PRINCIPLE OF OPEN JUSTICE – WHETHER APPLICATION TO REMOVE TRUSTEE, TO WHICH CLAIMS ALLEGING BREACH OF TRUST HAD SUBSEQUENTLY BEEN ADDED, SHOULD BE HEARD IN PRIVATE OR PUBLIC

Representation of C re P Trust [2024] JRC 299

This case addressed whether a Representation seeking the removal of a trustee and alleging breach of trust should be heard in private or public. The Representor sought an order that the proceedings be made public. The trustee and other beneficiaries objected. The Court emphasised the importance of the principle of open justice, noting however that there are exceptions where confidentiality is required by the more fundamental need to do substantive justice and that, in relation to applications for the blessing of a trustee’s decision, the Jersey courts have given more importance to the need to protect confidentiality of private trusts than may be the case in other jurisdictions. This was not a blessing application and therefore did not fall within the tenor of that policy. The Court held that each case has to be considered on its own facts. The starting point is the principle of open justice. The present case had been proceeding in interlocutory hearings on the basis that it would be held in private. No explanation for the Representor’s change of position had been given. The outcome of the allegations was still unknown and there was a possibility that the Representor’s complaints of breach of trust might be found to be merely tactical. In these circumstances the application for a public hearing was declined.

A beneficiary and settlor of a trust sought the removal of the trustee on the ground of an irretrievable breakdown of relations. In an amendment to her Representation she had also added allegations of breach of trust. The matter had proceeded in two judgments at the interlocutory stage on the basis that the matter would be heard in private. The Representor now sought an order that the proceedings be held in public. The application was contested by the trustee and by the Second Respondent, a beneficiary.

Held, refusing the application:

(1) Principle of open justice. The starting point is always the principle of open justice. This principle may however yield where necessary to the more fundamental object of securing justice itself. The importance of the principle of open justice is such that it cannot be displaced except for compelling reasons of necessity. The burden lies with the party seeking an order for hearing in camera to prove that it was the only way in which justice could be done; convenience, potential embarrassment and the parties’ preference are in themselves insufficient justifications: Jersey Evening Post Limited v Al Thani [2002] JLR 542; G v A [2000] JLR 5.

(2) Trustee blessing applications. In relation to blessing applications, the Royal Court has accorded a greater importance to the need to respect the confidentiality of private trusts than may appear to have been the case elsewhere. In particular, the practice, as explained in M Trust [2012] (2) JLR 51 and HSBC Trustee CI v Kwong [2018] JRC 051A, has been for the Court generally to sit in private, but to ensure its accountability by publishing a judgment setting out its reasons, albeit being anonymised. The practice of anonymising judgments in order to protect the privacy of the family involved with a trust was referred to as well established in The C Trust [2012] JRC 098; In the Matter of Sanne Trust Company Limited [2009] JRC 025B.

(3) Position with regard to other trust applications. What the Jersey cases had not had to grapple with is how the principles that apply on applications for directions by trustees and whether they should be held in public or in private, should be applied to other applications involving trusts, including at one end of the scale purely hostile claims for breaches of trust. However that is only one category of case as recognised in S Settlement, In re, 2001 JLR N [37], cited in Al-Thani. The distinctions between different categories of cases involving trusts are also not easy to draw as has also been recognised in the S Settlement and Al-Thani decisions, among others.

(4) Each case to be decided on own facts. As emphasized in Isle of Man decision in Re Delphi Trust [2014] 16 ITELR, each case must be considered in relation to its own facts. The starting point still remains open justice with the discretion having to be exercised for each case. The starting point does not prevent the court from formulating a policy as to when it might depart from that principle. Although in the Isle of Man trustee removal cases are ordinarily held in public, the following observations forming part of the extract from Delphi cited above are pertinent and bear repetition: “It is unwise to be dogmatic as to when the court should sit in public and when in private to hear applications by trustees for directions. The court should adopt a principled, pragmatic and flexible approach and can review the question whether to hear a matter in private in the course of the proceedings. Each claim for directions and each application to sit in private must be considered on its own facts, circumstances and merits.”

(5) Naming of trustees found in breach of duty. Paragraph 39 of HSBC Trustee CI v Kwong [2018] JRC 051A was also significant. The court there recognised the importance of publishing judgments and explaining its decisions so it could be held to account in that way. That can include naming trustees and describing any breaches of duty even if the identity of beneficiaries or trust assets is anonymised. This allows for findings of misconduct to be put into the public domain.

(6) Disposal in circumstances of present case – application for public proceedings refused.

(a) In the present case, the proceedings were a combination of a claim for breach of trust and an administrative action designed to determine whether the removal of the trustee was in the interests of the beneficiaries as a whole. The breach of trust claims came long after the removal request. Four different possible outcomes to the proceedings had been set out by Commissioner William Bailhache in a December 2021 unpublished judgment in these proceedings, namely (i) the Representor had not in fact lost trust and confidence in the trustee at all but had brought this Representation for other tactical reasons; (ii) the Representor has lost trust and confidence in the trustee albeit there was no rational basis for her having done so; (iii) as (ii) above but there was such a rational basis although the trustee had not been guilty of any misconduct; or (iv) as (iii) above but the trustee had been guilty of such misconduct as amounted to a breach of trust. Bearing in mind these ongoing possibilities, the Commissioner concluded that the question of what should be made public should await the outcome of any trial of the issues.
(b) In particular, the Commissioner shared Commissioner Bailhache’s concern that the Representor’s complaint might be found to be tactical. The present application sought an order that the entire proceedings should be public when this would have the consequence of all the information being put in the public domain unless the court made different orders. It was significant that there was no explanation from the Representor as to why the application was being made at this stage, when it had been referred in interlocutory proceedings in 2021 and 2022 but had not been pursued further. While Al Thani suggests that the burden is on those seeking to displace an application of a privacy order in a particular case, that principle focuses on an application at the outset to determine proceedings in private. The authorities do not address how the court should approach applications to hear proceedings in public where the court has previously ordered that matters should be heard in private and no party has challenged that decision; notwithstanding indicating it might. When an application comes late in the day, for a court being asked to re-consider previous decisions on whether or not proceedings should be in public or in private, the court should at least have an explanation as to why the proceedings, having previously been determined to be in private, should henceforth be held in public. In this case, no explanation was forthcoming. The court was entitled to take this into account as part of deciding whether or not these proceedings should continue to be held in private, or whether they should now be heard in public.