This case highlights the level of protection afforded by the law in financial transactions, even when the victim, Van Zuylen, may seem unduly naive and trusting. The Defendant, Whiston-Drew, is found liable.
The claimant, Baroness Jacqueline Van Zuylen, met Rodney Whiston-Dew, the first defendant, in 2011. Whiston-Dew, a solicitor, was introduced to Van Zuylen as an experienced investor. Dissatisfied with her current arrangements, Van Zuylen agreed to transfer her fortune into a trust in order for Whiston-Dew to invest the money and provide her with a monthly income. By mid-2012 Van Zuylen had granted powers of attorney to Whiston-Dew and transferred £2.1 million to a solicitors’ firm working for GBT Global Ltd, this being a company owned and directed by Whiston-Dew, and the second defendant in this case.
Unbeknown to Van Zuylen, her funds continued to be held in the account of GBT’s solicitors. Whiston-Dew, however, gave the impression that her money had been placed in the newly constituted Azure Trust. It is unclear whether the Azure Trust ever came into existence, but certainly none of Van Zuylen’s wealth was transferred into it. Whiston-Dew based much of his defence around the Azure Trust, arguing that its trustees rather than himself were responsible for managing Van Zuylen’s wealth, and that the present case fell outside the jurisdiction of UK courts as the Azure Trust was domiciled in St Kitts and Nevis. Mr Nicholas Thompsell of the High Court dismissed these arguments, preferring to view the Azure Trust as a fiction invented by Whiston-Dew to pretend that Van Zuylen’s finances were being properly managed.
Nothing is more noble, nothing more venerable than fidelity.”
Cicero
The truth of what happened to Van Zuylen’s funds can be at least partly ascertained by examining the accounts of GBT’s solicitors. It seems that payments were made to a large range of individuals and companies, usually with no explanation. In some cases a connection was apparent between the payee and Whiston-Dew, for example when £140,000 was transferred to a company called Bellgold. Over time a total of £846,000 was returned to Van Zuylen, of which £719,000 came directly from the solicitors and £127,000 from various other payers whose names were either unrecognisable to Van Zuylen or not given at all. In his judgement Mr Thompsell suggested that Whiston-Dew was operating a Ponzi scheme.
Van Zuylen reports becoming increasingly concerned with the lack of transparency in these arrangements, although she took no action to terminate them until learning of Whiston-Dew’s imprisonment in 2017 on a charge of tax evasion. GBT’s solicitor initially helped her to investigate the whereabouts of her money, and it transpired that in 2011 a legal charge worth £1 million had been registered in relation to some land in Harwich in Essex. The charge was registered on the same day that £1 million was transferred from GBT to Quay Investments Ltd, the previous holder of the same charge, and just a week after Van Zuylen’s first payment of £1 million to GBT’s solicitors.
Despite this discovery Van Zuylen did not succeed in recovering any funds, and proceeded to bring a claim against Whiston-Dew and GBT. Mr Thompsell found Whiston-Dew liable for the tort of deceit by implying falsely that Van Zuylen’s money would be looked after in a properly constituted trust; for breach of fiduciary duty by exploiting the confidence which Van Zuylen held in him as her agent; and for breach of Section 22 of the Financial Services and Markets Act 2000. This section, known as the general prohibition, forbids unauthorised persons from carrying out any kind of regulated activity, including managing assets belonging to another person and giving investment advice. GBT, which came under new management following Whiston-Dew’s imprisonment, was also ruled to be liable given that it held the claimant’s funds under a constructive or resulting trust.
In terms of remedies, Mr Thompsell ruled that Von Zuylen was entitled to recover her losses from Whiston-Dew and GBT. Von Zuylen was also entitled to compensation equivalent to the interest she would have received if her funds were invested and managed properly. Following precedent from the similar case Kea v Watson [2019] EWCA Civ 1759, Mr Thompsell set this hypothetical rate of interest at 6.5 per cent. The judge also granted Von Zuylen’s tracing claim into the legal charge over the land in Essex, which, pending confirmation that the charge itself is valid, would allow her to recoup a significant proportion of her losses. Mr Thompsell offered Von Zuylen a choice between asserting ownership over the legal charge and accepting it at its current value, or claiming lien over the charge and recouping the initial cost, £1 million. The judge conceded to the defendants that “it would overcompensate the claimant if [they] were to be allowed to cherry-pick…taking the gains on the assets that have gone up in value but requiring the defendant to compensate [them] for the assets that had gone down”.
Link: Van Zuylen v Whiston-Dew & Anor [2021] EWHC 2219 (Ch) (04 August 2021)
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