Mubarak v Mubarik - A Clarification Of Article 47 Of The Trusts (Jersey) Law 1984

The notorious litigation in Mubarak v Mubarik may finally have come to a conclusion in the Jersey Court of Appeal decision on the 19 November 2008. The judgment is the appeal against the decision in the Royal Court of the Deputy Bailiff in In the Matter of IMK Family Trust (15 August 2008). The two decisions confirm the Jersey Court's approach to the English Family Division's purported variation or alteration of Jersey trusts.

Article 47 of the Trusts (Jersey) Law ("the 1984 Law") became the vehicle to vary the Trust and the means by which the wife could be given access to the funds in Trust. The Court of Appeal decision is therefore a clarification of the width of Article 47 and its practical application.

In the Royal Court the Deputy Bailiff had ordered (i) a variation of the family trust pursuant to Article 47 of the 1984 Law; (ii) the removal of The Craven Trust Company Ltd as trustee of the trust and (iii) appointed two individuals as receivers and managers to the assets of the trust pursuant to Article 51 of the Trusts (Jersey) Law 1984. In giving the leading judgment in the Court of Appeal, Sir Michael Beloff, QC upheld the judgment of the Deputy Bailiff, with some clarification of the orders made by the Royal Court.

THE ROYAL COURT

In 2007 Holman J in the High Court in England had sought to vary the Jersey governed family trust to enable the First Respondent Wife to receive a lump sum of £4.875m awarded to her in ancillary relief proceedings as long ago as 1999. The First Respondent Wife had previously been excluded as a beneficiary to the family trust and, under the terms of the trust deed, the power to add beneficiaries could not be exercised in favour of an excluded person.

The Deputy Bailiff found that by reason of Article 9(4) and Article 9(1) of the 1984 Law the Royal Court could not enforce a judgment of the Family Division varying or altering a Jersey trust under the provisions of the 1973 Matrimonial Causes Act. Thus, the Royal Court gave power to the statutory amendment of Article 9 which Jersey lawyers had long been expecting.

The Royal Court could however (in certain circumstances) give effect to an order of the Family Division by giving directions pursuant to Article 51 of the 1984 Law. To do so, the order must involve something the trustees had power to do under the Trust (a variation). Whether the variation could be given effect would then be a matter for judicial discretion taking into account the interests of the...