Jersey: Coming Round The Mountain? Does IFM Corporate Trustees Limited V Helliwell And Mountain Mean That Intended Tax Mitigation May In Future Affect How The Royal Court Decides Trust Applications?

Last Updated: 19 August 2015
Article by Kellyann Ozouf, Damian James and Richard Holden

In IFM Corporate Trustees Limited v Helliwell and Mountain the Royal Court itself raised the potential tax consequences and intentions behind a trust, and whether they should affect how the Court decides applications made to it in respect of trusts.

As far as the parties were concerned, the main issue was to succeed in their application to rectify the trust, i.e. to correct and rewrite its drafting to bring it back into line with the original intention behind it. The Court's power to rectify a trust in this way is a rare but established one. It is available where there has been a genuine mistake in the drafting of the terms of a trust, for example (as in IFM), omitting an intended beneficiary. Rectification is not available to change a trust from the form in which it was originally settled into something else that the parties have decided would have been better, e.g. to alter it to meet a change in tax legislation. It is not the Court altering the underlying trust, but correcting the documents recording its terms and existence.

Previously, the Royal Court has decided that to order rectification:

  1. it must be satisfied that as a result of a genuine mistake the trust instrument does not carry out the true intentions of the parties, and the settlor in particular,
  2. there must be full and frank disclosure, And
  3. there should be no other practical remedy.

If the Court is satisfied as to these three points, it does not follow that it will order rectification, but the Court then decides in its discretion whether it should order rectification.

The trust in IFM was an employee benefit scheme, the employer being the settlor. Separately to the trust, that employer paid its employees wages and also made discretionary loans to them. It then settled its right to repayment into the trust, together with cash contributions to the trust fund. The repayment rights were held on the trusts of a sub-fund of the trust (the "Initial Sub-Fund") of which Ms Helliwell and Ms Mountain were two of the beneficiaries. The cash contributions were held on the trusts of other sub-funds ("Subsequent Sub-Funds") of which there were a large and variable number. The repayment rights and the cash contributions would then be transposed by the trustee so that the cash contributions were held by the Initial Sub-Fund and the repayment rights were held by the Subsequent Sub-Funds. In this way, on the repayment of a loan, the trustee could potentially benefit employees who were beneficiaries of Subsequent Sub-Funds.

The beneficial class of the overall trust scheme extended to any specified employee and specified classes of relatives. Unfortunately, the trust instrument omitted certain relatives and their spouses (defined by reference to an employee's grandparents) from this class, which included Ms Mountain.

The trustee, settlor and other beneficiaries of the trust supported the application, and on the evidence before it the Court accepted the omission had been a genuine mistake not truly reflecting the intentions of the settlor, and that there was no practical remedy other than rectification.

So far, so orthodox, and IFM does not alter the law as stated above regarding rectification applications. However, the case increases in significance because of what it did not decide, but clearly indicated it might have to in future. When considering whether the applicants had given full and frank disclosure, the Court noted the paperwork originally submitted to it made no mention at all of the UK tax position – realistically, the common driver for settling property into an offshore trust. Subsequently, the Court was satisfied that the rectification did not alter the tax position, nor that the trust overall was intended as an aggressive tax avoidance scheme. What is interesting is whether, had the trust appeared such a scheme, it would have altered the Court's decision.

Because the trust was not such a scheme, the Court did not have to decide. But it made comments that such a consideration might be relevant in a future case. It expressly recognised strong ethical arguments exist why tax payers should make a fair and appropriate contribution towards the outgoings of the state they live in which are made for the benefit of the community as a whole.

But equally, the Court recognised the strict legal position that any citizen is entitled to retain his or her property unless it is taxable by appropriate legislation. It further noted that to organise one's affairs so as to minimise tax according to the rules which the taxing state has itself set down can be seen as a fundamental freedom, and it could be said that to decide what is or is not acceptable by reference to a moral view those rules do not expressly provide would be extremely uncertain.

The Court has reflected on this previously, in a case involving an application to set aside a mistaken settlement into a trust. There, the issue was whether the Court should exercise its discretion to relieve the settlor from a mistake when effecting the settlement. Again, the Court there noted that there were two sides to the argument, but seemed ambivalent as to whether tax avoidance was a "social evil" (as it had been described by the UK Supreme Court), because the perspective is different from a foreign jurisdiction and tax system, and the state can be said to have passed all the laws necessary to tax everything it intended to tax. As in IFM, however, the Court did not have to decide which side of these arguments it preferred.

Nevertheless, the Court's comments in IFM indicate that the increasing global focus on tax payment, avoidance and evasion mean that the day the Jersey Court has to decide and adopt its stance may be approaching. Potentially, any application to the Court involving its discretion (and most applications in respect of trusts do involve the Court's discretion) may require the tax consequences and intentions of the scheme to be aired and subjected to a wider debate whether the Court should go along with them.

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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