Discrimination against Beneficiaries Disallowed. 

Discrimination against Beneficiaries Disallowed. 
In the matter of the Representation of the Y Trust and the Z Trust [2017] JRC100 

Family trusts – case dealing with the question on definition of “issue” and “descendants” in order to determine who the beneficiaries are. Some grandchildren of the settlor were excluded on the current definition. Representation brought to ask the court to adjust the definition of issue and descendants, in order to bring it in line with the other family trusts. Also sought to correct an amending deed in 2000 in respect of the trustees powers.  In addition, and as a result of changes in the English charities law, which resulted in a family foundation being required to carry out the charitable giving, a further amendment was required to allow one of the family trusts to channel charitable giving through the foundation – which it was otherwise constrained from doing by the list of charitable bodies which could be benefitted. The hearing was in private, but given the small number of judgments in relation to the exercise of the court’s powers in Jersey to vary a trust, the Bailiff considered it in the public interest to set out the full reasoning.

The court referred to the leading case on variations, Re Osias Settlements [1987 – 1988] JLR 389, and six other Jersey cases on variation, but noted that they were all (except one) based upon tax considerations, which the present case is not. Noting that following the one Jersey case not concerned with tax, (In the matter of the Representation of N and N [1999] JLR 86), the court concluded that benefit means any kind of benefit – whether financial, physical, educational or social.  The court then looked at English decisions on the point and concluded that the consistent theme of the English decisions is that the Court, in considering whether to exercise its discretion, will have some regard to (but will not necessarily follow) the wishes of the settlor – but only where those wishes are relevant to the question of whether the proposed arrangement is beneficial to those for whom the Court is concerned. The other way of putting that test is that where the Court is satisfied that a proposed arrangement is beneficial to those on whose behalf it is asked to sanction the variation, the fact that the variation might be contrary to the wishes of the settlor or testator is not material. The court accepted and applied that analysis in Jersey.

There was also a public policy issue to consider – the importance of the trust industry in Jersey’s financial services offering – should the Court, in the exercise of its discretion, have regard to the desirability, if it be so, of practitioners being able to reassure putative settlors that their wishes will be resolutely enforced by Jersey courts? It might be said that such a result would encourage the formation of Jersey trusts and therefore would be to the advantage of the Island. Policy reasons can, of course, influence the Court’s approach to an exercise of discretion.

At paragraph 45, the court said We have no hesitation therefore in saying that the policy argument, that the financial services industry might be able to encourage trust business by indicating to putative settlors that if they wanted to discriminate against those born out of wedlock or those of same sex sexual orientation those wishes would be respected on an Article 47 application, is outweighed by the policy statement of where this Island currently stands in relation to such issues, as is demonstrated by the legislation referred to above and the international treaties by which the Island is bound. Obviously, those whose rights come to be adjudicated in a court can expect the rights to be adjudicated in accordance with the law, but to the extent that the law includes policy considerations in the exercise of judicial discretion on an application under Article 47, the Court’s policy is one of tolerance towards and acceptance of the rights of others, acting within the law, to live their lives as they see fit. There may well be occasions where it is appropriate to have regard to the cultural and religious norms of the beneficiaries in the assessment of what is in the interests of the minor and unborn beneficiaries – and indeed we have done so in this case – but that is a separate question to the policy question now under consideration. This question engages the principle of non-discrimination, exemplified by the European Convention on Human Rights and other international instruments and, for policy purposes, it has primacy over any other policy considerations of the type under discussion.”

The Court therefore firmly concluded, as might be expected, that it would not favour a settlor who wishes to discriminate against beneficiaries contrary to the law of Jersey.

Mark says:-

This is an interesting judgment in which the Bailiff sat and concluded, as might be expected, that the Royal Court would not favour the wishes of a settlor who wished to discriminate against beneficiaries, contrary to the law of Jersey.  The case is also interesting as it is only the second case in Jersey dealing with the variation of a trust NOT for tax purposes (in this case, definitions of “issue” and “descendants” required variation to ensure uniformity across several family trusts and a new foundation).

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