Representation of A Trustees Limited re the ABC Trust: [2024] JRC 221

The Representor (a trustee of a Jersey law governed trust) sought the Royal Court’s approval of its decision to enter into a settlement agreement settling proceedings before the English High Court.  The court was also invited to approve the payment of legal fees incurred by one of the beneficiaries (D) in relation to those proceedings, which the Representor proposed to satisfy through a loan.  The court declined to bless a direct distribution to D for their legal fees.

The key issue that arose were potential conflicts of interest where D or other beneficiaries could potentially pursue the Representor for breach of trust due to the English High Court proceedings.  The Representor sought the approval of the court that it was acting properly within their powers.  The court accepted that the proposed settlement of the litigation was a momentous decision that fell within the scope of major trustee actions which warrant a blessing of the court.

While the court authorized the Representor’s decision to enter into the settlement agreement, it declined to approve the direct distribution of funds to D for his legal fees. Instead, the Court suggested that the trustee consider a loan arrangement, which would allow for the repayment of the legal fees while maintaining the possibility of recovering the funds for the benefit of the other beneficiaries. The Court approved the making of an interest-free loan for a fixed period of five years, with a requirement to create a ring-fenced fund for the minor and unborn beneficiaries in the near future.

Full Judgement Here