TRUST; BLESSING OF TRUSTEE’S DECISION; APPLICATION FOR BLESSING BROUGHT BY BENEFICIARY

Y v Church Street Trustees Limited and Ors [2025] JRC 033

This was an application for the blessing of a trustee’s decision brought by a beneficiary rather than the trustee, although it was supported by the trustee. The Court held that there was no reason why the same principles as in a trustee application (see Representation of the Otto Poon Trust [2015] JCA 109; Re S Settlement [2001] JLR N37) should not apply.

This blessing application was, unusually, brought by a beneficiary of the trust (Y), but supported by the trustee. The trustee was the owner of a Delaware LLC which was in turn the owner of a hotel. The operating agreement of the LLC required the trustee’s consent for the sale of the hotel. Two beneficiaries (U and V) objected to the hotel being sold and had threatened but had not, in the event, sought an injunction to prevent the sale. They alleged that the trustee had not taken into account relevant considerations. Although an injunction had not been obtained it was still a condition precedent of the sale that title insurance be provided and the contentions advanced by the objecting beneficiaries’ had inhibited the obtaining of that insurance. The validity of the trustee’s consent thus needed to be established if the sale were to proceed and the supporting beneficiary thus brought the present application.

Held:

(1) Beneficiary application not treated as hostile. As is often the case in trust applications, there was a lack of agreement between the parties as to the order the Court should make; but that did not mean that the litigation should be considered as “hostile”. The Court sat in private and anonymised its judgment in accordance with the usual practice.

(2) Same test to be applied. The trustee acquiesced in the present application. The substance of the exercise for the Court was no different from one where a trustee seeks a blessing of its decision. The Court should apply the same test. When it comes to blessing applications, the approach of this Court is well-established and was summarised in the Court of Appeal decision in Representation of the Otto Poon Trust [2015] JCA 109 where Bompas JA said this: “14. Where a trustee has made a momentous decision, that is a decision of real importance for the trust, and seeks the Court’s approval for the decision, the legal test to be applied by the Court is well-established in this jurisdiction. As explained in Re S Settlement [2001] JLR N37, the Court must satisfy itself (i) first, that the trustee’s decision has been formed in good faith, (ii) second, that the decision is one which a reasonable trustee properly instructed could have reached, and (iii) that the decision has not been vitiated by any actual or potential conflict of interest. A similar approach is taken in England – see Public Trustee v Cooper [2001] WTLR 901.”

(3) Disposal. Applying that test, as elucidated by Bompas JA in Otto Poon, the Court approved the trustee’s decision to give consent.

(a) There was nothing to suggest that the trustee took its decision other than in good faith.

(b) Nor was it vitiated by any conflict of interest.

The trustee’s resolution showed that it was well informed about the material considerations. Not every trustee would perhaps have reached the same conclusions as the trustee reached, but others might. That was another way of saying that the decision of the trustee to give consent was not irrational. It fell within the band of decisions a trustee could reasonably make on the material before it. It is not for the Court to form its own view as to what decision it would have taken – the non-intervention principle requires it to accept that it is the trustee who has the decision taking function, subject only to the Court’s review on the established grounds.

Bridgeford A. WDJL 16-22 June 2025