The Pw Trust

CourtRoyal Court
JudgeWilliam Bailhache, Deputy Bailiff and Jurats de Veulle and Tibbo
Judgment Date04 November 2010
Date04 November 2010
William Bailhache, Deputy Bailiff and Jurats de Veulle and Tibbo

J.P. Speck for the representor;

N.M. Sanders for the sixth respondent.

Cases cited:

(1) Bamford, In re, 2003 JLR N [13]; [2003] JCA 048, dicta of Southwell, J.A. applied.

(2) Guardian Trust & Executors Co. of New Zealand Ltd. v. Public Trustee of New Zealand, [1942] A.C. 115 ([1942] UKPC 1), applied.

(3) Hsu v. Barclays Private Bank & Trust Ltd., 2010 JLR N [35]; [2010] JRC 003A, considered.

Trustslegal proceedingsclaims against trustclaim against trust to be brought timeouslyif trustee informed of claim against trust but no proceedings brought for several years, on trustee's application for directions court may order that, unless proceedings brought within short timescale, trustee entitled to administer trust disregarding claim

The representor sought directions concerning a potential claim against a trust.

The representor was the trustee of a Jersey trust of which the first respondent was the settlor. She and her children, the second to seventh respondents, were beneficiaries under the trust. The seventh respondent, who was also the protector of the trust, claimed that the trust assets had been the property of his father (the settlor's husband) who had died in 2000 domiciled in Indonesia and that the settlor's purported gift of them into the trust therefore failed. Probate had not been obtained in relation to the estate of the deceased.

The trustee was aware of the seventh respondent's challenge to the legitimacy of the payments into the trust and had therefore not made any distributions out of the trust fund. The seventh respondent had, however, taken no action to pursue his claim for five years. The trustee accordingly brought the present application under art. 51 of the Trusts (Jersey) Law 1984 seeking directions inter alia as to the seventh respondent's claim and the origin of the trust assets.

The court received a letter from the Jakarta Legal Aid Institute to the effect that only the District Court of Jakarta had jurisdiction in the dispute concerning the deceased's estate and that the seventh respondent should not therefore appear before the Royal Court. The seventh respondent also provided information to suggest that his financial position was not good, which might make it difficult for him to institute proceedings in this jurisdiction. The court removed the seventh respondent as protector of the trust because he had a clear conflict of interest.

The sixth respondent submitted that he and the remaining respondents considered the trust assets to have belonged absolutely to the settlor at the time of settlement. The trustee and the sixth respondent submitted that the seventh respondent should be directed to bring proceedings within a narrow timescale or be barred from any subsequent complaint.

Held, ordering as follows:

Unless the seventh respondent brought proceedings in Jersey within six months of the date of this judgment, seeking to set aside all or part of the original transfers of assets into the trust, the trustee would be entitled to administer the trust free from any claims of the seventh respondent to the assets (except as a beneficiary of the trust). A trustee faced with an adverse claim regarding a trust fund, which was prima facie arguable but in respect of which the claimant had not issued proceedings and appeared to have no immediate intention of doing so, would be at risk if any distribution were made without the sanction of the court. Equity, however, required that such a claim be brought timeously. In the present case, it was wholly unacceptable for the current uncertain state of affairs to continue. It was quite wrong and unfair to the trustee and other beneficiaries that the trustee of an apparently valid Jersey trust should be unable to perform its duties by the seventh respondent's unparticularized and vague complaint which had not been substantiated by detail provided to the trustee nor taken forward by hostile litigation. The court made no finding as to the merits of any claim that the seventh respondent might bring and merely ordered that a claim had to be brought within six months of the date of this judgment. The seventh respondent would otherwise require special leave of the court to bring such a claim and it was inconceivable that that would be granted unless it were shown that the trustee had acted intentionally, recklessly or with gross negligence in misleading the court on this application. In the circumstances, in order to ensure that the seventh respondent had access to justice, the trustee would be ordered to pay out of the trust fund the seventh respondent's legal costs (up to 50,000) incurred in seeking advice upon and/or instituting a claim before the court challenging the original transfers into the trust. If such a claim were brought, the trustee similarly had authority to reimburse the other respondents for legal fees incurred in respect of those proceedings (also limited to 50,000) ( paras. 19-27).

1.BAILHACHE, DEPUTY BAILIFF: A hearing took place in private on September 28th, 2010 of the representation of the representor, which first came before the court on March 12th, 2010. Although the...

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