Estate of the Late J. D. Hanson [2021] JRC 319 (17 December 2021)

in the name of ARF with the said three Councillors already identified, and declared that the attached Articles of the foundation were binding upon it. Those Articles identified the founder as Pelican Trust Company Limited, but it was accepted that the beneficial founder was Mr O'Leary. Indeed, the recited purpose of the foundation was identical to the instruction form signed by Mr O'Leary, i.e. to benefit the founding members or other beneficiaries of the foundation. The section dealing with 'By-laws and appointment of beneficiaries' said that the Councillors "shall issue by-laws designating the beneficiaries and determining the extent and nature of their beneficial interests" . In addition, the Foundation Council was authorised to delegate powers to "Guardians". There were no 'Guardians' appointed. The beneficiaries were blandly defined as 'those persons, groups, organisations and institutions named by the Councillors in the by-laws who receive the distributions of the Foundation'. Under the clause dealing with the Councillors it was provided that the 'founder shall retain the right to amend the Board of Councillors during his lifetime'. The by-laws are dated 14 th October 2013.

228. Although there is no provision in the by-laws for a protector, on 3 rd February 2014 all members of the council signed 'Protector Regulations' for the St Kitts ARF appointing Mr O'Leary protector with extremely wide powers as follows: "The Protector shall have the following powers: Advising and supervising of the Foundation Council. Access to all the files of the Foundation and information on the Foundation's assets. Consent to changes in the Foundation's by-laws and regulations (including these Protector Regulations). Consent to changes in the Foundation Council. Authorise any distribution to a Beneficiary." 229. In the event of the death of the protector, there was provision for a 'Successor Protector' , namely Mr O'Leary's wife, Ann.

230. Mr O'Leary signed a Letter of Wishes on 9 th October 2013 addressed to the foundation describing himself as the founder. He said that his wishes for the administration of the foundation were that the Trust should be the principal beneficiary of the foundation. He reserved the right to alter his wishes from time to time. He accepted that the Letter of Wishes made no sense as the plan was for the Trust to cease to exist as soon as the foundation was created.

231. The only mention of charity was in the by-laws of the St Kitts ARF which could be altered from time to time by the Councillors, subject to the consent of the protector, i.e. Mr O'Leary. The by-laws were defective in that they were purportedly issued by the founder, i.e. Mr O'Leary (and, indeed, signed by him) whereas pursuant to the Articles of the St Kitts ARF, it was for the Councillors to issue the by-laws and not the founder. In any event, these by-laws were read and approved by Mr O'Leary on 23 rd January 2014. The class of beneficiaries was declared to be 'charity or charities' , but the foundation Councillors under Article 3 of the by-laws had the power to remove or add to the beneficial class at any time in the exercise of their discretion.

232. Finally, Mr O'Leary, as founder, approved the fee schedule of Pelican, indicating their annual fees were anticipated to be $7,500.

233. Mr Delany, when he gave evidence, took the Court through the relevant constitutional documents of the St Kitts ARF. He said the story started with the instructions and he said that the ultimate beneficial owner was Mr O'Leary, and the Pelican Trust Company was the nominee founder. The true founder was economic owner of the corpus of the foundation - Mr O'Leary. In his view, the foundation appeared to have been set up to benefit Mr O'Leary and his family; there was no mention of charitable purpose.

234. He said it was common for the Articles not to identify the beneficiaries and he also noted that the purpose for the Trust set out in the Articles was in the same terms as the original form completed by the founder. It was only the Statement of the Founder (signed by Pelican) and the Articles that would be made public in St Kitts.

235. As to the Letter of Wishes, Mr Delany said this was atypical for a St Kitts foundation, but it was further evidence that Mr O'Leary was the founder.

236. Mr Delany was also confused, as were we, by the reference to 'Protector Regulations'. He said that that is 'something that is not used with respect to a foundation. They are talking trust language here'. He also questioned the validity of the regulations as they purported to be issued under Article 12 of the Articles, whereas Article 12 refers to the ability to appoint auditors. He added that the document appointed Mr O'Leary as the protector and give Mr O'Leary what he described as 'extreme, almost concerning powers... over the foundation' . He said: "Here we really see an attempt from Mr O'Leary to control every aspect of this foundation, or every meaningful aspect of this foundation, through powers that even if it was an incorrect reference to a protector versus a guardian, the foundation legislation does not allow a guardian to have this wide range of power." 237. Notwithstanding doubts about the validity of the protector appointment, Mr Delany confirmed that the foundation was properly set up and was able to accept assets. He also said that normally a person who wished to set up a charitable entity in St Kitts would use a trust and not a foundation. This would be the appropriate mechanism under the relevant St Kitts' legislation, and the Trusts Act provides for a 'charitable trust'.

238. Having looked at the documentation as a whole, Mr Delany concluded that the St Kitts Foundation was established for family advancement as opposed to charitable purposes.

239. We agree with this conclusion.

240. Mr O'Leary protested that the St Kitts' material was irrelevant because the foundation, although set up, was 'never used' owing to, he said, the illness of Mr Jeeves senior and the need to approach another adviser. However, the material was relied on by the Plaintiffs, correctly in our view, as illustrating the fact that Mr O'Leary, having decided to dissolve what he said he believed to be a charitable trust which he had helped set up, did not attempt to set up a genuinely charitable structure to replace it. The Plaintiffs relied on the contents of the constitutional documents for the St Kitts foundation as they were unable to obtain any of the documentation relevant to the constitution of the Panamanian Foundation which was subsequently set up by Mr O'Leary, with the exception of the Charter which we consider below. Mr O'Leary agreed that at the time he set up the St Kitts foundation, with the assistance of the Jeeves Group, he believed that it would come into effect. He accepted that he knew that he was appointed protector. When asked what he was told about the role of the protector, he said that Messrs Jeeves had told him that a protectorship gave him 'control of the council'. The Panamanian Foundation 241. The Plaintiffs say that the Court should infer that, absent the discovery of the Panamanian documents (with the exception of the Charter), the proper inference to be

drawn is that the constitutional documentation for the Panamanian Foundation would be similar, if not identical, to those of the St Kitts ARF. We were unable to accept that that was an inference that could properly be drawn. Accordingly, such findings as we are able to make in relation to the nature of the Panamanian Foundation arise from the documentation that is available, i.e. the Charter; the expert evidence we heard from Gisela Porras, a Panamanian lawyer, who we regarded as an impressive witness, and the factual matrix which forms the background to the creation of a Panamanian Foundation, which includes the contents of the St Kitts ARF documentation.

242. On 26 th November 2013, BLP, on the instructions of Mr O'Leary, produced a draft deed terminating the Trust entitled ' Instrument of Advancement' . Ultimately it was amended to identify the donee of the assets of the Trust as the Panamanian Foundation. The Instrument recited that Mr O'Leary was the trustee of the Trust and that, by clause 4 thereof, the trustee may, at his discretion, apply the funds to charity or charities and that the foundation was a 'wholly charitable foundation established under the laws of Panama'. The Instrument does not contain a governing law clause and provided that in exercise of the power of advancement the trustee 'hereby advances and declares that the whole of the incoming capital of the Trust Fund shall be immediately be paid to the Foundation absolutely freed and discharged from the trusts of the Settlement'. The Instrument concluded: "This being done and there be no remaining assets held under the terms of the Settlement the Settlement shall come to an end." 243. The Instrument of Advancement was executed by Mr O'Leary on 3 rd July 2014 and executed on behalf of the foundation by Michael Gassner , to whom Mr O'Leary was referred by Mr Moore when (he says) Mr Jeeves senior fell ill. Mr Gassner was a principal of Salamander Trust. Mr O'Leary relies on the terms of the Instrument of Advancement as showing that he intended to transfer the

assets to a charitable trust. However, no reputable English or Jersey lawyer, having regard to the terms of the Trust, would have drafted an Instrument which permitted the assets of the Trust to be devised to anything other than a charitable entity in accordance with clause 4. Mr O'Leary also relies upon one piece of disclosure he did make from the files of BLP, namely the tax advice from Mr Bunker dated 22 January 2014, to which we have already referred. The instructions to Mr Bunker have not been disclosed but in his advice in addition to advising Mr O'Leary that he did not have any liability to UK tax by virtue of being a trustee of the Trust, Mr Bunker also said: "The Trust has been terminated by the appointment of the assets of the Trust to Arbitrage Research Foundation a wholly charitable foundation established under the laws of the island of St Kitts. It is my understanding that throughout of its existence no distributions whatsoever have been made to any person by the Trust." 244. Most of this paragraph was, one way or the other, incorrect because at this time the Trust had not been terminated, still less the assets transferred to the St Kitts Foundation, and distributions (albeit few) had in fact been made by the Trust. Nonetheless, for what it is worth, Mr O'Leary relies on this as some evidence that he intended to ensure the assets made their way to a charitable structure.

245. Accompanying the letter was a document entitled 'SR Charitable Trust' for which Mr O'Leary accepts that he was responsible as the contents could have only been provided to Mr Bunker by him. This sets out various aspects of the Trust's history, directors and ownership of the shares in ARTL. The document said that ARTL had been operating since 1994 and that it had 'a substantial portfolio of investments with total assets of approximately £30 million. The bookkeeping and financial records are up to date'.

246. On 1 st April 2014, Mr O'Leary resigned as a director of ARTL and Messrs Jeeves were appointed directors in his stead (Herald Trust resigned at about the same time). For a brief period, Anglo Saxon Trust Limited, a Jersey regulated business, became administrator and corporate company secretary of ARTL. There was no disclosure from Anglo Saxon Trust and, in any event, their role was short lived.

247. It was about this time that Mr O'Leary said that he was notified that Bryan Jeeves had become very ill. At this point Mr Moore of Jeeves Group agreed to become a director of ARTL and recommended that Michael Gassner of Salamander Trust Company Zurich should also become a director of ARTL. Mr O'Leary had not previously heard of Mr Gassner and relied upon the recommendation of Mr Moore. Mr O'Leary appears to have done little, if any, and on any view certainly insufficient due diligence on Mr Gassner or Salamander Trust Company. Bearing in mind he was dealing with a company with declared assets of £30 million for which he had been responsible for in excess of a decade, he should have taken far more care than he did of the assets entrusted to him. Mr O'Leary says that 'Much of the work undertaken by Jeeves Group and BLP in 2013 and early 2014 was still of value', but new trustees and administrators of the assets were needed.

248. Mr O'Leary says that as Salamander Trust had no presence in St Kitts, they recommended that the new structure be located in Panama where Salamander has 'previous experience'. Mr O'Leary became a client of Salamander and met Mr Gassner in London in his office and again in Switzerland on more than one occasion. As to the Panamanian foundation that was set up, Mr O'Leary said that he was assured it was a charitable entity.

249. Mr O'Leary says his 'final responsibility as a trustee' of the Trust was to execute the Instrument of Advancement on 3 rd July 2014. From that date, he says, the Trust was wound up and he ceased to be a trustee.

250. On any view, Mr O'Leary said nothing about these matters at the meeting of the Neatly Board that took place approximately a week later, at which time Mr Hanson was seriously ill.

251. The resolution of the sole member of ARTL, resolving that it should continue overseas, was executed on 17 th May 2015 by Mr Gassner and a Mr Kaddech on behalf of the foundation. An application needed to be made to the JFSC for approval of the migration of the company to Panama. The effect of migration is that the company ceased to be a Jersey company.

252. The regulations of the Foundation would have been made at the same time as the Charter for the Foundation (which is publicly available) was created. Mr O'Leary said he tried to get a copy of the regulations of the foundation in 2018 on a trip to Zurich. At that stage, Mr Moore was still on the foundation council but Mr O'Leary said that the regulations could not be found and that Mr Gassner may have 'removed them or altered them in some way'.

253. Mr O'Leary said he was not troubled by the fact that Mr Moore, who had been a Foundation Councillor, selected by Mr O'Leary, at that stage for over four years, did not have a copy of the regulations. He accepted that a prudent charitable trustee would have been concerned to see and retain a copy of the constitutional documents relevant to the Panamanian Foundation at the time of their retirement as trustee of the Trust.

254. Ms Porras gave evidence that the Foundation was governed by its founding charter and regulations but only the former was publicly available. The Foundation was a Private Interest Foundation which is an entity which may hold shares and other investments but cannot be a trading company. The relevant Panamanian legislation provides that the founding charter needs to set out, inter alia , the name of the foundation, the initial assets, the address of the members of the foundation council, the domicile of the foundation, the name of the resident (in Panama) agent, the objectives of the foundation, the duration of the foundation, and the liquidation procedure in the event of dissolution. The Foundation was called the Arbitrage Research Foundation and was incorporated on 14 th October 2014. Ms Porras said: "I cannot conclude that the ARF was a charitable institution. Moreover I see no basis to suggest that it might have been, given that there is nothing in its charter of incorporation that suggests any connection with charity." 255. As to the Charter, the core constitutional document for the Foundation, Ms Porras took the Court through the contents of the same. She confirmed that a PIF is commonly used as an asset protection vehicle in Panama and, in the event of the insolvency of the founder, the assets held in the foundation are immune from action by the founder's trustee and bankruptcy. This even applies if the founder is a beneficiary identified by the regulations. The foundation is administered by a council which is similar to a board of directors.

256. Although trusts are known to the law of Panama, foundations are more commonly used as they may be controlled by the persons who are beneficially entitled to the assets, whereas trust activities can only be provided by a licensed entity or licensed individual.

257. The procedure for setting up a charity is, in Panama, completely different from the procedure for setting up a foundation. Charities are set up as ASFLs (from the Spanish, ' Asociaciones Sin Fines de Lucro ') which are recognised and granted corporate personality by the State. Generally, a PIF is not used for charitable purposes and is not the appropriate vehicle for setting up a charity. However, Ms Porras said that if a PIF were to be used for such purposes then she would expect the charter of incorporation to be explicit and transparent about that purpose. She said 'The charter of incorporation of PIFs used solely for charity would need to be very specific about it when describing its objectives (as required by Art 5 of the PIF Law)' . Ms Porras said that there was 'no way to confuse' a charity from a PIF. The charter of the foundation in this case said the foundation was established with the purpose of 'preserving, investing, administering and disposing of its capital and income of profits derived from its investments, and that of making distributions to its beneficiaries as may be determined from time to time' . Ms Porras said that this was standard wording and 'not at all' consistent with it being a charitable entity.

258. Ms Porras said that, although it is common for the charter to conceal the true purpose of the foundation which would only be revealed by the regulations, she said that she had 'never seen it' in the case of a charity.

259. The Charter went on to provide that the council should have at least three members and under the title 'Beneficiaries' it was provided that the designation of the beneficiary or beneficiaries shall be provided for in the regulations, and such regulations shall set forth the manner in which the property of the foundation is to be distributed to any one or more of the beneficiaries. The terms of the Charter in this regard were also inconsistent with its being a foundation for charitable purposes.

260. The founder was identified as a Panamanian company, namely Primus Founder SA. Ms Porras said it was very common to have a nominee founder and that she had acted as a founder of many foundations on behalf of clients. The true founder would only be known to the law firm that was setting up the structure. Generally, Ms Porras said that the beneficial founder would have full information in respect of what is occurring within the foundation and would direct council members, particularly if they were nominees, on how to manage or distribute or dispose of the "patrimony of the foundation".

261. She also said that the ultimate beneficial founder would have a right to access the regulations, particularly because they should have signed them. The Foundation was dissolved in December 2020 and the dissolution documents are publicly available. Ms Porras said that a meeting took place at 8:00am on 10 th December 2020 with the company, ARTL, (a company which had continued in Panama in 2014) being dissolved at the same time. The company was dissolved by its directors, adopting a dissolution agreement proposed by the company's shareholders. The document recording the dissolution of the company said that the company had settled all of its obligations and the remaining assets had been distributed amongst the shareholders, i.e. any assets had been distributed to the Foundation. Ms Porras said that in those circumstances, pursuant to the terms of the Foundation regulations, the assets would have been distributed to the beneficiaries identified in the Foundation regulations.

262. Although the company and Foundation were dissolved by nominees, the documentation recorded that the directors of the company at the date of dissolution were Terence Moore, who was described as ' Director/President', Harald Quaderer , 'Director/Secretary', and Helmuth Tschutscher , 'Director/Treasurer' . Ms Porras said that the founder would generally be consulted before dissolution and that the company could be reinstated by its shareholders under the relevant Panamanian legislation.

263. The documentation recording the dissolution of the Foundation confirmed that Terence Moore and Harald Quaderer were members of the foundation council and were represented by persons in Panama for the purpose of the meeting. Accordingly, at the date of the dissolution of the foundation and ARTL, Mr Moore was a member of the foundation council and a director of the company respectively. Mr O'Leary accepted in evidence that he had no idea whether the original council members, Mr Gassner , Mr Kaddech and Dr Biedermann (two men he never met), had any knowledge or experience of administering a charity worth £30 million, particularly in circumstances where they resided in Europe and the Foundation was in Panama.

264. We found it surprising that after Mr O'Leary and Mr Hanson had built up ARTL over the course of ten years, during which time ARTL was controlled at company level by Mr O'Leary and its sole shareholder, the Trust, controlled at trustee level by Mr O'Leary, that he should effectively give it away to people whom he did not know in circumstances where there was so little documentation.

265. Further, although Mr Moore and Mr Gassner and the Jeeves Group (together with relatively minor input from BLP and Castellan) seemed to have done relatively little work in setting up two relatively simple structures, the fees that were charged to ARTL were huge. In evidence, Mr O'Leary said 'Basically people like Jeeves Group and other advisers and international advisers generally charge to do restructuring....usually I'm told it's higher than 12% of the assets under management. I managed to negotiate that down...'.

266. Mr O'Leary claimed that he had done well in negotiating the fees to 6% of the £30 million structure, resulted in ARTL having to pay £1.8 million for this exercise. To pay £1.8 million to move a charitable trust from jurisdiction A to jurisdiction B, in circumstances where, in its ten year lifetime it had made precisely £22,000 by way of distributions to charity, seems to us to be remarkable. That such huge fees were charged for doing so little work seems to reflect, in our view, on the bona fides of those who Mr O'Leary selected to advise and execute these transactions.

267. What of Mr Moore and Mr Gassner ? Mr Moore, according to Mr O'Leary, is refusing to answer Mr O'Leary's calls and emails and, according to Mr O'Leary, dissolved the Foundation without any notice or reference to Mr O'Leary. We think that this was unlikely to be the truth. As to Mr Gassner , he was sentenced, we are told, to three years imprisonment for offences of dishonesty in Liechtenstein in approximately 2019 and, according to Mr O'Leary in evidence, he is still in prison.

268. The Plaintiffs say that it is no coincidence that the Foundation and ARTL were dissolved a matter of days after a mediation, which Mr Moore knew about, between the parties failed. Whether or not this is correct does not seem to us to matter very much.

269. Although Mr O'Leary painted a picture of being unable to obtain access to any documentation in relation to the Foundation once it had been incorporated in 2014, and entirely unable, for example, to secure a copy of the regulations which we find he probably approved, he did at least in relation to the fees of defending this litigation, continue to benefit from the assets that he had allegedly provided to a charitable entity. In reliance on the indemnity provisions in the Instrument of Advancement, pursuant to which the Foundation agreed to indemnify him in respect of claims arising from his trusteeship, even though the indemnity provided that it extended only to liabilities in respect of which the trustee would have been entitled to reimbursement out of the Trust fund as trustee, Mr O'Leary managed to obtain, he told the Court, approximately £1 million from Mr Moore. It was not Mr Moore that turned off the tap. Mr O'Leary stopped claiming when his then advocates were threatened by the Plaintiffs' advocates that they may be liable to repay to the Foundation the funds they had received. According to Mr O'Leary his advocates said 'I am sorry, we can't risk having any more fees from you, unless we know where the money comes from and it has to come from you personally'. Did Mr O'Leary breach his duties as bare trustee by transferring the assets of the Trust to the Panamanian Foundation and thereby terminating the Trust?

270. We unhesitatingly answer this question in the affirmative. We have set out the duties that Mr O'Leary owed to the Trust above. We have no doubt that Mr O'Leary acted dishonestly and, therefore, fraudulently when he breached his duties as bare trustee. In particular, he: (i) concealed his actions from Mr Hanson and Creditforce ; (ii) took advantage of Mr Hanson's declining health to carry out the transactions; (iii) instructed experts who he knew had no experience or skills in looking after charity money - instead selecting advisers who specialised in asset protection; (iv) failed to keep a proper paper trail of communications with the advisers and advice that they gave in order to, in our view, conceal his actions; (v) lied to and misled the professionals who were instructed to assist the executors after Mr Hanson's death; (vi) concealed his activities from the Neatly Board; and (vii) deliberately set up an entity, first in St Kitts and then in Panama, which he knew that he could benefit from personally, owing to their terms. Neither entity was exclusively charitable and, indeed the proper entity to set up in St Kitts would have been a charitable trust (not a foundation) and the proper entity to set up in Panama would not have been the Private Investment Foundation that Mr O'Leary selected on the advice of an adviser who is now serving a sentence of imprisonment for

dishonesty. The effect of our findings 271. In consequence of our findings, Mr O'Leary did not execute the Instrument of Advancement, either in good faith or intra vires the Trust. He purported to execute the power under clause 4 to dispose of the Trust property in favour of charity. He did not do so as the Foundation was not a charitable trust. In any event, the 2014 appointment was a fraud on a power as Mr O'Leary exercised the power in order to benefit himself and his relatives, not charity. Accordingly, the exercise of the Power of Appointment and the 2014 Instrument of Advancement are void and of no effect and we so declare. In the circumstances the purported resolution of the board of ARTL on 13 October 2014 (a day before Mr Hanson died), by the then directors, Mr Gassner and Mr Moore (with Mr O'Leary purportedly in attendance as 'trustee of the SR Charitable Trust' which he had, by then, claimed to have dissolved), is also void, in that it purported to transfer the shares in ARTL from Mr O'Leary as trustee of the Trust to the Panamanian Foundation. Mr O'Leary's conduct after the death of Mr Hanson 272. We touch on this only briefly. We heard evidence from Miss Wuenschmann -Lyall who we found to be an impressive witness.

273. She was instructed in November 2014, shortly after the death of Mr Hanson, by the then executors of the Estate to deal with matters, particularly tax, relating to the Estate. She was not the only person instructed to assist with the Estate. After she was instructed, a Mrs Chris Erwood , who specialised in offshore taxation matters, was instructed, as was a Mr Andrew Gotch, who was instructed to make disclosure to HMRC of potentially undeclared matters.

274. Owing to the concerns that Miss Wuenschmann -Lyall had at the time, she made extremely detailed contemporaneous notes of various meetings which made her, in our view, a reliable witness. She made handwritten notes of all the meetings that she attended and then typed them up immediately after each meeting. She said that she was given to understand that Mr Hanson was also a meticulous record keeper. Shortly after she was instructed, she became aware of tensions between executors. Things escalated rapidly - by the summer Mr Torkington and Mr Wall were applying to the High Court for the Joint Administrators to be appointed. She first met the executors (Mr Torkington , Mr Wall, Mr Fox and Mr O'Leary) together in early December 2014. At that meeting, she repeated advice she had already given that HMRC would scrutinise every detail of the documentation filed in respect of the Estate and would likely assign someone from the High Net Worth team to investigate.

275. Subsequently, she had meetings with the executors including Mr O'Leary and documentation was provided to her, including Mr O'Leary providing Mr Hanson's bank statements for the last seven years. Mr Torkington said that he had been trying to obtain a back-up of Mr Hanson's computer, but had experienced significant resistance from Mr O'Leary. Mr Torkington told her that Mr O'Leary had control of Mr Hanson's personal computer and had only reluctantly handed a storage device to Mr Torkington for provision to Miss Wuenschmann -Lyall. Upon review of the bank statements, it became clear to Miss Wuenschmann -Lyall that Mr Hanson had made substantial lifetime gifts that needed to be reported to HMRC in their form IHT400. The lifetime gifts ran to several million pounds. In January 2015, Miss Wuenschmann -Lyall was given a folder of documents pertaining to the dispute that Mr Hanson had had in 2013 with Ms Mercer. Reviewing these documents showed that Mr Hanson had made payments totalling £400,000 to Ms Mercer. Miss Wuenschmann -Lyall was unable to reconcile this information with any of the material that she had been given hitherto. Mr Hanson had paid this money from his resources but it had not come from any source of wealth that she had been told about. She was surprised by this. She wanted a complete back up of Mr Hanson's computer. This was blocked by Mr O'Leary who caused the password to Mr Hanson's email account to be changed, thus preventing an extraction of Mr Hanson's email account. Miss Wuenschmann -Lyall said that Mr O'Leary 'appeared determined to do whatever he felt necessary in order to prevent me and the Executors from getting access to the documentation that we needed to do our jobs'.

276. Mr O'Leary's actions caused great consternation to the other executors. Ultimately, in February 2015, Mr O'Leary did inform others of the new password so Mr Hanson's records could be backed up and reviewed. At a meeting with Mr O'Leary and the other executors on 12 th February 2015 (Miss Bonney was also in attendance), Miss Wuenschmann -Lyall reiterated the importance of disclosure to HMRC, particularly in view of the discovery of the payments to Ms Mercer and asked for any information they had concerning the source of payments made to Ms Mercer for refurbishment of her property and urged Mr O'Leary to disclose the new password for Mr Hanson's email accounts. Mr O'Leary became 'quite agitated' in response to her questions and he said that he was 'unable to disclose the source of payments to Miss Mercer on account of him having a conflict of interest' . This was the first time that Mr O'Leary confirmed that he knew about the payments to Ms Mercer.

277. At the end of the meeting, Mr Fox and Mr O'Leary took Miss Wuenschmann -Lyall to the corner of the meeting room, saying they wanted to speak with her 'quietly'. They explained that Mr Hanson had also made a payment of $200,000 to a trust, which they described as the Tatyana Trust. Mr Fox and Mr O'Leary promised to give her more information about this trust. On 15 th and 16 th February, Mr O'Leary did provide Miss Wuenschmann -Lyall with a new password for Mr Hanson's email account, details in relation to the Tatyana Trust and details of missing payments made to Ms Mercer for the refurbishment of her property. He still did not provide her with details as to where the payments to Ms Mercer had come from. He repeated that he was 'conflicted here as the payments came from an account on behalf of Don and not his own account' . It was clear to Miss Wuenschmann -Lyall that Mr O'Leary knew the source of the payments but simply was not willing to identify it. By now she felt that Mr O'Leary knew much more about the Mercer payments than he was prepared to say and he was unwilling to give her any further detail.

278. Finally, on 25 th February, Mr O'Leary said that the payments came from an offshore company which, he said 'had folded' in 2012. The loan had then been written off. It had taken Miss Wuenschmann -Lyall three months to discover the existence of ARTL and, when she did, Mr O'Leary lied to her saying that it had 'folded' in 2012. Of course, ARTL had continued in existence in Jersey until 2015 when it migrated to Panama. We find that Mr O'Leary lied to Miss Wuenschmann -Lyall because he knew that discovery of the existence of ARTL would lead to discovery of its migration and the Panamanian Foundation. This is precisely what happened. On 26 th February 2015, Mr Torkington sent her an email which alerted her to two entities that she had never previously encountered - ARTL and the Trust. Mr Pitchford, who knew Mr Hanson's financial affairs reasonably well, said that ARTL was 'another enterprise funded by Don which at one stage had many millions in funds'. Mr Pitchford said 'Don advised that, as it was offshore I didn't need to know about it' .

279. Miss Wuenschmann -Lyall renewed her request for information and, over the days that followed, she had several exchanges of emails with Miss Bonney in which she cast some light on her understanding of ARTL and the Trust. She said that so far as she could recall the Trust, at one point, was the owner of ARTL and that 'Mr O'Leary knew all about ARTL and the [Trust] as he remained a trustee of the [Trust] and a director of ARTL' and that when she last did the accounts for ARTL in 2005 (she was replaced by Mr O'Leary by Mr Hanson), 'it had assets of some £25m I think???'. This material from Miss Bonney confirmed Miss Wuenschmann -Lyall's suspicion as to a close link between ARTL, the Trust and Mr Hanson. Mr O'Leary provided her with limited additional information.

280. Miss Bonney did further digging and on 3 rd March 2015 wrote to Mr Torkington (who forwarded the email to Miss Wuenschmann -Lyall), saying that she had found the annual returns for ART for various years including 'the most interesting of all in 2015'. She said: "It comes as a big surprise to me to see that the [Trust] owned all the shares, and even more of a surprise that I am still mentioned in 2014! That the fact that all the shares in ART seem to have been sold to a company in Panama in 2015 is pretty awesome!! I sincerely hope that I have got all of this completely wrong." 281. There was an executors' meeting on 6 th March 2015 that Miss Wuenschmann -Lyall was unable to attend. Mr Torkington told her that Mr O'Leary left the meeting abruptly when he was asked questions about the Trust and ARTL.

282. Miss Wuenschmann -Lyall sent Mr O'Leary a number of questions concerning ARTL and the Trust on 13 th May 2015 and he replied saying that they should meet at his offices at Hottinger on 18 th March. This they did. In respect of the payments to Ms Mercer, Mr O'Leary gave a different account from the one he had previously given (that this was a non-recourse loan made to Mr Hanson), to the effect that there had been no loan made to Mr Hanson and these funds were, in fact, paid to Mr Hanson in lieu of consultancy fees.

283. Mr O'Leary, according to the contemporaneous note made by Miss Wuenschmann -Lyall, 'confirmed that the Trust is now in Panama and that this had been planned for a while'. She had now also heard of Susan Ruddick and she asked who Susan Ruddick was. Mr O'Leary said that she was 'an old friend' and that she had been 'gifted out' in June last year. This was obviously a meaningless phrase and, in any event, untrue. Miss Wuenschmann -Lyall said she was 'at a loss to understand how a settlor could be 'gifted out' of a charitable trust, or what was meant by that' .

284. Later in the meeting, Mr O'Leary told Miss Wuenschmann -Lyall that if she kept looking into ARTL and the Trust then things would 'become unpleasant' for her which she took to be a threat. We found that it was a threat. It was at this stage that Miss Wuenschmann -Lyall recommended that Mr Gotch and Mrs Erwood should be appointed to assist her.

285. On 7 th April 2015, Miss Wuenschmann -Lyall met with Mr O'Leary again, saying that she needed to get to the bottom of the matters relating to the Trust and ARTL. Mr O'Leary said that he had nothing further to add and that she would be better talking to the directors of ARTL in Switzerland and expressed the view that 'the directors of ARTL were unlikely to tell me much' .

286. This was at a time when the Trust and ARTL had only just been transferred from Jersey and Mr O'Leary's stance was, in our view, extremely unhelpful and, indeed, we find a close similarity between conduct in 2015 and the letter that he caused his advocates to send to his advisers in 2020 effectively discouraging them from providing this Court with documents that ought to have been disclosed.

287. From this point on, Mr Fox and Mr O'Leary effectively stopped cooperating with Miss Wuenschmann -Lyall and, indeed, Mr Gotch and Mrs Erwood . They failed to attend meetings, cancelled meetings that they had agreed to attend and were unhelpful in correspondence. Miss Wuenschmann -Lyall concluded that Mr O'Leary was 'deliberately evasive, obstructive and difficult'.

288. She concluded 'With the benefit of hindsight, and with the knowledge of the allegations which the Plaintiffs now make against Mr O'Leary, his obstructive conduct in 2015 is explained in view of what it would seem he has done with the assets of the [Trust] by transferring them to an entity incorporated in Panama' .

289. Miss Wuenschmann -Lyall reviewed the back up on Mr Hanson's computer and various matters came to light in respect of ARTL and the Trust which we have already touched upon in this judgment, in particular the statements showing that Mr Hanson treated ARTL as an asset of his over a number of years.

290. Mr O'Leary contended that the Plaintiffs' claims were driven, to some extent, by UK taxation considerations in that certain findings that the Court may make would result in less tax being chargeable to the Estate. Such foreign taxation considerations are irrelevant to the allegations made and the facts that we have found. However, one of the contentions that was made was that there will be a taxation advantage to the Estate if the settlor of the Trust is identified as Creditforce and not Mr Hanson. Miss Wuenschmann -Lyall said that that was not the case. She explained that because Mr Hanson was the beneficial owner during his lifetime as to 99% of the shares in Creditforce , HMRC would simply look through the company to its participators and that would have been, in effect, Mr Hanson. Accordingly, the identity of the settlor of the Trust, whether Mr Hanson to Creditforce was tax neutral from a UK perspective. Equitable compensation 291. In view of our findings, Mr O'Leary is liable to make good to the Plaintiffs the value which the ARTL shares would have had if they had not, in breach of trust, been transferred to the Panamanian Foundation.

292. We note that there is no limitation or prescription period applying to the Plaintiffs' claim in these circumstances as Mr O'Leary was party to a fraud and, in any event, he, in addition, converted Trust property to his use by transferring the Trust to a non-charitable trust and personally benefitting from it to the tune of at least £1 million. Accordingly, pursuant to Article 57(1) of the Law, no period of limitation or prescription applies.

293. We agree with the Plaintiffs that the base measure of the loss must be the value of ARTL at the date of misappropriation.

294. Mr O'Leary, in evidence, said that value of ARTL in 2014 was £18 million. He produced no evidence to this effect. As noted above, Mr O'Leary told Mr Bunker that ARTL was worth £30 million in 2014. Article 30 of the Law provides that a trustee who is liable for breach of trust should be liable for either an account of profits or 'the loss or depreciation in value of the trust property resulting from such a breach'.

295. In Crociani v Crociani [2017] JRC 146 , Commissioner Clyde-Smith cited with approval the judgment of Lord Browne-Wilkinson in Target Holdings v Redfern [1996] AC 421 , which also concerned a bare trust. Lord Browne-Wilkinson's dicta on equitable compensation is comprehensive: "The basic right of a beneficiary is to have the trust duly administered in accordance with the provisions of the trust instrument, if any, and the general law. Thus, in relation to a traditional trust where the fund is held in trust for a number of beneficiaries having different, usually successive, equitable interests, (e.g. A for life with remainder to B), the right of each beneficiary is to have the whole fund vested in the trustees so as to be available to satisfy his equitable interest when, and if, it falls into possession. Accordingly, in the case of a breach of such a trust involving the wrongful paying away of trust assets, the liability of the trustee is to restore to the trust fund, often called "the trust estate" what ought to have been there. The equitable rights of compensation for breach of trust have been largely developed in relation to such traditional trusts, where the only way in which all the beneficiaries' rights can be protected is to restore to the trust fund what ought to be there. In such a case the basic rule is that a trustee in breach of trust must restore or pay to the

trust estate either the assets which have been lost to the estate by reason of the breach or compensation for such loss. Courts of Equity did not award damages but, acting in personam , ordered the defaulting trustee to restore the trust estate: see Nocton v Lord Ashburton [1914] AC 932 , 952, 958, per viscount Haldane L. C. If specific restitution of the trust property is not possible, then the liability of the trustee is to pay sufficient compensation to the trust estate to put it back to what it would have been had the breach not been committed: Caffrey v Darby (1801) 6 Ves.488; Clough v Bond (1838) 3 M. & C.

490. Even if the immediate cause of the loss is the dishonesty or failure of a third party, the trustee is liable to make good that loss to the trust estate if, but for the breach, such loss would not have occurred: see Underhill and Hayton, Law of Trusts & Trustees 14th ed. (1987), pp.734-736; In re Dawson, decd.; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 N. S. W. R. 211; Bartlett v Barclays Bank Trust Co. Ltd. (Nos. 1 and 2) [1980] Ch.

515. Thus the common law rules of remoteness of damage and causation do not apply. However there does have to be some causal connection between the breach of trust and the loss to the trust estate for which compensation is recoverable, viz. the fact that the loss would not have occurred but for the breach: see also In re Miller's Deed Trusts (1978) 75 L. S. G. 454; Nestle v National Westminster Bank Plc. [1933] 1 W. L. R. 1260." 296. Accordingly, the liability of Mr O'Leary is to pay sufficient compensation to the trust estate (in this case, the Plaintiffs) to put it back to what it would have been had the breach not been committed. The Plaintiffs accept that, if appropriate in calculating the equitable compensation, credit needs to be given to Mr O'Leary in respect of any recoveries that Mr O'Leary may himself effect from the Panamanian Foundation.

297. In this case, the Plaintiffs say that the Court should, having identified an appropriate base value for ARTL in 2014, then award compounded interest to reflect the increase in the net asset value of ARTL which would have taken place had the portfolio remained in the Trust.

298. A similar issue arose in Crociani v Crociani [2018] (1) JLR 468 when the Court was considering the issue of reconstitution of the trust fund. The Court ordered an inquiry as to what the value of a portfolio transferred away from the trust in 2011 would have been at the date of the handing out of the substantive judgment just over six years later.

299. We adopt Commissioner Clyde-Smith's exposition of the law as at paragraph 35 as follows: "35. It seems to us fundamental, and it was not in dispute, that in carrying out this hypothetical exercise as to how the portfolio would have performed between May 2011 and September 2017, we must assume that the trustees of the Grand Trust over the relevant period, whoever they may have been, would have performed all of their duties in relation to the Grand Trust. The plaintiffs, as beneficiaries, are entitled to no less than that. The point is made in Equity: Doctrines and Remedies by Meagher, Gummow and Lehane at paragraph 23-425:- "It seems to be inherent in the compensatory principle at the heart of equitable compensation that a court's hypothesis of what would have happened had the defendant not committed the particular breach of which complaint is made should extend further to assume that the defendant would have performed all the defendant's duties in relation to the relevant trust or fiduciary relationship. ... Nevertheless, it would seem contrary to principle to proceed on the basis that the defendant would have properly performed fewer than all the defendant's duties. These duties are not merely a narrowly defined set of fiduciary duties, nor duties which are imposed by equity rather than duties assumed by the fiduciary or imposed by legislation. In the case of a trustee,

it is submitted, a court ought to suppose that the trustee: (a) would have complied with ( i ) the terms of the trust, and (ii) with any applicable legislation; and (b) would have ( i ) performed the trustee's obligations and (ii) exercised the trustee's discretions within the bounds set by fiduciary doctrine and to the level of care and diligence required by equity (or, where there are statutory duties of care owed by trustees, by statute) and (iii) complied with any other equitable obligations, such as obligations of good faith and to exercise powers only for proper purposes." 36. Under Jersey law, those duties are set out in Article 21 of the Trusts (Jersey) Law 1984 as follows:- "21. Duties of trustee (1) A trustee shall in the execution of his or her duties and in the exercise of his or her powers and discretions - (a) act ( i ) with due diligence, (ii) as would a prudent person, (iii) to the best of the trustee's ability and skill; and (b) observe the utmost good faith." This is consistent with the general principle under English law expressed in the well-known case of Speight v Gaunt [1883] 9 App. Cas.

1. HL :- "...[As] a general rule a trustee sufficiently discharges his duty if he takes in managing trust affairs all those precautions which an ordinary prudent man of business would take in managing similar affairs of his own." 37. We will refer therefore to "a prudent trustee" as a trustee who is fulfilling all of the duties of a trustee. We note however that a higher standard of care applies to a trustee such as a trust corporation carrying on a specialised business of trust management - see Bartlett v Barclays Bank Trust Co. Limited [1980] Ch. 515 at 531, cited with approval by the Jersey Court of Appeal in Midland Bank Trust Company (Jersey) Limited v FPS [1995] JLR 352 at page 381.

38. As Meagher, Gummow and Lehane say at paragraph 23-395, the decision as to what would have happened if there had been no breach of trust is not a simple question of fact and must be reached by means of a structured exercise. They go on to say at paragraph 23-400:- "In considering the structure of the hypothetical inquiry, it is well to remember that the purpose of the inquiry is to permit a comparison between the facts as they ought to have been and the facts as they are, in order to identify any loss suffered by the trust fund or a fiduciary's principal by reason of the relevant breach of duty, and if so in what amount. That purpose is frustrated if too much weight is placed on the hypothesis of what would have happened without the particular breach." 39. There are a number of presumptions to assist the Court in this hypothetical exercise. The first is encapsulated in this extract from the judgment of Parker LJ in the English Court of Appeal decision of Browning v Brachers [2005] EWCA Civ 763 at paragraphs 204 and 205:- "[204] In the well-known case of Armory v Delamirie (1772) 1 Stra 505 the claimant, a chimney-sweeper's boy, found a jewel, and took it to the shop of the defendant (a goldsmith) to find out what it was worth. The defendant handed it to an apprentice, who, under the pretence of weighing it, told the defendant that it was worth three halfpence. The defendant

offered the claimant that sum, but the claimant refused to take it and demanded the return of the jewel; whereupon the apprentice returned only the empty socket. The claimant sued the defendant in trover. The trial of the action took place before Pratt CJ and a jury. The Chief Justice ruled that the claimant was entitled to maintain an action against the defendant in trover. The significance of the case, however, lies in the direction which the Chief Justice gave to the jury as to the measure of damages. In the course of the trial, the jury had heard evidence from witnesses in the trade as to the value of a jewel of the finest quality of the right size to fit the socket. The brief report of the case concludes as follows: '.... The Chief justice directed the jury that unless the defendant produce the jewel, and show it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages: which they accordingly did'. [205] It has been recognised in subsequent authorities that in so directing the jury the Chief Justice was applying a general principle to the effect that, in a case where the defendant has wrongfully deprived the claimant of property of value (be it an item of physical property or a chose in action), the court will, save to the extent that it is persuaded otherwise by the defendant, assess the value of the missing property on a basis which is generous to the Claimant." .......

41. The second presumption is that where there are a number of realistic possibilities as to what might have been done with an asset, the presumption is made that it would have been used in the most beneficial way. In the English Court of Appeal case of Wallersteiner v Moir (No 2) QB 373, Lord Denning MR said this in the context of determining whether to award compound interest for breach of fiduciary duty:- "In addition, in equity interest is awarded whenever a wrongdoer deprives a company of money which it needs for use in its business. It is plain that the company should be compensated for the loss thereby occasioned to it. Mere replacement of the money - years later - is by no means adequate compensation, especially in days of inflation. The company should be compensated by the award of interest. That was done by Sir William Page Wood V.-C. (afterwards Lord Hatherley) in one of the leading cases on the subject, Atwool v Merryweather {1867] L. R. 5 Eq. 464n., 468-469. But the question arises: should it be simple interest or compound interest? On general principles I think it should be presumed that the company (had it not been deprived of the money) would have made the most beneficial use open to it: cf. Armory v Delamirie (1723) 1 Stra . 505." 300. We have applied these principles in this case, although we have done so cautiously to take into account that Mr O'Leary was unrepresented. In this regard we asked the advocate for the Plaintiffs to put forth the arguments on quantum that Mr O'Leary would have argued had he been represented. He did so and we have, in fairness to Mr O'Leary, adopted many of those submissions in calculating the compensation payable.

301. We agree that as the Plaintiffs and the Court have no visibility as to what the value of ARTL was between its misappropriation in 2014 and dissolution in December 2020, then it is appropriate to establish the value of ARTL at the date of misappropriation having regard to the available evidence. The Plaintiffs have undertaken a thorough review of all information relating to the net assets and underlying value of ARTL, including its subsidiary companies, namely a Jersey company called ART2 Limited and an English company called Grosvenor Research Trading and Investments Limited (of which Mr O'Leary was also a director). Documents identified included ARTL's management accounts, a statement of ARTL's holdings held with Bank of Julius Baer as of June 2014, and documents detailing monthly movements in holdings of shares and cash within ARTL from March 2012 to August 2014. The 2012 management accounts gave a value of £38,675,336. This include various loans to ART2 Limited which was dissolved in 2013. There was also an outstanding loan to GRTIL in excess of £7 million which was only recoverable, it appears, to the extent of £4 million approximately.

302. The Plaintiffs have adjusted the value of ARTL in 2012 by reference to the extent of which the loans receivable were considered not recoverable, giving an adjusted net asset value as at 31 March 2012 of £25,696,820. Further adjustments to reflect the true value of the investments referred to in the 2012 management accounts resulted in a reduction of £3,028,643, giving a total of £22,668,177. However, from 2012 to 2014, there were various realised gains on disposals, unrealised gains and other transactions leading to a valuation of ARTL of £24,561,582 at the date of misappropriation.

303. An alternative basis for the estimate of the 2014 value of ARTL involves taking the management accounts from 2004 to 2012 inclusive, plotting the average growth or decline in the value of ARTL over this period and applying that percentage of growth to the value of ARTL as reflected in the 2012 management accounts. The average performance of ARTL over these years was growth of 5.3% per annum. This would yield a figure at the date of misappropriation of £33,003,219, after taking account of the non-recoverable loan from ARTL2 of £9,794,062. The principal claim for the Plaintiffs for £33,003,219 in equitable compensation plus interest which, at 5.3% per annum compounded, would give rise to a total claim for compensation of £47,176,908.

304. We decided to adopt the lower figure at paragraph 303 above as we regarded it as more reliable and fairer to Mr O'Leary, notwithstanding the fact that the Court would have been entitled to adopt the presumptions referred to Armoury v Delamirie .

305. Furthermore, we were told that, in slightly curious circumstances so it seems to us, Mr Gassner wrote to Mr O'Leary and the other director of GRTIL in May 2017, to the effect that ARTL had received instructions from its owner, the Foundation, as 'part of their ongoing charitable policy going forward' to the effect that the GRTIL should be wound up and its assets transferred to a UK registered charity. This occurred, we were told, and assets with the value of £2 million transferred to the Don Hanson Charitable Foundation.

306. Accordingly, we think it appropriate for the Plaintiffs to give credit for this sum, because even though the sum was not received by the Plaintiffs, it did benefit the ultimate beneficiary of these proceedings, to the extent that assets are recovered. Accordingly, the base figure for equitable compensation is £22,561,582, to which we agree that compound interest at 5.3% per annum to 30 November 2021 should be added, which yields a total sum by way of compensation payable by Mr O'Leary of £32,666,771.

307. We note that compound interest is a standard order in cases of fraud committed by a trustee, as recently confirmed by the High Court of England and Wales in FM Capital Partners Limited v Marino and Others [2019] EWHC 725 (Comm) . Mr O'Leary's pleaded defences 308. It is axiomatic from our findings that we have rejected these pleaded defences but, nonetheless, we set them out. Ex turpi causa non oritur actio 309. Mr O'Leary alleges that the Plaintiffs are not entitled to the relief they seek as neither of them have "clean hands". Mr O'Leary's case, in short, is that the Trust was a thoroughly rotten structure designed to mislead HMRC and the Plaintiffs are standing in the shoes of Mr Hanson, who set the structure up (with the help of Mr O'Leary) and, accordingly, are disentitled to any relief. The Plaintiffs, say that although they are alleging that Mr Hanson was party to a sham, their main purpose is to recoup the assets of the Trust, make good the effects of the invalidity of the Trust by paying taxes due and distributing the balance to a residuary beneficiary which is a genuine charity. The Plaintiff says that any illegality, if a feature of this case, is not to be regarded as offensive to public policy, so that the Plaintiffs are prevented from making the claims they advance in these proceedings. Further, they say that it would be offensive to public policy to allow a person who had misappropriated assets from a trust to retain the benefits of those assets.

310. Reference was made to the decision of the Supreme Court in Patel v Mirza [2017] AC 467 . Lord Toulson, giving the principal judgment, said: "120. The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality, the boundaries of which have never been made entirely clear and which do not arise for consideration in this case). In assessing whether the public interest would be harmed in that way, it is necessary a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, b) to consider any other relevant public policy on which the denial of the claim may have an impact and c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts. Within that framework, various factors may be relevant, but it would be a mistake to suggest that the court is free to decide a case in an undisciplined way. The public interest is best served by a principled and transparent assessment of the considerations identified, rather by than the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate.

121. A claimant, such as Mr Patel, who satisfies the ordinary requirements of a claim for unjust enrichment, should not be debarred from enforcing his claim by reason only of the fact that the money which he seeks to recover was paid for an unlawful purpose. There may be rare cases where for some particular reason the enforcement of such a claim might be regarded as undermining the integrity of the justice system, but there are no such circumstances in this case. I would dismiss the appeal." 311. In this Court, in Macon v Querée [2001] JLR 80 , Commissioner Page said at paragraph 65, to similar effect: "It becomes a question of degree whether the misconduct is sufficiently serious to preclude the plaintiff from invoking the Court's equitable jurisdiction." 312. In this case, the Plaintiffs are seeking to set aside transactions, not profit from them. Notwithstanding the conduct of Mr Hanson (and, indeed, Mr O'Leary), we do not take the view that there is sufficient evidence of unconscionable behaviour in this case to prevent the Plaintiffs from enforcing their claims. Indeed, it would be quite wrong for them to be prevented from doing so. Laches 313. That the doctrine of laches forms part of Jersey law was affirmed in Pell Frischmann v Bow Valley [2007] JRC 105A . In that case, it was observed that the customary law of Jersey was well accustomed to administering equité and would recognise the maxim that a person must not be indolent in seeking equitable relief, which extends to the declarations sought in this case and equitable compensation.

314. In Partridge v Partridge [1894] 1 Ch 351 , North J said that: "Laches, or lasches , is an old French word for slacknesse [sic], or negligence, or not doing." 315. Snell's Equity says: "This maxim must be treated with caution. It can be seen as underpinning, in a general sense, the doctrine of laches, which acts as a bar to equitable relief. That doctrine is not based, however, on a mere fact of delay. Something more than mere delay, more even than extremely lengthy delay, is required before B will be denied equitable rights under the doctrine of laches, as the question is whether the lapse of time has given rise to circumstances that now mean it would not be inequitable to deny relief to B. The principal example occurs where, perhaps as a result of having relied on a mistaken belief that B has no relevant right, A would now suffer an irreversible detriment, as a result of B's delay, if B were permitted relief. The doctrine will therefore apply if the delay has resulted in the destruction or loss of evidence by which B's claim might have been resisted, or if B can be said to have released or abandoned any right." 316. In this case Mr O'Leary, in his Answer, says that delay on the part of the Plaintiffs has caused him prejudice as a consequence of which two witnesses, namely Mr Hanson and Mr Torkington , have died. This, in our view, really does not amount to prejudice at

all. From what we can tell, Mr Torkington would have been a witness hostile to Mr O'Leary. As to Mr Hanson, his death was a precondition for this matter being investigated and it was under the cover of Mr Hanson's terminal illness, as we have found, that Mr O'Leary misconducted himself in the way that we have held. Accordingly, the defence in laches is hopeless. Acquiescence / estoppel 317. Mr O'Leary's pleading appears to argue that the Plaintiffs are not entitled to the relief they seek as a result of the acquiescence of Mr Hanson and Creditforce in the disposal of the ARTL shares on the charitable trusts of the Trust, in the knowledge that the trustees had an unrestricted right to manage those assets and that the trustees, in reliance on the same, distributed Trust property for charitable purposes, on the footing that the Trust was a valid charitable trust and thereafter Mr O'Leary validly settled the shares in ARTL on the charitable trusts of the Panamanian Foundation.

318. Further, it appears to be argued that Mr Hanson acquiesced in the transfer of the shares in Trust carried out by Mr O'Leary in 2014 and that the Plaintiffs are thereby estopped from advancing their claims.

319. The difficulty with these claims is that they are fact dependent and the factual basis for each claim does not exist. As to the creation of the Trust, the Court has found that neither Mr Hanson nor Mr O'Leary intended the Trust to be a charitable trust or the assets of ARTL to be applied for charitable purposes - indeed they were not, save as to £22,000 over the course of ten years.

320. As to the second assertion, the Court has rejected the evidence of Mr O'Leary that Mr Hanson knew of the transactions that he arranged in 2013 and 2014 resulting in the Trust assets migrating to Panama and the shares in the company being owned by a Panamanian Foundation.

321. Accordingly, there is no evidential foundation for the claim that the Plaintiffs have acquiesced and no evidence that any person in the position of a beneficiary (i.e. Mr Hanson and Creditforce ) acquiesced in the breach of trust which we have found that Mr O'Leary committed. Article 45 relief 322. Finally, Mr O'Leary sought relief from personal liability under Article 45 of the Trusts Law which provides as follows: "45 Power to relieve trustee from personal liability (1) The court may relieve a trustee either wholly or partly from personal liability for a breach of trust where it appears to the court that - (a) the trustee is or may be personally liable for the breach of trust; (b) the trustee has acted honestly and reasonably; (c) the trustee ought fairly to be excused - ( i ) for the breach of trust, or (ii) for omitting to obtain the directions of the court in the matter in which such breach arose. (2) Paragraph (1) shall apply whether the transaction alleged to be a breach of trust occurred before or after the commencement of this Law." 323. As we found that Mr O'Leary acted neither honestly nor reasonably, the question of Article 45 relief does not arise. Summary of relief ordered by the Court 324. Accordingly, we grant and make: (1) The declaration at paragraph 37 above. (2) A declaration in accordance with our findings at paragraph 169 that the Trust was not a

valid trust as its purposes were not exclusively charitable as a matter of Jersey law and, accordingly, the Trust is void and the assets of the Trust, namely the shares in ARTL, were at all times held by Mr O'Leary as bare trustee (in accordance with our further finding at paragraph 63) as to 25.25% for Mr Hanson and 74.75% for Creditforce . (3) A declaration in accordance with paragraph 271 that the Instrument of Advancement and the October 2014 resolution of the ARTL board are void and of no effect and that, in consequence, the Panamanian Foundation and any successors in title hold the shares of ARTL as bare trustees as to 25.25% for the Estate of Mr Hanson and 74.75% for Creditforce . (4) A declaration that Mr O'Leary is liable by way of equitable compensation for breach of trust to make good to the Plaintiffs the value that the ARTL shares would have had had they not been transferred by him in breach of trust in the sum of £32,666,771 in accordance with paragraph 307 herein.

325. We decline to grant the declaration that the continuation of ARTL in Panama is void and that ARTL remains a company incorporated under the provisions of the Companies (Jersey) Law 1991 as we have no power under the provisions of the 1991 Law to make such an order. In particular, we have no power to reinstate ARTL to the register of Jersey limited companies pursuant to Article 213(1) of the 1991 Law.

326. We will hear further argument as to costs in due course and any other consequential relief that the Plaintiffs seek. Postscript 327. It is to be noted that the Trust in this case was set up and administered prior to the implementation of the Charities (Jersey) Law 2014 in 2018. Under the 2014 Law, a Jersey charity must be registered and meet the statutory "charity test." 328. The Guidance Notes issued by the Commissioner under the 2014 Law are comprehensive and extensive. Registered charities need to continue to meet the requirements of the 2014 Law after registration.

329. Further, a registered charity must send an annual return to the Commissioner, containing such information as is specified in the Law. Under the Charities (Core Financial Information) (Jersey) Regulations 2018, this includes the charity's income, expenditure, value of assets and other material that needs also to be supplied annually and also on registration.

330. Accordingly, the sort of conduct carried out by Mr Hanson and Mr O'Leary under the guise of establishing a Jersey charity in this case will now not be possible. Authorities Curatorship of X [2002] JLR 259 . Charities (Jersey) Law 2014. Anchor Trust Company Limited v Jersey Financial Services Commission [2005] JLR 428 . Re Esteem Settlement [2003] JLR 188 . MacKinnon v Regent Trust Company Limited [2005] JCA 066 . MacKinnon v Regent Trust Company [2004] JLR 477 . Hitch v Stone [2001] STC 214 . A v A [2007] EWHC 99 (Fam) . JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 Trusts (Jersey) Law 1984. Meaker v Picot [1972] JJ 2161 . Basnage - Royal Court from 1955 - Barclays Bank Limited v Fraser. Barclays Bank v Mercantile Bank Limited [1962] 1 WLR 763 at 765. Lewin (20th edition). Crociani v Crociani [2017] JRC 146 . Target Holdings v Redfern [1996] AC 421 . Crociani v Crociani [2018] (1) JLR 468. FM Capital Partners Limited v Marino and Others [2019] EWHC 725 (Comm) . Patel v Mirza [2017] AC 467 . Macon v Querée [2001] JLR 80 . Pell Frischmann v Bow Valley [2007] JRC 105A . Partridge v Partridge [1894] 1 Ch 351 . Companies (Jersey) Law 1991. Charities (Core Financial Information) (Jersey) Regulations 2018. Page Last Updated: 24 Jan 2022 BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII