Compass Trustees Ltd v McBarnett and Others

JurisdictionJersey
CourtRoyal Court
JudgeLe Cras, Commr.
Judgment Date15 May 2002
Date15 May 2002
ROYAL COURT
Le Cras, Commr.

Miss D. Gilbert for the representor;

N. Pearmain for the 1st, 2nd and 3rd respondents;

M. Renouf for the 6th, 7th, 8th, 10th, 11th, 12th, 16th, 17th and 18th respondents.

The remaining respondents did not appear and were not represented.

Cases cited:

(1) F v. H, 2001 JLR 492, referred to.

(2) Lane v. Lane, 1985-86 JLR 48, followed.

(3) Solvalub Ltd. v. Match Invs. Ltd., 1996 JLR 361, referred to.

(4) SP v. AJP, 2002 JLR N [15], followed.

(5) T v. T, [1996] 2 FLR 366, referred to.

Additional cases cited by counsel:

E v. E (Financial Provision), [1990] 2 FLR 233.

I, In re, Royal Ct., November 12th, 2001, unreported.

Maister v. Rind, Royal Ct., November 25th, 1997, unreported.

Osias, In re, 1987-88 JLR 389.

Rabaiotti (1989) Settlement, In re, 2000 JLR 173.

heirship, "lgitime" or similar rights) of the law of his domicile or any other system of law shall affect any such transfer or disposition or otherwise affect the validity of such trust."

Legislation construed:

Trusts (Jersey) Law 1984, art. 8A(2):

"(2) If a person domiciled outside Jersey transfers or disposes of property during his lifetime to a trust

...

(b) no rule relating to inheritance or succession (including, but without prejudice to the generality of the foregoing, forced

art. 47: The relevant terms of this article are set out at para. 12.

Trustsvariationenforcement of foreign financial provisioncourt may vary discretionary Jersey trust under Trusts (Jersey) Law 1984, s.47 to make capital provision ordered for wife in English divorcecomity requires Jersey court to give effect to properly considered judgment of foreign court

The trustees of a discretionary Jersey settlement applied for directions under art. 47 of the Trusts (Jersey) Law 1984.

The sole asset of the trust, which was set up in 1996, was the matrimonial home in England of the settlor and his wife. She obtained a decree nisi of divorce in England, and an injunction in Jersey preventing the settlor from disposing of the house. The trust deed specifically excluded any former wives of the settlor from the discretionary class of beneficiaries. The English High Court held that the trust was a post-nuptial settlement, created for the benefit of the settlor, his wife and their children, which was capable of variation under the Matrimonial Causes Act 1973, and that it was in the interests of justice to vary the settlement to allow a capital distribution to be made to the wife by way of financial provision. The trustees advised the English High Court that they would not give effect to any order it made until authorized by the Royal Court. After the High Court judgment was delivered, the wife obtained a decree absolute.

On the application by the trustees for directions in Jersey, the wife submitted that (a) the court should give effect to the English judgment by exercising its power to vary the settlement under art. 47 of the Trusts (Jersey) Law 1984, giving weight to the principle of the comity of courts; (b) alternatively, the trust deed authorized the court to alter its terms if, in the opinion of the trustee, that was for the benefit of the beneficiaries; (c) it was irrelevant that she had obtained a decree absolute as the relevant date for determining her status under the settlement was the date of the English judgment and, at that time, she was still a beneficiary; and (d) if she were not a beneficiary, under the terms of the settlement she could be added.

The minor beneficiaries submitted that (a) the wife was no longer a beneficiary because, as a result of obtaining a decree absolute, she was excluded as a former wife of the settlor; and (b) as she was not a beneficiary, the court, standing in the position of trustee, could not make a payment to her.

Held, varying the settlement:

(1) This was an appropriate case in which to follow the doctrine of comity of courts and give effect to the declaration of the English High Court. The English court had properly explored the background of the case and had concluded that the necessity to provide capital to the wife outweighed any disadvantage caused to the other beneficiaries. The court would therefore exercise its discretion under art. 47 of the Trusts (Jersey) Law 1984 to vary the settlement to allow a capital payment to be made to the wife ( para. 7; para. 13).

(2) Moreover, as the court was considering whether to give effect to the decision of the English High Court, it was irrelevant that the wife had subsequently excluded herself from the settlement by obtaining a decree absolute. The court should consider the facts as they stood at the date of the English judgment and, at that time, the wife was still a beneficiary ( para. 20).

(3) Although it was not necessary to decide the matter, it would have been inappropriate for the court, acting as trustee, to vary the provisions of the trust deed by adding the wife as a beneficiary when, as a former wife, she had been explicitly excluded by the terms of the settlement ( para. 15).

1 LE CRAS, COMMR.: This is a representation by Compass Trustees...

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