Cunningham v Cunningham [2010] JRC 074

Cunningham v Cunningham [2010] JRC 074

Facts

A trust known as the A Cunningham No. 2 Settlement (the “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 got into dispute with one another as to certain transactions relating to the Trust. The original trustees at the time of establishment of the Trust had power to designate the settlor and protector, and they chose A as such A had power as protector of appointing new or additional trustees and removing 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 as trustee. SI then purported to exercise its power under the deed to exclude the plaintiff, following which they retired in favour of “M” as new trustee of the Trust. The plaintiff then began proceedings 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 trustees, M. A problem arose as M had recently lost its licence to conduct trust company business following an investigation into its associated firm of “M&Co”, which has since ceased to practice. 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 he 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. Mr C felt that he would only be able to provide such information after the court directed him to do so.
The plaintiff’s advocates therefore issued a summons seeking directions that Mr C should be authorised to provide the evidence on the grounds that the interests of justice prevailed over any duty of confidence which Mr C owed to M.

The court disagreed on the grounds of the application, as though Mr 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 Mr C being able to disclose a ny information. It was suggested by the court 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, 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 Mr 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.

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