X Trust Company v Y Ltd and C and F and E and D and P and H and I and J and O and U and v and W and Minor and un-born beneficiaries of the Trusts and The adult children of C and F

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Matthew John Thompson
• Judgment Date: 06 April 2018
• Neutral Citation: [2018] JRC 68
• Date: 06 April 2018

Between

IN THE MATTER OF THE REPRESENTATION OF X TRUST COMPANY AND Y LIMITED

AND IN THE MATTER OF THE A TRUST AND THE B TRUST

AND IN THE MATTER OF ARTICLE 51 OF THE TRUSTS (JERSEY) LAW 1984, AS AMENDED

(1) X Trust Company

Representors

(2) Y Limited

and

(1) C

Respondents

(2) F

(3) E

(4) D

(5) P

(6) H

(7) I

(8) J

(9) O

(10) U

(11) V

(12) W

(13) Minor and un-born beneficiaries of the Trusts

(14) The adult children of C and F

[2018] JRC 068

Before:

Advocate Matthew John Thompson, Master of the Royal Court

ROYAL COURT

(Samedi)

Trust — reasons for requiring the third to twelfth respondents to provide more information in relation to their particulars of claim.

Authorities

Royal Court Rules 2004.

Royal Court (Amendment No.20) Rules 2017.

Trust (Jersey) Law 1984.

Royal Court Rules 2004.

Practice Direction RC17/08

Advocate E. Moran for the first Representors.

Advocate N. N. E. Addis for the First and Second Respondents.

Advocate J. M. Dann for the Third to Twelfth Respondents.

Advocate S. A. Franckel for the Thirteenth Respondent.

Advocate J. Harvey Hills for the Fourteenth Respondent.

CONTENTS OF THE JUDGMENT

		Paras
1.	Introduction	1–3
2.	Procedural history	4–20
3.	The requests in dispute	21
4.	Jersey law/Foreign law	22–26
5.	Ownership of assets	27–32
6.	‘Agree or purported to agree’	34
7.	Allegations relating to breaches of duty	35–38
8.	Other orders	39
9.	Costs	40

THE MASTER:

Introduction

1 This judgment contains my detailed written reasons for requiring the third to twelfth respondents to provide more information in relation to their particulars of claim, pursuant to Rule 6/15 of the Royal Court Rules 2004, as amended.

2 The issue at the heart of the dispute concerns whether or not the settlor's assets were settled into two trusts known as the A Trust and the B Trust. The representors are the present trustees of both trusts. The settlors of the disputed assets were the parents of the first to fourth respondents. The fifth to twelfth respondents are the adult children of the third and fourth respondents. Advocate Franckel represents minor and unborn beneficiaries and Advocate Harvey-Hills represents the adult children of the first and second respondents.

3 As is explained in more detail below, the rival protagonists of the dispute are the third to twelfth respondents on the one hand and Advocate Franckel for the minor and unborn beneficiaries on the other. The remaining beneficiaries and the representors are playing a neutral role in relation to the dispute.

Procedural history

4 What has led to the present dispute was first raised by the representors by way of a representation presented to the Royal Court in 2015. One of the directions sought was that, if any beneficiary wished to dispute the validity of the settlement of any asset into the A or B Trusts, that beneficiary had to commence proceedings within the following three months, failing which the trustees were entitled to administer assets free of any such claims.

5 In a judgment dated 23 ^rd June, 2015 sent to the parties only, at paragraph 1 (ii) the Royal Court stated:–

“We therefore order that any beneficiary who proposes to contend that any transfer of assets to either of the trusts is invalid, by which we mean whether it is void or voidable, then that beneficiary or those beneficiaries must file particulars of claim setting out the exact nature and grounds of their challenge within a certain period…”

6 At paragraph 1 (vi) of the said judgment, the Royal Court also stated:–

“As at present advised we consider that this litigation will become hostile litigation, not administrative. It follows that costs orders should be considered in that light. We do not propose to make any order at present about the costs between now and the next hearing save that the trustee continues to have its costs order during that period. Advocate Franckel can continue to have his costs order for the unborn and unascertained during that period; we will hear him as to whether we should now suspend his order in so far as it relates to adult beneficiaries.”

7 Advocate Franckel was first appointed by an act of court dated 6 ^th March, 2015. Following the Royal Court's judgment dated 23 ^rd June 2015, he has only represented minor and unborn beneficiaries with other adults being separately represented.

8 The act of court dated 23 ^rd June, 2015 at paragraph 3, in light of the judgment of the same day therefore, stated:–

“3) any beneficiary who wishes to contend that the transfer of any asset to the [A] or [B] Trusts is void or voidable shall file Particulars of Claim setting out the exact nature and grounds of the claim by 30th September, 2015” .

9 On 7 ^th October, 2015 the third and fourth respondents filed particulars of claim challenging transfers of various assets into the A and B trusts. It now appears that all of the third to twelfth respondents who all have the same legal representation adopt the position set out in the particulars of claim.

10 On 30 ^th November, 2015 a further hearing took place before the Royal Court. This was to decide who would defend the particulars of claim. Paragraph 1 of the Royal Court's decision stated as follows:–

“1. … The issue before me is a question as to who should put forward the case in defence of the assets being in these trusts. I think the starting point would be that it is for the minor beneficiaries, so that the trustee can remain neutral. It is clearly in the minor beneficiaries' interest to preserve assets in the trust. The argument put against that is that it is likely to be more expensive and I accept that it is, because I think there will be a fair amount of duplication of effort because Advocate Franckel will be very dependent on the information provided by the trustee and its officers.”

11 At paragraph 4 of the judgment, the Royal Court continued as follows:–

“… I think in the overall interests of the trust relationship it is probably best that Advocate Franckel does it and that has a certain logic because he is representing those who have the financial interest in defending the trust. But I think everyone agrees that Advocate Franckel continues to have the benefit of being paid out of the trust. There is no alternative and it seems to me that has to be the case.”

12 The judgment then concluded at paragraph 5 as follows:–

“5. Certainly at some stage, information should be disclosed between the parties because if the documents are given to Advocate Franckel and they are thought to be conceivably relevant, they should be disclosed in the ordinary way. I know we are not into formal discovery but it is perfectly apparent that all the parties must have all the relevant documents….”

13 The draft order approved by the Royal Court on 30 ^th November, 2015 firstly required Advocate Franckel to file an answer to the particulars of claim by 1 ^st March, 2016 and also gave permission to any other beneficiary to file a pleading in response. No other beneficiary has in fact done so. Advocate Franckel's answer was ultimately filed on the 15 ^th March 2016. Without any discourtesy to him, it is something of a holding answer as various paragraphs of the particulars of claim are said to lack sufficient detail.

14 A reply to Advocate Franckel's answer was filed on behalf of all the third to twelfth respondents on 29 ^th April 2016.

15 On 27 ^th June, 2016, the Royal Court approved a stay for mediation for one month. This stay was then extended until 14 ^th October, 2016. By an act of court dated 9 ^th November, 2016 the stay was further extended until 7 ^th December, 2016.

16 The Royal Court also made discovery orders in the event that the matter did not settle by 7 ^th December, 2016. This order also permitted further directions hearings either before the Royal Court or before the Master of the Royal Court.

17 On 26 ^th May, 2017 the Royal Court made further orders in respect of discovery requiring discovery to be completed by the middle of June 2017.

18 On 24 ^th July, 2017 I gave further directions in respect of discovery. I also directed Advocate Franckel to file any request for information about the particulars of claim by Friday, 22 ^nd December, 2017 and ordered him to provide an amended answer by 29 ^th January, 2018. The matter was also listed for a further directions hearing in March 2018, which ultimately took place on Monday, 12 ^th March, 2018.

19 By a letter sent by email at 17:23 on Thursday, 8 ^th March, 2018 for the directions hearing, Advocate Dann for the first time indicated that his clients would answer a number of the requests for information. The hearing before me, therefore, addressed those requests that his clients were not willing to answer.

20 Finally, I record, in light of the fact that no response was received to the requests for further and better particulars until 8 ^th March 2018, no amended answer has been filed. Yet, two years have passed since the answer was filed. I also record that it has taken over a year to complete the discovery process. The delays in responding to the requests and in relation to the discovery process are not satisfactory and not consistent with the overriding objective introduced by the Royal Court (Amendment No.20) Rules 2017 in June 2017. They mean that this action has not progressed in an appropriate timeframe. This will not be permitted to happen in the future.

The requests in dispute

21 The requests in dispute concerned the following areas:–

• (a) Issues of Jersey law or foreign law — requests 7 and 22;

• (b) Ownership of assets — requests 10, 11, 13, 15, 16, 19.2, 36...