Jersey: Protectors, Powers And The Proceeds Of Crime

Last Updated: 20 October 2008
Most Read Contributor in Jersey, September 2016

On 28 January 2008, the Royal Court delivered judgment in the matter of The Bird Charitable Trust and the Bird Purpose Trust. Proceedings were brought by Basel Trust Corporation (Channel Islands) Limited ("Basel") as the Jersey trustee of the Bird Trusts seeking directions pursuant to Article 51 of the Trusts (Jersey) Law 1984. The issues before the Court centred upon concerns Basel had raised regarding the validity of certain appointments made by the Protector of the Bird Trusts, a Mr Gary Kaplan. Mr Kaplan was the founder of BetonSports Plc and is currently incarcerated in the USA facing various charges relating to the operation of BetonSports' online gaming business. The Bird Trusts effectively held Mr Kaplan's share of the proceeds of BetonSports Plc's flotation in 2004.

Mr Kaplan sought to exercise his power as Protector to appoint a replacement Protector who would then appoint two new trustees. All of the replacements were operated from Liechtenstein. Basel's concerns arose out of certain technical deficiencies in the documents that had been executed by Mr Kaplan to effect the appointments, and to his broader motive in making the appointments, the effect of which would be to make Basel a minority trustee. That was set against the background of an ongoing criminal investigation in the United States relating to BetonSports Plc (ie, the ultimate source of the funds in the Trusts), and where it was known (at least by Mr Kaplan's advisers) that Basel was, at the time of the appointments, acting under a police consent regime pursuant to the Proceeds of Crime (Jersey) Law 1999 (later superseded by the granting of a saisie judiciaire in Jersey in respect of the realisable property of Mr Kaplan at the request of the US authorities). Basel sought directions from the Court as there was a possibility that Mr Kaplan's ultimate motive was to put assets beyond the reach of the authorities and to thus avoid the impact of Jersey's anti-money laundering legislation.

The Court considered the technical arguments and held that, on a proper construction of the relevant provisions of the Bird Purpose Trust, Mr Kaplan's notices had succeeded in doing no more than appoint a successor Protector - effectively "a Protector in waiting". The Bird Charitable Trust contained different provisions for appointments; as a result it was held that the notices in respect of that trust were technically effective.

The Court then considered Mr Kaplan's motives for making the changes and whether they were improper and amounted to fraud on a power. After reviewing the facts surrounding the appointments, the Court considered the relevant authorities concerning the nature of the powers that were being exercised. The Court confirmed the basic principle that a power can only be exercised for the purpose for which it was conferred and in accordance with its terms - failure to do so could amount to fraud on a power, a doctrine that can apply to administrative as well as distributive powers. The Court confirmed that the doctrine does not apply to general personal powers, but does apply to limited personal powers and fiduciary powers.

English and Cayman Islands authorities were followed by the Court in reaching its conclusion that, whilst it is a matter of construction in any case, in the circumstances of the Bird Charitable Trust, the Protector's powers of appointment of a successor protector were fiduciary - if the Protector's role is fiduciary, which in this case it was held to be (judged by considering the trust instrument as a whole), the power of appointing a successor would also be fiduciary.

Accordingly, the Court found that the doctrine of fraud on a power would apply the Protector's powers in the Charitable Trust Deed. It then had to consider the purpose for which the powers were exercised. It was held that Mr Kaplan had two motives; the first was to put in place a successor protector that could operate efficiently even if Mr Kaplan were incarcerated. The second is more interesting; to move the administration of the Trusts to a jurisdiction not constrained by the same anti-money laundering restrictions as applied to Basel as a Jersey trustee.

The Court analysed Article 32 of the Proceeds of Crime (Jersey) Law 1999 concerning the seeking of consent from the police to transact notwithstanding a suspicion that funds might represent the proceeds of crime. The Court concluded that Article 32 does not impose any direct prohibition but, rather, is essentially voluntary: if police consent is granted, it gives a trustee a defence to money laundering offences relating to those funds; whereas, if it is refused, it does not create a prohibition on dealing. The Court recognised that Basel had quite reasonably and properly followed the police consent, but nevertheless, in so doing was acting voluntarily.

The court held that Mr Kaplan was not, therefore, seeking to circumvent a prohibition imposed by law, but rather a restriction which the trustee had chosen to impose. That did not amount to an improper purpose under trust law and, therefore, Mr Kaplan had exercised his power in good faith in the interests of the beneficiaries.

The Court noted that it was not, in the circumstances of the case, having to consider an attempt to transfer assets, as that was not necessarily part of the change of identity of trustee - the transfer of assets to the new trustees would give rise to further considerations; similarly, the Court noted that, if there had been a conviction the position would be different. Nonetheless, the conclusion may come as a surprise, as to even suggest that a person motivated by a desire to circumvent anti-money laundering legislation or its impact when exercising a trust power is acting properly, will be considered by some to be sending the wrong message in a climate where countering money laundering and terrorist financing is at the top of the international political agenda.


This case is important for trustees and their advisors in both contentious and non-contentious areas of practice. The analysis of the position of protectors, types of powers, the approach to how notices will be technically construed and how the fraud on a power doctrine applies are instructive. Further, it is the first time in Jersey where the potential conflict of trust law and anti-money laundering legislation has been considered and, therefore, it is of considerable interest and significance. The decision is particularly timely, as Jersey's anti money laundering legislation is going to be subject to an IMF review in October and is currently undergoing an overhaul. In particular, the provisions of Article 32 will be under scrutiny as the last IMF visit in 2003 led to a recommendation that that Article be amended to provide positive obligations on reporting suspicion, rather than it being a defensive mechanism. It is also the latest in a line of decisions of the Royal Court where the shortcomings of the police consent regime under Article 32 have been highlighted.

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.