Winkler & Anor v Shamoon & Ors, Court of Appeal - Chancery Division, February 15, 2016, [2016] WLR(D) 101,[2016] EWHC 217 (Ch)

Resolution Date:February 15, 2016
Issuing Organization:Chancery Division
Actores:Winkler & Anor v Shamoon & Ors
 
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Case No: HC-2014-00535

Neutral Citation Number: [2016] EWHC 217 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Royal Courts of Justice

7 Rolls Building

Fetter lane

London

EC4N 1NL,

Date: Monday 15th February 2016

Before :

The Hon Mr Justice Henry Carr

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Between :

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MR SIMON COLTON, MS STEPHANIE WOOD (instructed by PCB Litigation LLP) for the Claimants

MR DANIEL JOWELL QC, MR TONY SINGLA (instructed by Quinn Emanuel Urquhart & Sullivan UK LLP) for the First and Second Defendants

MR MICHAEL MCPARLAND (instructed by Kingsley Napley LLP) for the Third Defendant

Hearing dates: 13-15, 18-19 January 2016

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Mr Justice Henry Carr:

Introduction 4

The applications before the Court 5

The agreed list of issues 6

Submission to the jurisdiction of the English Court 7

The relevant facts 7

Legal issues 10

The Claimants' submissions 13

Assessment 14

Whether the claim falls within the ``succession'' exception 17

Legal Principles 17

Article 1(2)(a) 19

Application to the facts of the present case 20

Whether England is the natural and convenient forum 22

Domicile of Mrs Angela Shamoon 23

Legal principles 23

Application to the facts 26

The evidence of Mrs Angela Shamoon 26

Day Count 28

The Position of the UK and Israeli Tax Authorities 30

The Quality of Mr Winkler's evidence 31

Additional points made by the Claimants 32

Conclusion 35

The merits of the claim 35

The conditions which the Claimants need to satisfy 35

Relevant facts 37

Re Rose claim 38

Express declaration of trust 41

Proprietary estoppel claim 43

The trust structure 43

Alleged representations by Ms Alexandra Shamoon 44

Alleged detrimental reliance 45

Is England the proper place for the Claimants to bring the claim against Ms Alexandra Shamoon 46

Does the English Court have jurisdiction in respect of the claim against Mr Grumbach? 47

Conclusions 49

Introduction

  1. On 29th May 2009, Mr Sami Shamoon (``Mr Shamoon''), a very successful Israeli businessman, passed away. He was known in his lifetime as one of the wealthiest men in Israel. He left a large and valuable estate. In June 2012, an Israeli judge recorded that its estimated value was about 1.7 billion new Israeli Shekels, which is approximately US $1 billion. The First Defendant (``Mrs Angela Shamoon'') is his widow and the Second Defendant (``Ms Alexandra Shamoon'') is his only daughter. The First Claimant (``Mr Winkler'') is a Certified Public Accountant who was, amongst other things, the Chief Financial Officer and manager of the Yakhin Hakal Group of Israeli companies, which were owned or controlled by Mr Shamoon. Mr Winkler is the sole beneficial owner of the Second Claimant (``Arzal'').

  2. Mrs Angela Shamoon and Ms Alexandra Shamoon are the residuary legatees under Mr Shamoon's will which is dated 19th December 2007. Ms Alexandra Shamoon's share of Mr Shamoon's estate is subject to a private trust created under Israeli Trusts Law 5739-1979. This directed that if, as was the case, Ms Alexandra Shamoon was not yet 35 years old at the time of Mr Shamoon's death, both the specific monetary bequest made to her in the will and her interest in the remainder of the estate would be held on trust for her benefit until she reached the age of 35. This will happen on the 26th November 2019, until when Ms Alexandra Shamoon receives a monthly allowance.

  3. Mr Shamoon made a number of monetary bequests in his will, including a bequest to Mr Winkler of US $30,000. However, the Claimants allege that they are entitled to 1% of the shares in Ainsbury Properties Limited (``Ainsbury'') and 12.5% of the shares in Placido Investments Inc (``Placido''). Both Ainsbury and Placido are British Virgin Islands (``BVI'') companies, and the shares in dispute (``the Shares'') are currently registered in the name of Mr Shamoon and are managed and controlled by the Administrator of Mr Shamoon's estate. The Shares are worth tens of millions of dollars.

  4. In particular, Mr Winkler claims that in about 2008, Mr Shamoon contemplated transferring a part of Ainsbury's holding in another company called B. Gaon Holdings Limited (``Gaon'') to Mr Winkler. However, following advice from the Third Defendant (``Mr Grumbach''), Mr Winkler claims that Mr Shamoon decided instead to give 1% of Ainsbury to Mr Winkler and instructed Mr Grumbach to transfer these shares. Furthermore, Mr Winkler claims that in April 2009, shortly before his death, Mr Shamoon decided to transfer to Mr Winkler 12.5% of the shares in Placido in order to incentivise Mr Winkler to be involved in the business of the Yakhin Hakal Group after Mr Shamoon's death. Mr Winkler claims that Mr Shamoon directed Mr Grumbach to register Mr Winkler as owner of 12.5% of Placido.

  5. By this claim, the Claimants seek declarations against Mrs Angela Shamoon and Ms Alexandra Shamoon to establish that Mr Winkler is entitled to 1% of the shares in Ainsbury and that Arzal, alternatively Mr Winkler, is entitled to 12.5% of the shares in Placido. Orders are also sought that Mrs Angela Shamoon and Ms Alexandra Shamoon should ``take all necessary steps'' to ensure that Mr Winkler, in the case of the Ainsbury shares, and Arzal or alternatively Mr Winkler, in the case of the Placido shares, is registered as owner, or their proceeds transferred, ``at the earliest opportunity''. As against Mr Grumbach, it is claimed that he negligently failed to transfer the legal title in the Shares, and so, if the Claimants' claim for registration of the legal title in the Shares fails, their value is claimed from Mr Grumbach.

  6. There have been a very large number of claims in the Israeli courts against Mr Shamoon's estate. In February 2015, Mr Reicher, the current Administrator of the estate, told the Israeli Court that more than 300 court applications had been filed in Israel, involving more than 30 litigants, since the start of the administration of the estate in Israel in 2009. One such application was made in Israel by Mr Winkler himself. In particular, Mr Winkler brought proceedings in April 2014 in Israel against the Administrator of Mr Shamoon's Estate, and against Mrs Angela Shamoon and Ms Alexandra Shamoon as the beneficiaries of the remainder rights under Mr Shamoon's will. By this application, he asked the Israeli Court to direct that the Shares, which are all assets within Mr Shamoon's estate, should be transferred into the ownership of Mr Winkler, by requiring the Administrator of the estate to remove his objections to having the shares transferred into Mr Winkler's name.

  7. The Israeli Court dismissed Mr Winkler's application on 2nd June 2014. It ruled that the summary process of asking the Court to give instructions to the Administrator of the estate was not suitable where there was a dispute between the parties as to the ownership of the shares in question. Instead the Court directed that Mr Winkler ``... is obliged to file a suitable claim to the competent court...''. I have no doubt that the Israeli judge dismissing the summary process intended that the ``competent court'' would be an Israeli court. However, Mr Winkler did not bring such proceedings in Israel, but instead issued the Claim Form in these proceedings on the 8th October 2014. In contrast to the proceedings in Israel, the Administrator was not made a defendant to these proceedings.

    The applications before the Court

  8. Mrs Angela Shamoon applies for an order under CPR Part 11 setting aside the Claimants' purported service of the Claim Form on her within the jurisdiction on the basis that she is not domiciled in the UK for the purposes of Article 59 of the Brussels Regulation 44/2001 (``the Brussels Regulation''), and was not therefore served at her ``usual or last known residence'' within CPR 6.9(2). The Brussels I Recast Regulation (1215/2012) (``the Brussels Recast Regulation'') has no application to this case.

  9. Alternatively, and in the event that the Court holds that she was validly served within the jurisdiction, Mrs Angela Shamoon applies for an order declaring that the Court does not have jurisdiction, or, alternatively should not exercise its jurisdiction in respect of the claim against her on the basis that:

    i. The claim relates to succession and therefore falls outside the scope of the Brussels Regulation (pursuant to Article 1(2)(a) thereof); and

    ii. Pursuant to the common law rules, the English Court has no jurisdiction in respect of the claim and in any event England is not the natural forum for the claim.

  10. Ms Alexandra Shamoon accepts that she is domiciled in the UK for the purposes of the Brussels Regulation. However, she applies for an order on essentially the same basis as that set out above, contending, in particular, that the claim relates to succession and therefore falls outside the scope of the Brussels Regulation.

  11. The Claimants claim that the applications of Mrs Angela Shamoon and Ms Alexandra Shamoon should be dismissed. Alternatively, the Claimants apply for permission to serve Mrs Angela Shamoon out of the jurisdiction (``the Protective Application''). The Claimants seek permission from the Court to serve Mrs Angela Shamoon out of the jurisdiction in Israel pursuant to CPR 6.36 and 6.37, on the basis that she is a ``necessary or proper party'', within the meaning of CPR PD 6B paragraph 3.1(3), to the claim against Ms Alexandra Shamoon, who would thus operate as an ``anchor defendant''.

  12. Mr Grumbach also challenges jurisdiction under CPR Part 11. In particular, he is a Swiss lawyer, domiciled in Switzerland, and the Claimants seek to establish the jurisdiction of the English Court under Article 6(1) of the Lugano Convention 2007 (``the Lugano II Convention''). Mr Grumbach claims that there is no proper basis for the exercise of jurisdiction, on the basis inter alia that Article 6(1) is inapplicable to the facts of this case.

    The agreed...

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