| Return to Contents Book Review MISPLACED TRUST by PETER WILLOUGHBY. Published by Gostick Hall Publications, 1st edition 1999. Keen bridge players are perhaps more aware than most people of the dangers of mind games. A favourite story is that of the highly regarded young bridge player making his way in the bridge world. In an important competition he found himself playing as declarer in a difficult game call and he soon realised that he would be one trick short of the total number of tricks he needed. With half the cards played, he was resigned to losing the contract. At that point he relaxed, and perhaps thinking of other things he inadvertently played the seven of hearts. As soon as he played it, he knew he had made a mistake but he tried to cover up with the best facial expressions he could. To his surprise the opponent on his left went into a trance. What in bridge playing terms is known as a triple progressive squeeze then started. Every card our man played caused the enemy to discard a critical defence card or winner and the contract was duly made. Alas our poor hero was sunk. He certainly could not admit that he had played the seven of hearts by accident. But worse still he now looked for the triple progressive squeeze at every opportunity. Routine hands which he could have won as an average player without thinking twice suddenly became enormously complex. L’idee fixe was born. His ratings in the bridge world sank and eventually he gave up play altogether. The decision in Rahman v Chank Trust Company (C.I.) Limited & others [1] struck the trust industry like a thunderbolt. The part of the decision which struck down the gifts into trust on the basis of the old Jersey Law maxim that donner et retenir ne vaut because the terms of the trust deed in effect allowed the settlor to retain control over the gifted assets did not cause much fear – after all in recognition that this decision was a possibility the Trusts (Jersey) Law 1984 had been amended in 1989 to exclude, for the future, successful attacks upon gifts into trust on this basis. However the striking down of the trust on the grounds that it was a sham was a different matter altogether. Suddenly it appeared that the Court was prepared to examine the way in which a trustee fulfilled his duties to assess whether in fact he was a trustee at all. Far be it from this reviewer to suggest that the Rahman decision was wrongly reached on either count! Nonetheless it is important to beware l’idee fixe, and the dangers inherent in turning over every trust to ascertain whether one can find a sham underneath. If there is any criticism to be made of Professor Willoughby’s otherwise admirable book, it is that there appears from time to time to be an over-emphasis of the importance of sham. Possibly this is because, despite the Rahman case, some trustee companies are still not yet apparently aware of the distinction between a nominee and a trustee; and refuse to focus on the need to exercise a genuine discretion when it is afforded to them by the trust deed rather than take instructions from the settlor. That criticism apart, Peter Willoughby’s book is an excellent aid to trust lawyers and trustees. As Timothy Ridley says in his foreword to the book, it is the first occasion on which there has been pulled together with a global perspective the themes and implications of litigation which have developed and continue to develop in the offshore common law jurisdictions in the fertile areas of trusts and private companies. The book covers cases which involve invalidity of trusts for lack of essential criteria; cases where the problem lies in the settlor’s home jurisdiction; and cases where the trust is perceived to be an invalid will. There are then chapters dealing with the setting aside of trusts by creditors, improper administration and exemption clauses, and breach of directors’ duties in relation to asset holding companies. The book also tackles problems of which trustees are well aware, namely attempts by beneficiaries to obtain documents or information, and problems which arise with letters of wishes and protectors. It winds up with chapters on the liability of professional advisers for defective trusts, and on trustees’ indemnification for legal costs. All these topics are tackled by reference to c have been heard in mostly offshore jurisdictions, although careful attention is given to Australian cases such as Hartigan Nominees Pty Ltd.& Another v Wydge [2] . The book is written with a pleasant humour. Professor Willoughby reminds us that all law students are aware of the three certainties required for the creation of an express trust – certainty of objects, certainty of property and certainty of terms. He then goes on to give credit to an observation by James Wadham at a seminar in Hong Kong that these traditional three certainties have now been placed by three modern certainties – a pen, ink and a cheque book! It is probably inevitable that a book which concerns itself with decided cases is liable to give the impression that acting as a trustee is an impossible task. The book is nonetheless particularly useful for pointing out the pitfalls and difficulties which face the blissfully unaware trustee who does not take time and trouble to understand the nature of his position. It should be mandatory reading for all trustees who might otherwise approach their function by adopting the words appearing in the cartoon on the front: "we’ll be needing a big cheque…. you’ll be needing a little blind trust". William Bailhache is an advocate of the Royal Court with Bailhache Labesse, 14/16 Hill Street, St. Helier, Jersey, JE1 1BD. |