Jersey: Protecting Interests In Divorce Proceedings

Last Updated: 2 June 2009
Article by Steve Meiklejohn

Most Read Contributor in Jersey, September 2016

The C Trust Company Limited and Advocate Mark Temple as Guardian for LD and ZD, Royal Court, unreported judgment 12 March 2009


The trustee in this case sought the blessing of the Royal Court to certain decisions made in relation to the R Trust and the M Trust. Mr Temple (an Advocate) was appointed to represent the minor beneficiaries. KD (the "Husband") and AD (the "Wife") had three adult children, named for these purposes A, B and C. The Husband and the Wife separated in 1994 albeit that they did not divorce until 2004. During 1997, the Husband commenced a relationship with another woman MS (hereinafter referred to as the "Common Law Wife") and they had two minor children, D and E. The relationship between the Husband and the Common Law Wife subsequently ended.

The R Trust was settled in 1995 and the M Trust in 2000, namely some time after the Husband and the Wife had separated. Both were Jersey discretionary trusts, the beneficiaries being the Husband and his three children, A, B and C, the Common Law Wife and her two children D and E. The Husband was the settlor of the assets for both trusts. Following their divorce in 2004, the Husband and the Wife subsequently became involved in ancillary proceedings which were due to be heard before the Family Division in March of this year.

The claims made by the Wife in the English proceedings caused the Common Law Wife to be concerned that her own contributions might be invisible to the English Court and therefore her position and that of her children might be seen as insecure. Accordingly, through her English lawyers she applied to the trustee for a distribution of 50% of the assets of the two trusts.


The Royal Court noted that the trustee was in a very difficult position. The Wife was not a beneficiary and had not apparently contributed to the trust funds. However, she was making it clear that she was, if necessary, looking to the trusts to make good any award made in her favour by the Family Division. On the other hand, the Common Law Wife who was a beneficiary and who had apparently made a substantial contribution to the trust funds was understandably placing the trustee under pressure to protect her interests and those of her children.

Being mindful of its duty to protect the beneficiaries as a whole, the trustee proposed, without fettering its discretion, to create a fresh trust for the Common Law Wife and her children D and E which it intended to settle only following the outcome of the English family proceedings. However it sought the blessing of its provisional decision by the Royal Court at this hearing.

The Court, in accordance with the principles set out in re The S Settlement, noted that the trustee was not surrendering its discretion to the Court, but was seeking the Court's sanction to the decisions already taken. In respect of those decisions, the Court had to ask itself three questions namely:-

  1. Had the trustee in fact formed its opinions in good faith?
  2. Was the opinion formed by the trustee one at which a reasonable trustee properly instructed could have arrived?
  3. Was the Court satisfied that the opinion was not one which had been vitiated by any actual or potential conflict of interest which might have affected the decision?

Having heard argument, the Royal Court concluded that it would be helpful to the Family Division, if the trustee could indicate in advance the extent to which it would not consider assets of the trusts to be available for distribution to the Wife. The proposal put forward by the trustee was to appoint 40% of the net assets of the trusts to and for the benefit of the Common Law Wife and her two children, who would then cease to be beneficiaries of the trusts. The appointment would not be made until after the termination of the English proceedings and would be subject to the further sanction of the Royal Court. The Royal Court concluded that in essence the trustee was notionally ring fencing assets for the benefit of the Common Law Wife and her children, but fully retaining its freedom and that of the Court to act as appropriate following and taking full account of the decision of the Family Division in the English proceedings.

Ultimately the Royal Court did not doubt the good faith of the trustee, believed that the decision was one to which a reasonable trustee properly instructed could have arrived at, and did not see any conflict or potential conflict arising here. Accordingly the Royal Court blessed the decision of the trustee. The Court also blessed the decision of the trustee to provide written evidence for the English court and for the trustee's director to make himself available to the English Court to speak to that evidence if required.

Finally, the Court refused to bless the trustee's approach to date in relation to the English proceedings because as a matter of policy it did not think it was appropriate to grant trustees such generalised sanction in relation to past conduct.


Yet another example of where the Royal Court is prepared to assist trustees in a pragmatic way, and of the Court being flexible and accommodating in the exercise of its supervisory jurisdiction.

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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