TRUSTS; RECTIFICATION; JURISDICTION; GUERNSEY LAW; POSSIBLE DIFFERENCES IN STANDARD OF PROOF BETWEEN JERSEY AND GUERNSEY LAW OF RECTIFICATION

Representation of NBK Trustees (Jersey) Limited re C Trust [2024] JRC 133

The Court granted an application for the rectification by the trustee of a Guernsey law trust, applying Guernsey law. Due to an omission in the drafting of the trust instrument, the late settlor was not expressly named as an Excluded Person, nor was he subsequently declared to be an Excluded Person. The possibility remained that, during his lifetime, the settlor could have benefitted from the trust fund. This had adverse UK tax consequences.

Held, in granting the application on the facts, as to the material issues of law:

(1)  Jurisdiction. The Court had jurisdiction to hear the application pursuant to Article 5 of the Trusts (Jersey) Law 1984 because the Representor was a Jersey company. The Court nevertheless had discretion to decline jurisdiction. This could arise where the relevant provisions of the foreign law are not clear and so the application for rectification should be heard by the Courts of the jurisdiction whose law governs the trust (see In the Representation of Barrett and Rathbone Jersey Limited [2001] JLR Note 34). In this case the Court was happy to exercise jurisdiction, firstly because all of the beneficiaries notified of the application supported the relief sought by the Representor and secondly, we had the benefit of expert evidence of Guernsey law which mirrored the law of Jersey, apart from in the one respect below.

(2) Guernsey law on the standard of proof for rectification.

(a) The Guernsey law principles for rectification are derived from English law, and are similar to the principles applied as a matter of Jersey law in B and C v Virtue Trustees (Switzerland) AG [2018] JCA 219.

(b) The one difference between the law of Guernsey and the law of Jersey followed on from the decision of Deputy Bailiff MacRae in the Representation of Vistra Fiduciary Limited Re The Maria Trust [2022] JRC 164, where Deputy Bailiff MacRae, departing from B and C, held that the standard of proof in rectification cases was no more than the normal civil burden.

(c) In The Matter of the OSM Provident Fund [2018] GRC 33, Deputy Bailiff McMahon, stated it had to be established to the highest degree of civil probability that a genuine error has been made. In The Matter of B Trust [2019] GRC 074, Sir Richard Collas Bailiff, spoke of the need for convincing proof to counteract the evidence of a different intention represented document itself. Deputy Bailiff Roland in Guernsey stated the following at paragraph 66 of The matter of the Cloudburst Trust [2023] GRC 019 decision:

“66. The learned Deputy Bailiff [of Jersey] is right to highlight the importance of the standard of proof being no more than the normal civil burden. Nevertheless, in cases where there is no opposition to the rectification, the Court is often looking back some or even many years to the time of the original intentions, and the evidence is provided by those who can equally be described as having ‘a lively personal interest in establishing that there was a serious causative mistake’, thus the Court needs to be alert to ensure that there is cogent evidence of the facts needed to be found to establish the case for rectification on the balance of probabilities. The Deputy Bailiff directed the Jurats that as with rescission the standard of proof was and remains the balance of probabilities.”

(d) The latest authority from Guernsey therefore appeared to require cogent evidence of the facts relied upon to show that the written instrument did not reflect the intention of the parties.

Bridgeford A, WDJL 15-21 July 2024