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Babbé breaks new ground in Guernsey Royal Court costs decision
Babbé has successfully obtained an order that a Defendant pay interest on the costs which he has to pay following judgment being granted against him. Babbé acted for a major trust company in a claim against an Italian national to recover monies retained by the Defendant in breach of his duties as a fiduciary agent. Judgment with interest was awarded against the Defendant in excess of €3 million. Advocate Ian Swan successfully argued that the Defendant should not only be ordered to pay the Trustee’s costs, but also to pay interest on those costs which the Trustee had already actually paid. This is believed to be the first time that the Royal Court has exercised a discretion to award interest on costs. In doing so it took account of the wide discretion afforded by rule 82 of the Royal Court Civil Rules and also of the more specific provisions of Rule 43.3(6)(g) of the English Civil Procedure Rules and cases under that sub-rule decided in the English courts.
Ian Swan commented: “This decision demonstrates the Royal Court’s willingness to apply its rules flexibly to achieve justice. Without an order for interest on costs, the trustee would have lost the investment yield on monies which it had historically had to pay out in legal fees as the case advanced to trial.”
Babbé Advocates act on successful appeal by trustees to Privy Council
Ian Swan and Simon Howitt, both partners of the firm, acted for Spread Trustee Company Limited in their successful appeal to the Privy Council. In the case of Spread Trustee Company Limited v Hutcheson and others (2011) UKPC 13 the Privy Council had to decide whether it was possible, before the coming into force of the Trusts (Guernsey) Law, 1989, for the terms of a Guernsey trust to exempt its trustees from liability for gross negligence. Both the Royal Court and the Court of Appeal decided that it was not, but the Privy Council, disagreed.
In this landmark decision, their Lordships, by a majority, held that the Guernsey law pre-1989 was the same as the English law, which permits the exemption of trustees from liability for gross negligence. In so doing, the Privy Council confirmed that, in areas where Guernsey’s trust statutes are silent, Guernsey law will generally follow English principles. The Court of Appeal had decided that Guernsey should follow Scottish law, which does not permit the terms of a trust to exclude liability on the part of its trustees for gross negligence.
A copy of the Privy Council’s decision is available at http://www.jcpc.gov.uk/news/latest-judgments.html.
Babbé wins another award
Prestigious publication Finance Monthly has just announced its law awards for 2011. Babbé have been announced as the 'Winner' in the categories of 'M&A Law Firm of the Year (Channel Islands)'. This award follows a series of industry-wide accreditations for the services Babbé provide to the offshore finance sector.
Synergy's legal claims against RGI struck-out by the Guernsey Court
R.G.I. International Limited, (a Babbé client) were successful in defending against legal proceedings brought against them by Synergy Classic Limited ("Synergy"). The claim was struck-out by the Royal Court of Guernsey on the grounds that Synergy has no standing to bring a claim for unfair prejudice. Proceedings against Boris Kuzinez, RGI's Chief Executive, Jacob Kreisler, the Company's Chairman and D.E.S. Commercial Holdings Limited (D.E.S.) were also struck-out. As a result the entire substantive application for unfair prejudice brought by Synergy has been struck-out and there are now no outstanding legal claims in Guernsey against RGI or any of its directors. Synergy has further been ordered by the Court to pay RGI's legal costs, as well as those of Mr Kuzinez and D.E.S.
UK HMRC announcement on overseas pensions will not affect Guernsey QROPS
UK HMRC announcement on overseas pension scheme tax avoidance will not affect pensions payable to UK residents from Guernsey pension schemes including QROPS.
On 6 April 2011 HM Treasury announced it will introduce legislation to prevent the use of an unintended tax loophole to prevent tax avoidance through the interaction of relief for pension savings and the provisions of certain double taxation arrangements.
The new legislation, which will take effect from 6 April 2011, will to the extent the relevant double taxation treaty, does not already so provide override the provisions of the double taxation arrangement with another territory so that the payment of pensions (or other similar remuneration) may be taxed in the UK where:
- “the payment arises in the other territory;
- it is received by an individual resident of the UK;
- the pension savings in respect of which the pension or other similar remuneration is paid have been transferred to a pension scheme in the other territory; and
- the main purpose or one of the main purposes of any person concerned with the transfer of pension savings in respect of which the payment is made was to take advantage of the double taxation arrangement in respect of that payment by means of that transfer.”
While the double taxation arrangements between certain territories and the UK could confer a tax advantage on individuals who have transferred pension savings from the UK to that territory this will not, on the basis of the announcement, be the case in respect of the UK/Guernsey double taxation arrangement (“UK/G DTA”) since the UK/G DTA already provides that a pension payable from a Guernsey pension scheme to an individual who is resident in the UK will be liable to UK tax on that pension.
For reference paragraph 5A of the UK/G DTA provides that:
“Subject to the provisions of paragraph 6 [which solely concerns the payment of government pensions], pensions and other similar remuneration paid to an individual who is a resident of one of the territories shall be taxable only in that territory.”
For more information please contact Nicholas Donnithorne (n.donnithorne@babbelegal.com) or 01481 746179)
Babbé strengthens its Trust team
Babbé are very pleased to announce the appointment of Nicholas Donnithorne a highly experienced trust and pensions lawyer. Nicholas has a wealth of experience in the trusts and pensions sector and has previously worked for several leading London firms including top 20 Global Law firm McDermott Will and Emery where he was a partner. His practice largely involves advising trustees, employers, beneficiaries and other professionals involved in pensions on the establishment, ongoing administration, winding-up of pension schemes as well as regulatory compliance and the development of new products, but he has also advised governments and industry bodies on structural pension reform.
“Babbe are one of the leading law firms in Guernsey and have an enviable reputation within the Trusts and pensions sector. Nicholas’s arrival will enhance further our reputation in this area and provide more strength and depth to our overall capabilities” Andrew Laws, Managing Partner, Babbé
Robert Varley joins team at Babbé
Babbé are pleased to announce the appointment of funds specialist Robert Varley to the team. Robert, a highly successful offshore funds specialist who was previously managing partner of Walkers’ Dubai office, says “I am delighted to be joining Babbé and look forward to playing my part in the continued growth of Guernsey’s funds industry”.
Andrew Laws, Managing Partner of Babbé said, “We are delighted to be able to welcome Robert aboard and I am certain he will prove to be an extremely valuable member of our team”
“Robert has worked on a large number of both open- and closed-ended investment structures over the years, with a particular learning toward private equity, real estate and infrastructure funds. He is particularly noted for his pioneering work on Islamic funds, which led him to a five year stint in the Middle East”.
“It was fun to be involved in the creation of a new industry in that region” says Robert “but as a practitioner it is altogether more satisfying to be in an environment where the industry has had over forty years of experience, and enjoys an unsurpassed reputation for combining intelligent regulation with innovative and flexible structures. As the global funds industry’s recovery continues, it seems that increasing numbers of managers and investors feel the same way”.
Guernsey - A Leading Funds Domicile
Guernsey’s position as a leading funds domicile was recently illustrated by the announcement that 2010 had seen a 39.7% rise in funds managed or administered from the Island to £257.4 billion. Guernsey is the leading domicile for offshore companies listed on the London Stock Exchange.
