This case concerned orders made by the English Family Court in
relation to a Jersey discretionary trust, and therefore the
operation of the so-called "firewall" provisions
contained in Article 9 of the Trusts (Jersey) Law 1984
(Trusts Law) regarding the enforcement or
recognition of foreign judgments against Jersey trusts.
The case confirms that trustees are not prevented from taking
steps which are in the best interest of their beneficiaries simply
because doing so might also be seen as giving effect to a decision
of a foreign Court which had applied foreign law to a question
regarding a Jersey trust.
Mr B and his former wife (Mrs B) had been involved in divorce
proceedings in England, as a result of which there had been a
division of the matrimonial assets ordered by the English Family
The trust in question had been settled by the Mr B, and the only
beneficiaries were the children of the marriage who were both
minors. The trust instrument permitted, among other things,
the addition of beneficiaries.
The English Court made orders that that the disposition of the
trust assets by Mr B to the trust be set aside, and ordered the
trustee to treat that disposition accordingly and remit the trust
fund to Mr B for onward payment by him to Mrs B.
It was clear from the judgment in the divorce proceedings that
the assets of the family overall were not sufficient for Mrs B to
maintain the property in England in which she and the two children
resided. It was in part for that purpose that the judge in
England determined that access was required to the trust assets to
enable Mrs B to keep the property.
The trustee had carefully considered the English judge's
analysis and concluded, on the basis of his factual findings, that
it was in the best interest of the beneficiaries of the trust (the
children) that Mrs B have access to the trust funds so that she
could maintain the home over the children's heads.
The trustee therefore decided to add Mr B as a beneficiary of
the trust and to distribute the whole of the trust assets to him to
enable their onward distribution to Mrs B, and applied to the Royal
Court for approval of that decision on the basis that it was
That Court had no difficulty in confirming that the tests for
approval of a momentous decision (as set out in the well-known case
of Re S Settlement  JLR N37) were satisfied, that is
The trustee's decision was formed in good faith;
The decision was one which a reasonable trustee properly
instructed could have reached;
The decision was not vitiated by any actual or potential
conflict of interest. An interesting question arose, however, as to
whether the proposed steps fell foul of Article 9(4) of the Trusts
Law which provides that:
"(4) No –
(a) judgment of a foreign
with respect to a trust shall
be enforceable, or given effect, to the extent that it is
inconsistent with this Article, irrespective of any applicable law
relating to conflict of laws"
Article 9 requires questions regarding a Jersey trust to be
determined in accordance with Jersey law, which was not the case in
relation to the orders made by the English Court. As a
result, Article 9(4) would have prohibited the English order being
enforced or "given effect".
The Court noted that the English judgment was not being
enforced, and importantly the Court was not concerned that trustee
was "giving effect" to the English decision (which would
be prohibited by Article 9(4)). Rather, the Court was
satisfied that the trustee was taking the proposed steps because
the trustee considered them to be in the best interests of the
The main aim of Article 9 of the Trusts Law is to ensure that
questions concerning a Jersey trust are governed by Jersey law, and
as such it has been largely welcomed by trustees since its
introduction in 2006.
However, it would be an absurd consequence were a trustee
prevented from taking steps which are clearly in the best interests
of the beneficiaries simply because there is an English Court order
requiring similar steps. In this regard, the decision
provides some welcome clarity that this is not how Article 9(4)
(which was introduced in 2012) is to be interpreted.
We note in passing that the most recent Consultation Paper on
amendments to the Trusts Law published last week records that there
have been a number of suggestions as to how Article 9 may be
improved, but that there are no amendments immediately in
prospect. Given this decision, it may be considered that the
correct interpretation of Article 9(4) is sufficiently clear.
Ogier acted for the trustee.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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