Recent Developments in Jersey Case Law in the context of Commercial Fraud

“Lessons from the Frontline: An Offshore Perspective”

David Cadin and Mark Taylor, Partners Bedell Group, Jersey

Jersey | Guernsey | London | Dublin | Geneva

"Easy prey for the vultures in Jersey ?"

Mark Taylor, Partner, Bedell Group, Jersey

Jersey | Guernsey | London | Dublin | Geneva

1. William Tacon2. Montrow International Limited3. Nautilus Trust Company4. Kensington International Limited5. Likouala SA

The Players

Company structure

Nautilus Trust company

Trustee of Jersey Charitable Trust which owns 100% shares in Montrow

Montrow BVI company which owns 100% of Likouala

LikoualaA Congolese company which owns the Likouala oil field in Congo

Events unfold

■ Background■ BVI Proceedings – March 2007- Liquidation/

Appointment of Liquidator■ Jersey Proceedings – March 2007- Recognition■ BVI Proceedings: The Tacon Report- Montrow failure■ Jersey Proceedings: The stay and the affidavit■ Jersey takes a slightly different approach: the affidavit■ So why did the Royal Court do this?■ BVI Proceedings: the end of the road for Mr Tacon

Royal Court Order 13 March 2007

2. That William Richard Tacon as provisional liquidator be permitted within the jurisdiction of Jersey to take the following steps:

(a) to ascertain the assets of Montrow and/or Likouala;(b) to locate, protect, secure and take possession of all books, records, papers, statements and other documents

of Montrow and/or Likouala including accounting and statutory records, wherever located within Jersey and in whatever form and to exercise such powers as may be necessary for the purpose of acquiring, retaining possession or making copies thereof;

(c) to take over and manage the affairs of Montrow and/or Likouala and to carry on the business of Montrow and/or Likouala to the extent necessary to preserve the assets of Montrow and/or Likouala and to protect the interests of their investors;

(d) to appoint over such period as Mr Tacon consider necessary any person including a manager, administrator, custodian or other functionary whose services may be required for the proper conduct of the affairs of Montrow and/or Likouala;

(e) to pay out the assets of Montrow and/or Likouala or [sic] reasonable expenses or disbursements incurred in the management and administration of Montrow and/or Likouala as the case may be and the execution of the powers and duties of the provisional liquidator;

(f) to bring or defend any actions to the [sic] proceeding whether civil or criminal on behalf of Montrow and/or Likouala and to give such instructions in connection therewith and to take such action as may be necessary;

(g) to examine by interview any director or officer of Montrow and/or Likouala in particular Mr Grimshaw and/or any other employee of Nautilus who reasonably believed to have in his or her possession any property of Montrow and/or Likouala or any information concerning the promotion, business dealings or affairs of Montrow and/or Likouala.

Court order

Consequences

■ The Royal Court will exercise its discretion on similar application.

■ However, Directors and Trustees who are being ordered to disclose or answer questions must cast a critical eye over the proceedings and the orders.

■ How are the documents going to be used?■ Who is assisting the Liquidator and why?■ Are the questions that are going to be asked of the

Directors relevant to the role of the Liquidator or are they for another purpose?

F G Hemisphere Associates LLC

The vulture fund and Plaintiff in the Jersey proceedings

Democratic Republic of Congo

GecaminesA Congolese company which owns a mining operation in Congo and

shares in GTL

GTLA Jersey company which as an agreement to purchase

cobalt and copper from Gecamines’ mine

The FG Hemisphere Players

What was it about?

■ Background■ Jersey Proceedings■ Role of GTL■ Disclosure Orders■ Type of Injunction: Arret entre Mains■ Enforcement

Lessons from the Frontline: An Offshore Perspective

David Cadin, Partner, Bedell Group, Jersey

Jersey | Guernsey | London | Dublin | Geneva

"During the appellant’s own evidence the Commissioner intervened withsubstantive questions on no fewer than 273 occasions, 138 of them during evidence in chief. Generally this was with a whole series of questions, taking upin all just over 18% of the appellant’s eight and a half days in the witness box. SoMuch for the bare statistics. Of altogether greater significance than the merenumber and length of these interruptions was, however, their character. For themost part they amounted to cross examination, generally hostile. By hisquestioning the Commissioner evinced not merely scepticism but sometimesdownright incredulity as to the defence being advanced. Regrettably too, on occasion the questioning was variously sarcastic, mocking and patronising.“

Brown LJ, Michel v AG [2009] UKPC 40

(Jersey Evening Post)

In the Matter of Centurion Management Services Limited [2009] JRC 227

“The gardener, the Notts County fixer and the Lost FortuneMan who worked for Russell King says he lost cash won incompensation claim”(Matt Scott, The Guardian, Thursday 1 October 2009)

■ Re Belgravia Financial Services Group Limited and others [2008] JRC 161

■ Re Hickman [2009] JRC 40■ Lawson v Belgravia Asset Management Limited (in

Liquidation) [2010] JRC 107

In the Matter of the AE and other Settlements[2010] JRC 85

Trust Trust Trust

Holding Company

Wholly owned companies

Companies with a minority stake

"(2) The court may, if it thinks fit –(a) make an order concerning…

(iii) a beneficiary or any person having a connection with the trust…“

Article 51(2) of the Trusts (Jersey) Law 1984

■ In the matter of the CA Settlement [2002] JLR 312

■ In the matter of the Internine and Azali Trusts [2006] JLR 195

"11/3 Authority to satisfy judgment debts by distraint(1) When the Court grants a judgment condemning a defendant to pay a sum of money, the judgment shall be taken to authorize the plaintiff to cause the moveables of the defendant to be distrained on unless the Court directs otherwise.

(2) Moveables distrained on shall be applied towards the satisfaction of the judgment debt and costs, or sold

(either at a public auction or at a valuation) and the proceeds of sale so applied without the plaintiff’s being required to obtain any further judgment."

Royal Court Rule 11/3

Contacts:

David CadinBedell CristinT: +44(0)1534 814701E: david.cadin@bedellgroup.com

Mark TaylorBedell CristinT: +44(0)1534 814857E: mark.taylor@bedellgroup.com