The MJB/SJB Amethyste Trust

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Deputy Bailiff
• Judgment Date: 10 October 2002
• Neutral Citation: [2002] JRC 186
• Date: 10 October 2002

[2002] JRC 186

ROYAL COURT

(Samedi Division)

Before:

M.C. St. J. Birt, Esq., Deputy Bailiff, and Jurats Quérée and Clapham.

In the Matter of the MJB/SJB Amethyste Trust

In the Matter of the Representation of Walbrook Trustees (Jersey) Limited

Advocate M. St. J O'Connell, appointed by the Court as representative of the issue and remoter lineal descendants of the presently excluded primary beneficiaries of the Trust.

Advocate K.J. Lawrence for the Representor.

Advocate M. St. J O'Connell in person.

Authorities

In Re Moody Jersey “A” Settlement (1990) JLR 264

In Re Westbury Settlement (26th March, 2001) Jersey Unreported; [2001/72]

Application to rectify a Trust Deed.

Deputy Bailiff

THE

1 This is an application by Walbrook Trustees (Jersey) Limited for rectification of a Settlement known as the MJB/SJB Amethyste Trust, which we shall call the “Settlement”. The Settlement was established on the 8 ^th March 1999 by way of Declaration of Trust made by Walbrook as Trustee. The Settlement was established at the request of Mr Michael John Bentley who provided the funds for the Settlement and is defined in the Settlement as the “Settlor”.

2 The Settlement is an accumulation and maintenance settlement. Clause 4(1) provides that the Trust Fund is to be held for such of the primary beneficiaries of the relevant class of primary beneficiaries as attain the age of 25 before the end of the trust period or are living and under that age at the end of the trust period and if more than one in equal shares. There are corresponding powers of maintenance and advancement. ‘Primary beneficiary’ is defined in Clause 1 (h) as meaning the existing grandchildren of the Settlor named in Part 1 of the Third Schedule and every other grandchild of the Settlor born after the date of the settlement but before the first grandchild attains the age of twenty-five. The Third Schedule divides the primary beneficiaries into four classes by reference to the four children of the Settlor. The trust fund is to be divided into four equal shares, one for each class of beneficiaries.

3 Thus far the Settlement is quite clear. It is an accumulation and maintenance settlement in fairly conventional form for the grandchildren of the Settlor, with common place default provisions for more remote issue to take in the event of a grandchild dying under 25.

4 The difficulty arises because of the effect of Clause 21 of the Settlement read with the Fourth Schedule. Clause 21 provides:

“…that no Excluded Person shall be capable of taking any benefit of any kind by virtue or in consequence of this Settlement…”.

5 Excluded Persons are defined by the Fourth Schedule as follows:

“Any person being from time to time a defined person within the meaning of paragraph 2(3) of Schedule 5 of the Taxation of Chargeable Gains Act 1992 of the United Kingdom or any statutory modification or re-enactment of such paragraph”.

6 Unfortunately paragraph 2(3) of Schedule 5 of the Taxation of Chargeable Gains Act 1992 includes any grandchildren of a settlor. The consequence is that while the trust provisions establish the Settlor's grandchildren as the beneficiaries of the Settlement, they are then excluded from benefit by virtue of Clause 21 of the Settlement read with the Fourth Schedule. The result is clearly nonsensical. In these circumstances the Trustee applies to rectify the Settlement by deleting the existing wording of the Fourth Schedule and replacing it with the following wording:

“Save for any grandchild of the Settlor born before the first grandchild of the Settlor attains the age of 25, Excluded Persons shall be any person from time to time being a defined person within the meaning of paragraph 2(3) of Schedule 5 of the Taxation of Chargeable...