In the recent case of In the Matter of the Turino
Consolidated Ltd Retirement Trust 
JRC100, the Royal Court considered the variation
of a fixed trust. The Royal Court confirmed that the general
supervisory power of the court arising from Article 51 of the
Trusts (Jersey) Law 1984 ("the Law")
does not confer a power on the Royal Court to vary the terms of a
It held that the Royal Court cannot enforce or give effect to
any judgment of a foreign court which purports to vary a fixed
trust as the Royal Court cannot give effect to an order which it
has no power to make or which the trustees have no power to carry
out. The court can only act in accordance with the terms of the
trust and the Law.
Where, however, all the beneficiaries are ascertained of age and
of sound mind and are acting as one, there is long-standing
authority that they can call for the termination of a trust and,
indeed, the variation of the terms of the trust, following the rule
in Saunders v. Vautier (1841) Cr & Ph 240 and
reflected in Article 43(3) of the Law
In Turino, a Jersey law trust had been
established by a husband and wife. The terms of the trust were such
that the assets that each contributed were to be held in separate
funds in the proportions of their contributions. Contributions by
the husband were 83.33% and by the wife 16.66% of the total trust
fund. The trust funds were used to purchase a matrimonial home
situated in the Netherlands. This was essentially both the sole
asset of the trust and the sole matrimonial asset.
Unfortunately the marriage broke down resulting in a divorce. In
heavily contested ancillary relief proceedings (to which the
trustee was not a party), the Dutch court held that the matrimonial
assets should be split equally between the parties. Whilst the
Dutch court did not purport to vary the trust, the matrimonial
assets were said to include the respective shares of the parties in
the trust. The Dutch court provided a mechanism for the split
ordering that the matrimonial home should be sold at a certain
value to the wife.
The trustee sought directions from the Royal Court as the wife
wished to purchase the house but wished the trustee to distribute
the proceeds of sale equally. The husband (for various reasons)
urged the trustee and the Royal Court to uphold the terms of the
Trust (that is the 83.33%:16.66% split) and stated that there was
no power for the Royal Court to vary the terms of a fixed
Unfortunately for the husband, the parties had sent what was
termed a "Letter of Wishes" to the trustee some time
earlier asking for the trustee to hold the trust funds equally in
the event of a divorce. The Jersey court found that this was an
effective Saunders v. Vautier direction and that
the fixed trust had, therefore, been varied by the parties
themselves. The court emphasised that the trust was not varied by
reason of any order of the Dutch court or even as the result of any
order of the Jersey court. Rather the variation was a result of the
instruction by the two sole beneficiaries of the trust.
The court went on to consider the mechanics of the sale. It
confirmed the trustee's duty to act in the best interests of
the beneficiaries and to be impartial as between them. Usually this
would mean that the trustee should sell the property for the best
price that could be obtained which would be the full market value;
this course of action was supported by the husband. However, as the
property was situated in the Netherlands, was subject to the
jurisdiction of the Dutch court and was the subject of an order of
the Dutch court to the effect that the property should be sold to
the wife at a certain price, the Royal Court felt that this was
impractical. In these particular circumstances, the court decided
that it was in the best interests of both husband and wife for the
trustee to sell the property to the wife at the price fixed by the
Dutch court which in practical terms would be the best price that
could be achieved. As the Royal Court stated, "A trustee
should not be criticised for bowing to the inevitable by complying
with an order of the court in which jurisdiction the real property
in question is situated."
This article first appeared in the autumn 2008 issue of Appleby
Jersey's Resolution newsletter.
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.
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