Family Context Is Key In Blessing Applications (Re Z Trust (Jersey))

• Law Firm: Carey Olsen
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Author: Mr Andreas Kistler and Christopher Tan
• Published date: 08 March 2023

Private Client analysis: In a 'Public Trustee v Cooper'-style blessing application, the Royal Court of Jersey gave its sanction to the in-principle decision of J Trustee Ltd (the 'Trustee') to 'account to the Fourth and Fifth Respondents for certain forgone 2014/2015 capital distributions, paying them amounts equal to the sums forgone, and thereafter to distribute, gross of any tax payable, the assets of the Z Trust' (the 'Trust').

The application was brought under Article 51 of the Trusts (Jersey) Law 1984. Article 51(1) of the Law reads, 'A trustee may apply to the court for direction concerning the manner in which the trustee may or should act in connection with any matter concerning the trust and the court may make such order, if any, as it thinks fit'. This decision is of wider relevance as: (i) the Settlors were not convened to the hearing; (ii) the Trustee was minded to split the assets of the Trust equally among the six sibling-Beneficiaries (four sisters and two brothers), despite the brothers having, historically, received more from the Trust than the sisters; and (iii) the court considered whether the Trustee's concerns regarding potential transaction costs arising from the Trustee's change in management policy, might indicate a conflict of interest. Written by Andreas Kistler, partner and Christopher Tan, associate at Carey Olsen.

Representation of J Trustee Limited re Z Trust [2023] JRC 006

What was the background, and what are the practical implications of this case?

The implications of Re Z Trust are threefold-the first two relate to the importance of considering (inter-generational and intra-generational) family dynamics in blessing applications for archetypal discretionary family trusts, whilst the third concerns conflicts of interest and the Trustee.

Perhaps unusually, the Settlors/parents were not convened to the hearing. This was due to strained relationships between the parents and most of their children-it was hypothesised that the daughters, in particular, would not express their true wishes regarding the Trustee's 'in-principle' decision were their parents convened to the hearing (at para [13]). As a matter of law, the court noted that, under the terms of the Trust Instrument, the Settlors had 'lost control of the property' (ibid). It was, however, considered proper that the Settlors be informed, after the hearing and after judgment was given, that the Trust was to be dissolved-accordingly, an appropriate paragraph from the...