Guernsey: In The Matter Of The [AAA] Children’s Trust

In the matter of the [AAA] Children's Trust (Royal Court, 8 January 2014, Sir Richard John Collas, Esq., Bailiff) the Royal Court of Guernsey gives important guidance to trustees on the decision-making process when reaching a "momentous decision". This judgment will be of interest to the trust industry and legal practitioners alike as the Court addresses what documents it would expect to see when considering whether or not to bless a decision. Throughout the judgment there are two recurring issues. The first was that it was unclear from the papers lodged by the Trustees whether or not a decision had in fact been made and/or what factors the Trustees took into account if they had made a decision. This led to the second issue relating to the duty of disclosure as it had become apparent during the course of the hearing that the Trustees had not given full and frank disclosure to the Court or the opposing parties. The Trustees' failure was described as unforgiveable. The Court was left with only one option - which was to decline to bless the "transaction".

Carey Olsen (Advocate John Greenfield and senior associate Kelly Walton) acted for a joint protector (referred to as "P1" in the judgment) in the successful opposition of an application brought by the Trustees to bless a momentous decision. The application was brought under the second category of cases as identified in Public Trustee v Cooper [2001] WTLR 903, that is "...where the issue is whether the proposed course of action is a proper exercise of the trustees' powers where there is no real doubt as to the nature of the trustees' powers and the trustees have decided how they want to exercise them but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action on which they have resolved and which is within their powers". The Court held that it had jurisdiction under section 4 of the Trusts (Guernsey) Law, 2007 to consider the application, as whilst the Trust was governed by Jersey law, it was administered in Guernsey and two of the three Trustees were companies incorporated and based in Guernsey.


The momentous decision related to the sale of a property which comprised a substantial part of the Trust assets (the "Property"). The money required to purchase the Property (and to carry out alterations and remedial work) was advanced by the Trustees to a company (which owned the Property via a nominee share arrangement) by way of secured and unsecured promissory notes (the "Loan Notes"). Therefore, the Trustees were a creditor of the company.

The Settlor had left meticulous and detailed wishes, which were, unusually, incorporated as a Schedule to the Trust Deed itself. A separate memorandum setting out his wishes was finalised after the Settlor's death. It was accepted that the memorandum recorded the wishes communicated by him during his lifetime. He described the Property as a unique property, the "finest jewel in the jewel box" and said that it was only to be sold in "exceptional circumstances" and then "at an appropriately extraordinary price such that the news will reach [him] even in heaven".

So steadfast was the Settlor in his wish that the Property be retained that he said that he did not want his two children (who were minors) (the "Children") to dispose of their interest in the Property until they reached the age of 40 and, even then, he did not want them to dispose of the Property as it had been acquired to "protect their long term interests and security ..." in a particular area.


The hearing took five days and was held in camera. The joint protector, P1, was not formally convened as a party to the proceedings because there was no need for her to be bound by the decision of the Court but she was permitted, with the agreement of all of the parties, to adduce evidence and make submissions.

The sale was supported by the Trustees and the other joint protector, P2, who was a long term business associate of the Settlor and involved with the running of the Settlor's business. It was opposed by all family members, namely P1, R1 (the widow of the late Settlor and the Children's mother) and the Advocate representing the Children together with the unborn and unascertained beneficiaries (jointly referred to in this note as the "Opposing Parties").


One of the problems faced by the Court was that it was difficult to identify clearly the reasons relied upon by the Trustees in reaching their decision to sell the Property.

The Court expressed concern regarding the lack of documents produced by the Trustees and noted that this was in part because there was not a clear-cut decision by them to accept the proposed offer to purchase the Property, supported by a dossier of relevant factual information and fully recorded in a comprehensive minute of the Trustees' deliberations. Indeed, the Bailiff adopted the Opposing Parties' submission that it was surprising that a professional trust administrator (charging substantial fees for its services) had not prepared a dossier as described above.

The Trustees were unable to point to a single document that listed all of the factors that they took into account. The principal document referred to by the Trustees was a minute of their meeting held on 10 July 2012, which was considered by the Court in some detail. The Court noted that:

  1. The Trustees had not disclosed to the Court a copy of the agenda for the meeting on 10 July 2012 or the documents that would have been circulated prior to that meeting;
  2. The proposed sale was not a specific agenda item and instead had been considered as part of the Trustees' deliberations regarding the investment portfolio held by the Trust;
  3. There was no reference to the memorandum of wishes referred to above or the wellbeing of the Children;
  4. There was no discussion or consideration of other steps that could be taken to preserve capital;
  5. There was no consideration of the possibility of deferring the decision until the Children had attained the age of majority nor was there any attempt by the Trustees to ascertain their present views (Counsel, having met with the Children, found them to be intelligent as well as being advanced intellectually and mature for their age); and
  6. The minutes suggested that the decision was taken as if the Trustees were discussing a simple investment.

The Court concluded that it was impossible to pinpoint a meeting of the Trustees at which the momentous decision was taken. In fact, it was unclear whether a decision was taken at all. What emerged during the hearing was that it was a "rolling decision" taken over a long period of time, discussed by telephone and by email, of which no file notes or records were disclosed to the Court or the Opposing Parties. The Court said that the Trustees' failure to produce such records was unforgiveable, especially as the Opposing Parties' Counsel had pressed the Trustees' Advocates on a number of occasions to ask whether there had been full disclosure.

It is important to note that the Trustees submitted further information after the application was made to the Court on 20 June 2013. The Court noted that information was "elicited" in a number of affidavits (six in total) with the last being sworn on 30 October 2013. The Trustees also lodged expert evidence which post-dated their application, designed to support the Trustees' decision to sell the Property in the current market. In terms of the weight placed on that evidence the Court remarked that "[a]s the application has evolved, the opinions are less relevant than they might have been". By this stage, the Trustees' momentous decision should have already been made and all factors that they took into account should have already been before the Court. Therefore, if expert evidence or advice was required this should have been obtained prior to the decision being made in order to avoid having to submit further evidence to justify the decision after the event.


When facing a momentous decision, a trustee should ensure that the decision made is able to withstand scrutiny. Some of the lessons to be learned from this case include;

  1. A trustee should hold a meeting specifically to consider all relevant factors in relation to the momentous decision.
  2. Prior to the meeting, a trustee should consider whether or not it is necessary to obtain any independent professional advice (financial, legal, valuation etc).
  3. A trustee, and in particular, a paid professional trustee, should prepare a full dossier of information to include:

    • the agenda and supporting documents circulated prior to the meeting (including any advice obtained);
    • a comprehensive minute of the meeting, which sets out the trustee's deliberations as well as the factors that it took into account when reaching its decision;
  4. Full and frank disclosure should be provided to the Court and the opposing parties; and
  5. A trustee would be unwise to try and bolster its application after the event by way of supplementary expert opinion or lay evidence. Good preparation for both the decision and the application is essential.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
24 Jan 2018, Conference, St Peter Port, Guernsey

In association with the Guernsey Training Agency, we are pleased to offer a unique, interactive event that will explore the role of integrity in the modern employment relationship, with a particular focus on the financial services sector.

15 Mar 2018, Seminar, St Peter Port, Guernsey

We are once again sponsoring C5 Fraud, Asset Tracing & Recovery which is due to take place on 15-16 March 2018 (tbc) in Geneva.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions