Kent v Paterson-Brown & Anor

Where an alleged agency relationship is governed by the Rome Convention, an implied choice of law requires a real choice shown with sufficient clarity. Without such a choice, the characteristic-performance presumption applies unless the circumstances clearly show a closer connection with another country.

The existence and parties to an alleged agency are determined objectively from the circumstances known when the relationship was formed. Clear corporate documentation may establish that an intermediary contracted for a company rather than personally. A trust or fiduciary claim cannot succeed against a person who neither received the money nor held legal or beneficial title to the shares. A fiduciary duty to disclose information is not freestanding. A tortious duty under Swiss law requires inaccurate or misleading information.

John Kent brought claims against William Paterson-Brown for an account, alleging personal agency, purchase trusts, share trusts, fiduciary duties and an advisory duty in relation to investments made between 2005 and 2009. He also claimed against Timothy Paterson-Brown in knowing receipt concerning two payments made to a company account.

The central issues were the governing law of the alleged relationships, whether William Paterson-Brown acted personally or for corporate entities, whether he became trustee or custodian of the funds or shares, whether he owed an advisory duty, and whether Timothy Paterson-Brown beneficially received trust property.

1. Agency and governing law. The court held that the Rome Convention governed the alleged agency relationship. There was no real implied choice of English law under Article 3. The characteristic performance was to be carried out by William Paterson-Brown, habitually resident in Switzerland, and the evidence did not clearly show a closer connection with England under Article 4.
2. Under Swiss law, the court first considers whether there was an actual common intention to be legally bound. If not, it applies an objective test based on how a reasonable person in the recipient’s position would understand the declarations and surrounding circumstances. Applying that test, the contemporaneous documentation identified Asia IT as the contracting party. The claim that William Paterson-Brown personally acted as agent therefore failed. The court would have reached the same conclusion under English law.
3. Purchase and share trusts. The law applicable to a constructive or resulting trust follows the law applicable to the relevant cause of action. Swiss law therefore governed the alleged purchase trusts, which could not arise under Swiss law. In any event, the purchase monies were paid to corporate accounts and were not received by William Paterson-Brown. The shares were held by nominee companies directly for John Kent, not by William Paterson-Brown or through a sub-trust. The trust and Swiss custodian claims consequently failed.
4. Advisory duty. There was no freestanding fiduciary duty to disclose information. The pleaded case was in substance a claim based on the underlying no-profit or no-conflict duties, which did not arise because no fiduciary relationship was established. Swiss tort law did not impose liability for mere non-disclosure in this case. It concerned inaccurate or misleading information, which was not alleged. The proposed liability based on trust was unpleaded, uncertain in status and unsupported by the facts.
5. Knowing receipt. A claim in knowing receipt required disposal of assets in breach of fiduciary duty, beneficial receipt of traceable assets and knowledge of the breach. The payments to TPRC were made for the purpose of purchasing shares and were not shown to have been made in breach of trust. Timothy Paterson-Brown was not shown to have beneficially received them.
6. The claims against both defendants were dismissed.

First-instance judgment. No earlier appellate decision is stated in the judgment.