Trusts
[2024]JRC222
Royal Court
(Samedi)
22 October 2024
|
Before :
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A. R. Binnington, Esq., Commissioner, and
Jurats Austin-Vautier and Opfermann
|
IN THE MATTER OF THE REPRESENTATION OF SUMMIT
SERVICES LIMITED
AS TRUSTEE OF THE B TRUST, THE C TRUST,
THE D TRUST AND THE E TRUST
AND
IN THE MATTER OF ARTICLE 51 OF THE TRUSTS
(JERSEY) LAW 1984,
AS AMENDED
Advocate J. M. Dann for the Representors
Advocate M. P. Renouf for the Protector
Advocate D. James for K
Advocate D. Evans for J and H
IN PRIVATE
JUDGMENT
the COMMISSIONER:
1.
On 9 July
2024, we heard an application in proceedings brought by way of Representation
dated 23 November 2020 by Summit Services Limited (“the Trustee”),
as trustee of certain family trusts to which we refer below. The Representation
was issued pursuant to Article 51 of the Trusts (Jersey) Law 1984
(“the 1984 Law”) for the Court to “bless” various
decisions of the Trustee in connection with the separation of the assets of the
family trusts, of which this hearing is a part of the process. At the
conclusion of the hearing, we reserved our decision, which we now give.
Background
2.
When the
proceedings first commenced, the Trustee was the trustee of four Jersey law
discretionary trusts: the (“B”), (“C”), (“D”)
and (“E”) Trusts ('the Trusts”).
3.
The Trusts
were settled by (“JLS” or “the Settlor"), who died in Country
1 in December 1991 leaving three sons: (“DJ”), (“MJ”),
and (“JJ”). A fourth son, (“BJ”) had pre-deceased the
Settlor.
4.
Not long
after the establishment of the four Jersey trusts, the sons of the Settlor (and
spouses), were excluded as beneficiaries.
5.
The
Settlor was born in Country 1 in 1902 and moved to the Country 2 around 1917. He and his four sons by his first wife
worked in the family’s import business in Country 2. He immigrated to the UK in the 1960s, and
capital from the Country 2 business was then used to establish a property
investment and finance business based principally in the UK, (although assets
and investments in Country 2, Country 1 and elsewhere appear to have formed
part of the overarching business) with JJ, MJ, and DJ respectively moving to
London from Country 2. JJ
subsequently emigrated to Country 3 State to establish operations there.
6.
BJ, DJ, JJ
and MJ are now all deceased. MJ, DJ and JJ were excluded from the beneficial
class of the Trusts by way of deeds of exclusion in 1992. BJ was not excluded
at that time because he was already deceased.
7.
The
current living members of the beneficial class of the overall structure
therefore comprise the lineal descendants of BJ, DJ, MJ, and JJ, including
their children and remoter issue (and the class includes their unborn
descendants).
8.
The ten
adult grandchildren of JLS are the current “active”
generation in the sense that all but two of them are members of the Family
Advisory Group (whose meetings are the primary means of communication between
the Trustee and the beneficiaries). A number of them are also involved in the
management of properties held by the Trusts.
9.
The Trusts
hold between them a property portfolio (consisting of [redacted] properties in
London) and cash. The current net
assets of the Trusts are approximately £75 million. The properties held by the Trusts are
managed by partnerships or companies in which various members of the [Redacted]
family participate. Management
charges are paid to these managing entities in line with market rates. The
individual members of the family also mostly have sources of income which are
independent of the Trusts or their assets.
10. The first Protector of the Trust was JLS. JLS died on 26 December 1991. (“F”), who had advised the
family from time to time in relation to banking matters, was appointed
protector of the “D” Trust on 4th January 1994. Following a lengthy period without a
protector, F was appointed protector of the B, C and E Trusts on 14 May 2013. The current Protector of the Trusts is
Turicum Services Limited, a company which is incorporated in St Vincent and the
Grenadines and which was appointed on 11th July 2017. The directors of Turicum comprise the two
sons of F, the latter having passed away in May 2023. The terms of the Trusts require that the
consent of the Protector be obtained for the appointment of assets out of the
Trusts.
11. There had been ongoing discussions between the [Redacted]
family and their successive sets of trustees since 2004 as to the possibility
of separating the Trusts into individual funds for each branch of the family. This process had more recently become
imperative given that the third generation is the “active”
generation in the Trusts, and the Trustee's decision-making process in relation
to the Trusts now needed to take into account the views of a fairly large group
of people who were spread over three continents and are at different stages in
their lives and their careers. The
potential for differences of opinion was obvious, as were the advantages of
each family branch having its own fund in respect of which the wishes and needs
of that family branch can specifically be taken into account.
12. As a result of the family dynamics, it appears
to have been inevitable that the task of the Trustees in dividing the assets
between the different family groups was not going to be straightforward.
13. In his first affidavit Andrew Haynes, a
director of the Trustee said (at para 23):
“….in my experience
at Advisory Group meetings I constantly encountered a uniform reluctance on the
part of the family to resolve differences of opinion. This is not intended as a
criticism but simply an observation to explain the situation with which the
Trustee now has to grapple. Neither side in any argument expressed a willing
(sic) to compromise. Arguments persisted and no side recognised any aspect of
the facts or arguments other than their own. Deadlock therefore required a
determination by the trustees which invariably, triggered accusations of bias
and unfairness by those members of the Advisory Group whose argument was not
upheld. It became apparent over time that this inability to reach consensus
extended to family affairs outside the ambit of the trusts, some matters going
back 20 years or more.”
14. There are sufficient assets in the Trusts to
allow for separation of the Trusts without disadvantaging any family branch. UK tax advice was obtained, which
confirmed that the proposed separation would not give rise to any adverse UK
tax consequences.
15. Following extensive consultations with the
family members, the Trustee developed a plan to separate the trusts into funds
for individual branches of the family, for which the approval of the Court was
to be sought, by means of the Representation, as a decision which was momentous
in the life of the Trusts.
16. The impetus for separation could be traced back
to a letter of wishes written by JLS dated 23 December 1991, in which he
indicated that he wished for the wealth which was held in the Trusts to be
divided as follows:
(a) For JJ's descendants: 29.3%
(b) For MJ's descendants: 29.3%
(c) For DJ's descendants: 25%
(d) For BJ's descendants: 16.4%
17. These proportions have been referred to by the
Trustee and the family as the "four-way uneven split”. The four-way uneven split principally
reflected the differing levels of contribution to the family business that had
been made by JLS' four sons. The
proportion for the BJ Group, in particular, reflected the fact that BJ died in
the 1970s and was not therefore involved in the subsequent creation of wealth. The Trustee did however point out in its
evidence that this uneven split was not to suggest that the family was not a
close one, and it is of note that DJ requested that part of his family's
allocation be redirected to BJ's family.
18. At a hearing before the Court (Birt,
Commissioner) on 17 May 2021 [unpublished] , the uneven four-way split was approved
by the Court, as was the creation of ten new Jersey law trusts to facilitate
the separation, and it was envisaged that the Trustee would return to the Court
for approval of the precise terms of the new trusts in due course. The balance of the orders sought in the
Representation were adjourned to a further hearing or hearings.
19. The terms of the ten new trusts were approved
by the Court at a hearing on 31 May 2022.
20. It is accepted by the parties that the power
that the Trustee seeks to exercise in order to fund the new trusts is, pursuant
to the relevant trust instruments, exercisable only "with the prior or
simultaneous consent of the Protector".
21. The separation of the assets of the Trusts for
the benefit of the members of three of the four groups of the [Redacted] family
(the JJ Group, the DJ Group and the BJ Group) is now largely complete,
following agreement between the respective family members of those Groups as to
the allocation of the relevant assets. Seven of the ten individual trusts have
now been created, and all assets held by the D Trust and the B Trust have been
transferred to the C Trust. The
shareholdings of each of the companies held in the C Trust have been
restructured in accordance with tax advice received by the Trustee, and the
underlying properties have been transferred to new corporate shareholders. The shares in the new property holding
companies have been appointed out as appropriate to the seven new trusts and
the relevant filings have been made with HMRC. Separation accounts are in the process of
being updated to take into account income and expenditure since April 2022,
after which the accumulated income and gains will also be apportioned out to
the new trusts.
The issue before the Court
22. Unfortunately, it has not been possible to
reach agreement in relation to the allocation of assets (the 'MJ Group Assets')
between the trusts which are to be established for the benefit of each of the
three members of the MJ Group (“H"), (“J”), and (“K”))
and their respective families. Pending resolution of this issue, the MJ
Group Assets are held in a single Jersey law trust, which has been established
for the benefit of all the members of the MJ Group. Following resolution of the allocation of
the MJ Group Assets, this trust will form the eighth of the ten new individual
trusts, and will be for the benefit of one of the MJ Group beneficiaries and
their family. At the same time, the other MJ Group beneficiaries will be
excluded from this trust and two further new trusts will be created for their
benefit. At the conclusion of this process, ten new trusts will have been
created for the ten branches of the family, as originally envisaged.
23. In the absence of any agreement as to
allocation, and in the circumstances to which we refer below, the Trustee made
a decision (“the Determination”) as to how it ought to allocate the
MJ Group Assets between the three trusts to be established for the benefit of
members of the MJ Group. The Trustee's decision, subject to the Court's
approval, was that it would allocate the MJ Group Assets equally. The Protector
has however refused to consent to the exercise of the Trustee’s powers in
that way.
24. It is the contention of H and J that the
Trustee should (pursuant, they say, to the wishes of the Settlor) implement the
wishes of their father MJ [Redacted] by allocating the fixed sum of £1.8
million to the trust for the benefit of K and her family, and by dividing the
remaining assets equally between the respective trusts for the benefit of
themselves and their own families. Conversely,
K’s position is that the MJ Group Assets should be allocated between the
three trusts in three equal shares.
The legal framework
25. Although there is a further issue in relation
to Protector consent, which we shall address later in this judgment, the
principles that govern the Court's jurisdiction to bless a decision of a
momentous character by a trustee are well established. The test is summarised
in the Court of Appeal's decision in Representation of Otto Poon Trust
[2015] JCA 109 (K71), (at paragraph 14 of the judgment):
“Where a trustee has made a
momentous decision, that is a decision of real importance for the trust, and
seeks the court's approval for the decision, the legal test to be applied by
the court is well established in this jurisdiction. As explained in Re S
Settlement [2001] JLR N 37, the court must satisfy itself (i) first, that the
trustee's decision has been formed in good faith, (ii) second, that the
decision is one which a reasonable trustee properly instructed could have reached,
and (ii) third, that the decision has not been vitiated by any actual or
potential conflict of interest. A similar approach is taken in England: - see Public
Trustee-v-Cooper [2001] WTLR 901."
26. There is therefore a threefold test as to
whether the Court ought to approve or bless a momentous decision taken by the
trustee (the “Re S test"), namely:
(a) Was the decision formed in good faith?
(b) Was the decision one which a reasonable trustee
properly instructed could have reached?
(c) Is the decision vitiated by any actual or
potential conflict of interests?
27. The Court of Appeal in Otto Poon (at
paragraph 15 of the judgment) considered, but rejected, a submission that there
now exists a fourth requirement, that the trustee must also prove that it has
given proper consideration to the matter under scrutiny, setting out in detail
the steps which it has taken and the matters which it has considered.
28. The Court of Appeal said (at paragraph 17):
“We do not read the English
case-law as introducing a new and additional requirement that a trustee must in
all cases prove anything other than that the three-part test set out above has
been satisfied. Furthermore, we consider that it is both unnecessary and
undesirable to introduce a separate requirement for a trustee to prove in all
cases precisely what it has done in giving consideration to the matter under
scrutiny: a decision-maker can consider matters carefully and still reach an
irrational decision, and conversely an entirely rational decision can be
reached on the basis of superficial thought processes.”
Criticisms of the Trustee’s Determination
29. The reasons expressed by J and H for not
supporting the Determination are, in summary:
(a) the Trustee has applied too rigorous a
threshold for ascertaining the wishes of the Settlor. In doing so, the Trustee has disregarded
(or attached insufficient weight to) a body of material which is relevant to
that question;
(b) the Trustee pre-determined its intended
approach to the division of assets between the MJ Branch as far back as 2017. Since that time, the Trustee has assessed
everything put to it from that pre-determined starting point, rather than
considering the issue completely afresh;
(c) the Trustee has attributed too much weight to
the fact that none of J, H or K have provided the Trustee with details of their
current financial means and needs, and has used that to determine that there is
no basis for departing from an equal split;
(d) the Trustee has given insufficient weight to
the cultural values of families such as the [Redacted] family; and
(e) the Trustee has, in the Determination, taken
account of irrelevant considerations and has also failed to take into account
relevant considerations.
30. To the above can be added a further criticism
in relation to process. In their
skeleton argument, J and H make the following points in relation to the
evidence of the Determination that was presented to the Court by the Trustee:
(a) the Determination is a relatively short
document, spanning some nine and a half pages, in large typeface;
(b) it is undated, meaning that it is impossible to
determine how proximately it was prepared to the decision-making process it
purports to document (although, it appears to have been taken after the Opinion
of Andrew Holden dated 19 February 2023 and before 27 March 2023 when it was emailed
to J, H and K);
(c) it is not clear whether the Trustee convened
any formal meeting for the purposes of taking the decision which the
Determination purports to document;
(d) if there was such a meeting it is equally
unclear who attended that meeting, who chaired the meeting, whether the
relevant quorum and such other formalities were complied with in accordance
with the requirements of the Trustee's articles of association (or Gibraltarian
companies’ law), and whether there was any dissenting view expressed;
(e) it is unclear what documents were tabled to the
meeting (if there was a meeting) because there is no reference to a board pack
or to any other index of documents tabled at such a meeting (if there was such
a meeting);
(f) it is equally unclear what documents were
considered in respect of each issue, what particular features of those
documents were weighed in the balance by the Trustee in arriving at its
particular determination, and what weight was attached to each and why; and
(g) there is no statement or explanation of what
other matters, issues, options and ways forward (if any) were considered by the
Trustee at the meeting (if there was one) and dismissed, including the reasons
for them being dismissed.
31. Whilst we agree that it would have been helpful
for there to have been a formal minute of the meeting of the Trustee,
identifying where and when it took place, who was present and listing those
documents that were reviewed by those present, we are satisfied that there is
sufficient evidence before us to enable the Court properly to scrutinise the
Trustee’s decision in order for us to determine whether the three-part
test referred to in Otto Poon has been satisfied. Mr Haynes swore four
affidavits prior to the Determination summarising the enquiries that the
Trustee had made and the results of those enquiries and a further affidavit to
which the Determination, which he said was made on 27 March 2023, was
exhibited. The Determination summarises the background leading to the
Trustee’s decision, identifies the issues identified by the Trustee as
relevant, summarises the arguments of the parties in relation to those issues
and the conclusions reached by the Trustee in relation to them. The principal
parties obtained opinions from eminent trust counsel and those opinions were
clearly available to and considered by the Trustee in reaching its
Determination. Indeed, the Determination makes specific reference to excerpts
from the opinions of Tim Collingwood KC on behalf of K, Tom Dumont KC on behalf
of MJ, J and H, and the opinions obtained by the Trustee from Kathryn Purkis
and Andrew Holden.
32. Although, as the Court of Appeal in Otto Poon
made clear, there is no requirement for the Trustee to provide evidence of its
deliberations and decision in any particular manner, we do not regard ourselves
as disadvantaged by the manner in which the Trustee has presented its evidence.
33. In its Determination, the Trustee, whilst
recognising that numerous arguments had been raised by J and H against the
equal split, identified five relevant considerations to be examined, namely:
(i)
The
Settlor's wishes.
(ii) MJ’s wishes.
(iii) The views of the three siblings, (including
their financial needs and reasonable expectations).
(iv) The contribution made to the business by H and J,
and the benefits received by the brothers.
(v) The application of Country 1 cultural rules and
values to the governance of the affairs of the MJ family branch.
Insufficient weight given to the wishes of the Settlor
and/or MJ
34. The Letters of Wishes written by the Settlor,
and which relate to the Jersey Trusts, are a letter of 8 August 1991, a letter
dated 22 December 1991 and a final letter dated 23 December 1991. The Settlor died three days later.
35. It appears that the letter of wishes dated 22
December 1991 was provided to the trustee by the former Protector in early
2018. The letter of wishes dated 8 August 1991 was provided to the trustee by
the lawyers acting for MJ, H and J in June 2020. Prior to this date the trustees of the
trusts had administered the trusts solely by reference to the letter of wishes
dated 23 December 1991.
36. In the letter of wishes dated 22 December 1991,
addressed to the Protector, the Settlor stated (in translation from the
original (“language”):
“My capital outside [Country
1] that I have put in (4) trusts (B, C, E and D) and in companies under them, I
wish be managed for the welfare of descendants of my (4) sons ([DJ], [MJ], [JJ]
and late [BJ] and I request you to manage as per the wish and instructions of [DJ],
[MJ], and [JJ]. I wish you the best and send my salam.”
37. In his last letter of wishes, dated 23 December
1991 which, as we have noted, was only three days before his death, the Settlor
wrote (in translation):
"My capital/holding
outside [Country 1], I have put in (4) Trusts [E], [C], [B] and [D] and in
various companies under these trusts. I wish this my wealth be managed for the
welfare of descendants of my (4) sons ([JJ], [MJ], [DJ] and late [BJ]). I also
wish this my wealth should be shared by the descendants of my above mentioned
(4) sons as under:
For [JJ’s] descendants
29.3%
For [MJ’s] descendants
29.3%
For [DJ’s] descendants
25%
For late [BJ’s] descendants
16.4%
Holding in above mentioned
Trusts and in their relative companies to be managed as above is my wish and
request you to do needful for same.
Wish you best and my
salams."
38. Some years after the Settlor’s death, in
a letter of wishes dated 1 July 2015, MJ stated, inter alia:
“(4.2) A sum certain of
£1.8m (Pounds one million eight hundred thousand) (the "[K] Allocation')
should be earmarked and allocated from the [MJ] Trust Benefits for the benefit
of [K] Beneficiaries. This sum amounts to approximately 10% of the MJ Trust
Benefits. I reiterate that the [K] Allocation is to be a fixed sum and shall
not be varied nor be dependent on the actual realisations….
(4.4) In formulating my wishes
in relation to the [K] Allocation and the [K] Trust, both in terms of the
quantum of benefits allocated to the [K] Beneficiaries, and my wish to remove
the abovementioned uncertainties from the arrangements that relate to them, I
have had regard to the facts that: [K] has her independent family; she has not
been involved in the family business; she is not familiar with family matters;
and she and her husband, [L]j, are both highly successful and very prosperous
in their respective professions and occupations.”
39. MJ (who died on 2 February 2023) wrote a
further letter dated 18 August 2017, co-signed by his wife (“G”),
setting out his wishes (albeit that at the date of the letters MJ was not a
beneficiary of the Trusts):
"This is further to the
letter of wishes dated 01 July 2015 signed by me and my wife, [G]. This
document was sent to you by my solicitor Anup Viyas in July 2015 and I trust
that you had received it safely. I am attaching a copy of the same for your
ready reference.
It has recently become apparent
that the trustees of the JLS trusts are requesting an agreement signed by my 3
children (H, J and K) in order to implement the said wishes. Given the content
of the said wishes and the relative split between the 3 children, this will
likely not be possible.
The trustee is clearly not well
versed with the workings of an [Country 1] business family, such as ours. As
you are well aware, according to our culture and customs, once the daughter
gets married and leaves her parents' home, she goes into a new family and makes
a new life and home for herself. Her husband's family is her family and his
home is her new home. If she has no connection with the family business (which
may be through active involvement or by working within it), then she does not
involve herself in the affairs of her parents' or brothers' home or business.
Indeed, I can confirm that [K] has
never had any connection with the family business. Meanwhile, the sons of the
family usually join the family business and work together with the father. In
such cases, the understanding is that there is a partnership between the father
and sons, even though there may not be a formal partnership agreement between
them. Where the daughter is not involved in the family business, as is indeed
the case of [K], she does not get involved with nor interfere in her father's
and brothers' business and its workings.
Indeed, it is true that the
structure of [Country 1] families and [Country 1] culture treats men working in
the family business differently from married women not working in the family
business. Another important aspect that the trustees have not appreciated is
that it was always the intention of JLS to pass the wealth down to his sons
(BJ, DJ, MJ and JJ) and for the sons, as the head of their respective branch,
to exercise control and discretion as to how the family wealth was distributed
further down. This is also a part of our [Country 1] tradition and culture. And
each head of the respective branch would exercise such control and discretion
based on the culture and workings of [Country 1] families, as described above,
as it applies to them.
I have made my wishes based on
the above and can confirm that we have an understanding amongst us (myself, [H]
and [J]) that the three of us are partners in the business, and indeed I have
to say that my two sons have been more active in the businesses than me for
very many years now, indeed for all but the first few years after their joining
the family business and certainly since 1988. For the sake of clarity, I can
also confirm that [K] is not a partner of ours (myself, [H] and [K]) and so
does not have the same status."
40. The Trustee’s understanding of how the
figure of £1.8 million had been calculated by MJ was set out in the
record of its Determination, dated 27 March 2023 as follows:
“MJ's wishes were for an
unequal split of the assets which would result in the main share of assets
passing to his two sons. The formula which resulted in the unequal division
between the three MJ siblings was explained to the Trustee to have been arrived
at by agreement between MJ and his sons as follows:
·
The trust
assets allocated to the MJ branch would be divided equally among the three
"partners”: MJ, [H], and [J].
MJ, being 'excluded' as a
beneficiary would pass his share equally among his grandchildren: six in total,
two of which are [K’s] children, thereby resulting in 1/3 of MJ's 'share'
being applied to [K]. (The error in Kathryn Purkis' opinion which calculated [K’s]
share under her fathers' letter of wishes as being equal to 15% was repeated by
Mr Dumont. The error arises as a result of the base figure representing the
value of the total share allocated to the MJ branch. The number relied on by
Kathryn Purkis: £12,172.000 is incorrect and the current estimate is
£20,792,635, so that the allocation of £1.8m for [K] set-out in
MJ's letter of wishes amounts to approximately 9%).”
41. Mr Dumont KC, on behalf of H and J, had argued
that the letters of wishes supported what has been described as “the
Sons/Daughters Principle”, “the Working Family Members Only
Principle” and the “Head of Branch Principle”.
42. It was suggested that the Sons/Daughters
Principle was that if a daughter (who did not work in the family business)
married, she ceased to be an individual whom the Settlor intended should
benefit from the fruits of the family business (save perhaps in exceptional
circumstances and/or in accordance with the wishes of the head of the family).
43. The Working Family Members Only Principle was
that sons who did not work in the family business were also likely to be
excluded from benefit.
44. The Head of Branch principle was that the head
of each branch of the family should decide how funds are to be allocated within
that branch.
45. Whilst it is fair to say that the
Settlor’s wishes for an unequal division of the trust assets between the
different family branches, set out in his letter of wishes of 23 December 1991,
recognised the respective contributions that his sons had made to the creation
of the family wealth there is no reference to that recognition being extended
to succeeding generations. Indeed, he went on to refer to the assets thereafter
being managed “for the welfare of descendants of my (4) sons” without
any further restriction, whether as to working in or contributing to the family
business or as to sex.
46. In relation to the letters of wishes written by
MJ, whilst he was neither a settlor nor a beneficiary it was clear that the
Settlor wished his sons to be consulted by the Trustees and that this
consultation could be both as to “management” of the trust
assets and disposition. In the
letters of wishes of 22 and 23 December 1991, the Settlor said “I
request you to manage as per the wish and instructions of [DJ], [MJ] and [JJ]”.
The Trustee was advised by Mr
Holden that whilst this referred to “management” rather than
disposition, there was no reason to circumscribe this wish as if it applied
only to the management or investment of the Trusts’ assets and the
Settlor may well have anticipated his sons being consulted on the distribution
of Trust assets. However, he pointed out that this fell
short of an expression of a wish that each of his sons were to have the
exclusive right to dictate the devolution of his branch's share of the Trust
fund.
47. MJ’s expressed wishes, which were,
unsurprisingly, supported by H and J were that K’s new trust should
receive only a fixed sum of £1.8 million, the balance going to the trust
for H and J. This was justified by
MJ on the basis of the Sons/Daughters and Working Family Members Only
principles, which he said reflected the customs and culture of a Country 1
family business. However, we note that if it was so ingrained in the [Redacted]
family culture it is surprising that it was not mentioned by the Settlor in his
letters of wishes nor was it applied by the other branches of the family, whose
shares of the trust assets were agreed to be divided equally. That is of course not to say that
MJ’s wishes should have been disregarded by the Trustees, but it may
affect the weight given to his views.
The views of the three siblings, (including their
financial needs and reasonable expectations) and the contribution made to the
business by H and J, and the benefits received by the brothers
48. No authority is required for the proposition
that when considering the exercise of their powers in a matter such as this,
trustees should take into account the wishes of the beneficiaries and their
needs. Whilst the wishes of H, J
and K in relation to the split of trust assets were clear, their financial
needs were not. Although the
Trustee had sent a detailed financial questionnaire to all three, making it
clear that if the questionnaire was not returned then it would proceed on the
basis that no beneficiary was asserting any particular financial need, none of
the beneficiaries returned the questionnaire. Accordingly, the Trustee proceeded on the
basis that none of them had any particular financial need for funding from the
trust assets.
49. The Trustee had noted in its Determination that
the potential for a dispute within the MJ Branch was apparent to both of MJ's
brothers, DJ and JJ. It would appear that JJ took it upon himself to invite K
to join the Advisory Group and that there was an initial objection made by J on
behalf of the MJ branch to her joining or even attending meetings, but this was
not supported by either JJ or DJ, and so K was admitted. It was apparent to the Trustee that K had
not been aware of her father’s wishes and she made clear her opposition
to her father's proposed unequal split as soon as she was informed. Later, while dealing with another dispute
that arose within the family, it became clear to the Trustee that MJ, as also H
and J, had been in no doubt that K would oppose the letter of wishes as and
when she was made aware of the contents. The Trustee concluded that K had not been
conditioned to expect a lesser share than her brothers either by the Settlor
during his lifetime nor by her father or the previous trustees.
50. However, H and J argued that they were entitled
to a greater share of the assets as they had dedicated themselves to the
success of the family business and had thereby acted to their detriment.
51. In an affidavit sworn by J on 6 December 2023
he stated, having referred to the Trustee’s alleged disregard for the
wishes of the Settlor and MJ:
“Having fallen into the
errors described above, the Trustee then proceeds to consider the financial
circumstances of [H], [K] and I. In this regard, the Trustee has noted that it
has not received information as to ours and [K’s] financial needs and has
therefore assumed that no one has a particular financial need. Whilst it is
correct that we have not provided the Trustee with that information, that does
not, without more, justify an equal split. All that it justifies is the
assumption that none of [K], [H] or I have an immediate financial need.”
52. Notwithstanding his acceptance of a lack of
financial need, he then went on to assert that he was underpaid for the many
years in which he was working in the “family business”
(which, it should be noted, comprised businesses that were assets of the trust
and others that were not). He
exhibited a schedule which detailed the alleged underpayment, which he had
submitted to the family some years previously, stating:
“From these documents, I
can confirm that I made a claim to the family for a total of £493,085 in
respect of both underpaid salary and for overtime work that I did over the
years that I worked in the family business. I will explain the following in respect
of my claim: (a) The figures in the "Proper Salary" column are
derived from what some of my peers (those that I studied with) were earning,
doing jobs representing a lower level of skills set and responsibility. I say
that I was doing work that required both accounting and finance knowledge and
legal knowledge, none of which I had learnt formally, but which I had
self-taught and became reasonably proficient at. I am proud to say that I was
the one amongst all in the family office best able to deal with accountants and
lawyers. (I would refer the reader to the Work Note to see the description of
the work that I did, but also see below.) This assertion of mine can also be
verified by those members of the family who I have worked with and/or know of my
capabilities. As such, I consider the figures shown in the "Proper
Salary" column to be a conservative estimate.”
53. It would appear that J’s claims fell on
deaf ears as far as other family members were concerned, J going on to say:
“Most of the discussions
over pay, nearly always turning into arguments, occurred verbally in meetings,
which always included DJ……I would point out that none of my efforts
to communicate and engage with the main target of those communications, DJ,
seemed to produce any results whatsoever, apart from more discussions in which
we were told as to why we were working to look after our share in the family
(including the trusts) wealth and that we are partners and will reap the
rewards later.”
54. In its
Determination, the Trustee noted that Ms Purkis, in her opinion, had “made
clear that the trustee could accede to the brothers' position: it would
obviously be possible for the trustee to justify, and the court to bless,
differing distributions in a case in which a beneficiary had been permitted by
the trustee to work on trust assets, and had been under-remunerated for doing
so or had enhanced their value”.
55. The Trustee further noted that “Linked
to the matter of 'expectations” is the question of the financial
position of each of the siblings. As
per Kathryn Purkis's Opinion "The Jersey trusts represent only a
proportion of the family wealth. No full picture of that is available. Nor is
it clear how much each individual receives or has in the past received from the
family wealth".
56. Notwithstanding J’s expressed sense of
grievance, his assertion of a quantified under-remuneration was highly
subjective, being based on his assessment of the earnings of his university
peers. Furthermore, it ignored
other benefits that he and H had received from the family assets which included
the allocation of three flats in central London to MJ, J and H around 1990 as
part of a settlement of an Inland Revenue enquiry and the drawing of family
capital by J and H in 1996 or 1997 to buy their respective houses.
57. However, the Trustee went on to say:
“The two difficulties
faced by the trustee are:
As per Andrew Holden: that it
has no real way of evaluating the extent to which [H] and [J] have either been
prejudiced by, or have benefitted from their decision to work for the family
business.
...
That whilst the work of the
'London Managers', [the [Redacted] family members responsible for managing the
trust property portfolio] is known and can be quantified and assessed,
nevertheless the same cannot be said of the work undertaken by MJ and his sons
in respect of the family business operated outside the trusts.”
58. The conclusion reached by the Trustee on this
point was that:
“The expectations raised
in the minds of [H] and [J] cannot, in the estimation of the trustee, be
attributed either to the Settlor or any former trustees. Any expectations
raised by either MJ or the former Protector have, in the estimation of the
trustee, less weight than would have been the case had they originated from
either the Settlor or the trustee. The argument made regarding the
under-remunerated work of the brothers for the benefit of the family has not
addressed the issues identified by Kathryn Purkis in June 2019, despite the
brothers having had ample opportunity to provide a sufficient response.”
The application of Country 1 cultural rules and values to
the governance of the affairs of the MJ family branch
59. In its Determination the Trustee noted that:
“MJ's letter of wishes
was followed by a letter signed by both MJ and his spouse dated 18th August
2017. The letter sought to provide a rationale for the trustee to approve MJ's
dispositive wishes without seeking the consent of his daughter. The letter makes
the case for the application of [Country 1] Cultural mores whereby [K] not
being a partner in the family business, did not have the same 'status" as
her brothers. The letter goes on to explain: "The structure of Country 1
families and Country 1 culture in general and our family specifically treats
men working in the family business differently from married women not working
in the family business.”
60. This was an assertion that was considered in
some detail by the Trustee. Ms Purkis was asked to advise the Trustee on this
point and she noted that, contrary to what she might have expected, there was
nothing in the Settlor’s letters of wishes that suggested that he wished
the Trustee to distinguish between the claims of men and women to the trust
fund, as might be the case if he had intended some form of Sharia equivalent
regime to apply.
61. Ms Purkis undertook some research into the
Hindu (and Sikh) legal concept of the joint family, and in particular, the laws
that relate to joint family property.
62. She noted that the Royal Court in M v W Ltd,
re the L Trust [2017] JRC 168A, which was an application by beneficiaries
for disclosure of trust documents, considered the concept of a Hindu joint
family in the context of an express trust. In its decision the Court stated:
“By the expression
"Hindu joint family" (or what is sometimes called a "Hindu
united family"), we mean a family where the ownership, production and
consumption of wealth takes place on a joint basis - something akin to a
cooperative institution, similar to a joint stock company in which there is
joint property. In the typical Hindu joint family, the head of the family is
like a trustee who manages the property of the family for the material and
spiritual welfare of all family members.”
63. The Court went on to note that:
“It is noteworthy that in the
typical joint Hindu family, the rights and obligations of members of the joint
family are the same. None except the head of the family has special privileges,
and every member of the family has equal obligations.”
64. The Court concluded that:
“This feature of the joint
Hindu family sits alongside the Trust and it informs the expectations of the
beneficiaries and the way in which we should exercise our discretion in the
provision of information to them.”
65. Ms Purkis noted that in the present case, the
Trustee had never been told that the [Redacted] family operated even in part
under such a system, and there was no provision in the trust deed referring to
community property, as in the L Trusts case. However, she suggested that the summary
of the applicable principles by the Court indicated that if in fact there is
something of that kind in place, it would "inform the expectations of
the beneficiaries" and potentially be relevant not only to administrative
questions like disclosure, but also to the discretions of the trustee on
disposition where there is wealth outside the trusts.
66. Ms Purkis had accordingly asked the Trustee to
ask the male members of the MJ branch to answer a careful set of questions about
their contentions. Efforts were
made to elicit detail on the points that appeared to be central, without
identifying the doctrine in terms, with a view to then approaching K if
necessary.
67. Ms Purkis’s response to the answers that
were subsequently provided on behalf of J and H was that MJ's family's values
were really their own, albeit shaped by their culture, rather than the result
of subscribing to an extraneous and independent religious doctrine. Her
conclusion was that the Trustee need not therefore view "[Country 1]
cultural values" as some sort of extraneous objective factor albeit
that expectations of benefit could properly be factored in.
68. K had represented to the Trustee that there was
no basis for the Trustee to accede to the "Head of Line" principle.
The argument in favour of an
informal partnership established between MJ and his sons in the context of Country
1 cultural rules and for the fruits of that partnership to be attributed also
in accordance with Country 1 cultural rules were rejected by K. The basis for rejecting the application
of Country 1 cultural values or rules, according to K, was that these had no
place in a family which was and had operated in accordance with values of their
adopted country where the two younger MJ siblings were born. K also rejected
her brothers' arguments that they were underpaid and pointed out that they
received additional benefits from their father separate from their income.
69. Given the advice from Ms Purkis and the
responses from H, J and K the Trustee concluded that in light of the family's
current circumstances, the Trustee did not consider that the application of Country
1 cultural values should be given any real weight in its overall deliberation.
70. Having reviewed all the evidence placed before
us, we note that the Trustee took careful note of the arguments put forward by H
and J and had the benefit not only of opinions from their own counsel but from
leading counsel instructed by the other parties. Even if it were to be accepted that H and
J had been under-remunerated for their work in the family businesses, the
result of their claim to an unequal split would have been that the burden of
compensation for that under-remuneration would have fallen solely on K and her
descendants rather than on the family as a whole. Furthermore, whilst the Settlor had
requested an unequal split between the second generation, he did not express
the view that there should be unequal splits, based on the “the
Sons/Daughters Principle”, “the Working Family Members Only
Principle” or the “Head of Branch Principle”
thereafter. It is also worthy of note that none of the other three branches of
the family appear to have been guided by those principles.
71. In all the circumstances, we find that the
Determination was formed in good faith, that it was one which a reasonable
trustee properly instructed could have reached, and that the decision has not been vitiated
by any actual or potential conflict of interest.
The Protector’s decision
72. As we have already noted, the decision of the
Trustee was subject to the Protector’s consent. The Representation does not seek any
order in relation to the Protector or its consent, nor has the Protector sought
the Court’s blessing for it. However,
in its skeleton argument the Trustee requested the Court to consider the
propriety of the decision of the Protector and in the event that the
Trustee’s decision was blessed, and the decision of the Protector was
found to be improper, either to direct the Protector to consent or to give
directions to break the deadlock.
73. Given that there was no formal application
before us in relation to the Protector’s decision and mindful of the
principle of non-intervention we declined to consider the making of orders such
as those suggested by the Trustee. However, Advocate Renouf, on behalf of the
Protector, indicated that should the Court make any comment on the
Protector’s position, not objecting to such comments being made, then the
Protector would give those comments careful consideration. With that in mind we
turn to a brief review of certain matters relevant to the Protector’s
decision.
The legal framework
74. The role of a Protector in considering whether
or not to consent to the exercise of a power by a trustee is currently the
subject of some judicial debate. In essence, the debate is between what has
been described by the Bermuda Court of Appeal as the “Narrow Review
Role” and the “Wide Review Role”, the former
having been favoured by the Bermuda Court of Appeal in Re X Trusts
[2023] CA (Bda) 4 Civ, the latter by the Royal Court in Re Piedmont and
Riviera Trusts [2021] JRC 248 (Birt, Commissioner).
75. Under the Wide Review Role the protector, when
deciding whether or not to give consent to a proposed exercise of a power of
the trustees which requires protector consent, must exercise an independent
discretion, taking into account relevant considerations and disregarding
irrelevant considerations, so that the protector might withhold their consent
to a proposed exercise of power by the trustees even if the proposed exercise
of power was an exercise of power which a reasonable body of properly informed
trustees was entitled to decide upon (the latter being a relevant factor, but
not the only relevant factor, for the protector to take into account).
76. Under the Narrow Review Role, the protector
must be satisfied that the proposed exercise of a power by the trustees is an
exercise which a reasonable body of properly informed trustees is entitled to
undertake and, if so satisfied, consent to the same.
77. In Piedmont (at para 90), Birt,
Commissioner referred to the function of a court in blessing trustee decisions
as a “limited review function”, reasoning that:
“A settlor does not choose
the Court as a trustee; he chooses his appointed trustee. It is that trustee
upon whom the various discretions conferred by the trust deed have been
conferred. If the Court were to exercise a wide-ranging role on such
applications and decide the matter entirely for itself, the effect would be to
constitute the Court as a trustee. That is not the Court's role. The Court's
role is a supervisory one and it is simply to ensure that decisions taken by
trustees are reasonable and lawful. Accordingly, the Court does not simply
substitute its own discretion for that of the trustee.”
78. In relation to the protector’s function,
the Commissioner went on to say that:
“These considerations do not
apply to a protector. The settlor has decided that a protector (often himself
or a longstanding friend or adviser whose judgment he trusts) should be
appointed pursuant to the trust deed and has specified those matters where the
protector's consent is required. The settlor must be taken in those
circumstances to have intended that the protector should exercise his own
judgment in exercising those powers; otherwise, why bother to go to the trouble
of appointed a trusted friend or adviser (or himself) as protector rather than
someone with a legal qualification to judge issues of rationality. Furthermore,
if the role of a protector was simply to review the trustee's decision in the
same way that the Court would do, his role would be almost redundant; he would
bring nothing to the table that the Court itself would not bring on a blessing
application. It follows that, depending on the circumstances, a protector may
well be entitled to veto a decision of a trustee which is rational, in the
sense that the Court would bless it.”
79. The Commissioner did nevertheless recognise
that where the protector is exercising a power of consent its role differed
from that of a trustee, saying (at para 92):
“In the context of a power to
consent, as in this case, a protector's discretion lies within a narrower
compass than that of a trustee. He is not the trustee. It is for the trustee to
make a decision in the first place as to distributions or in relation to the
exercise of any other discretionary power conferred on the trustee. It is
emphatically not the duty of the protector to take that decision himself or to
force the trustee into making the decision which the protector would make if he
were the trustee by stating that he will only consent to a particular decision.
That would be to exceed his proper role and to use the power given to him
otherwise than for its intended purpose. Such conduct would also almost certainly
not be in the interests of the beneficiaries and would be likely to lead to
deadlock requiring the intervention of the Court. A protector may often find
that he should consent to a discretionary decision of a trustee on the basis
that it is for the benefit of one or more of the beneficiaries even though, if
he had been the trustee, he might have made a different decision which he
thought to be even more beneficial.”
80. The Commissioner’s approach was
criticised by the Bermuda Court of Appeal, Gloster, JA stating (at para 133):
“In my judgment that is an
inaccurate description of the role of the Protectors; it fails to include any
reference to (i) the special role of the Protectors in bringing relevant
information relating to (for example) the circumstances of individual
beneficiaries or the wishes of the settlor, to the notice of the Trustees; and
(ii) and what Mr Green descriptively referred to as the "control mechanism
for the real-time assurance of proper administration of a trust" which "reflects
the safeguarding function that the investment of a consent power - rather than
a joint power - in the separately constituted fiduciary office-holder
entails”. Even within the confines of the Narrow Review Role, the
Protectors exercise undoubted practical control over the Trustees' discretion,
through the leverage of the requirement for the former's consent. That is a
significant benefit to the administration of the trust as it might well obviate
the need for the Trustees to obtain the assistance of the Court through a
Public Trustee v Cooper category 2 confirmation that it has reached a lawful
and reasonable conclusion in the exercise of its discretion, as to which I
refer further below.”
81. Referring to the risk of deadlock Gloster JA
went on to say:
“However, it does not seem to
me that it is necessary, or indeed appropriate, for this court on this appeal
to decide whether or not an application by means of any of the above routes
would enable the court, on the application of the Trustees, to override a
refusal of consent by the Protectors to a decision by the former. What is clear
to me, is that the obstacles and uncertainties which would lie in the way of
the Trustees attempting to set aside, or overcome, a refusal of the Protectors
to consent to a decision which the Trustees considered manifestly in the best
interests of the beneficiaries, strongly support the conclusion that the Narrow
Review Role is the correct one. Problems about impasse do not arise when the
criteria entitling the Protectors to refuse their consent are clear - namely a
decision by the Trustees which the Protectors regard as not reasonable, tainted
by improper process or which has failed to take into account relevant
considerations. On the assumption that the Narrow Review Role applies, and accordingly
the criteria are clear, any disagreement between the Trustees and the
Protectors as to whether the latter were entitled to refuse consent, if not
resolved by agreement, could be resolved by a simple application to the court
under the Public Trustee v. Cooper category 2 jurisdiction. And, contrary to Mr
Taube's submission that the Protectors' right to refuse consent is absolute,
the Supreme Court's decision in CIFF certainly does not support the notion that
a fiduciary, in the position of a protector and holding a consent power, has an
absolute right of veto, even in circumstances where the court considers that
the primary decision taker, such as a trustee, had reached a rational and
proper decision to exercise a power of appointment.”
82. Given that no order was sought from the Court
in relation to the Protector’s refusal of consent, the question as to
which of the Narrow View or the Wide View should be applied was not argued
before us and we therefore express no view on it.
83. Instead, the Trustee suggested, without
objection from the other parties, that until these open issues of law are
definitively resolved the law relating to the exercise of the Protector's
consent function may nevertheless be stated in the following terms:
(a) The Protector's consent function, whether wider
(being an independent discretion) or narrower (being a pure review function) is
nevertheless clearly subsidiary to the Trustee's own decision. The Protector
does not exercise a joint power with the Trustee.
(b) It follows that, in determining whether to
consent to the Trustee's exercise of its power, the Protector should not
consider how it would have exercised the Trustee's power. Nor should the Protector refuse to
consent to the Trustee's exercise of its power on the basis that it (the Protector)
might have exercised the power in a different way, had it been the Trustee.
Rather, the Protector's role is to consider how the Trustee has exercised the
power, and to determine whether to consent to that exercise of the Trustee's
power on the basis of an evaluation as to whether it is in the best interests
of the beneficiaries as a whole for it to do so.
(c) If the Protector's refusal to consent to the
Trustee's exercise of its power is irrational or otherwise legally flawed, the
Court has jurisdiction to overturn the Protector's veto.
(d) By contrast, if the Protector's refusal to
consent to the Trustee's exercise of its power is itself a proper exercise of
that function, the Court can either (i) give directions for further discussions
between the Trustee and the Protector to see whether the deadlock can be broken
by a process of dialogue; or (ii) break the deadlock which has emerged by
directing the Protector's exercise of its power (by analogy to the Court's
ability to break a deadlock between co-trustees acting in good faith). In
deciding how to proceed in this regard, the Court will no doubt consider the
history of the matter, the circumstances in which the deadlock has arisen, and
whether further dialogue or a decision by the Court itself is likely to be in
the best interests of the beneficiaries as a whole.
84. Whilst not ruling on the matter, we can see
some merit in the Trustee’s suggested approach. What is clear is that the
Protector’s consent is subsidiary to a decision by the Trustee. Without a
decision of the Trustee there is nothing to which the Protector can consent.
The Protector therefore exercises a review function, irrespective of whether it
is a narrow or wider review, and is not exercising a power jointly with the
Trustee.
Comments on the Protector’s decision-making process
85. The Protector, Turicum Services Limited
(“Turicum” or “the Protector”), held a meeting on 4
April 2024, to consider whether to provide its consent to the decision of the
trustee of the Trusts in relation to the allocation of the Trusts' assets. As
we have already noted, the original Protector of the Trusts was F, the late
father of the two present directors of Turicum. Turicum became the Protector of
the Trusts and discharged its obligations in that regard through the late F
until his death in 2023.
86. The conclusion of the meeting was that:
“It was determined that there
were marginally more factors weighing in favour of an uneven split than there
were weighing in favour of an even split. It was decided that the MJ Branch
assets should be split unevenly, with [K] receiving less than each of [H] and [J].
It was however determined that the Company invite the trustee to make
alternative proposals, such that may enable the trustee to obtain a negotiated
agreement.”
87. In reaching its decision the Protector
indicated that it had had regard to the following factors:
(i)
The former
Protector, and late father of the directors of the Company, was a very close
friend and trusted advisor of the Settlor, and his evidence of the Settlor's
wishes were relevant because of that proximity. It was determined that little
guidance could be found in the wording of the trust instruments.
(ii) It was noted that the Company should not attach
any weight to the former Protector's personally held views, though his evidence
of the Settlor's wishes was relevant. Upon review of all the documents, it was
considered that the Settlor did favour arrangements that preferred those family
members who worked in the family businesses, and the Settlor did wish each
branch head to be consulted in relation to the administration of his branch. It
was determined that some weight ought to be attached to these views, though
they alone were not determinative of the Protector's position.
(iii) It was noted that MJ had expressed a clear wish
which he justified by reference to both the cultural preference for sons and
the preference for those working in the family businesses. It was also noted
that the Company must assess for itself the validity of the justification which
MJ advanced. It was determined that some weight could be attached to MJ's
views.
(iv) It was noted that cultural traditions were a
relevant consideration to the extent to which they informed the views of the
Settlor and MJ and the expectations of the beneficiaries. It was noted that MJ
was influenced by cultural traditions, though the expectations to which they
gave rise in the beneficiaries are perhaps less certain. It was determined that
some weight could be attached to the cultural traditions, but only to the
extent that they held any importance to the relevant persons.
(v) It was determined that the beneficiaries'
contributions to the family businesses was a relevant factor, though it was
noted that it was not possible to be certain how to quantify those
contributions or whether they had been suitably remunerated. Overall, some
weight could be attached to such considerations though it was noted that more
detail would have been helpful.
(vi) It was noted that K had received less from
family assets (whether from the Trusts or otherwise) than her brothers and this
was relevant. It was also noted
that none of the beneficiaries claimed any financial hardship or had expressed
any plans that would require the trustee to assist financially in future.
(vii) It was determined that deadlock was undesirable
and that there was therefore some weight to be attached to the Company reaching
a conclusion that avoided deadlock. This was not a determinative factor but
was relevant.
(viii) Issues of discrimination were relevant to the
Court, but not the trustee or the Company. No weight would be attached to such
factors so far as they might impact the Company's obligations.
88. It is clear that the Protector was influenced
by views that had previously been expressed by the late F, the father of the
director of Turicum who took the decision.
89. In an email sent on 29 August 2018 by F to Mr
Haynes of the Trustee, in response to “a request for recommendations
in the distribution of JLS Trust assets to MJ branch”, F said:
“I have been humbled by
the faith and trust placed in me by JLS and it is of paramount importance to me
that his wishes are followed. Having regard to the above, I am firmly of the
view, and it is strong recommendation that the trust assets should be
distributed within each branch according to the wishes of the respective head
of the branch. In the case of the MJ branch, it should follow the wishes of MJ,
which he has conveyed via his letter of wishes dated 01 July 2015, attached. To
do so any other way would be contrary to the wishes of the Settlor and my room
for discretionary decisions is non-existent where the head of a branch has
specifically expressed his wishes.”
90. F would appear, in using the words “my
room for discretionary decisions is non-existent”, to have felt that
he had no option other than to follow the wishes of the Settlor and, after his
death, those of the Settlor’s son, MJ. There was no suggestion in that email
that he recognised that he had any form of review function in respect of the
Trustee’s decision nor that he was prepared to take into consideration
any other matters that might be relevant to the Trustee’s decision.
91. The note of the Protector’s meeting of 4
April 2024 (albeit a meeting of just one of the two directors of the
Protector), suggests that it had directed its mind to issues in addition to the
wishes of the Settlor and MJ although it is to be noted that all the factors to
which it ascribed “some weight”, save for K’s lack of
benefit from the trusts and the importance of avoiding deadlock, were in effect
various iterations of those wishes as they understood them to be. Having ascribed “some weight”
to a number of considerations, the Protector concluded that there were “marginally
more factors weighing in favour of an uneven split than there were weighing in
favour of an even split”.
92. There was little indication that the Protector
was conscious of the need to review the decision of the Trustee rather than
taking its own decision: the
marginal nature of the Protector’s view of the merits of an unequal split
would clearly have been relevant in relation to the former. Indeed, the note of
the meeting suggests that the Protector was in effect deciding how it would
have exercised the trustee’s power had it been the trustee, stating “[i]t
was decided that the MJ Branch assets should be split unevenly, with [K] receiving
less than each of [H] and [J]”.
93. F’s view of the Protector’s role,
whilst possibly a misunderstanding, no doubt arose from the fact that he was
the Settlor’s adviser on banking matters rather than being a professional
protector. It is clear that he
regarded his role as that of simply carrying out the wishes of the settlor or
at least those wishes as he understood them to be.
94. In a letter dated 8 December 2023 from Advocate
Pinel, on behalf of Turicum , to Advocate Dann on behalf of the Trustee,
Advocate Pinel stated: “Turicum confirms and re-states the position
articulated by [F], as former protector to the Trust and then former
owner/director of Turicum, namely that Turicum believes that the distribution
of assets within the MJ branch of the family should be made in accordance with
MJ's wishes. As such, the Protector is not able to give its consent to the
Determination”.
95. Whilst that letter pre-dates the meeting held
by a director of the Protector at which the Protector’s decision was
reached, it supports the view that the decision was heavily influenced by the
views expressed by the director’s father and that a sense of family
loyalty may have obscured the need to reconsider the role of the Protector. In
saying that, we mean no disrespect to the directors of the Protector.
Protectors are often chosen for their connection to the settlor rather than for
their professional experience in acting as a protector. The office of protector
is far less developed in terms of case law than that of the trustee and
protectors often take on the role with little guidance as to how it is to be
discharged. As the debate over the role of a protector in the X Trust
case demonstrates, the protector’s role is still the matter of some
judicial debate. Nevertheless, we regard the Protector’s consent as
subsidiary to a decision by the Trustee and the Protector should not therefore
regard itself as a co-trustee, which it would seem, the Protector did in this
case.
96. We recognise that we have not been asked to
make a finding on the validity of the Protector’s decision, but we would
hope that our comments may be of some assistance to the Protector should it
decide to reconsider its decision.
97. For the reasons set out above, we accordingly
bless the decision of the Trustee as set out in the Determination. Subject to
there being no objection from any of the other parties within fourteen days of
the formal handing down of this judgment, we order that the Trustee shall have
its costs of this application on the trustee indemnity basis, and the costs of
the parties otherwise be reserved.
Authorities
Trusts (Jersey) Law 1984.
Representation
of Otto Poon Trust [2015] JCA 109.
M
v W Ltd and Ors, re the L Trust [2017] JRC 168A.
Re X Trusts [2023] CA (Bda) 4 Civ.
Re
Piedmont and Riviera Trusts [2021] JRC 248.