EC involvement in Jersey appeal before Privy Council

This is a case wherein Erriah Chambers has been extensively involved since 2013, advising the respondents on all aspects of Mauritian law pertaining to the case, with specific regard to local trust law. The below is a summary of the Judicial Committee of the Privy Council decision rendered in November 2014:

Crociani and others (Appellants) v Crociani and others (Respondents) and Princess Camilla de Bourbon des deux Sicilies (Interested Party) [2014] UKPC 40

On appeal from the Court of Appeal of Bailiwick of Jersey
JUSTICES: Lord Neuberger, Lord Mance, Lord Reed, Lord Hughes, Lord Hodge

BACKGROUND TO THE APPEAL
In 1987, Mme Crociani created a trust (“the Grand Trust”) by deed (“the 1987 Deed”). Among the beneficiaries of the Grand Trust were Mme Crociani’s daughters Camilla de Bourbon des Deux Siciles and Cristiana Crociani (“Cristiana”). Under Clause 15 of the 1987 Deed, the Grand Trust was to be governed by the law of the Commonwealth of the Bahamas “which shall be the forum for the administration thereof”. Clause 12 of the 1987 Deed provided the trustees with a power to resign and to appoint new trustees outside the jurisdiction and, when exercising that power, to declare the governing law of the trust to be the law of the country of residence or incorporation of the new trustees. Clause 12 went on to provide, at clause 12(6), that:

“thereafter the rights of all persons and the construction and effect of each and every provision hereof shall be subject to the exclusive jurisdiction of and construed only according to the law of the said country which shall become the forum for the administration of the trusts hereunder”

From October 2007, the trustees were Mme Crociani, Paul Foortse, and a Jersey trust corporation (together “the Jersey Trustees”) and the effect of clause 12 was that Jersey law was the governing law of the trust. In February 2012 the Jersey Trustees executed a deed resigning as trustees and appointing a company incorporated and registered in Mauritius, “Appleby”, as sole trustee.

Cristiana and other claimants (“the Respondents”) brought proceedings in the Jersey Royal Court against the Jersey Trustees and Appleby (“the Appellants”) in January 2013 challenging, among other things, an appointment out of the Grand Trust made in 2010, the appointment of Appleby in 2012, and certain payments made by the Jersey Trustees to Mme Crociani. The Appellants made an application to stay the proceedings in Jersey on the basis that the effect of clause 12 is to confer exclusive jurisdiction upon the Mauritius courts. The application was rejected by the Royal Court, whose decision was upheld on appeal, and the Appellants now appeal to Her Majesty. Two issues fall to be decided in this appeal: (1) whether clause 12(6) confers exclusive jurisdiction upon the Mauritius courts and (2) if so, whether the proceedings in Jersey should be stayed.

JUDGMENT

The Judicial Committee of the Privy Council will humbly advise Her Majesty that the appeal should be dismissed. Lord Neuberger gives the advice of the Board.

REASONS FOR THE JUDGMENT

In the Board’s view, no part of clause 12(6) of the 1987 Deed was concerned with identifying which country’s courts should have jurisdiction to determine disputes relating to the Grand Trust. Two phrases are principally relied upon by the Appellants to support their contention that clause 12(6) confers exclusive jurisdiction upon the Mauritius courts. First, they argue that “the forum for the administration of the trusts” is a reference to the courts which resolve disputes and give directions in relation to the Grand Trust. While the Board accepts that the expression could have this meaning, in context these words indicate the place where the trust is administered in the sense of its affairs being organized.

It is perfectly feasible for the draftsman to stipulate where the Grand Trust’s affairs would be organised, and this might be relevant to the tax treatment of the trust. A provision identifying the country whose courts were to determine disputes would be expected to refer to the courts of a country rather than simply the country as being the “forum”. Clause 12 contains a further provision enabling trustees to declare that the trusts shall continue to be governed by the laws of the Bahamas; it would be odd if the words “forum of administration” nevertheless required the Mauritius courts to have exclusive jurisdiction. It would make more sense if these words forced the new trustee to maintain its country as the place where the Grand Trust was managed. Even if these words do mean that the courts of Mauritius have jurisdiction, it is doubtful whether, on the basis of the use of the definite article, it was intended that those courts should have exclusive jurisdiction.

Secondly, the Appellants argue that the words “shall be subject to the exclusive jurisdiction” confer exclusive jurisdiction upon the Mauritius courts. The Board rejects this interpretation, and considers that, properly construed in context, these words have the effect of ensuring that all issues concerning the Grand Trust are to be governed by the same law. This emphasis on exclusivity in relation to the governing law of the trust avoids the risk that different aspects of the Grand Trust were subject to different proper law. Clause 15 of the 1987 Deed, which deals with initial governing law of the trust, contains no equivalent words; it is hard to see any sense in providing for exclusive jurisdiction only after a new trustee outside the jurisdiction is appointed. The words in question are located between two provisions of clause 12 which are concerned with the law applicable to the Grand Trust, and it would be odd for the draftsman to insert a phrase conferring exclusive jurisdiction between two phrases concerning governing law. Even if the words did have the effect contended for by the Appellant, there are strong grounds for saying that the Jersey court has exclusive jurisdiction in relation to several of the claims, as the language of the provision suggests that the question is to be assessed by reference to the date on which the breach or abuse occurred.

If the Mauritius courts have exclusive jurisdiction, should the proceedings in Jersey continue

Given the Board’s conclusion on the meaning of clause 12(6) it is unnecessary to decide this point. However, it was fully argued and it raises a point of some interest, namely whether the approach taken to exclusive jurisdiction clauses in contract cases applies to such a clause in a deed of trust. Where a claim has been brought in breach of a contractual exclusive jurisdiction clause, the burden is on the claimant to justify the claim continuing, and to discharge the burden, the claimant must normally establish “strong reasons” for doing so. The Board is of the opinion that in the case of a trust deed, the weight to be given to an exclusive jurisdiction clause is less than the weight to be given to such a clause in a contract. The court does not face the argument that it should hold a contracting party to his or her contractual bargain. Furthermore, the court has an inherent jurisdiction to supervise the administration of trusts, which exists primarily to protect the interests of beneficiaries, and it will usually be a trustee who seeks to rely upon such a clause. Therefore, while a trustee is prima facie entitled to enforce an exclusive jurisdiction clause in a trust deed, the weight to be given to the existence of the clause is less than if it was contained in a contract.

Applying this approach, the Board considers that even if clause 12 had conferred exclusive jurisdiction on the courts of Mauritius, no stay would have been granted in respect of the proceedings in Jersey. There are a number of trust law issues raised by the proceedings, and the great majority of those issues will be governed by Jersey law. The Jersey courts have very extensive experience of dealing with trust litigation, and are plainly more familiar with Jersey law than any other court would be. The documentation and many of the witnesses are likely to be in Jersey. The purpose of the clause was presumably that proceedings should be brought in the courts of the country where the trustee was based and whose law governed the trusts. Correspondence before the proceedings were issued made clear that the Appellants were content with the claims being pursed in Jersey. Finally, the reasons put forward by the Appellants for preferring the courts of Mauritius are unimpressive.

2014 Privy Council case on AML

Beezadhur (Appellant) v Independent Commission against Corruption and another (Respondents) [2014] UKPC 27

The Prevention of Corruption Act 2002, as amended is the main piece of legislation governing anti-money laundering in Mauritius and it aims, inter alia, at prohibiting the depositing of cash amounts above a specified limit except where it was “commensurate with the lawful business activities of the customer”. In that respect and as is decided in the present case, a customer could not claim that cash sums above the limit regularly deposited by him from his pension were deposits from his “business activities”.

The Privy Council so held (Lord Kerr of Tonaghmore JSC dissenting however), dismissing an appeal by Mr. Toolsy Beezadhur against the decision of the Supreme Court of Mauritius on 28 June 2013 to dismiss his appeal against his conviction and sentence on 24 November 2010 in the Intermediate Court of Mauritius for five offences contrary to sections 5(1) of the Financial and Anti-Money Laundering Act 2002.

The said Section 5(1), as it was then, prohibited the depositing of sums in banks in Mauritius above a specified amount unless, inter alia, it was an “exempt transaction” (which included, by section 2(d) of the Act, “where the transaction does not exceed an amount that is commensurate with the lawful business activities of the customer”). The Board further held, unanimously, that the burden had been on the appellant to bring himself within the exception.

Indeed, by virtue of section 10 of the Constitution of Mauritius, “ (2) Every person who is charged with a criminal offence— (a) shall be presumed to be innocent until he is proved or has pleaded guilty; … Nothing contained in or done under the authority of any law shall be held to be inconsistent with or in contravention of— (a) subsection (2)(a), to the extent that the law in question imposes upon any person charged with a criminal offence the burden of proving particular facts…”.

As LORD CARNWATH JSC, giving the judgment of the majority, duly stated, the 2002 Act had been enacted to combat economic crime and money laundering, including the close monitoring of cash transactions. The appellant had left Mauritius in 1959 to live in the United Kingdom, where he had been employed in the National Health Service. When he retired in 2004 he had deposited a lump sum, and then further sums from his monthly pension payments, in a bank in Mauritius on his regular visits there. In the Intermediate Court the magistrate had accepted that the money in question did not have a “tainted” origin and was merely the fruit of his savings. However, it was held that the Act did not require the prosecution to aver in the information that the money emanated from tainted origins and the appellant was found guilty as charged.

The defendant’s appeal to the Supreme Court had been dismissed because the court held that the burden had been on him to bring himself within exemption (d), which he had not sought to do, and that in any event the exemption was not applicable to his case since “business activities” meant activities which were money making or profit making: in short commercial activities and purposes.
Dealing first with the issue of construction, the appellant had argued that the word “business” was apt to describe a person’s regular occupation, profession or trade whether or not “commercial” in the sense used by the Supreme Court. In the same way, the appellant’s “business” was his occupation as a retired nurse, and all the impugned transactions were commensurate with his lawful activities in that occupation. The Board agreed that the Supreme Court’s interpretation might have been too narrow, in so far as it restricted the phrase to commercial or “money-making” activities, but there were no grounds for treating the occupation of a retired nurse as a business activity. To hold otherwise would deprive the word “business” of any meaning in the definition. The exemption was directed at businesses, typically in the retail trade, in which substantial cash transactions were a routine activity.

As to the burden of proof, section 10 of the Constitution of Mauritius gave expression to a fundamental rule of the common law, that the general burden of proof in criminal cases lay on the prosecution. That rule was subject to a well-established exception, the best known statement of which was in the judgment of Lawton LJ in R v Edwards [1975] QB 27, 39–40, in respect of offences arising under enactments which prohibited the doing of an act save in specified circumstances which, if they existed, were readily provable by the defendant as matters within his own knowledge or to which he had ready access. That clearly applied to a customers’ knowledge of his status as an established customer of a bank, of the nature and purpose of his own cash transactions, and of whether they were commensurate with his lawful activities in general.

In the present case, the structure and content of the statutory offence and of the specific exemptions were in the Board’s view clearly designed to bring into play the Edwards principle. The Supreme Court of Mauritius had been right to hold that, in accordance with section 10(11)(a), it was for the defendant to show that the transaction was within one of the exempt categories.
LORD KERR OF TONAGHMORE JSC delivered a judgment, dissenting on the construction issue but agreeing with the majority as to the burden of proof.