Jersey: In The matter Of The E, L, O And R Trusts

Last Updated: 3 December 2008
Article by Matthew Thompson and Kerry Lawrence

Most Read Contributor in Jersey, September 2016


The beneficiaries of four trusts (the "H Family Trusts") sought the removal of one of their cotrustees, Verite Trust Co Ltd ("Verite"), on the grounds of conflict of interest, arising from Verite's trusteeship of eight other trusts (the "J Family Trusts"). H and J (the primary beneficiaries of their respective trusts) were brothers, and their family trusts between them held 89% of the shares in the family company, which operated a successful business. The H Family Trusts owned a minority shareholding. J was the chairman and chief executive of the company.

In 2006 a dispute arose between H and J concerning the affairs of the company, which reached the point where H considered bringing a minority shareholders' petition in his own name before the English High Court. Accordingly, H's English solicitors wrote to Verite to explain that litigation appeared to be a very real prospect and that the interests of the primary beneficiaries under the family trusts were in actual conflict. The conflict was explained in some detail. The trustee sought further information; but it was pointed out by the beneficiaries that the amount of information that could be provided to Verite about the potential litigation was limited because Verite was trustee of the J Family Trusts and therefore under a duty also to act in J's best interests.

Verite responded by seeking directions from the Royal Court. In early 2007, Verite withdrew their Representation, because H had failed to provide funds to Verite to meet the costs of the Representation. H and the settlors of the H Family Trusts then brought a second representation, seeking the removal of Verite as trustee, primarily because of alleged conflicts of interest. Ultimately Verite agreed to resign unconditionally on 13 May 2008. However, Verite sought its costs. The Royal Court was therefore required to determine the question of who should bear the costs of the parties, which required it to consider the position of a trustee who is requested to resign, and the law on conflicts of interest.


The Royal Court applied the English case of Bristol & West Building Society v Mothew [1996] 4 All ER 698. The Court noted the distinguishing obligation of a fiduciary namely the obligation of loyalty, giving rise to the "double employment rule", the duty of good faith, the "no inhibition principle" and the "actual conflict rule". The Court also considered its powers to remove trustees [Eiro v Equinox Trustees Ltd and Lewin on Trusts] and particularly where a trustee has failed to recognise a conflict of interest [Hunter v Hunter 1938] NZLR 520]. Applying the law to the facts, the Court found that:

  • Verite was in breach of the "double employment rule" from April 2006: as a result of the dispute between H and J, their respective trusts were in conflict yet Verite was trustee of both. Verite was therefore in a position where its duty to one principal conflicted with its duty to the other.
  • Verite was also in breach of the "no inhibition principle" because it listened to the concerns of strangers to the H Family Trusts and considered the effect of its retirement from the H Family Trusts on the beneficiaries of the J Family Trusts.
  • Verite had all the information in 2006 that it needed to recognise that it had no choice but to retire.

In considering the chronology of events, the Royal Court noted four key dates that proved pivotal for the purposes of determining costs, as follows:

  1. from April 2006 onwards, Verite was in an impossible position because of the dispute that had arisen between H and J causing a conflict in Verite's position. Verite should have realised this conflict, and retired, without needing to apply to the Court for directions, because the conflict was so plain and obvious. The first Representation was accordingly unnecessary.
  2. Whilst it should have retired earlier, it became unreasonable for Verite not to retire upon consideration of a letter from Ogier of 18 July 2006, setting out, in what the Court felt was compelling form, the reasons why Verite had to retire.
  3. Allowing time for Verite to consider the letter of 18 July 2006, the Royal Court considered it right to penalise Verite for unreasonably failing to have retired from 25 July 2008.
  4. The date on which Verite finally agreed to resign without conditions was 13 May 2008. Therefore Verite was ordered to pay the costs of the other parties in connection with the first Representation on the standard basis and it lost the right to an indemnity from trust assets for its legal and other costs and its remuneration in connection with the first Representation.

Regarding Verite's legal costs after 25 July 2006 in connection with the issue of whether it should retire, Verite was not to be indemnified. Verite was also not entitled to charge remuneration for its time spent on that issue. The Court decided that in respect of the second Representation, brought about only because Verite unilaterally withdrew the first Representation, there was no justification for the withdrawal, and thus the decision to withdraw warranted H and the settlors' costs being paid by Verite on the indemnity basis, up to 13 May 2008. Thereafter, costs were to be paid by Verite on the standard basis.


This judgment is a useful clarification by the Court of duties owed by fiduciaries, and when conflicts of interest arise. It also highlights the need for a trustee to consider carefully when to make an application for directions. Where the steps that a trustee must take are so plain and obvious, this judgment makes it clear that a trustee may be said to have acted unreasonably if it seeks the Court's directions, with adverse costs consequences. The Court did stress that it did not want to discourage trustees from applying to Court but a trustee must be able to show that grounds exist which justify use of the Court's jurisdiction.

Finally, this judgment serves as a useful reminder to the trust industry to be alert to conflicts of interest especially where professional trustees "wear two hats" (which can occur in many scenarios), and to have a clear understanding of the rules in Bristol & West v Mothew, so that any potential conflicts can be dealt with appropriately at the earliest opportunity. This could include, at the stage a structure is set up, considering drafting appropriate provisions to address potential conflicts, where structures hold family businesses or family assets.

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.