With special thanks to our guest author, Jeremy Muir, for this Client Briefing
Judgment of the Lords of the Judicial Committee of the Privy Council (on appeal from the High Court of Justice of the Isle of Man (Staff of Government Division)) Delivered the 14th January 2008
What is a deed as a matter of Jersey law? Can a written resolution of the directors of a trustee company be a "deed"? This Isle of Man case, based on Jersey law, has obvious interest for lawyers in both Jersey and Guernsey.
The Tabatha Trust was governed by Jersey law. Under the trust deed, the trustee had the power to declare "by deed" that the proper law should change. The trustee of the Tabatha Trust purported to change the law of the trust to the law of the Isle of Man by way of a written resolution of the directors of the trustee company.
The majority judgment of the Privy Council held that, based on the expert evidence of Jersey law at trial, the resolution had sufficient formality to qualify as a "deed" for Jersey law purposes and the proper law of the trust had duly changed.
The minority (Lord Scott of Foscote) disagreed, noting that "the document was prepared in circumstances that were the antithesis of formal" and that it was, in any event, an act of the directors of the trustee and not of the trustee itself.
Whilst Guernsey law does not recognise or grant any particular status to a "deed", current practice in the jurisdiction suggests that a resolution of directors should not be considered as a "deed" and, therefore, Lord Scott's view is preferable.
This question, as a matter of Guernsey law, can only be determined by a judgment of Guernsey Courts.
In the meantime, we think that, where the terms of a trust require something to be done by a "deed", it should be recorded in a document with the same formality as a deed would require in England or similar jurisdictions.
For those drafting trust deeds, it is worth noting the potentially different interpretation of the word "deed". It is not uncommon to see a definition of the word "deed" in a trust, something presumably lacking in the Tabatha trust deed. This definition should specify the degree of formality required and so avoid the problems experienced.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.