Analysis
In the course of the claimant’s application as trustee of four discretionary trusts in similar terms governed by English law for the blessing of momentous decisions, AS (the settlor and the original protector of the trusts) died.
The trusts had been varied soon after they were declared to expand the powers of the protector to give and withhold consent to the exercise of powers by the trustee. In the absence of a protector the trustee was free to exercise those powers without obtaining a third-party consent. The trusts were administered in Jersey on behalf of the claimant, a professional trustee resident in New Zealand. The main assets of the trusts were shares in Bahamian companies settled into the trusts by AS.
On 10 May 2017 the claimant made a momentous decision to restructure the trusts and to redistribute the funds to create six trusts for the benefit of AS’s late brother E’s children (including new trusts for the benefit of illegitimate children of E, who were not existing beneficiaries of the trusts). AS was to receive a distribution of the balance remaining in the trusts after payment of costs. On 12 May 2017 the Jersey Royal Court blessed the trustee’s decision and was said to have exercised the discretion surrendered to it by AS as protector to approve the same. The restructuring was not implemented following the Jersey decision.
By its application in March 2019 to the English court, the claimant sought the blessing of its 10 May 2017 decision and of a further decision relating to the restructuring made on 29 January 2019. AS died in April 2019. On 9 October 2019 CA was appointed as protector of each of the trusts by AS’s widow and his three children (his children being the second to fourth defendants, as beneficiaries of the trusts) as AS’s heirs under Monegasque law.
Under the terms of the trust deeds a power to appoint a protector or successor protector was exercisable by the ‘[p]rotector for the time being, or in the event of his death his executor, administrator or personal representative’. No English grant had been issued in relation to AS’s estate and the administration of his estate was being undertaken by the appointors in Monaco, where AS died domiciled.
The claimant sought determination under CPR Pt 64 of the following questions: whether the appointment of CA as protector was valid, and if so:
- whether his consent was required in relation to the decisions of the trustee that were the subject of the blessing application; and
- whether there should be any restriction on the role he should play in relation to the final hearing of the claimant’s application for the court’s blessing.
The judgment is anonymised and some issues were heard in private.
Held, that the appointment of the protector was valid and that his consent was required:
The same principles of construction apply to trust instruments as apply to wills and commercial contracts. This involves construing the words used in themselves and against the factual context of the document.
The context in which the trusts were created was one in which the settlor had no obvious ties to or connection with England and where it was unlikely that the settlor would have any assets in England to administer on his death, as has proved to be the case. The trusts were formed, and amended, to give rise to a regime where the settlor, in his intended office of protector, could veto important decisions made by the trustees. At that time the settlor was resident in Monaco. Under Monegasque succession law there is no equivalent figure to an executor or administrator in English law: the heirs immediately upon the death of the deceased become the joint owners of all the assets in the estate and, as ‘continuators’, are jointly legally responsible to collect the deceased’s assets, pay the liabilities and deal with the administration of the estate until its sharing among the heirs and legatees.
There is no single meaning of ‘personal representative’ in English law. In the Administration of Estates Act 1925 it encompasses administrators and executors. In the Guardian (Missing Persons) Act 2017 it denotes a person who is either an executor, an administrator or a person who, under the law of another country or territory, has functions equivalent to those of administering the person’s estate under the law of England and Wales. The words used in the trusts, without reference to context, embrace persons who may not obtain an English grant (ie executors) as well as those who have (ie administrators appointed by a grant). The disjunctive use of the terms ‘executor, administrator or personal representative’ implies that ‘personal representative’ was intended to bear a separate meaning to ‘executor’ or ‘administrator.’ The settlor would not have intended for there to be an interval between his death and the obtaining of an English grant (if available), during which the trustee could act without obtaining the protector’s consent. Against the relevant factual context, there is no reason to restrict the meaning of the words used to persons who hold an English grant. The position of the appointors as heirs under Monegasque law made them AS’s ‘personal representatives’ for the purposes of the trust deeds. The appointments of CA as protector were accordingly valid.
The actions of AS as protector in respect of the earlier Jersey proceedings were not relevant, as the claimant now sought the blessing of the English court and did not seek recognition of the Jersey judgment of 12 May 2017. Accordingly, the trustee would require the consent of the protector to implement the decisions that were the subject of its application, in accordance with the trust deeds.
As a matter of construction of the trust deeds against their factual context, the powers of the protector were in effect joint powers and not limited to a review of decisions taken by the trustee. The protector in the exercise of his independent discretion, if he disagreed with the trustees, would therefore in principle be entitled to withhold his consent, even if the trustees were neither acting unreasonably nor for improper purposes. There was no basis for imposing any limit on the role of the protector at the final hearing of the trustee’s blessing application.
JUDGMENT MASTER SHUMAN: [1] This is the first of two hearings listed to determine issues arising out of the restructuring of four family trusts and subsequent events. The claimant is a corporate trustee seeking the blessing of the court in respect of two momentous decisions made on 10 May 2017 and 29 January 2019. The …Continue reading "PTNZ v AS & ors [2020] WTLR 1423"