Jersey Trusts And Divorce - Submission And Exclusion

Trusts Advisory Group

Two linked judgments of the Royal Court of Jersey have provided a further insight into the exercise of the Court's supervisory jurisdiction over Jersey trusts in the context of a trustee faced with overseas divorce proceedings concerning members of the beneficial class.

Both judgments relate to decisions made by the trustee of a Jersey trust in connection with divorce proceedings in Hong Kong. In the initial court application, the Trustee sought directions as to whether it should submit to jurisdiction of the Hong Kong Court and take part in the divorce proceedings. In the second, the trustee sought a blessing of its decisions to: distribute funds from the trust to enable the husband (the settlor and a beneficiary) to pay the sum ordered on the divorce; and thereupon to exclude the by then former wife as a beneficiary of the Trust.

Submission to the jurisdiction (Otto Poon [2011] JRC 167)

Having been joined to the Hong Kong divorce proceedings, the trustee sought directions from the Jersey Court as to whether it should take part in them. The trustee was in favour of submission for various reasons. First, the Hong Kong Court could enforce its decision against trust assets in Hong Kong even if the trustee did not submit. Second, the trust was administered in Hong Kong and key individuals could be subpoenaed to give evidence. Third, the trustee was minded to appear in order to put forward relevant arguments to seek ot safeguard the interests of the other beneficiaries - in that context the trustee considered that the ability to make submissions would outweigh merely providing information by way of its disclosure obligations. Finally, the trustee considered that there was little risk of it being put in a position of conflict between the duty to obey the Hong Kong Court and the duty to adhere to the trust instrument. The Jersey Court concluded that the trustee's decision to submit to the jurisdiction of the Hong Kong Court was reasonable and blessed it.

The divorce proceedings and impact on the Trust (Otto Poon [2014] JRC 254A)

The divorce proceedings were appealed up to the Hong Kong Court of Final Appeal where the wife was awarded 50% of the combined matrimonial assets of the parties, which were treated as including the assets of the trust. Following this judgment, the Trustee decided to make distributions out of the Trust in order to enable the husband to comply with the Hong Kong judgment but also decided to thereafter...