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
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
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
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such correspondence should be withdrawn from the Court.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
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
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.
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.
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