Withers Worldwide

Facts of the Case

The Jersey proceedings arose out of a dispute between nine brothers and sisters who were all beneficiaries of two Jersey trusts.  In September 2000, the parties had entered into an agreement (the ‘Disengagement Agreement') whereby one group (the ‘First Party') would take assets in Saudi Arabia and the other group (the ‘Second Party') would take other assets including the Jersey trust.

A Saudi court of first instance held in January 2004 that the Disengagement Agreement was null and void and this decision was upheld by the Saudi Court of Appeal.  One issue in the Jersey proceedings was whether as a result of the Disengagement Agreement, the First Party had disclaimed their interest in the Jersey trust.  The issue was relevant as to whether the Jersey Royal Court could order the disclosure of information relating to the Jersey trust to the First Party since they were no longer a beneficiary. 

The Jersey Royal Court ordered that the trustees should not disclose any trust information to the First Party until further order but subsequently ordered that the trustees were to disclose such information to the First Party, only up to the date of the Disengagement Agreement. 

On appeal, the representor (the sole remaining member of the Second Party) submitted that the Jersey Court could do nothing in favour of the First Party until the issue of whether or not they were beneficiaries had been conclusively resolved in all jurisdictions.

The Decision

The Jersey Court of Appeal found that although it was usual to defer decisions on directions until the issue of whether a party was a beneficiary had been decided, there might be exceptional cases where this would not be appropriate.  The Jersey Court found that this was an exceptional case and decided in favour of the First Party on the following grounds:

1. The First Party were beneficiaries of the trust, at least until the date of the Disengagement Agreement;
2. On the basis that the Disengagement Agreement was at present null and void, the First Party were still beneficiaries of the trust;
3. It would be unsatisfactory to postpone making directions until the issue of the identity of the beneficiaries was determined as during this time the court might not order disclosure to those who claimed to be beneficiaries and might not take their interests into account;
4. The Royal Court's objective of securing disclosure to facilitate settlement of disputes could never be achieved until all matters relating to the identity of the beneficiaries were resolved;
5. Disclosure to all parties might facilitate settlement of the family dispute; and
6. The former members of the Second Party and the trustees did not oppose disclosure.  Only the representor (the sole remaining member of the Second Party) opposed disclosure and in fact had indicated that he would agree to disclosure after the Saudi Court of Appeal decision which had now been given. 

Points of Interest

In making its decision, the Jersey Court of Appeal referred to the 2004 Withers lecture given by Lightman J, published in the newsletter for contentious trust and probate specialists on ‘The trustees duty to present information to beneficiaries'. 

Lightman J's view is that if the existence of the interest in a trust is uncertain, the court should in ordinary circumstances defer any decision whether to give any direction to the trustees to make disclosure, in accordance with the principle in Schmidt v Rosewood Trust Ltd, until the issue of construction has been decided. 

The Jersey Court of Appeal acknowledged that on this reasoning it followed that Lightman J accepts that there may be exceptional circumstances where it would be appropriate for the court to make a decision on disclosure before the issue of construction is resolved and that on the present facts, this was an exceptional case.