Sherborne Corporate Services Ltd & Ors v Positive Approach Services Ltd & Ors

A debtor who fails effectively to transfer assets in satisfaction of a contractual or deed-based contribution remains liable to pay the underlying debt. Alleged misrepresentations must be proved on the evidence and construed in their factual and documentary context. General statements that pension assets are sheltered from tax do not ordinarily represent that a company’s separate corporation tax liabilities or filing obligations are removed. Under Seychelles law, the expression “trust business” in an international business company’s memorandum concerns trust-formation and administration services, not the company’s capacity to act as trustee. Under Guernsey’s fiduciaries legislation, a regulatory breach does not of itself affect civil liability.

The claimants, trustees and related parties, sued to enforce a deed under which Kenneth Williams acknowledged a £1 million contribution to an occupational pension plan and purported to satisfy it by transferring shares in Positive Approach Services Ltd. The defendants did not attend trial. Their pleaded case included misrepresentation, breach of contract, illegality and invalidity arising from alleged restrictions on the claimants’ powers under Seychelles law and licensing requirements under Guernsey law.

The central issues were whether the shares had been effectively transferred, whether the alleged representations were made and relied upon, and whether the trustees’ corporate powers or regulatory status invalidated the deed or supplied a defence.

1. Debt and share transfer. The claim succeeded and the counterclaim was dismissed. The evidence and documents did not establish an effective transfer of all the shares said to satisfy the contribution. Even on the defendants’ case, that would leave Mr Williams liable to discharge the £1 million debt by payment in money. Judgment was therefore appropriate under clause 1 of the deed.
2. Misrepresentation. The defendants did not call evidence supporting the pleaded express representations. The evidence of Mr Everett was accepted. Read in context, the scheme brochure represented tax treatment of assets within the pension scheme, not immunity of Positive Approach Services Ltd from corporation tax or an exemption from filing tax returns. The alleged representation concerning mitigation of capital gains tax on the transfer was likewise not established.
3. Seychelles law. The expression “trust business” in the memoranda of association was construed as referring to services connected with forming, registering and administering trusts. It did not prevent the Seychelles companies from acting as trustees of an international or foreign trust. The defendants’ contrary case was rejected.
4. Guernsey law. On the factual case advanced, the claimants were resident outside Guernsey and acted without remuneration, so no licence was required under the Fiduciaries Law. In any event, section 1(4) provided that carrying on a regulated activity in breach of the licensing provision did not of itself affect civil liability or make the deed void or voidable.
5. The court would, if necessary, have upheld the assignment of the claim to the additional trustees, although it did not need finally to determine that issue.

Further submissions were invited on interest, scheme charges and costs.