Quan v Bray & Ors

Tigers are an endangered species and the Chinese Tiger (panthera tigris amoyensis), in particular, no longer exists in the wild at all. Li Quan (the wife), who was born in China, has, since at least 1999, been passionate about not only saving the Chinese tiger from disappearing from the planet altogether but also breeding them for reintroduction into wild reserves in China. To that end she has invested huge amounts of time and energy and some money.

The wife met Stuart Bray (the husband) in 1990 and he too, over time, became infected with the same passion for the cause of saving the Chinese tiger. And he too has invested even greater sums of money in the venture (loosely and frequently described as the Chinese Tiger Project) and a great deal of his time and energy. The Government of the People’s Republic of China are (via their government agencies) completely behind their work and have signed an agreement (The Framework Agreement) in 2002 which forms the basis of the ongoing cooperation between the husband and wife, the fourth Respondent (Save China’s Tigers; SCT UK) and China. The other contracting party to the Framework Agreement apart from the Chinese government is a trust established in Mauritius called Chinese Tigers South Africa Trust (CTSAT) which was executed on 18 November 2002, a week before the signing of the Framework Agreement.

The husband and wife lived together from 1997 (they married in 2001). In 2000 the wife established Save China’s Tigers in the UK which secured UK Charity Commission registration the following year. Between that time and July 2012 the husband and wife worked tirelessly and more or less cooperatively on this patently bold, imaginative, charitable and laudable venture. The wife’s expertise in the field of tiger conservation and her Chinese contacts and cultural background combined with the husband’s profound understanding of and experience in complicated international finance and financial structures undoubtedly produced a dynamic partnership. Over time a number of their friends and colleagues became involved and to an extent enthused by and in the project.

Tragically for all involved the personal relationship of the wife and husband deteriorated over time. Part of the problem seems to have been disagreements over the future policy and precise presentation of the project.

In July 2012 the wife was removed as director of SCT UK and on 15 August she filed a divorce petition. At the time of the breakdown of the marriage the wife’s governing preoccupation was to ensure the survival of the Chinese tiger project and the preservation for that purpose of the funds and assets which had thus far been provided for that purpose. That was the focus of her concern when she went to her first lawyers in July 2012 .

However by the time her claim for financial relief was first listed before me for a First Appointment on 27 November 2012 the suggestion that the funds within the charity might have more than one purpose was beginning to surface.

Her leading counsel on that day said …

“It is an unusual case. I will not pretend it is not. We have all seen, on many occasions, trusts – sometimes in Liechtenstein, sometimes in Jersey, sometimes elsewhere – where the primary, or perhaps the only, beneficiary is ostensibly a charity. The thing that makes this case different is that in this case there is no doubt that funds have been deployed to charitable purposes. It is not as though we can say that this is a pool from which this family has lived with no intention of ultimately benefitting the charity. The question is though, “Is this, as it were, a genuine philanthropic irrevocable disposition by Mr Bray or is there, in fact, a complex web through which he can [and, if he can, we say in due course he will] extract funds back for himself?”

Gradually since that time her case in this respect has solidified so that on 17 July 2013 she filed an application by way of amendment to her Form A seeking a variation of a post nuptial settlement viz “variation of the post nuptial settlement –Chinese Tigers South Africa Trust”. The core of her case from that time has been that CTSAT was established not only to advance the cause of the chinese tiger but also to provide financial benefit and support for the husband and wife personally over the long term. That assertion has been hotly disputed by the husband since it first surfaced.

As the character and purpose of CTSAT had thus become the central issue in this most unusual financial relief application, the use of the OS v DS procedure to determine, as a preliminary issue, whether it is a post nuptial settlement (and so capable of variation under the MCA 1973 s24 by this court) and if not the extent to which it is, if at all, a “resource” in the more broad sense (under s25) available to the husband to meet the wife’s claim (apart from also paying for its charitable activities) is both an apt process and a priority for determination.

It is especially important because CTSAT has assets which are worth tens of millions of dollars or pounds (the precise figure is far from agreed but on the most optimistic view not more than £25m) but there are now almost no assets, relatively speaking, outside it. Accordingly the determination of this preliminary issue necessarily has a profound impact on the wife’s claim.

On 3^rd October 2013 by way of a refining of the OS v DS hearing I made the following order :

“the hearing on 9th December 2013 shall be utilized to enquire into:

(i)

The circumstances under which the China Tiger trusts were set up;

(ii)

The purpose of those trusts;

(iii)

Whether those trusts are nuptial settlements;

(iv)

The availability of funds within those trusts to the parties;

(v)

Whether the funds within those trusts can only be utilized for tiger conservation”

On the same day a number of other parties were joined to the proceedings including SCT UK and CTSAT. The wife and SCT UK have been represented at this hearing by leading and junior counsel. The husband has not been but he has received assistance both indirectly (and I suspect directly) from both SCT UK’s solicitors and counsel. His case is in every important respect identical to that of the UK charity of which he is understandably fiercely protective.

This preliminary hearing which began last December (10 days in all) and continued for a further 14 days from 19 June 2014 has lasted a total 25 days including reading time. There are no less than 33 lever files of statements and documents. At the hearing I heard oral evidence from the wife, the husband and 8 other witnesses including two Mauritian lawyers. The oral evidence has been simultaneously transcribed by “livenote” which has been helpful given the importance of the oral evidence and the gap between the two halves of the hearing.

It goes without saying that I have also been provided with very lengthy opening and closing notes from the represented parties. They are of the highest quality. The husband has also supplied me with more succinct notes. All have been of immense help to me. Furthermore, following the delivery of this judgment in draft in late July, the wife’s team served a very lengthy further written argument pursuant to the so-called Barrell jurisdiction. In due course both the husband and SCT UK responded. I will deal with that specific “application” at the conclusion of the judgment.

At the start of the hearing Mr Richard Harrison QC (for SCT UK), complained with some justification that, in the absence of pleadings and given that he had not been a party to the earlier case management directions leading to the hearing, even at that late stage he did not have a clear idea precisely what the wife’s case was in support of her assertion that CTSAT (and its related corporate vehicles) was a post nuptial settlement. As I sympathised with his complaint I ordered the wife to set out her case concisely.

This she did and on 12 December a document entitled “W’s Case on the CTSAT Nuptial settlement” was lodged and served.

It is convenient to include it in full here:

“1.

The Wife asserts that the CTSAT arrangement is a nuptial settlement. It follows that all parts of that Group are within and part of that nuptial settlement.

2.

It was always intended by the parties that it should benefit one or both of them. To this end the Trust was created with powers to:

(a)

enable the parties to be expressly added as objects of the power (although this has proved to be unnecessary)

(b)

Create sub-entities (such as other limited companies) which the parties would then benefit from.

(c)

Give a direct benefit to the parties by, for example, paying for services for the parties which were not commercial arm’s length transactions.

(d)

Be and create other vehicles whereby matrimonial assets can be held (e.g. the South African land, the South African flat, the matrimonial home, the Deutsche Bank money and so on) in the expectation that these can be used medium to long term to benefit the parties.

3.

If, which is denied, they were not created with the ultimate intention of benefiting one or both of the parties to the marriage, the trusts subsequently acquired that character by the Husband deciding that he could and would use this for benefiting the parties – it was akin to adding the Husband and / or the Wife as objects of the power (although that formality was not necessary because of the structure which enabled benefits to be taken obliquely). This happened at the latest at the time of the payment of the G Bank money (in July 2009).

4.

One of the motivations of the Husband was to shelter his fortune from the attentions of the Revenue – including the IRS. It is now opportunistically being deployed to against the Wife.

5.

The fact that the Trusts were also intended to benefit another third party, the tigers of South China, does not prevent this settlement from being nuptial.

6.

Examples of the nuptiality of the trust include:

a.

It was used to buy the parties’ home. It created a sub-company to purchase the property. It then gave them a benefit in that they have continued to live in that property rent free. The money ostensibly used for that purchase was provided by the Husband to the trust in the expectation that it could (and would) be used to benefit the parties in that way. (Footnote: ¹)

b.

It holds the leases of the South African land for the benefit of the parties. This was matrimonial property settled into the trust.

c.

Held the Husband’s South African flat.

d.

The Framework Agreement comes to an end when China takes back its tigers and sets up its own reserves. Thereafter there would be little more for the Trust to do. H can wind up the trust. He has already indicated to the Wife that on such a winding up he would expect the funds to go to the Wife via the Li Quan Trust. (K42 to 43)

e.

Receiving the Husband’s G Bank money.

f.

The Trust has continued to provide direct benefits to the parties by:

i.

Paying money to the Husband via his companies in the JAS Group.

ii.

Being prepared to pay the Wife £150,000 per annum from the CTSAT group via the JAS group.

iii.

Paying money to the Wife by paying bills on her behalf.

iv.

Paying the bills on the matrimonial home.

v.

Giving the Husband’s company the very valuable Put Option in return for what might be nothing (i.e. if Durango has no assets or it is able to set off contributions of c £18m against the strike price of c £18m).

vi.

All the matrimonial assets are available (or were available) on, for example, the predecease of the Husband.

7.

The Framework Agreement is not the onerous contract which the Husband pretends it is. The reality is that the re-wilding project will come to an end within two years. Then the money will be available for redistribution. As intimated in his 2011, “winding up” email; this will then go to the benefit of the parties”.

The essence of the response by the husband is in his skeleton filed at the beginning of the first part of the hearing on 9 December 2013 part of which read :

“The South China tiger is truly on the edge of extinction. It is one of the 10 most endangered animals on the planet. Its demise is part of one of the largest, and according to some, the fastest mass extinction since life began. The chance of survival of the South China tiger in the wild is so low that every large conservation organization has written it off because improbably large amounts of time, energy, and money will be required in a complex, multi-step plan to restore the lost biodiversity in the habitat on which the tigers depend.

I have personally expended enormous time, energy and money working trying to build the Chinese Tiger Project into something that has a chance, however small, of succeeding. The enormity of the challenge combined with the relative paucity of resource makes the Chinese Tiger Project very fragile. Unless something dramatic changes, the Chinese Tiger Project will be out of cash in a couple of years.

For the sake of personal enrichment, my wife now seeks to tear down the Chinese Tiger Project she helped create. I believe that it is part of my wife’s legal strategy to create confusion about what the Chinese Tiger Project is and how it has been administered. Rather than presenting a clear case, she has hinted at multiple, often contradictory cases. She has put forward many disingenuous, misleading and provocative statements. Her actions have placed enormous strain on the financial and human resources of the Chinese Tiger Project.

I have been forced to spend very considerable time, energy, and money trying to clarify this obfuscation. I do not believe the court (or the Chinese Tiger Project, or other parties) will be well served by endless examination of details and irrelevant side issues. While I am happy to talk about any details, I believe the court will better served by focusing on the big picture rather than the detail. Accordingly, I try in this position statement to ignore the multitude of false, misleading, and provocative statements (including many that are profoundly important to me personally but probably irrelevant to this hearing) and instead do my best to distil, as much as possible, my understanding of the relevant issues.

I am aware, of course, that much analysis has been devoted by Mr Todd QC and those others representing my wife to the inevitably complex transactions undertaken over the years.

I believe, however, that it important not to lose sight of the bigger picture, and that it assists to pose the questions on which the Court needs to focus in a different way, as follows. I do not consider that this amounts to an over-simplification:

i.

Was (and is) the Chinese Tiger Project intended to be:

a.

A sham?

b.

A money laundering operation?

c.

A means of dishonestly reducing tax I would otherwise pay?

d.

An honest means of reducing tax I would otherwise pay?

e.

A means of defrauding my wife in these proceedings?

f.

A vehicle to keep my wife in the public eye?

g.

A narrowly focused breeding and rewilding project in South Africa only?

e.

An enterprise embracing some combination of the above?

Alternatively, was and is the Chinese Tiger Project a holistic approach to reintroducing the South China tiger in China based on the IUCN Reintroduction Specialist Group guidelines on reintroduction that require the cause of the demise of the species to be addressed before any individuals are reintroduced? In the case of the South China tiger this is loss of habitat due to pressure from human economic development. The guidelines (and common sense) dictate that failure to address the underlying cause will lead to the reintroduced individuals succumbing to the same problem. This means that sustainable economic development opportunities must replace the unsustainable practices that have destroyed the habitat that led to the loss of wild South China tigers in the first place.”

Finally SCT UK put its case shortly in its initial skeleton in this way :

“[the wife] will no doubt seek to suggest that she has always been ignorant of such matters and has been dependent upon H to explain the true position. The evidence filed in these proceedings demonstrates that this stance by her is completely contrived. The evidence shows that – as she has been aware throughout:

(a)

The trust was created solely for the purpose of furthering the Chinese Tiger Project;

(b)

Suggestions at the time of creation of the trust that she or H might be beneficiaries were specifically rejected;

(c)

It was created in a great haste in order to take the place of two individuals (the Varty brothers) as a party to a tripartite agreement (the Framework Agreement) involving the Chinese Government and SCT (UK) in furtherance of the Chinese Tiger Project.

(d)

The need for haste has been explained in detail by H in his evidence (and indeed by W in her South African evidence) but was in essence caused by the Varty brothers reneging on the deal at the last minute such that the entire Framework Agreement which lies at the heart of the Chinese Tiger Project was in grave danger of falling apart.

(e)

Mauritius was chosen as a forum for the trust because South Africa would have presented exchange control problems.

All of this has always been well known to W and her failure to be upfront about it is a serious breach of her duty of full and frank disclosure and has led to enormous costs being expended on behalf of SCT (UK) in obtaining the evidence to establish matters that should never have been put in issue.”

The main issues for determination are as set out but inevitably to reach conclusions on them it will be necessary to determine a number of other subsidiary issue of fact and law, as I hope will become clear.

For a better understanding of the way in which these issues arise it is necessary to provide some further history and chronology surrounding the creation of the tiger trusts almost all of which is uncontentious. As can be seen from the “pleadings” already referred to the issues are about the motives behind and the precise purpose of the CTSAT structure.

The wife’s team have produced a very lengthy chronology which forms the background to this application. It had been updated by the conclusion. It is not agreed but there are no issues of significance. The husband has produced two narratives ; one in his Form E (B/151) and then a lengthy expanded version in his statement of December 2013 (H4/110). For reasons I will explain later I shall Annex to this judgment an abbreviated version of the husbands narrative as contained in that statement

That the ultimate overall structure (of which CTSAT is a part) is complex is obvious. Thankfully there is structure diagram illustrating how the various parts relate to one another. I shall annex a copy to this judgment. The different parts had different functions and purposes but were all ultimately directed to the work of the tiger project

The core of the wife’s case is that the documents whatever they may say or seem to say on their face do not tell the whole story. Thus her case must stand or fall on the oral evidence. In other words the more the documents do not support the wife’s case the more Mr Todd QC, on her behalf, asserts, and is driven to assert, that that is inevitable because the husband with his expertise, has set up and organised the structures precisely with the intention of making actions untraceable and the structures impenetrable. The absence of documents is part of his strategy of leaving no paper trail.

So let me consider the witnesses. The husband and wife are the central figures in the drama. I watched them both give evidence in response to skilful and penetrating questioning by the QCs over many days. I have no qualms about my conclusions. In addition I heard from witnesses called on their behalf.

Mr Todd says he would have wanted to question other witnesses who produced statements on behalf of the husband and their absence is a telling lacuna in the respondents’ cases. I have read the statements as I was expected to. I must and do of course take into account that some of the makers of the statements have not been available to be questioned. However their evidence is largely repetitious of other evidence produced by the husband himself and witnesses who were called and in the end I do not regard myself as disadvantaged by their non-attendance.

From the word go the wife has been beside herself with grief and anger at the way that she has been unjustifiably (as she sees it) removed from SCT UK and the Tiger project which she has always seen as “her baby”. She has gone as far as saying that if she cannot lead the project she would rather it was destroyed. She has since her departure set up another charity with similar objectives and which the husband believes is an attempt to try and usurp SCT UK’s function.

Her emails at the time are graphic and contain the following:

And she signed off her emails with “wrath of a tiger mother whose cub is killed by Evil (sic)” or “wrath of the tigress whose baby has been taken away” etc. [G2/367-371]

And there is no doubt that when this application started her preoccupation was to ensure the continuance of the work. She did not allege that the money earmarked via CTSAT for the tigers was also for the parties’ benefit, much less that she and the husband had had discussions at the outset to the effect that they could ultimately benefit, as she maintained in this hearing.

Her solicitor’s email of 30 November 2012 could not have been clearer when it said

“I am only going to reiterate that Li’s objective in these proceedings does not include any attack on assets which belong to any of the charities, and on the contrary she is intending to establish which assets have been donated and to ensure that they cannot subsequently be retrieved or diverted away from the charitable objectives… Mr Marks QC’s note for the First Appointment … makes [it] abundantly clear what Li’s concerns are, and the purpose of almost all of the questions in the questionnaire is to give you the opportunity to allay those concerns… There is no conflict of interest between Li’s role in the charities and her objectives in these proceedings – indeed they are wholly aligned.”

The suggestion that CTSAT had, or might have had, other purposes crept in later and the application to vary CTSAT later still.

As her evidence in this application is also at variance with statements she made in the very lengthy Varty litigation she has also had to distance herself from much of her evidence in the Varty litigation (in which the parties were entirely successful) by asserting that she only wrote and said what she was told to say. However there is a clear finding by that experienced tribunal (Mr Justice Kriegler) who also heard evidence over many days, that she was a truthful witness so far as that evidence was concerned. And there is also much evidence to the effect that many hours were spent with professional help compiling it.

I also found some of the wife’s evidence wildly inaccurate in places. Her assertion that the parties were spending at the rate of £60,000 per month was completely wrong, possibly by a factor of 15. This could not have been just a bit of understandable miscalculation or guesstimate but a manufacturing of a figure to support her case.

Mr Todd says that the wife has not really changed her case but only, as the case has proceeded, her objective. He urges me to accept the wife’s account in her oral evidence about discussions surrounding CTSAT’s true multi-purpose function.

In the end, considering fully the points urged on both sides, I find myself in agreement with closing submissions made by SCT UK in respect of the wife’s change of stance and also the doubts surrounding her credibility and I am driven to find, overall, that she is an unreliable witness upon whom the court cannot rely. This is especially so when it comes to deciding where the truth lies about the underlying purpose of CTSAT and any discussion which took place at the time of its creation.

The wife is a very intelligent person but she has become blinded by her desire for revenge and this has led her to fabricate where she thinks it will assist her case.

The husband is also obviously a highly intelligent and articulate person and a complete and, it would seem, leading expert in the field of structured finance. His grasp of the detail of the history and knowledge of the documents was extraordinary and encyclopaedic. He was in the witness box for four days, three of which consisted of a rigorous and searching cross examination by Mr Todd QC. It could not have been more thorough. Over and over again the husband’s knowledge of the detail of the transactions leading to the establishment of CTSAT and other structures supporting the Tiger Project was tested and found to be sound. His evidence at every stage was clear, detailed and consistent (both internally and by contrast with the evidence in the Varty litigation). He took great pains over the answers and made minor corrections as appropriate. He also agreed with the wife whenever possible.

At the end of the day his passion for the Tiger Project was as evident as it was with the wife and the longer he gave evidence the more convinced I became that he was telling the truth and doing his best to assist the court in arriving at the right answer. In contrast with the wife’s evidence, I found his evidence bore all conventional hallmarks of honesty and accuracy.

At the conclusion of the Varty arbitration the retired South African judge made this finding

“I find Mr Bray to be a reliable source of factual information, fully au fait with the contemporaneous documents and an articulate and coherent presenter of the narrative as seen from the Bray parties’ perspective. Though obviously not impartial, he did not appear to be overstating his case.” [F5/236]

I agree with that assessment and endorse it.

Accordingly I am driven to the inevitable conclusion that where he and the wife differ in their recall and evidence especially over whether there were discussions at the time of the creation of CTSAT to the effect that it was for their benefit as well as the tigers’ his recollection is to be preferred and relied on .

This witness was called on witness summons by the wife. He was immersed in the world of structured finance and was a colleague and friend of the husband until they had a major falling-out over the large fee he expected for his work on the G Bank claim. He ended up getting nothing and the husband accused him of blackmail. They have not spoken since.

Mr Harrison summarised his evidence in this way (after categorising examples of where Mr Cross had been speculating rather than giving direct evidence from his own knowledge)

“Mr. Cross plainly holds a grudge against H. Rather curiously, he had retained, in the 5 years since his involvement with H, 5 lever arch files of information about H, SCT and CTSAT. His comments at the beginning of his evidence as to his “forgetfulness” and memory were rather telling and it is submitted that the court can attach no weight to the speculations put before the court by Mr. Cross, which in themselves were not consistent with what Mr. Cross had understood and represented at the time of his employment. ”

Mr Todd QC urges me to place reliance on Mr Cross’s evidence

“Mr Cross is a professional man (we say this as such emphasis is put on the “professional” standing of for example, Mr Cole Morgan). The evidence of Stephen Cross was compelling. He had nothing to gain by lying and yet on H’s case he was committing wholesale perjury. Mr. Cross accepted that he had been accused of seeking to blackmail H but did not accept that he had done so. He sought compensation of £4m in respect of the work he had conducted on the [foreign] Bank litigation which raised £20m; but also said that was his opening gambit.”

At the end of the day I am left with the strong impression that Mr Cross (who is unable to give direct evidence of the purpose behind transactions but can only guess or speculate based on his background in structured finance) has put the worst interpretation on events because of the sense of injustice he feels at the treatment of him by the husband. Against this background I have a distinct sense of unease in relation to his evidence and don’t find it to be reliable or in the end that it takes the wife’s case forward in any real way. In large part and in relation to the important issues in this case, it is speculation as opposed to recall of witnessed events.

He gave evidence about an alleged conversation with the husband about the size of the husband’s fortune. However on exploration this was a social occasion and he was far from certain whether the husband was talking about his own fortune or the funds available for the tiger project. His evidence was of no real help to me.

His notes of the meeting July 2012 were, as he admitted, no more than that. I don’t find his evidence helps me on the core issues

He is a member of the South African Bar. At the conclusion of his oral evidence last December I wrote in my notebook “very impressive and obviously completely honest; put masses of time and effort into the project”.

Mr Harrison QC said in this in closing note

“Mr. Leibowitz said that in relation to his capacity as director he absolutely did not view himself as a mere nominee director. He made sure he understood what each individual transaction was about and signed it when he was comfortable that it was appropriate and an appropriately documented transaction. He often called for explanations about documents from H, from Rumit Shah and from Emil Peters. He said that very seldom did the documents come to him out of a vacuum, they usually came following detailed discussions. He was always given an explanation when he asked and none of those explanations gave him cause for concern.

His evidence was clear, unambiguous, compelling and entirely consistent with every contemporaneous document. He had a detailed knowledge and understanding of the background of the Project. He has dealt with H and W more than any other individual in connection with the Project. He has no motive to be anything other than truthful”.

In his oral evidence he stated [Transcript day 4/499]:

This was a litigation that started off incredibly intensely and really never abated for most of a decade. I believe that at the time we concluded the arbitration agreement and moved the matter from the high courts to arbitration, there had been something like 18 different summonses and actions, more than a dozen different substantive motion proceedings and applications and then, in 2004, when the arbitration agreement was signed, we commenced a period where all of those disputes were consolidated in what ended up being seven or eight years' worth of fairly bitter arbitration. In all of that time, in conversations, at dinner times, social occasions, through to meetings about project affairs, through to consultations with solicitors and counsel, preparation of witness statements, preparation for cross-examination, discussions regarding contemporaneous documents, I had -- when I say "more occasions than I can count", I mean that in a literal sense -- dozens and dozens and dozens of occasions where I discussed and reviewed the facts and documents with both Li and Stuart, often together and often separately.  In that entire decade or more, not a single document has ever been presented to me which contradicts in one material respect a single thing that either of them had ever told me about the project, its conception, its origins and the way in which it developed. The version that they had always given to me and which we later presented to the courts first, to the arbitrator second, was utterly consistent for more than a decade and consistent with every single underlying document that we ever produced or laid our hands on. By the time the arbitration finished, I believe that our core bundle, which I think you refer to my Lord as "elevation bundle", was something like 40 or 50 lever arch files of documents with which I am intimately familiar. So, I believe what I was trying to record in paragraph 20 was both the breadth of my involvement and the consistency of the versions on that history that were always given to me by both Li and Stuart and, for that matter, everyone else that I ever met through them that was involved in the project.”

Mr Leibowitz said that the discussions with H and W “very materially” were about the purposes of CTSAT. When asked whether H had ever told him that CTSAT was also conceived for a secondary purpose of benefitting either him or W personally, he responded [Transcript day 4/501]:

“He has never told me that, nor has Li, and in fact they have told me the opposite on, again, more occasions than I can recall. I want to reiterate that I have never seen a single document which contradicts the fact that it was a single-purpose trust; namely, for the benefit of, ultimately, the tigers but the project in general. I would certainly never have involved myself, at my own expense and put my reputation at risk and signed agreements with the Chinese government, if I had had any inkling at any stage in that process that this was a trust out of which Stuart and Li were entitled to benefit in a personal capacity.”

Mr. Leibowitz did not believe that it was possible that CTSAT had a secondary purpose that he was unaware of [Transcript day 4/503]:

“I do not believe that is possible. It would contradict, as I said, more than a decade of documentation, versions given to me in private, in social settings, to solicitors and counsel in consultations and in affidavits and oral evidence, to both courts and arbitrators and an arbitration appeal panel on more than one occasion. I have never seen a document which indicates to me that the purpose of the Trust is anything other than what I have described it to be.

…

As I mentioned earlier, my understanding has always been that all of the assets held by CTSAT would be held beneficially for the sole purpose of advancing the interests of the project and for no other purpose at all. “ [emphasis added]

This witness filed two reports and gave oral evidence. BDO audit the accounts of JAS. He carried out a very comprehensive (and very expensive) quasi audit of CTSAT to deal with the allegation made by the wife that it had been a source of funds for the parties’ private expenditure. He was unable to conclude that any of the expenses had been used to fund the husband or the wife.

In the end the highest this point can be put is that it is possible that the parties have benefitted incidentally from staying in nice hotels when on charity business. Mr Mason found nothing untoward about that from an auditing point of view.

None of his evidence was controversial and his evidence was not materially challenged. He was the one who suggested the parties should be named as beneficiaries of the CTSAT and they were removed from the draft on instructions he received.

Counsel have produced very helpful summaries of the law and in most respects there is no disagreement between them. Post nuptial settlements are unusual legal animals that can come in all shapes and sizes. They do not have to involve a conventional written trust instrument although they usually do. All kinds of transactions and arrangements have over time and from time to time been held to be “settlements” within the meaning of the statute which contemplates the possibility of their variation.

Many attempts have been made by the courts to pin down their precise essential ingredients and Counsel in their submissions have drawn attention to some.

Mr Todd’s skeleton alights rightly on the current President’s analysis in Ben Hashem v Al Shayif [2009] 1 FLR 115 as a precise and for this case relevant and useful summary. I repeat it below:

“The starting point for any consideration today of s 24(1)(c) must be the speech of Lord Nicholls of Birkenhead (with whom Lords Keith of Kinkel, Ackner, Lloyd of Berwick and Steyn all agreed) in Brooks v Brooks [1996] AC 375, [1995] 3 WLR 141, [1995] 2 FLR 13. At 391, 147 and 19 respectively Lord Nicholls said this:

'The section is concerned with a settlement “made on the parties to the marriage”. So, broadly stated, the disposition must be one which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children. Conversely, a disposition which confers an immediate, absolute interest in an item of property does not constitute a settlement of that property. The statutory provision is concerned with an order varying the terms of a settlement. This would not be an altogether apt exercise in relation to property given out-and-out and belonging to one of the parties to the marriage as his or her own absolute property. The context does not require that outright gifts of this nature should fall within the scope of the variation provision. In such a case the appropriate order on the dissolution of the marriage, if an order is needed in respect of the property, is a property transfer or property settlement order.'

[231]     The phrase 'continuing provision' is important but not fortuitous, for it has a long history in the authorities: see, for example, Smith v Smith [1945] 1 All ER 584 at 586 (Denning J) and Smith v Smith [1970] 1 WLR 155, [1970] 1 All ER 244 at 158 and 246 respectively (Lord Denning MR).

[232]     Lord Nicholls of Birkenhead continued (at 392, 147 and 19 respectively):

'Beyond this the authorities have consistently given a wide meaning to settlement in this context, and they have spelled out no precise limitations. This seems right, because this approach accords with the purpose of the statutory provision. Financial provision that is appropriate so long as the parties are married will often cease to be appropriate when the marriage ends. In order to promote the best interests of the parties and their children in the fundamentally changed situation, it is desirable that the court should have power to alter the terms of the settlement. The purpose of the section is to give the court this power. This object does not dictate that settlement should be given a narrow meaning. On the contrary, the purpose of the section would be impeded, rather than advanced, by confining its scope. The continuing use of the archaic expressions 'ante-nuptial' and 'post-nuptial' does not point in the opposite direction. These expressions are apt to embrace all settlements in respect of the particular marriage, whether made before or after the marriage. In this connection, it should be noted in passing that a settlement may be made in respect of a particular marriage even though in certain circumstances the wife or husband by a subsequent marriage might be the person to take. Lort-Williams v Lort-Williams [1951] P 395 affords an illustration of this.'

Conversely, it may also be noted, a settlement which was nuptial when made may lose that character, depending on the facts and circumstances of the particular case: C v C, at para [44] (Thorpe LJ) and para [53] (Arden LJ).

[233]     Again, as Lord Nicholls of Birkenhead pointed out, it has long been recognised that the word 'settlement' in this context has a wide meaning, indeed a meaning extending far beyond what a Chancery lawyer would understand in a conveyancing context: see, for example, Bosworthick v Bosworthick [1927] P 64 at 71 (Scrutton LJ) and at 72 (Romer J), Lort-Williams v Lort-Williams [1951] P 395, [1951] 2 All ER 241 at 403 and 245 respectively (Denning LJ) and Prescott (formerly Fellowes) v Fellowes [1958] P 260, [1958] 3 WLR 288 at 281 and 299 respectively (Romer LJ).

[234]     In Blood v Blood [1902] P 78 Gorell Barnes J, considering the ambit of s 5 of the 1859 Act, said at 82:

'Those words are extremely wide, and I am anxious that they should not, by any construction the Court may put upon them, be narrowed in any way. To narrow them would be undesirable for this reason: the various circumstances which come before the Court, and for which this section is brought into operation, are so diverse that it is to my mind extremely important that, so far as possible, the Court should have power to deal with all the cases that come before it, and, in dealing with them, to meet the justice of the case. I, therefore, do not desire to see any narrow interpretation placed upon the words of the section.'

That policy seems to me to be as important and the approach, in my judgment, is as valid today as a century ago.

[235]     One of the classic statements of what is meant by a nuptial settlement for this purpose is to be found in the judgment of Hill J in Prinsep v Prinsep [1929] P 225 at 232:

'Is it upon the husband in the character of husband or in the wife in the character of wife, or upon both in the character of husband and wife? If it is, it is a settlement on the parties within the meaning of the section. The particular form of it does not matter. It may be a settlement in the strictest sense of the term, it may be a covenant to pay by one spouse to the other, or by a third person to a spouse. What does matter is that it should provide for the financial benefit of one or other or both of the spouses as spouses and with reference to their married state.'

He added at 235:

'But whether a settlement is within s 192 does not depend on who is the settlor. In many ante-nuptial settlements, neither the husband nor the wife are themselves the settlors … But whether a settlement is within s 192 must depend on what it effects. If, in fact, it is a settlement on either husband or wife, or both in the character of husband or wife, it is wholly immaterial that it is prompted and stated to be prompted by affection only for one of them.

On the question whether a settlement is a settlement within s 192, the motive of the settlor seems to me immaterial, except so far as it is given effect to by the terms of the deed.'

[236]     In N v N and F Trust Coleridge J conducted a careful survey of the authorities. The case concerned a property which was owned, via a Bahamian company, by a Jersey based trust of which the husband was a beneficiary. It was common ground that the Jersey settlement was not per se a nuptial settlement which could be varied by the court under s 24(1)(c) of the 1973 Act. However the Jersey Trust had made available a property to the husband and wife which they used as their family home. The wife argued, and Coleridge J agreed, that the property was subject to an ante-nuptial settlement which could accordingly be varied. Referring to Brooks v Brooks, he said (para [30]) that 'There is nothing in that case which shows any departure from the previous approach of the court over the previous one hundred years'. I respectfully agree.

[237]     Coleridge J described his approach as follows at para [33]:

'My task is to consider what the real substance of the arrangement was which governed this property. The authorities make it clear that I should consider the question broadly and ask myself whether or not it was an arrangement which made ongoing provision for the husband, wife and/or child in those capacities. Motive is irrelevant.'

He continued, at para [34]:

'This property was bought by the trust during the parties' engagement and prior to their marriage. I think there can be no doubt it was nuptial.

In terms of the question of ongoing provision for them during their marriage, it is hard to think of any arrangement that is more ongoing than the provision of a matrimonial home.'

A little further on, at para [38], he indicated that the task of the court was to 'examine the true character of the arrangement'.

[238]     I respectfully agree with Coleridge J's approach. I would only add that, where the relevant transaction is embodied in a formal written document, the exercise involves the familiar process of construction of the document, giving the appropriate legal effect to the words as properly construed. Where the transaction, as in the present case, is not said to be embodied in any formal document, the process is essentially one of finding the facts, a process which can legitimately involve the process of drawing inferences with a view to ascertaining what the terms of the transaction really are.

[239]     It is quite clear as a matter of principle that what Miss Parker calls the simple provision of the matrimonial home as a home for the family is capable of being a settlement for this purpose; indeed, as she points out, N v N and F Trust was just such a case.”

Once again my function is to “examine the true nature of the arrangement” embodied in CTSAT not forgetting that the relevant transaction in this case is embodied in a “formal written document”.

I have also been addressed on the question of whether a trust , non nuptial at its inception, can later become nuptialised. (see Burnett v Burnett [1936] P1).

The essential features of a PNS seems to be an existing disposition in favour of, one, other or both parties to the marriage (in their capacity as husband or wife) and for their present or future benefit. An existing intention to benefit one of the spousal beneficiaries is obviously a prerequisite.

In my judgment on the authorities, a settlement which is non nuptial at its creation could itself later become “nuptialised” if there was, in fact, a flow of benefit to the parties during the marriage from the trust . Alternatively a later disposition from the trust can itself constitute a post nuptial settlement without the main or superior trust necessarily becoming nuptial.

I cannot begin to do justice by way of paraphrase to the very lengthy and comprehensive written submissions provided by SCT UK and the wife. SCT UK’s run to some 119 pages and the wife’s to 49 (plus a 40 page revised chronology). I don’t intend to attempt to do so. The husband has also provided submissions in a succinct tabular form. They have been fully absorbed by me into my determination of the issues (as have the submissions submitted after the delivery of this judgment in draft).

The whole thrust of SCT UK’s (and the husband’s) case is that there is not a shred of evidence to support the wife’s assertions that CTSAT was ever contemplated as a vehicle for the support or benefit, now or in the future, of the parties. Indeed all the evidence both oral and written points the other way. And all their actions have been consistent with the furthering of the project. The funds from the G bank donation were designated from the day of their receipt for the tiger project and only for the tiger project and that is how they have been spent. The funds are required for the ongoing work of the project (which is very far from complete) and will be so spent. The wife’s case is an invention dreamt up in response to her being ousted from the SCT UK trust in 2012. There were and are no “back doors” or “front doors” through which money could legitimately (as opposed to illegitimately) be extracted for their use. And even if there were, theoretically, such exits they were not put there for that purpose and they have never been viewed as or been employed for that purpose.

The wife’s case, on the other hand is that the parties always knew that CTSAT was not only for the tigers but also a long term “insurance/pension policy” for their benefit too. To that end the structures were designed deliberately to be complex but ultimately capable of penetration or access. Apart from conversations which the parties had at the outset to that effect, the only and obvious inference can be drawn that this is so from the fact that the husband’s extraordinary expertise in the structured finance field meant that he would be bound to design a structure like this to enable it to be used for their benefit if needed. The officers of the trust are in the final analysis his stooges who will do his bidding if asked. Once the dust of this litigation has settled the tiger project (which is winding down) will in due course draw to a close and he will, by one means or another, take the value in the trust for his own use. In the final analysis look at the whole evidential picture especially the emails at [K/51]. It all points to the husband not only controlling the trust but intending ultimately that they should, one day, benefit from it.

Mr Todd QC ends his submissions in this way:

“The Husband created the CTSAT to benefit the tigers, his wife and himself. It has continued to benefit them by, for example, providing a home and paying for expenses (examples are in Annexe 1). In the not too distant future it will also provide capital. H can easily access CTSAT – he can become the Protector and thereafter dismiss the professional trustees. If he chooses not to take up residence and qualify as a professional trustee he can simply change the proper law of the trust. A man thus motivated will have no difficulty in getting round his self-imposed exclusion (he will use a separate corporate vehicle or simply charge ongoing commissions etc). The trust was settled for these parties. It provides ongoing benefit. It is a nuptial settlement. In addition it can provide real benefit.”

I have read and heard a mass of evidence about the thinking behind the establishment of the CTSAT, the means by which and the reasons why it was created in the form it was and why it was formed in Mauritius. I have read (and re-read) and heard lengthy and detailed submissions too. All arguments have been canvassed and from every angle.

I have ended up with these essential questions (of law):

Three factual questions underlie the answers to those three questions:

In answering those questions it is important not to forget that genuine charitable giving is not and never has been economically logical or beneficial for the donor (except perhaps in the most indirect or utilitarian sense). But that is not to suggest that it does not bestow on the donor other great benefits, satisfaction and fulfilment which are capable of providing a perfectly reasonable explanation for why it takes place and so why it is a conventional feature of human life. Huge sums of money can often be involved.

My answers to the questions of law are as follows ;

My answers to the factual questions are as follows;

Finally, even if CTSAT is a PNS would the Mauritian court enforce an order to vary it? On a balance of probabilities the Mauritian Court would not enforce an English order varying the trust especially if an attempt was made to do it in the teeth of opposition from the trust. In my judgment the meaning of Mauritian Trusts Act 2001 s.11(5) is quite plain on its face. In those circumstances, I would not, in any event be prepared to make an order varying the trust.

Should CTSAT be regarded, in a section 25 sense, as a resource in a more broad way? Especially in the light of the fact that these parties have never been named beneficiaries and have now been specifically excluded, by subsequent deed, as potential beneficiaries of CTSAT and also in the light of the findings I have already made about the trust’s original and ongoing purpose the Thomas v Thomas jurisdiction cannot apply in this case. In my judgement, CTSAT’s assets cannot properly be regarded as a resource of the husband in the s.25 sense. The assets of CTSAT are for the tiger project via SCT UK . Accordingly it would be wrong in principle for a UK court to make a lump sum order against the husband in the hope and expectation that funds would be provided by CTSAT to fulfil it.

I should say finally, and for the avoidance of any doubt, that during this exhaustive examination of the actions of CTSAT and SCT UK since their creation I have come across no behaviour or actions by either the husband or the wife which in any way cause me concern that they might be improper from a UK charitable perspective. There is no doubt about the benefit to the public in the Chinese Tiger project succeeding.

As I accept the veracity of the husband’s evidence and in order to provide a fuller narrative of the events surrounding the creation and funding of the tiger project I have annexed an abbreviated version of the husband’s December 2013 statement to this judgment. This will enable another court to understand the full context of my findings should it be necessary.

I hope the husband will now be creative to deal with W’s legitimate claim for financial relief.

Postscript-Barrell Application

Unsurprisingly the wife was disappointed by the findings I made. Her Counsels’ note emphasised the consequences to the wife of those findings and argued that every single one of them and the resulting overall conclusions were wrong. The new argument consisted of either a re-iteration of points or evidence previously made, or reliance on new points and other evidence. The husband’s and SCT UK’s response was to the effect that the findings and evidence were correct and unimpeachable and that the wife’s attempted use of the Barrell jurisdiction to rewrite the entire judgment was in fact a misuse. They also provided a more or less point by point refutation of the wife’s further note and in so doing similarly reiterated many of the points and much of the evidence previously made or provided new justification for previous argument.

In deference to the industry of all Counsel I re-read and re-considered the draft judgment in the light of the three notes and have reached these further conclusions.

Because I was giving up significant value in the 99 year lease of the land that I then owned, I presume that Richard assumed that I would want to get the value back and proposed amendments to the CTSAT trust deed accordingly. Richard marked up the standard deed of trust with a number of changes including a change that included me and LQ among the beneficiaries. However, that was not my intention. LQ was aware of my intention to give up the value in the land with a 99 years lease for no rent and she fully supported that decision. She also insisted that we could not have an interest in the businesses undertaken by CTSAT because of a potential conflict of interest that she felt strongly about. This was the same conflict of interest that led her to insist that I should not invest in those businesses when they were to have been run by the Vartys. It is for this reason that LCM wrote then wrote back to Bryan Cave explaining that they had misunderstood my intentions. I quote from LCM’s email:

“I have spoken to Stuart and it does seem that there has been some confusion over how the trust should work.

The key point is that Stuart should not be a beneficiary; the sole beneficiary should be the Save China’s Tigers charity Stuart would like to ensure that the proposed structure:

Would entitle him to a US tax deduction should the trust never be in a position to repay his loan;

Would not result in Stuart being taxed on any of the trusts income;

Would be accepatbel [sic] to US and UK Charity commissions.

The Mauritian lawyers have indicated various provisions of the trust deed which cause them problems under Mauritian law and I would like to determine whether the current form of the trust deed can achieve Stuart’s objectives if these provisions are deleted. The problem provisions are as follows:

Clause 4 (g) ‘The Settlor shall have the unrestricted overriding power to remove a protector and to appoint new or additional Protectors…’ to be deleted.

Clause 19 ‘RETAINED RIGHTS OF SETTLOR’ delete in its entirety.

Clause 34(b), delete the added words entitling Stuart to the Trust Property on termination of the trust.

Schedule 2, the sole beneficiary should be the Save China’s Tigers charity” …

“As you are aware we are under considerable time pressure so I would like to have a conference call involving Bryan Cave and Mitch Barret (Mauritian trust attorney) as soon as possible.

The object of the call is to agree a form of trust deed that is acceptable to all side[s] even if it is not perfect by the close of business today, so that we have [a] properly constituted and registered trust for the signing date of the Framework Agreement.”