THE M and OTHER TRUSTS [Royal Ct]

JurisdictionJersey
CourtRoyal Court
JudgeBirt, Bailiff and Jurats Le Cornu and Marett-Crosby
Judgment Date28 June 2012
Date28 June 2012
ROYAL COURT
Birt, Bailiff and Jurats Le Cornu and Marett-Crosby

A.D. Robinson for the representors;

R.J. MacRae for the first respondent;

The second respondent appeared in person.

Cases cited:

(1) Deery v. Continental Trust Co. Ltd., 2010 JLR N [8]; [2010]JRC001, dicta of Bailhache, Deputy Bailiff applied.

(2) Macedonian Orthodox Community Church St. Petka Inc. v. Diocesan Bishop of Macedonian Orthodox Church of Australia & New Zealand, [2006] NSWCA 160; (2006), 66 NSWLR 112, referred to.

(3) Midland Bank Trust Co. Ltd. v. Green, [1980] Ch. 590; [1979] 3 W.L.R. 167; [1979] 3 All E.R. 28, dicta of Templeman, J. considered.

(4) S Settlement, In re, 2001 JLR N [37], referred to.

(5) Westbond Intl. Bank Ltd. v. Cantrust (C.I.) Ltd., 2004 JLR N [29]; [2004]JRC111, applied.

Legislation construed:

Trusts (Jersey) Law 1984 (Revised Edition, ch.13.875, 2007 ed.), art. 51(1):

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

Trustspowers and duties of trusteesapplication for directionsconfidentialitybeneficiary convened to trustee's application for directions who undertook to disclose in English matrimonial proceedings material received in directions application if ordered to do so, granted leave to disclose all but legally privileged material (disclosure without leave contempt of court)hope expressed that Family Division respects confidentiality of directions application

A trustee applied for directions under art. 51 of the Trusts (Jersey) Law 1984.

In July 2011, the first respondent, as trustee of four trusts administered in Jersey, applied to the court for directions under art. 51 of the Trusts (Jersey) Law 1984 in relation to matrimonial proceedings before the Family Division of the English High Court. The parties to the matrimonial proceedings were not members of the beneficial class, which included the husband's father and mother, and his children and remoter issue. Following an application by the wife to join the trustee to the matrimonial proceedings, the trustee sought the court's approval of the following decisions: (i) to continue to disclose information about the assets of the trusts to the husband's father, in the knowledge that he was likely to disclose the information to the husband, from which it would become available to the Family Division and the wife; and (ii) not to submit to the jurisdiction of the Family Division and therefore not to take part in the matrimonial proceedings. The representors, the adult children of the husband, were joined to the art. 51 proceedings (which were held in private) and received the material filed in support of the proceedings. The court approved the trustee's decisions.

The representors, who were resident in England, sought leave to intervene in the matrimonial proceedings. As a condition for obtaining leave, they gave an undertaking to the Family Division inter alia to produce within 24 hours, if ordered to do so, all documents that they had received in connection with the trustee's art. 51 application. They were concerned that if they were to produce the documents without the leave of the Royal Court they might be in contempt of this court, whereas if they were to refuse to produce the documents they would be in contempt of the Family Division. They therefore applied to the Royal Court for leave to disclose the documents referred to in the undertaking should they be ordered to do so.

Whilst wishing to maintain the confidentiality of directions hearings, in the circumstances of the present case the trustee did not object to the disclosure of the material that had been placed before the Royal Court in the July proceedings, with the exception of legally privileged material and material that disclosed the purpose of the July hearing or set out the trustee's decision-making processes.

Held, ordering as follows:

(1) It would be a contempt of court for the representors to disclose without the leave of the court any documents that they had received in the July proceedings (such as affidavits, exhibits, skeleton arguments, notes of the content of the hearing and the judgment of the court) save to the extent that they were in possession of such documents independently of those proceedings. It was very common for trustees in Jersey to seek the directions of the court under art. 51 of the Trusts (Jersey) Law 1984 and such applications were an important part of the court's supervisory jurisdiction over trusts. A trustee making such an application had to make full and frank disclosure and to summarize the arguments for and against a proposed course of conduct, including any weaknesses or possible risks in respect of what was proposed. Such applications were invariably held in private and it was of vital importance that, if they were to serve the purpose for which they were intended, information and documents received by parties convened to them should be held in confidence. If trustees considered that documents disclosed in art. 51 applications might be provided to persons hostile to the trust, they would be less likely to be candid and the underlying purpose of the art. 51 procedure would be liable to be frustrated. Given the clear public interest reasons for hearing trustees' applications for directions in private, it would be a contempt of court for a party to publish information which he only received as part of such an application (if a party already had particular documents in his possession, the fact that such documents were produced and referred to by another party in the application held in private would not prohibit the first party from using those documents in other proceedings or publicly) ( paras. 13-20).

(2) The court hoped that, in the interests of comity, the Family Division would take note of its concerns that information and documents disclosed in art. 51 applications should be held in confidence. The court accepted that, in resolving the financial dispute between the husband and the wife, the Family Division would wish to establish the financial position of the trusts and the likelihood of the husband benefiting thereunder. However, by approving the trustee's decision to disclose information about the trust assets to the husband's father, in the knowledge that he was likely to disclose that information to the husband, from which it would become available to the Family Division and the wife, the court had done all it could to ensure that the Family Division was made fully aware of that information. It seemed highly unlikely that the material disclosed for the purpose of the July proceedings could be relevant to the issue before the Family Division. The internal thinking of the trustee as to what it considered to be in the beneficiaries' best interests, and the decision of the court in relation to that matter, appeared to be very different from the issue of what order the Family Division should make in the matrimonial proceedings. The court would respectfully invite the Family Division to consider very carefully whether it needed to order the representors to disclose material relating to the July proceedings. If the Family Division were to begin...

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