M and Other Trusts

JurisdictionJersey
CourtRoyal Court
JudgeThe Bailiff:
Judgment Date28 June 2012
Neutral Citation[2012] JRC 127
Date28 June 2012

[2012] JRC 127

ROYAL COURT

(Samedi)

Before:

Sir Michael Birt, Kt., Bailiff, andJurats Le CornuandMarett-Crosby.

IN THE MATTER OF THE M AND OTHER TRUSTS

Between
A, B and C
Representors
and
Rozel Trustees (Channel Islands) Limited
First Respondent
Advocate Damien James, Guardian of the minor and unborn beneficiaries
Second Respondent

Advocate A. D. Robinson for the Representors.

Advocate R. J. MacRae for the First Respondent.

The Second Respondent appeared in person.

Authorities

Trusts (Jersey) Law 1984.

Re S Settlement [2001] JLR N 37 .

Deery -v- Continental Trust Company Limited [2010] JRC 001 .

Midland Bank Trust Co Limited -v- Green [1980] Ch 590 .

Westbond International Bank Limited -v- Cantrust (CI) Limited [2004] JRC 111 .

Macedonian Orthodox Community Church St Petka Inc -v- Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand [2006] NSWCA 160 .

Trust — application by the representor seeking leave of the court to disclose certain documentation to the family division in London.

The Bailiff:
1

On 15th July, 2011, following a hearing held in private, the Court gave certain directions to the First Respondent (“the trustee”) as trustee of the M, R, T and O Trusts (“the Trusts”) in connection with matrimonial proceedings taking place before the Family Division of the High Court in London (“the Family Division”). The Representors (“the adult beneficiaries”) were joined to those proceedings and received the various papers filed in support of those proceedings. They now seek the leave of the Court to disclose to the Family Division, so far as is necessary, the documents served on them in the course of those proceedings as well as the decision of this Court in those proceedings.

Background

2

The background to the matter is set out in the Court's judgment dated 19th August, 2011, which gave reasons for the decision reached on 15th July. For today's purposes we can summarise the position briefly as follows.

3

D (“the husband”) and E (“the wife”) are engaged in divorce proceedings before the Family Division. The adult beneficiaries are the three adult children of the husband by his first marriage. The husband also has one child, who is a minor, by the wife. One of the adult beneficiaries also has a child, who is a minor.

4

The trustee is the trustee of the Trusts. Each of them is a discretionary trust in conventional form. The class of beneficiaries in each case comprises the husband's father (“the grandfather”), the husband's mother (“the grandmother”), the children and remoter issue of the husband, the Red Cross Geneva and such other persons as may be added as beneficiaries by the trustee with the consent of the protector. The husband and the wife are not beneficiaries, although it would be open to the trustee, with the consent of the protector, to add them. The living beneficiaries of the Trusts therefore comprise the grandfather, the grandmother, the adult beneficiaries and the two minors referred to earlier.

5

The Trusts are governed by the law of the British Virgin Islands but the trustee is a Jersey company resident in Jersey and the administration of the Trusts is carried on in Jersey; hence the Court has jurisdiction under Article 5(b) and (d) of the Trusts (Jersey) Law 1984 (“the 1984 Law”).

6

In the course of the English matrimonial proceedings, the wife applied to join the trustee to those proceedings. In the light of that application, the trustee applied to this Court for approval of two decisions which it had reached:-

  • (i) It had disclosed and wished to continue to disclose information about the assets of the Trusts to the grandfather as a beneficiary in the knowledge that he was likely to disclose this information to the husband (despite the fact that the husband was not a beneficiary), from which the information would of course become available to the Family Division and the wife.

  • (ii) It sought the Court's approval of its decision not to submit to the jurisdiction of the Family Division and therefore not to take part in the divorce proceedings.

7

In each case, for the reasons set out in the judgment dated 19th August, the Court approved the decision of the trustee.

This application

8

During the earlier proceedings the adult beneficiaries indicated that they might themselves seek leave to intervene in the divorce proceedings in the Family Division. This they have now done. They have done so in order to be able to make submissions concerning the Trusts. Their application to intervene has not yet been fully dealt with by the Family Division but, by an order dated 2nd December, 2011, they were given leave to attend a Financial Dispute Resolution hearing (“FDR”) before Baron J which was to commence in February 2012. As a condition for obtaining that leave, they were required to give an undertaking to the Family Division in the following terms:-

“D. AND UPON the above-named “Applicants to Intervene” [the adult beneficiaries] each undertaking to the Court and agreeing with the petitioner [the wife] that:-

  • (i) They will not, until further order destroy or dispose of (or permit any other person to destroy or dispose of) any of the documents in their possession, custody or power as have been served upon them, or which they (or any person acting on their behalf) may have received other than by way of service, in relation to any and all applications in connection with the proceedings herein that have been made by the Trustees in overseas courts in their capacity as trustees of the trusts listed in the schedule at annex 8 of this order including all pleadings (including the Jersey ‘Representation’ document), orders (including Jersey ‘Acts of Court’), transcripts of hearings, skeleton arguments and other advocates documents, statements of position and evidence filed (including any affidavits sworn by Philippe de Salis) or served in the BVI and Jersey proceedings and all correspondence connected with those proceedings;

  • (ii) They will use their best endeavours to obtain personal possession of any of the documents referred to in the previous sub-paragraph that are not already personally possessed by them; and

  • (iii) They will have available, to bring to court on 24 hours notice at the hearing that is to take place pursuant to paragraph 2(i) below, [i.e. the FDR] copies of all such documents.”

9

As can be seen, the above undertaking (“the Undertaking”) requires the adult beneficiaries to have all the relevant documents and be ready to disclose them on 24 hours notice. Although they have not yet been called upon to honour the Undertaking, the FDR was not concluded in February and was adjourned to a later date. The adult beneficiaries are concerned that, either at the adjourned FDR or prior to the subsequent hearing of the wife's application for financial relief in the divorce proceedings, they may to be ordered to produce the documents in question.

10

The difficulty is that the previous proceedings in this Court were held in private. The adult beneficiaries therefore see themselves as being on the horns of a dilemma. If they produce the documents in question without the leave of this Court, they may in contempt of this Court; if, on the other hand, they refuse to produce them to the Family Division if and when required, they would be in contempt of the Family Division. The adult beneficiaries all reside in England and accordingly are subject to the personal jurisdiction of the Family Division.

11

It is in those circumstances that they apply at this stage to this Court seeking leave to disclose the documents referred to in the Undertaking should they be ordered to do so by the Family Division. They confirm that they would raise all proper arguments against disclosure before the Family Division but they wish to be in a position to comply with any order which, despite such objections, the Family Division may make.

12

The trustee understands the position in which the adult beneficiaries find themselves. Accordingly, whilst wishing to maintain the confidentiality of directions hearings before this Court, it accepts that in this particular case, it should not object to disclosure of much of the material which was placed before this Court in July should the Family Division insist on its production. However, it believes that two categories of material should not be disclosed. First, there is legally privileged material and secondly there is material which discloses the purpose of the July hearing or sets out the trustee's thinking in relation to the application which was before the Court on that occasion. We shall refer to the former as “the privileged material” and the latter as “the sensitive material”.

The nature of applications by trustees for directions

13

It is common for trustees in Jersey to seek the directions of the Court in relation to matters concerning the administration of trusts. These are brought under Article 51 of the 1984 Law. Usually the trustee will have reached a decision itself but will seek the Court's blessing on the grounds that the decision is of a “momentous” nature (see Re S Settlement [2001] JLR N 37, Jersey Unreported 2001/154). In other cases the trustee will surrender its discretion to the Court. Some applications are Beddoe applications properly so called, in the sense that they seek directions as to whether the trustee should institute or defend legal proceedings. Others concern decisions in relation to a variety of matters relating to the administration of the trust e.g. whether to sell a major trust asset. In this case, as already mentioned, the trustee's application sought approval of two “momentous” decisions, namely a decision to disclose information about the Trusts to the grandfather in the knowledge that he was likely to pass this on to a non-beneficiary, the husband and through him the information...

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