Facts
Decision
Comment
Facts
The A Cunningham No 2 Settlement Trust was established in 1991 with two brothers (the plaintiff and his brother, referred to herein as 'A') in the class of beneficiaries who subsequently entered into a dispute with one another as to certain transactions relating to the trust. The original trustees at the time of establishment of the trust had the power to designate the settlor and protector; they chose A and, as such, A had power as protector to appoint new or additional trustees and remove trustees by instrument in writing.
A while after the trust was established, A removed the original trustees and appointed a Gibraltar company (SI) in their place. SI then purported to exercise its power under the deed to exclude the plaintiff, following which it retired in favour of 'M' - the new trustee. The plaintiff then began proceedings(1) to the effect that A's actions as protector retiring the original trustees and appointing SI in their stead were void, as was SI's attempt to exclude the plaintiff as beneficiary and certain loans made to A by SI and the original trustees. The subject of this application concerned specific evidence to be given regarding the trust's assets and loans that would ordinarily be obtained from the current trustee, M.
A problem arose as M had recently lost its licence to conduct trust company business following an investigation into its associated firm, 'M&Co', which has since ceased to practise. Mr C was the lawyer within M&Co charged with representing M's interests when M had sought directions from the Jersey courts on previous occasions, and had indicated that through his knowledge of the trust as a result of these proceedings, he would be able to provide the evidence and information required. C felt that he would be able to provide such information only after the court directed him to do so. The plaintiff's advocates therefore issued a summons seeking directions that C should be authorised to provide the evidence on the grounds that the interests of justice prevailed over any duty of confidence which C owed to M.
Decision
The court disagreed on the grounds of the application, as although C had acted as a solicitor to M, he had done so with M in its capacity as trustee of the trust. Therefore, it was not purely a duty of confidentiality, but also a question of legal professional privilege that M would have to waive prior to C being able to disclose any information. The court suggested that an alternative application be made, whereby the plaintiff apply under Article 51(3) of the Trusts (Jersey) Law 1984 for leave to apply for directions to be given to M as trustee of the trust. It was thought that due to the exceptional circumstances of the case, such leave would be given and M and other parties should be convened.
Additionally, as M's costs in respect of the previous proceedings had been met out of the trust fund, the privilege was not M's in its own right, but rather in its capacity as trustee, and therefore fell within the court's jurisdiction over trusts and trustees. It was therefore suggested that the plaintiff reapply to request that the court direct M to waive privilege to allow C to produce the evidence required for the proceedings that M could not provide itself. Alternatively, the application could call for M to surrender its discretion to the court, where the court would arrive at the same decision. The court would have jurisdiction to hear the application, as it would merely be giving directions to a trustee on how to act. The application was therefore withdrawn so that the plaintiff could reapply pursuant to Article 51 of the Trusts (Jersey) Law 1984.
Comment
This is an unusual case surrounding fairly unique facts. However, it provides another example of the Royal Court's expertise in dealing with complicated or indeed unusual cases and its willingness to help trustees find a solution to seemingly intractable problems.
For further information on this topic please contact Dina El-Gazzar at Ogier by telephone (+44 1534 504 000), fax (+44 1534 504 444) or email (
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).
Endnotes
(1) Cunningham v Cunningham [2010] JRC 074.
