The recent Jersey case of In the matter of the C Trust (2012) is a reminder to all trustees of the importance of ensuring they undertake a proper decision making process.


The case concerned a trust where by it was indicated by a letter of wishes that the trustee should consider the trust for the primary benefit of the settlor's widow, his son and his son's issue (of which there were two minors). The settlor's son was involved in matrimonial proceedings in England. It was agreed as part of these proceedings that the trust would assist the son in meeting his maintenance obligations to his wife. The wife sought to protect her interest by exerting pressure on the trustee to exclude the two minor beneficiaries of the trust. As a result the trustee with the consent of the protector excluded the minor beneficiaries from the class of beneficiaries of the trust.


The facts and remedies sought in the case led to the consideration of a number of legal points.

1. Conflict

As a result of the English matrimonial proceedings (including an application by the wife to vary the trust), applications were brought in Jersey in relation to the trust. The trustee sought directions as to their involvement, if any, in the English proceedings. This was heard in private. The beneficiaries of the trust then applied to be joined to the English proceedings so they could defend the wife's attack of the trust. At this stage, they were requested to disclose documents relating to the proceedings in Jersey to the English Court. Interestingly, this disclosure could amount to a contempt of Court in Jersey whereas non disclosure would be a contempt of the English Court, thereby creating a clear conflict. In the end, the way in which this particular case developed meant that this was not an issue for the Jersey Court. It is unclear (and it will be interesting to see) how this conflict will be determined in future offshore trust cases.

2. Privacy

As a general rule, matters pertaining to trusts are heard in private to protect the privacy of the family involved with the trust and the inherent confidential nature of such arrangements. For example, a direction application made by trustees is held in private to allow them to openly and candidly present their case to the court.

The Jersey Court in the C Trust case reminded the parties that open justice is of "constitutional, legal and practical importance and that the court should depart from it only if it is necessary to do so in the interest of justice". Where there was no confidential information being disclosed, there was no justification not to hear the application in public. The parties argued for confidentiality and the privacy of the parties concerned. The Court took the view that the conduct of trustees and protectors carrying on trust company business was of public interest.

This case highlights that it is no longer a foregone conclusion that matters pertaining to trusts will be held in private.

3. Reasonable decision making – duties to minor beneficiaries

The Jersey Court is generally reluctant to interfere with a trustee's decision. However, it will do so where trustees have been unduly influenced or if their actions are not for the benefit of a trust and its beneficiaries.

It was held in the C Trust that the decision made by the trustee to exclude the minor beneficiaries was one that no reasonable trustee could have arrived at. Trustees must account for improper decisions and not be overly influenced by forceful beneficiaries or third parties. The test is to consider whether a rational trustee would have made the same decision.

It has been held by the Isle of Man Court that trustees are obliged to protect the interests of beneficiaries under a disability such as minors (In re Poyiadjis 2001-03 MLR 478). This comes from the paternal nature of a trustee's role referred to in the C Trust case as "bon père de familie" ("a good father of the family").

Trustees must remember to observe the terms of the trust deed, act impartially between the beneficiaries and exercise reasonable care when administering a trust, as the decisions they make may be subject to the scrutiny of the Court and made public.

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.