Property tycoon Robert Tchenguiz suffers blow in the Supreme Court over discretionary trust
Property tycoon Robert Tchenguiz has lost a landmark Supreme Court judgment against a conglomerate of advisers he claimed acted negligently when his discretionary trust fell into financial difficulty.
The London businessman, thought to be worth around £800m, accused various trustees of the Tchenguiz Discretionary Trust (TDT) of failing to alter the trust’s structure around the time that its bank, Icelandic giant Kaupthing, hit the rocks in 2008.
The tycoon pursued claims of negligence and breach of duty in the Guernsey courts before taking them to the Supreme Court, the final port of call, where they were rejected yesterday.
The lengthy judgment delivers a thumping defeat for Tchenguiz, who could lose his lavish £50m mansion in Kensington, the Royal College of Organists’ house by the Royal Albert Hall.
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The court found that Tchenguiz’s claim that his property was protected under article 8 of the European Convention on Human Rights was “untenable”.
It said that while the current case was “not part of any legal process to dispossess Mr Tchenguiz of his leasehold interest in his family home”, it did establish the rights of relevant trustees, including Glenalla Properties and Thorson, to “enforce their contractual rights against the assets of the TDT”.
“Whether or not the enforcement of any such claims will result in an action for possession of Mr Robert Tchenguiz’s home is unknown and may depend on what he does in response to a judgment against the current trustees,” it said.
A spokesperson for Investec, one of the trustees, said: “Investec Trust Guernsey Limited (‘ITG’) has faced numerous claims over eight years from successor trustees of the TDT. We have always maintained that the claims are baseless and successive courts have rejected them.
“We wish to make it clear that, in its former role as trustee of the TDT between 2007 and 2010, ITG fulfilled its duties professionally and with integrity. We have nevertheless been forced to commit substantial resources over many years to defending ourselves.”
In a further twist to the case, the judgment opens the door for Grant Thornton to pursue him for outstanding legal costs of £140m in connection with a long-running dispute with Kaupthing which came to the fore through a failed Serious Fraud Office (SFO) investigation into Robert and his brother Vincent.
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The fraud squad’s investigation collapsed in 2012 and the SFO was subsequently forced to issue an apology and an out-of-court settlement of £4.5m.
In 2014, the brothers launched a High Court claim alleging Kaupthing, Grant Thornton partners Stephen Akers and Mark McDonald and Icelandic lawyer Jóhannes Jóhannsson conspired with the SFO in a bungled investigation that led to the brothers’ arrests and dawn raids on their properties.
Vincent settled the £2.2bn lawsuit with Kaupthing and Grant Thornton in October last year, but Robert’s claim against Akers, McDonald and Jóhansson is ongoing.
However, part of the claim was dismissed and he was found liable to pay the auditor’s legal costs, which Grant Thornton confirmed they would now be pursuing.
A spokesperson for Akers and McDonald and the joint liquidators of Oscatello Investments Limited, Glenalla Properties Limited, Eliza Limited and Thorson Investments Limited said: “We welcome the Privy Council ruling that allows us to enforce a judgment of in excess of circa £140m against assets held in the Tchenguiz discretionary trust. This is a welcome outcome for the creditors of the trust, including Kaupthing.”
Robert Tchenguiz last night said he was “very disappointed” by the ruling.
He said he will now “ask the European Court of Human Rights in Strasbourg for a fair trial”.
“What happens in the meantime to my home… is a matter for the Royal Court of Guernsey,” Tchenguiz said.
A separate civil case regarding the matter will begin in October.
“And so all is not lost. In October 2018, a civil case in the UK will commence and for the first time, the judiciary will be able to see all of the evidence of wrongdoing that I was unable to show to the Privy Council. Even though I was denied the right to use the SFO disclosure documents in the Privy Council proceedings, the court has granted permission to use the documents in the High Court proceedings in October.”
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