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	England and Wales High Court (Family Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Family Division) Decisions >> Tchenguiz -Imerman v Imerman [2012] EWHC 4277 (Fam) (20 June 2012) URL: http://www.bailii.org/ew/cases/EWHC/Fam/2012/4277.html Cite as: [2012] EWHC 4277 (Fam)

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IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION

		Royal Courts of Justice
		20th June 2012

MR. JUSTICE MOYLAN:

1. I am determining an application made by adult beneficiaries of certain trusts to be joined as parties to financial remedy proceedings. The parties who have been represented at this hearing are the wife, represented by Mr. Turner, QC, Mr. Harrison, QC and Mr. Hagen; the husband, represented by Mr. Howard, QC, Mr. Oliver and Mr. Hilliard; and the adult beneficiaries represented by Mr. Pocock, QC and Miss Moys.
2. The substantive proceedings are financial remedy proceedings which are being heavily and extremely expensively contested. The scope of the conflict in those proceedings can be seen from the fact that in his open offer the husband proposes that the wife should receive £2 million, while in her open offer the wife proposes that she should receive £120 million. When the parties are as far apart as that, the litigation risk which they both appear to be embracing is clearly very significant.
3. The husband is aged 56. The wife is aged 47. The parties were married on 25^th November, 2001. The marriage came to an end in 2008. There is one child of the marriage who is now aged ten. The husband has three adult children by his first marriage, who are aged 29, 26 and 24. They are the adult beneficiaries who are applying to be joined to these proceedings.
4. The wife commenced her financial application on 4^th February, 2009. Since then the parties have spent many millions of pounds on the litigation. Currently the final hearing is fixed for six weeks in the middle of 2013.
5. The husband deposes to having assets in his own name worth, net of liabilities, just over £7 million. In addition, he is the principal beneficiary of five trusts, all of which are agreed or accepted to be nuptial settlements and which hold assets valued at approximately £20 million. The husband accepts that the assets held within these trusts are resources available to him and, as I understand it, can effectively be treated as his assets.
6. The wife has assets in her own name worth, net of liabilities, just over £10 million. The wife is also a beneficiary of various family trusts, including a sub-fund established in 2007 called the Lizella Trust of which the wife and her children, and remoter issue, are the only beneficiaries. The husband is specifically excluded from being a beneficiary. The Lizella Trust received assets worth, it would seem, somewhere in the region of £15 million. The wife is also a potential beneficiary of other family trusts. It is not clear to me at the moment what resources are held within those trusts. Certain of the documents which I have seen suggest that they are substantially in debt.
7. Having regard to her own financial position the wife's claim is based entirely on the application of the sharing principle. During the course of his submissions Mr. Turner expressly said that the wife is not advancing any case in reliance on the needs principle. Put very simply the wife's claim is to a share of the assets generated during the course of the marriage, the most significant of which is the sum of approximately £250 million which was made from the acquisition, and then later sale, of a company called Whyte & Mackay. The acquisition took place in or about 2001; the sale took place in 2007. All the profit was - and insofar as it remains, is - held within a trust structure because the husband conducted, and conducts, his business affairs through the vehicle of companies held within a trust structure.
8. At one point the assets held within these trusts were said to be worth approximately £360 million (at the date of their appointment out to the husband's father) but they are now said to be worth approximately £130 million. The structure which holds this wealth consists of approximately ten trusts, of which neither the husband nor the wife are named beneficiaries. If the husband were added as a beneficiary, the wife, as I understand it, could not under the terms of all but one of the trusts be made a beneficiary; and vice versa. The only named beneficiaries, save for a charity, are the husband's parents, the husband's adult children by his first marriage, the child of this marriage, and a grandchild of the husband's (being the daughter of Bianca). They are all discretionary trusts and hold assets, as I have said, believed to be worth in the region of £130 million.
9. These trusts were settled by the husband's father in 2008. Essentially, again as I understand it, the assets of earlier trusts, which (or some of which) had been settled by the husband, were appointed out to the husband's father, clearly with the intention that he would re-settle them as he did. There is a dispute as to the motivation for the assets being re-settled in this way. In part, it appears to have been motivated by anticipated or proposed tax changes and, in part, it is alleged by the wife, it was to seek to shelter the assets from any claim she might have, or make, on a divorce.
10. On 13^th May, 2011 the wife amended her Form A to make an application for the variation of all the trusts on the basis that they are all post-nuptial settlements. The trustees of the trusts, being four trust companies, were joined as parties to that application by order of this court on 2^nd December, 2011. The trustees then applied, to the Royal Court of Jersey or to the East Caribbean Supreme Court as relevant, and obtained those respective courts' approval to their not participating in these proceedings.
11. Those applications by the trustees were supported by the adult children. In other words, both the trustees and the children clearly took the view that it was not in the interests of the various trusts for them - the trustees - to participate as parties in these proceedings. At present I have not been told why they took this view, but it is not difficult to come to the tentative conclusion that it is to enable them in due course more easily to submit to the courts of the trusts' home jurisdictions that any order which this court might make should not be enforced. I say this because in a decision of the Royal Court of Jersey, In The Matter of the H Trust, X Trust Company Limited v RW and Six Others [2006] JLR 280, Birt DB (as he then was), said at para. 15,

"It is more likely to be in the interests of a Jersey trust and the beneficiaries thereunder to preserve the freedom of action of both the trustee and this court to act as appropriate following and taking full account of the decision of the overseas court".

I return to this decision later.

12. It might therefore be said, as indeed Mr. Turner submits, that the adult children are acting inconsistently when they now themselves seek to be joined as parties.
13. Their application is supported by a statement from Bianca Ladow, dated 29^th November, 2011. In the course of that statement she says,

"6. My siblings and I took our own advice. Having done so we formed the view that, should the trustees take no part in these proceedings, then we should do so in defence of the settlements and of our interests in them ...

7. My siblings and I do seek to intervene in these proceedings. We do not, with respect, understand how Lisa ... can properly hold the view that 'the variation of the [settlements] she seeks [will not] be unduly prejudicial to the interests of' my siblings and me. Judging by the contents of Miss Parker's fourth statement, Lisa seeks a very substantial (without saying how substantial) share in the assets of all the settlements of which we are beneficiaries, asserting that our father's 'free estate is relatively speaking of little consequence'. Lisa seeks orders adding her as a beneficiary and appointing to her absolutely specific (but not yet specified) assets ....

9. My siblings and I have naturally been aware of the family settlements for a number of years. We have always known that our livelihoods as beneficiaries have been intimately tied up with the settlements, which are intended to provide for us and our descendants. All three of us either work professionally for a business owned by the settlements, or intend to do so in the future. I am the Executive Director of Earlcrown, the property development and project management arm of the family activities. I have worked full-time in this role for five years now, and I am fully committed to this work notwithstanding having a young daughter. I work on particular property-related projects which are then developed - with funding from the settlements - and usually sold on. Megan is the lead interior designer, currently part-time, but her role is increasing. We are building up a major business. Jess is training at Bain & Co., the global management consultants, in order to give him a broad grounding in business: he is being groomed to join, and ultimately to take a lead role in, the family enterprises.

10. Lisa's application has as its direct target the funds within the settlements, which are intended to support us, our children, and future descendants. Moreover, in the case of Megan and myself, Lisa's claims cut across and undermine the work we are currently doing in our present careers. The same is true for Jess and his future career. I cannot stand idle while she seeks to do this.

11. Miss Parker accepts, in para. 20 of her fourth statement that, as beneficiaries, we are entitled to proper representation in relation to Lisa's applications. The trustees of the settlements have decided not to participate, but in any event there are, for the purposes of Lisa's application to vary the settlements, at least two 'classes' (for want of a better word) of beneficiary identified by Lisa herself (in the same paragraph) - my siblings and I on the one hand, and Lisa's daughter (and our half-sister) on the other. I do not understand how the trustees could properly have represented the interests of both.

12. As I have always understood matters, the primary intention behind the settlements is that they should benefit me, my siblings and our descendants. I do not know whether any other beneficiaries intend to make applications similar to that which my siblings and I now make, but whether or not they do so, we wish to participate fully in proceedings which plainly have the capacity dramatically to affect the assets of the settlements, and therefore the provision that might be able to be made for us in the immediate and long-term future".

14. The relevant Rules are contained within the Family Procedure Rules 2010. Under Rule 1.1 the overriding objective requires the court, "so far as practicable", to ensure that a case is dealt with expeditiously and fairly, in ways that are proportionate to the nature, importance and complexity of the issues, and, also, in a way which saves expense. Under Rule 1.4, which is headed "The court's duty to manage cases", the court is required to further the overriding objective by actively managing cases. This includes:

"(a) encouraging the parties to co-operate with each other in the conduct of the proceedings;

(b) identifying at an early stage—

(i) the issues; and

(ii) who should be a party to the proceedings;

(c) deciding promptly—

(i) which issues need full investigation and hearing and which do not; and

(ii) the procedure to be followed in the case; ...

(h) considering whether the likely benefits of taking a particular step justify the cost of taking it;"

Rule 9.11, which does not directly apply to this application, provides:

"1) Where an application for a financial remedy includes an application for an order for a variation of settlement, the court must, unless it is satisfied that the proposed variation does not adversely affect the rights or interests of any child concerned, direct that the child be separately represented on the application".

Rule 9.13 provides that an application for an order for a variation of settlement "must" be served on the trustees of the settlement – with further consequential provisions.

Rule 9.26B, which does apply directly to this application, is headed, "Adding or removing parties".

"(1) The court may direct that a person or body be added as a party to proceedings for a financial remedy if –

(a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or

(b) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue".

15. Turning to the parties' submissions, I have read and heard at some length submissions on behalf of each of the parties (save the trustees) and the applicants. Mr. Pocock submits, at para. 27 of his written submissions,

"… this Rule [he is referring to Rule 9.26B], plainly supports the joinder of the adult children:

a) As with any trust the assets are held (subject to the terms of the trust) for the benefit of the beneficiaries.

b) Here the adult children are such beneficiaries. W is not.

c) W says, however, that:

i) the settlements are nuptial in relation to her and H's marriage; and that

ii) a (very) substantial proportion of the assets currently held for the beneficiaries should be removed and transferred to her.

d) The adult children have an obvious interest in that application:

i) they do not accept that the settlements are nuptial; and

ii) it will remove those assets from the pool of assets held for their benefit – and they oppose it".

An additional factor was added during the course of his oral submissions - namely that it could be asserted that part of the wealth, if the wife's case is correct, is marital property of Bianca's marriage.

e) As a result, it is submitted that:

i) it is plainly "desirable to add the [adult children] so that the court can resolve all the matters in dispute in the proceedings" and that

ii) there is a clear "issue involving the [adult children] and [W] which is connected to the matters in dispute in the proceedings". Indeed it is not just "connected" – it is central to W's application".

16. Mr. Pocock also refers to a passage in Lord Denning MR's judgment in Gurtner v. Circuit [1968] 2 QB, 587 at 596. That case dealt with the situation of the Motor Insurers' Bureau in respect of an untraced defendant. The Rules of the Supreme Court, which then applied, provided that the court could add any person as a party "whose presence before the court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon".

At p.596D Lord Denning said,

"It is thus apparent that the Motor Insurers Bureau are vitally concerned in the outcome of the action. They are directly affected, not only in their legal rights, but also in their pocket. They ought to be allowed to come in as defendants. It would be most unjust if they were bound to stand idly by watching the plaintiff get judgment against the defendant without saying a word when they are the people who have to foot the bill".

17. Mr. Pocock has also referred me to a number of other authorities, some of which I refer to later in the judgment. He submits that the adult children should be joined and that this should not be made subject to conditions as sought on behalf of the wife (as her alternative case).
18. Mr. Howard, on behalf of the husband, supports the application. He submits that the only "real" - I use his word - beneficiaries of the relevant trusts are currently the three adult and two minor beneficiaries and that if the wife's claim succeeds it will inevitably result in a very substantial diminution in the assets of the trusts of which they are potential discretionary beneficiaries. Two of them, as set out in the statement to which I have referred, work for trust companies so that the wife's application is, he submits, highly prejudicial to their interests.
19. Mr. Turner submits that the adult beneficiaries should not be joined as parties to these proceedings. He refers to their support for the trustees' applications to the Royal Court of Jersey and the East Caribbean Supreme Court in respect of their participation in these proceedings and submission to the jurisdiction of this court, following their being joined as parties to the substantive proceedings. He submits that, as a result, the adult beneficiaries are seeking to obtain the benefit of participation in these proceedings without the consequences which would flow from active participation by the trustees, in particular insofar as disclosure and enforcement are concerned.
20. Mr Turner submits that the proper respondents to the wife's application are the trustees, as owners of the trust assets and as holders of the relevant discretion. He accepts that there is an issue involving them but not - or not a sufficient - issue involving the children which should entitle them to be joined. How, he asks, can they submit that their participation as parties is "desirable" when they supported the position taken by the trustees in their applications to the foreign courts? As they have engaged in, what he terms, "tactical manoeuvring", I should exercise my discretion by declining to join them as parties. He further submits that the additional costs and time which will be caused by their joinder point towards their being joined as being disproportionate.
21. I have already referred to the relevant rules and to the overriding objective.
22. Turning to some of the authorities to which I have been referred, starting with In Re H Trust. In the course of his judgment Birt DB said:

"(ii) Submission to the jurisdiction of the English court

11. This part of the application is rather different. The trustee seeks approval of its decision not to submit to the jurisdiction of the English court. That is a continuing and significant matter such that it is reasonable to seek the approval of the court.

12. Significant consequences may flow from a decision by a trustee of a Jersey trust to submit to the jurisdiction of the Family Division of the High Court or, indeed, any other court considering the matrimonial affairs of beneficiaries of a trust. Any order subsequently made by the Family Division would be made in proceedings to which the trustee had voluntarily submitted and in which therefore it had full opportunity to put forward submissions on the order which the court should make. It follows that the trustee would be in some difficulty in arguing subsequently before this court against the proposition that any order of the Family Division relating to the trust should be enforced without reconsideration of the merits of such order.

13. Conversely, if the trustee has not submitted to the jurisdiction of the Family Division, any order of that court will not be enforceable in Jersey under the rules of private international law. On any subsequent application to this court to vary the trust so as to achieve the effect of any variation or other order made by the Family Division, this court would have complete discretion as to the course it should take.

14. In this respect, it is important to note the roles of the two courts are very different. The Family Division is concerned to do justice between the two spouses before it. It is sitting in a matrimonial context and its objective is to achieve a fair allocation of assets between those spouses. It has no mandate to consider the interests of the other beneficiaries of any trust involved. Conversely, this court is sitting in its supervisory role in respect of trusts, as is regularly done in the Chancery Division of the English High Court. This court's primary consideration is to make or approve decisions in the interests of the beneficiaries. It has, therefore, a very different focus from the Family Division.

15. It follows that, in most circumstances, it is unlikely to be in the interests of a Jersey trust for the trustee to submit to the jurisdiction of an overseas court which is hearing divorce proceedings between a husband and a wife, one or both of whom may be beneficiaries under the trust. To do so would be to confer an enforceable power upon the overseas court to act to the detriment of the beneficiaries of a trust when the primary focus of that court is the interests of the two spouses before it. It is more likely to be in the interests of a Jersey trust and the beneficiaries thereunder to preserve the freedom of action of both the trustee and this court to act as appropriate following and taking full account of the decision of the overseas court. We have said this is likely to be the case in most circumstances. In some cases, e.g. where all the trust assets are in England, it may well be in the interests of a trustee to appear before the English court in order to put forward its point of view because, by reason of the location of the assets, that court would be able to enforce its order without regard to the trustee or this court.

16. The observations which we have made do not lead to the conclusion that this court will ignore a decision of the Family Division or other overseas court. Far from it. That court will have investigated the matter very fully and will have made a decision intended to achieve a fair allocation as between the spouses. In such cases, the interests of comity, as well as the interests of the beneficiaries will often point strongly in favour of this court making an order which achieves the result contemplated by the order of the Family Division. Indeed, this court has made such orders in the past and will no doubt do so again in the future. But, the significant factor from the point of view of whether the trustees should submit to the jurisdiction of the overseas court is that it will remain a matter of discretion for this court as to the course it should take in the light of the overseas order if the trustee has not submitted, whereas if the trustee has submitted, the overseas order is likely to be enforced without reconsideration of the merits. For these reasons we approve the trustees' decision not to submit to the jurisdiction of the Family Division in this case.

17. We should add that a decision that the trustees should not submit to the jurisdiction is separate from the question of provision of information. It seems to us important in this case that the husband and the wife should have the fullest information concerning the financial affairs of the trust so that any compromise which they reach, failing which any decision of the Family Division, is based upon the true financial position. It is our understanding that the wife has received the necessary information, but if this understanding is incorrect and further information is requested, the trustees should make the fullest information available to both parties and through them to the Family Division should this become necessary".

I wholly endorse what Birt DB says in para. 17.

23. However, I was puzzled and, I must say, somewhat concerned when I read the comments in the Deputy Bailiff's judgment that the English court has "no mandate to consider the interests of the other beneficiaries of any trust involved" in the case before the English court and is concerned - and I would add the word "only", which in my view seems to be implicit – "to do justice between the two spouses before it". If I have understood these comments correctly they do not, with respect, reflect the approach taken by the English court. Indeed, at an earlier hearing in these proceedings Baron J said, "The court is going to be concerned to protect their interests --", 'their interests' being the interests of the beneficiaries of the trusts. She then added, "-- to protect Mr. Imerman's interests and to be fair to Mrs. Tchenguiz".
24. In addition, in the decision of Ben Hashem v Ali Shayif [2009] 1FLR, 115, Munby J (as he then was), when summarising the matters which the court will take into account when dealing with applications for the variation of a settlement, included the following:

"iv) The settlement ought not to be interfered with further than is necessary to achieve that purpose, in other words to do justice between the parties;

v) Specifically, the court ought to be very slow to deprive innocent third parties of their rights under the settlement. If their interests are to be adversely affected then the court, looking at the wider picture, will normally seek to ensure that they receive some benefit which, even if not pecuniary, is approximately equivalent, so that they do not suffer substantial injury. As Sheldon J put it in the passage in Cartwright which I have already quoted: "if and in so far as [the variation] would affect the interests of the child, it should be permitted only if, after taking into account all the terms of the intended order, all monetary considerations and any other relevant factors, however intangible, it can be said, on the whole, to be for their benefit or, at least, not to their disadvantage."

25. In the later decision of BJ v. MJ (Financial Order: Overseas Trust) [2012] 1FLR, 667, Mostyn J said in respect of sub-paras (iv) and (v):

"[9] The statement in (iv) is surely of wider application than cases about variation of settlement alone. A respondent's property rights obviously should not be interfered with by way of lump sum or property adjustment order in favour of a claimant further than is necessary to achieve a fair and just result".

In addition he later said:

"[12] … The scheme of the rules assumes that the interests and views of adult children and the interests of the unborn will be represented by the trustees. However, those interests and views may not be best voiced if the trustees, as here, have, notwithstanding their joinder to the proceedings, refused to participate in the proceedings. In such circumstances I suggest that it is incumbent on the applicant to draw the claim to the attention of any significant beneficiaries explaining that they are at liberty to apply to intervene, or otherwise make representations."

The purpose of such a step is clearly to seek to put the court in a better position to consider the interests of the beneficiaries when exercising its powers under the Matrimonial Causes Act 1973.

26. The English family court is clearly under an obligation to consider the interests of beneficiaries when deciding whether, and if so how, to exercise its powers to vary settlements. In my view, the rules and the practice of this court constitute a mandate to consider such interests. It is also consistent with the wider approach referred to by the Court of Appeal in Charman v Charman (No. 4) [2007] 1 FLR 1246, at para [57]:

"… it is essential for the court to bring to it a judicious mixture of worldly realism and of respect for the legal effects of trusts, the legal duties of trustees and, in the case of off-shore trusts, the jurisdiction of off-shore courts".

27. In addition, I have been referred to the case of PNPF Trust Co. Ltd. (Trustee of the Pilots' National Pension Fund) v. Taylor & Ors. [2009] EWHC 1693 (Ch). Proudman J said, at para. 62:

"Thus all of these authorities can be distinguished from the present case on their own facts in the manner I have suggested. However, I agree with Mr Martin that all the cases show a consistent and instinctive approach on the part of the judges that the remedy of a person dissatisfied with his representation is to be joined as a defendant in his own right".

I interpolate that, given the beneficiaries in this case supported the applications made by the trustees in respect of their participation in these proceedings, it is difficult to see how they could qualify as being dissatisfied with the representation made by the trustees.

"64. The genesis and purpose of the rules about representation, the reasons for their inclusion and the attitude of judges in former days can indeed provide a foundation for a logical and principled analysis of procedural rules in trust actions. To my mind the cases cited support Mr Martin's proposition that the historical purpose of representation orders was to enable all relevant parties to be heard in circumstances where that would otherwise be impracticable. The procedure was (and is) intended to include people within the ambit of an action rather than to exclude them. The purpose was (and is) not to shut someone out who is ready and willing to appear to represent his own interests at his own risk as to costs".

Conclusion

28. I agree with Mr. Turner's submission that the adult beneficiaries are, in some respects, seeking to have their cake and eat it. Having supported the stance taken by the trustees they now seek to go behind that stance by applying to be joined as parties to these proceedings. In my view, this is not an attractive position. It is no doubt founded in part on the belief that enforcement of any order of this court would or might be made more difficult if the trustees do not participate.
29. This court is to some extent placed at a potential handicap, or disadvantage, because of the trustees' decision not to participate. Even currently, as I understand it, to the extent of not providing witness statements, although I would expect that they will act in accordance with the observations made by Birt DB in para. 17 of In Re H Trust. The motivation for the position adopted by the trustees is at present not expressed. It follows what recently has become the practice of foreign trustees. However, as referred to above, it is not difficult to see at least one potential supposed benefit as referred to in the decision of In Re H Trust.
30. Are the beneficiaries in the present case in some way bound by the trustees' decision, as endorsed by the Royal Court of Jersey and the East Caribbean Supreme Court, so that they cannot now separately apply to be joined or otherwise to participate in these proceedings? Or, are they able separately to seek to participate in these proceedings? From the court's perspective it is the trustees who are in the best position to assist this court in the exercise of its powers under the Matrimonial Causes Act 1973. However, I do not consider that the beneficiaries are bound by the trustees' decision, even though they supported it.
31. In my judgment, I should address whether it is "desirable" for them to be joined as parties to these proceedings for one or both of the purposes set out FPR 9.26B. Assessed in this way, I can see considerable advantages to the direct participation of the adult beneficiaries in these proceedings. Indeed, in my judgment, it is desirable to join them as parties for both of the purposes identified in Rule 9.26B. It will clearly assist with the investigation and resolution of the matters and issues raised in this case, as referred to above. Further, it would be consistent with the overriding objective. It will put the court in a better position to deal with the case justly. In my view it is also likely, in fact, to assist with enforcement.
32. It will assist with the investigation and resolution of the matters and issues raised in the case because, as parties, the adult beneficiaries will be subject to direct disclosure obligations deriving from their status as parties. They will be subject to cross-examination. They will be entitled to cross-examine other witnesses and the parties. All the factual and legal issues which they reasonably wish to raise can be ventilated and determined.
33. Joinder of all the named beneficiaries, save the husband's father and mother, in the circumstances of this case would be as close as it is possible to achieve to the direct participation of the trustees. These beneficiaries would all be bound by this court's decision. How, in those circumstances, I ask rhetorically, could the Royal Court of Jersey or the East Caribbean Supreme Court accept arguments to the effect that, having fully participated, the beneficiaries should be permitted to evade the consequences of any order that I might make?
34. In my judgment the direct participation of these beneficiaries will have enabled this court to take fully into account the interests of those who assert that they are the main intended beneficiaries of the relevant trusts. This will make evident that this court's focus is not limited in the manner set out in In re. H; that it is not limited to the husband and the wife but includes the beneficiaries. This would not be achieved in this case, given the extent of the issues, by enabling them merely to make representations rather than by joining them as parties.
35. I do not, accordingly, accept Mr Turner's submissions that it would be inappropriate or unfair to join the adult beneficiaries as parties. I reach this conclusion notwithstanding their support for the position taken by the trustees when declining to participate in these proceedings. The likely benefit of their being joined as parties, in my view, amply justifies the cost of taking that course.
36. As referred to above, from this court's perspective it would have been preferable for the trustees to have participated fully because they are able to act on behalf of all the trusts and their respective beneficiaries. I say this because I do not accept the submission advanced by Mr. Pocock that there might be a conflict between the beneficiaries of the respective trusts which would or might in some way inhibit or disable the trustees from acting on behalf of all the trusts. However, as they have declined to participate, the second best course to adopt is to join the adult beneficiaries as parties.
37. Mr. Turner seeks the imposition of conditions on the basis that this would, as closely as possible, replicate the position as it would be if the trustees were properly participating. This, he submits, is appropriate having regard to the "tactical manoeuvring" which has been adopted by the trustees and the adult beneficiaries, and in particular seeking to take advantage of the position that they would obtain by being parties without the consequences which would flow from the trustees being active parties. I do not agree with that submission. In my judgment any decision, for example as to disclosure, should be made after the adult beneficiaries have been joined as parties and not as a condition of their becoming parties.
38. Mr. Turner also seeks the imposition of "an undertaking by the adult beneficiaries to take all steps within his or her power to facilitate the enforcement of any substantive relief that the court may grant to the wife in the present proceedings". I do not consider it appropriate to fetter a party in that way as a condition of them being joined as a party. The consequences of my judgment will flow from that judgment.
39. Accordingly, I propose to permit the adult beneficiaries to be joined as parties to these proceedings. I do not propose to impose any conditions in respect of their joinder. I will deal with applications for disclosure and any other applications as may be appropriate in due course. However, my current view is that I would be likely to order disclosure of the documents which the BVI court and (by a draft judgment) the Jersey court have given permission to be disclosed to this court. I would, therefore, invite the adult beneficiaries voluntarily to disclose that information in accordance with the permission given by those courts and notwithstanding the cautious manner in which that has been expressed by the Jersey court in its draft judgment.
40. There has been some debate during the course of the hearing as to what disclosure obligations will be imposed on the adult beneficiaries as a result of them becoming parties to these proceedings. In my view, as parties they would be under an obligation to disclose all documents relevant to the issues raised within these proceedings, which would include (a) whether the trusts are or are not nuptial settlements; (b) what are the resources held within the trusts; (c) the manner in which the trustees would be likely to exercise their discretion; and (d) any other issue going to the likely ability to enforce any order which this court might make.

L A T E R

41. Mr. Turner submits that Rule 9.11 of the Family Procedure Rules 2010, when it refers to "any child", is confined to any child of the family. In part he seeks to rely on the definition section of the Family Procedure Rules, which is Rule 2.3. Rule 2.3(1) provides:

""child" means a person under the age of 18 years who is the subject of the proceedings ----"

There are then certain exceptions in the case of adoption proceedings and of proceedings brought under certain specified instruments.

42. This definition does not apply to Rule 9.11 because "any child" within Rule 9.11 is not the subject of the proceedings. Indeed, it is difficult to see how such a child could ever be the subject of the proceedings because the proceedings concerned are an application for an order for a variation of settlement.
43. "Child of the family" is also defined. It has the meaning given to it by section 105(1) of the 1989 Act. But that deals with and is self-evidently confined to the term child "of the family".
44. I reject Mr. Turner's submission that "child" in Rule 9.11(1) must be confined to "child of the family". He submits that the Rule only makes sense if it is so confined. In my view it only makes sense if it is not so confined because it provides a right of representation to any child whose interests or rights might be adversely affected by the proposed variation application - in other words, any potential or actual beneficiary under a settlement. To me, although the derivation of this Rule has not been explored for the purposes of this hearing, it is this interpretation which makes sense.
45. The next point is that Mr. Turner submits that "must" means "may". It is, in some respects, startling that the Rule requires the court to direct that the child be separately represented. However, when attention is focused on the rights that are thereby being given to any such child, they are in fact quite limited. It is not that any such child must be joined as a party; it is simply that they must be separately represented. In my view it is to provide an opportunity for someone to consider by separate representation how any such child's rights or interests should be protected. For example, the decision might be taken that nothing need be done because all the potential arguments will be addressed otherwise.
46. The third point advanced by Mr. Turner is that, in the circumstances of this case, I should be satisfied that the proposed variation does not adversely affect the rights or interests of the child of the family. It is submitted that the child's rights or interests will not be adversely affected because what is proposed is the payment to the wife (the child's mother) of a substantial sum which would be to the child's advantage.
47. I look at it somewhat differently. The proposed variation is, as I understand it, for the payment of a substantial lump sum from the trusts' assets, out of the trusts, for the benefit of the wife. In my view the only correct conclusion for me to draw is that the proposed variation does potentially adversely affect the rights or interests of the child of the family because it would result in a very substantial diminution of the resources held within the trust of which this child is one of the potential beneficiaries. It would potentially have a very real effect on her rights or interests.
48. I am concerned as to who should be speaking on behalf of the child and who should be putting forward arguments as to how the child should be separately represented. Both the minor children were separately represented during the course of the proceedings in Jersey and in the British Virgin Islands by a Jersey advocate who acted on behalf of them both. In my view the trustees should be deciding - or at least putting forward their views - as to who should separately represent the child of the family for the purposes of this application (in other words the wife's financial remedy application, and specifically her application for a variation of settlement). I do not consider it disproportionate or likely to result in any substantial delay if I put over the resolution of how the minor children should be represented to give the trustees an opportunity to express their views of the manner in which the child should be separately represented in accordance with Rule 9.11.

L A T E R

49. I must now determine an application made on behalf of the adult children by Mr. Pocock, QC that the wife should pay their costs of the application to be joined as parties. Mr. Pocock submits that the wife should pay the costs of their successful application. Mr. Turner opposes that application and submits that there should be no order in respect of those costs.
50. During the course of my judgment I said,

"I agree with Mr. Turner … that the adult beneficiaries are, in some respects, seeking to have their cake and eat it. Having supported the stance taken by the trustees they now seek to go behind that stance by applying to be joined as parties to these proceedings. In my view, this is not an attractive position".

It is not an attractive position. Having supported the trustees and thereby, as I also said in my judgment, having sought potentially to provide a later opportunity to join in seeking to frustrate the enforcement of any order - and I keep emphasising any order - that I might make, the beneficiaries in subsequently seeking to participate in these proceedings as parties have sought, in some respects, to have their cake and eat it.

51. I do not propose to make any order for costs in respect of their application. In my judgment the stance they have now taken has been inconsistent with the position they took before the courts in Jersey and the BVI. Even though it was limited to supporting the trustees, it did consist of supporting the trustees in not participating in these proceedings as parties. That is inconsistent with their application to be joined as parties to these proceedings on the basis that their interests are being fundamentally attacked. Their interests are, in my judgment, broadly coincidental with the interests of the trusts more generally. So, the trusts' interests are directly being attacked. It might, therefore, have been considered appropriate for the trustees to participate as parties in these proceedings save for the approach outlined in the judgment of Birt DB in the decision of In Re H Trust.
52. In my judgment, permitting them to be joined is the second best course, resulting from the non-participation of the trustees as supported by the adult beneficiaries. I do not, therefore, consider it just that they should have an order for their costs to be paid by the wife. In my judgment the merits are best met by my making no order as to costs in respect of their application.
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