In In the matter of H ( JRC 070) the Royal Court of Jersey ruled on an application for the widow of a settlor to participate in proceedings in relation to a charitable trust.
The settlor's widow brought an application to participate in proceedings instituted by a sub-trustee that was seeking relief in connection with a charitable trust and a compromise agreement regarding issues arising under the settlor's will. There appeared to be no previous Jersey case regarding the test for convening parties to proceedings concerning a charitable trust.
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 ( 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. The court should use its discretion to decide which beneficiaries should be convened, after considering the particular application and circumstances.
The court may deem it appropriate to convene a non-beneficiary where there is a close connection with the trust (eg, a protector). In addition, the court may occasionally deem it appropriate to convene persons who are not beneficiaries or who have no close connection with the trust, as in Re Abacus  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 moneys.
The court must consider whether it is necessary to convene a party to properly determine the application; if so, then it has the discretion to convene the relevant party. The court's rationale for convening a beneficiary is essentially two fold:
- where it is likely that the beneficiary will have a material opinion of which the court should be aware; and
- where it may be unfair for the court to make a decision that affects the beneficiary's interests without the beneficiary having an opportunity to put its observations to the court.
Neither of the above 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 in Re Hampton Fuel Allotment Charity ( 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 also of assistance. While a person having a general interest only 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 considered such a person.
When considering the role of 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 that entitles them to see that the trust is properly administered.
The court did not find this decision easy, but on the balance of arguments it decided that 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 with regards to the wishes and intentions of the settlor. It further ruled that giving evidence was not as beneficial as participating in proceedings - the former is essentially passive and would rely on the widow being called as a witness; in contrast, if the widow were able to receive and comment on other parties' submissions in the context of the settlor's wishes, it 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 court therefore ruled that the widow should be allowed to participate in the main proceedings.
This was the first time that the court had been required to consider the test for convening parties to proceedings concerning a charitable trust. Given the appetite of high-net-worth individuals for establishing such trusts, it is 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.
For further information on this topic please contact Corinne Barnes at Ogier by telephone (+44 1534 504 000), fax (+44 1534 504 444) or email ([email protected]).