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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Representation of Credit Suisse re Jasmine Investment Trust [2018] JRC 161 (04 September 2018) URL: http://www.bailii.org/je/cases/UR/2018/2018_161.html Cite as: [2018] JRC 161 |
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Before : |
Sir Michael. Birt, Commissioner, and Jurats Crill and Christensen |
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Between |
Credit Suisse AG (Singapore Branch) |
Representor |
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And |
H M Attorney General |
First Respondent |
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The Viscount |
Second Respondent |
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H1 Trust Company Limited |
Third Respondent |
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And |
Tan Chi Fan |
Intervenors |
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Jason Ray Tan |
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Sandy Tantular |
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Michelle Tantular |
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IN THE MATTER OF A SAISIE JUDICIAIRE OVER THE REALISABLE PROPERTY BELONGING TO ROBERT TANTULAR
AND IN THE MATTER OF THE JASMINE INVESTMENT TRUST
Advocate R. O. B. Gardner for the Representor.
Advocate A. J. Belhomme for the Attorney General.
Advocate M. W. Cook for the Third Respondent.
Advocate T. V. R. Hanson for the Intervenors.
judgment
the COMMISSIONER:
1. This case concerns an application by the Singapore branch of Credit Suisse AG ("the Bank") for variation of two saisies judiciaires ("the saisies") so as to permit the Bank to exercise its power of sale as mortgagee in respect of a residential property situated in Singapore.
2. At the conclusion of the hearing, we granted the relief sought subject to certain amendments. What follows constitutes our reasons for reaching that decision.
3. The detailed background of this matter is set out in a number of earlier judgments including Re Tantular 2014 (2) JLR 25, Tantular-v-AG [2014] JRC 243 and Re Tantular (No 2) 2015 (1) JLR 97, but for present purposes, the background can be shortly stated.
4. The property referred to in paragraph 1 ("the Property") is owned by a BVI company called Jonzelle Limited ("Jonzelle"). The shares in Jonzelle are a wholly owned asset of the Jasmine Investment Trust ("the Trust") of which the Third Respondent ("the Trustee") is the current trustee. The Trust was established by Mr Robert Tantular ("the settlor") on 17th June 2004. It is a discretionary trust governed by Jersey law. The class of beneficiaries comprises the settlor and the Intervenors, who are all members of the settlor's family. A number of the Intervenors reside in the Property.
5. The settlor has been prosecuted in two separate sets of proceedings in Indonesia. The first is referred to as the 1631 proceedings. On 9th August 2013, this court granted a saisie judiciaire ("the first saisie") in respect of those proceedings. Following the judgments in the two Re Tantular cases referred to above, the first saisie is restricted to US$ 1.7m in respect of four gifts to the Trust alleged to have been made by the settlor after the commencement of the criminal conduct in Indonesia which gave rise to the 1631 proceedings.
6. The settlor has also been prosecuted in Indonesia pursuant to what are known as the 210 proceedings. The criminal conduct in that case is said to precede the date of the Trust with the consequence that all gifts to the Trust fall within the definition of 'realisable property' in the Modified Law. Accordingly all the assets of the Trust are potentially liable to confiscation in relation to the 210 proceedings. This court granted a further saisie ("the second saisie") in support of the 210 proceedings on the 3rd September 2014. In Re Tantular (No 2) the court rejected an application that it was an abuse of process to seek the second saisie in reliance upon the 210 proceedings.
7. The upshot is that there are at present two saisies which cover the Property.
8. On 9th June 2008, Jonzelle entered into a credit facility with the Bank in the sum of S$ 7,475,000. That facility was secured by a legal mortgage dated 24th November, 2008, granted by Jonzelle to the Bank over the Property. The mortgage is governed by the law of Singapore.
9. According to the Bank - and this does not appear to be disputed - Jonzelle is in default with the result that the amount outstanding pursuant to the facility is payable in full. The information before the court suggests that the outstanding liability as at 21st July, 2017, was S$ 4,176,191.43. Jonzelle appears to have been in default since December 2013 and the Bank now wishes to exercise the powers which are available to it under the law of Singapore in order to realise its security and obtain repayment of the amount owed to it by Jonzelle. It appears from the mortgage documents that, in the event of default, the Bank is given power to sell the Property, although Advocate Gardner was unable to assist us as to whether any application to a Singapore court was required before such power of sale could be exercised or whether the Bank was free to sell the Property without any such application.
10. The Bank wishes to be able to exercise such powers as are available to it under the mortgage and the law of Singapore to realise its security and obtain repayment of the amount owed to it by Jonzelle. It therefore requests the court to vary the saisies so as to permit the Bank to sell the Property, reimburse itself out of such sale proceeds in respect of the capital and interest due under the facility together with all expenses incurred in enforcing and realising its security, and then remit the balance of the sale proceeds to the Viscount, who holds the assets of the Trust pursuant to the saisies.
11. When the representation was first tabled, the court ordered that the Attorney General, the Viscount and the Trustee be convened. It also ordered that the beneficiaries of the Trust be notified that they could apply to intervene if they wished. The Intervenors have subsequently applied to intervene and that application was granted.
12. The Attorney General, the Viscount and the Trustee did not oppose the relief sought by the Bank. Advocate Hanson on behalf of the Intervenors raised four points for consideration.
13. Regulation 2(1) of the Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 ("the 2008 Regulations") provides that the Proceeds of Crime (Jersey) Law 1999 ("the 1999 Law") shall apply to external confiscation orders with the modifications set out in the Schedule to the 2008 Regulations. The 1999 Law as so modified is referred to as the 'Modified Law'.
14. Having provided at Article 16(4) that, on the making of a saisie, all the realisable property held by the defendant in Jersey shall vest in the Viscount, Article 16(5) of the Modified Law goes on to provide:-
15. Article 16(6) goes on to provide:-
16. Advocate Hanson submitted that a mortgage over foreign real property, such as in the present case, does not fall within Article 16(5). A mortgage is not a hypothec, which is an expression clearly limited to a hypothec under the Loi (1880) Sur La Propriété Foncière. Similarly, the expression 'security interest' is clearly intended to refer to a security interest over intangible moveable property created pursuant to the Security Interests (Jersey) Law 2012 or its predecessor the Security Interests (Jersey) Law 1983.
17. We have not heard full argument on this aspect and, although Crown Advocate Belhomme was inclined to agree with Advocate Hanson's submission, he wished to reserve his position for any future occasion where the point arose. Nevertheless, as at present advised, we are inclined to agree with Advocate Hanson. Accordingly we assume for present purposes that the whole of the Property is caught by the saisies and it is necessary to consider the power to vary under Article 16(6).
18. However, the principle underlying Article 16(5) is very clear. What is intended to be caught by a saisie and to be available for confiscation in the event of registration of an external confiscation order is the equity in the asset. The operation of the Modified Law is not intended to prejudice the position of a bona fide lender, such as a bank, which holds security over the asset in question. Lenders such as banks should be able to realise their security and obtain repayment of what they are owed, with only the equity in the property remaining available for confiscation. Similarly, when property has been realised by the Viscount, the court should exercise its power under Article 20(1) to direct that the bank should first be paid out of the sale proceeds with only the balance (reflecting the offender's equity in the property) being applied towards satisfaction of any external confiscation order.
19. It follows that, in our judgment, the starting point where the court is satisfied that the application is being made by a bona fide, arm's length third party with security over foreign property which is subject to a saisie, should be that the saisie should be varied so as to allow the secured party to enforce its security in accordance with its terms. We see no reason not to adopt that approach in the present case. Jonzelle is in default. The Bank has been seeking to recover its money for some time. It should now be permitted to realise its security over the Property in accordance with such rights as it has under the documents creating the mortgage and Singapore law.
20. Advocate Hanson submitted that the wording proposed by the Bank in its representation could enable it to recover more by way of costs and expenses related to enforcement of the mortgage than is permissible under the law of Singapore. Advocate Gardner readily conceded that this was not the intention. What the Bank wished to do was to recover all the costs and expenses (including legal costs) which it was entitled to recover under the law of Singapore, whether pursuant to the constitutive documents or any overriding principle of Singapore law (e.g. as to the reasonableness of any such costs and expenses). We agreed that our order should contain a proviso to clarify that the Bank would only be entitled to deduct all costs and expenses permissible under the law of Singapore. That is because the Bank's right to recover costs and expenses is governed entirely by the terms of the mortgage, subject to any overriding principle of the law of Singapore as the proper law of the mortgage. The fact that this court is varying the saisie so as to allow enforcement of the mortgage is not intended to have any effect on the amount of costs and expenses which can be recovered by the Bank pursuant to the mortgage.
21. Although the Bank has on a number of occasions indicated the total amount of capital and interest outstanding, it has not previously been asked for (and therefore has not given) a breakdown of how these sums have been calculated (i.e. the amount of capital and the rates of interest applied and over which periods). The court agreed that it was reasonable for this information to be provided and that the Bank should also provide full particulars of the costs and expenses incurred so far and which it would be seeking to deduct from any sale proceeds. We directed the Bank to provide this information to all the other parties within fourteen days.
22. Advocate Hanson submitted that an order for variation of the saisies should be directed only to take effect on a certain date which would give the beneficiaries time to review the disclosure provided by the Bank and that it should then be further suspended should the beneficiaries or any other party apply to the Royal Court.
23. We agreed that it was reasonable for the parties to have time to consider the detailed information provided by the Bank and accordingly directed that the variation should only take effect twenty-eight days after provision of the information by the Bank. This is a mortgage governed by the law of Singapore and the question of the amount outstanding or recoverable pursuant to the mortgage is a matter entirely for the courts of Singapore. The suspension for twenty-eight days would enable any party aggrieved to make an application to the Singapore court if they were so advised. We cannot, as at present advised, see any basis for an application to this court in connection with a dispute as to the amount properly recoverable under the mortgage.
24. Advocate Hanson submitted (correctly) that it was in the interests of all parties that the highest possible price for the Property should be obtained. He further submitted that there was a risk that a purchaser might be put off by the suggestion that the Property represented the proceeds of crime or was in some way vulnerable to attack because it was being sold (other than by the Viscount) in circumstances where it was subject to a saisie and potentially vulnerable to enforcement of an external confiscation order.
25. In our judgment, there is no actual risk of the purchaser's title being vulnerable under Jersey law. It is true that the Property is currently vulnerable to enforcement of any external confiscation order which is registered at the instance of the Indonesian authorities. However, as discussed earlier, what is available to satisfy a confiscation order is the equity in the Property. Under the proposed arrangement, that equity will be transmitted to the Viscount following any sale of the Property. In effect, one will substitute the equity in the Property by an amount of cash representing that equity. It will then be that cash which (potentially) represents the proceeds of crime. In those circumstances, as a matter of Jersey law, there can be no possible blot on the title of a bona fide purchaser for value (assuming that the purchase price itself is not tainted by criminality). Nevertheless, we can understand the possibility that a purchaser might fear such a consequence and accordingly agreed that the Act ought to include wording that would comfort such a purchaser as this might assist in achieving the best price.
26. Crown Advocate Belhomme agreed that the legal position was as stated above and was amenable to the suggestion of a form of comforting wording but wished to reflect carefully on the exact nature of any such comfort which could be given. In the circumstances, we directed that the Act should contain comforting wording agreed by the parties with liberty to apply in the event of difficulty. The wording subsequently agreed by the parties was as follows:-
"Assuming the Property is bought by a bona fide third party purchaser for value and the acquisition monies are not themselves tainted by criminality, the Property would not, as a matter of Jersey law, thereafter be taken to represent the proceeds of crime."
27. In summary, we were of the clear opinion that the saisies should be varied so as to allow the Bank to enforce its security in accordance with the terms of the mortgage and to recover such sums it is entitled to recover in accordance with the law of Singapore. Subject to the various points which we have discussed above, we therefore granted the Bank's application.
28. The constitutive documents of the mortgage entitle the Bank to a 'full indemnity' in respect of its costs and expenses (including legal expenses) in connection with the enforcement of its security. In the circumstances, the Commissioner ordered that the Bank should be entitled to recover its costs on the indemnity basis out of the proceeds of sale, such costs to be taxed if not agreed. This order was of course without prejudice to any right of the Bank under the law of Singapore to recover any difference between costs on the indemnity basis (under Jersey law) and any costs which it is entitled to recover under the law of Singapore pursuant to the provision in the documents for a 'full indemnity' in respect of such costs and expenses.
29. The Commissioner further ruled that all the other parties should have their costs out of the assets of the Trust; the Trustee on the usual trustee indemnity basis and the other parties on the indemnity basis (to be taxed if not agreed), and all such costs to be recoverable out of the proceeds of sale of the Property once received by the Viscount.
