In the matter of H [2011] JRC 070: application to participate in proceedings in relation to a…

In the matter of H [2011] JRC 070: application to participate in proceedings in relation to a charitable trust

Background

The settlor’s widow brought an application to participate in proceedings instituted by a sub-trustee seeking relief in connection with a charitable trust and a compromise agreement in respect of issues arising under the settlor’s will. There appeared to be no Jersey case regarding the test for convening parties to proceedings concerning a charitable trust.

Applicable principles

In determining the applicable principles, the Court noted that, although they related to a private trust, the Court’s observations in Re the E R O and L Trusts [2008] JRC 053 were a useful starting point:

• when the Court sits in its supervisory capacity, the beneficiaries (though not necessarily all of them) should normally be convened. It is a matter for the Court’s discretion as to which beneficiaries should be convened, having regard to the particular application and circumstances;
• the Court may think it appropriate to convene a non-beneficiary where there is a close connection with the trust (for example, a protector);
• occasionally the Court may think it appropriate to convene persons who are neither beneficiaries nor who have a close connection with the trust, as for example in Re Abacus [2000] JLR 165, where a creditor of the settlor was convened on the basis that it was not a mere creditor but asserted a proprietary interest in some of the monies;
• the question is whether it is necessary to convene a party to properly determine the application; if so, then the Court has discretion to convene the relevant party;
• the rationale for convening a beneficiary is essentially two-fold: it is likely the beneficiary will have something material of which the Court should be aware and it may be unfair for the Court to make a decision affecting the beneficiary’s interests, without the beneficiary having an opportunity to put his observations to the Court. Neither of these considerations is likely to have such strength in the case of non-beneficiaries and it is rarely appropriate to convene strangers to the trust.

The observations of Nicholls LJ in Re Hampton Fuel Allotment Charity [1989] 1 Ch 484, made in the context of Section 28 of the Charities Act 1960 (which provides that proceedings in relation to charities may be taken by “any person interested in the charity…”), were of assistance. Whilst a person having just a general interest should not be given leave to intervene, the Court may convene a person who has an interest materially greater than or different from that possessed by ordinary members of the public. The settlor would normally be such a person. As regards heirs and executors, the Court preferred the approach of Scottish law, under which (in contrast to English law) heirs - in which the Court included legatees - or executors of the founder of a charity have an interest which entitles them to see that the trust is properly administered.

Held

This was not an easy matter, but on the balance of arguments, although the widow was not an executor and had only a small interest as a legatee, she was nonetheless in a good position to assist the Court as to the wishes and intentions of the settlor. Giving evidence was not as good as participating in proceedings - the former is essentially passive and depends upon being called as a witness, whereas an ability to receive and comment on other parties’ submissions in the context of the settlor’s wishes would be more effective and of more assistance to the Court. Apart from her interest as legatee and widow of the settlor, the widow had an interest greater than that of an ordinary member of the public as a shareholder of the Trust’s underlying company and of the trustee company. The widow should therefore be allowed to participate in the main proceedings.

Comment

This was the first time the Court was required to consider the test for convening parties to proceedings concerning a charitable trust and, given the appetite of high net worth individuals for establishing such trusts, it is helpful and reassuring to see that the Court is minded to allow settlors, heirs, legatees and executors to participate in proceedings, in particular where they can assist the Court as to the settlor’s wishes and intentions.

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