U Ltd v B & ors [2011] JRC 131

WTLR Issue: April 2013 #128

U LTD

V

1.B

2.C(both on her own behalf and on behalf of her brother A together with their unborn issue and their future husbands, wives, widowers of both of themselves and their unborn issue)

3.D (both on her own behalf and on behalf of her unborn issue and their heirs, future husbands, wives or widowers)

4.E (both on her own behalf and on behalf of her issue and her and their spouses, widows or widowers)

5.J (both on her own behalf and on behalf of her issue and her and their spouses, widows or widowers)

6.M (both on her own behalf and on behalf of all other persons beneficially interested under the settlement)

7.V

Analysis

B had created the W Settlement (the trust) in 1989 as one of a number of settlements created for the benefit of B, his three sisters, their issue and their remoter issue. As the settlor, B and any wife of his were expressly excluded from benefit under the trust (but not from the other family settlements).

B and his wife Q had been involved in divorce proceedings before the Family Division of the High Court (the English court) for three years. It was considered that the trust’s value (some £2.5m based on publicly available information) greatly exceeded the other settlements’ combined value and could therefore be sufficient to meet the needs of all potential beneficiaries save for B and Q, leaving the other settlements to make financial provision in the divorce proceedings. Accordingly, Q’s representatives had sought disclosure of the trust’s accounts. U Ltd (the trustee) had refused this request.

On 2 February 2011, the English court had ordered B to use his ‘best endeavours’ (specifically by writing to the trustee) to obtain the necessary accounts. Failing this, the English court had ordered B to provide affidavit evidence of the trust’s assets.

By a letter dated 4 February 2011, B had requested disclosure. However, the trustee merely disclosed the fact that there had been no distributions made from the trust and that no additions had been made to its capital since 1989. The trustee contended that it should not have to disclose confidential information to B and through him to Q, as both were excluded from benefit under the trust and because the purpose of disclosure might prejudice the interests of the beneficiaries.

In the circumstances, the trustee sought the court’s directions as to whether it should accede to B’s written request for disclosure of the accounts.

Held (directing disclosure of the trust’s accounts, and of the underlying companies’ accounts, for the past three years):

  1. (1) It was not necessary to find exceptional circumstances to justify disclosure to an excluded individual (Re Internine Trust [2004] JLR 325 distinguished). The trustee had invoked the court’s supervisory jurisdiction, so that the question was not whether B could require disclosure but whether the trustee should exercise its powers to make disclosure to B for the purposes of the divorce proceedings (paras [10-13], [16]).
  2. (2) In exercising its inherent supervisory jurisdiction, the court was to exercise its own discretion to determine whether disclosure was, on balance, in the interests of the beneficiaries as a whole. In coming to this conclusion, the trustee’s views were no more than a factor to be taken into account (paras [17-19]).
  3. (3) It was in the beneficiaries’ interests that disclosure be made to B (paras [27-30]):
  4. (i) The English court had received financial information in relation to all other family settlements.
  5. (ii) Withholding information would not prevent Q from pursuing her contentions before the English court and it was preferable that these should be evaluated on accurate information. In any case, the extent to which the trustee could be compelled to use its powers to satisfy the English court’s final order was a matter for the Jersey court (Re H Trust [2006] JLR 280 applied).
  6. (iii) Privacy was not an issue; B had an intimate knowledge of the underlying assets and was due to provide this information to the English court by affidavit.
  7. (iv) Failure to disclose the accounts was protracting the divorce proceedings and consequently having an adverse impact on the success of the trust’s underlying businesses.
  8. (v) It was in the interests of B’s children (and the wider family) that the divorce proceedings be determined fairly and on the basis of accurate financial information.
JUDGMENT THE COMMISSIONER: [1] On 1 March 2011 we gave directions to U Ltd (the trustee) to disclose the accounts of the W Settlement (the settlement) to the first respondent, B, and we now set out our reasons. [2] The settlement is a discretionary settlement established by B on 13 March 1989 with assets derived …
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Counsel Details

Advocate R MacRae (Carey Olsen, 47 Esplanade, St Helier, Jersey JE1 0BD, tel 01534 888900, e-mail enquiry@careyolsen.com)

Cases Referenced

Legislation Referenced

  • Trusts (Jersey) Law 1984, Art 24(2)