Rep of Mourant and Company Trustees

JurisdictionJersey
CourtRoyal Court
JudgeThe Bailiff
Judgment Date08 December 2006
Neutral Citation[2006] JRC 185
Date08 December 2006

[2006] JRC 185

ROYAL COURT

(Samedi Division)

Before:

Sir Philip Bailhache, Kt., Bailiff, and Jurats Le Breton, and Allo.

In the Matter of the B Trust

Representation of Mourant and Co Trustees Limited

Advocate M. H. Temple for the Trustee.

Advocate D. J. Petit for the “wife”.

Advocate J. P. Michel for the minor and unborn beneficiaries.

Advocate S. A. Franckel for the “husband” and other beneficiaries.

Authorities

Trusts (Amendment No. 4) (Jersey) Law 2006.

re the H Trust [2006] JRC 057.

Trusts (Jersey) Law 1984.

Matrimonial Causes Act 1973.

J v M [2002] JLR 330.

Matrimonial Causes (Jersey) Law 1949.

Brooks v Brooks [1995] 2 FLR 13.

The Abidin Daver [1984] 1 ALL ER 470 at 476.

Lane v Lane [1985–86] JLR 48.

re Rabiotti 1989 Settlement [2000] JLR 173.

re The Fountain Trust [2005] JLR 359.

The Bailiff
1

This is an application by Mourant & Co Trustees Limited for directions in relation to the administration of the B Trust following an order dated 6th February 2006 of the Family Division of the High Court in England (“the English order”) in matrimonial proceedings between J “the wife” and S “the husband”. The trustee had submitted to the jurisdiction of the English court and this application might have been straight-forward but for the coming into force of the Trusts (Amendment No. 4) (Jersey) Law 2006 (“the Trusts Law amendment”). The Trusts Law amendment was registered in this Court on 20th October 2006 and came into force at midnight on 26th October. Entirely fortuitously, this application came on for hearing on 27th October. Mr Franckel appeared for the husband and for certain other family members, namely all the adult beneficiaries of the trust other than the wife. We refer to him for convenience as “counsel for the husband”.

2

The B Trust was established by a deed of settlement dated 8th December 1988 and was made between E, the settlor, a cousin of the husband, and Granby Trustees Limited. At that time the settlor was domiciled in Jersey but he put no significant assets into the trust. On 27th November 2003 Granby Trustees Limited retired from the office of trustee in favour of Mourant & Co Trustees Limited (“the trustee”). The principal beneficiaries of the trust are the issue and remoter issue of W the husband's mother, and the spouses and widows and widowers of those issue and remoter issue. For practical purposes the beneficiaries comprise two branches of the B family, namely that of the husband and that of his brother N. The trust fund consists of the issued share capital of a Jersey company which in turn holds, inter alia, real property in England. The B Trust is a Jersey trust the proper law of which is Jersey law.

3

The trustee was joined as party to the matrimonial proceedings in England and, having sought the directions of this Court, submitted to the jurisdiction and gave evidence before the English court while maintaining a neutral stance as between the husband and the wife. The English court found that the B Trust was a post-nuptial settlement and liable to be varied in accordance with provisions of the English statute. Its order purported to vary the trusts of the B Trust in the following manner –

  • “(i) The sum of £1,500,000 should be settled into a sub-trust of the Trust together with interest on that sum running from 6th February 2006 to the date on which the sub-trust is established;

  • (ii) [the Wife] should have a life interest in the funds comprised in the sub-trust;

  • (iii) the sub-trust should include a power of advancement of capital in favour of [the Wife];

  • (iv) [the Wife] should be entitled to nominate the trustee of the sub-trust;

  • (v) following the death of [the Wife] the funds comprised in the sub-trust should revert to the Trust;

  • (vi) the trustees of the sub-trust should make available to the trustees of the Trust -

    • a) any annual accounts of the sub-trust (provided that a copy of such accounts is requested by the trustees of the Settlement within a reasonable period after the expiry of the accounting period to which they relate); and

    • b) any document disclosing the exercise of the power of advancement in relation to the whole or any part of the capital of the sub-trust fund.”

4

The Trustee now seeks directions from this Court as to how it should respond to the English order. The representation was served upon the adult beneficiaries of the Trust who are all represented by counsel, and upon Advocate Michel as guardian ad litem of the minor and unascertained beneficiaries. Prior to the coming into force of the Trusts Law amendment the matter might well have been regarded as relatively uncontroversial. The Trustee had submitted to the jurisdiction of the English court and had been heard in the English matrimonial proceedings. As Birt, Deputy Bailiff, stated in re the H Trust [2006] JRC 057 at paragraph 16 –

“The significant factor from the point of view of whether the trustee should submit to the jurisdiction of the overseas court is that it will remain a matter of discretion for the Court as to the course it should take in the light of the overseas order if the trustee has not submitted, whereas if the trustee has submitted, the overseas order is likely to be enforced without reconsideration of the merits.”

5

The Trusts Law amendment has however introduced new provisions which affect the relevant rules of private international law. It substitutes a new Article 9 of the Trusts (Jersey) Law 1984, the relevant parts of which are in the following terms –

“9 Extent of application of law of Jersey to creation, etc of a trust

(1) Subject to paragraph (3), any question concerning –

(a) the validity or interpretation of a trust;

(b) the validity or effect of any transfer or other disposition of property to a trust;

(c) the capacity of a settlor;

(d) the administration of the trust, whether the administration be conducted in Jersey or elsewhere, including questions as to the powers, obligations, liabilities and rights of trustees and their appointment or removal; or

(e) the existence and extent of powers, conferred or retained, including powers of variation or revocation of the trust and powers of appointment and the validity of any exercise of such powers;

shall be determined in accordance with the law of Jersey and no rule of foreign law shall affect such question.

(3) the law of Jersey relating to –

(b) conflicts of law, [sic]

shall not apply to the determination of any question mentioned in paragraph (1) unless the settlor is domiciled in Jersey.

(4) No foreign judgment with respect to a trust shall be enforceable to the extent that it is inconsistent with this Article irrespective of any applicable law relating to conflicts of law [sic]

(6) In this Article –

‘foreign’ refers to any jurisdiction other than Jersey;

(7) Despite Article 59, this Article applies to trusts whenever constituted or created.”

6

Mr Temple for the trustee contended that the Court should give effect to the English order. This was opposed by counsel for the husband. First, he submitted that the effect of Article 9 was to render the English order unenforceable on the basis that the finding that the B Trust was a post-nuptial settlement was inconsistent with Jersey law. Secondly, he submitted that the jurisdiction to enforce a foreign judgment on the basis of comity had been removed on a proper interpretation of Article 9(4).

7

We take first the issue relating to post-nuptial settlements. Section 24(1)(c) of the Matrimonial Causes Act 1973 empowers an English court to make –

“an order varying for the benefit of the parties to the marriage and of the children of the family or either or any of them any ante-nuptial or post-nuptial settlement (including such a settlement made by will or codicil) made on the parties to the marriage.”

8

We can find no discussion in the judgment of Bennett J as to the rationale for the finding that the B Trust was a post-nuptial settlement. It seems to have been assumed and, we have no doubt, correctly assumed as a matter of English law that the B Trust was a post-nuptial settlement. On that basis the court exercised the statutory power conferred by section 24(1)(c) of the 1973 Act and made the English order.

9

Counsel for the husband submitted that, while no issue was taken as to the finding that B Trust was a post-nuptial settlement in accordance with English law, it was not a post-nuptial settlement under Jersey law. Counsel referred to a judgment of this Court in J v M [2002] JLR 330 where the court had to construe the meaning of the phrase “post-nuptial settlement” under Article 27 of the Matrimonial Causes (Jersey) Law 1949, as amended. The court there considered the terms of section 24 of the Matrimonial Causes Act 1973 and cited an extract from the judgment of Lord Nicholls in Brooks v Brooks [1995] 2 FLR 13 which includes the following passage at 19 –

“Beyond this the authorities have consistently given a wide meaning to settlement in this context, and they have spelled out no precise limitations. This seems right, because this approach accords with the purpose of the statutory provision. Financial provision that is appropriate so long as the parties are married will often cease to be appropriate when the marriage ends. In order to promote the best interests of the parties and their children in the fundamentally changed situation, it is desirable that the court should have power to alter the terms of the settlement. The purpose of the section is to give the court this power. This object does not dictate that ‘settlement’ should be given a narrow meaning. On the contrary, the purpose of the section would be impeded, rather than advanced, by confining its scope. The continuing use of the archaic expressions ‘ante-nuptial’ and ‘post-nuptial’ does not...

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    • Jersey
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    ...Advocate M. P. Renouf in person. Advocate J. M. P. Gleeson for the Fourth Respondent. Authorities Matrimonial Causes Act 1973. Re B Trust [2006] JRC 185. Re the Fountain Trust [2005] JLR 359. Saunders v Vautier (1841) 4 Beav 115. Trusts (Jersey) Law 1984. Trusts (Amendment No 4) (Jersey) ......
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