Representation of JTC Trust Company Limited re the L Trusts 12-Mar-2021 [2021] JRC 068 (12 March 2021)

Representation of JTC Trust Company Limited re the L Trusts 12-Mar-2021 [2021] JRC 068 (12 March 2021)

Article 33 of the Trust (Jersey) Law 1984 applies to deem the recipient trustee as constructive trustee of any profit, gain or advantage received from a breach of trust, including interest-free loans made in breach of the Prohibition. The recipient trustee holds the proceeds and any derived benefit as constructive trustee for the lending trust until the arrangement converting the loans to interest-bearing terms.

Citation
[2021] JRC 068
Parties
Applicant/representor: JTC Trust Company Limited; Respondent: HMRC; Representative of Minor Beneficiaries: Advocate Le Maistre
Jurisdiction
Jersey
Judgment Date
12 March 2021
Procedural Posture
Trust Application / Judgment on Application for Declaration Under Article 51 of the Trust (jersey) Law 1984
Outcome
Application granted
Legal Topics
Constructive Trusts, Breach of Trust, Inter Trust Loans, Tax Liability, Trust Administration
Trusts Taxation Constructive Trusts Breach of Trust Inter Trust Loans Tax Liability Trust Administration

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Parties

JTC Trust Company Limited

Applicant/representor

HMRC

Respondent

Advocate Le Maistre

Representative of Minor Beneficiaries

Procedural Posture

Trust Application / Judgment on Application for Declaration Under Article 51 of the Trust (jersey) Law 1984

Legal Issues

  1. 1 Whether interest-free inter-trust loans breached trust prohibitions
  2. 2 Whether recipient trustees hold proceeds as constructive trustees for lending trusts
  3. 3 Whether Article 33 of the Trust (Jersey) Law 1984 applies to create a constructive trust

Ratio Decidendi

Article 33 of the Trust (Jersey) Law 1984 applies to deem the recipient trustee as constructive trustee of any profit, gain or advantage received from a breach of trust, including interest-free loans made in breach of the Prohibition. The recipient trustee holds the proceeds and any derived benefit as constructive trustee for the lending trust until the arrangement converting the loans to interest-bearing terms.

Court Disposition

Application granted

Orders

  • Declaration that the recipient trustee holds proceeds and any profits or advantages from interest-free loans made in breach of trust as constructive trustee for the lending trust until the date of the arrangement converting the loans to interest-bearing.