Jersey: Trusts Update - Freeman v Ansbacher

In an important judgment, the Deputy Bailiff of the Royal Court of Jersey has clarified the Jersey law position in relation to two points. Firstly, whether the object of a mere power has standing to sue for breach of trust against trustees. Secondly, whether the principle of 'reflective loss' is directly applicable to a discretionary trust which wholly owns a company.


The application in the present case was a strike out application by Ansbacher Trustees (Jersey) Limited against the Plaintiffs, Sarah Daile Freeman, Robert Keith Freeman and Rosanna Freeman. The order of justice claimed several causes of action for breach of trust and negligence.

The Deputy Bailiff found that the first two plaintiffs' claims were statutorily time barred by Article 57(2) (b) of the Trusts (Jersey) Law 1984 (as amended). The plaintiffs had been adults at all material time and had knowledge of the occurrence of the alleged breaches of trust for more than three years before the order of the justice was served. They were therefore removed from the action.

Rosanna's claim however was not time barred because she was a minor for part of the period when the Plaintiffs had the relevant knowledge. The argument was that she was unable to bring a claim for breach of trust against the Trustees, being the object of a mere power to appoint capital and income and the mere power to distribute income. She also had a contingent interest, being named as a beneficiary of the ultimate default trust which arose at the end of the trust period.

The Deputy Bailiff accepted that the position in English law as stated in Lewin was equally applicable in Jersey law, namely that the object of a fiduciary power (whether a trust power or a mere power) has locus standi to apply to the Court for relief. Further that such relief can include the reconstitution of the trust fund where loss has been caused by a trustee's breach of trust. The Deputy Bailiff also decided that a person with a contingent interest had locus standi to bring an action for breach of trust. In the circumstances of the object of either a mere power or a contingent interest claiming reconstitution of the trust fund following a breach of trust, it would be a matter of discretion for the Court as to what relief, if any, should be granted in any particular case.


The second point of some importance was the question of whether the principle of reflective loss (the Foss v Harbottle principle) applied to a discretionary trust. The reflective loss principle is that the proper plaintiff in respect of loss suffered by a company is the company itself and not its shareholders. The Deputy Bailiff affirmed that the principle undoubtedly forms part of Jersey law (eg Khan v Leisure Enterprises Limited [1997] JLR 313). As such, he was able to look to English precedent in the absence of Jersey authority.

In Ansbacher, certain investments in land and software made by a company (wholly owned by the discretionary trust) were said to be in breach of trust. The losses were those of the company although the order of justice sought the reconstitution of the trust fund for the breaches of trust.

The Deputy Bailiff conducted a review of the relevant English authorities which importantly did not have any discretionary trust element to them. The only fiduciary relationships considered in the English authorities were those of a director and the company and of a bare trust. If the Deputy Bailiff was to accept that the Foss v Harbottle principle applied in the present case, the order of justice should be struck out. He was unconvinced however that the principle should be applied to a situation involving a discretionary trust. Even if that were to be the case in England, there were strong grounds for believing that Jersey law should follow a different path.

The Court concluded that it was strongly arguable that the Foss v Harbottle principle did not apply in the present case. In doing so, the Deputy Bailiff distinguished the situation of a company and a discretionary trust. The rationale behind the reflective loss principle is to prevent double recovery and to ensure that monies are returned to the company in order not to prejudice creditors of that company. Neither of the two rationales are applicable to a discretionary trust situation where the plaintiff claims a breach of trust and a reconstitution of the trust fund. The Court in deciding upon a remedy can be flexible and can order the trustees to reimburse the company directly or use the funds to acquire new shares in the company. In this way, there can be no risk of double recovery because the company will have been reimbursed. Secondly, there can be no prejudice to investors because they are in the same position as they were prior to the wrongful investments which gave rise to the breaches of trust.

On a purely practical level, if the reflective loss principle applied to a discretionary trust a beneficiary would be unable to sue for a breach of trust if the losses were those of a company. It is not unusual for Jersey trustees to be the trustees of discretionary trust which wholly owns a company. The directors of that company are often the same individuals as the trustees. If that company makes the investments on behalf of the trust fund and makes losses then the losses are the company's. The beneficiaries would be unable to sue the trustees for breaches of trust because the company had lost money. The beneficiaries would also be unable to sue the directors because the directors owed the beneficiaries no duties as directors. The beneficiaries would (one imagines) have to take steps to remove the trustees due to an obvious conflict of interest if they refused to take the necessary action against the company directors (which in all likelihood would be the same individuals).

The Deputy Bailiff concluded that although such options were available that it would not reflect well on the law or on Jersey as a trust administration centre if the beneficiaries had to go through such hoops unless absolutely unavoidable.

In reliance upon the above points the Deputy Bailiff found it was strongly arguable that the principle of reflective loss had no application where a discretionary beneficiary is seeking reconstitution of the trust fund because of a failure by the trustee to supervise the investments of a wholly owned company.


Once again the Jersey Court has applied the spirit of the principles expressed in authorities such as Schmidt v Rosewood in emphasising the importance of the Court's supervisory jurisdiction over trusts and trustees. It is not surprising that in the circumstances of loss said to be caused to the trust fund by a breach of trust that the Court is loathed to strike out the application in its entirety.

Importantly trustees need to be aware that the three year limitation period is not necessarily taken from the date of knowledge of the adult beneficiaries as Ansbacher confirmed that the object of a contingent interest and mere power can sue for breach of trust. Objects of such interests in the context of discretionary trusts will often be minors and will therefore extend the limitation period for such actions.

Furthermore, although not conclusive on the point of reflective loss, the Deputy Bailiff has given strong arguments for this point to succeed at a final hearing. This emphasises the principles expressed in Barlett v Barclays Bank Trust Company Ltd of the importance of the duties of trustees to supervise the affairs of a company of which they are the controlling shareholders.

The judgment reinforces the regulatory guidance of the importance of exercising management and control over a company of which trustees are the controlling shareholders, particularly if trustees are also the directors of such a company. To not do so could be ultimately costly from a regulatory as well as a legal perspective.

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.

In association with
Mondaq Advice Centre (MACs)
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.