(1) A(Representors) v (1) K

JurisdictionJersey
CourtRoyal Court
JudgeSir William Bailhache,Bailiff,Jurats Pitman,Christensen,William Bailhache
Judgment Date30 June 2017
Neutral Citation[2017] JRC 100
Date30 June 2017

Royal Court

(Samedi)

Before:

Sir William Bailhache, Bailiff, and Jurats Pitman and Christensen.

In the Matter of the Representation of the Y Trust and the Z Trust

And in the Matter of the Trusts (Jersey) Law 1984.

Between
(1) A
(2) B
(3) C
(4) D
(5) E
(6) F
(7) G
(8) H
(9) I
(10) J
Representors
–v–
(1) K
(2) L
(3) M
(4) N
(5) O
(6) P
(7) Q
(8) R and the family charitable beneficiaries
Respondents

Advocate E. C. P. Mackereth for the Representors.

Advocate M. P. Cushing for the Third, Fourth and Fifth Respondents.

Advocate A. Kistler as Guardian ad Litem for the Minor Beneficiaries.

Advocate O. A. Blakeley as Amicus Curiae.

Authorities

Re Osias Settlements [1987 – 1988] JLR 389.

Variation of Trusts Act 1958.

Re Seale's Marriage Settlement (1961) Ch 574.

Re Holt's Settlement (1969) 1 Ch 100.

Re Ball's Settlement Trusts [1968] 1 WLR 899.

Underhill's Law of Trusts and Trustees, 13th edition.

Re Weston's Settlements [1969] 1 Ch 223.

In the matter of the Representation of N and N [1999] JLR 86.

In the matter of Douglas [2000] JLR 73.

In the matter of the DDD (1976) Settlement and other Settlements [2012] (1) JLR Note 8.

In the matter of Quorum Trustees Limited 2002/61.

X Trustees Limited v W and A [2015] JRC 136.

Goulding and another v James and another [1997] 2 All ER 239.

Chapman v Chapman [1954] AC 429.

Saunders v Vautier (1841) 4 Beav 115.

Re Holmden's Settlement Trusts [1968] AC 685.

Pemberton v Pemberton and others [2016] EWHC 2345 (Ch).

Re Beard [1908] 1 Ch 383.

Re Edgar [1939] 83 SJ 154.

Wills and Succession (Jersey) Law 1993.

Civil Partnership (Jersey) Law 2012.

Human Rights (Jersey) Law 2000.

Discrimination (Jersey) Law 2013.

Trust — reasons relating to orders regarding approval of variations and additional new foundation.

THE BAILIFF:
1

At a hearing of the Representors' representation in private on 11 th April, 2017, the Court made orders in the exercise of its discretion approving on behalf of the minor unborn and unascertained beneficiaries a variation of the Y Trust and the Z Trust in accordance with the terms set out in Schedules 5, 6 and 7 of the representation, and an order adding a new foundation called the X Foundation, a company limited by guarantee registered in England as a charitable beneficiary of the Y Trust. We indicated that our reasons would be reserved and this judgment expresses those reasons. Although the hearing took place in private, we think the reasons for the exercise of the Court's discretion may be of interest to those as yet unborn and the other minor beneficiaries of the two trusts as and when they attain their majority and indeed they are entitled to know why it is that the Court has made the orders which it has. In redacted form the judgment is being published because, given the small number of judgments in relation to the exercise of the Court's powers in Jersey to vary a trust, it is in the public interest to do so.

Background
2

The Y Trust and the Z Trust are two of the major settlements forming part of a large group of settlements (“the General Family Trusts”), all of which were settled directly by W (“the Settlor”) or by the trustees of trusts which he had previously established with funds either originating from him or from trusts which he had established. The trust provisions are complex, but will be set out later to the extent that they are relevant to the current proceedings. The value of the trust property within all of the General Family Trusts is very substantial indeed. This wealth has enabled the family through the trusts to make very substantial annual charitable donations.

3

The Settlor died some years ago. He was married several times and had a large family.

The Y Trust
4

The Y Trust was established by a settlement governed by the proper law of Jersey and made by the Settlor on 31 st December, 1993. The trust fund and income of this settlement was divided into seven equal shares representing each of the Settlor's surviving children, with each share being held in trust for the benefit of that child and his or her issue (as defined in the settlement), the trustees holding each such share as to capital and income on discretionary trusts in relation to the relevant branch of the family. After the death of the Settlor, the Trust Fund was to be held on discretionary trusts for the Settlor's descendants (as defined), his widow and the charitable organisations listed in the seventh schedule — the trustees have power to accumulate income and either pay income, accumulated income or capital, with the prior written consent of the special trustee, to any one or more of the beneficiaries. The discretion of the trustees goes both to whether to make such payments and as to quantum if in their discretion they deem it appropriate. Some of the powers contained in the settlement are subject to the obligation to obtain the written consent of the protectors, but this is not relevant for present purposes. There is no power to add beneficiaries and paragraph 22 of the settlement deed contains this provision:-

“The Trustees, with the prior written consent of the protector, may amend this Settlement in order to (i) clarify the provisions thereof; (ii) modify the administrative provisions thereof; or (iii) cause such clarifications which are required or appropriate for the effective implementation of this Settlement. This power shall not be exercised so as to add any beneficiaries, alter the beneficial interests of the beneficiaries, add or modify a power or create an interest which would cause the Settlor to be treated as the owner of any portion of the trust for the purposes of sub-part E of sub-chapter J of the [United States Internal Revenue Code of 1986 as amended], permit the Settlor or the Settlor's spouse to be appointed as a Trustee, Special Trustee or Protector, or allow any portion of the trust to be used to discharge any obligation of the Settlor or the Settlor's spouse.”

5

One provision relevant to the present application is to be found in the interpretation paragraph of the Settlement at 1(M):-

“For the purpose of this Settlement and in the interpretation and construction of each and every provision hereof all references to ‘child’ or ‘issue’ or ‘descendant’ shall mean only a person who:-

  • i) Is born a legitimate child of his father and mother;

  • ii) Is a child who is legitimised by the subsequent marriage of his father and mother;

  • iii) Is adopted to a situation where a congenital male and a congenital female, married to each other, and there not having been a child born of the marriage, adopt a person under the age of two years in accordance with the law of the ordinary residence of the adoptive parents at the time of the adoption; or

  • iv) Is a child which is the result of an artificial insemination where the donor or the recipient is issue (within the meanings of sub-paragraph (i) or sub-paragraph (ii) hereof only) of the Settlor and such child is adopted by such issue under the law of ordinary residence of such issue at the time of the adoption.

No other person shall be included in the definition of ‘child’ or ‘issue’ or ‘descendant’ for the purposes of this settlement.”

The Z Trust
6

The Z Trust was made by settlement deed dated 8 th June, 1990, and executed by the Settlor and L as trustee. It is governed by the proper law of Jersey. The beneficiaries are named as A, the first named Representor, and any issue of the parents of the Settlor, other than the Settlor himself; and a number of named charitable institutions. There are various protector powers which are not relevant for the purposes of the present application. There is a limited power to add to the class of beneficiaries, subject to the prior written consent of the Settlor, or after his death or in the event of his incapacity, subject to the prior written consent of the protector. The trustees hold the trust fund as to capital and income on discretionary trusts for the benefit of the beneficiaries (other than the Settlor) for the time being in existence. The third schedule, which defines the beneficiaries uses the word ‘issue’ and that is defined as follows:-

“1(L) For the purposes of this Settlement and in the interpretation and construction of each and every provision hereof all references to ‘issue’ shall include a person who either

  • i) Is adopted into a normal situation wherein a congenital male and a congenital female lawfully married to each other wish to adopt a person under the age of two years because they are biologically unable to have children of their own; or

  • ii) Is a child which is the result of artificial insemination where the donor or the recipient is a lineal descendant of the Settlor and the child is legally adopted by such lineal descendant or is otherwise legally recognised as the child of the donor or donee. Nevertheless, during the Settlor's lifetime, the Settlor may by instrument in writing delivered to the trustees amend the definition of ‘issue’ contained herein to include a legally adopted child of any lineal descendant of the Settlor provided in each instance that the adoptee is under the age of two (2) years at the time of adoption.”

7

The Settlor did amend the interpretation of the word ‘issue’ because the provisions set out above was amended in the restated Z Trust by deed dated 22 nd April, 1997, and without deciding it, we proceed on the assumption that those changes are operative. By clause (1)(A)(i) ‘beneficiaries’ means all and any of the persons specified in the third schedule, and the trustees of such trusts for such persons as may be selected. The third schedule defines beneficiaries as the Settlor, A, now the widow of the Settlor, and ‘the issue (whether now living or yet to be born) of [the Settlor].

8

At clause 1(m) there appears the following:-

“A.

In the interpretation and construction of each and every provision of this...

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