Sinclair Versailles

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  • Topic: Trust law, Trustee, Fiduciary
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Date: 29/03/2011
Before :

THE MASTER OF THE ROLLS

LORD JUSTICE RICHARDS
and
LORD JUSTICE HUGHES
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Between :

| |Sinclair Investments (UK) Ltd |Appellant | | |- and - | | | |Versailles Trade Finance Limited (in administrative receivership) | | | |Versailles Group Plc (in administrative receivership) | | | |National Westminster Bank Plc |Respondents and | | |Anthony V Lomas |Cross-appellants | | |Robert Birchall | | | |Royal bank of Scotland Plc | |

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(Transcript of the Handed Down Judgment of
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Robert Miles QC and Richard Hill (instructed by Liam Hemmings, Sinclair Investments (UK) Ltd) for the Appellant Matthew Collings QC (instructed by Denton Wilde Sapte LLP) for the Respondents

Hearing dates : 14th, 15th and 16th February 2011
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Judgment
The Master of the Rolls:

1. This is an appeal and a cross-appeal against a decision of Lewison J, who held that the appellant, Sinclair Investments (UK) Limited (“Sinclair”), was not entitled to assert a proprietary interest in the proceeds of sale of some shares in Versailles Group PLC (“VGP”), but was entitled to assert a proprietary interest in funds originally held by Versailles Trade Finance Limited (“VTFL”), albeit to a more limited extent than Sinclair had claimed.

2. The proprietary claims arise out of the insolvency of the Versailles Group, whose business the Judge described as “little but a fraudulent scam” and “a classic Ponzi scheme”. The claims give rise to (i) an issue as to the circumstances in which a proprietary interest arises, (ii) an issue as to what constitutes sufficient notice to defeat a person’s claim that he is a purchaser for value without notice in good faith, and (iii) a number of other issues relating to tracing claims.

The background

The facts in outline

3. I take the relevant facts largely from the judgment below at [2010] EWHC 1614 (Ch), paras 3-19, where Lewison J set out the background, which was more fully described by Rimer J in an earlier case, Sinclair Investment Holdings SA v Versailles Trade Finance Ltd [2007] EWHC 915 (Ch), paras 7-72.

4. VGP’s principal shareholder was Mr Carl Cushnie (or, more accurately, a company which it is agreed is to be treated as his alter ego, and so I shall simplify matters by ignoring it). VTFL was VGP's wholly owned principal trading subsidiary, and, at least ostensibly, its business was a modified form of factoring. This business required money, and funds came from two principal sources, wealthy individuals, known as “traders”, and loans made by banks.

5. The traders provided the money to a company, which was not part of the Versailles Group, called Trading Partners Ltd (“TPL”), which was controlled by Mr Cushnie and his associate Mr Clough, and of which they were both directors. From March 1996, TPL solicited funds from traders, who, having...
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