Re A Settlement

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Bailhache, Deputy Bailiff and Jurats Coutanche and Hamon:
• Judgment Date: 26 April 1994
• Date: 26 April 1994

ROYAL COURT

Bailhache, Deputy Bailiff and Jurats Coutanche and Hamon:

T.J. Le Cocq for the trustees;

P.C. Sinel for the beneficiaries.

Cases cited:

(1) Butler v. Butler (1877), 7 Ch. D. 116; 37 L.T. 518; 47 L.J. Ch. 77; 26 W.R. 85, followed.

(2) Lombardo Settlement, In re, Royal Ct., December 5th, 1990, unreported, followed.

(3) Londonderry's Settlement, In re, Peat v. Walsh, [1965] Ch. 918; [1964] 3 All E.R. 855; (1964), 108 Sol. Jo. 896, followed.

(4) Marley v. Mutual Security Merchant Bank & Trust Co. Ltd., [1991] 3 All E.R. 198, considered.

(5) O'Rourke v. Darbishire, [1920] A.C. 581; [1920] All E.R. Rep. 1; (1920), 123 L.T. 68; 36 T.L.R. 350; 89 L.J. Ch. 162; 64 Sol. Jo. 322, considered.

(6) West v. Lazard Bros. & Co. (Jersey) Ltd. 1987-88 JLR 414.

Additional cases cited by counsel:

Clore v. Stype Trustees (Jersey) Ltd., 1984 J.J. 13.

Eaton, In re, Shaw v. Midland Bank Exor. & Trustee Co. Ltd., [1964] 3 All E.R. 229.

Ezekiel's Settlement Trusts, In re, National Provncl. Bank Ltd. v. Hyam, [1942] Ch. 230.

Midland Bank Trust Co. Ltd. v. Green, [1978] 3 All E.R. 555.

Moritz, Re, Midland Bank Exor. & Trustee Co. Ltd. v. Forbes, [1959] 3 All E.R. 767.

Radnor (Earl)'s Will Trusts, In re (1890), 45 Ch. D. 402.

Smith v. Croft, [1986] 2 All E.R. 551.

Strafford (Earl), In re, Royal Bank of Scotland Ltd. v. Byng, [1980] Ch. 28.

Legislation construed:

Royal Court Rules 1992 (R. & O. 8509), r.6/29: The relevant terms of this rule are set out at page 143, line 42 - page 144, line 16.

Trusts (Jersey) Law 1984, art 25: The relevant terms of this article are set out at page 146, lines 1-18.

art. 47: The relevant terms of this article are set out at page 142, lines 10-32.

Rules of the Supreme Court, O.85, r.3(2): The relevant terms of this sub-rule are set out at page 142, line 43 - page 143, line 4.

Texts cited:

Atkin's Encyclopaedia of Court Forms in Civil Proceedings, 2nd ed., vol. 41, para. 24, at 36 (1991).

Trusts—powers and duties of trustees—application for directions—no automatic rule that beneficiaries should be joined as parties to trustee's application for directions—joinder may be ordered if appropriate in circumstances, since court should have all relevant information before it—sufficient disclosure of documents required to allow beneficiaries to make informed submissions, but disclosure not to contravene principle that trustee's exercise of discretion confidential if acts in good faith

Trusts—trust accounts—meaning—by Trusts (Jersey) Law 1984, art. 25(d), beneficiaries entitled to inspect "accounts of the trust"—phrase not so wide as to embrace virtually all trust documents

The trustee of a settlement applied for directions in relation to proceedings involving the trust and third parties.

The trustee sought directions from the court under art. 47 of the Trusts (Jersey) Law 1984. The beneficiaries applied independently for leave to intervene in the hearing of the application for directions and to be heard independently of the trustee.

The beneficiaries submitted that (a) by art. 47(3) of the 1984 Law, they could themselves apply for directions to be given in relation to the trust, but it would be preferable that they be heard in the existing proceedings rather than to bring duplicate proceedings; (b) the court had an inherent jurisdiction to allow them to be joined as parties, which it should exercise since it was important that on an application for directions the court should have all relevant material before it; (c) the court should rule that as a matter of practice, beneficiaries should generally be joined as parties to an application for directions by trustees; and (d) if joined as parties, they should have disclosed to them all trust documents to allow them to make informed submissions, because (i) as beneficiaries, they had a proprietary interest in all trust documents; and (ii) by art. 25(d) of the 1984 Law, they had a right to see documents which "relate[d] to or form[ed] part of the accounts of the trust," which was so wide as to embrace virtually every trust document, notwithstanding the restrictions on disclosure contained in art. 25(a), (b) and (c).

The trustee did not oppose the application to intervene and submitted in reply that (a) the court did indeed have the power to allow the application, but should not make a general rule that beneficiaries should always be joined as parties, since that would not necessarily be appropriate in all cases; and (b) if permitted to intervene, the beneficiaries should be given sufficient information to make informed submissions, but such information should not include any details of the trustee's reasoning in the exercise of its discretion under the trust, which should properly remain confidential.

Held, making the following order:

(1) In the exercise of its discretion, the court would order that the beneficiaries be joined as parties to the application for directions since, on the hearing of the application, it was proper that the court have before it all relevant material, including the views of any beneficiary who did not agree with the trustee's proposals or who might be adversely affected by any proposed order. However, the court was not prepared to rule that this should always be done as a matter of practice, since whether beneficiaries ought to be heard depended upon the circumstances of each individual case (page 144, line 31 - page 145, line 10).

(2) Whilst it was not necessary to decide whether the beneficiaries had a proprietary interest in trust documents generally, it was clear that they had a right to see certain classes of documents relating to the trust but not others. It was important that as long as a trustee was acting in good faith, which it...