Jersey & Guernsey Law Review – June 2008
CASE SUMMARIES
The following key indicates the court to which the case reference refers.
JRC - Royal Court of Jersey
GRC - Royal Court of Guernsey
JCA - Jersey Court of Appeal
GCA - Guernsey Court of Appeal
JPC - Privy Council, on appeal from Jersey
GPC - Privy Council, on appeal from Guernsey
ADMINISTRATIVE LAW
TRIBUNALS
Cable and Wireless Guernsey Ltd v Director General of the Office of Utility Regulation & Others Royal Ct: (Collas, Deputy Bailiff) [2007] GRC 15. C.J. Hay for the applicant: A.M. Ozanne for the respondent; R.G. Shepherd for the first intervener; S.H. Davies for the Utilities Appeals Tribunal.
The applicant intended to appeal the respondent’s refusal of a 3G telecommunications licence. By s. 14 of the Regulation of Utilities (Bailiwick of Guernsey) Law 2001, the States was given power to make ordinances providing for, inter alia, the procedure to be followed by the Utility Appeals Tribunal (“UAT”). The UAT was itself to be appointed from the membership of the Utility Appeals Panel (“UAP”). By s.15(4) an appeal was to be brought within 14 days of the respondent’s decision. By s. 15(8) the States was given power to amend the provisions of s.15. The States subsequently made an ordinance giving power to the relevant States Department to make rules of procedure for the UAT. Those rules included a provision permitting the UAT to extend any time limit. The applicant wrote to the UAT seeking an extension of time in which to appeal. The UAT purported to grant such an extension. A summons was issued on the final day of the extended period. The vires of that extension was challenged.
Held, granting the application, that –
(1) The UAT did not have power to extend the 14 day period in which to appeal. The appeal was a nullity and incapable of proceeding.
(2) In any event the provision relating to the 14 day time limit went to jurisdiction and not merely procedure. The subsequent ordinance and rules had not, properly construed, amended the provision.
(3) There was, furthermore, no breach of the right to a fair hearing under Article 6(1) European Convention on Human Rights.
ARBITRATION
STAY OF PROCEEDINGS
Ferbrache & Richardson v Kirk, Bound, Cheong, Ogier & Green Royal Ct: (Newman, Lieut. Bailiff) [2007] GRC 17
The applicants in person; P.T.R. Ferbrache for the respondents.
The parties were the partners of Collas Day, Advocates. The working relationship between the applicants and the respondents had broken down. The partnership agreement contained an arbitration clause. The applicants had sought the dissolution of the firm, but the parties had since agreed that the firm should be dissolved with effect from a date within a matter of weeks of the hearing date. The respondents sought a stay of the Royal Court proceedings. The applicants sought an order that the first and second named respondents should be restrained from acting in the management of Collas Day. The applicants alleged “victimisation” and “equitable fraud” and therefore relied on the power contained in s. 24(2) of the Arbitration (Guernsey) Law 1982 (as amended) to order that an arbitration agreement should cease to have effect.
Held, granting the application for a stay and dismissing the application in respect of the management of the firm -
(1) Following English authority, “fraud” meant fraud strictly so called. Since the applicants expressly did not intend to allege deceit or impropriety their application based upon s. 24(2) of the Guernsey law failed and there was no other reason not to refer the remaining issues to arbitration.
(2) It followed that, having stayed the proceedings, it was no longer open to the Court to make any order in respect of the management of the firm; however, the Court would not have made such an order in any event.
Comment [G. Dawes]: The question of a Syers v Syers order was also raised. Prima facie, on dissolution a partner is entitled to require a sale of the partnership (assets) to a third party. However, in a suitable case, the Court may make an order that, instead of winding up the firm, the majority is to buy out the minority’s share, against the minority’s wishes; (see Syers v Syers). The judge made the following observations about such orders: (i) they were not commonly made, (ii) such orders were not likely to be made where the minority share was as large as the 29.2% owned by the applicants, (iii) the technical availability of such an order was not a good reason why the arbitration should not proceed, (iv) there was nothing to stop either camp from making a suitable offer to buy out the other and a mediation might usefully be considered.
CIVIL PROCEDURE
COSTS
Wilson v Minister of the Environment Department and others Royal Ct: (Collas, Deputy Bailiff) [2007] GRC 22
J.T. Le Tissier for the applicants; R.J. McMahon for the respondent; C.J. Hay for the Intervenor.
The applicants had brought judicial review proceedings in respect of a planning matter. In accordance with Practice Direction No. 3 of 2004, the applicants required leave to proceed. In fact the applicants withdrew the proceedings with the agreement of the other parties, subject to the question of costs. The respondent and Intervenor sought their costs.
Held, ordering the applicants to pay the reasonable costs of the other parties -
(1) While costs normally followed the event, there was no inflexible rule to that effect and costs orders were always in the discretion of the Court.
(2) The procedure to be followed in Guernsey judicial review proceedings differed materially from English practice at the leave stage in that English respondents were not required to attend or take part. By contrast, Guernsey respondents were summonsed to Court and were required to appear.
(3) Accordingly, English costs principles in this area of law would not be followed.
NORWICH PHARMACAL ORDERS
Garnet Investments Ltd v BNP Paribas (Suisse) SA & The Government of the Republic of Indonesia (Third Party) Royal Ct: (Carey, Lieut. Bailiff) [2007] GRC 13
R.G. Shepherd & C.H. Edwards, for the plaintiffs; K. Le Cras for the defendant; S.H. Davies for the third party.
The plaintiff Guernsey company was beneficially owned by one Hutomo Putra, (“Putra”), son of Suharto, former President of the Republic of Indonesia. The company held funds valued at €36,000,000 with the defendant who had disclosed the position to the Financial Intelligence Service of the States of Guernsey (“FIS”) pursuant to the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law 1999. The plaintiff made payment requests. The FIS did not give consent to make such payments. The defendant refused to honour the payment requests and the plaintiff bought proceedings. The defendant sought, and obtained, directions leading to the joining of to the Indonesian Government as third party. The third party sought and obtained an interim freezing order. The order was challenged by the plaintiff who also sought leave to cross-examine the deponent of an affidavit lodged on behalf of the third party. The third party sought extensive disclosure in addition. The defendant bank remained neutral.
Held, dismissing the plaintiff’s application, that a risk of dissipation was established. An arguable case had been made out as against both Putra personally and for a direct proprietary claim against the plaintiff’s funds, notwithstanding the absence of extant civil proceedings against Putra by the third party. The people of Indonesia should have the opportunity, through their government, of laying claim to the funds in the plaintiff on the alleged grounds that they had been proceeds of misappropriation and corruption in which Putra had (allegedly) been involved over a great many years. However, the Court was concerned by the attitude disclosed by the third party’s evidence in that it was not appropriate for the Government of Indonesia, having been notified by the Court of the existence of the proceedings by the plaintiff against the defendant, to give the appearance of trying to use “this small jurisdiction” as the lead forum for taking proceedings against Putra. The most appropriate forum for those claims appeared to be the Indonesian courts in a direct action against Putra by the Government. The Court would not allow a freezing order to continue without some oversight of the progress of those civil proceedings. Accordingly, the freezing order would only be continued on terms, inter alia, that the Government undertook to bring civil proceedings in Indonesia against Putra within 3 months. Limited disclosure was ordered given the circumstances that the identity of the alleged wrongdoer was already known and given also that any information gathered in Guernsey was highly unlikely to show where the original funds came from, disclosure was not necessary to get proceedings under way in Indonesia.
CONFLICT OF LAWS
JURISDICTION – FORUM CONVENIENS
Colussi v Investec Trust (Guernsey) Ltd & Serravallo Royal Ct: (Collas, Deputy Bailiff) [2007] GRC 16/2006
J. P. Greenfield for the applicant; J.M. Wessels for the first respondent; S.H. Davies for the second respondent.
The applicant was the sister of the second respondent. Their late father had settled property on trust. Their stepmother’s share in the father’s estate was acquired and shares in the family company transferred to a Guernsey trust established by the second respondent. The first respondent became trustee of the trust. The applicant was a beneficiary of the trust. A number of disputes arose between the applicant and the second respondent. The applicant brought proceedings against the second respondent seeking declaratory relief as to the validity of a trust instrument and other transactions, including claims relating to the shares. The second respondent brought proceedings in the Court of First Instance of Perugia concerning the agreement made with the stepmother and claiming sums from the applicant and challenging the validity of the gift on the grounds of its failure to comply with the formal requirements of Italian law. The second respondent lodged exceptions déclinatoire (i.e. a pleading taking a preliminary issue based upon jurisdiction) in the Guernsey proceedings, seeking a stay of the trust claims pending the outcome of the Perugia proceedings as to the validity of the gift, claiming also that the share claims were not properly justiciable in Guernsey.
Held, refusing the application for a stay of the trust claims but setting aside the order permitting service out of the jurisdiction as to the share claims -
(1) It was not in dispute that the Royal Court had jurisdiction over the trust claims, the proper law of the trust was Guernsey law and in any event the terms of the trust instrument conferred exclusive jurisdiction on the courts of the state whose laws governed the trust.
(2) Applying the principles of Spiliada Maritime Corp v Cansulex Ltd, the assets which were the subject of the instrument challenged in Italy were already settled into the trust. Accordingly the instrument was governed by Guernsey law. In any event, were there to be an issue of Italian law, expert evidence could be adduced in the Guernsey court. Furthermore, the issues in the case were likely to be resolved more quickly in Guernsey than in Italy. The forum in which the trust claims could most suitably be tried in the interests of all the parties and the ends of justice was Guernsey.
(3) By contrast, the trustee was not party to either of the agreements relevant to the share claims. One or more of the agreements pre-dated the creation of the trust. There was no connection with Guernsey. The companies concerned were not registered in Guernsey. The Royal Court had no jurisdiction over the agreement(s), nor would it be proper for the Royal Court to stay a claim over which the Royal Court had no jurisdiction.
CRIMINAL LAW
APPEAL AGAINST CONVICTION – ECHR – JUDICIAL INTERVENTIONS
Michel v Att. Gen. CA (Birt, Vaughan and Vos JJA) [2007] JCA 239
D. F. Le Quesne for the appellant; C. E. Whelan for the Attorney General.
The appellant applied for leave to appeal against conviction by Jurats on money laundering offences under Article 32 of Proceeds of Crime (Jersey) Law 1999 on the ground inter alia that the number and nature of the Commissioner’s interventions during evidence given by him – 273 interventions in the course of 8½ days – meant that he did not receive a fair trial. The question was also raised as to the effect of Article 6 (right to a fair trial) of the European Convention on Human Rights, as incorporated into Jersey law by the Human Rights (Jersey) Law 2000.
Held, dismissing the application –
(1) The tests for a criminal appeal under Article 26(1) of the Court of Appeal (Jersey) Law 1961 were different from the English test, which since 1995 has been whether the conviction is “unsafe”. The European Convention on Human Rights had been incorporated into English law by the Human Rights Act 1998. Article 6 of the ECHR provides for the right to a fair trial. It had been held in England that a conviction which results from “unfair trial”, contrary to Article 6 of the ECHR, is “unsafe” regardless of the strength of the case against the defendant: R v Togher. In Jersey the ECHR had been incorporated into the law by the Human Rights (Jersey) Law 2000, which came into force on 10 December 2006. The effect of Article 6 in the Jersey context was that where irregularities during a trial are of such a nature or extent as to lead the Court to conclude that a defendant’s trial has been unfair, this will amount to a “substantial miscarriage of justice” for the purposes of the proviso to Article 26(1) of the Court of Appeal (Jersey) Law 1961 and the appeal must similarly be allowed regardless of the strength of the case against the defendant.
(2) It is wrong for a judge to descend into the arena and give the impression that he is acting as an advocate. Interventions to clear up ambiguities and to ensure the judge is taking an accurate note are perfectly justified; but three types of intervention may give rise to the quashing of a conviction (R v Hamilton [1969], unreported; quoted in R v Hulusi): (i) interventions which invite the jury disbelieve the evidence for the defence which is put to the jury in such strong terms that it cannot be cured by the common formula that the facts are for the jury and that they must disregard anything that the judge may have said with which they disagree; (ii) where the interventions make it really impossible for counsel for the defence to do his or her duty in properly presenting the defence; and (iii) where the interventions have the effect of preventing the defendant himself from doing himself justice and telling the story in his own way. The ultimate question was whether, taking the trial as a whole (including the adducing and testing of evidence, the submissions of counsel and the summing up of the judge) the proceedings were so affected by the judge’s interventions as to render the applicant’s trial unfair. The nature and extent of the Commissioner’s interventions in the present case were improper but in all the circumstances they were not such as to render the trial unfair. None of the Hamilton grounds were made out. The Commissioner had given an impeccable direction in his summing up to the effect that the Jurats should reach their own verdict on the facts and reject any apparent view of the Commissioner as they thought fit; defence counsel had not been prevented from properly presenting the defence; and viewed overall the applicant had not been deflected from telling his story in his own way.
PRESUMPTIONS – DOLI INCAPAX – PRESUMPTION OF INCAPACITY
Att.Gen. v Drean Royal Ct: (Clyde-Smith, Cmmr., sitting alone) [2008] JRC 016
M. St. J. O’Connell, Crown Advocate; D. S. Steenson for the defendant.
The questions were raised as to whether the presumptions of English common law doli incapax (a rebuttal presumption that a child aged not less than 10 and under 14 years is incapable of committing crime) and the presumption of incapacity (a special non-rebuttable rule of exemption for a boy under 14 to the effect that he could not be convicted of rape, offences involving sexual intercourse, buggery or, possibly, assault with intent to commit buggery) formed part of Jersey law. Both presumptions had been abolished in England.
Held,
(1) There was no Jersey authority on the existence of either presumption. The influence of English law on the criminal law in Jersey was clear but Jersey courts have a choice whether or not to imitate English models. There was no ground to suppose that either presumption had been incorporated into Jersey law. Moreover, the presumptions were outdated, no longer had any application and had been described in England as absurd or giving rise to absurdities. Accordingly the Court also declined to adopt them into present-day Jerseylaw.
(2) There was, however, a cogent argument that the abolition in England of the presumption of doli incapax did not affect the substantive English common law (see Nigel Walker [1999] 149 NLJ 64). If it did not affect the substantive common law, it was still open under English law for a child under 14 to introduce evidence that he did not know that what he did was seriously wrong, whereupon it would be necessary for the prosecution to prove, not only the usual mens rea, but also that the child did have such knowledge. The Court expressly declined to determine whether the substantive law underlying doli incapax in England formed or should form part of Jersey law.
Comment [W.Grace] Subsequent to this decision the issue of whether the substantive defence of doli incapax has survived the abolition of presumption came up for decision in the English Court of Appeal. In R. v T.[5] the Court held that S34 of the Crime and Disorder Act 1998 had swept away not only the presumption but the doctrine itself. By implication, it seems likely that the Royal Court would now follow the same line.
EVIDENCE
SIMILAR FACTS
Attorney General v Drean (Royal Ct: Clyde-Smith, Cmmr., sitting alone) [2008] JRC 007A
M. St. J. O’Connell, Crown Advocate; D. S. Steenson for the defendant.
The defendant stood to be tried before a jury in relation to two counts of rape and one count of procuring an act of gross indecency. It was alleged that the defendant raped E when she was around five years old and N when she was around six to ten years old. It was also alleged that the defendant procured an act of gross indecency by N when she was around six to ten years old. The preliminary issue for the Court was whether there was sufficient connection between the circumstances spoken of by the two girls for their testimony mutually to support each other (as “similar fact evidence”). If not, counsel for the defendant sought to apply for severance.
Held, dismissing the defendant’s application –
The leading case on similar fact evidence was DPP v P. In that case the House of Lords moved away from the test of probative force sufficient to overcome the prejudice of evidence of another crime to admitting similar fact evidence where there was some striking similarity between the cases. The degree of similarity required varied according to the issues in the case and the nature of the other evidence. In a case where the defence involves a denial of the truth of the accounts given by the victims, “the task of the judge will be to assume that the evidence of the witnesses is true (R v H ), and then ask himself whether explanation of the common allegations on the basis of chance or coincidence would be an affront to common sense. No particular degree of similarity is required. The reality is that independent people do not make false allegations of a like nature against the same person”: Archbold (2005 ed., 13-25). On the facts, to explain the evidence of the two girls, assuming it was true, as coincidence was an affront to common sense. Adopting the wording of Lord Mackay in DPP v P, there was material upon which the jury would be entitled to conclude that the evidence of one victim, about what occurred to that victim, was so related to the evidence given by the other victim, about what happened to that other victim, that the evidence of the first victim provided strong support for the evidence of the second victim to make it just to admit it notwithstanding the prejudicial effect of admitting the evidence. The evidence of E was thus ruled to be admissible to support the evidence of N and vice versa. It followed that the defendant’s application for severance, which was contingent on success in relation to similar fact evidence, fell away.
LAND LAW
HYPOTHÈQUES – HYPOTHÈQUES JUDICIAIRES
Ansbacher v HSBC Bank Plc CA (Bailhache, Vaughan, and Vos JJA) [2007] JCA 228
M. J. Thompson for the appellant; J. Harvey-Hills for the respondent.
The question was raised as to whether, as a result of Article 16 of the Loi (1880) sur la Propriété Foncière, the registration of a judgment debt as a judicial hypothec has the effect of extinguishing a prior judicial hypothec obtained consensually by reconnaissance for the same debt. Article 16 provides: “(1) Lorsqu’une créance ou une autre réclamation, emportant une hypothèque légale ou judiciaire, deviendra éteinte par n’importe quelle cause, ou que l’hypothèque résultant de l’enregistrement d’un acte ou d’un jugement soit de la Cour Royale soit de la Cour pour le Recouvrement de Menues Dettes rendu dans une procédure aura perdu sa date, en conséquence de l’inscription au Registre Public d’un acte ou jugement dans la même procédure ayant une date subséquent, la personne ayant droit à l’hypothèque sera tenue de la faire rayer du Registre Public dans le délai d’un mois du jour de l’extinction de la créance, réclamation, ou hypothèque”.
Held, affirming the decision of the Royal Court –
The issue to be determined was whether the first hypothec, obtained consensually, had, for the purposes of Article 16, been obtained “dans la même procédure” as the second which had been obtained by registration of a Royal Court judgment for the same debt. Properly construed, the word ‘procédure’ in Article 16 referred to the whole judicial process associated with the debt. Being obtained “dans la même procédure” meant, as a result of Article 16, that the second judicial hypothec destroyed the first.
OWNERSHIP EN INDIVIS
Jones v Le Vallée Royal Ct: (Collas, Deputy Bailiff) [2007] GRC 23
J.E. Roland for the applicant, A.M. Merrien for the respondent.
The parties had purchased a dwelling house in undivided one-half shares. In addition, the parties granted each other a life enjoyment of the half belonging to the other, such enjoyment to be exercised jointly during their joint lives and thereafter during the life of the survivor. Neither party sought a partage (physical division) of the property. The respondent lived at the property and wished to buy out the applicant’s interest, although it was contended by the applicant that there was no realistic prospect of the respondent being able to raise sufficient borrowing. The respondent sought an order for licitation (judicial auction) of the property and contended that there was no power to delay the implementation of that order beyond the normal period permitted of three months.
Held, that licitation would be ordered, third parties would be permitted to participate in the auction and a Jurat would be nominated Commissioner for the purpose.
Obiter: The Court’s initial view was that a discretion to postpone did exist, although it might be a limited discretion to postpone for only a relatively short period of time. On the evidence the Court would not have been persuaded that the start of the licitation should be delayed. There were insufficient numbers of licitation cases to determine any normal period during which licitation was to take place. In the circumstances, three months was too short a period and five months would be allowed, with liberty to apply for the sale to be deferred, if appropriate.
SAISIE
Governor and Company of the Bank of Scotland v Henderson & Shales Royal Ct: (Judge, Lieut. Bailiff) [2007] GRC 26
M.G.A. Dunster for the plaintiff; first defendant not present or represented; second defendant in person.
The defendants had purchased jointly a dwelling house. Their relationship failed and the first defendant left Guernsey. His whereabouts were not known. The defendants had defaulted on loan payments. The borrowing was secured by way of bond. The plaintiff sought judgment in the full amount of the loan, together with interest and costs. The second defendant did not oppose saisie. The parties had, in effect, abandoned the property. The issue arose as to how the plaintiff could proceed against the first defendant in his absence. The plaintiff did not rely upon a clause in the bond purporting to appoint a manager of the plaintiff as attorney of the defendants with power to sell the property on the basis that the defendants had appeared by attorney to consent to the bond and the maxim delegatus non potest delegare applied. The plaintiff did rely on a provision of the bond which provided that a demand or notice made in writing and served by post at the last known address of the borrower would be effective.
Held, that the provision relied upon by the plaintiff could not be interpreted as the giving of an address for service for the purposes of Rule 1(d) of the Royal Court Civil Rules 1989. It was open to doubt whether it would be just to permit saisie proceedings to proceed when all summonses were served at an abandoned address. The clause relied upon related only to service of notices and demands and not legal process. However, the Court would make an order for substituted service and, in the unusual circumstances of the case, such substituted service could be effected at the property concerned, notwithstanding the fact that such documents might never come to his attention.
TRUSTS
POWERS ANDDUTIES OF TRUSTEES – “FRAUD ON POWER”
In the matter of the Bird Trust Royal Court: (Birt, Deputy Bailiff, and Jurats Bullen and Liddiard) [2008] JRC 013
M.J. Thompson for the representor; L.J.L. Buckley for the first, second and third respondents; M. St. J. O’Connell for the fourth respondent; P.D. James appeared in person.
The Jerseytrustee of a Jersey trust made a suspicious activity report to the Jersey police upon becoming aware that criminal charges in the US had been brought against the settlor/protector. The charges were as yet unproven. The issuance of the SAR had the effect of freezing the trust fund since the trustee, now holding the requisite suspicion, and not having the consent of the police, wished to avoid, should those funds prove to be criminal proceeds, committing the offence of assisting another to retain the benefit of criminal conduct under Article 32 of the Proceeds of Crime (Jersey) Law 1999. The protector then purported to resign as protector by appointing a successor protector and the successor protector, exercising powers under the terms of the trust, purported to appoint non-Jersey new co-trustees with a view to removing the administration of the trust from Jersey. Seeking directions as to the validity of these appointments, the existing trustee suggested inter alia that the protector’s intention, and that of his purported successor, had been to circumvent difficulties caused the Proceeds of Crime (Jersey) Law 1999 and that accordingly the exercise of powers in this manner amounted to a “fraud on power”.
Held, giving directions on this point that the appointments did not amount to a “fraud on power” –
(1) A distinction is drawn between the excessive exercise of a power and a fraud on that power. If the donee of a limited power, exercises the power in good faith in a manner which is not consistent with the terms and scope of the power, such exercise is excessive. If, however, the donee deliberately attempts to secure the effect of an excessive exercise of power, it is fraudulent and void. “Fraud” does not mean “common law fraud” but rather that the power has been exercised “for a purpose or with an intention beyond the scope of or not justified by the instrument creating the power”: Vatcher v Paul. The doctrine of fraud on a power does not apply to general personal powers, where the donee may benefit himself as well as anyone else in the world; but it does apply to limited personal powers and to fiduciary powers: Underhill & Hayton, Law of Trusts and Trustees (17th ed), 1.76.
(2) As to the question whether the powers exercised by the protector in this case were fiduciary powers, the power to appoint new trustees was normally a fiduciary power, even if conferred on someone who was not a trustee, such as a protector. The powers of a protector varied considerably from one trust to another. It was a question of construction of the particular trust as to whether a particular power of a protector is fiduciary or not. On the proper construction of the trust, the role of the protector was a fiduciary one and the power to appoint a successor protector was also a fiduciary power.
(3) On the facts, the Court found that the protector had acted in good faith and that his intention in appointing a successor protector was to enable the protectorship to function more effectively should he be remanded in prison in the US. Such an intention was entirely consistent with the purpose for which the power of appointment of a successor protector had been conferred. Although he had a secondary intention of procuring the removal of the administration of the trust from Jersey because of the difficulties caused to the administration of the trust by reason of the anti-money laundering provisions of Jersey law, this did not constitute a fraud on power. The Court was sitting in its supervisory jurisdiction over trusts and its duty was to consider simply whether the appointments were valid under trust law. The protector genuinely believed that it would be better in the interests of the trust and the beneficiaries as a whole if the trustees (with the consent of the protector as necessary) were free to deal with the assets of the trust as they thought best in the interests of the beneficiaries without having to seek the consent of the police in Jersey. Such an intention was entirely consistent with the purposes for which the powers were conferred. The exercise of a power to remove the administration of a trust from one jurisdiction to another would rarely amount to a fraud on power.
(4) Nor did the fact that the intention was to avoid difficulties posed by Article 32 of the Proceeds of Crime (Jersey) Law 1999 make a difference to this analysis. Article 32 does not itself prevent a business such as a bank from making payments out of suspected funds, even if it has the requisite suspicion. Unless the funds in fact constitute criminal proceeds, this is a matter of choice for the bank. Naturally, however, it is the policy of most banks, when they have made a SAR, to refuse to make a payment without the consent of the police. In the present case, it had not yet been proved that the trust funds were proceeds of crime and it was therefore open to the existing trustee to make payment without police consent. The Court fully understood why the trustee declined to do so, but it followed from this analysis that the intention of the existing protector had not been to circumvent a prohibition under Jersey law, but rather one which the trustee had chosen to impose upon itself. Furthermore, the appointments merely changed the identity of the protector and trustees and did not themselves remove assets. For these reasons there had been no fraud on power.
Comment [D. Benest]: This case raises, in the context of the Royal Court’s consideration of the validity of certain trustee/protector appointments, an important point of interest. It confirms, as a matter of Jersey law, the scope of the doctrine of fraud on a power which has not been considered by the Royal Court in recent times. The Court had, in Re the X Trust, accepted the existence of the doctrine, but without reviewing its scope in detail and the previous, though still applicable, authority was an appeal to the Privy Council from the Royal Court in 1915. The Bird Trust case considers the content of the doctrine in a very modern setting; that of the world of internet gambling and the application of Jersey’s anti-money laundering provisions. It is therefore an example of the adaptability of trust law principles to very modern situations. It also, in its application of the doctrine to the facts of the case, demonstrates that the Royal Court will be careful to analyse the motives and intentions of a person exercising a trust power. Further, in the context of its supervisory jurisdiction, it will limit its considerations to pure trust principles and not, as may have been tempting, fall into the trap of looking at the wider money laundering issues.