This representation arose out of divorce proceedings between JG (the "Husband") and HK (the "Wife") in the Netherlands.

In the early 1990s the Husband instructed Mourant & Co. Retirement Trustees Limited (the "Trustees") to establish a retirement benefits trust called the Turino Consolidated Ltd. Retirement Trust (the "Trust"). The sole members of the Trust were the Husband and the Wife, in respect of each of whom a "Member's Accumulated Fund" (each a "Fund") was held. As a result of apportioning the various contributions made to the Trust, the value of the Trust's assets was held as to 83.33% by the Husband's Fund and as to 16.67% by the Wife's Fund.

At the time of the divorce proceedings the sole material asset of the Trust was a property in the Netherlands (the "Property") whose open-market value in mid-2001 had been estimated at €533,191 but which by the time of the representation was likely to have increased materially. The Wife, however, who remained resident in the Property, had refused to allow any up to date valuation to be made.

During the course of the divorce proceedings the Wife sent to the Trustee a certified copy of what was described as a "Letter of Wishes" (the "Letter") dated 17 May 1999 and signed by both Husband and Wife which said, inter alia, that the Property should "be considered to be held within the Trust to the benefit of each of the parties [i.e. the Husband and the Wife]".

After protracted litigation in the Dutch courts, the following financial settlement was eventually ordered:

  • that the Letter constituted a binding agreement as between Husband and Wife to the effect that, in the event of divorce, the assets held in the Trust would be divided equally between them;
  • that the Wife's valuation of the Property at the time of the divorce was €415,000 and that this valuation had not been disputed by the Husband; and
  • that the Husband should procure that the Trust sell the Property to the Wife at the valuation of €415,000 (subject to adjustments for notional rent due and for occupier-related costs).

The net result of this order would have been that the Wife would receive title to the Property and that the Trust would receive the cash sum of €415,000 (subject to adjustment as noted above, the "Consideration"). Unfortunately this raised other issues in relation to which the parties could not agree, specifically:

  • the Wife contended that, on receipt of the same and in accordance with the terms of the Letter, the Trustee should distribute the Consideration equally between the Husband and the Wife;
  • the Husband contended that the Trust was a fixed trust which had not been varied by the order of the Dutch court and that, accordingly, the Consideration should be distributed as to 83.33% to the Husband and as to 16.67% to the Wife; and
  • the Husband contended that, in any event, the valuation of €415,000 for the Property was a gross undervalue, that the Trustee was actually under a duty to get the best price for the Property, and that therefore the Trustee should (regardless of the order of the Dutch court) proceed by evicting the Wife from the Property and selling it on the open market.

In the light of the continuing disagreements the Trustee brought the representation before the Royal Court seeking its directions on how it should act.


After consideration the Royal Court held as follows:

  • the Dutch courts had specifically not purported to vary the terms of the Trust from being one which held its assets in a ratio of 83.33% for the Husband and 16.67% for the wife to one where the assets were to be held in equal shares for the parties - all it had done was find that the Letter constituted a binding agreement between Husband and Wife as to how they would treat the Trust's assets in the event of divorce;
  • in any event, the Royal Court had no power to vary the terms of a fixed trust in this way (or, for that matter, in any other way save in the limited circumstances envisaged by article 47 of the Trusts (Jersey) Law 1984 as amended which allows the Court to approve variations on behalf of minors and unascertained beneficiaries);
  • where a fixed interest trust such as the Trust has only ascertained adult beneficiaries, however, then those beneficiaries acting together do have the power to vary the terms of the Trust (the authority for which is the well-known case of Saunders -v- Vautier);
  • the Letter, when conveyed to the Trustee, constituted such a variation since it was signed by all of the beneficiaries of the Trust, both of whom were adults and, as determined by the Dutch court, both of whom were acting voluntarily in signing the Letter; and
  • the Trust had, therefore, been varied to the extent that the Property was now held for the Husband and Wife in equal shares;
  • in the normal course of events the correct course for the Trustee would be to sell the Property on the open market with vacant possession for the best price achievable;
  • in the light of (a) the Wife's refusal to co-operate with any new valuation of the Property and (b) the likely difficulties that the Trustee would face in attempting to evict the wife (since they would have to rely on bringing an action before the Dutch courts to achieve that), the Court acknowledged that the Trustee may be unable to achieve the objective referred to at (vi) above in which case it should proceed with the sale to the Wife at the Consideration which, in the circumstances, would be the best price reasonably attainable; and
  • the sum remaining in the Trust after deduction of all relevant fees and expenses (including those incurred by the Trustee) should be distributed to the Husband and Wife in equal shares.


This case raises a number of issues for a professional trustee to reflect upon.

Firstly, simply because a document might refer to itself as a "letter of wishes", its actual effect needs to be considered carefully. It remains the case that letters of wishes are generally just that - expressions of intent or desire normally made by the settlor or by a beneficiary of a trust which will inform a trustee's decision making in the exercise of its discretionary powers but will not bind the trustee. In the specific case where a so-called "letter of wishes" is expressed as a direction in relation to a fixed trust and is given by all of the beneficiaries (being competent adults acting of their own volition) the effect of that document will be to vary the terms of the trust concerned and to bind the trustee to administer the trust on that basis as soon as it is aware of the contents of that document.

Secondly, other than in the limited circumstances envisaged by article 47 of the Trusts (Jersey) Law 1984 as amended, the Royal Court does not have the power to vary the terms of a fixed trust.

Thirdly, the Court will be sympathetic to a professional trustee which has difficulty in dealing with real property which it holds as a trust asset where that difficulty arises out of the law of the jurisdiction in which that real property is situated. In this case, Jersey trust law would have dictated that the Trustee should sell the Property for as good a price as possible - i.e. on the open market with vacant possession. Since the Property was in Holland, however, and since the Dutch courts had ordered the sale of the Property to the Wife for the Consideration, the Court made it clear that the Trustee could not be criticised for only realising that sum for the Property if it could not easily overturn the order of the Dutch court.

Finally, the Court offered further comfort to the Trustee in the matter of its remuneration and expenses. It made it clear that it did not feel that in the circumstances of the case it had been unreasonable for the Trustee to (i) have sought the sanction of the Court for the sale of the Property to the Wife for the Consideration or (ii) to have obtained independent legal advice in both Holland and Jersey in relation to this matter.

In summary the lessons to be learnt appear clear: judge documents from settlors or beneficiaries on what they actually say rather than on what they call themselves and, if in doubt, obtain legal advice and if necessary a ruling from the Royal Court.

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.