A Trust Company (“A”)

JurisdictionJersey
CourtRoyal Court
JudgeSir William Bailhache,Bailiff,Jurats Olsen,Thomas,William Bailhache
Judgment Date08 September 2017
Neutral Citation[2017] JRC 142
Date08 September 2017

[2017] JRC 142

ROYAL COURT

(Samedi)

Before:

Sir William Bailhache, Bailiff, and Jurats Olsen and Thomas.

In the Matter of the F Charitable Trust (“the Trust”) and in the Matter of Article 51 of the Trusts (Jersey) Law 1984 (“the Law”)

Between
A Trust Company (“A”)
First Representor
B
Second Representor
C
Third Representor

Advocate J. Harvey-Hills for the Representors.

M Attorney-General, partie publique.

Authorities

Trusts (Jersey) Law 1984.

Public Trustee v Cooper [2001] WTLR 901.

Re S Settlement [2001] JLR Note 37.

Re S Settlement 2001/154.

Lewin on Trusts 19th Edition.

Clore v Stype Trustees (Jersey) Limited and Others [1984] J.J.13.

Alhamrani v J P Morgan [2007] JLR 527

Trust — Beddoe application in relation to proceedings brought to recover a substantial debt owed to the Trust.

[This is the approved redacted judgment in respect of a hearing which took place in private]
THE BAILIFF:
Introduction
1

This matter arises out of a Beddoe application pursuant to Article 51 of the Law, in relation to some proceedings brought [elsewhere] to recover a substantial debt (“the debt”) owed to the Trust….and a principal asset of the Trust.

2

The Trust was established …. [many years ago with the First Representor as sole trustee. The Second and Third Representors were appointed as additional trustees more recently.] The proper Law of the Trust is the Law of Jersey. The Trust is exclusively charitable …. and the First Representor has made a number of distributions in accordance with the charitable objects of the Trust. It is because it is an exclusively charitable trust that the Attorney General has been joined as the partie publique.

[The judgment has been heavily redacted to protect the interests of the Representors in any ongoing litigation but it is published for the points of principle contained in it.]

3

4

5

….

6

7

….

8

By the present Beddoe application, the Representors asked the court to sanction and bless the conduct of the various proceedings to date, and to direct the Representors to maintain and pursue those proceedings until the conclusion of the discovery process, or the conclusion of the proceedings, whichever is the earlier. The Second and Third Representors [have sought other procedural relief.]

9

This court has had the opportunity of reviewing two affidavits with exhibits, sworn …[in support of the application].

10

We have also had the advantage of having been addressed by H M Attorney General in his capacity as partie publique, representing the general charitable interest.

The Law
11

Advocate Harvey-Hills submitted that the test on a Beddoe application of this nature was well established, namely that, on the application of the dicta in Public Trustee v Cooper [2001] WTLR 901, approved in Jersey in Re S Settlement [2001] JLR Note 37, JRC 2001/154, the question for the court was whether it was appropriate to bless the action of the trustees in circumstances where there was no real doubt as to the nature of their power, but the decision was particularly momentous. It was said, relying upon Lewin on Trusts (19th edition 2015 at 27–079) that the court's function was a limited one. The trustees were not surrendering their discretion as they had no conflict of interest, and all the Court had to do was to satisfy itself that the proposed exercise of trustee power was lawful and that it did not infringe the duty to act as ordinary, reasonable and prudent trustees might act. If the trustees could properly form the view that the proposed transaction was for the benefit of the beneficiaries or the trust estate, and they had in fact formed that view, the court should not interfere because it was only concerned with the limits of rationality and honesty.

12

In this court we have seen numbers of Beddoe applications of this kind. The test set out in Re S [supra] has been applied on many occasions. Having said that, we think the position, established in practice and by the cases, is slightly more nuanced than is contended by Advocate Harvey-Hills. In our view, it is right to have regard to the substratum of the decision which the trustee seeks to have blessed. Frequently this will be a decision where the court would not normally claim to have any more expertise than the trustee, and indeed very possibly less – a decision to realise a majority interest in a family company, or to make an appointment to a particular member of the class of beneficiaries; or to exercise a power contained in the trust deed to reduce the trust period. There will be many other examples of cases where one could expect the trustee, with its greater knowledge of the family or of acting as a trustee, to be in at least as good a position as the court to take a decision, if not a better one. In those circumstances, there is every reason for thinking that as the settlor had conferred the relevant power or discretion on the trustee, he was satisfied that the trustee was the right person to exercise it, and it is unsurprising in those cases that the court exercises only a supervisory power in blessing a momentous decision, restricting itself to a review, as has been said in the cases, based on honesty (lack of conflict) and rationality.

13

Where the substratum of the decision is the question of litigation however, it appears to us that the court is not in quite the same position. One thing that can firmly be said about litigation is that it is something with which the court is familiar, probably in most cases more familiar than the trustee. Where the trustee therefore seeks to have a decision to litigate blessed by the court, it should expect the court to exercise a more direct, inquisitorial role, and be ready to form its own judgement as to whether it is sensible for the trust estate to be put at risk by the litigation in question. Clearly the court does not give advice in the sense that the trustee will have gained advice from its professional advisers in relation to the prospects of litigation — and it is entirely appropriate that the court should consider the advice carefully and certainly have a good reason if it should not be willing to bless the trustee's decision where it is based on that advice. Equally clearly, the Court's view cannot guarantee the outcome of a hearing before a different court. We make this distinction where the substratum of the decision is litigation because there are many cases in which this court has followed that approach, still applying Re S, but in the more nuanced way as described above.

14

The other question which arises as a matter of law is whether it is absolutely necessary that the Beddoe application brought by the trustee should be so brought before the relevant litigation is commenced, or if not before, then as soon as possible thereafter. Clearly the trustees will not always know in advance if they are to be actioned in court, but in those circumstances, it might have been argued that it is the trustees' duty to come to court as quickly as possible.

15

We note that in Clore v Stype Trustees (Jersey) Limited and Others [1984] JJ 13, Crill DB said this at page 17:-

“Having looked at the decisions of the English courts which were placed before us by all counsel we have come to the conclusion that during the time between the filing of Mr Alan Clore's Order of Justice in October, 1979, and today, a sufficient explanation has been given to us as to why the application of Stype Trustees (Jersey) Limited had not been made earlier, and we asked ourselves this question; had the applicant come before us, as appears to be the practice in the United Kingdom, immediately or very soon after the service on it of Mr Alan Clore's Order of Justice, would we at that time, faced with such facts as we have had before us today, granted the application? We think we would have done. We think it was a proper case then and is a proper case now in which the application would have been granted. We are not, therefore, satisfied that the trustees have acted in any way that would justify us disentitling them to their prayer.”

16

So there we have a case where the Royal Court has not treated the delay in making a Beddoe application as a conclusive reason why the application should be dismissed.

17

Lewin (op cit) says this at 27–257:-

“Although it is prudent for a trustee to make a Beddoe application before he brings proceedings, or as soon as proceedings are commenced against him, a Beddoe application may be made during the course of or after the main action, and in such a case he will be allowed to retain his costs out of the trust property if, had he applied at the outset, he would have been directed to take the steps he did, but not otherwise [see re Wilkie's Settlement [1914] 1 Ch 77]. However, it not infrequently happens that at the outset of litigation, the issues involved seem straightforward and it is anticipated that a summary judgment or a speedy compromise will be achieved, but later on it becomes apparent that the litigation is likely to be more complex or protracted than was at first appreciated. Trustees are understandably – and rightly – reluctant to incur the costs of a Beddoe application at the outset in such circumstances since the costs of the Beddoe application would be out of all proportion to the costs likely to be at stake in the main action. In such circumstances, provided that the trustee makes a prompt application as soon as it appears that the litigation is likely to be complex or protracted, it is thought that the court would be very sympathetic to an application by the trustees for an indemnity to cover their past as well as future costs.”

18

We think there is no doubt as to the practice in this court, namely that, even if the application brought by the trustee comes late, the court has a discretion to grant it. Of course, the drawback to the trustee in coming to court at a later stage is...

To continue reading

Request your trial
1 cases
  • The Trustee v Principal Beneficiary
    • Jersey
    • Royal Court
    • 10 August 2020
    ...Authorities Trust (Jersey) Law 1984. Public Trustee v Cooper [2001] WTLR 901. Re S Settlement [2001] JLR Note 37. The F Charitable Trust [2017](2) JLR 26. M & L Trust [2003] JRC 002A. In the matter of the H Trust [2006] JLR 280. HSBC International Trustee Limited v Poon [2011] JRC 167. Conf......
1 firm's commentaries

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT