Representation of BBB: the interpretation of Excluded Person

Representation of BBB: the interpretation of Excluded Person

In Representation of BBB the Royal Court was asked to consider whether an Excluded Person would cease to be an Excluded Person if a change in circumstances meant that they no longer fell within the definition of the class of Excluded Persons.

Facts

A Jersey Trust had been established with provisions for Excluded Persons who could not benefit from the Trust in any circumstances even if named as a beneficiary.  "Excluded Persons" were defined as the Founder, any person connected with the Founder, the Participator in the Founder and any person connected with the Participator.  The Founder was a company that had been dissolved after the establishment of the Trust.  "Participator" and "connected with" were defined in the Trust Deed as having the same meanings as under the UK Income and Corporation Taxes Act 1988 ("ICTA").  The Founder's sole shareholder, who had subsequently died, was a Participator under this definition and his widow and children were "connected" with the Participator.  It was clear that whilst the Founder was in existence and the Participator its sole shareholder, the wife and children of the Participator were Excluded Persons.

At the time of the application the widow and children were the only remaining people named as beneficiaries but if they retained their status as Excluded Persons then they could not benefit.  The question arose whether the widow and children were still Excluded Persons.  The Court was asked to consider, in the circumstances of this Trust, whether someone who had become an Excluded Person would cease to be an Excluded Person if a change in circumstances meant that they no longer fell within the definition of the class of Excluded Persons.  As the Founder no longer existed and the Participator had died then the widow and children no longer came within the description of Excluded Persons.

The Law

The Court decided that in this case the widow and children were no longer Excluded Persons.  The principles of construction of a trust deed were set out and confirmed that the first principle is to establish the intention from the words used but it was permissible to use background information if necessary in order to construe the meaning.

The Court considered that other language used in the trust deed contemplated that the definition of beneficiaries could change over time as there was a reference to past, present and future employees of the Founder.  Therefore, it would be surprising if the actual members of the class of Excluded Persons could not also change.  English counsel also advised that ICTA also envisaged that someone who was classed as a participator in or connected with a participator could fall out of that definition as circumstances changed.  Therefore, given the connection between the definitions used in the Trust and ICTA, the Court found that the members of the class of Excluded Persons could change over time and the widow and children were no longer within that class.

Comment

This is a helpful case confirming the Court's approach to interpretation of Trust Deeds.  Although the interpretation of any trust deed will be specific to that trust, it is useful support for the general interpretation that if Excluded Persons are defined in accordance with a class description then it is only the class description that is fixed and not the members of that class.

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