This case arose out of the divorce proceedings between Mrs Tchenguiz-Imerman and Mr Imerman. During contested financial remedy proceedings, the wife applied to the English High Court for the disclosure of documents and information in relation to offshore discretionary trusts of which the husband's family were beneficiaries. Despite a request from the Royal Court of Jersey not to do so, the Family Division of the English High Court ordered disclosure of sensitive trust information due to its potential relevance and importance to the financial remedy proceedings.
The wife was seeking a share of assets held within offshore discretionary trusts, which included assets generated during the marriage. Neither the husband nor the wife were beneficiaries of these trusts, but each of them could be added to the class of beneficiaries.
The High Court had to decide whether or not these trusts were nuptial settlements for the purposes of section 24 of the Matrimonial Causes Act 1973 and could therefore be varied by the court and whether the trust assets were financial resources available to the husband. One of the key questions was whether or not the trustee was likely immediately or in the foreseeable future to exercise its powers for the husband's benefit.
The trustee of these trusts, which was a Jersey-resident company, was joined as a party to the proceedings. The trustee took the decision not to submit to the High Court's jurisdiction and applied to the Royal Court of Jersey, in private, to approve its decision. As part of its application to the Royal Court, the trustee disclosed sensitive information to the Royal Court and the beneficiaries explaining the reasoning for its decision. The Royal Court approved the trustee's decision.
Joining of the beneficiaries
Given the refusal of the trustee to participate in the proceedings, the husband's three adult children, who were beneficiaries of these trusts, were joined to the proceedings. The High Court held that this would clearly assist with the investigation and resolution of the matters and issues in the case. It would place the court in a better position to deal with the case justly in accordance with the overriding objective and its obligations under the Matrimonial Causes Act 1973. After the trustee, the beneficiaries were in the next best position to assist the court in making its decision.
The Royal Court of Jersey's decision
The adult beneficiaries further applied to the Royal Court of Jersey for permission to disclose information about the trusts (save for privileged material) if ordered to do so by the High Court. The Royal Court unusually granted permission to make such disclosure, if the High Court made such an order, due to the "very unusual circumstances" of the case.
However, it did invite the High Court to carefully consider, in the interests of comity, whether it was necessary to order such disclosure. It emphasised the importance of trustees being able to apply to the Royal Court for directions in private, confident that what was put before the court would not be disclosed at a later date.
The High Court's decision
The High Court gave considerable weight to the Royal Court's concerns and emphasised its respect for the principle of comity and its continued development. It noted the particular importance of comity in cases involving offshore trusts, in which the High Court relies on the trusts' home courts to enforce its decisions. Nevertheless, it balanced this with the need to have as much information as possible and therefore ordered the beneficiaries to disclose all material, including sensitive material.
It held that in the absence of any evidence from the trustee, the Court would have to rely on assumptions and inferences about the likelihood of the trustee exercising its powers in favour of the husband. It is clearly preferable that the Court base its decision on direct evidence and very little evidence was available from other sources in respect of this issue. The disclosure of such information was considered necessary and proportionate to assist the Court in determining the issues raised in the proceedings.
This is yet another example of the ongoing clash between the English family division of the High Court and the Jersey Royal Court. The family division have again laid down a marker. The court will seek to obtain as much evidence as possible about the internal thinking of the trustees in relation to their exercise of powers in favour of the relevant spouse. It appears that this will, in some circumstances, have primacy over the interests of comity and respect for the process of the Jersey Royal Court.
It remains to be seen how the Royal Court of Jersey and the courts of other offshore jurisdictions will react to ensure sensitive information is not disclosed in English proceedings. As noted by the Royal Court, this might involve heavily redacting information served on English resident beneficiaries or precluding material from being sent out of the jurisdiction.