Re Abacus

CourtRoyal Court
JudgeBailhache, Bailiff and Jurats Quérée and Bullen:
Judgment Date26 May 2000
Date26 May 2000
Bailhache, Bailiff and Jurats Qure and Bullen:

J.A. Clyde-Smith for the trustee;

N.F. Journeaux for the plaintiff company;

P.C. Sinel for the second and third defendants;

The fourth and fifth defendants appeared in person.

Cases cited:

(1) B, Re, [1987] 2 All E.R. 475; [1987] 1 W.L.R. 552; [1987] 2 FLR 155; (1987), 131 Sol. Jo. 658; 84 Law Soc. Gaz. 1573.

(2) Bolan (Marc) Charitable Trust, In re, 1981 J.J. 117.

(3) I.G. Farbenindustrie A.G. Agreement, In re, [1944] 1 Ch. 41; [1943] 2 All E.R. 525.

(4) Sanders Lead Co. Inc. v. Entores Metal Brokers Ltd., [1984] 1 All E.R. 857; [1984] 1 W.L.R. 452; [1984] 1 Lloyds Rep. 276.

(5) Settlement, In re a, 1994 JLR 139.

(6) Walmsley, Re, 1983 J.J. 35.

Legislation construed:

Royal Court Rules 1992 (R. & O. 8509), r.6/29: The relevant terms of this rule are set out at page 168, lines 29-32.

Trusts (Jersey) Law 1984, art. 47:

"(1) A trustee may apply to the court for direction concerning the manner in which he may or should act in connexion with any matter concerning the trust and the court may make such order, if any, as it thinks fit.

(2) The court may, if it thinks fit

(a) make an order concerning

(i) the execution or the administration of any trust; or

(ii) the trustee of any trust, including an order relating to the exercise of power, discretion or duty of the trustee, the appointment or removal of a trustee, the remuneration of a trustee, the submission of accounts, the conduct of the trustee and payments, whether payments into court or otherwise; and

(iii) a beneficiary or any person having a connection with the trust;

(b) make a declaration as to the validity or the enforceability of a trust;

(c) rescind or vary any order or declaration made under this Law, or make any new or further order or declaration.

(3) An application to the court for an order or declaration under paragraph (2) may be made by the Attorney General or by the trustee or a beneficiary or, with leave of the court, by any other person."

Trustspowers and duties of trusteesapplication for directionsparties to be convenedthird party with proprietary claim to trust funds obtained from it by fraud may be convenedcourt has in- herent discretion to convene party if necessary properly to determine application

A trustee company sought directions from the court as to the distribution of trust funds.

The trustee of two trusts was considering a distribution of part or all of the assets of those trusts to their settlor. This distribution was intended to enable the settlor to pay his judgment creditor, a company which had been successful in fraud proceedings against him. The settlor, who had previously been a director of the company, had been ordered to repay the money he had obtained from it by fraud but the company had been unable to enforce the judgment against him since he had placed the proceeds of the fraud into two Jersey trusts.

The company therefore brought separate proceedings in Jersey seeking to enforce the judgment against the assets of the two trusts. In an attempt to avoid the time and expense of those proceedings, the trustee made the present application seeking a direction of the court as to whether distribution could be made to the settlor thereby enabling the company to retrieve the funds of which it had been defrauded. All the beneficiaries of the trusts, which included the settlor and his wife and son, were to be convened. The company sought to be convened as well.

On this preliminary question, the trustee submitted that (a) the company was materially affected by the trustee's application and therefore should be convened since (i) as a result of the proceedings elsewhere it had a claim in relation to the money paid into one of the trusts, (ii) it had possible tracing claims in respect of money in both trusts, and (iii) at least one of the trusts had been used to launder the proceeds of the first settlor's fraud; and (b) it was necessary to hear the company because it could provide the benefit of all the knowledge it had acquired during several years of litigation against the settlor without which the court might only have the unreliable evidence of the beneficiaries.

In support, the company agreed with the trustee's submission and submitted that (a) the court needed to hear it in order to determine

The wife and son of the settlor submitted in reply that (a) the company had no legal interest under the settlements and its claim to standing as the judgment creditor of the settlor did not in fact accord it any standing to intervene and consequently the court had no jurisdiction to join it; and (b)...

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