Knowledge

In Y v Church Street Trustees Limited and Others [2025] JRC 033, published on 17 June 2025, Jersey's Royal Court (the "Court") blessed the Trustee's decision to sell a major family trust asset (namely a luxury hotel in the United States) amid a heated family trust dispute between three brothers.

Background

The case involved a trust established in 2012 and managed by Church Street Trustees Limited (the "Trustee"). The beneficiaries comprise the children and descendants of the late settlor, including three of his sons, plus spouses/widows and any other person added.  The dispute involved the decision to sell the hotel (which was owned through a company).

One of the three sons, who sits on the board of the company, supported selling the hotel for US$50 million to a third-party buyer. The other two sons opposed the sale, preferring to keep the hotel within the trust for personal and sentimental reasons.

The dispute

The disagreement escalated when the two sons who opposed the sale accused the Trustee of acting improperly in executing a written resolution authorising the sale of the hotel by the company and threatened legal action.

Their brother responded by issuing a Representation (as beneficiary) seeking the Court's approval of the Trustee's decision to consent to the sale of the hotel. He argued that it was a valid decision, one that a fully informed and reasonable trustee could rationally reach and that it was not voidable.

The Trustee asserted that the decision to provide consent was made in good faith, following adequate deliberation, and that it represented a rational conclusion within the scope of decisions a reasonable trustee could make.

The opposing sons raised a series of objections to the Trustee's decision. They alleged that both their brother and the Trustee had conflicts of interest that were not properly addressed, and that the Trustee had taken a passive role, effectively allowing their brother to dominate the decision-making process. They argued that the Trustee failed to treat all beneficiaries equally, favouring their brother's interests and covering his legal costs while denying similar support to them.

They also questioned the commercial rationale for the sale, citing the hotel's value, potential tax burdens and the absence of a reinvestment plan. They contended that the sale would impose disproportionate financial consequences on them, including significant tax liabilities. Additionally, they claimed the Trustee had not adequately considered alternative options, such as retaining the hotel and borrowing against it. Other concerns included the Trustee's failure to account for the wishes of the late settlor.

The Court's decision

In its judgment, the Court affirmed that the correct approach to blessing applications is to apply the legal test set out in Re S Settlement [2001] JLR N37 and reaffirmed in the Court of Appeal decision in Representation of the Otto Poon Trust [2015] JCA 109. The Court emphasised that it must be satisfied that the Trustee acted in good faith, that the decision was one a reasonable trustee could have reached, and that it was not tainted by any actual or potential conflict of interest.

Although the application was brought by a beneficiary rather than the Trustee, the Court held that the same legal principles applied.

The Court concluded that the Trustee acted in good faith and without conflict of interest. It confirmed that the decision to sell was rational and reasonable, with the Trustee being well-informed about material considerations and having followed proper procedures.

The Court reiterated that its role was not to decide what it would have done, but to ensure the Trustee's decision fell within a reasonable range of options. Accordingly, it blessed the Trustee's decisions.

If you would like any further information, please get in touch with your usual Bedell Cristin contact or one of the contacts listed.