Representation of V Trustees Limited (Formerly G Trustees Limited) re K and N Trusts 21 Oct 2020 [2020] JRC 220 (21 October 2020)

Representation of V Trustees Limited (Formerly G Trustees Limited) re K and N Trusts 21 Oct 2020 [2020] JRC 220 (21 October 2020)

The Court held that V Trustees Limited, as trustee of both the K and N Trusts, was properly disabled by a conflict of interest regarding the proposed inter-trust loan restructuring and was entitled to surrender its discretion to the Court. However, the Court determined that it could not authorise the proposed restructuring or forgiveness of the inter-trust loan, as this would not be in the best interests of the K Trust and would improperly benefit excluded persons in contravention of the trust's terms. The Court accepted the legal advice that Section 47 of the Bermudan Trustee Act 1975 could not be used to override exclusion provisions or to authorise transactions benefiting excluded...

Citation
[2020] JRC 220
Parties
Representor/applicant/trustee: V Trustees Limited; Respondent/beneficiary: Mr A; Respondent/beneficiary: Mrs C; Respondent/beneficiary: Mr D; Settlor/excluded Person: Mr E
Jurisdiction
Jersey
Judgment Date
21 October 2020
Procedural Posture
Trusts Representation/surrender of Discretion / Final Judgment on Application to Surrender Discretion and Directions Regarding Inter Trust Transactions
Outcome
Application granted in part; Court accepts surrender of discretion but declines to authorise proposed inter-trust restructuring or forgiveness of debt.
Legal Topics
Surrender of Trustee Discretion, Inter Trust Loans, Excluded Persons Provisions, Self Dealing/conflict of Interest, Trustee Powers Under Bermudan Law, Court's Jurisdiction Over Foreign Trusts, Variation of Trusts, Section 47 Bermudan Trustee Act 1975
Trusts and Estates Private International Law Surrender of Trustee Discretion Inter Trust Loans Excluded Persons Provisions Self Dealing/conflict of Interest Trustee Powers Under Bermudan Law Court's Jurisdiction Over Foreign Trusts +2 more

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Parties

V Trustees Limited

Representor/applicant/trustee

Mr A

Respondent/beneficiary

Mrs C

Respondent/beneficiary

Mr D

Respondent/beneficiary

Mr E

Settlor/excluded Person

Procedural Posture

Trusts Representation/surrender of Discretion / Final Judgment on Application to Surrender Discretion and Directions Regarding Inter Trust Transactions

Legal Issues

  1. 1 Whether V Trustees Limited as trustee can rebalance assets between the K and N Trusts by forgiving or restructuring inter-trust loans
  2. 2 Whether the Court should accept the surrender of discretion by V Trustees Limited due to conflict of interest
  3. 3 Whether Section 47 of the Bermudan Trustee Act 1975 can be used to authorise transactions benefiting excluded persons

Ratio Decidendi

The Court held that V Trustees Limited, as trustee of both the K and N Trusts, was properly disabled by a conflict of interest regarding the proposed inter-trust loan restructuring and was entitled to surrender its discretion to the Court. However, the Court determined that it could not authorise the proposed restructuring or forgiveness of the inter-trust loan, as this would not be in the best interests of the K Trust and would improperly benefit excluded persons in contravention of the trust's terms. The Court accepted the legal advice that Section 47 of the Bermudan Trustee Act 1975 could not be used to override exclusion provisions or to authorise transactions benefiting excluded...

Court Disposition

Application granted in part; Court accepts surrender of discretion but declines to authorise proposed inter-trust restructuring or forgiveness of debt.

Orders

  • V Trustees Limited's surrender of discretion in relation to the inter-trust loan is accepted by the Court.
  • The proposed restructuring of the inter-trust loan and asset appropriation between the K and N Trusts is not authorised.