X Trustees Ltd v A

• Jurisdiction: Jersey
• Court: Royal Court
• Judge: Jurats Crill,J. A. Clyde-Smith, OBE.,Dulake
• Judgment Date: 07 January 2021
• Neutral Citation: [2021] JRC 18
• Date: 07 January 2021

[2021] JRC 18

ROYAL COURT

(Samedi)

Before:

J. A. Clyde-Smith, OBE., and Jurats Crill and Dulake.

In the Matter of the Representation of X Trustees Limited

and

In the Matter of the D Trust and The E Trust

and

In the Matter of the Trusts (Jersey) Law 1984 (As Amended)

Between

X Trustees Limited

Representors

and

A

First Respondent

and

B

Second Respondent

and

C

Third Respondent

and

F

Fourth Respondent

and

G

Fifth Respondent

and

H

Sixth Respondent

and

J

Seventh Respondent

and

K

Eighth Respondent

and

L

Ninth Respondent

and

M

Tenth Respondent

and

N

Eleventh Respondent

and

O

Twelfth Respondent

and

P

Thirteenth Respondent

and

Advocate Damian Evans as guardian ad litem of Q and R, minors

Fourteenth Respondent

Advocate J. P. Speck for the Representor.

Advocate J. M. Sheedy for the First, Second, Third, Fourth, Fifth and Sixth Respondents.

Advocate A. Kistler for the Seventh and Eighth Respondents

Advocate D. Evans as guardian ad litem

Authorities

Trusts (Jersey) Law 1984 (as amended)

(Exchange of Information with Third Countries) (Jersey) Regulations 2008

Channel Islands & International Law Trust Co. Ltd v Pike and 5 others [1989] JLR Notes-13d.

Re Moritz [1959] 3 All E.R. 767

E, R, O and L Trusts [2008] JRC 053

Re Y Trust [2013] JRC 126

Lewin on Trusts (20th edition)

Trust — re directions to the Representor — reasons.

THE COMMISSIONER:

1 On 26 ^th November 2020 the Court gave certain directions to the Representor (“X Trustees”) firstly in connection with proceedings it had commenced and is defending elsewhere, in which certain beneficiaries of the D Trust, of which it is trustee, are defendants and secondly for the disclosure of information to the Country 1 tax authorities. We now set out our reasons.

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

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20 X Trustees applied by way of a further Beddoes application for authority to continue the overseas proceedings. It also sought directions for disclosure of information directly and indirectly to the Country 1 tax authorities.

Request for information under the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 (“TIEA”)

21 By letter dated 27 ^th October 2020, X Trustees received three requests for information from the Jersey Comptroller of Taxes in respect of each of the E, the D Trust and another associated trust called the V Trust, following a request from the competent authority of Country 1. The V Trust had not been included in the reinstatement application because it was terminated in December 2011. The initial deadline for compliance with the notices was 26 ^th November 2020 but after further liaison between the Comptroller and Mourant Ozannes, the Comptroller agreed to extend the deadline to 18th December 2020.

22 X Trustees had considered the contents of the notices and intended to comply insofar as it was able, and in doing so, wished to send a covering letter to the Comptroller to explain the background to the trusts, including the circumstances and process by which they were reinstated. Copies of the notices were served on the Jersey lawyers for all of the beneficiaries on 30 ^th October 2020, and none had expressed an objection to X Trustees' intention to comply. X Trustees requested permission, however, to go beyond strict compliance with the terms of the notices and to provide the Comptroller with the judgment of [redacted], by which the trusts were reinstated. This was necessary in order for the Comptroller, and through him the Country 1 tax authorities to fully understand the history and circumstances of the trusts.

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The law: Beddoe type relief

25 A brief summary of the position is contained in the case of Channel Islands & International Law Trust Co. Ltd v Pike and 5 others [1989] JLR Notes-13d which held (insofar as is relevant):

• “a. A trustee has an absolute right to apply to the court for directions under [then] Art. 47(3) of the Trusts (Jersey) Law, 1984 (“the Trusts Law”) concerning the bringing of an action which raises questions relating to a trust, at the expense of the trust fund (a “Jersey-applied Beddoe application”) .

• b. Since only a ‘court’ (defined by art. 1(1) of the Trusts Law as the Inferior Number of the Royal Court) may hear such an application, or any other application made under the Trusts law, neither a single judge nor the Judicial Greffier has jurisdiction to entertain an application under [then] Art. 47 or otherwise .

• c. For an application to sanction the bringing of proceedings to succeed, the applicant need only show the existence of a prima facie case and need not go so far as to show a good arguable case on the substantive issues to be raised ( West v Lazard Bros. & Co. (Jersey) Ltd, 1987–88 JLR N-21, followed; Johnson Matthey Bankers Ltd. v. Shamji, 1984–85 JLR N-26, not followed).”

26 Clearly the purpose of Beddoe-type relief is to provide certainty and protection to a trustee by predetermining the question of whether costs incurred in third party litigation were reasonable and should be borne out of the trust fund. If Beddoe-type relief is granted it removes any doubt as to the right of the trustee to be indemnified from the trust fund for its costs incurred in the third-party litigation.

27 The essential question for the Court on a Beddoe-type application is not whether the Court considers that the proposed actions of a trustee are the right ones, although Advocate Speck for the Representor submitted that in this case it is difficult to see what option was available to X...