In the Representation of the Jasmine Trustees Limited
 JRC 196 the Royal Court had to consider whether or
not new trustees and protectors had been validly appointed to two
trusts; the P Trust and the R Trust. In doing so the Court gave
guidance on how fiduciary powers should be exercised.
The two trusts were family trusts and the case is set against a
backdrop of acrimonious relationships between a father and his two
sons on the one hand, and the father's daughter on the other,
and involving long-running disputes and litigation in the US. Each
of the trusts had the same original protector, the father, who had
the power to appoint and remove trustees. The P Trust also
specifically provided that the first successor to the original
protector was to be the eldest son and the daughter
The father, as protector of the P Trust, purported to remove the
incumbent trustees - Jasmine Trustees Limited - and appoint a New
Zealand trustee (K) in its place. He also purported to do the same
in respect of the R Trust of which Jasmine and Lutea Trustees
Limited were the trustees. Later, the father retired as
protector of the P Trust. The power to appoint a successor was
vested in all the adult beneficiaries and they (including the two
sons but not the daughter) appointed the two sons jointly as
protector of the P Trust. The father, as protector of the R Trust
and in whom the power of appointment of a successor was vested, and
the two sons, also executed a deed whereby the father retired as
protector of the R Trust and appointed the two sons as joint
protector. Following the issuing of proceedings by the daughter,
the two sons, as protectors of the trusts, removed K as trustee of
both trusts but did not appoint a successor.
The Court considered what the duties for the exercise of a
fiduciary power by a trustee were, and considered that such duties
should apply to the holder of any fiduciary power, not just a
trustee. Whilst it did not suggest an exhaustive list, the Court
held that when exercising the power to appoint a new trustee, a
protector was under a duty to:
to act in good faith and in the interests of the beneficiaries
as a whole;
to reach a decision open to a reasonable appointor (ie not to
exercise the power irrationally; the decision must not be one at
which no reasonable power holder could arrive);
to take into account relevant matters and only those matters;
not to act for an ulterior purpose.
The Court found that the father failed to take into account
material matters, and took irrelevant matters into account, so that
the decision to appoint K was one no reasonable appointor could
have taken. The appointment of K was therefore invalid and Jasmine
and Lutea remained in office.
It went on to use the above formulation when considering the
appointment of the two sons as protector of the trusts. The court
found that the daughter had legitimate fears over how her two
brothers would perform their function as a protector. They had a
history of being willing to do exactly as their father wished, and
it had been shown in the US litigation that they paid little
attention to fiduciary duties. The Court therefore held that the
appointment of the brothers as protectors of the two trusts was
outside the band within which reasonable disagreement is possible
and was a decision to which no reasonable appointor could come ie
it was irrational. Their appointments were therefore invalid.
The case is a valuable reminder of the approach the courts in
Jersey will adopt where there is disagreement concerning the
exercise by any holder of a fiduciary power of that power, not just
by a trustee.
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