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beneficiary) who holds a power, discretion or right in connection with a trust.


Remuneration of professional trustees Before Amendment No. 5, Article 26 of the Trusts Law provided that unless a trustee was so authorised by the terms of the trust, the written consent of the beneficiaries or an order of the Court, the trustees would not be entitled to remuneration for its services. The amendment to Article 26(1) applies to professional trustees only and provides that, where the trust deed is silent as to remuneration, a professional trustee is entitled to reasonable remuneration for its services, but only for services provided after Amendment No. 5 came into force. A ‘professional trustee’ is defined as a trustee


that is registered under Article 9 of theFinancial Services (Jersey) Law 1998 by the Jersey Financial Services Commission and that operates within that law.


Trustees transacting with themselves on behalf of different trusts Often a professional trustee transacts with itself as trustee of different trusts. However, before Amendment No. 5, it had not been certain, in Jersey law, whether a person acting as trustee of one trust could contract with themselves in their capacity as trustee of another trust. Article 31 now expressly allows a person to so contract. While the provision clarifies this issue and enables trustees to enter commercial arrangements between connected trusts, trustees need to be mindful of their duties not to place themselves in positions of conflict. Therefore, in the event of contention, where a conflict exists, the trustee needs to act to deal with it, which at a minimum will include taking legal advice.


Position of outgoing trustee Amendment No. 5 gives an outgoing trustee a right to enforce a term of a contract providing reasonable security against liabilities (i.e. indemnities), even though not a party to the contract. This change is welcome. In relation to retirement of trustees, and notwithstanding the existence of the privity of contract rule in Jersey, if an indemnity must be provided to previous trustees (in addition to the trustee who is retiring) it is now possible for indemnities to be given in favour of those former trustees, even though they will not be parties to the deed. The new provision makes clear that the deed must expressly provide that the trustee, in their own right, can enforce the terms in their favour, or the deed must seek to confer a benefit on the trustee. In either case, the deed must expressly identify the trustee.


Limitation of actions or prescription Article 57 of the Trusts Law remains untouched as regards the provision that no period of


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limitation applies to claims against trustees based on fraud or seeking to recover trust property from the trust. The time limits for beneficiary, enforcer or new trustee actions also remain unchanged. However, Amendment No. 5 has clarified that where the beneficiary is a minor or an interdict, or is under any other legal disability, the time periods do not begin to run until the beneficiary ceases to be a minor or an interdict, or be under that other disability, or sooner dies. The other welcome change is a provision that (subject to fraud or recovery of trust property claims) actions are time-barred 21 years after the date of the alleged breach of trust. This provision provides certainty to trustees. It is also now expressly provided that Article 57 does not apply to foreign trusts whose proper law is the law of a jurisdiction to which the Convention on the Law applicable to Trusts and on their Recognition, signed at the Hague on 20 October 1984, extends.


Comment on Amendment No. 5 and looking ahead In my view, the changes introduced by Amendment No. 5 are extremely helpful. In particular, the possibility of creating ‘ownership only’ purpose trusts, the clarification in respect of trustees contracting with themselves, the 21-year-long stop on actions against trustees, the ability for trustees to enforce covenants in their favour when they are not parties to the deed, and the provision allowing trustees reasonable remuneration where deeds are silent on the subject, all improve the Trusts Law. What, then, lies ahead for possible future amendments? Despite the curtailment of the wide application of the Hastings-Bass rule under English law, Jersey is considering introducing an amendment to expressly enshrine the Hastings-Bass rule in the Trusts Law, and it is anticipated that this will be the main focus of Amendment No. 6. In Jersey, the Royal Court has consistently adopted the Hastings-Bass principle in appropriate cases and has had a much clearer test when considering remedies for mistake than in England. Given the importance of the trusts industry in Jersey and the attractiveness for settlors and beneficiaries as well as trustees of the Royal Court’s regime in this area, the industry would welcome the affirmation of the Jersey approach by expressly including it in the Trusts Law. In addition, the Trusts Law Working Party is considering further clarification of Article 9A (in relation to reserved powers), Article 38 (to re-order the duty of the trustee so that the fallback is to accumulate undistributed income and add it to capital, as opposed to the current fallback, which is to distribute it), and Article 29 (in respect of beneficiaries’ rights to information).


APRIL 2013 55


JERSEY


CAPITAL: SAINT HELIER POPULATION: 97,857 AREA: 116 KM2


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