Quan v Bray & Ors [2014] EWHC 3340 (Fam)

[2014] EWHC 3340 (Fam)Case No FD12D083916
IN THE HIGH COURT OF JUSTICE
FAMILY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 27/10/2014
Before
MR. JUSTICE COLERIDGE/ Sir Paul Coleridge
Between
LI QUANPetitioner(1) WILLIAM STUART BRAYRespondents(2) MAITLAND(MAURITIUS)LTDRespondent(3)CHINESE TIGERS SOUTH AFRICA TRUSTRespondent(4) SAVE CHINESE TIGERSRespondent(5) RALPH EDMUND BRAYRespondent(6) CONSERVATION FINANCE LIMITEDRespondent
Mr. Richard Todd QC and Ms. Lily Mottahedan (instructed by Messrs. Vardags) for PetitionerWilliam Stuart Bray appeared in person for in personMr. Richard Harrison QC, Mr. David Eaton Turner and Ms. Samantha Ridley (instructed by Lewis Silkin LLP) for Save China’s TigersHearing Hearing dates: 9-20 December 2013 and 19 June–8 July 2014
JudgmentThis judgment is being handed down in private on 27 October 2014. It consists of 28 pages (plus two annexures of 18 pages) and has been signed and dated by the judge. The judge hereby gives leave for it to be reported from 27 October 2014.Mr Justice Coleridge / Sir Paul Coleridge :
[1]Tigers are an endangered species and the Chinese Tiger (panthera tigris amoyensis), in particular, no longer exists in the wild at all. Li Quan (the wife), who was born in China, has, since at least 1999, been passionate about not only saving the Chinese tiger from disappearing from the planet altogether but also breeding them for reintroduction into wild reserves in China. To that end she has invested huge amounts of time and energy and some money.[2]The wife met Stuart Bray (the husband) in 1990 and he too, over time, became infected with the same passion for the cause of saving the Chinese tiger. And he too has invested even greater sums of money in the venture (loosely and frequently described as the Chinese Tiger Project) and a great deal of his time and energy. The Government of the People’s Republic of China are (via their government agencies) completely behind their work and have signed an agreement (The Framework Agreement) in 2002 which forms the basis of the ongoing cooperation between the husband and wife, the fourth Respondent (Save China’s Tigers; SCT UK) and China. The other contracting party to the Framework Agreement apart from the Chinese government is a trust established in Mauritius called Chinese Tigers South Africa Trust (CTSAT) which was executed on 18 November 2002, a week before the signing of the Framework Agreement.[3]The husband and wife lived together from 1997 (they married in 2001). In 2000 the wife established Save China’s Tigers in the UK which secured UK Charity Commission registration the following year. Between that time and July 2012 the husband and wife worked tirelessly and more or less cooperatively on this patently bold, imaginative, charitable and laudable venture. The wife’s expertise in the field of tiger conservation and her Chinese contacts and cultural background combined with the husband’s profound understanding of and experience in complicated international finance and financial structures undoubtedly produced a dynamic partnership. Over time a number of their friends and colleagues became involved and to an extent enthused by and in the project.[4]Tragically for all involved the personal relationship of the wife and husband deteriorated over time. Part of the problem seems to have been disagreements over the future policy and precise presentation of the project.[5]In July 2012 the wife was removed as director of SCT UK and on 15 August she filed a divorce petition. At the time of the breakdown of the marriage the wife’s governing preoccupation was to ensure the survival of the Chinese tiger project and the preservation for that purpose of the funds and assets which had thus far been provided for that purpose. That was the focus of her concern when she went to her first lawyers in July 2012 .[6]However by the time her claim for financial relief was first listed before me for a First Appointment on 27 November 2012 the suggestion that the funds within the charity might have more than one purpose was beginning to surface.[7]Her leading counsel on that day said … “It is an unusual case. I will not pretend it is not. We have all seen, on many occasions, trusts – sometimes in Liechtenstein, sometimes in Jersey, sometimes elsewhere – where the primary, or perhaps the only, beneficiary is ostensibly a charity. The thing that makes this case different is that in this case there is no doubt that funds have been deployed to charitable purposes. It is not as though we can say that this is a pool from which this family has lived with no intention of ultimately benefitting the charity. The question is though, “Is this, as it were, a genuine philanthropic irrevocable disposition by Mr Bray or is there, in fact, a complex web through which he can [and, if he can, we say in due course he will] extract funds back for himself?”[8]Gradually since that time her case in this respect has solidified so that on 17 July 2013 she filed an application by way of amendment to her Form A seeking a variation of a post nuptial settlement viz “variation of the post nuptial settlement –Chinese Tigers South Africa Trust”. The core of her case from that time has been that CTSAT was established not only to advance the cause of the chinese tiger but also to provide financial benefit and support for the husband and wife personally over the long term. That assertion has been hotly disputed by the husband since it first surfaced.[9]As the character and purpose of CTSAT had thus become the central issue in this most unusual financial relief application, the use of the OS v DS procedure to determine, as a preliminary issue, whether it is a post nuptial settlement (and so capable of variation under the MCA 1973 s24 by this court) and if not the extent to which it is, if at all, a “resource” in the more broad sense (under s25) available to the husband to meet the wife’s claim (apart from also paying for its charitable activities) is both an apt process and a priority for determination.[10]It is especially important because CTSAT has assets which are worth tens of millions of dollars or pounds (the precise figure is far from agreed but on the most optimistic view not more than £25m) but there are now almost no assets, relatively speaking, outside it. Accordingly the determination of this preliminary issue necessarily has a profound impact on the wife’s claim.[11]On 3rd October 2013 by way of a refining of the OS v DS hearing I made the following order :
“the hearing on 9th December 2013 shall be utilized to enquire into: (i) The circumstances under which the China Tiger trusts were set up; (ii) The purpose of those trusts; (iii) Whether those trusts are nuptial settlements; (iv) The availability of funds within those trusts to the parties; (v) Whether the funds within those trusts can only be utilized for tiger conservation”
[12]On the same day a number of other parties were joined to the proceedings including SCT UK and CTSAT. The wife and SCT UK have been represented at this hearing by leading and junior counsel. The husband has not been but he has received assistance both indirectly (and I suspect directly) from both SCT UK’s solicitors and counsel. His case is in every important respect identical to that of the UK charity of which he is understandably fiercely protective.[13]This preliminary hearing which began last December (10 days in all) and continued for a further 14 days from 19 June 2014 has lasted a total 25 days including reading time. There are no less than 33 lever files of statements and documents. At the hearing I heard oral evidence from the wife, the husband and 8 other witnesses including two Mauritian lawyers. The oral evidence has been simultaneously transcribed by “livenote” which has been helpful given the importance of the oral evidence and the gap between the two halves of the hearing.[14]It goes without saying that I have also been provided with very lengthy opening and closing notes from the represented parties. They are of the highest quality. The husband has also supplied me with more succinct notes. All have been of immense help to me. Furthermore, following the delivery of this judgment in draft in late July, the wife’s team served a very lengthy further written argument pursuant to the so-called Barrell jurisdiction. In due course both the husband and SCT UK responded. I will deal with that specific “application” at the conclusion of the judgment.[15]At the start of the hearing Mr Richard Harrison QC (for SCT UK), complained with some justification that, in the absence of pleadings and given that he had not been a party to the earlier case management directions leading to the hearing, even at that late stage he did not have a clear idea precisely what the wife’s case was in support of her assertion that CTSAT (and its related corporate vehicles) was a post nuptial settlement. As I sympathised with his complaint I ordered the wife to set out her case concisely.[16]This she did and on 12 December a document entitled “W’s Case on the CTSAT Nuptial settlement” was lodged and served.[17]It is convenient to include it in full here: “1. The Wife asserts that the CTSAT arrangement is a nuptial settlement. It follows that all parts of that Group are within and part of that nuptial settlement. 2. It was always intended by the parties that it should benefit one or both of them. To this end the Trust was created with powers to:(a) enable the parties to be expressly added as objects of the power (although this has proved to be unnecessary)(b) Create sub-entities (such as other limited companies) which the parties would then benefit from.(c) Give a direct benefit to the parties by, for example, paying for services for the parties which were not commercial arm’s length transactions.(d) Be and create other vehicles whereby matrimonial assets can be held (e.g. the South African land, the South African flat, the matrimonial home, the Deutsche Bank money and so on) in the expectation that these can be used medium to long term to benefit the parties. 3. If, which is denied, they were not created with the ultimate intention of benefiting one or both of the parties to the marriage, the trusts subsequently acquired that character by the Husband deciding that he could and would use this for benefiting the parties – it was akin to adding the Husband and / or the Wife as objects of the power (although that formality was not necessary because of the structure which enabled benefits to be taken obliquely). This happened at the latest at the time of the payment of the G Bank money (in July 2009). 4. One of the motivations of the Husband was to shelter his fortune from the attentions of the Revenue – including the IRS. It is now opportunistically being deployed to against the Wife. 5. The fact that the Trusts were also intended to benefit another third party, the tigers of South China, does not prevent this settlement from being nuptial. 6. Examples of the nuptiality of the trust include:a. It was used to buy the parties’ home. It created a sub-company to purchase the property. It then gave them a benefit in that they have continued to live in that property rent free. The money ostensibly used for that purchase was provided by the Husband to the trust in the expectation that it could (and would) be used to benefit the parties in that way. We go further in that we say that this was just a vehicle to get funds directly to the parties. In reality the Husband has retained the beneficial ownership of that property. If we are wrong about this the Trust has paid £875,000 for no real commercial benefit (bought 19 May 2008).b. It holds the leases of the South African land for the benefit of the parties. This was matrimonial property settled into the trust.c. Held the Husband’s South African flat.d. The Framework Agreement comes to an end when China takes back its tigers and sets up its own reserves. Thereafter there would be little more for the Trust to do. H can wind up the trust. He has already indicated to the Wife that on such a winding up he would expect the funds to go to the Wife via the Li Quan Trust. (K42 to 43)e. Receiving the Husband’s G Bank money.f. The Trust has continued to provide direct benefits to the parties by: i. Paying money to the Husband via his companies in the JAS Group. ii. Being prepared to pay the Wife £150,000 per annum from the CTSAT group via the JAS group. iii. Paying money to the Wife by paying bills on her behalf. iv. Paying the bills on the matrimonial home. v. Giving the Husband’s company the very valuable Put Option in return for what might be nothing (i.e. if Durango has no assets or it is able to set off contributions of c £18m against the strike price of c £18m). vi. All the matrimonial assets are available (or were available) on, for example, the predecease of the Husband. 7. The Framework Agreement is not the onerous contract which the Husband pretends it is. The reality is that the re-wilding project will come to an end within two years. Then the money will be available for redistribution. As intimated in his 2011, “winding up” email; this will then go to the benefit of the parties”. (a) enable the parties to be expressly added as objects of the power (although this has proved to be unnecessary) (b) Create sub-entities (such as other limited companies) which the parties would then benefit from. (c) Give a direct benefit to the parties by, for example, paying for services for the parties which were not commercial arm’s length transactions. (d) Be and create other vehicles whereby matrimonial assets can be held (e.g. the South African land, the South African flat, the matrimonial home, the Deutsche Bank money and so on) in the expectation that these can be used medium to long term to benefit the parties. a. It was used to buy the parties’ home. It created a sub-company to purchase the property. It then gave them a benefit in that they have continued to live in that property rent free. The money ostensibly used for that purchase was provided by the Husband to the trust in the expectation that it could (and would) be used to benefit the parties in that way. We go further in that we say that this was just a vehicle to get funds directly to the parties. In reality the Husband has retained the beneficial ownership of that property. If we are wrong about this the Trust has paid £875,000 for no real commercial benefit (bought 19 May 2008). b. It holds the leases of the South African land for the benefit of the parties. This was matrimonial property settled into the trust. d. The Framework Agreement comes to an end when China takes back its tigers and sets up its own reserves. Thereafter there would be little more for the Trust to do. H can wind up the trust. He has already indicated to the Wife that on such a winding up he would expect the funds to go to the Wife via the Li Quan Trust. (K42 to 43) e. Receiving the Husband’s G Bank money. f. The Trust has continued to provide direct benefits to the parties by: i. Paying money to the Husband via his companies in the JAS Group. ii. Being prepared to pay the Wife £150,000 per annum from the CTSAT group via the JAS group. iii. Paying money to the Wife by paying bills on her behalf. iv. Paying the bills on the matrimonial home. v. Giving the Husband’s company the very valuable Put Option in return for what might be nothing (i.e. if Durango has no assets or it is able to set off contributions of c £18m against the strike price of c £18m). vi. All the matrimonial assets are available (or were available) on, for example, the predecease of the Husband. v. Giving the Husband’s company the very valuable Put Option in return for what might be nothing (i.e. if Durango has no assets or it is able to set off contributions of c £18m against the strike price of c £18m). vi. All the matrimonial assets are available (or were available) on, for example, the predecease of the Husband.[18]The essence of the response by the husband is in his skeleton filed at the beginning of the first part of the hearing on 9 December 2013 part of which read : “The South China tiger is truly on the edge of extinction. It is one of the 10 most endangered animals on the planet. Its demise is part of one of the largest, and according to some, the fastest mass extinction since life began. The chance of survival of the South China tiger in the wild is so low that every large conservation organization has written it off because improbably large amounts of time, energy, and money will be required in a complex, multi-step plan to restore the lost biodiversity in the habitat on which the tigers depend. I have personally expended enormous time, energy and money working trying to build the Chinese Tiger Project into something that has a chance, however small, of succeeding. The enormity of the challenge combined with the relative paucity of resource makes the Chinese Tiger Project very fragile. Unless something dramatic changes, the Chinese Tiger Project will be out of cash in a couple of years. For the sake of personal enrichment, my wife now seeks to tear down the Chinese Tiger Project she helped create. I believe that it is part of my wife’s legal strategy to create confusion about what the Chinese Tiger Project is and how it has been administered. Rather than presenting a clear case, she has hinted at multiple, often contradictory cases. She has put forward many disingenuous, misleading and provocative statements. Her actions have placed enormous strain on the financial and human resources of the Chinese Tiger Project. I have been forced to spend very considerable time, energy, and money trying to clarify this obfuscation. I do not believe the court (or the Chinese Tiger Project, or other parties) will be well served by endless examination of details and irrelevant side issues. While I am happy to talk about any details, I believe the court will better served by focusing on the big picture rather than the detail. Accordingly, I try in this position statement to ignore the multitude of false, misleading, and provocative statements (including many that are profoundly important to me personally but probably irrelevant to this hearing) and instead do my best to distil, as much as possible, my understanding of the relevant issues. I am aware, of course, that much analysis has been devoted by Mr Todd QC and those others representing my wife to the inevitably complex transactions undertaken over the years. I believe, however, that it important not to lose sight of the bigger picture, and that it assists to pose the questions on which the Court needs to focus in a different way, as follows. I do not consider that this amounts to an over-simplification: i. Was (and is) the Chinese Tiger Project intended to be:a. A sham?b. A money laundering operation?c. A means of dishonestly reducing tax I would otherwise pay?d. An honest means of reducing tax I would otherwise pay?e. A means of defrauding my wife in these proceedings?f. A vehicle to keep my wife in the public eye?g. A narrowly focused breeding and rewilding project in South Africa only? e. An enterprise embracing some combination of the above? Alternatively, was and is the Chinese Tiger Project a holistic approach to reintroducing the South China tiger in China based on the IUCN Reintroduction Specialist Group guidelines on reintroduction that require the cause of the demise of the species to be addressed before any individuals are reintroduced? In the case of the South China tiger this is loss of habitat due to pressure from human economic development. The guidelines (and common sense) dictate that failure to address the underlying cause will lead to the reintroduced individuals succumbing to the same problem. This means that sustainable economic development opportunities must replace the unsustainable practices that have destroyed the habitat that led to the loss of wild South China tigers in the first place.” i. Was (and is) the Chinese Tiger Project intended to be: a. A sham? b. A money laundering operation? c. A means of dishonestly reducing tax I would otherwise pay? d. An honest means of reducing tax I would otherwise pay? e. A means of defrauding my wife in these proceedings? f. A vehicle to keep my wife in the public eye? g. A narrowly focused breeding and rewilding project in South Africa only? e. An enterprise embracing some combination of the above?[19]Finally SCT UK put its case shortly in its initial skeleton in this way :
“[the wife] will no doubt seek to suggest that she has always been ignorant of such matters and has been dependent upon H to explain the true position. The evidence filed in these proceedings demonstrates that this stance by her is completely contrived. The evidence shows that – as she has been aware throughout: (a) The trust was created solely for the purpose of furthering the Chinese Tiger Project; (b) Suggestions at the time of creation of the trust that she or H might be beneficiaries were specifically rejected; (c) It was created in a great haste in order to take the place of two individuals (the Varty brothers) as a party to a tripartite agreement (the Framework Agreement) involving the Chinese Government and SCT (UK) in furtherance of the Chinese Tiger Project. (d) The need for haste has been explained in detail by H in his evidence (and indeed by W in her South African evidence) but was in essence caused by the Varty brothers reneging on the deal at the last minute such that the entire Framework Agreement which lies at the heart of the Chinese Tiger Project was in grave danger of falling apart. (e) Mauritius was chosen as a forum for the trust because South Africa would have presented exchange control problems. All of this has always been well known to W and her failure to be upfront about it is a serious breach of her duty of full and frank disclosure and has led to enormous costs being expended on behalf of SCT (UK) in obtaining the evidence to establish matters that should never have been put in issue.”
[20]The main issues for determination are as set out but inevitably to reach conclusions on them it will be necessary to determine a number of other subsidiary issue of fact and law, as I hope will become clear.[21]For a better understanding of the way in which these issues arise it is necessary to provide some further history and chronology surrounding the creation of the tiger trusts almost all of which is uncontentious. As can be seen from the “pleadings” already referred to the issues are about the motives behind and the precise purpose of the CTSAT structure.

Some background

[22]The wife’s team have produced a very lengthy chronology which forms the background to this application. It had been updated by the conclusion. It is not agreed but there are no issues of significance. The husband has produced two narratives ; one in his Form E (B/151) and then a lengthy expanded version in his statement of December 2013 (H4/110). For reasons I will explain later I shall Annex to this judgment an abbreviated version of the husbands narrative as contained in that statement[23]That the ultimate overall structure (of which CTSAT is a part) is complex is obvious. Thankfully there is structure diagram illustrating how the various parts relate to one another. I shall annex a copy to this judgment. The different parts had different functions and purposes but were all ultimately directed to the work of the tiger project

Witnesses and their evidence

[24]The core of the wife’s case is that the documents whatever they may say or seem to say on their face do not tell the whole story. Thus her case must stand or fall on the oral evidence. In other words the more the documents do not support the wife’s case the more Mr Todd QC, on her behalf, asserts, and is driven to assert, that that is inevitable because the husband with his expertise, has set up and organised the structures precisely with the intention of making actions untraceable and the structures impenetrable. The absence of documents is part of his strategy of leaving no paper trail.[25]So let me consider the witnesses. The husband and wife are the central figures in the drama. I watched them both give evidence in response to skilful and penetrating questioning by the QCs over many days. I have no qualms about my conclusions. In addition I heard from witnesses called on their behalf.[26]Mr Todd says he would have wanted to question other witnesses who produced statements on behalf of the husband and their absence is a telling lacuna in the respondents’ cases. I have read the statements as I was expected to. I must and do of course take into account that some of the makers of the statements have not been available to be questioned. However their evidence is largely repetitious of other evidence produced by the husband himself and witnesses who were called and in the end I do not regard myself as disadvantaged by their non-attendance.

The wife

[27]From the word go the wife has been beside herself with grief and anger at the way that she has been unjustifiably (as she sees it) removed from SCT UK and the Tiger project which she has always seen as “her baby”. She has gone as far as saying that if she cannot lead the project she would rather it was destroyed. She has since her departure set up another charity with similar objectives and which the husband believes is an attempt to try and usurp SCT UK’s function.[28]Her emails at the time are graphic and contain the following: i. “Now that you have taken hostage of my charity/project, I have NOTHING to loose (sic) ” [C/317] ii. “With the support of MANY people I will do ALL I can to get justice even if it means I have to sacrifice myself. That is just part of life and I have nothing more to loose after you took my life’s work away and destroying it” [C/320-321][29]And she signed off her emails with “wrath of a tiger mother whose cub is killed by Evil (sic)” or “wrath of the tigress whose baby has been taken away” etc. [G2/367-371][30]And there is no doubt that when this application started her preoccupation was to ensure the continuance of the work. She did not allege that the money earmarked via CTSAT for the tigers was also for the parties’ benefit, much less that she and the husband had had discussions at the outset to the effect that they could ultimately benefit, as she maintained in this hearing.[31]Her solicitor’s email of 30 November 2012 could not have been clearer when it said “I am only going to reiterate that Li’s objective in these proceedings does not include any attack on assets which belong to any of the charities, and on the contrary she is intending to establish which assets have been donated and to ensure that they cannot subsequently be retrieved or diverted away from the charitable objectives… Mr Marks QC’s note for the First Appointment … makes [it] abundantly clear what Li’s concerns are, and the purpose of almost all of the questions in the questionnaire is to give you the opportunity to allay those concerns… There is no conflict of interest between Li’s role in the charities and her objectives in these proceedings – indeed they are wholly aligned.”[32]The suggestion that CTSAT had, or might have had, other purposes crept in later and the application to vary CTSAT later still.[33]As her evidence in this application is also at variance with statements she made in the very lengthy Varty litigation she has also had to distance herself from much of her evidence in the Varty litigation (in which the parties were entirely successful) by asserting that she only wrote and said what she was told to say. However there is a clear finding by that experienced tribunal (Mr Justice Kriegler) who also heard evidence over many days, that she was a truthful witness so far as that evidence was concerned. And there is also much evidence to the effect that many hours were spent with professional help compiling it.[34]I also found some of the wife’s evidence wildly inaccurate in places. Her assertion that the parties were spending at the rate of £60,000 per month was completely wrong, possibly by a factor of 15. This could not have been just a bit of understandable miscalculation or guesstimate but a manufacturing of a figure to support her case.[35]Mr Todd says that the wife has not really changed her case but only, as the case has proceeded, her objective. He urges me to accept the wife’s account in her oral evidence about discussions surrounding CTSAT’s true multi-purpose function.[36]In the end, considering fully the points urged on both sides, I find myself in agreement with closing submissions made by SCT UK in respect of the wife’s change of stance and also the doubts surrounding her credibility and I am driven to find, overall, that she is an unreliable witness upon whom the court cannot rely. This is especially so when it comes to deciding where the truth lies about the underlying purpose of CTSAT and any discussion which took place at the time of its creation.[37]The wife is a very intelligent person but she has become blinded by her desire for revenge and this has led her to fabricate where she thinks it will assist her case.

The husband

[38]The husband is also obviously a highly intelligent and articulate person and a complete and, it would seem, leading expert in the field of structured finance. His grasp of the detail of the history and knowledge of the documents was extraordinary and encyclopaedic. He was in the witness box for four days, three of which consisted of a rigorous and searching cross examination by Mr Todd QC. It could not have been more thorough. Over and over again the husband’s knowledge of the detail of the transactions leading to the establishment of CTSAT and other structures supporting the Tiger Project was tested and found to be sound. His evidence at every stage was clear, detailed and consistent (both internally and by contrast with the evidence in the Varty litigation). He took great pains over the answers and made minor corrections as appropriate. He also agreed with the wife whenever possible.[39]At the end of the day his passion for the Tiger Project was as evident as it was with the wife and the longer he gave evidence the more convinced I became that he was telling the truth and doing his best to assist the court in arriving at the right answer. In contrast with the wife’s evidence, I found his evidence bore all conventional hallmarks of honesty and accuracy.[40]At the conclusion of the Varty arbitration the retired South African judge made this finding “I find Mr Bray to be a reliable source of factual information, fully au fait with the contemporaneous documents and an articulate and coherent presenter of the narrative as seen from the Bray parties’ perspective. Though obviously not impartial, he did not appear to be overstating his case.” [F5/236][41]I agree with that assessment and endorse it.[42]Accordingly I am driven to the inevitable conclusion that where he and the wife differ in their recall and evidence especially over whether there were discussions at the time of the creation of CTSAT to the effect that it was for their benefit as well as the tigers’ his recollection is to be preferred and relied on .

Mr Cross

[43]This witness was called on witness summons by the wife. He was immersed in the world of structured finance and was a colleague and friend of the husband until they had a major falling-out over the large fee he expected for his work on the G Bank claim. He ended up getting nothing and the husband accused him of blackmail. They have not spoken since.[44]Mr Harrison summarised his evidence in this way (after categorising examples of where Mr Cross had been speculating rather than giving direct evidence from his own knowledge) “Mr. Cross plainly holds a grudge against H. Rather curiously, he had retained, in the 5 years since his involvement with H, 5 lever arch files of information about H, SCT and CTSAT. His comments at the beginning of his evidence as to his “forgetfulness” and memory were rather telling and it is submitted that the court can attach no weight to the speculations put before the court by Mr. Cross, which in themselves were not consistent with what Mr. Cross had understood and represented at the time of his employment. ”[45]Mr Todd QC urges me to place reliance on Mr Cross’s evidence “Mr Cross is a professional man (we say this as such emphasis is put on the “professional” standing of for example, Mr Cole Morgan). The evidence of Stephen Cross was compelling. He had nothing to gain by lying and yet on H’s case he was committing wholesale perjury. Mr. Cross accepted that he had been accused of seeking to blackmail H but did not accept that he had done so. He sought compensation of £4m in respect of the work he had conducted on the [foreign] Bank litigation which raised £20m; but also said that was his opening gambit.”[46]At the end of the day I am left with the strong impression that Mr Cross (who is unable to give direct evidence of the purpose behind transactions but can only guess or speculate based on his background in structured finance) has put the worst interpretation on events because of the sense of injustice he feels at the treatment of him by the husband. Against this background I have a distinct sense of unease in relation to his evidence and don’t find it to be reliable or in the end that it takes the wife’s case forward in any real way. In large part and in relation to the important issues in this case, it is speculation as opposed to recall of witnessed events.

Jonathan Shepherd

[47]He gave evidence about an alleged conversation with the husband about the size of the husband’s fortune. However on exploration this was a social occasion and he was far from certain whether the husband was talking about his own fortune or the funds available for the tiger project. His evidence was of no real help to me.

Mr Prassas

[48]His notes of the meeting July 2012 were, as he admitted, no more than that. I don’t find his evidence helps me on the core issues

Mr David Leibowitz

[49]He is a member of the South African Bar. At the conclusion of his oral evidence last December I wrote in my notebook “very impressive and obviously completely honest; put masses of time and effort into the project”.[50]Mr Harrison QC said in this in closing note “Mr. Leibowitz said that in relation to his capacity as director he absolutely did not view himself as a mere nominee director. He made sure he understood what each individual transaction was about and signed it when he was comfortable that it was appropriate and an appropriately documented transaction. He often called for explanations about documents from H, from Rumit Shah and from Emil Peters. He said that very seldom did the documents come to him out of a vacuum, they usually came following detailed discussions. He was always given an explanation when he asked and none of those explanations gave him cause for concern. His evidence was clear, unambiguous, compelling and entirely consistent with every contemporaneous document. He had a detailed knowledge and understanding of the background of the Project. He has dealt with H and W more than any other individual in connection with the Project. He has no motive to be anything other than truthful”. In his oral evidence he stated [Transcript day 4/499]: This was a litigation that started off incredibly intensely and really never abated for most of a decade. I believe that at the time we concluded the arbitration agreement and moved the matter from the high courts to arbitration, there had been something like 18 different summonses and actions, more than a dozen different substantive motion proceedings and applications and then, in 2004, when the arbitration agreement was signed, we commenced a period where all of those disputes were consolidated in what ended up being seven or eight years' worth of fairly bitter arbitration. In all of that time, in conversations, at dinner times, social occasions, through to meetings about project affairs, through to consultations with solicitors and counsel, preparation of witness statements, preparation for cross-examination, discussions regarding contemporaneous documents, I had -- when I say "more occasions than I can count", I mean that in a literal sense -- dozens and dozens and dozens of occasions where I discussed and reviewed the facts and documents with both Li and Stuart, often together and often separately. In that entire decade or more, not a single document has ever been presented to me which contradicts in one material respect a single thing that either of them had ever told me about the project, its conception, its origins and the way in which it developed. The version that they had always given to me and which we later presented to the courts first, to the arbitrator second, was utterly consistent for more than a decade and consistent with every single underlying document that we ever produced or laid our hands on. By the time the arbitration finished, I believe that our core bundle, which I think you refer to my Lord as "elevation bundle", was something like 40 or 50 lever arch files of documents with which I am intimately familiar. So, I believe what I was trying to record in paragraph 20 was both the breadth of my involvement and the consistency of the versions on that history that were always given to me by both Li and Stuart and, for that matter, everyone else that I ever met through them that was involved in the project.” Mr Leibowitz said that the discussions with H and W “very materially” were about the purposes of CTSAT. When asked whether H had ever told him that CTSAT was also conceived for a secondary purpose of benefitting either him or W personally, he responded [Transcript day 4/501]:
“He has never told me that, nor has Li, and in fact they have told me the opposite on, again, more occasions than I can recall. I want to reiterate that I have never seen a single document which contradicts the fact that it was a single-purpose trust; namely, for the benefit of, ultimately, the tigers but the project in general. I would certainly never have involved myself, at my own expense and put my reputation at risk and signed agreements with the Chinese government, if I had had any inkling at any stage in that process that this was a trust out of which Stuart and Li were entitled to benefit in a personal capacity.”
Mr. Leibowitz did not believe that it was possible that CTSAT had a secondary purpose that he was unaware of [Transcript day 4/503]: “I do not believe that is possible. It would contradict, as I said, more than a decade of documentation, versions given to me in private, in social settings, to solicitors and counsel in consultations and in affidavits and oral evidence, to both courts and arbitrators and an arbitration appeal panel on more than one occasion. I have never seen a document which indicates to me that the purpose of the Trust is anything other than what I have described it to be. … As I mentioned earlier, my understanding has always been that all of the assets held by CTSAT would be held beneficially for the sole purpose of advancing the interests of the project and for no other purpose at all. “ [emphasis added] This was a litigation that started off incredibly intensely and really never abated for most of a decade. I believe that at the time we concluded the arbitration agreement and moved the matter from the high courts to arbitration, there had been something like 18 different summonses and actions, more than a dozen different substantive motion proceedings and applications and then, in 2004, when the arbitration agreement was signed, we commenced a period where all of those disputes were consolidated in what ended up being seven or eight years' worth of fairly bitter arbitration. In all of that time, in conversations, at dinner times, social occasions, through to meetings about project affairs, through to consultations with solicitors and counsel, preparation of witness statements, preparation for cross-examination, discussions regarding contemporaneous documents, I had -- when I say "more occasions than I can count", I mean that in a literal sense -- dozens and dozens and dozens of occasions where I discussed and reviewed the facts and documents with both Li and Stuart, often together and often separately. In that entire decade or more, not a single document has ever been presented to me which contradicts in one material respect a single thing that either of them had ever told me about the project, its conception, its origins and the way in which it developed. The version that they had always given to me and which we later presented to the courts first, to the arbitrator second, was utterly consistent for more than a decade and consistent with every single underlying document that we ever produced or laid our hands on. By the time the arbitration finished, I believe that our core bundle, which I think you refer to my Lord as "elevation bundle", was something like 40 or 50 lever arch files of documents with which I am intimately familiar. So, I believe what I was trying to record in paragraph 20 was both the breadth of my involvement and the consistency of the versions on that history that were always given to me by both Li and Stuart and, for that matter, everyone else that I ever met through them that was involved in the project.” “He has never told me that, nor has Li, and in fact they have told me the opposite on, again, more occasions than I can recall. I want to reiterate that I have never seen a single document which contradicts the fact that it was a single-purpose trust; namely, for the benefit of, ultimately, the tigers but the project in general. I would certainly never have involved myself, at my own expense and put my reputation at risk and signed agreements with the Chinese government, if I had had any inkling at any stage in that process that this was a trust out of which Stuart and Li were entitled to benefit in a personal capacity.” “I do not believe that is possible. It would contradict, as I said, more than a decade of documentation, versions given to me in private, in social settings, to solicitors and counsel in consultations and in affidavits and oral evidence, to both courts and arbitrators and an arbitration appeal panel on more than one occasion. I have never seen a document which indicates to me that the purpose of the Trust is anything other than what I have described it to be. I found him to be a compelling witness and have no hesitation in accepting what he has written and said. Mr Mason of BDO[51]This witness filed two reports and gave oral evidence. BDO audit the accounts of JAS. He carried out a very comprehensive (and very expensive) quasi audit of CTSAT to deal with the allegation made by the wife that it had been a source of funds for the parties’ private expenditure. He was unable to conclude that any of the expenses had been used to fund the husband or the wife.[52]In the end the highest this point can be put is that it is possible that the parties have benefitted incidentally from staying in nice hotels when on charity business. Mr Mason found nothing untoward about that from an auditing point of view.

Mr Cassell

[53]None of his evidence was controversial and his evidence was not materially challenged. He was the one who suggested the parties should be named as beneficiaries of the CTSAT and they were removed from the draft on instructions he received.

The law - What is a post nuptial settlement?

[54]Counsel have produced very helpful summaries of the law and in most respects there is no disagreement between them. Post nuptial settlements are unusual legal animals that can come in all shapes and sizes. They do not have to involve a conventional written trust instrument although they usually do. All kinds of transactions and arrangements have over time and from time to time been held to be “settlements” within the meaning of the statute which contemplates the possibility of their variation.[55]Many attempts have been made by the courts to pin down their precise essential ingredients and Counsel in their submissions have drawn attention to some.[56]Mr Todd’s skeleton alights rightly on the current President’s analysis in Ben Hashem v Al Shayif [2009] 1 FLR 115 as a precise and for this case relevant and useful summary. I repeat it below:
“The starting point for any consideration today of s 24(1)(c) must be the speech of Lord Nicholls of Birkenhead (with whom Lords Keith of Kinkel, Ackner, Lloyd of Berwick and Steyn all agreed) in Brooks v Brooks[1996] AC 375, [1995] 3 WLR 141, [1995] 2 FLR 13. At 391, 147 and 19 respectively Lord Nicholls said this: 'The section is concerned with a settlement “made on the parties to the marriage”
. So, broadly stated, the disposition must be one which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children. Conversely, a disposition which confers an immediate, absolute interest in an item of property does not constitute a settlement of that property. The statutory provision is concerned with an order varying the terms of a settlement. This would not be an altogether apt exercise in relation to property given out-and-out and belonging to one of the parties to the marriage as his or her own absolute property. The context does not require that outright gifts of this nature should fall within the scope of the variation provision. In such a case the appropriate order on the dissolution of the marriage, if an order is needed in respect of the property, is a property transfer or property settlement order.' [231] The phrase 'continuing provision' is important but not fortuitous, for it has a long history in the authorities: see, for example, Smith v Smith[1945] 1 All ER 584 at 586 (Denning J) and Smith v Smith [1970] 1 WLR 155, [1970] 1 All ER 244 at 158 and 246 respectively (Lord Denning MR). [232] Lord Nicholls of Birkenhead continued (at 392, 147 and 19 respectively):
'Beyond this the authorities have consistently given a wide meaning to settlement in this context, and they have spelled out no precise limitations. This seems right, because this approach accords with the purpose of the statutory provision. Financial provision that is appropriate so long as the parties are married will often cease to be appropriate when the marriage ends. In order to promote the best interests of the parties and their children in the fundamentally changed situation, it is desirable that the court should have power to alter the terms of the settlement. The purpose of the section is to give the court this power. This object does not dictate that settlement should be given a narrow meaning. On the contrary, the purpose of the section would be impeded, rather than advanced, by confining its scope. The continuing use of the archaic expressions 'ante-nuptial' and 'post-nuptial' does not point in the opposite direction. These expressions are apt to embrace all settlements in respect of the particular marriage, whether made before or after the marriage. In this connection, it should be noted in passing that a settlement may be made in respect of a particular marriage even though in certain circumstances the wife or husband by a subsequent marriage might be the person to take. Lort-Williams v Lort-Williams[1951] P 395 affords an illustration of this.'
Conversely, it may also be noted, a settlement which was nuptial when made may lose that character, depending on the facts and circumstances of the particular case: C v C, at para [44] (Thorpe LJ) and para [53] (Arden LJ). [233] Again, as Lord Nicholls of Birkenhead pointed out, it has long been recognised that the word 'settlement' in this context has a wide meaning, indeed a meaning extending far beyond what a Chancery lawyer would understand in a conveyancing context: see, for example, Bosworthick v Bosworthick[1927] P 64 at 71 (Scrutton LJ) and at 72 (Romer J), Lort-Williams v Lort-Williams[1951] P 395, [1951] 2 All ER 241 at 403 and 245 respectively (Denning LJ) and Prescott (formerly Fellowes) v Fellowes[1958] P 260, [1958] 3 WLR 288 at 281 and 299 respectively (Romer LJ). [234] In Blood v Blood[1902] P 78 Gorell Barnes J, considering the ambit of s 5 of the 1859 Act, said at 82:
'Those words are extremely wide, and I am anxious that they should not, by any construction the Court may put upon them, be narrowed in any way. To narrow them would be undesirable for this reason: the various circumstances which come before the Court, and for which this section is brought into operation, are so diverse that it is to my mind extremely important that, so far as possible, the Court should have power to deal with all the cases that come before it, and, in dealing with them, to meet the justice of the case. I, therefore, do not desire to see any narrow interpretation placed upon the words of the section.'
That policy seems to me to be as important and the approach, in my judgment, is as valid today as a century ago. [235] One of the classic statements of what is meant by a nuptial settlement for this purpose is to be found in the judgment of Hill J in Prinsep v Prinsep[1929] P 225 at 232:
'Is it upon the husband in the character of husband or in the wife in the character of wife, or upon both in the character of husband and wife? If it is, it is a settlement on the parties within the meaning of the section. The particular form of it does not matter. It may be a settlement in the strictest sense of the term, it may be a covenant to pay by one spouse to the other, or by a third person to a spouse. What does matter is that it should provide for the financial benefit of one or other or both of the spouses as spouses and with reference to their married state.'
He added at 235:
'But whether a settlement is within s 192 does not depend on who is the settlor. In many ante-nuptial settlements, neither the husband nor the wife are themselves the settlors … But whether a settlement is within s 192 must depend on what it effects. If, in fact, it is a settlement on either husband or wife, or both in the character of husband or wife, it is wholly immaterial that it is prompted and stated to be prompted by affection only for one of them. On the question whether a settlement is a settlement within s 192, the motive of the settlor seems to me immaterial, except so far as it is given effect to by the terms of the deed.' [236] In N v N and F Trust Coleridge J conducted a careful survey of the authorities. The case concerned a property which was owned, via a Bahamian company, by a Jersey based trust of which the husband was a beneficiary. It was common ground that the Jersey settlement was not per se a nuptial settlement which could be varied by the court under s 24(1)(c) of the 1973 Act. However the Jersey Trust had made available a property to the husband and wife which they used as their family home. The wife argued, and Coleridge J agreed, that the property was subject to an ante-nuptial settlement which could accordingly be varied. Referring to Brooks v Brooks, he said (para [30]) that '
There is nothing in that case which shows any departure from the previous approach of the court over the previous one hundred years'. I respectfully agree. [237] Coleridge J described his approach as follows at para [33]:
'My task is to consider what the real substance of the arrangement was which governed this property. The authorities make it clear that I should consider the question broadly and ask myself whether or not it was an arrangement which made ongoing provision for the husband, wife and/or child in those capacities. Motive is irrelevant.'
He continued, at para [34]:
'This property was bought by the trust during the parties' engagement and prior to their marriage. I think there can be no doubt it was nuptial. In terms of the question of ongoing provision for them during their marriage, it is hard to think of any arrangement that is more ongoing than the provision of a matrimonial home.'
A little further on, at para [38], he indicated that the task of the court was to 'examine the true character of the arrangement'. [238] I respectfully agree with Coleridge J's approach. I would only add that, where the relevant transaction is embodied in a formal written document, the exercise involves the familiar process of construction of the document, giving the appropriate legal effect to the words as properly construed. Where the transaction, as in the present case, is not said to be embodied in any formal document, the process is essentially one of finding the facts, a process which can legitimately involve the process of drawing inferences with a view to ascertaining what the terms of the transaction really are. [239] It is quite clear as a matter of principle that what Miss Parker calls the simple provision of the matrimonial home as a home for the family is capable of being a settlement for this purpose; indeed, as she points out, N v N and F Trust was just such a case.” 'The section is concerned with a settlement “made on the parties to the marriage”. So, broadly stated, the disposition must be one which makes some form of continuing provision for both or either of the parties to a marriage, with or without provision for their children. Conversely, a disposition which confers an immediate, absolute interest in an item of property does not constitute a settlement of that property. The statutory provision is concerned with an order varying the terms of a settlement. This would not be an altogether apt exercise in relation to property given out-and-out and belonging to one of the parties to the marriage as his or her own absolute property. The context does not require that outright gifts of this nature should fall within the scope of the variation provision. In such a case the appropriate order on the dissolution of the marriage, if an order is needed in respect of the property, is a property transfer or property settlement order.' 'Beyond this the authorities have consistently given a wide meaning to settlement in this context, and they have spelled out no precise limitations. This seems right, because this approach accords with the purpose of the statutory provision. Financial provision that is appropriate so long as the parties are married will often cease to be appropriate when the marriage ends. In order to promote the best interests of the parties and their children in the fundamentally changed situation, it is desirable that the court should have power to alter the terms of the settlement. The purpose of the section is to give the court this power. This object does not dictate that settlement should be given a narrow meaning. On the contrary, the purpose of the section would be impeded, rather than advanced, by confining its scope. The continuing use of the archaic expressions 'ante-nuptial' and 'post-nuptial' does not point in the opposite direction. These expressions are apt to embrace all settlements in respect of the particular marriage, whether made before or after the marriage. In this connection, it should be noted in passing that a settlement may be made in respect of a particular marriage even though in certain circumstances the wife or husband by a subsequent marriage might be the person to take. Lort-Williams v Lort-Williams[1951] P 395 affords an illustration of this.' 'Those words are extremely wide, and I am anxious that they should not, by any construction the Court may put upon them, be narrowed in any way. To narrow them would be undesirable for this reason: the various circumstances which come before the Court, and for which this section is brought into operation, are so diverse that it is to my mind extremely important that, so far as possible, the Court should have power to deal with all the cases that come before it, and, in dealing with them, to meet the justice of the case. I, therefore, do not desire to see any narrow interpretation placed upon the words of the section.' 'Is it upon the husband in the character of husband or in the wife in the character of wife, or upon both in the character of husband and wife? If it is, it is a settlement on the parties within the meaning of the section. The particular form of it does not matter. It may be a settlement in the strictest sense of the term, it may be a covenant to pay by one spouse to the other, or by a third person to a spouse. What does matter is that it should provide for the financial benefit of one or other or both of the spouses as spouses and with reference to their married state.' 'My task is to consider what the real substance of the arrangement was which governed this property. The authorities make it clear that I should consider the question broadly and ask myself whether or not it was an arrangement which made ongoing provision for the husband, wife and/or child in those capacities. Motive is irrelevant.' 'This property was bought by the trust during the parties' engagement and prior to their marriage. I think there can be no doubt it was nuptial. In terms of the question of ongoing provision for them during their marriage, it is hard to think of any arrangement that is more ongoing than the provision of a matrimonial home.' A little further on, at para [38], he indicated that the task of the court was to 'examine the true character of the arrangement'.[57]Once again my function is to “examine the true nature of the arrangement” embodied in CTSAT not forgetting that the relevant transaction in this case is embodied in a “formal written document”.[58]I have also been addressed on the question of whether a trust , non nuptial at its inception, can later become nuptialised. (see Burnett v Burnett [1936] P1).[59]The essential features of a PNS seems to be an existing disposition in favour of, one, other or both parties to the marriage (in their capacity as husband or wife) and for their present or future benefit. An existing intention to benefit one of the spousal beneficiaries is obviously a prerequisite.[60]In my judgment on the authorities, a settlement which is non nuptial at its creation could itself later become “nuptialised” if there was, in fact, a flow of benefit to the parties during the marriage from the trust . Alternatively a later disposition from the trust can itself constitute a post nuptial settlement without the main or superior trust necessarily becoming nuptial.

The parties’ submissions

[61]I cannot begin to do justice by way of paraphrase to the very lengthy and comprehensive written submissions provided by SCT UK and the wife. SCT UK’s run to some 119 pages and the wife’s to 49 (plus a 40 page revised chronology). I don’t intend to attempt to do so. The husband has also provided submissions in a succinct tabular form. They have been fully absorbed by me into my determination of the issues (as have the submissions submitted after the delivery of this judgment in draft).[62]The whole thrust of SCT UK’s (and the husband’s) case is that there is not a shred of evidence to support the wife’s assertions that CTSAT was ever contemplated as a vehicle for the support or benefit, now or in the future, of the parties. Indeed all the evidence both oral and written points the other way. And all their actions have been consistent with the furthering of the project. The funds from the G bank donation were designated from the day of their receipt for the tiger project and only for the tiger project and that is how they have been spent. The funds are required for the ongoing work of the project (which is very far from complete) and will be so spent. The wife’s case is an invention dreamt up in response to her being ousted from the SCT UK trust in 2012. There were and are no “back doors” or “front doors” through which money could legitimately (as opposed to illegitimately) be extracted for their use. And even if there were, theoretically, such exits they were not put there for that purpose and they have never been viewed as or been employed for that purpose.[63]The wife’s case, on the other hand is that the parties always knew that CTSAT was not only for the tigers but also a long term “insurance/pension policy” for their benefit too. To that end the structures were designed deliberately to be complex but ultimately capable of penetration or access. Apart from conversations which the parties had at the outset to that effect, the only and obvious inference can be drawn that this is so from the fact that the husband’s extraordinary expertise in the structured finance field meant that he would be bound to design a structure like this to enable it to be used for their benefit if needed. The officers of the trust are in the final analysis his stooges who will do his bidding if asked. Once the dust of this litigation has settled the tiger project (which is winding down) will in due course draw to a close and he will, by one means or another, take the value in the trust for his own use. In the final analysis look at the whole evidential picture especially the emails at [K/51]. It all points to the husband not only controlling the trust but intending ultimately that they should, one day, benefit from it.[64]Mr Todd QC ends his submissions in this way:
“The Husband created the CTSAT to benefit the tigers, his wife and himself. It has continued to benefit them by, for example, providing a home and paying for expenses (examples are in Annexe 1). In the not too distant future it will also provide capital. H can easily access CTSAT – he can become the Protector and thereafter dismiss the professional trustees. If he chooses not to take up residence and qualify as a professional trustee he can simply change the proper law of the trust. A man thus motivated will have no difficulty in getting round his self-imposed exclusion (he will use a separate corporate vehicle or simply charge ongoing commissions etc). The trust was settled for these parties. It provides ongoing benefit. It is a nuptial settlement. In addition it can provide real benefit.”

Essential overall questions and findings

[65]I have read and heard a mass of evidence about the thinking behind the establishment of the CTSAT, the means by which and the reasons why it was created in the form it was and why it was formed in Mauritius. I have read (and re-read) and heard lengthy and detailed submissions too. All arguments have been canvassed and from every angle.[66]I have ended up with these essential questions (of law):a. Neither party is identified directly on the face of the written instrument (in schedule 2), as a beneficiary of CTSAT. Only SCT UK. Can it nevertheless be categorised as a PNS and one or other of them as a beneficiary of that trust, merely because CTSAT, as a fully discretionary trust, is capable of being amended or adjusted (by adding trustees or terms) to make them such?b. If not should CTSAT nevertheless be regarded as having become a PNS if there is, anyway by the time of the application to vary, an existing intention to benefit one or both of them which is evidenced by past receipts from the trust?c. If the parties have not to date received such benefits is the mere intention (established by other evidence) to benefit one of the spouses in an unspecified way and at some unspecified time in the future sufficient of itself to constitute a PNS ?[67]Three factual questions underlie the answers to those three questions:a. Is the husband ultimately capable, one way or another of procuring changes to CTSAT to enable the parties to benefit from it?b. Is there evidence to demonstrate past, present or future benefit to one or other of the parties from CTSAT?c. In the end what was or were the intention or intentions underlying the creation of CTSAT? Was it, as the husband has always asserted set up as a charitable venture for the sole purpose of furthering the Tiger Project or, as the wife asserts, for that purpose primarily but also with the ulterior or secondary purpose, of providing financial benefit and support for the parties, if not now then at some unidentified future time and if required?[68]In answering those questions it is important not to forget that genuine charitable giving is not and never has been economically logical or beneficial for the donor (except perhaps in the most indirect or utilitarian sense). But that is not to suggest that it does not bestow on the donor other great benefits, satisfaction and fulfilment which are capable of providing a perfectly reasonable explanation for why it takes place and so why it is a conventional feature of human life. Huge sums of money can often be involved.[69]My answers to the questions of law are as follows ;a. (66a) NO. This is mostly agreed and straightforward. The mere fact that a trust is a conventional fully discretionary trust capable of being varied to add other beneficiaries including the parties does not of itself render it a PNS.b. (66b) YES. If there has been a regular flow of receipts paid from CTSAT to the parties (in their capacity as spousal beneficiaries) for their benefit that could be evidence of a pre existing intention to benefit them whatever the instrument said on its face. It would evidence an existing disposition and render the trust a PNSc. (66c) NO. In my judgment if all that is established is a vague, unspecified intention at some time in the future, depending on the circumstances then prevailing, to benefit the parties possibly by way of amending the trust deed or in other ways, that is not enough to turn a non nuptial settlement into a PNS. That cannot amount to an existing disposition.[70]My answers to the factual questions are as follows;a. (67a) YES. I am satisfied that, in the end the husband could, as a theoretical possibility, seek to procure changes/additions to the beneficiaries. However given the answer to 65c (below) I do not find that the trustees would be likely or be expected to be guided by his wishes? This goes also to the “resource” question which I shall deal with below.b. (67b) NO. There is no evidence of past, present or future benefit to the parties from CTSAT. I am fully satisfied by both the evidence of BDO and the husband that nothing has been paid to them from CTSAT (or for that matter improperly from SCT) and there is no existing intention to do so. The highest the wife’s case could ever be put, even on her own evidence, is “a vague, unspecified intention at some time in the future, depending on the circumstances then prevailing, to benefit the parties possibly by way of amending the trust deed or in other ways” (see para 69 supra) and that is not enough to turn a non nuptial settlement into a PNS and so would not be enough in these circumstances.c. (67c) At the time CTSAT was established it was with only one intention and it had only one, sole, purpose viz. to further the Tiger Project via SCT UK. The husband’s evidence (supported copiously by the documents, the other witnesses and the parties’ subsequent exhaustive and exhausting work and actions) establishes this to my entire satisfaction. There were no conversations at the outset or subsequently which took place which establish an intention to benefit them or either of them and there was no ulterior /secondary purpose as the wife now seeks to suggest. That case is, in forensic parlance, a late invention by the wife. CTSAT was always, and is, only for the Chinese tigers. Accordingly it is not a PNS which can be directly invaded by court order.[71]Finally, even if CTSAT is a PNS would the Mauritian court enforce an order to vary it? On a balance of probabilities the Mauritian Court would not enforce an English order varying the trust especially if an attempt was made to do it in the teeth of opposition from the trust. In my judgment the meaning of Mauritian Trusts Act 2001 s.11(5) is quite plain on its face. In those circumstances, I would not, in any event be prepared to make an order varying the trust.[72]Should CTSAT be regarded, in a section 25 sense, as a resource in a more broad way? Especially in the light of the fact that these parties have never been named beneficiaries and have now been specifically excluded, by subsequent deed, as potential beneficiaries of CTSAT and also in the light of the findings I have already made about the trust’s original and ongoing purpose the Thomas v Thomas jurisdiction cannot apply in this case. In my judgement, CTSAT’s assets cannot properly be regarded as a resource of the husband in the s.25 sense. The assets of CTSAT are for the tiger project via SCT UK . Accordingly it would be wrong in principle for a UK court to make a lump sum order against the husband in the hope and expectation that funds would be provided by CTSAT to fulfil it.[73]I should say finally, and for the avoidance of any doubt, that during this exhaustive examination of the actions of CTSAT and SCT UK since their creation I have come across no behaviour or actions by either the husband or the wife which in any way cause me concern that they might be improper from a UK charitable perspective. There is no doubt about the benefit to the public in the Chinese Tiger project succeeding.[74]As I accept the veracity of the husband’s evidence and in order to provide a fuller narrative of the events surrounding the creation and funding of the tiger project I have annexed an abbreviated version of the husband’s December 2013 statement to this judgment. This will enable another court to understand the full context of my findings should it be necessary.[75]I hope the husband will now be creative to deal with W’s legitimate claim for financial relief.[76]Postscript-Barrell Application This judgment was delivered to the parties in draft on 24 July with an invitation to submit suggestions for minor and typing amendment by 5 September 2014. On 4 September the wife submitted to the court a so-called Barrell application accompanied by a 43 page note inviting “the court to exercise its Barrell jurisdiction to re-write the judgment”. In the light of the length and detail of the note I invited the husband and SCT UK for their responses by 1st October and they were duly provided. They were respectively three pages and 53 pages long. In other words a total of 99 pages of further submission were provided to the court post-delivery of theApproved Judgment I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. ............................. MR. JUSTICE COLERIDGE[77]Unsurprisingly the wife was disappointed by the findings I made. Her Counsels’ note emphasised the consequences to the wife of those findings and argued that every single one of them and the resulting overall conclusions were wrong. The new argument consisted of either a re-iteration of points or evidence previously made, or reliance on new points and other evidence. The husband’s and SCT UK’s response was to the effect that the findings and evidence were correct and unimpeachable and that the wife’s attempted use of the Barrell jurisdiction to rewrite the entire judgment was in fact a misuse. They also provided a more or less point by point refutation of the wife’s further note and in so doing similarly reiterated many of the points and much of the evidence previously made or provided new justification for previous argument.[78]In deference to the industry of all Counsel I re-read and re-considered the draft judgment in the light of the three notes and have reached these further conclusions. i) The use of the Barrell jurisdiction in these circumstances and in the fashion employed by the wife is quite simply wrong and not the purpose of that process. That process is designed to allow the court to look again at particular findings or conclusions where some particular fact or evidence has obviously been omitted, overlooked or has changed since the hearing. It does not afford a party the right to invite the court to start again from scratch and “have another go” at finding for them based on an entire re-arguing of the case. If that were a permissible approach it would result in litigation without end as one Barrell application would inevitably follow upon another and then another. 99 pages of further submissions says it all. ii) The implications of the potential findings to all the main parties are, and always have been, patently obvious to all and have caused me to approach the husband’s case in particular, with considerable caution. They have been in the fore front of my mind since the first occasion when the case came before me. iii) However, there is nothing that I have read in the wife’s latest supporting note which causes me to revisit any of the findings or conclusions (legal or factual) which I made or amplify any of my reasoning. The findings were reached, I remind myself, after very careful consideration of the evidence and arguments before, during and after the time when the hearings took place in December 2013 and June and July 2014. Indeed, on the contrary, I am fortified in my findings and conclusions by consideration of the further notes. iv) To have descended into the kind of detail which the wife now seeks would hugely increase the length of this judgment on these preliminary issues for no useful purpose. Annex to judgment (per paragraph 74 of the judgment) The 3 October 2013 order of Mr Justice Coleridge I have been ordered to provide a statement setting out: (a). the assets of the China Tiger trusts; (b). the provenance of those assets; (c). my relationship with those China Tiger trusts; (d). any access that LQ or I may have to the China Tiger trust assets; and (e). the total resources available to me including any available China Tiger trust assets. In order to answer the above questions, I set out here briefly what the China Tiger is, what the Chinese Tiger Project is, and what the China Tiger trusts are. China Tigers The geographic area that is now China is regarded as the ancestral home to all tigers. The first tigers emerged two million years ago in what is now Southern China. The South China tiger (Panthera tigris amoyensis) (hereafter referred to as “South China tiger” or “Chinese tiger” or “China tiger” interchangeably) is considered to be the direct descendents of these first tigers. These South China tigers spread across Asia and split into different subspecies. Several of which are now extinct. In one sense, all tigers are Chinese tigers. Bengal tigers (Panthera tigris tigris), for example, have only been in India for a comparatively short time - 12,000 to 15,000 years. Their history in China is two orders of magnitude longer. However, the South China tiger is the only tiger that occurs just in China and the South China tiger has featured prominently in Chinese culture for thousands of years.The South China Tiger is the most endangered subspecies of tiger. There are approximately 100 in captivity and no known individuals in the wild. The Chinese Tiger Project The Chinese Tiger Project was created by the Framework Agreement signed in November 2002 by the UK charity, Save China’s Tigers (“SCT UK”), the Chinese Tigers South African Trust (“CTSAT”) and the National Wildlife Research and Development Center of the State Forestry Administration of the People’s Republic of China. The Framework Agreement sets out an ambitious plan to save the South China tiger in the wild with an ambitious program that includes restoration of habitat, building of capacity in China, breeding and rewilding South China tigers. CTSAT is obliged to carry out and finance these activities through sustainable development, primarily eco-tourism and media. The main problem facing the South China tiger is loss of habitat due to human economic activity. Therefore, what we need to do to save the South China tiger is the same thing we need to do save biodiversity generally, and ultimately ourselves. That is, reverse the land use change to increase biodiversity. We must restore wild, biodiverse places from agricultural land. This is exactly what the Chinese Tiger Project has done in South Africa and what it must do in China on a much larger scale if there is to be a genetically viable population of free-ranging South China tigers. This problem presents a number of enormous challenges. In particular the land use change that is destroying biodiversity is driven by economic incentives and economic development. Addressing the intersection of economic incentives, economic development, and the resulting environmental degradation or restoration is at the heart of the Chinese Tiger Project. For me, the Chinese tigers are merely the symbol for this underlying problem. The tigers are a potentially powerful symbol around which to organize the activities necessary to restore biodiversity in the habitat required by wild tigers in a way that is economically sustainable. How can the economy develop without degrading the natural environment on which we depend for our long-term survival? In other words, can we find a model for economic development that is both financially and environmentally sustainable? I believe this is the most critical long-term problem the world faces today and this is the problem on which I spend most of my time. Although this is a more general formulation of the problem, I believe it is entirely consistent with LQ’s original vision for the Chinese Tiger Project based on ecotourism. Ecotourism as Economic Engine for Conservation When LQ observed ecotourism in southern Africa that was supporting wildlife as well as local communities, she was inspired to approach the Chinese government to explore whether or not this model could be used in the effort to save tigers in China. Broadly speaking, the economic interests of ecotourism in Southern Africa are more or less aligned with restoring and protecting biodiversity. If there is no wildlife to view, the tourist will not come. Therefore, the ecotourism and private game reserves operators have an incentive to protect and even restore wildlife. The ecotourism also provides jobs for locals which in turn builds support for conservation. Because there is a natural economic incentive to restore and protect biodiversity and the environment, private investment has naturally been drawn to this activity. Accordingly, the land under wildlife in South Africa has increased tenfold from private investment compared to land set aside from government investment. It was this success that LQ hoped to duplicate in China. If she could manage to promote a successful ecotourism model based on a South China tiger reserve, then others would naturally want to invest in other similar reserves. LQ hoped to solve the problem of financing the restoration of the habitat needed to save the South China tiger in this way. However, it became clear very early on that ecotourism would never cover the costs of the needed environmental restoration in China . Often, governments will help cover these costs in public private partnerships. However, the Chinese government has repeatedly refused to provide funding for the various proposals that have been put forward. For these reasons the Chinese Tiger Project has cast its net more widely in search of an economic model that would pay for the habitat restoration needed to save South China Tigers in the wild. (a). royalties from media, including books and documentaries with partners including Discovery, National Geographic, Granada Wild, Oracle films and a host of other media companies; (b). licensing of tiger designs for various fashion items, including t-shirts, watches, and toys with various partners including Disney, Dreamworks, Sanrio, Central Saint Martins College of Art and Design, Uniqlo, and others; (c). corporate sponsorship with the likes of Daimler Chrysler, Land Rover, Cathay Pacific, Asia Tigers, and many others in an effort to take advantage of the abundant media and celebrity endorsements the Chinese Tiger Project attracted. Above all, however, it has sought to generate profits from a levered endowment of sustainable development investments including sustainable forest, clean energy, etc with partners like Weyerhaeuser, Beijing Capital Group, Shell, Econcern, Eneco, Veolia and many others with financing from financial institutions like Credit Suisse, Citibank, Barclays, HSBC, Goldman Sachs, ABN AMRO, Rabo Bank, Standard Chartered, Standard Bank, ABSA, among others. Nonetheless, we continue to do our best to fulfil our obligations under the Framework Agreement and I hope that when the divorce is over the effort to finance the Chinese Tiger Project will face much better prospects. In any event, the Chinese Tiger Project will carry on for as long as we can pay for it. At the historic rate of spending that is just 3 more years. With the additional burden of financing this vexatious litigation, it may be less. China Tiger trusts (a). The Chinese Tigers South African Trust (“CTSAT”) (b). Willow Trust (“Willow”) (c). Asia High Yield Trust (“AHY”) (d). Save China’s Tigers Ltd in Hong Kong (“SCT HK”) (e). Save China’s Tigers in the UK (“SCT UK”) (f). Save China’s Tigers in the US (“SCT US”) (g). Save China’s Tigers special fund in the China Green Carbon Foundation of the People’s Republic of China (“SCT PRC”) (h). Save China’s Tigers in Australia (“SCT Oz”). (i). China Tiger Revival in the UK (“CTR”) Before I turn to the detail of the various China Tiger trusts I summarise my position on the questions I am asked to address in the evidence as follows. Assets The principal assets are: (a). Approximately 33,000 hectares of land in South Africa encumbered by a 99 year leases that prohibit the use of the land for any purpose other than the Chinese Tiger Project. The Chinese Tiger Project in South Africa incurs substantial annual costs so the value of the land encumbered by the leases is less than zero because no buyer would assume the obligations under the leases. If the leases were cancelled, the Chinese Tiger Project would be over in South Africa and the unencumbered land would be worth approximately £15 million. (b). Jiangxi forestry plantation worth approximately £3 million – the purchase price was approximately £3 million. Although the price for wood products remains strong in China, there are a number of problems relating to the plantation, including the collapse of Sino-Forest and a beetle infestation, which have impaired the value and make any sale of this asset difficult. (c). Econcern debt worth approximately £1.6 million. (d). Cash of approximately £5.4 million. (e). Property at 66D Royal Mint Street currently said to be worth £2 million. Provenance of the assets In 2002, I leased the 32,000 hectares of land in South Africa to the Chinese Tiger Project for 99 years at a peppercorn rent. The leases cannot be changed without the consent of CTSAT. In 2008, Lawrence Cole-Morgan donated CFI to the China Tiger trusts. At that time CFI already owned the Jiangxi forestry plantation and the property at 66D Royal Mint Street both of which it had purchased with its trading profits. In 2009, G Bank made a donation of some £20 million to SCT UK pursuant to the settlement of a claim by SCT UK. In 2011, the Econcern debt was purchased with the cash originating from the donation. LQ and SB relationship with the China Tiger trusts LQ and I have varying degrees of influence and control over the various trusts. I have most control over SCT UK as a result of my sole directorship. Even in this case my control does not extend to the ability to deal with the assets as if they were my own. In all cases, I have a fiduciary responsibility to use my influence for the benefit of the Chinese Tiger Project. I have always fulfilled my fiduciary responsibilities and will continue to do so in the future. Access to the China Tiger trusts’ assets It was never the intention that LQ or I should be able to access funds in the China Tiger trusts to support our lifestyle. The sole purpose of the establishment of CTSAT was to sign the Framework Agreement and execute the Chinese Tiger Project on behalf of its sole beneficiary, SCT UK. CTSAT The Purpose of CTSAT CTSAT was established in November 2002 as the alter ego of SCT UK for the sole purpose of signing the Framework Agreement and carrying out the Chinese Tiger Project established by that agreement. The Framework Agreement established the Chinese Tiger Project as a joint venture between the Chinese government and Save China’s tigers when the Varty brothers (two well-known South African eco-tourism operators, to whom I refer below) backed out just before a signing ceremony that had already been scheduled in Beijing. Accordingly, SCT UK, and the Chinese Tiger Project it is responsible for, have always been the beneficiaries of CTSAT. In the fall of 2002, the Vartys backed out of an agreement that the Vartys had reached in principle with the Chinese government to carry out the Chinese Tiger project… LQ was devastated. Rather than let the Chinese Tiger Project die, I suggested that SCT UK should step into the shoes of the Vartys and become a party to the Framework Agreement. LQ informed me that it was not politically appropriate for SCT to sign the Framework Agreement because SCT was known to the Chinese government and they were expecting to sign an agreement with a South African counterparty, referred to as the “SA Party” in the Framework Agreement on which so much work had been done, by so many people, including LQ, over many months.. I then suggested that a South African trust should be set up with Save China’s Tigers as the sole beneficiary. This trust could be the politically acceptable alter ego of Save China’s Tigers to step into the shoes of the Vartys and sign the Framework Agreement. However, tight foreign exchange controls on movement of currency in and out of the country rendered South Africa unsuitable as a jurisdiction for the trust. I called Lawrence Cole-Morgan, an old friend and former colleague, to come to South Africa to document the trust and other agreements related to the Chinese Tiger Project. Lawrence flew to South Africa and worked with Grant Weyer, who was advising the Vartys, to document the trust and the various other agreements that the Chinese Tiger Project would require. Lawrence worked long hours for no pay to get the documents ready in time. Lawrence prepared a deal diagram and a note setting out what was intended at the time. The deal diagram and notes clearly state that SCT UK would be the sole beneficiary of the trust. When it became clear that South Africa was not suitable as a jurisdiction for the trust, Grant Weyer (corporate finance advisor to the Vartys) suggested Mauritius. Grant had previously worked with a trust company in Mauritius, then known as Inter-Ocean management. Lawrence and Grant called Inter-Ocean to see if Mauritius would be a suitable jurisdiction. No problems were identified with Mauritius and no other jurisdictions were considered. Lawrence then sent an email to me and LQ on 1 November 2002 with a copy of a standard trust deed (which I understood came from Inter-Ocean Management) and a brief note indicating that SCT UK would be the Settlor and sole beneficiary of the trust. Lawrence suggested that SCT UK’s lawyers should review the deed of trust. It later emerged that under Mauritius law, the Settlor could not be the sole beneficiary so it was suggested that I would settle the required $10 so that SCT UK could be the sole beneficiary. I agreed. Pursuant to LCM’s email to me and LQ, I gave the sample deed of trust to Richard Cassell at Bryan Cave to review, with me as the Settlor. 101. Because I was giving up significant value in the 99 year lease of the land that I then owned, I presume that Richard assumed that I would want to get the value back and proposed amendments to the CTSAT trust deed accordingly. Richard marked up the standard deed of trust with a number of changes including a change that included me and LQ among the beneficiaries. However, that was not my intention. LQ was aware of my intention to give up the value in the land with a 99 years lease for no rent and she fully supported that decision. She also insisted that we could not have an interest in the businesses undertaken by CTSAT because of a potential conflict of interest that she felt strongly about. This was the same conflict of interest that led her to insist that I should not invest in those businesses when they were to have been run by the Vartys. It is for this reason that LCM wrote then wrote back to Bryan Cave explaining that they had misunderstood my intentions. I quote from LCM’s email:
“I have spoken to Stuart and it does seem that there has been some confusion over how the trust should work. The key point is that Stuart should not be a beneficiary; the sole beneficiary should be the Save China’s Tigers charity Stuart would like to ensure that the proposed structure: Would entitle him to a US tax deduction should the trust never be in a position to repay his loan; Would not result in Stuart being taxed on any of the trusts income; Would be accepatbel [sic] to US and UK Charity commissions. The Mauritian lawyers have indicated various provisions of the trust deed which cause them problems under Mauritian law and I would like to determine whether the current form of the trust deed can achieve Stuart’s objectives if these provisions are deleted. The problem provisions are as follows: Clause 4 (g) ‘The Settlor shall have the unrestricted overriding power to remove a protector and to appoint new or additional Protectors…’ to be deleted. Clause 19 ‘RETAINED RIGHTS OF SETTLOR’ delete in its entirety. Clause 34(b), delete the added words entitling Stuart to the Trust Property on termination of the trust. Schedule 2, the sole beneficiary should be the Save China’s Tigers charity” … “As you are aware we are under considerable time pressure so I would like to have a conference call involving Bryan Cave and Mitch Barret (Mauritian trust attorney) as soon as possible. The object of the call is to agree a form of trust deed that is acceptable to all side[s] even if it is not perfect by the close of business today, so that we have [a] properly constituted and registered trust for the signing date of the Framework Agreement.”
Schedule 2, the sole beneficiary should be the Save China’s Tigers charity” … It is clear from LCM’s email that: (a). The intention was that Save China’s Tigers should be the sole beneficiary. Accordingly, neither Li nor I could be a beneficiary; (b). The purpose of CTSAT was to sign the Framework Agreement. (c). Accordingly, the purpose of CTSAT was not to achieve any tax advantage. However, I did hope to avoid tax problems. In particular I should not be taxed on CTSAT’s income because I would not receive, or be entitled to receive, any income or assets from CTSAT. Also, I wished to be entitled to a US tax deduction for the loss I would incur should CTSAT default on any loans I might make to CTSAT. (d). The terms of CTSAT’s trust deed should be acceptable to the US and UK Charity commissions. (e). LCM was under enormous time pressure to finish before the signing ceremony and he was not engaged in the construction of any doors, front or back or otherwise. (f). Lawrence went on to ask if these objectives would be met if various provisions giving me various rights were weakened or removed. (g). Lawrence goes on to ask for confirmation that these are the only changes that are required to achieve the objectives. (h). It is clear the deed was changed to reflect these intentions. For the avoidance of doubt, CTSAT was not set up with a view to provide me or my wife with any tax or other financial benefits and therefore I never asked any of the advisers to give any thought to this possibility. There was similarly no intention to create any access for either LQ or me to the assets of CTSAT at that time or in the future. Accordingly, likewise, no research was done in this regard. Circumstances leading to the establishment of CTSAT The Framework Agreement was initially conceived as simply a commercial agreement between a Varty business, Tiger Moon Ventures (“TMV”), on the one hand and the Chinese government on the other. I reached a deal with the Vartys in December 2001 in Beijing such that they would acquire the needed land on my behalf for £2.5 million and I would lease it to them at a below market rate on the condition that they used their best efforts to reach an agreement with the Chinese government to set up a similar reserve in China. The leased land was to be used only for the Chinese Tiger Project. I kept my end of the bargain. In January 2002, I provided £2.5 million to the Vartys to acquire land, fence, and game for Tiger Moon Sanctuary. At first, the Vartys appeared to be keeping theirs. By September 2002, the final form of the Framework Agreement had been agreed by the Vartys and approved by the Chinese government at a ministerial level. A big media event was scheduled for the signing ceremony for November 2002. In October 2002, the Vartys wanted to rewrite the agreement completely such that they would keep all the assets, but jettison all of the liabilities. The Vartys new position fundamentally undermined the principle on which the entire deal was premised: the assets would only be made available in exchange for undertaking the liabilities …. the Vartys bait a switch strategy rendered the revised terms unsellable to the Chinese. The negotiations that had already been completed on better terms for the government when the Vartys tried to force the hand of the government by threatening to pull out. LQ was very emotional at this time. At first, she contemplated suicide because of the irreparable damage she feared she brought on the effort to save the South China Tiger. Such a public failure for those government officials who had risked their careers on Li’s idea would mean that no one would dare try anything again for the South China tigers. When she got over her thoughts of suicide, she became furious with the Vartys for their role in the fiasco. It was in these circumstances that CTSAT was set up to step into the shoes of the Vartys and take on the business of TMV. This meant that CTSAT would take on the ecotourism and media business that LQ insisted that I should not invest in because of potential conflicts of interest. Accordingly, LQ was equally adamant that neither of us could benefit from the activities of CTSAT. CTSAT was going to be undertaking the very businesses that the Vartys had intended to undertake through Tiger Moon Ventures. LQ insisted that I could not invest in Tiger Moon Ventures because of the potential conflicts of interest with Save China’s Tigers and she applied the same reasoning to CTSAT. The Assets of CTSAT (a). Approximately 32,000 hectares of land in South Africa encumbered by a 99 year leases that prohibit the use of the land for any purpose other than the Chinese Tiger Project. The Chinese Tiger Project in South Africa incurs substantial annual costs so the value of the land encumbered by the leases is less than zero because no buyer would assume the obligations under the leases. If the leases were cancelled, the Chinese Tiger Project would be over in South Africa and the unencumbered land would be worth approximately £15 million. (b). Jiangxi forestry plantation worth approximately £3 million – the purchase price was approximately £3 million. Although the price for wood products remains strong in China, there are a number of problems relating to the plantation, including the collapse of Sino-Forest and a beetle infestation, which have impaired the value and make any sale of this asset difficult. (c). Econcern debt worth approximately £1.6 million. (d). Cash of approximately £5.4 million. I note that the net assets are zero due to the obligations arising from the Framework Agreement. The existence of these obligations, including the obligation to finance and establish a pilot reserve in China, is confirmed, among other places, in LQ’s sworn affidavit in the Varty litigation. I set out all of the assets settled into CTSAT. I settled the original $10 into CTSAT in November 2002. In early 2003, a South African company, Laohu Valley Reserve (Pty) Limited (“LVR”) (formerly called Tiger Moon Sanctuary (PTY) Ltd), issued Class B shares to CTSAT for no consideration. The Class B shares conferred no economic rights but gave CTSAT the power to ensure that LVR would always act in the best interest of the Chinese Tiger Project. Additionally, LVR had leased 32,000 hectares of land then ultimately owned by me and the Vartys. Under the leases LVR pays a peppercorn rent for 99 years and the leases are registered on the title deeds to the land. This ensures the land cannot be sold without the leases. The leases state that the land could only be used for the Chinese Tiger Project. In 2004, 100% of the shares of Energetic Business Solutions (“EBS”) were settled into CTSAT by Lawrence Cole-Morgan (“LCM”) for no consideration. EBS only had nominal capital and its purpose was to act as paying agent in South Africa for the CFI then owned by LCM. EBS facilitated payments and issues relating to exchange control. For the sake of completeness, I note that I loaned a total of £0.3 million to EBS to pay CFI expenses in South Africa. CFI has since repaid this loan to JAS Holdings pursuant to my contribution of this loan as capital. In 2007, 100% of the shares of Asia High Yield Limited were settled into CTSAT for no consideration. Asia High Yield Limited had nominal capital and was intended to be a securitization vehicle for a forestry financing that was never completed. It is common practice in structured finance to donate the shares of securitization vehicles to charities. Settlement of CFI into CTSAT In March 2007, LCM donated to SCT HK, 100% of the shares of the ultimate holding company for CFI, Ensor Investments Limited (“Ensor”). CFI was the successor to TMV. LCM had concluded after 4 years of hard work that the liabilities arising from the Framework Agreement would very likely always exceed the revenue of CFI and therefore the prospect of realizing any profit was very low. Accordingly, he donated the business. At the end of 2008, the Conservation Trust settled 100% of Ensor into CTSAT. The National Wildlife Research and Development Center (“NWRDC”) was the sole beneficiary of those shares on the condition that any distributions to NWRDC from CTSAT would be used for the Chinese Tiger Project. In 2013, CFI settled cash of approximately £5.4 million, Econcern debt of approximately £1.6 million, the Jiangxi forestry plantation worth approximately £3 million, and the South African reserve into CTSAT pursuant to my undertaking to this court to use my best efforts to transfer those assets to CTSAT. I estimate the South African reserve has a value of negative £6.9 million unless the leases are modified. This is because the only purpose for which the land can be used under the leases is the Chinese Tiger Project and the associated ecotourism. We have investigated ecotourism exhaustively and determined that it is not viable on this property. That leaves direct costs of the reserve of approximately £350k per year. The present value of annual costs over the life of the lease discounted at 5% is approximately £6.9 million. SB and LQ Relationship to CTSAT I am the Settlor of CTSAT. I settled the original $10 in the trust deed to establish CTSAT for the purpose of signing the Framework Agreement. As Settlor, I do not have the right to any income or assets unless I pay fair market value for the assets as determined by a third party valuer. As Settlor, I cannot be the sole beneficiary. I was the Protector of CTSAT from its establishment until 7 May 2013 when I resigned in order to disclose to this court information about CTSAT pursuant to LQ’s questionnaire. I am a partner in JAS Financial Products LLP, the operational, financial and marketing advisor to CTSAT. I am the sole director of SCT UK, the sole beneficiary of CTSAT. The Front and Back Doors – Is there a Legal Strategy Available to SB or LQ to Gain Access to the Assets of CTSAT? The documents governing CTSAT were drafted solely to create a vehicle that could carry out the Chinese Tiger Project. Accordingly, the documents were not drafted to provide the possibility of CTSAT being used for any other purpose than the Chinese Tiger Project. More specifically, the documents were not drafted to allow me or LQ to have access to the assets of CTSAT. A number of legal mechanisms were put in place to defend against attacks on the assets of the Chinese Tiger Project. These defence mechanisms include the 99 year leases on the South African land, the articles of LVR, and the B shares. I have however gleaned from my involvement in applications made previously in these proceedings that there is, in particular, the likelihood of an attack on the true nature and effect of the Put Option, - on the basis that it is a ‘back door’ into the Trust, capable of being exploited by me for my own benefit. I do my best therefore to comment on this possibility below. (a). “The Real Front Door”; (b). “The Alleged Front Door”; (c). “The Alleged Back Door; and (d). “The Real Back Door”. The Real Front Door To my mind, the only acceptable way LQ or I can legally gain access to the assets of CTSAT (or any of the China Tiger trusts) is through the Real Front Door. That is, to enter into contractual agreements to buy or sell goods or services to CTSAT on terms no worse than arm’s length for CTSAT. This is the basis on which I have always dealt with CTSAT. I have provided advisory services to CTSAT and its subsidiaries from time to time through JAS Financial Products LLP (“JAS”). JAS has charged fees sufficient to cover its costs and no more. Also, I work hard to keep JAS’ costs down in order to minimise the fees. I do my best to negotiate the lowest possible compensation for my colleagues and still retain and motivate the people with the skills I believe are necessary to do the job. I have never paid myself anything. When I travel, I fly economy unless it is an overnight flight and I have important meetings where I must be alert soon after I land. Whenever it is practical, I stay in youth hostels and cheap hotels to keep my costs down. I take public transport, even on business trips, whenever it is practical. Companies that I own have provided financial services at well below market rates to facilitate financing transactions for the Chinese Tiger Project. JAS Financial Trading, for example, has bought and sold assets and entered into hedges with razor thin margins in order to minimize the cost of funding in financing transactions for the Chinese Tiger Project. I sold my flat to Conservation Finance Ltd at a market rate. I have worked as a director of Save China’s Tigers for no compensation other than the market value of the rent for the room I stay in at 66D Royal Mint St. The Front Door is also open to LQ. LQ offered to work cooperatively on the Chinese Tiger Project if she would be offered a job at £150,000 per year. In the circumstances, I considered that acceptable. LQ had then worked for many years on the Chinese Tiger Project for no pay other than the value of the rent she would otherwise pay for her right to occupy part of 66D Royal Mint Street. She has valuable contacts she might be able to use to contribute to the finance resources of the Chinese Tiger Project. Of course, the Front Door is open to anyone and it has been used at various times by many people and institutions. Indeed, I wish it were used more often. The Alleged Front Door The suggestion that Mauritius was selected because Mauritius Trust Law uniquely provided me with legal access to the assets of CTSAT through LQ’s Front Door is untrue. The circumstances that led to the choice of Mauritius are explained above. So, it is clear that there is no legal way “H accessing the assets” of CTSAT that “relies on H alone”. This conclusion is, I believe, consistent with LQ’s expert evidence as well. Read carefully, the Appleby advice merely says that I could be a trustee, not a sole trustee. I would like to think that this is the end of the matter. It could not be clearer in the circumstances set out above that the only reason CTSAT was established was to sign the Framework Agreement and fulfil the obligations within that agreement. In any event, in light of the allegations levelled at me, Maitland has irrevocably excluded both me and LQ as possible beneficiaries of CTSAT. This effectively closes any possible strategy in which I would be a beneficiary of CTSAT. The Alleged Back Door – the Put Option I recognise that the Put Option is, on its face, a transaction of some complexity (at least for anyone not professionally involved in structured finance). There is, however, no conceivable way that I can legally benefit from the put in Durango. In summary: (a). The put is exercised at the option of China Tiger Investments Limited (“CTI”). CTI will only exercise that option if it is in CTI’s benefit to do so. Because the put option (like every other option I can think of) is a zero sum game, CTI’s benefit is Durango’s detriment (the buyer’s benefit is the seller’s detriment and conversely). The best that Durango can hope for is that the option is not exercised. In that case, nothing happens. Things simply stay as they are. In any other circumstances (i.e. the put is exercised) Durango is unambiguously worse off. (b). If the put is exercised and Durango’s assets are less than the settlement amount, i.e. the difference between the strike price and the value of the 0.68% fractional share of Conservation Finance International Holdings Ltd (“CFIH”), then Durango simply pays all of its assets to CTI and receives nothing. This will leave Durango with no assets at all. This is by far the most likely case because Durango’s assets are small and getting smaller. (c). If the put is exercised and Durango’s assets are more than the settlement amount, but less than the strike price, then Durango will pay the settlement amount to CTI and receive nothing. In this case Durango will have some assets but less than before the put was exercised. (d). The last possibility is when the put is exercised and Durango’s assets are greater than the strike price, then Durango can elect to pay the strike price and receive the 0.68% fractional share of CFIH . I note in this case that the option would only be exercised if the strike price were greater than the value of the 0.68% fractional share. Therefore, Durango would be worse off by the amount the put was “in-the-money” at the time it was exercised (ie the difference between the strike price it paid and value of the 0.68% fractional share of CFIH it received). In this case, Durango would end up owning the 0.68% fractional share of CFIH but it would be worse off. This is the last possibility. There are no others. (e). Also, I note that the fractional share is only worth some £340k based on LQ’s optimistic estimate of the value of the assets that were indirectly owned by CFI H. Moreover, since moving the assets to CTSAT, CFI H is now worth zero. In light of the above analysis, the put option has always been no more than a purely hypothetical way to gain access to the assets of CTSAT, that has recently been rendered doubly irrelevant because CFIH no longer has any material assets beyond cash to cover operating expense for 1 year. The Real Back Door I could I suppose support LQ’s claim that CTSAT was intended to provide a benefit to me and her, and that this intention informed the drafting of the legal documentation associated with the establishment of CTSAT and that CTSAT is therefore a post nuptial settlement and ask this court to give me access to the assets. However, this would be dishonest and would violate my fiduciary responsibility to the Chinese Tiger Project. Permissible Uses of CTSAT Assets apart from the Chinese Tiger Project As far as I am concerned, there is no permissible use of the assets of CTSAT apart from advancing the Chinese Tiger Project. Of course, this does not mean that LQ and I were forbidden from enjoying benefits, if any, that coincidently arise from advancing the Chinese Tiger Project. Nor does it mean that any expense apart from purchasing blesbok (antelope) is forbidden. But, it does mean that those people responsible for the funds and the Chinese Tiger Project must use their best judgment with respect to how best to deploy the assets for the Chinese Tiger Project. I can say with complete confidence that I have always done that. Nonetheless, I can say with complete confidence that I have never used any of CTSAT’s resources in any way that I remotely believed was for my or LQ’s benefit at the expense of the Chinese Tiger Project. It has been clear from the very beginning that the most important part of the Chinese Tiger Project is restoring the habitat in China. CTSAT has never had enough funds to accomplish this. Accordingly, I, and many others, have worked very hard trying to find ways to finance the shortfall. I regret that I have not yet succeeded. SCT HK The Purpose of SCT HK SCT HK was established primarily to raise funds for and promote the Chinese Tiger Project. In 2009 it expanded its activities to include funding small cat conservation. Circumstances leading to establishment of SCT HK SCT HK was established primarily to help address a problematic question that would come up repeatedly when we were marketing the Chinese Tiger Project. We were routinely asked why the Chinese government and Chinese people aren’t doing more for the Chinese Tiger Project. Provenance of SCT HK Assets The vast majority of SCT HK’s assets came from the big donation from SCT UK. There are a variety of other smaller donations from supporters of the Chinese Tiger Project. SB and LQ Relationship to SCT HK I was hardly involved in the establishment of SCT HK. The sole member is CTSAT. My only relationship with SCT HK is that I am a partner in JAS which advise the Chinese Tiger Project. SB and LQ Legal Access to Assets of SCT HK I am not aware of any legal means by which either LQ or I could gain access to the assets of SCT HK, a regulated charity in Hong Kong. I have not investigated whether or not any such legal strategy is available because it was never the intention that we should have such access. I cannot imagine that changing in the future. Permissible uses of SCT HK Assets apart from the Chinese Tiger Project The small cat fund can be used for funding small wildcat conservation projects. The small cat fund helps with the Chinese Tiger Project by building much needed scientific support. There are no other permissible uses. SCT UK The Purpose of SCT UK SCT UK was established by consultants hired by LQ for the purpose of assisting China with conservation of the South China tiger primarily by liaising with conservationists around the world and raising funds for, and awareness of, the plight of the South China tiger. SCT UK has taken a leading role in organizing the Chinese Tiger Project that culminated in SCT UK signing the Framework Agreement in November 2002. Circumstances leading to establishment of SCT UK LQ was born in Beijing during 1962. As I got to know her, I learned that since 1984, she had lived variously in Europe and the United States of America. LQ has had a life-long interest in animals, particularly cats. However, growing up in China, her only experience with animals was gained through visiting zoos. During the latter part of the 1980s, and whilst living and studying in Europe, LQ became familiar with the concept of wild life conservation. She heard of organisations such as the World Wildlife Fund (the WWF) and Care for the Wild. Through her deep interest in the cat family, LQ began reading about wild life conservation. For that reason, during 1997, she and I visited a game park in Africa for the first time. We visited Zambia, and LQ was enthralled with her experience of a huge game park where wild animals existed in their natural environment, and where they could be viewed by tourists in a manner which was not inimical to their conservation. LQ, during her trip to Zambia, was particularly keen to see a leopard. She was not successful in this regard. Consequently, on her return from Zambia, she made enquiries and read articles in order to establish where and how she could get to see a leopard in its natural environment. In the process, LQ heard of the Londolozi and Mala Mala game parks in South Africa. As a result, during 1998, LQ and I travelled to Londolozi. We spent some time there and were immensely impressed with our experience. Whilst at Londolozi, we became familiar with the South African conservation community's approach to the concept of eco-tourism, and the philosophy underpinning it. LQ also began contacting various specialists dealing with Tigers and in particular the conservation of Tigers. She spoke, inter alia, with Peter Jackson, Sarah Christie (the curator of the London Zoo and Stud bookkeeper for Tigers in Europe), Dr Gary Koehler, Dr Ron Thilson (the curator of the Minnesota Zoo), Endi Zhang (who is the Shanghai representative of WCS) and Josh Ginsberg (the conservation director for Asia of the WCS). The expenses incurred in the work that LQ was doing in this regard were all funded by myself. I was willing to support LQ in her endeavours (including giving her the requisite financial assistance), and LQ was willing to dedicate her time because of our passion for nature and the conservation of wildlife. The project increasingly became a passion for LQ and she devoted herself to assisting in the conservation of the South China Tiger. I was not only supportive of LQ, but also became independently interested in the project. Establishing SCT UK By 2000, LQ had taken the lead, internationally, in the conservation of the South China Tiger. Eventually, LQ's application for registration of a charity was approved by the Charity Commission of the United Kingdom, and she set up a charity, which was registered as "Save China's Tigers". The cost involved in setting up the charity was borne by me. During the period 2000 to 2001, I spent approximately US$ 150,000 in setting up the charity and funding projects in relation to the South China Tiger conservation project. Once "Save China's Tigers" was launched, I became concerned that the financial demands of the project were significantly greater than LQ and I could handle. We wished to make a difference to wildlife conservation and to this end focussed our energies on the conservation of the South China Tiger. However, we also realised that we would need to involve others in order to make the project successful. In addition, the support of the Chinese Government was critical because the South China Tiger existed only in China. Because of my concerns regarding the financial demands of the project, LQ began investigating ways of raising funds for the project. Her initial attempt at fundraising was through the internet, when LQ set up a website directed towards fund raising for the project. Unfortunately, this did not prove sufficiently successful. LQ believed that the effort to save the South China Tiger must involve the expertise of people and organizations from all over the world. "Save China's Tigers" should act as a bridge to channel such efforts to the project in China. She also wanted the charity to communicate to the rest of the world what efforts were being undertaken in China in regard to conservation. Thus, when the "Save China's Tigers" charity was launched in London on 9 October 2000, we invited a delegation of Chinese authorities. I contributed towards their expenses incurred in travelling to London and attending the launch. The launch was held at the Chinese Embassy in London. This is evidence of the strides LQ had made by then in earning the-trust and confidence of the Chinese Government. I emphasise that the aim of the entire project was the conservation of the South China Tiger. The project was not aimed towards securing commercial benefits for any individual, nor was it a part of the project that any individual would be personally enriched without making a proper contribution towards the conservation of the South China Tiger. SCT UK Assets Following the reorganization of assets pursuant to my undertaking to this court, SCT UK owns most of the empty special purpose financing vehicles that used to be owned by CTSAT and cash to cover operations for less than 1 year after including the cost of liquidating various special purpose financing vehicles in light of the current circumstances which make any financing very difficult. Going forward this should lower the minimum annual cost. SCT UK also ultimately owns its registered office, the property at 66D Royal Mint Street, subject to a UN1 lean lodged by LQ. Of course, SCT UK is happy to provide an undertaking not to dispose of the property until this court has made a final determination. SCT UK is also the sole beneficiary of the assets held by CTSAT, these include the South African reserve, the Chinese forestry plantation, the Dutch windfarm debt, and approximately £5.4 million in cash (ie less than 2 years of historical operating cost of the Chinese Tiger Project). Provenance of SCT UK Assets I provided the funds to pay the consultants who set up the charity on LQ’s instructions in 2000. Although the fees to the consultants were, as I recall, £100k, I believe that SCT UK had only minimal capital. The remainder of the fee was allegedly for the consultants to raise funds but no funds were ever raised and we were henceforth reluctant to hire consultants for upfront fees. We always had a strong preference for success fees after that. My tax returns show that I claimed approximately £400k of donations. As I recall, the US had punitive provisions that clawed back any deductions above a certain amount and there was hardly any tax benefit. I think I donated more than this but I did not bother to include it my taxes both because I had no income and because of the clawback provisions. G Bank and the SARs In 2004, I effectively donated to SCT UK my Stock Appreciation Rights (“SARs”) awarded to me by G Bank as part of my discretionary compensation. The SARs were structured to be very similar to call options on G Bank stock. However, unlike traded options, G Bank was keen to structure the SARs so that the value could only be realized at maturity. I explored the possibility of assigning my SARs to SCT UK’s trading account at Credit Suisse. Eventually it turned out that I had been entitled to do what was needed. I then assigned the SARs to SCT UK, and SCT UK sold offsetting call options on G Bank stock. I believe the proceeds to SCT UK still exceeded £1 million. However by then the SARs were far less valuable than when the takeover rumours were circulating. So, SCT UK lost a lot in opportunity cost. I believe the losses were well into seven figures. SCT UK then decided to sue G Bank. G Bank libel claim (a). the SARs claim for SCT UK; (b). the libel claim for myself. In the end, G Bank agreed to pay me £150k for the libel. In addition, G Bank agreed to pay SCT UK £19.85 million in respect of its claim on the SARs. For the avoidance of doubt, the allocation of the payments had nothing at all to do with any tax planning. Also, I reject entirely any suggestion that I could have taken the entire amount for myself. If I were to have asked G Bank to make a payment to me, in order to procure that SCT UK should drop its claims for no payment, then I would be guilty of an egregious and totally unacceptable conflict of interest. SB and LQ Legal Access to Assets of SCT UK I am not aware of any legal means by which either LQ or I could gain access to the assets of SCT UK, a regulated charity in the UK. I have not investigated whether or not any such legal strategy is available because it was never the intention that we should have such access Permissible uses of SCT UK Assets apart from the Chinese Tiger Project There are no other permissible uses. FINANCIAL RESOURCES Background (a). The circumstances under which the China Tiger trusts were set up; (b). The purpose of those trusts; (c). Whether those trusts are nuptial settlements; (d). The availability of funds within those trusts to LQ and SB; (e). Whether the funds within those trusts can only be utilized for conservation. In order to address this subject, I think it appropriate to comment on my background. I was born in 1961 in Colorado and raised at the foot of the Rocky Mountains. I have one brother two years older than I am and one sister two years younger. Our parents were old enough to have lived through the Great Depression and their values were greatly shaped by that experience and they tried to pass on these values to their children. These values may seem like platitudes to some, or they may superficially seem contradictory to others. Nonetheless, they make sense to me and go to the core of how I analyze the world. Our parents taught us to be self-reliant and to expect no help from others. At the same time, we were taught to look after others who needed help. This was especially important in hard times and for people close to us. Our parents were concerned about financial security and castigated us when they observed us spending money in a manner they considered irresponsible. Yet, they spent everything they earned trying to give us a better life than they had. Financial Resources during the Marriage Immediately following the marriage, I had approximately £18.3 million comprised of: (a). Approximately £0.1 million cash in the UK (b). Approximately £0.3 million cash in the PRC (c). Approximately £0.1 million property in France (d). Approximately £0.3 million property in PRC (e). Approximately £0.5 million property in UK (f). Approximately £17 million investment portfolio (mostly US publicly traded shares). With £18.3 million of assets available to the family and a lifestyle that had historically cost an average of some £37k a year, I had more than enough to retire in 2001 when we married. I would have needed to earn just 2/100ths of 1% return on my investments to support us in perpetuity without any other income. Consequently, I felt that I could afford to invest some of my time and money with little or no return - especially if it would assist my wife in fulfilling her vision for Save China’s Tigers and the nascent Chinese Tiger Project. As part of my effort to assist the Chinese Tiger Project, I loaned £4.5 million to LQ in 2003 for the purpose of settling the Li Quan trust and ultimately funding CFI in such a way that the balance sheet of CFI would not be subject to onerous US reporting requirements. (a). any income from employment; (b). any distributions from any business apart from relatively modest loans that were repaid; (c). any distributions, or loans, or other payments from any tiger trust apart from re-imbursements of reasonable charity expense from SCT UK. (d). As set out above I had expenses after the marriage comprised of: i. Approximately £15.6 million net losses relating to the tiger project and three failed businesses, namely JAS, CFI and SBFX; ii. Approximately £0.6 million relating litigation with LQ and the divorce. (e). This leaves an amount of £1.1 million unaccounted for during the 12 years we were married. This amounts to approximately £7k per month. I estimate that this is approximately the average amount paid out of my NatWest current account each month. This amount would include many business and charity expenses too small to remember and it would be disproportionate to reconcile with our lifestyle expense. However, I believe it is reasonable to guess that more than half is business expense. In any event, it is a far cry from the £60k per month LQ falsely claims we were spending on lifestyle. My Current Financial Resources My financial resources now are substantially the same as I set out in my Form E apart from the fact that I sold the Unicorn shares and my cash balance is now approximately £100k due to legal and living expense. I am currently contesting a legal bill of approximately £38k which could further reduce the cash balance. The total assets remaining today are worth approximately £1.6 million comprised of illiquid property in China and France worth approximately £1.5 million and approximately £0.1 million of cash. *************************************

Cited in 2 later judgments