The Royal Court recently delivered a judgment concerning the principles to be applied where a body of executors is deadlocked.(1)


The case concerned the administration of the estate of a successful businessman who had been domiciled in Hong Kong, but had established significant Jersey trusts. The testator died in December 2001; probate was taken out in Jersey by five executors in October 2002. The executors comprised five individuals - four family members and an English solicitor. The residuary beneficiaries of the estate were the testator's wife (as to 1%) and BNP Paribas Jersey Trust Corporation Limited (BNP) in its capacity as the trustee of a Jersey trust (as to 99%).

The long-running administration already had a history of conflict - division among the executors had led to earlier court proceedings on other issues. The current matter arose as a result of a difference of opinion as to how to deal with an alleged debt due to the estate. As a complicating factor, the alleged debt was due from a company owned by two of the family executors. BNP had requested that the debt be assigned to it on the basis that it would account to the other residuary beneficiary for her 1% of any net recovery.

The solicitor executor (Mrs Garnham, who acted as the representor in the proceedings) applied to the Royal Court for a direction that the decision of herself and one of the other family executors to reject BNP's request (supported by the 1% beneficiary) be approved, and that the executors (save the two who owned the alleged debtor company and who were therefore conflicted) be authorised to incur further costs investigating the existence of the potential debt.

As the proceedings moved forward, the representor changed her position to one of neutrality. At the time of the hearing, the battle lines between the executors were thus as follows:

  • One executor continued to support the rejection of the request;
  • Two (of whom one was the representor) were neutral; and
  • Two (being the owners of the alleged debtor company) were in favour of the assignment.

As noted, the beneficiaries were also in disagreement. By this time BNP had refined its proposal by saying that it would accept that the full potential amount of the alleged loan could be included in the estate accounts. Thus, rather than accounting in due course to the other beneficiary for 1% of any recovery, there would be a deemed recovery for the purposes of ascertaining entitlements to distribution from the estate, with BNP receiving its 99% of that asset by way of the assignment.

The executor and beneficiary that objected to the assignment took the position that the testator had selected the executors to carry out the administration of the estate, and that role included the investigation into the alleged loan.


Ultimately, the court decided that the alleged debt should be assigned to BNP. In reaching its decision, the court had to determine the role of the court, the circumstances under which the court could intervene and on what basis.

The executors in favour of the assignment and BNP contended that the court could intervene to break a deadlock where a body of executors could not reach a decision. The executor and beneficiary who objected to the assignment argued that the court had a restricted role. They contended that, because the assignment of an estate asset in specie involved the exercise of a permissive power, the court should not intervene to direct an executor (or trustee) and thereby compel the exercise of that power, unless no executor addressing his or her mind to relevant considerations and disregarding irrelevant considerations would reasonably fail to do so. It was argued that because a decision of the executors requires unanimity, there had been no decision with regard to the assignment of the loan (ie, to exercise the permissive power to distribute in specie). Therefore, in such circumstances, absent unreasonableness, there was no basis on which the court could intervene to compel the exercise of the power.

The court reviewed English and Canadian authorities on the question of deadlock. It also considered the question of the duties that executors should perform in respect of the assets of an estate. The court concluded that there is a duty to gather in the estate assets and pay relevant expenses, debts and specific legacies, and thereafter to distribute the estate to the residuary beneficiaries. However, there is no duty to convert assets into cash, such as in the case of an alleged unpaid loan, but rather a power to distribute either in cash (once an asset is realised) or in specie if not converted. The court held that there was an actual deadlock over the exercise of the power to distribute and that, in the exercise of its supervisory jurisdiction, the court had jurisdiction to and should intervene and direct the executors to follow the course that the court considered to be in the best interests of the beneficiaries.

The court took into account the fact that it was an executor that had brought the matter before the court - that is, it was not BNP as the beneficiary seeking to compel the exercise of a power. The court also found that if there had been a unanimous decision not to exercise the power to distribute in specie, then the court could intervene only on the limited grounds of lack of reasonableness. However, where a decision had not been reached due to an inability to agree, the court did have jurisdiction to intervene. To take the objecting executors' view that a lack of unanimity must be taken as a decision not to exercise the power would lead to a single executor (or trustee) out of a body of executors (or trustees) having an ability to override the views of the others, which the court could not accept to be right.

Having confirmed its jurisdiction to intervene and break the deadlock, the court went on to assess the rival contentions concerning the proposed assignment. On the facts of the case, the court's decision to direct the assignment took account of the circumstances where the refined proposal had financially protected the 1% beneficiary, where there was considerable distrust and division among the executors and where the economic interest (in the loan as well as in the ongoing costs of administration should the loan not be assigned) rested with BNP.

The court went on to consider what the position would be if its analysis of the question of its jurisdiction were incorrect and that unreasonableness had to be shown. It concluded that the high threshold would be met in the circumstances.


This is an interesting and important decision insofar as it clarifies the jurisdiction of the Royal Court to intervene where there is disagreement between a body of executors or trustees. It helpfully analyses the nature of an executor's duties and powers. Naturally, the facts of future cases and the nature of the relevant duties or powers will differ, but clear guidance on a deadlock situation has been set out. The decision also provides a useful authority for the basic position that unanimity is required for a body of executors to reach a decision and that, where there is a proper argument that a beneficiary is seeking to compel the exercise of a permissive power, the court will impose the high threshold test of unreasonableness before intervening.

For further information on this topic please contact Nigel Sanders at Ogier by telephone (+44 1534 504 000), fax (+44 1534 504 444) or email ([email protected]).


(1) Garnham v PC, [2012] JRC050.