[1987-88 JLR 389]

IN THE MATTER OF THE LEAH and HARRY OSIAS 1980 SETTLEMENTS

On the representation of STANDARD CHARTERED TRUST COMPANY (C.I.) LIMITED

ROYAL COURT (Tomes, Deputy Bailiff and Jurats Picot and Myles): January 19th, 1988

Trusts—variation—scope—court has discretion to allow total variation, e.g. conversion of Jersey trust into

foreign trust if beneficial to minor, unborn and unascertained beneficiaries and exceptional circumstances

disclosed

Trusts—variation—scope—circumstances in which court will refuse to exercise discretion to vary

Trusts—variation—parties—all persons with potential interest to be convened in application to vary—

minor beneficiaries to be separately represented and preferable for unborn and unascertained

beneficiaries—adult beneficiaries to be own representors, allowing trustee to concentrate on interests of

minor, unborn and unascertained beneficiaries

A trustee made an application under art. 43 of the Trusts (Jersey) Law, 1984, seeking the court’s approval

of an arrangement varying the trusts of two settlements governed by Jersey law so that all the trusts would

be constituted under Florida law and the funds in Jersey transferred to trustees resident in the United

States.

The settlor and her husband had been living in the United States but subsequently became non-resident.

They each made identical settlements irrevocably settling assets situated in the United States on their own

behalf and on behalf of primary, minor, unborn and unascertained beneficiaries, who were resident in the

United States, so as to avoid US estate tax upon their death. Two companies were incorporated in Jersey

for the purpose of holding some of the trust assets. The settlor subsequently assigned her interest in the

settlement to the primary beneficiaries who, as US residents, would have been liable to pay US income tax

on income earned by the companies despite the fact that the settlement made no provision for them to

receive any distributions from those companies. In consequence, the Jersey trustee sought approval for an

arrangement varying the trusts so that they would all be recognised and governed by Florida law and the

assets transferred to trustees resident in the United States.

The trustee submitted that the holding of the assets in the companies was disadvantageous to the primary

beneficiaries and potentially to the unborn and unascertained beneficiaries, whose interests he also pro-

1987-88 JLR 389

tected, since they would be liable to pay US income tax and that the holding of the trust assets for their

issue on irrevocable trusts governed by Florida law would be for the benefit of all beneficiaries.

Held, granting the representation:

(1) The court could approve an application under art. 43 of the Trusts (Jersey) Law, 1984, for an

“arrangement”—giving that word a wide meaning—varying the Jersey trusts so as to make them governed

by Florida law and transfer funds to trustees resident in the United States if (a) there had been a variation

in substance which it had the discretion to approve, regardless of whether it affected the substratum of the

trust, the only limitation on its discretion under art. 43 being that the arrangement must benefit minor

beneficiaries and potential beneficiaries as yet unborn or unascertained who, unlike adult beneficiaries,

were not sui juris and therefore needed the court’s protection and (b) exceptional circumstances were

disclosed. These conditions were satisfied in the present case in that the arrangement constituted a

variation and was made in the exceptional circumstances of the United States being the natural domestic

base for the trusts, all the beneficiaries being resident there. It would, moreover, benefit the minor, unborn

and unascertained beneficiaries—giving “benefit” a wide construction, although in this particular case the

court was concerned with financial benefit—because, by minimising the penal effect of US tax laws, proper

taxes would be paid, it being in the court’s discretion to consent to a scheme even where it would result in

tax avoidance (page 408, line 26 – page 409, line 15; page 410, lines 22–25; page 412, lines 21–34).

(2) Although the court could not provide a definitive list of situations in which its discretion to approve a

variation would not be exercised, examples would be where the proposed arrangement was on behalf of a

beneficiary who would never exist; where a power of appointment had been exercised purely to facilitate

an application to have the proposed arrangement approved; and where the proposed arrangement

attempted to protect the beneficiary against his own extravagance (page 411, line 39 – page 412, line 17).

(3) In an application to vary a trust all parties having an interest or a potential interest should be

convened, separate representation being required for minor beneficiaries and, where there are unborn or

unascertained beneficiaries and a potential for conflict between their interests and those of adult

beneficiaries, then independent representation is preferable. The adult beneficiaries should, moreover, be

their own representors in such circumstances, leaving the trustee to concentrate on his main role of

protecting the interests of unborn and unascertained beneficiaries (page 402, lines 1–20).

Cases cited:

(1) Ball’s Settlement Trusts, In re, [1968] 1 W.L.R. 899; [1968] 2 All E.R. 438; (1968), 112 Sol. Jo. 445,

applied.

(2) Brook’s Settlement, In re, [1968] 1 W.L.R. 1661; [1968] 3 All E.R. 416; (1968), 112 Sol. Jo. 845.

1987-88 JLR 391

(3) Chapman v. Chapman, [1954] A.C. 429; [1954] 3 All E.R. 116.

(4) Druce’s Settlement Trusts, In re, [1962] 1 W.L.R. 363; [1962] 1 All E.R. 563; (1962), 106 Sol. Jo. 112.

(5) Holt’s Settlement, In re, [1969] 1 Ch. 100; [1968] 1 All E.R. 470; (1967), 112 Sol. Jo. 195, applied.

(6) Moncrieff’s Settlement Trusts, In re, [1962] 1 W.L.R. 1344; [1962] 3 All E.R. 838; (1962), 106 Sol. Jo.

878.

(7) Pettifor’s Will Trusts, In re, [1966] Ch. 257; [1966] 1 All E.R. 913; (1966), 110 Sol. Jo. 191.

(8) Seale’s Marriage Settlement, In re, [1961] Ch. 574; [1961] 3 All E.R. 136; (1961), 105 Sol. Jo. 257,

applied.

(9) Steed’s Will Trusts, In re, [1960] Ch. 407; [1960] 1 All E.R. 487; (1960), 104 Sol. Jo. 207.

(10) T’s Settlement Trusts, In re, [1964] Ch. 158; (1963), 107 Sol. Jo. 981; sub nom. Towler’s Settlement

Trusts, Re, [1963] 3 All E.R. 759, considered.

(11) Viscount of Royal Ct. v. Shelton, 1983 J.J. 53.

(12) Weston’s Settlements, In re, [1969] 1 Ch. 223; [1968] 3 All E.R. 338; [1968] T.R. 295; (1968), 47 A.T.C.

324; 112 Sol. Jo. 641, dicta of Lord Denning, M.R. applied.

(13) Whitehead’s Will Trusts, In re, [1971] 1 W.L.R. 833, applied.

(14) Wimborne (Viscount) v. Abacus (C.I.) Ltd., 1987-88 JLR N–22.

Text cited:

Underhill’s Law of Trusts & Trustees, 13th ed., at 395, 397 (1979).

A.J. Dessain for the representor;

P.R. Le Cras for H.M. Attorney General;

R.V. Jeune for the adult beneficiaries;

J.A. Clyde-Smith for the minor beneficiaries.

TOMES, DEPUTY BAILIFF: These two representations were

substantially in the same terms; they related to settlements made

in the same form and bearing the same date; in general terms the

30 trusts, the beneficiaries and the excluded persons were the same.

The only differences resulted from events outside the ambit of the

deeds themselves—Leah Osias had assigned her interest in the

Leah Osias 1980 Settlement to certain primary beneficiaries so

that they, for present purposes, were in the same position as if she

35 had died; Harry Osias had died on August 1st, 1981, which had

the effect of speeding up the interest of the primary beneficiaries,

which was now free of the life interest. The only other major

difference was that the accounts for the two trusts differed. It was

convenient, therefore, to hear the two representations together.

40 For purposes of convenience, we concentrate on the Leah Osias

1980 settlement.

1987-88 JLR 392

The representation of Standard Chartered Trust Co. (C.I.)

Ltd., “the trustee,” showed that—

1. Richard Allen (or Allan) Osias, Joan Osias Hoffman and

Martin Fred Greenberg are the primary beneficiaries of a

5 settlement made between Leah Osias (the mother of Richard

Osias and Joan Hoffman) and the trustee on December 8th, 1980.

A copy of the settlement was exhibited to us.

2. By cl. 2 of the settlement it was provided, inter alia, that the

settlement was established under the laws of Jersey and it was

10 declared that the proper law of the settlement was to be the law of

Jersey and that Jersey was to be the forum for the administration

of the settlement.

3. Prior to December, 1980, the settlor and her husband Harry

Osias, the father of Richard Osias and Joan Hoffman, who had

15 been living in the United States, became non-resident and were

advised that they should each irrevocably settle certain assets

situate in the United States, as by this means such assets would no

longer be subject to US estate tax on the death of either of them.

A copy of the Osias’ family tree and of that of the family of

20 Martin Greenberg was exhibited to us.

4. On December 3rd, 1980, in anticipation of the execution of

settlements by the settlor and Harry Osias, the trustee procured

the incorporation in Jersey of two companies, namely Le

Corbeau Investments Ltd. and L’Aiglon Investments Ltd.

25 5. Prior to December 4th, 1980 an engrossment of the

settlement was prepared in the same form as a revocable

settlement which had been executed by the settlor in 1978. The

settlement was executed by the trustee in Jersey on December

4th, 1980 and was then delivered to the United States for

30 execution by the settlor. Before the execution of the settlement

on December 8th, 1980 by Richard Osias as attorney of the

settlor, it was observed that the provisions of cl. 19 of the

settlement were the same as the 1978 settlement which would

have had the effect of making the settlement revocable.

35 Accordingly, as the US estate tax saving would not have been

achieved by a revocable settlement, the settlor, by her attorney

Richard Osias, simultaneously with the execution of the settle-

ment, exercised her power under cl. 19(a) of the settlement to

declare the settlement irrevocable. A copy of the instruction to the

40 trustee declaring the settlement irrevocable was exhibited to us.

6. On December 8th, 1980, following the execution of the

1987-88 JLR 393

settlement and also a settlement with the same trusts, powers and

provisions as the settlement and made between Harry Osias, as

settlor, and the trustee, the trustee procured the issue of 100

shares of £1 each in the capital of Le Corbeau and L’Aiglon to the

5 trustee or its nominees of which 50 shares of £1 each in the capital

of each company were held as a part of the trust fund of each of

the settlement and the Harry Osias settlement, in return for the

payment out of each trust fund of US $120 (calculated at the

exchange rate of $2.40 to the £) to each company.

10 7. Also on December 8th, 1980, the settlor and Harry Osias

jointly sold certain shares to Le Corbeau and certain loan notes,

mortgages and an interest in a parcel of US real estate to

L’Aiglon for the respective sums of $2,330,000 and $3,679,971.47,

which sums were left on loan account with the respective

15 company and both loan accounts were assigned on the same day

by the settlor and Harry Osias jointly, as to one half to the

settlement and as to the remaining half to the Harry Osias

settlement.

8. By cl. 4 of the settlement it was declared that the trustees

20 should stand possessed of the trust fund of the settlement and the

income thereof upon certain trusts the provisions of which were

poorly drafted and difficult to interpret. The trusts were fully set

out in the representation.

Pausing here, it will be sufficient for the purposes of this

25 judgment if we summarise the trusts and the difficulties arising

from them as fully explained to us by Mr. Dessain. Clause 1 of the

settlement contained certain definitions of which the following

are important: “beneficiaries” was defined as the settlor, her son,

Richard Osias, her daughter, Joan Hoffman, and an adviser,

30 Martin Greenberg, their issue and Richard Osias’ former wife

Alexandra Stuart Currey (“Alexandra Currey”), Joan Hoffman’s

husband, Jerome Jay Hoffman (“Jerome Hoffman”) and Martin

Greenberg’s wife Jane Frances (or Francis) Greenberg (née

Klein) (“Jane Greenberg”). “The trust period” was defined so as,

35 in practice, to signify a period of 80 years from the date of the

settlement. (Since the settlement was irrevocable from its

inception, the power to shorten the trust period by instructions to

revoke the settlement was never exercisable.) Clause 4 contained

the principal beneficial trusts which can be divided thus: (i) the

40 annuity provisions, (ii) the trusts operating during the settlor’s

lifetime, (iii) the principal trusts operating on the settlor’s death,

1987-88 JLR 394

(iv) further trusts engrafted on the principal trusts, (v) the

ultimate trusts.

(i) The annuity provisions directed the payment of $1,000 per

month to Richard Osias while he was a “protector” and $100 per

5 month to Martin Greenberg for professional services.

(ii) The trust operating during the settlor’s lifetime provided

(a) that the first 15% of the net annual income and realised gains

should be divided between Richard Osias, Joan Hoffman and

Martin Greenberg (or the persons interested under their wills or

10 intestacies) in the proportions 45: 45: 10 (“the stipulated

proportions”) and thereafter (b) that the whole of the “remaining

trust income” should be appropriated or applied to the settlor “as

she shall from time to time request in writing” and, if she did not

so request within 60 days of each year end, the balance was to be

15 added as an accretion to the capital of the trusts.

(iii) The principal trusts operating on the settlor’s death

provided for the payment of the rateable proportion of the “total

taxes payable as a consequence of the death of the settlor” and

thereafter for the trust fund to be divided into three trust funds as

20 follows: (a) 45% for Richard Osias or failing him 22.5% for

Alexandra Currey and 22.5% for his issue per stirpes; (b) 45% for

Joan Hoffman or failing her 22.5% for Jerome Hoffman and

22.5% for her issue per stirpes, and (c) 10% for Martin

Greenberg or failing him 5% for Jane Greenberg and 5% for his

25 issue per stirpes. If the engrafted trusts were ignored, the

principal trusts appeared to provide for the division of the trust

fund between Richard Osias, Joan Hoffman and Martin

Greenberg on the settlor’s death, or if any of them were dead

then for the deceased beneficiary’s spouse and issue to take the

30 deceased’s share. The position was, however, complicated by the

engrafted trusts which were very difficult to reconcile with the

principal trusts.

(iv) The engrafted trusts provided that the separate trust funds

should be held upon trust with the following effect: (a) during the

35 trust period the trustees should have discretion to pay, appropriate

or apply income or capital to or for the benefit of any of the

beneficiaries save that they should not distribute “in excess of

10% per annum of the gross corpus of the trust funds” for which

purpose “corpus” was to include “current income and accumula-

40 tions”; (b) the trustees would have wide powers to declare trusts

of income appropriated to a beneficiary under (a); (c) the 10%

1987-88 JLR 395

distributions under (a), although described as income, were to be

made so far as possible out of capital; (d) the intent of the

engrafted trusts was declared to be that “upon the demise of the

settlor the trusts of income and capital . . . shall be construed as

5 an inheritance to all the beneficiaries.”

A number of questions of construction arose in relation to the

engrafted trusts: (a) it was not clear how they were to be

reconciled with the principal trusts, particularly if those trusts

were to be construed as giving vested interests on the death of the

10 settlor whereas the engrafted trusts were expressed to endure

“for the trust period.” Had the engrafted trusts varied the

principal trusts? (b) It was not clear how much capital could be

distributed under the discretion in the engrafted trusts, i.e.

whether the entire capital could be distributed over 10 years in

15 equal tranches or, as seemed more probable, only 1/10 of what

was left after previous distributions could be distributed in that

year, i.e. a maximum 10% of the original corpus in year 1, 9% in

year 2, 8.1% in year 3, and so on.

(v) The ultimate trusts provided (a) that if Richard Osias or

20 Joan Hoffman “should die leaving no surviving spouse or issue

him/her surviving” then his or her trust fund was to devolve under

his or her will or intestacy and, subject thereto, on Martin

Greenberg and his spouse and issue; (b) that if Martin Greenberg

“should die leaving no surviving spouse or issue” his trust fund

25 was likewise to devolve under his will or intestacy and subject

thereto on the trusts of Richard Osias’ and Joan Hoffman’s funds

if they survived him; and (c) that, failing issue of Richard Osias,

Joan Hoffman and Martin Greenberg, the property was “to pass

to the State of Israel” or to “a major world Jewish charity.”

30 If it were not for the engrafted trusts, it would seem clear that

the relevant date for ascertaining takers under the ultimate trusts

would be the death of the settlor. However, the engrafted trusts

were expressed to endure during the trust period and were not

easy to reconcile with this construction.

35 The representation continued as follows:

9. On September 17th, 1982, the settlor contemporaneously

signed and delivered to the trustee a letter of renunciation and a

letter of assignment, copies of which were exhibited to us. By

virtue of its terms and for reasons which we do not need to set out

40 here, the renunciation was of no effect. By the assignment, the

settlor irrevocably assigned all right, title and interest which she

1987-88 JLR 396

had or might have had in the settlement to the primary

beneficiaries as to 45% each to Joan Hoffman and Richard Osias

and 10% to Martin Greenberg.

10. A summary of the laws of the State of Florida relating to

5 intestate succession was contained, inter alia, in a letter of advice

dated October 8th, 1985, from Holland & Knight, a firm of

lawyers practising in Florida, addressed to the primary bene-

ficiaries. A copy was exhibited to us.

11. Details of the assets comprising the trust fund were shown

10 in draft accounts of the settlement for the year ended December

31st, 1984, a copy of which was annexed to the representation.

These were updated by Mr. Dessain. The settlement as at

December 31st, 1985 had net assets of $1,789,604 and the Harry

Osias settlement net assets of $1,233,277. The difference repre-

15 sented the fact that US estate taxes had been paid following the

death of Harry Osias.

12. The primary beneficiaries, their respective wives and

children were all resident in the United States and in the letter of

advice the primary beneficiaries had been advised that the

20 holding of assets in the settlement and its underlying companies,

Le Corbeau and L’Aiglon, was highly disadvantageous, as the

primary beneficiaries were required to pay US income tax on the

income earned by Le Corbeau and L’Aiglon, even though the

primary beneficiaries did not receive any distributions from Le

25 Corbeau and L’Aiglon through the settlement.

Pausing again, although not referred to specifically in the

representation, the letter of advice further showed that all current

distributable net income of the settlements not in fact distributed

attracted a US tax penalty at 6% per annum until distribution, so

30 that the ultimate tax liability at distribution could in possible

circumstances exhaust the amount of the accumulated income

when distributed.

Furthermore, all capital gains would be converted to ordinary

income if not distributed within the trusts’s taxable (calendar)

35 year and those capital gains would bear the 6% per annum tax

penalty until distributed. The existing trusts operating during the

settlor’s lifetime and the principal trusts operating on the settlor’s

death restricted the power to distribute capital gains. Moreover,

interest income received from US sources was subject to a

40 withholding tax of 30% of the gross amount received without the

benefit of deductions for trust expenses.

1987-88 JLR 397

The representation continued:

13. The primary beneficiaries had been advised in the letter of

advice that assets held upon irrevocable trusts governed by

the laws of the State of Florida for their respective issue would be for

5 the benefit of their respective families. The letter of advice also

confirmed that the State of Florida recognised and would enforce

irrevocable trusts.

14. Richard Osias, Alexandra Currey and Martin Greenberg (a

fully qualified member of the Florida Bar and certified public

10 accountant) had consented to act as the first trustees of trusts

principally for the benefit of Richard Osias’ issue; Joan Hoffman,

Jerome Hoffman and Martin Greenberg had consented to act as

the first trustees of trusts principally for the benefit of Joan

Hoffman’s issue; Martin Greenberg, Jane Greenberg and Andrew

15 Harvey Weinstein, a partner in the law firm of Holland & Knight,

had consented to act as the first trustees of trusts principally for

the benefit of Martin Greenberg’s issue; and Martin Greenberg

and Joan Hoffman had consented to act as the first trustees of a

trust principally for the benefit of the issue more remote than

20 grandchildren of Richard Osias, Joan Hoffman and Martin

Greenberg. Copies of all the consents were exhibited to us.

As a result, the trustee sought the court’s approval of an

arrangement varying the trusts of the settlement so that all the

trusts would be constituted under Florida law and the funds

25 transferred to trustees resident in the United States and so that

the trust fund comprised therein should henceforth be held on the

following (varied) trusts, namely:

A. 45% of the trust fund (“the Richard Osias Family Fund”) should be held—

(i) as to 25% of the Richard Osias Family Fund upon trust for

30 Richard Osias absolutely;

(ii) as to 25% thereof upon trust for Alexandra Currey

absolutely;

(iii) as to 40% thereof (“Richard Osias’ Children’s Fund”)

principally for the benefit of the children of Richard Osias upon

35 the trusts, and with and subject to the powers and provisions,

which were set forth in the representation, of which the first

trustees were to be Richard Osias, Alexandra Currey and Martin

Greenberg; and

(iv) as to the remaining 10% thereof (“Richard Osias Grand-

40 children’s Fund”) principally for the benefit of the grandchildren

1987-88 JLR 398

of Richard Osias upon the trusts, and with and subject to the

powers and provisions, which were set forth in the representation,

of which the first trustees were to be Richard Osias, Alexandra

Currey and Martin Greenberg.

5 B. A further 45% of the trust fund (“the Joan Hoffman Family

Fund”) should be held—

(i) as to 25% of the Joan Hoffman Family Fund upon trust for

Joan Hoffman absolutely;

(ii) as to 25% thereof upon trust for Jerome Hoffman

10 absolutely;

(iii) as to 40% thereof (“Joan Hoffman’s Children’s Fund”)

principally for the benefit of the children of Joan Hoffman upon

the trusts, and with and subject to the powers and provisions,

which were set forth in the representation, of which the first

15 trustees were to be Joan Hoffman, Jerome Hoffman and Martin

Greenberg; and

(iv) as to the remaining 10% thereof (“Joan Hoffman’s

Grandchildren’s Fund”) principally for the benefit of the grand-

children of Joan Hoffman upon the terms, and with and subject

20 to the powers and provisions, which were set forth in the

representation, of which the first trustees were to be Joan

Hoffman, Jerome Hoffman and Martin Greenberg.

C. The remaining 10% of the trust fund (“the Martin

Greenberg Family Fund”) should be held—

25 (i) as to 25% of the Martin Greenberg Family Fund upon trust

for Martin Greenberg absolutely;

(ii) as to 25% thereof upon trust for Jane Greenberg

absolutely;

(iii) as to 40% thereof (“Martin Greenberg’s Children’s Fund”)

30 principally for the benefit of the children of Martin Greenberg

upon the trusts, and with and subject to the powers and

provisions, which were set forth in the representation, of which

the first trustees were to be Martin Greenberg, Jane Greenberg

and Andrew Weinstein; and

35 (iv) as to the remaining 10% thereof (“Martin Greenberg’s

Grandchildren’s Fund”) principally for the benefit of the grand-

children of Martin Greenberg upon the terms, and with and

subject to the powers and provisions, which were set forth in the

representation, of which the first trustees were to be Martin

40 Greenberg, Jane Greenberg and Andrew Weinstein.

D. Provided always that in priority to all the trusts herein-

1987-88 JLR 399

before referred to, the trustee should forthwith raise out of the

trust fund (rateably out of the several shares thereof hereinbefore

referred to according to the respective values thereof)—

(i) the sum of $5,000 for the benefit of the State of Israel;

5 (ii) the sum of $5,000 for the benefit of Jewish charities;

(iii) such sum as should be required to purchase a US zero

coupon tax exempt bond maturing in not less than 35 years from

date of purchase at a value of not less than $100,000 and should

purchase the same and the said bond and the full benefit thereof

10 and all moneys payable thereunder or in respect thereof

(collectively “the remainder fund”) should be held principally for

the benefit of the issue more remote than grandchildren of

Richard Osias, Joan Hoffman and Martin Greenberg and should

be held upon the trusts, and with and subject to the powers and

15 provisions, which were set forth in the representation, of which

the first trustees were to be Martin Greenberg and Joan

Hoffman.

E. And for the purpose of giving effect to this arrangement—

(i) the trustee might appropriate any assets in specie in or

20 towards the satisfaction of any share of the trust fund on the basis

of such valuations as it should think fit; and—

(ii) the trustee should forthwith transfer to Richard Osias,

Alexandra Currey, Joan Hoffman, Jerome Hoffman, Martin

Greenberg and Jane Greenberg the shares of the trust fund to

25 which they would be absolutely entitled and should forthwith

transfer to the respective trustees of each of the funds set out in

the representation the share of the trust fund directed to be held

upon each of the trusts.

F. On each and every occasion thereafter when any of Richard

30 Osias, Joan Hoffman or Martin Greenberg should marry he or

she would pay to his or her spouse by such marriage the sum of

$10,000.

At the conclusion of the hearing, we made the order requested,

that is to say that, being satisfied that the proposed arrangement

35 was for the benefit of all the minor beneficiaries of both

settlements and of all persons unborn or unascertained who may

become beneficiaries of either settlement, we approved the

arrangements varying the trusts of the two settlements so that the

trust funds comprised therein should henceforth be held on the

40 varied trusts set out in paras. A, B, C and D of the prayer of each

representation. We also approved para. E of each prayer for the

1987-88 JLR 400

purpose of giving effect to these arrangements and para. F in

respect of after-taken wives and husbands. We also authorised

the trustee to pay the costs of the representations and the costs of

the persons convened on a full indemnity basis out of the

5 respective trust funds.

We went on to say that because this was the first application of

its kind under art. 43 of the Trusts (Jersey) Law, 1984—and for

that reason we had felt it right to hear the application in detail

and to consider the authorities—we would, for the assistance of

10 the profession, put our reasons into a formal decision. We restrict

ourselves to art. 43 because no argument was addressed to us on

the question whether the court has any inherent jurisdiction to

vary trusts, as appears to be the case in England, albeit in certain

very limited circumstances (see Chapman v. Chapman (3)).

15 Further, we expressed our thanks to Mr. Dessain for a detailed

exposition of the application and indeed all counsel for their

assistance, not least for the quality of the preparation of the

papers. Included in those thanks were Mr. James, the solicitor

assisting Mr. Jeune, and the advisers of the parties from outside

20 the Island who were not known to us.

The first point which we wish to make is that those were not

idle thanks. It is of paramount importance that, in relation to all

applications under the Trusts (Jersey) Law, 1984, there should be

the same full and frank disclosure as this court has insisted upon

25 in cases where injunctions are sought. Furthermore, it is of the

highest importance that any revenue ramifications involved in the

application should be fully canvassed with the court. This will be

all the more important when applications come before us which

contain implications regarding claims or potential claims from the

30 UK Revenue authorities. We return to this point later.

Jurisdiction

The first matter upon which Mr. Dessain addressed us was

jurisdiction. Article 1(1) of the Trusts (Jersey) Law, 1984 defines

35 a “Jersey trust” as a trust whose proper law is the law of Jersey.

Article 5 provides that the court has jurisdiction where the trust is

a Jersey trust. Article 6 provides that Part II of the Law shall

apply only to a Jersey trust. Article 43, which is in Part II,

provides for variation of the terms of a Jersey trust by the court

40 and for approval of particular transactions. The relevant parts of

the article are:

1987-88 JLR 401

“(1) Subject to paragraph 2, the court may, if it thinks fit,

by order approve on behalf of—

(a) a minor or interdict having, directly or indirectly, an

interest, whether vested or contingent, under the

5 trust; or

(b) any person, whether ascertained or not, who may

become entitled, directly or indirectly, to an interest

under the trust as being at a future date or on the

happening of a future event a person of any specified

10 description or a member of any specified class of

persons; or

(c) any person unborn . . .

. . .

any arrangement, by whomsoever proposed and whether or

15 not there is any other person beneficially interested who is

capable of assenting thereto, varying or revoking all or any

of the terms of the trust or enlarging the powers of the trustee

of managing or administering any of the trust property.

(2) The court shall not approve an arrangement on behalf

20 of any person coming within sub-paragraph (a), (b) and (c)

of paragraph (1) unless the carrying out thereof appears to

be for the benefit of that person.

. . .

(4) An application to the court under this Article may be

25 made by any person referred to in paragraph (3) of article

47.”

Article 47(3) of the Law provides that—“(3) an application to

the court . . . may be made by the Attorney General or by the

trustee or a beneficiary or, with leave of the court, by any other

30 person.”

The proper law of these two settlements was the law of Jersey.

Thus the settlements were Jersey trusts and the court had

jurisdiction. The trustee was empowered, under art. 47(3) of

the Law, to make the representations and the court had the

35 power, under art. 43 of the Law, to grant the prayers of the

representations.

Parties convened

In this case all the parties that could have an interest in the two

40 settlements or either of them were either ordered to be convened

when the representations were first presented to the court or were

1987-88 JLR 402

added before the hearing of the representations. The court wishes

to emphasise the importance of all parties who have an interest or

potential interest under a trust being convened on any application

of this kind. When potential beneficiaries include unascertained

5 or unborn persons, arrangements should be made for them to be

represented. Whenever the slightest possibility of a conflict of

interest exists, there should be independent representation. In

the instant case, Mr. Dessain appeared for the unascertained and

unborn beneficiaries as well as for the representor as trustee of

10 the settlement. We accept that the trustee has a duty to protect

unascertained and unborn beneficiaries as well as to follow the

terms of the settlement. We also accept that Mr. Dessain saw his

role as one of presenting the case fairly and of ensuring that

unascertained and unborn beneficiaries were sufficiently pro-

15 tected. We are satisfied that he discharged that role admirably.

Nevertheless, we express the view that it would be preferable, in

general, in future cases of this kind, for the main adult

beneficiaries to be the representors, leaving the trustee to

concentrate on its primary function of protecting the un-

20 ascertained and unborn beneficiaries (see In re Druce’s Settlement

Trusts (4)). We note with approval that the minor beneficiaries

were independently represented by Mr. Clyde-Smith.

Basic principles

25 Subject to the terms of the Trusts (Jersey) Law, 1984, the

trustee’s duty is to obey the directions of a trust. This is subject to

modification where all the beneficiaries of a trust are sui juris and

concur in varying or amending the terms of the trust. Therefore,

the court is not concerned to protect the adult beneficiaries in the

30 sense that they can decide for themselves. Article 43 of the Law

empowers the court to approve, inter alia, any variation for those

who are unable to do so themselves. The court has to be satisfied,

however, that the proposal is for the benefit of, inter alios, any or

all minor, unascertained and unborn beneficiaries and, in any

35 event, that the case is a fit and proper one for the court to make

the order sought.

The law

The relevant parts of art. 43 of the Law are very similar to

40 s.1(1) of the Variation of Trusts Act 1958. Although, as has often

been said in this court, the courts of this Island are not bound by

1987-88 JLR 403

judgments of the English courts, we feel that, in this instance, we

should have a close regard to English authorities. However, it

must be borne in mind that the law of England and the law of

Jersey, on this part of the law, are not in all respects identical. For

5 example, the English Act applies to foreign trusts (i.e. trusts

governed by other than English law) whereas art. 43 applies only

to Jersey trusts. Section 1(1)(b) of the English Act enables the

court to approve an arrangement on behalf of

“any person (whether ascertained or not) who may become

10 entitled, directly or indirectly, to an interest under the trusts

as being at a future date or on the happening of a future

event a person of any specified description or a member of

any specified class of persons . . .”

the wording of which is identical to that of art. 43(1)(b), but the

15 section goes on:

“. . . so however that this paragraph shall not include any

person who would be of that description, or a member of

that class, as the case may be, if the said date had fallen or

the said event had happened at the date of the application to

20 the court. . .”

Seemingly, art. 43(1)(b) is, in its truncated form, preferred by

those Canadian provinces which have enacted similar legislation

and not in the longer form which has given rise to problems of

construction in England (see In re Moncrieff’s Settlement Trusts

25 (6)).

Both art. 43 of the Law and s.1(1) of the Variation of Trusts

Act, 1958, empower the court to approve “any arrangement.”

Lord Evershed, M.R. in In re Steed’s Will Trusts (9) said ([1960] 1

All E.R. at 492): “I think that the word . . . is deliberately used in

30 the widest possible sense so as to cover any proposal which any

person may put forward for varying or revoking the trusts.” We

respectfully agree that a very wide meaning must be given to the

word “arrangement.”

In In re Seale’s Marriage Settlement (8) the court held that,

35 having regard to the fact that the court could approve an

arrangement revoking all the trusts of a settlement, the court had

jurisdiction to approve an arrangement which, in effect, revoked

all the trusts of the English settlement in the event of the trust

property becoming subject to the trusts of a settlement which

40 would be recognised and enforced by some other jurisdiction.

Buckley, J. said this ([1961] Ch. at 578–579):

1987-88 JLR 404

“Under section 1 of the Variation of Trusts Act, 1958 the

court has jurisdiction where property is held on trust under

any will or settlement or other disposition to approve on

behalf of the various classes of persons mentioned in the

5 section any arrangement varying or revoking all or any of the

trusts or enlarging the powers of the trustees of managing or

administering any of the property subject to the trust. So far

as I am aware this is the first case in which that jurisdiction is

invoked for the purpose of converting an English trust into a

10 trust governed by some other system of law. If it were merely

a question of varying the trusts, it seems to me there might

be difficulty in saying that this court could properly vary the

trusts under the settlement by substituting trusts of a kind

which would fall to be administered by some other law; but,

15 having regard to the fact that the court can approve an

arrangement which revokes all the trusts of the settlement, it

seems to be clear that the court must have jurisdiction to

approve an arrangement which, in effect, does revoke all the

trusts of the English settlement in the event of the trust

20 property becoming subject to the trusts of a settlement which

would be recognised and enforced in some other jurisdiction.

It seems to me I have jurisdiction to approve a scheme on the

lines of the scheme I am asked to approve in the present

case.

25 The evidence establishes to my satisfaction that the

husband and the wife intend to continue to live in Canada,

that their children who are living in Canada and have been

brought up as Canadians are likely to continue to live in

Canada, and that it will be for the general advantage of all

30 the beneficiaries that the administrative difficulties and the

difficulties of other kinds which result from the fact that it is

an English settlement and the beneficiaries all reside in

Canada should be brought to an end; and I am satisfied that

the arrangement is sensible and advantageous for all con-

35 cerned.”

In In re Holt’s Settlement (5) the trusts of a settlement made in

1959 consisted of a life interest for the plaintiff and, subject

thereto, trusts for her children attaining 21 years and, if more

than one, in equal shares. The plaintiff wished to surrender her

40 life-interest in one-half of the income for the benefit of her

children but to have the trusts of the settlement rearranged so

1987-88 JLR 405

that the children’s interests should vest at the age of 30 years and

that half the income of their respective shares should be

accumulated at the trustees’ discretion until the age of 25 or the

earlier expiration of 21 years from the date of the court’s order.

5 The plaintiff proposed that the settlement should be revoked and

that new trusts should be declared in place thereof and she

applied under the Variation of Trusts Act 1958, for the court’s

approval of the arrangement. The court held that an arrange-

ment, although cast in the form of a revocation of existing trusts

10 and a declaration of new trusts, could still be within s.1(1) of the

Act if there was, in substance, a variation; and the court was

satisfied that the arrangement was a variation. The court further

held, on the merits of the arrangement, that although unborn

issue might be so circumstanced as to derive no benefit, there

15 were the normal prospects of events occurring which would either

improve or not improve their position, and since on the whole the

arrangement appeared to be for their benefit, the court would

approve it. Megarry, J. said this ([1969] 1 Ch. at 116–117):

“Finally, before turning to the second main point, I should

20 mention that in this case the arrangement carries out its

purpose by revoking all the existing trusts and establishing a

new set of trusts. That being so, it is said that some difficulty

arises on the wording of section 1 (1) of the Act of 1958. This

merely empowers the court to approve an arrangement

25 ‘varying or revoking all or any of the trusts,’ and so, it is said,

the court cannot approve an arrangement which, instead of

merely ‘revoking’ or merely ‘varying,’ proceeds to revoke

and then to set up new trusts, thereby producing an effect

equivalent to the process of settlement and resettlement.

30 The section, it is argued, says nothing of establishing new

trusts for old. As a matter of principle, however, I do not

really think that there is anything in this point, at all events in

this case. Here the new trusts are in many respects similar to

the old. In my judgment, the old trusts may fairly be said to

35 have been varied by the arrangement whether the variation

is effected directly, by leaving some of the old words

standing and altering others, or indirectly, by revoking all

the old words and then setting up new trusts partly, though

not wholly, in the likeness of the old. One must not confuse

40 machinery with substance; and it is the substance that

matters. Comparing the position before and after the

1987-88 JLR 406

arrangement takes effect, I am satisfied that the result is a

variation of the old trusts, even though effected by the

machinery of revocation and resettlement.”

In In re Ball’s Settlement Trusts (1) Megarry, J. said this ([1968]

5 2 All E.R. at 442–443):

“If an arrangement changes the whole substratum of the

trust, then it may well be that it cannot be regarded merely as

varying that trust. But if an arrangement, while leaving the

substratum, effectuates the purpose of the original trust by

10 other means, it may still be possible to regard that arrange-

ment as merely varying the original trusts, even though the

means employed are wholly different and even though the

form is completely changed.

I am, of course, well aware that this view carries me a good

15 deal farther than I went in Re Holt. I have felt some

hesitation in the matter, but on the whole I consider that this

is a proper step to take. The jurisdiction of the Act of 1958 is

beneficial and, in my judgment, the court should construe it

widely and not be astute to confine its beneficent operation. I

20 must remember that in essence the court is merely con-

tributing on behalf of infants and unborn and unascertained

persons the binding assents to the arrangement which they,

unlike an adult beneficiary, cannot give. So far as is proper,

the power of the court to give that assent should be

25 assimilated to the wide powers which the ascertained adults

have.

In this case, it seems to me that the substratum of the

original trusts remains. True, the settlor’s life interest

disappears; but the remaining trusts are still in essence trusts

30 of half of the fund for each of the two named sons and their

families, with defined interests for the sons and their children

in place of the former provisions for a power of appointment

among the sons and their children and grandchildren and for

the sons to take absolutely in default of appointment. In the

35 events which are likely to occur, the differences between the

old provisions and the new may, I think, fairly be said to lie

in detail rather than in substance.”

Mr. Dessain, very properly, drew the court’s attention to In re

T’s Settlement Trusts (10) where approval of an arrangement to

40 vary was refused. In that case the mother of an infant, who would

attain her majority very shortly, applied to the court to vary the

1987-88 JLR 407

trusts of a settlement under which the infant on attaining her

majority would immediately become entitled to one-fourth of the

trust funds and to other interests in the fund on the death of her

mother or another infant. The infant was said to be irresponsible

5 and immature and it was alleged that the immediate possession of

a large sum of money would be detrimental to her. The court was

asked to approve an arrangement transferring her share of the

trust fund to new trustees to be held on protective trusts for her

life with remainder to her issue and there was a gift over in

10 default. The trustees were to have extensive powers to advance

capital when she attained specified ages. The court (Wilberforce,

J.) held that the proposed arrangement was not a variation of the

trusts but a resettlement which the court had no jurisdiction to

approve, and that even if it had been within the court’s

15 jurisdiction, it was not such that the court in its discretion should

approve for the resettlement was not for the “benefit” of the

infant within the meaning of s. 1 of the Act of 1958. Wilberforce,

J. said this ([1964] Ch. at 161–162):

“It is obviously not possible to define exactly the point at

20 which the jurisdiction of the court under the Variation of

Trusts Act stops or should not be exercised. Moreover, I

have no desire to cut down the very useful jurisdiction which

this Act has conferred upon the court. But I am satisfied that

the proposal as originally made to me falls outside it. Though

25 presented as ‘a variation’ it is in truth a complete new

resettlement. The former trust funds were to be got in from

the former trustees and held upon wholly new trusts such as

might be made by an absolute owner of the funds. I do not

think that the court can approve this. Alternatively, if it can,

30 I think it should not do so, because to do so represents a

departure from well and soundly established principles.”

In In re Holt’s Settlement (5) Megarry, J. had no difficulty in

distinguishing In re T’s Settlement Trusts (10). He says this ([1969]

1 Ch. at 116–117):

35 “Mr. Brookes pressed me with the decision in In re T’s

Settlement Trusts. He accepts that the point is not a mere

matter of form, that is, whether in form there is a mere series

of variations of the existing trusts, or whether in form there is

a revocation and declaration of new trusts; but he says that

40 the form gives some indication as to whether there is a mere

variation or not. For myself, I cannot see much force in this;

1987-88 JLR 408

for so much depends on the individual draftsman who

prepares the arrangement. One draftsman may choose to

effect the arrangement by a series of variations of the

existing trusts. Another may prefer to effect precisely the

5 same variations by the formally more radical process of

revocation and new declaration. In any event, In re T’s

Settlement Trusts seems to me to be an entirely different

case. There the infant was within 18 days of attaining her

majority and obtaining an absolute interest in the trust

10 property. The existing trusts were at their very end, and what

in substance was proposed was to make a new settlement of

what was on the point of becoming an absolute unfettered

interest. Further, although Wilberforce J. rejected the wider

proposal put before him, he did in fact make some variation

15 in the trusts; and I cannot read the case as going so far as I

think Mr. Brookes would take it. It is not, of course, for the

court to draw the line in any particular place between what is

a variation and what, on the other hand, is a completely new

settlement. A line may, perhaps, one day emerge from a

20 sufficiently ample series of reported decisions; but for the

present all that is necessary for me to say is whether the

particular case before me is on the right side or the wrong

side of any reasonable line that could be drawn. In this case I

am satisfied that the arrangement proposed falls on the side

25 of the line which bears the device ‘variation.’”

This court proposes, subject to one important reservation, to

adopt the principles enunciated in In re Seale’s Marriage

Settlement (8), in In re Holt’s Settlement (5) and in In re Ball’s

Settlement Trusts (1). The jurisdiction of art. 43 of the Law is as

30 beneficial as the Act of 1958 and, in the court’s judgment, should

be construed widely. The one reservation that the court has

relates to the substratum doctrine. It seems to us that there are

two problems with this doctrine. The first is the practical difficulty

of deciding when the substratum has been changed. Different

35 judges may come to different conclusions on the same facts.

Indeed, the same judge may change his mind in different cases.

See, for example, the difficulties that Megarry, J. had in In re

Holt and In re Ball. The second problem is one of principle. If, as

we said earlier, the court under art. 43, is merely supplying the

40 consent on behalf of beneficiaries which they are not in a position

themselves to give, and if all beneficiaries being sui juris can put

1987-88 JLR 409

an end to the trust and re-settle the trust property as they please,

whether the substratum of the new trust be the same as the old or

not, we can see no justification for implying any limit on the scope

of the arrangement to which the court can give approval beyond

5 the words of the article itself. The article says nothing about

substrata and indeed refers to “varying or revoking the terms of

the trust.” The only limitation on the court’s power to give

consent is that contained in art. 43(2), i.e. that the carrying out of

the arrangement appears to be for the benefit of the person on

10 whose behalf the court’s approval is being given. The court has

power to convert a Jersey trust into a trust governed by some

other system of law and, therefore, in the instant case, into a trust

governed by the law of Florida. The court has power to approve

an arrangement which effectively revokes and then sets up new

15 trusts.

We must go on to consider whether the arrangement is for the

“benefit” of the minor, unascertained and unborn beneficiaries.

Underhill’s Law of Trusts & Trustees, 13th ed., at 395 (1979) says

that—

20 “in deciding whether a scheme is for a person’s benefit the

court will consider it as a whole. The word ‘benefit’ is not to

be narrowly interpreted or restricted to matters of finance.

Thus:

(a) If a person derives no financial benefit from a proposed

25 arrangement the court may still approve it on his behalf.”

And (op. cit., at 397):

“(b) Conversely, the mere fact that a person does derive

financial benefit from a scheme does not necessarily mean

that the court will sanction it on his behalf.”

30 In In re Weston’s Settlements (12), Lord Denning, M.R. said

this ([1969] 1 Ch. at 243–244):

“By the first part of the summons, Mr. Stanley Weston

asks for the appointment of two new trustees who live in

Jersey. One of them is Mr. Terence Cubitt Sowden, who is

35 an advocate and notary public. The other is Mr. Peter Gilroy

Blampied, who is a chartered accountant. . .

. . .

By the second part of the summons, Mr. Stanley Weston

asks for the approval of the court to a variation or revocation

40 of the trusts of the settlements. The proposal is that there

should be inserted in each of the settlements a power, after

1987-88 JLR 410

the expiration of three months, for the new trustees to

discharge the trusts of the English settlement and to subject

it to the trusts of an identical, or nearly identical, Jersey

settlement, which will be subject to Jersey law. That

5 application is made under section 1 of the Variation of Trusts

Act 1958, which says that ‘the court may if it thinks fit by

order approve on behalf of (infants and unborn persons) . . .

any arrangement . . . varying or revoking all or any of the

trusts, or enlarging the powers of the trustees. . .

10 . . .

There is one reported case in which a scheme on these

lines was approved. It was In re Seale’s Marriage Settlement.”

Lord Denning, M.R. went on to say (ibid., at 245):

“Two propositions are clear: (i) In exercising its discretion,

15 the function of the court is to protect those who cannot

protect themselves. It must do what is truly for their benefit.

(ii) It can give its consent to a scheme to avoid death duties

or other taxes. Nearly every variation that has come before

the court has tax avoidance for its principal object: and no

20 one has ever suggested that this is undesirable or contrary to

public policy.

But I think it necessary to add this third proposition: (iii)

The court should not consider merely the financial benefit to

the infants or unborn children, but also their educational and

25 social benefit. There are many things in life more worth

while than money. One of these things is to be brought up in

this our England, which is still ‘the envy of less happier

lands.’ I do not believe it is for the benefit of children to be

uprooted from England and transported to another country

30 simply to avoid tax. It was very different with the children of

the Seale family, which Buckley, J. considered. That family

had emigrated to Canada many years before, with no

thought of tax avoidance, and had brought up the children

there as Canadians. It was very proper that the trust should

35 be transferred to Canada.”

In In re Whitehead’s Will Trusts (13), at the request of the

beneficiary, the trustees of certain English trusts appointed, by

deed of appointment, new trustees resident in Jersey and

themselves sought to retire. The deed was made subject to the

40 beneficiary obtaining a declaration from the court that the

trustees were duly discharged by it from the trusts. The

1987-88 JLR 411

beneficiary with his family had, since 1959, settled in Jersey and

intended to stay here permanently. Pennycuick, V.-C. said this

([1971] 1 W.L.R. at 837):

“. . . [T]he law has been quite well established for upwards

5 of a century that there is no absolute bar to the appointment

of persons resident abroad as trustees of an English trust. I

say ‘no absolute bar,’ in the sense that such an appointment

would be prohibited by law and would consequently be

invalid. On the other hand, apart from exceptional cir-

10 cumstances, it is not proper to make such an appointment,

that is to say, the court would not, apart from exceptional

circumstances, make such an appointment; nor would it be

right for the donees of the power to make such an

appointment out of court. If they did, presumably the court

15 would be likely to interfere at the instance of the bene-

ficiaries. There do, however, exist exceptional circumstances

in which such an appointment can properly be made. The

most obvious exceptional circumstances are those in which

the beneficiaries have settled permanently in some country

20 outside the United Kingdom and what is proposed to be

done is to appoint new trustees in that country. In those

exceptional circumstances it has, I believe, almost uniformly

been accepted as the law that trustees in the country where

the beneficiaries have settled can properly be appointed.”

25 And he continued (ibid., at 839):

“I should, perhaps, add that one of the purposes of this

appointment is unquestionably to escape the burden of

certain United Kingdom fiscal liabilities. It has, however,

long been established that that is no reason why the court

30 should not lend its assistance in connection with a particular

transaction, and so far as the appointment of new trustees

out of court is concerned, it is, I think, an absolutely

irrelevant consideration. Those possessing the power are

clearly entitled to exercise it as they think best in the interest

35 of the trust estate.”

Again, we adopt the same principles in considering, as we have

to do under art. 43(2) of the Law, whether the carrying out of the

arrangement appears to be for the benefit of the minor,

unascertained and unborn beneficiaries. We are sure that it would

40 assist the profession if the court were to take this opportunity to

give guidance on the circumstances in which the court would

1987-88 JLR 412

decline to exercise its discretion to make the requested order

even though all the other conditions under art. 43 were satisfied.

However, in our view, given the infinite variety of fact situations

which may arise in the future, it would not be appropriate to do

5 more than refer to three examples drawn from English cases. But

we must not be taken to be deciding that these are the only cases

in which we would decline to make an order or that we would

necessarily so decline in every case where such facts occurred.

The first such example is that of the pointless application, such as

10 where approval is sought on behalf of a beneficiary who will never

come into existence (see In re Pettifor’s Will Trusts (7)). A second

example might be where the application followed the purported

exercise of a power of appointment which turns out to have been

exercised purely for the purpose of facilitating the application

15 itself (see In re Brook’s Settlement (2)). A third example might be

where a settlor created protective or spendthrift trusts in order to

protect the beneficiary against his own profligacy. Thus the court

will wish to consider whether the trusts, as proposed to be varied,

will confirm the protection which the settlor intended (see In re

20 Steed’s Will Trusts (9)).

In exercising its discretion the function of the court is to protect

those who cannot protect themselves. We must do what is truly

for their benefit. We can, in a proper case, give our consent to a

scheme to avoid tax. There are in the present case exceptional

25 circumstances that can justify the appointment of trustees in

Florida, i.e. there is a much stronger connection between all the

beneficiaries and Florida than there is with Jersey, or with

anywhere else. We were assured that in this case there was no

question of avoiding US taxation, the object being to minimise

30 the penal provisions of US tax law. The court was asked to

approve a variation which would result in the “proper” taxes

being paid. To that extent the arrangement was to benefit the

beneficiaries. The arrangement would not assist or encourage tax

avoidance.

35 The court must stress that this case is not an appropriate

occasion for considering whether the court would give its consent

to an arrangement where the avoidance of US tax liability is

involved and whether the constitutional position between Jersey

and the United Kingdom and the agreement, in regard to the

40 avoidance of taxation by British subjects, come to in July 1927,

between representatives of the United Kingdom and the Islands,

1987-88 JLR 413

referred to in Viscount Wimborne v. Abacus (C.I.) Ltd. (14) as

“our general undertaking” and in Viscount of Royal Ct. v. Shelton

(11) as (1983 J.J. at 57) “an agreement made between H.M.G

and the States some years before 1939,” should or do make any

5 difference. Nothing we say now should be taken as a response to

those questions, one way or the other. That question is wholly

reserved for, if necessary, a future occasion.

Decision

10 Under the terms of the arrangement, the grandchildren of the

principal beneficiaries will have a greater interest than hereto-

fore. The State of Israel and the Jewish charities will receive some

recognition but the court was satisfied that the proposed

payments-out were not extortionately large. The purchase of a

15 tax exempt bond will make reasonable provision for the remoter

issue of the principal beneficiaries. The court was satisfied that all

new trustees were proper and appropriate appointments. Florida

is the natural domestic base for these trusts. The proposed trusts

were rational; there was certainty, tax benefits, and flexible

20 provisions for income.

Mr. Jeune, for the adult beneficiaries, settlor and personal

representative of Harry Osias, fully supported the application of

the representor but, of course, the court is not concerned for

them. Mr. Clyde-Smith, for the minor beneficiaries, had

25 absolutely no doubt that the proposed arrangement was positively

for the benefit of all five of them. Mr. Le Cras, for the Attorney

General, on the assumption that the “major world Jewish

charity” would be charitable under Jersey law, a point which it

was not necessary to decide, said that the Attorney General was

30 satisfied with the provisions of the proposed arrangement. The

exact objects of the proposed donation to Jewish charities had yet

to be decided but he did not anticipate any difficulty. Mr. Jeune,

for the State of Israel, likewise supported the arrangement.

For all the reasons that we have given, the court was satisfied

35 that the proposed arrangement was for the benefit of the minor,

unascertained and unborn beneficiaries and we made the order to

which we have referred in respect of both representations.

Representations granted.