDT (the “Guernsey Proceedings”) which were commenced in March 2010. My firm is not involved in the Guernsey Proceedings but I understand that one of the effects is that the Defendants continue to hold the assets of the TDT although some of the administration of those trusts and all other matters are dealt with by the First Claimant. The First Claimant in the current proceedings is also a party to those proceedings in its capacity as the new trustee of the TDT. The Claimants consider that the Guernsey proceedings are separate and are not relevant to the current proceedings which simply relate to a specific transaction entered into by the parties.”

Once the point had been taken by the defendants on the application to set aside that the Guernsey Proceedings were very extensive and included specific reference to the RCO. Ms Rickard explained that among other things:

“In order to comply with the orders in the Guernsey Proceedings, neither I nor the Claimants are at liberty to provide any additional information to the court in this regard.”

It is fair to say that she did not make that explanation in her first witness statement and that the Deputy Master reading her first witness statement would have formed the view that there was nothing in the Guernsey Proceedings which was relevant. It seems to me that it would have been appropriate to have given that explanation in her first witness statement and even if it were impossible to identify precisely the nature of the Guernsey Proceedings, it was, I think, a mis-statement to say that the Guernsey Proceedings were not relevant to the current proceedings. I therefore agree with the Master that there was material non-disclosure in both respects.

However, it is not suggested by Mr Stanley that that was deliberate and furthermore, he accepted that if the claim under the Loan Agreement had been the only claim, the Guernsey Proceedings would not have been material to that claim. The main relevance of the Guernsey Proceedings was to the forum conveniens question which does not, as I have already explained, arise on the Loan Agreement claim. Mr Stanley however said that it was a fairly careless mistake, a slightly insufficient response, and that the appropriate thing to do, certainly in relation to the Deed of Novation, was to put it before the court. Indeed, he pointed out that if one had given any real consideration to the claimant’s ability to sue in paragraph 50 in the particulars of claim, one would have seen that the Deed of Novation was a necessary link in the claimant’s title.

Ms Weaver accepts that the Court has a jurisdiction, in the case of non-disclosure on an ex parte application, to set aside any order obtained but referred me to a decision of the Supreme Court in NML Capital Limited v Republic of Argentina [2011] UKSC 31. This was not actually a case dealing with an application to serve out of the jurisdiction but was a case dealing with state immunity. In the course of his judgment, Lord Collins at paragraph [136] referred to the practice in cases of non-disclosure and said this:

“In cases of non-disclosure, the court has a discretion (a) to set aside the order for service and require a fresh application or (b) to treat the claim form as validly served, and deal with the non-disclosure if necessary by a costs order.”

He then refers to two earlier cases but Ms Weaver told me that they were not actually of much assistance. At paragraph [137] he goes on:

“By analogy, where the so-called rule in Parker v Schuller 17 TLR 299 might apply in a case where the ground for service out has been incorrectly identified, the court would also have power to grant permission to serve out on a fresh basis and dispense with re-service.”

That has to be read with holding (4) in the headnote, which reads as follows:

“The overriding objective in CPR rule 1.1, to enable the court to deal with cases justly by saving expense and ensuring that they were dealt with expeditiously, was fulfilled in the normal approach to an application to amend pleadings, which was to grant permission where to do so would cause no prejudice to the other party which could not be dealt with by an appropriate order for costs, and the case for permitting the amendment was even stronger where all a refusal would achieve was additional costs and delay; that similar considerations applied when an application was made for permission to serve process out of the jurisdiction so that the court should have a discretion as to the order which would best serve the overriding objective; that in the present case the claimant was relying neither on a different cause of action from that in respect of which leave had been obtained to serve out of jurisdiction nor on facts which had not been before David Steel J when he had given permission to serve the defendant out of the jurisdiction, nor was there any failure to comply with a rule of court; that in those circumstances the application to rely on alternative reasons why the defendant had no immunity had been for Blair J to determine in the exercise of his discretion and there were no valid grounds for challenging his decision; that to require the claimant to start fresh proceedings would be a waste of time and money; and that, accordingly, the claimant was not precluded from proceeding with its action by its initial mistake in identifying the correct reason why the defendant was not entitled to immunity.”

On the basis of that Ms Weaver said that, there being a discretion, the court should apply the principle that all a refusal would achieve is additional cost and delay and that to require the claimant to start fresh proceedings would be a waste of time and money. She relied on the fact that this was not a deliberate case of non-disclosure and that the same seriousness did not attach to non-disclosure in a case of an application for permission to serve out, as in the case, for example, of an injunction where immediate effects might be suffered by the defendant subject to an ex parte injunction. Mr Stanley, while accepting both those points, said that in this case the particulars of claim would need complete recasting in any event so that there would not in fact be a great deal of waste of time and costs in requiring it to be re-pleaded. Although it was accepted not to be a deliberate error, it was he said really a rather obvious error.

The Chief Master’s view on this question was to the effect that, although he did not have to decide:

“Were it to be necessary for me to decide the issue, I would conclude that the court should exercise its discretion to set aside the order of the Deputy Master on the grounds of material non-disclosure.”

Mr Stanley however does not suggest that I am in any way inhibited by that and accepts that I should exercise my discretion afresh.

I have not found this an entirely straightforward case because I have not been given any real assistance from the authorities as to how one balances the twin considerations (i) that it is a salutary principle that those who make ex parte applications should make full and frank disclosure and if the court does nothing or little about it, one is really just paying lip service to the rule, with (ii) the consideration that in circumstances where proceedings have already been commenced, to set aside the grant of permission to serve out in a case such as this will simply lead to the proceedings being started again, which does not seem to be in either party’s interest.

In the end, I take the view this is a case where it is not necessary on the grounds of material non-disclosure to set aside the permission to serve out. Ms Rickard’s view that the Deed of Novation did not affect the jurisdiction clause is one which in the event I have agreed with, so that the non-disclosure of the Deed of Novation has not affected the actual answer which has been given. In those circumstances, and it being a case where it is accepted that the non-disclosure although something that was material was not deliberate, and where to require the claimants to start again would, so far as I can see, lead to unnecessary duplication of efforts, I do not regard it as necessary to set aside the permission. I will however leave the Master’s order for costs undisturbed. As Ms Weaver submitted, the effect of that would be that the cost of dealing with this issue and putting the Deed of Novation before the court will remain something that will be borne by her clients in any event.

I will allow the appeal accordingly.