PT-2023-000944 - [2025] EWHC 407 (Ch)

By an order of the Royal Court of Guernsey dated 29 March 2017 the Public Trustee of the Bailiwick of Guernsey (“the Public Trustee” or the “Claimant”) was appointed as trustee of five Guernsey based pension schemes referred to collectively in this judgment as the IXG Schemes. Mr Brian Williams currently holds the office of Public Trustee having replaced Mr Luis Gonzalez during the course of this claim. The Public Trustee’s appointment was initially for a period of six months but was extended until further order by an order of the Royal Court of Guernsey dated 22 September 2017 (the “March Appointment Order” and the “September Appointment Order”).

The Public Trustee’s powers and duties are set out in the Public Trustee (Bailiwick of Guernsey) Law 2002. Those powers and duties are broadly similar to that of the public trustee in England & Wales under the Public Trustee Act 1906.

This was the final disposal hearing of the Public Trustee’s Part 8 claim for vesting orders as trustee of the IXG Schemes under the Trustee Act 1925 ss.44 and 51 in respect of a number of real property assets and investment portfolio accounts (“the vesting application”) (“the Assets”).

The First and Second Defendants were the trustees of the IXG Schemes prior to the March Appointment Order (“the Former Trustees” or “Sherborne” or “Kenilworth”).

Sherborne was incorporated in the Seychelles on 22 July 2003. A certificate of Official Search of the Register of International Business Companies in the Seychelles dated 12 November 2024 confirmed that Sherborne was not of good standing for non-payment of the annual fees for 2024. On 10 December 2024, a Certificate of Incumbency was issued by A.C.T Offshore Limited as registered agent for Sherborne which confirmed that all fees had been paid up to date. It further confirmed that the present director of Sherborne was IXG Services Limited a Cypriot company (“IXG Services”) and that Roger Paul Mewis was the present shareholder of Sherborne (“Mr Mewis”).

Kenilworth was incorporated in the Seychelles on 24 July 2003. A certificate of Official Search of the Register of International Business Companies in the Seychelles dated 12 November 2024 confirmed that Kenilworth had been struck off the register for non-payment of the annual fees over a period of years.

Mr Mewis is a director of IXG Services, the corporate director of Sherborne. The Claimant believes that Sherborne and Kenilworth are owned beneficially by Mr Mewis and his brother.

The Third Defendant (“Temple”) is an English registered company of which Mr Mewis is both sole director and shareholder. Temple hold some of the Assets as nominee for the Former Trustees.

The Former Trustees and Temple (together the “Defendants”) have not had any legal representation during the course of this claim. Mr Mewis sought to represent the Defendants with the assistance of a McKenzie Friend.

Mr Mewis is in poor health. To assist the Defendants and Mr Mewis, all the hearings including those on 1 November, 12 November and 7 and 8 January were hybrid. This allowed Mr Mewis and his McKenzie Friend to attend the hearings remotely from Devon.

Mr Mewis’s poor health was the reason for the Defendants’ application to adjourn the final hearing listed to commence on 12 November 2024. On 1 November 2024 I refused the Defendants’ application to adjourn the original final hearing and made an adverse costs order against them.

The Defendants failed to attend the final hearing on 12 November 2024 due to a deterioration in Mr Mewis’s poor health. I adjourned the final hearing on terms which included an unless order requiring the Defendants to pay an outstanding adverse costs order made in September 2024. I made a second unless order on 18 November 2024 in respect of a further unpaid costs order. Unless the two costs orders were paid by the Defendants by 4pm on 29 November 2024 they would be debarred from defending the claim.

The effect of the debarring order was set out in clear and unambiguous terms in both debarring orders:

“…For the avoidance of doubt, if this order takes effect then:

(i)

It will prohibit the Defendants from defending the claim including relying on any evidence whether in witness statement form or in correspondence and/or making any submissions in defence of the claim.

(ii)

The Claimant will still be required to prove their claim”

In the event that the Defendants complied with the unless order I had given directions about the steps which the Defendants had to take, and by when they had to take them, if they sought permission for Mr Mewis to represent them at the adjourned final hearing. The Defendants did not comply with those directions.

On 7 January 2025, the Claimant argued that the unless order had taken effect and the Defendants were debarred. I gave Mr Mewis limited permission to represent the Defendants to explain why the Defendants were not debarred. For the reasons I gave in a separate oral judgment on 7 January 2025 I determined that the Defendants had been debarred from defending the claim from 4pm 29 November 2024. I refused the Defendants’ application for permission to appeal on 7 January 2025. This was recorded in an order dated 15 January 2025.

No application for permission to appeal has been made in respect of any of the 1 November 2024, 12 November 2024 or 18 November 2024 Orders. The time for doing so has long since passed. No renewed application for permission to appeal the 15 January 2025 Order has been made and the time for doing so has now expired.

Mr Mewis and his McKenzie Friend continued to observe the proceedings on 7 January 2025. On 8 January 2025 neither Mr Mewis nor his McKenzie Friend joined the hearing through the remote link. Neither Mr Mewis, his McKenzie Friend nor any other representative of the Defendants made contact with the court to say they would not be attending or that they were having difficulties joining the hearing remotely or at all. There were other remote participants and no obvious technical issues from the court’s perspective. The Defendants were therefore neither present nor represented on 8 January 2025.

If the Public Trustee can prove that the Assets are trust assets, then the Former Trustees (and their nominees) as retiring trustees must transfer the Assets to the Public Trustee, as replacement trustee, and must execute anything required for those transfers (see Trustee Act 1925 s.37).

If they do not then the Public Trustee can apply for a vesting order under the Trustee Act 1925 ss.44 and 51. Section 44 provides for vesting orders of land, and s.51 for vesting orders of personal property and in particular ss. 44(i) and 51(1)(i) apply:

“44.

In any of the following cases, namely:

(i)

Where the court appoints or has appointed a trustee, or where a trustee has been appointed out of court under any statutory or express power…

the court may make an order (in this Act called a vesting order) vesting the land or interest therein in any such person in any such manner and for any such estate or interest as the court may direct, or releasing or disposing of the contingent right to such person as the court may direct:

Provided that—

(a)

Where the order is consequential on the appointment of a trustee the land or interest therein shall be vested for such estate as the court may direct in the persons who on the appointment are the trustees…

51(1) In any of the following cases, namely: -

(i)

Where the court appoints or has appointed a trustee, or where a trustee has been appointed out of court under any statutory or express power…”

the court may make an order vesting the right to transfer or call for a transfer of stock, or to receive the dividends or income thereof, or to sue for or recover the thing in action, in any such person as the court may appoint

Provided that—

(a)

Where the order is consequential on the appointment of a trustee, the right shall be vested in the persons who, on the appointment, are the trustees…”

In principle therefore provided that the court is satisfied that the Public Trustee is the current trustee of the IXG Schemes, and the Assets are trust assets the court has the power and jurisdiction to vest those assets in the Public Trustee. Indeed, the power to do so is not limited to a trustee who has been appointed by this court but also applies to a trustee who has been appointed “out of court under any statutory or express power.” The Claimant asks me to exercise that power and jurisdiction to vest the Assets in the Public Trustee.

But in any event on 27 September 2017 the Royal Court of Guernsey made express provision for the transfer of all trust assets of the IXG Schemes to the Public Trustee (“the Surrender Order”):

“1.

That the Former Trustees shall immediately take all such steps as are necessary to surrender to the Public Trustee all trust property held by or vested in or otherwise under the control of the Former Trustees or any one thereof;

2.

That the Former Trustees shall complete the surrender of all trust property held by or vested in or otherwise under their control to the Public Trustee by no later than 4pm on 30 November 2017;”

The Surrender Order was made despite the Former Trustees’ opposition and despite their argument that they had incurred liabilities as trustees of the IXG Schemes and should be allowed to retain trust assets to meet those liabilities. The recitals defined Liabilities and recorded:

“ AND UPON READING the First Affidavit of Catherine Rowe sworn on 22 June 2017, the Third Affidavit of Roger Paul Mewis sworn on 30 August 2017, the Third Affidavit of Catherine Rowe sworn on 6 September 2017, the Fourth Affidavit of Roger Paul Mewis sworn on 20 September 2017 and the email from Ashfords LLP to Ferbrache & Farrell LLP dated 22 August 2017 which detailed specified liabilities (the Liabilities) said to have been incurred by the Second and Third Respondents in their capacities as the (former) trustees of the pension schemes specified at Schedule 1 of the order of the Royal Court dated 29 March 2017 (the Former Trustees)”

At paragraph 3 the Surrender Order continued:

“3.

That with reference to the Former Trustees' requirement for the provision of reasonable security pursuant to section 43(1)(b) of the Trusts Law, following the transfer of trust assets by the Former Trustees in accordance with orders 1 and 2 (above) and at all times prior to the resolution of the Liabilities (whether by agreement between the parties or payment by the Public Trustee from trust assets or by order of the Royal Court), the Public Trustee shall retain trust assets totalling not less than £4,200,000.”

The Surrender Order therefore determined that any security to which the Former Trustees may have been entitled under the Trusts Law (Guernsey) 2007 (“the Trusts Law”) s.43(1)(b) was to be provided by the Public Trustee retaining £4.2m pending resolution of the Liabilities. Section 43(1)(b) provides for a former trustee to be provided with reasonable security before surrendering trust property. By the Surrender Order the court had determined what that security was and what was reasonable. The Former Trustees were not thereafter entitled to hold the Assets as security for the Liabilities nor were they entitled to therefore retain the Assets on the basis of a lien. Indeed, s.44 of the Trusts Law provides only for a non-possessory lien over trust property in respect of expenses and liabilities properly incurred, which could not and did not entitle the Former Trustees whether in 2017 or now to continue to retain the Assets in breach of the Surrender Order, s.44 itself or their duties as trustees.

The Former Trustees do not deny that the Assets were all originally trust assets and save in relation to four of the investment portfolio providers’ accounts the Former Trustees’ evidence is that they remain trust assets.

The Former Trustees’ resistance to the transfer of the Assets other than the four investment portfolio providers’ accounts was based on what they considered to be their continued entitlement to retain the Assets by way of lien or security in respect of the Liabilities and subsequent liabilities they say they have incurred following their removal as trustees. They were not entitled to do so whether as a consequence of the Surrender Order or by reference to the Trusts Law.