Walbrook Trustees (Jersey) Ltd & Ors v Fattal & Ors

A broadly worded joint venture restriction on assignment may catch the vesting of a beneficial share in newly appointed trustees. An express exception for changes of trustees must be given its full effect, including successive changes where the wording supports that construction. A trust instrument requiring nominees to act on each owner’s written instructions does not imply a requirement of unanimity merely because the nominees are jointly appointed. A receiver and manager will not be appointed to secure a sale where independent trustees can act through the companies’ ordinary governance and no present jeopardy or other good reason for intervention is shown.

The proceedings concerned the ownership and management of Berkeley Court, held through BCIL, BSL and BS2K for interests associated with the Delta, Sofaer, Sharet and Fattal Trusts. The parties proceeded on the interim assumption that the 1989 Joint Venture Agreement remained effective.

The court determined three applications: whether the Sharet Trust’s interest could be vested in new trustees without further consent; whether BSL’s membership could be restructured so that the trusts’ interests were separately represented; and whether a receiver and manager should be appointed to procure a sale of the property and manage the companies pending sale.

1. JVA transfer issue. Clause 12 of the Joint Venture Agreement was drafted in exceptionally wide terms. The vesting in new trustees of the entitlement to receive the benefit of an undivided share involved an assignment and therefore fell within the prohibition on sale, assignment or encumbrance without the other parties’ consent. The Addendum was not merely declaratory: paragraph (i) authorised transfers on the appointment of new trustees of the Delta and Sofaer Trusts.
2. Paragraph (ii) of the Addendum, permitting the Fattal brothers and Selim Dangoor to transfer their shares to trustees for themselves or their immediate families, extended to later transfers following the appointment of new trustees. The court was willing to make the requested declaration.
3. BSL membership issue. Clause 2 of the BSL Trust required Walbrook Jersey and Witco, as nominee members, to act on the written instructions of the relevant Owner concerning that Owner’s proportion of the membership and its associated benefits, including voting rights and distributions. The instrument did not require unanimity merely because there were only two members. If separating the membership rights and increasing the number of members was necessary to give effect to the trust, the court could direct that course in administering the trust. The requested declaration was therefore appropriate.
4. Receiver and manager application. Although the court accepted jurisdiction to appoint a receiver over English-located assets of a foreign company, neither BSL nor BS2K was a party to the application. More importantly, following the appointment of independent trustees to the Non-Fattal Trusts, the companies could conduct the proposed sale through their directors. The parties’ common objective of achieving a sale, the absence of present jeopardy, and the evidence of JTC’s intentions meant that past disputes, mistrust and speculation about future misconduct did not justify intervention in the companies’ internal management. The receiver and manager application was dismissed.

The judgment was a first-instance decision. It records earlier procedural orders and appeals in related proceedings, including a Court of Appeal decision which left the Sharet issue live, but no appellate decision from this judgment.