Trust Applications In Jersey - Confidentiality Under Threat: English Divorce Court Denies Royal Court’s Request For Restraint In The Interests Of Comity

In the high-profile matrimonial proceedings of Tchenguiz v Imerman, the Family Division of the English High Court ([2013] EWHC 3627 (Fam)) recently refused the request of Jersey's Royal Court to refrain from ordering disclosure in the English proceedings of sensitive trust information received by beneficiaries who were convened to a trustee's application to the Royal Court, in private, for directions under Article 51 of the Trusts (Jersey) Law 1984 (as amended).

The English proceedings concerned the wife's application for financial relief against the husband. They focussed on certain BVI-law trusts, the trustee of some of which was a Jersey-resident company. Neither the husband nor the wife was a beneficiary of the trusts in question but it was open to the trustee to add them as such. The wife's application sought that the English court should vary the trusts under the English statutory regime on the basis that they were post-nuptial settlements and/or that it should find that the assets of the trusts were financial resources available to the husband.

The Jersey trustee was joined to the English proceedings. Rather than submitting to the English court's jurisdiction the trustee applied to the Royal Court, in private and convening the trusts' beneficiaries, for a blessing of its decisions (a) not to submit but (b) to disclose certain information concerning the trusts and their assets to the husband's father (who was a beneficiary) in the knowledge that the information would end up being available to the English court and the wife. Fulfilling its obligation of full and frank disclosure on such an application, the trustee provided affidavits, evidence and argument to the Royal Court and to the convened parties, including sensitive information relating to its reasoning and its decision-making process. The Royal Court blessed both of the trustee's decisions.

Some of the beneficiaries of the trusts, English-resident adult children of the husband, then applied (to the English court) and were granted permission to participate in the English proceedings: they did so in order to make submissions concerning the trusts. As part of that process they gave undertakings to the English court to preserve and make available the documentation which they had received in the course of the trustee's Royal Court application. Having given such undertakings, and as they would be in contempt of the Royal Court if they disclosed without its permission, the...