At first glance there doesn’t seem to be any link between Michael Jackson and the resulting trust (RT). However, I read a newspaper article last night which had me thinking in the middle of the night that perhaps this might be a case for a Quistclose trust. (The things you think of at 2am in the morning when you’re feeding a baby!)
Sheikh Abdulla bin Hamad Al Khalifa, second son of the King of Bahrain, is suing cash-strapped Jackson for $US7 million ($10.78 million), demanding the repayment of several advances which the artist has argued were gifts.
According to the prince’s lawyer Bankim Thanki, Jackson signed a contract to record albums, write an autobiography and stage shows, and that document noted that $US7 million would be deducted from the artist’s royalties to pay for the expenses.
Perhaps the Sheikh will argue that the payments were loans for purposes, applying Lord Millett’s judgment in Twinsectra Ltd v Yardley [2002] 2 AC 164. In that case, it was held that where a loan was made for a sole purpose, and the borrower did not spend it for that purpose, the lender retained a beneficial interest in that money pursuant to a resulting trust. It will depend on the terms of the contract. Twinsectra seems to suggest that fairly strong language is required before a RT will arise: eg, the contract in Twinsectra stated the money was to be applied “solely” for the specific purpose of buying property and “for no other purpose”.
The advantage to the Sheikh in arguing a RT rather than a simple contractual claim would be if Jackson went insolvent. The Sheikh would have priority over other creditors as his claim would be secured by RT, and he would retain beneficial ownership of the $US7M. But it would very much depend upon the strength of the evidence.
On the other side, Jackson is also invoking the aid of Equity, alleging that the Sheikh’s case is based on “mistake, misrepresentation and undue influence”.
Adding a bit of extra drama to the case, Jackson’s legal counsel said that he was possibly too ill to travel to the UK to give evidence, but did not elaborate as to what the illness was, although the other side speculated that it was related to Jackson’s nasal surgery.
Update
Upon further reflection, I don’t think the RT idea would work after all unless Jackson was paid the money for a specific purpose and did not spend it for that purpose. That’s the problem with brilliant ideas when you are sleep deprived…
But in further developments, Jackson will apparently be giving evidence in person at the trial.
Update II
Jackson has reached an out-of-court settlement with the Sheikh. Wonder how much that set him back?
12 Comments
I wondered why Whacko moved back to the US! Wow! he’s going down, big time.
Yeah. Regardless of whether he wins or loses, this battle will cost him a pretty packet…
It’s got to the stage where I almost feel sorry for Jackson – he’s just, well, wretched.
Actually on second thoughts I don’t know if the RT idea would work or not. It depends whether the contract specifies the purpose for which the money is to be spent. In Quistclose it had to be spent on shareholders in Rolls Razor, and in Twinsectra it had to be spent on acquiring property. A mere loan for purposes is not enough (this could be a case of the latter – the Sheikh agreed to loan Jackson money if he agreed to record records in the future). If there was no specified purpose for which Jackson had to spend the money, then he was free to deal with it as he chose, and the Sheikh would not retain a beneficial interest.
That’s the problem with coming up with interesting ideas when you are sleep deprived. You don’t think them through as well as you might!
LE, you may (or may not) find this of interest.
Also, have you considered adding a contact page? Or am I so stupid I can’t find it (quite possibly)?
Pregnancy mush-brain take a while to wear off:-) I was reading your post and getting ready to look up that case cause that seemed an awful thin road to a resulting trust.
Twinsectra is a bit of a mess. It involved two different claims. First, a knowing assistance claim which confused the bejesus out of that particular area of law (just when everyone thought it had been settled by Royal Brunei v Tan). And then secondly, the RT claim. If you want to read about the RT, read Lord Millett’s judgment with which the other Lords agreed on the issue of RTs arising from loans for purposes. There’s been a lot of literature on whether Quistclose trusts are an awfully thin road to a trust…certainly Gummow J was of the opinion that they were in Re Australian Elizabethan Theatre Trust.
Paul, we don’t seem to have a contact page. But if you would like to contact me, it’s still the same old e-mail as at Soapbox: legalsoapbox-AT-gmail-DOT-com.
Regardless of whether he wins or loses, this battle will cost him a pretty packet…
Jackson’s been on a slow slide to destitution for about two decades. His experience essentially is of growing up richer and richer being a megastar from around the age of 10 to his late 20s with Thriller. After that his sales declined sharply. They were still strong just not megastrong.
The trouble is that he continued to spend obsecne sums on the marketing – video clips etc. He figured that the relatively poor sales were due to inadequate hoopla. Thus he hires Martin Scorsese to direct “Bad” . Jackson didn’t realize that “Bad” had him aspiring to a persona which was ridiculous (who’d take him seriously as a gangster type) it wasn’t a very good song compared to the Thriller or Of The Wall material.
He was too far removed from reality to realize that that was his pop peak. If he’d done so and reigned in his shopping sprees and miscellaneous extravagances he’d be doing alright. But he’s living on borrowed time as it is. His reputation for kiddy-fiddling hasn’t done any harm to the popularity of Thriller but I doubt he’s gonna regain his Pop Prince status any time soon. And being a classical child-star zapped brain he just can’t deal with the reality of his situation. He’s slowly sliding.
And yeah, it’s sad.
My hubby and I were actually discussing the ridiculousness of the “Bad” clip the other night. Who can believe that a man who clutches his crotch and yelps is bad? And the black clothes with metal stuff – yeah, that is bad…bad taste.
I understand he still splurges his money – no sense of reality at all. No sense of how he looks, either, the poor fellow. I saw a show which showed what he would have looked like if he’d kept off the surgery – a pleasant round-faced, slightly balding black man – SO much better than he looks now.
Who can believe that a man who clutches his crotch and yelps is bad? And the black clothes with metal stuff
Well L’eagle I used to spend my Friday nights at Central station doing exactly that. I’m not sure if they thought it was bad but they definitely didn’t think it was good.
I don’t think Jacko’d be round faced he’s still a dancer or was last time I saw him without all the palava on (c1987).