The case concerned an application to the Court by Y, the liquidator of Centurion Trust Company Limited ("Centurion"), to approve the proposed appointment of Herald Trust Company Limited ("Herald") as the trustee of the Q Trust.
Centurion was the subject of a just and equitable winding up order and Y had been appointed as liquidator. Centurion was the trustee of the Q Trust, a Jersey trust set up by the late N for the benefit of his children and grandchildren from his first marriage (the "L Beneficiaries") and the children from his second marriage (the "M Beneficiaries").
The power to appoint new trustees of the Q Trust had vested in Y on his appointment as liquidator of Centurion. The need to appoint a new trustee had become pressing as the process of transferring the client base of Centurion to new service providers was nearly done and Y's staff would soon be released.
Y had made extensive efforts to find a new trustee but was struggling to do so because of the limited financial resources of the trust and, in particular, a lack of liquidity. Only two trust companies were willing to take on the trust. Y had concerns about the resources of one of those companies and the fact that the person who would be dealing with the trust knew certain of the M Beneficiaries socially. As such, Y elected to appoint the other company, Herald, as trustee.
The M Beneficiaries agreed to the appointment of Herald but although the L Beneficiaries agreed in principle, they felt unable to agree as the court had not disclosed to them certain correspondence between Y and the M Beneficiaries.
- The Court sanctioned and approved the appointment of Herald on 3 August 2010 but two issues were raised which the Court now dealt with:
- whether the issue of the L grandchildren (being beneficiaries of the Q Trust) should be represented; and
whether certain correspondence between Y and the M Beneficiaries should be disclosed to the L Beneficiaries and, if not, whether such correspondence should be withdrawn from the Court.
Representation of Issue
The Court held that there was no need for the issue to be represented. There was no rule of practice that all beneficiaries should be convened to an application such as this and, in any event, it was inconceivable that any lawyer appointed to represent the issue would dissent to the appointment of Herald as new trustee.
It was stressed that it was very much in the interests of all beneficiaries for a new trustee to be appointed.
Disclosure of Information
In the circumstances, Y should be equated to a trustee and as such was able to apply to the court for directions under Article 51 of the Trusts (Jersey) Law 1984. The trustee role is a confidential one and beneficiaries have no absolute right to see trust documents. Similarly, it is important that beneficiaries should be able to communicate in confidence with the trustee.
The Court is able to order disclosure if it is "in the interests of justice". In this case, the correspondence between the Y and M Beneficiaries was not relevant to the issue before the court, save for one email which had already been disclosed to the L Beneficiaries. Consequently, there was no justification for breaching the confidential nature of the correspondence.
Furthermore, the Court rejected the argument that the correspondence should be withdrawn by Y on the basis that full disclosure to the Court should be encouraged.
An interesting example of the Court allowing a liquidator of a trustee to invoke the Court's jurisdiction under Article 51 of the Trusts (Jersey) Law 1984 and a useful reminder of the confidential nature of the role of trustee.
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