The Representation of Trustcorp (Jersey) Ltd and The H and J Trusts and The Trusts (Jersey) Law 1984, as Amended and in the Inherent Jurisdiction of The Court

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: J. A. Clyde-Smith,Jurats Nicolle,Sparrow
• Judgment Date: 20 December 2016
• Neutral Citation: [2016] JRC 237
• Date: 20 December 2016

[2016] JRC 237

ROYAL COURT

(Samedi)

Before:

J. A. Clyde-Smith, Esq., and Jurats Nicolle and Sparrow

In The Matter of the Representation of Trustcorp (Jersey) Limited

And In The Matter of the H and J Trusts And in the Matter of the Trusts (Jersey) Law 1984, as Amended and in the Inherent Jurisdiction of the Court

Advocate H. J. Heath for the Representors.

Advocate O. A. Blakeley for the unborn and minor beneficiaries.

Authorities

Trusts (Jersey) Law 1984.

In the matter of the R. E. Sesemann WT [2005] JLR 421 .

Re Representation of PP Investors [2008] JRC 031 .

Trust — application to rectify two separate trusts.

THE COMMISSIONER:

1 The Court has two applications to rectify two separate trusts which were declared by the same original trustee on the same day in identical terms save for the beneficiaries. Both were established through instructions given by the same accountant on behalf of two clients who wished to settle shares in the same company. Both are discretionary trusts in familiar form established under the law of Gibraltar and both have now changed the proper law to that of Jersey. The representor is the trustee of both. Indeed it was on the change in the proper law in April of this year that the issue which the representor and beneficiaries would like rectified came to light.

2 We are satisfied that the adult beneficiaries of both trusts have been notified of the application and indeed all have written in in support. There are no minor beneficiaries and Advocate Blakeley has been appointed to represent the unborn beneficiaries for both trusts.

3 The issue arises out of the wording of the third and fourth schedules, which are as follows:

“The Third Schedule hereinbefore referred to:

(The Beneficiaries)

• 1. [The client],

• 2. The wife or widow of the [client], (whether or not for the time being remarried).

• 3. The children and remoter issue of [the client] (whether present or future).

The Fourth Schedule hereinbefore referred to:

(Excluded Persons)

• 1 The Settlor or its Directors, Shareholders or Officers for the time being.

• 2 Any person being a trustee or having the power of appointment of trustees in the Fifth Schedule hereto.

• 3 Any person, body or its Directors, Shareholders or Officers for the time being who has any legal power to direct the Trustees in the exercise of their power.

• 4 Any Gibraltarian or Resident of Gibraltar within the meaning of the Companies (Taxation and Concessions) Ordinance 1983.”

4 The term “Settlor” used in clause 1 of the Fourth Schedule is not defined in the trusts (both having been created by declaration by the original trustee) and as in both cases the client settled assets upon their respective trusts, it is arguable that notwithstanding the Third Schedule, they are excluded from benefit under the Fourth Schedule. The Trusts (Jersey) Law 1984 at Article 1 defines the term “settlor” as a person who provides trust property to a trust, which both clients have done in this case.

5 The original trustee had construed the reference in the Fourth Schedule to “the Settlor” to be a reference to itself. Its rationale for this construction was twofold. First, that clause 1 of the Fourth Schedule refers to “the Settlor, or its Directors, Shareholders or Officers for the time being” and the reference to the Settlor could not therefore intend to capture an individual person. Secondly, it was not possible for an individual to be expressly names as a Beneficiary and also at the same time fall within a class of “Excluded Persons”.

6 Whilst the Representor could see the strength of those arguments, it understandably would like the matter put beyond doubt.

7 Working from the confines of the trust deeds themselves, we would resolve the issue of construction in the same way and conclude that the clients are not excluded persons. The evidence we have seen puts it beyond doubt that the clients were intended to benefit and this was simply an error in the drafting.

The Law

8 Turning to the law on rectification in Re Sesemann WT [2005] JLR 421 and Re Representation of PP Investors [2008] JRC 031 the Royal Court stated the test for rectification in Jersey as...