Do The Objects Of A Mere Power Have The Rights To Sue Their Trustees?

Sarah Daile Freeman and others -v- Ansbacher Trustees (Jersey)

Limited [2009] JRC003

Facts and Decision

Facts:

This judgment arose out of an application by Ansbacher Trustees

(Jersey) Limited (the "Trustee") to

strike out a claim made by Sarah Daile Freeman

("Sarah"), Robert Keith Freeman

("Robert") and Rosanna Freeman

("Rosanna", and together the

"Beneficiaries") for damages arising

from breach of trust.

The JB Sims No.1 Jersey Settlement (the

"Trust") was a standard discretionary

trust which had been established under Jersey law on 4 May 1978.

The Trustee was the original sole trustee of the Trust from its

inception up until 14 August 1998 when a number of individuals

including Kenneth George Freeman ("Mr

Freeman") and his wife Pauline Ann Freeman

("Mrs Freeman") were appointed to act as

co-trustees with the Trustee (Mr Freeman being the father of the

Beneficiaries and the most significant settlor of assets into the

Trust). Subsequently, the Trustee resigned from office as a

co-trustee of the Trust on 1 March 2000.

At all material times the sole significant asset of the Trust

was the whole of the issued share capital of a Jersey company

called S.D. & R. Trading Limited

("SDR") which in turn held a number of

underlying assets.

On 14 December 2007 the Beneficiaries together issued an order

of justice making a number of specific allegations of breach of

trust against the Trustee relating to losses sustained in respect

of a land transaction, a software deal and a tax claim. The Trustee

responded by attempting to have the claim struck out without a

substantive hearing on a number of grounds including prescription,

the ability of the Trustee to rely on the exculpation provisions

contained in the Trust documentation and the rule against the

recovery of reflective loss. For the purposes of this note,

however, the relevant ground upon which the Trustee sought to have

the claims abandoned was that the Beneficiaries had no locus standi

to sue the Trustee - i.e. that their status as potential recipients

of benefit under the Trust did not constitute an interest

sufficient enough to allow them to bring the claim.

Submissions:

The Trustee contended that the Trust could be analysed as

including the following elements:

(i) a trust to accumulate income;

(ii) a mere power to appoint capital and/or

income to the Beneficiaries during the trust period; and

(iii) a default trust to take effect at the end

of the trust period to hold the Trust's assets in equal...