T Choithram International SA V Pagarani
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was a decision of the
Judicial Committee of the Privy Council The Judicial Committee of the Privy Council (JCPC) is the highest court of appeal for the Crown Dependencies, the British Overseas Territories, some Commonwealth countries and a few institutions in the United Kingdom. Established on 14 Augus ...
on appeal from the
British Virgin Islands ) , anthem = "God Save the King" , song_type = Territorial song , song = "Oh, Beautiful Virgin Islands" , image_map = File:British Virgin Islands on the globe (Americas centered).svg , map_caption = , mapsize = 290px , image_map2 = Brit ...
in relation to the vesting of
trust Trust often refers to: * Trust (social science), confidence in or dependence on a person or quality It may also refer to: Business and law * Trust law, a body of law under which one person holds property for the benefit of another * Trust (bus ...
property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
in a
trustee Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility to t ...
.


Facts

Mr Thakurdas Choithram Pagarani wanted to start a foundation called the Choithram International Foundation. He was dying of
cancer Cancer is a group of diseases involving abnormal cell growth with the potential to invade or spread to other parts of the body. These contrast with benign tumors, which do not spread. Possible signs and symptoms include a lump, abnormal b ...
. He drew up a trust deed, including himself a trustee. He travelled from his business based in
Dubai Dubai (, ; ar, دبي, translit=Dubayy, , ) is the most populous city in the United Arab Emirates (UAE) and the capital of the Emirate of Dubai, the most populated of the 7 emirates of the United Arab Emirates.The Government and Politics of ...
and had a ceremony at his son's home in
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
. On 17 February 1992, with people gathered at his bedside, Mr Pagarani announced he was transferring his money to a Jersey trust for his proposed philanthropic foundation. Witnesses differed in the precise words, but the generally accepted substance as to what he was thought to have said was: "I now give all my wealth to the Trust" or "I have given everything to the Trust". Mr Pagarani executed the trust deed in front of three trustees (who also signed), his accountant and the First Secretary of the Indian High Commission. He told the group accountant, Mr Param, that he knew what to do to transfer all balances to the foundation. There were to be three more trustees (who signed shortly afterwards), and Mr Pagarani himself was to be a seventh trustee. Those present testified that Mr Pagarani made an immediate absolute gift to the Foundation of all his shareholdings and credit balances in four British Virgin Island companies. But then he died before actually executing the documents to transfer legal title to the assets to the trustees. Some of his children contended the gift was imperfect and unenforceable. The four BVI companies in fact altered the share registers later the same day. Mr Pagarani had also prepared a will, but had not signed it. The share transfer documents were also unsigned by Mr Pagarani. The relatives who were trustees of the Foundation claimed that the gift to the Foundation was valid, and that the shares in the companies had not been transferred properly in the manner specified by law in the
International Business Companies Act The International Business Companies Act, 1984 was a statute of the British Virgin Islands which permitted the incorporation of International Business Companies (IBCs) within the Territory. The Act played in a huge role in the economic and fi ...
. Other people who stood to inherit challenged the foundation's claim.


Advice


Court of Appeal

The Court of Appeal of the British Virgin Islands, upholding the judge at first instance, held that the trust failed. It took the view that a perfected
gift A gift or a present is an item given to someone without the expectation of payment or anything in return. An item is not a gift if that item is already owned by the one to whom it is given. Although gift-giving might involve an expectation ...
could only be made in one of two ways, viz. # by a transfer of the gifted asset to the donee, accompanied by an intention in the donor to make a gift; or # by the donor declaring himself to be a trustee of the gifted property for the donee. In case 1 above, the donor must have done everything necessary to be done which is within his own power to do in order to transfer the gifted asset to the donee. If the donor has not done so, the gift is incomplete since the donee has no equity to perfect an imperfect gift, for which there is a long line of authority. Moreover, the court will not give a benevolent construction so as to treat ineffective words of outright gift as taking effect as if the donor had declared himself a trustee for the donee, see ''
Milroy v Lord ''Milroy v Lord''
''_(1862)_4_De_G_F_&_J_264. So_in_this_case_Mr_Pagarani_used_words_of_gift_to_the_Foundation_(not_words_declaring_himself_a_trustee)_–_unless_he_transferred_the_shares_and_deposits_so_as_to_vest_title_in_all_the_Trustees,_he_had_not_done_all_that_he_could_in_order_to_effect_the_gift;_so_under_the_law_as_it_had_previously_been_understood,_the_gift_would_have_failed.__Further_it_would_not_be_possible_to_treat_Mr_Pagarani's_words_of_gift_as_a_declaration_of_trust,_because_they_make_no_reference_to_trusts.__Therefore,_if_the_case_does_not_fall_within_either_of_the_possible_methods_by_which_a_complete_gift_can_be_made,_then_the_gift_should_have_failed.


_Privy_Council

Nicolas_Browne-Wilkinson,_Baron_Browne-Wilkinson.html" "title="862EWHC J78is an English trusts law case that held trusts should not be used to save gifts from being defeated. It purported to follow one of the maxims of equity that "Equity will not assist a volunteer". Facts Thomas Medley ...
'' (1862) 4 De G F & J 264. So in this case Mr Pagarani used words of gift to the Foundation (not words declaring himself a trustee) – unless he transferred the shares and deposits so as to vest title in all the Trustees, he had not done all that he could in order to effect the gift; so under the law as it had previously been understood, the gift would have failed. Further it would not be possible to treat Mr Pagarani's words of gift as a declaration of trust, because they make no reference to trusts. Therefore, if the case does not fall within either of the possible methods by which a complete gift can be made, then the gift should have failed.


Privy Council

Lord_Browne-Wilkinson_ Nicolas_Christopher_Henry_Browne-Wilkinson,_Baron_Browne-Wilkinson,__PC_(30_March_1930_–_25_July_2018)_was_a_British_judge_who_served_as_a_Lord_of_Appeal_in_Ordinary_from_1991_to_2000,_and__Senior_Lord_of_Appeal_in_Ordinary_from_1998_to_2000. _...
_delivered_the_advice_of_the_Privy_Council. The_Privy_Council_advised_that_the_fairness_required_by_equity_meant_the_fact_that_the_trust_property_was_vested_in_one_trustee_(Mr_Pagarani_himself)_at_the_time_of_the_gift_was_sufficient_to_make_the_conveyance_to_the_trust_valid._Nicholas_Browne-Wilkinson,_Baron_Browne-Wilkinson.html" "title="Nicolas Browne-Wilkinson, Baron Browne-Wilkinson">Lord Browne-Wilkinson Nicolas Christopher Henry Browne-Wilkinson, Baron Browne-Wilkinson, PC (30 March 1930 – 25 July 2018) was a British judge who served as a Lord of Appeal in Ordinary from 1991 to 2000, and Senior Lord of Appeal in Ordinary from 1998 to 2000. ...
delivered the advice of the Privy Council. The Privy Council advised that the fairness required by equity meant the fact that the trust property was vested in one trustee (Mr Pagarani himself) at the time of the gift was sufficient to make the conveyance to the trust valid.
Lord_Browne-Wilkinson_ Nicolas_Christopher_Henry_Browne-Wilkinson,_Baron_Browne-Wilkinson,__PC_(30_March_1930_–_25_July_2018)_was_a_British_judge_who_served_as_a_Lord_of_Appeal_in_Ordinary_from_1991_to_2000,_and__Senior_Lord_of_Appeal_in_Ordinary_from_1998_to_2000. _...
_said_the_most_important_question_was_this:_on_the_basis_that_Mr_Pagarani_intended_to_make_an_immediate_absolute_gift_"to_the_Foundation",_but_had_not_vested_the_gifted_property_in_all_the_trustees_of_the_Foundation,_are_the_trust_law.html" "title="Nicholas Browne-Wilkinson, Baron Browne-Wilkinson">Lord Browne-Wilkinson Nicolas Christopher Henry Browne-Wilkinson, Baron Browne-Wilkinson, PC (30 March 1930 – 25 July 2018) was a British judge who served as a Lord of Appeal in Ordinary from 1991 to 2000, and Senior Lord of Appeal in Ordinary from 1998 to 2000. ...
 said the most important question was this: on the basis that Mr Pagarani intended to make an immediate absolute gift "to the Foundation", but had not vested the gifted property in all the trustees of the Foundation, are the trust law">trusts A trust is a legal relationship in which the holder of a right gives it to another person or entity who must keep and use it solely for another's benefit. In the Anglo-American common law, the party who entrusts the right is known as the "settl ...
 of the Foundation trust deed enforceable against the deposit account, deposits and the stock, shares, or was it (as the judge at first instance and the Court of Appeal had held) a case where there has been an imperfect gift which cannot be enforced against Mr Pagarani's estate whatever his intentions might have been? It expressed "some doubt" whether '' Bridge v Bridge'' had been correctly decided when it said that vesting of property in one trustee among many was insufficient, but they distinguished the case on technical grounds.


Significance

Most academic commentary was to the effect that the decision made new law, notwithstanding the comments of the Privy Council to the contrary. Suggestions have also been made to the effect that the Privy Council was prepared to bend the law to prevent the intention of the donor being frustrated, and the charitable foundation losing such a large bequest. The logic behind the decision is slightly fuzzy, relying more upon notions of fairness than legal rules, and it has been questioned in some quarters whether it would be followed in similar less clear cut circumstances. One commentator has suggested politely that in the decision "the courts are not entirely consistent with their message in relation to equity's power to perfect imperfect gifts". ;Background Mr Pagarani was born in 1914 in
India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
. He was a devout
Hindu Hindus (; ) are people who religiously adhere to Hinduism.Jeffery D. Long (2007), A Vision for Hinduism, IB Tauris, , pages 35–37 Historically, the term has also been used as a geographical, cultural, and later religious identifier for ...
. In 1928 he married his first wife, Lalibai Thakurdas Pagarani, by whom he had six daughters. In about 1937 Mr Pagarani left India and eventually established a supermarket business in
Sierra Leone Sierra Leone,)]. officially the Republic of Sierra Leone, is a country on the southwest coast of West Africa. It is bordered by Liberia to the southeast and Guinea surrounds the northern half of the nation. Covering a total area of , Sierra ...
, Lalibai and their children remaining in India. In
Sierra Leone Sierra Leone,)]. officially the Republic of Sierra Leone, is a country on the southwest coast of West Africa. It is bordered by Liberia to the southeast and Guinea surrounds the northern half of the nation. Covering a total area of , Sierra ...
he met and in 1944 married Virginia Harding. They had eight children together, including three sons.In the legal proceedings, the claimants had alleged that the marriage to Virginia Harding was void (law), void for non compliance with the ''
lex loci celebrationis In conflict of laws, the term ''lex loci'' (Latin for "the law of the place") is a shorthand version of the choice of law rules that determine the ''lex causae'' (the laws chosen to decide a case).''Black's Law Dictionary'' abridged Sixth Edition (1 ...
'', but that claim was rejected and not appealed; see page 4 of the judgment of Georges J at first instance, Suit No 184 of 1992 of the High Court of Justice of the British Virgin Islands (Civil). Mr Pagarani remained in Sierra Leone until the 1980s but used to return to India to visit his Indian family and those members of his Sierra Leone family whom he had taken to India to be brought up according to Indian ways and customs. The businesses carried on by Mr Pagarani were outstandingly successful and spread widely throughout the world. They were usually named "T. Choithram and Sons" and were often known simply as "Choithrams". In 1989 Mr Pagarani brought most of his business under the umbrella of the first various
offshore companies The term "offshore company" or “offshore corporation” is used in at least two distinct and different ways. An offshore company may be a reference to: * a company, group or sometimes a division thereof, which engages in offshoring business pro ...
(including T Choithram International SA), in effect,
holding companies A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
. He was not the sole owner of the shares in those companies, but he held a majority share. Throughout his life Mr Pagarani gave to
charity Charity may refer to: Giving * Charitable organization or charity, a non-profit organization whose primary objectives are philanthropy and social well-being of persons * Charity (practice), the practice of being benevolent, giving and sharing * Ch ...
, amounting to more than a million US dollars. The judge at first instance found as a fact that:


See also

*
English trusts law English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trusts were a creation of the English law of property and obligations, and share a subsequent history with countries across the ...


Notes

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External links


Full report of the Privy Council decisionChoithram International's website
Judicial Committee of the Privy Council cases on appeal from the British Virgin Islands English trusts case law 2000 in case law 2000 in the British Virgin Islands 2000 in British law British Virgin Islands case law