EMM Capricorn Trustees Ltd v Compass Trustees Ltd

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Birt, Deputy Bailiff and Jurats Quérée and Bullen
• Judgment Date: 23 April 2001
• Neutral Citation: [2001] J.Unrep 87
• Date: 23 April 2001

ROYAL COURT

Birt, Deputy Bailiff and Jurats Quérée and Bullen

S. J. Young for the plaintiff;

Miss D. Gilbert for the defendants.

Cases cited:

(1) Aratra Potato Co. Ltd. v. Egyptian Nav. Co. (The "El Amria"), [1981] 2 Lloyd's Rep. 119; [1981] Com. L.R. 136, dicta of Brandon, L.J. followed.

(2) G.K.N. (Jersey) Ltd. v. Resources Recovery Bd., 1982 J.J. 359.

(3) Gheewala v. Compendium Trust Co. Ltd., 1999 JLR 154, distinguished.

Legislation construed:

Trusts (Jersey) Law 1984, art. 5(b):

"The court has jurisdiction where—

…

(b) a trustee of a foreign trust is resident in Jersey…"

Text cited:

Halsbury's Laws of England, 4th ed., vol. 1(1), para. 355, at 414.

Trusts—exclusive jurisdiction clauses—discretion of court—weight normally given to clause but not as decisive as in contract—court may disregard since maxim la convention fait la loi des parties less strictly applicable to trusts

Trusts—exclusive jurisdiction clauses—forum conveniens—doctrine normally ousted by clause giving exclusive jurisdiction to foreign court

Trusts—exclusive jurisdiction clauses—stay of Jersey proceedings—stay normally granted in pursuance of foreign jurisdiction clause—burden of showing no case for stay on party in breach of clause but less onerous than in contract—balance of convenience and expense then to be considered

The defendant trust company sought a stay of proceedings against it for breach of trust.

The plaintiff was the trustee of the Tramp Trust. It brought proceedings against the defendant, a Jersey company, which was the prior trustee of the Tramp Trust and the current trustee of the Time Trust. The proceedings involved three contractual claims against the defendant, both in its position as the former trustee of the Tramp Trust and as trustee of the Time Trust. It also alleged breach of trust by the defendant as the former trustee of the Tramp Trust in relation to the matters covered by the contractual claims. The Tramp Trust contained a clause providing that any dispute concerning the trust was to be subject to the exclusive jurisdiction of the Guernsey courts and was to be governed by Guernsey law. After an initial determination by the court that it had jurisdiction to hear the breach of trust claim under art. 5(b) of the Trusts (Jersey) Law 1984, the defendant sought a general stay of the allegations of breach of trust against it or, failing that, a stay pending determination of the contractual claims against it.

The defendant submitted that (a) the law relating to exclusive jurisdiction clauses in trusts should follow that relating to contracts; (b) there was a prima facie rule that the parties should be held to their agreement and there was therefore a heavy burden on the plaintiff to show why a stay should not be granted; (c) the plaintiff, in taking the position of trustee of the Tramp Trust, had thereby shown that it had agreed to the provisions of the exclusive jurisdiction clause; and (d) in consequence, the trust was subject to Guernsey law and disputes had to be adjudicated upon in Guernsey.

The plaintiff submitted in reply that (a) the court should adopt the principles applied in cases of forum non conveniens, with the burden on the defendant to show that there was a more appropriate forum for the dispute's resolution than Jersey; and (b) it was more convenient and economical to hear the breach of trust action in Jersey as (i) the Guernsey law of trusts was not materially different to that in Jersey and it would not be difficult for the Jersey court to comprehend and apply it, (ii) no relevant evidence or documents were situated in Guernsey, while all those relating to the defendant were situated in Jersey, (iii) it was questionable whether the Guernsey court would be bound by the findings of fact in the contractual claims, and (iv) additional expenditure would have to be incurred in registering a Guernsey judgment in Jersey.

Held, ordering a stay of the trust proceedings pending the determination of the contractual claims:

(1) An exclusive jurisdiction clause in a trust deed should not be given the same weight as one in a contract. The policy considerations which justified parties being held to a contract to which they had freely agreed did not apply to beneficiaries of a trust who had never been parties to the agreement between the settlor and the trustee, and one could not readily adopt differing approaches between a successor trustee who accepted the obligation conferred upon his position and a beneficiary suing on the provision. Nevertheless, the exclusive jurisdiction clause could not be completely ignored as would occur if the principle of forum non conveniens were adopted. The correct approach would be to adopt that established for exclusive jurisdiction clauses in contracts but with a less onerous burden on the plaintiff ( paras. 16-18).

(2) The principles to be applied to clauses contained in trust deeds giving exclusive jurisdiction to foreign courts would therefore be as follows:

(a) where a plaintiff sued in breach of an exclusive jurisdiction clause and the defendants applied for a stay, the Jersey court had a discretion whether or not to grant a stay;

(b) a stay should normally be granted, on the ground that exclusive jurisdiction clauses meant what they said, unless there was good reason not to do so, the burden of showing which was on the plaintiff; and

(c) in exercising its discretion, the court should take into account all the relevant circumstances and, in particular, the following:

(i) in what country the factual evidence was situated, or more readily available, and the effect on the relative convenience and expense of trial as between the Jersey and foreign courts;

(ii) whether the law of the foreign court applied and, if so, whether it differed from Jersey law in any material respects;

(iii) with what country either party was connected, and how closely;

(iv) whether the defendants genuinely desired trial in the foreign country, or were only seeking procedural advantages; and

(v) whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: (a) be deprived of security for their claim; (b) be unable to enforce any judgment obtained; (c) be faced with a time-bar not applicable in Jersey; or (d) for political, racial, religious or other reasons be unlikely to get a fair trial ( para. 19).

(3) In the circumstances, the plaintiff had shown good reason why a general stay should not be granted, sufficient to overcome the presumption in favour of the exclusive jurisdiction clause. The only connection with Guernsey was that clause and the fact that the breach of trust claim would be governed by Guernsey law. The Guernsey law of trusts was, however, not materially different from Jersey law and it would not be difficult for the...