Win in "Holocaust Fund" case

A High Court judgment was handed down on Friday in favour of our client, the sister in the well publicised case of Hamilton -v- Hamilton.

The case involved a brother and sister arguing about £3.2M of assets held offshore in a Liechtenstein Foundation, left to them by their father, David Hamilton. David had escaped Nazi Germany aged 15, as an unaccompanied child under the Kindertransport programme. His sister Hannah, was refused permission to travel with him because she was 16. She and the rest of David's family were killed during the war, and David never returned to Germany. He made his fortune through his own efforts and hard work, in the UK and abroad, and at the age of 83 died in London leaving a substantial fortune to this children, Alan and Carolyn.

The central issue in the case was whether the assets formed part of David's UK estate, or whether the Foundation was void as a result of alleged tax evasion. 

My client, Carolyn, is herself a lawyer - a barrister and a leading, international children's rights lawyer. She was sued by her brother Alan.

Background: In the late 1990s, David Hamilton set up a Liechtenstein Foundation, which operating using a number os Swiss bank accounts. During his lifetime, he was entitled to the assets and income of the Foundation, but he made provision that upon his death the Foundation’s assets were to be split between Alan and Carolyn. He arranged for Carolyn to receive more, but did not disclose this to Alan. This was in contrast to the assets in his UK estate, which passed under his Will, and which were split 50/50 between the siblings.

On his death, Alan and Carolyn each received a sealed envelope detailing their personal entitlements to assets in the Foundation, and flew to Zurich to withdraw their respective shares: Alan withdrew around £1.05m and Carolyn withdrew around £2.2m, but neither told the other what amount they had received. It was clear that Alan believed he had received more than Carolyn, and that he did not want to disclose precisely how much he had received, in case she then expected him to 'even out' their respective shares.

The Foundation was dissolved. For years, nothing more was said about the funds received. Then more than 5 years later, Alan discovered that in fact, Carolyn had received a larger share from the Foundation than he had. Despite having withdrawn his own funds years before, Alan commenced legal proceedings saying that the Foundation assets should have fallen into the UK estate, should be repaid to the estate, and divided equally.

The issues: The case involved a number of complex issues, including the applicable law (English or Liechtenstein), whether the Foundation was a sham, whether it was set up to evade tax, and indeed, whether the brother was even entitled to bring this claim given his prior conduct of taking his share of the funds when he believed he had received more than his sister, but then changing his mind when he found out she had received more.

In reaching his decision, Mr Justice Henderson took into account the factual evidence of the siblings, a number of Swiss bankers, and the deceased's accountant, as well as the expert evidence of two distinguished experts; a practitioner in Liechtenstein law acting for the sister, and an Austrian professor of law acting for the brother.

Both siblings described how their father was scarred by his experiences in Nazi Germany and they shared a common understanding that he felt the need to have “an escape fund, should history ever repeat itself”.  Similarly, the Swiss bankers recalled that the father was scarred by the Holocaust and went onto describe him as a “righteous” and “principled” man.

The result: The brother's claim was dismissed, and he was ordered to pay the sister's legal costs, approaching £1M. Alan will have to bear his own costs, which are at least £1M.

In addition, Carolyn was awarded indemnity costs from March 2015, so for the last year of proceedings and covering the trial. This was on the basis that Alan amended his case at that time to actively accuse David Hamilton of tax evasion, despite this being a weak argument legally, on the evidence, and even though Carolyn had made an open offer to walk away from proceedings with each of them bearing their own legal costs. The offer was made by Carolyn to put an end to the feud, and the judge made it clear Alan should have accepted the offer. The judge concluded that from the point of that offer onwards, Alan's conduct was so unreasonable that he should be penalised with an indemnity costs order.

In a telling phrase, the judge said "[Alan's] dispute with Carolyn is so bitter, and jealousy of her so corrosive, that he persuaded himself of the justice of the case, and shaped his vision and recollection of past events accordingly". In his judgment he quoted the comments made by Carolyn Hamilton when she was cross examined "I don't hate my brother. I think it's very sad. To rip apart a family for this sake is just incredibly sad."

Alan asked the judge for permission to appeal the decision, which was refused. If he still wishes to seek permission to appeal, he will now have to take his case to the Court of Appeal.