Jersey Court Criticises Trustee For Not Convening All Beneficiaries To Application For Approval Of Momentous Decisions

Published date29 October 2020
Subject MatterWealth Management, Wealth & Asset Management
Law FirmCollas Crill
AuthorSam Williams

Case analysis by Group Partner Sam Williams, published on LexisPSL on 20 October.

Private Client analysis: The Royal Court of Jersey has criticised the approach of a trustee to its application for approval of two momentous decisions involving settlement of English court proceedings and a proposed distribution and termination of the trust. The court said that fresh proceedings should have been brought and that all the relevant beneficiaries with an interest in the outcome should have been convened. While the court was prepared to approve the settlement, the trustee was forced to withdraw the remainder of the application. Written by Sam Williams, group partner at Collas Crill LLP (Jersey).

In the matter of the Arpettaz Settlement [2020] JRC 183

For analysis of an earlier decision in these proceedings, see News Analysis: Jersey court decision in Beddoe application may have implications for statutory firewall (In the matter of the Arpettaz Settlement).

What are the practical implications of this case?

The case serves as a poignant reminder to trustees and legal advisers to ensure that the correct court procedure has been followed, and that all those with a potentially relevant interest in a trust have at the very least been contacted and informed of, if not actually convened to, a trustee's application for the blessing of a momentous decision. It is highly unusual for a trustee to be compelled to withdraw its application because parties have not been convened, as occurred here.

The fact that the court identified a potential conflict of interest as between the principal and other beneficiaries at the second stage of proceedings in August 2020 also raises the question of whether it might have reached a different conclusion at the previous stage in June 2020 when approving the trustee's decision to submit to the jurisdiction of the High Court in proceedings where the ownership of the trust assets was at stake. The principal beneficiary was a party to the June 2020 application, but apparently the court was not informed that his settlement negotiations with the English claimants were already at an advanced stage. The court proceeded on the assumption that the principal beneficiary intended to defend the English proceedings and uphold the validity of the trust.

The remaining beneficiaries were not convened in June 2020 and, as a result, lost any opportunity to influence the trustee's serial decisions to submit, settle and surrender the substantial liquid assets of...

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