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Subtracting from powers of addition: the limits of the trust supervisory jurisdiction in Guernsey

May 24, 2024

BX v T Limited [2024] GRC 036

The Royal Court of Guernsey has handed down a significant judgment involving the disclosure of trust information to applicants asserting their likely future status as beneficiaries of a trust.

The case concerned applications made by two parties: ‘B’ and a family referred to as the ‘US Family.’ Both parties sought disclosure of information from the ‘W Trust’, a trust established under Guernsey law. Their applications were based on the submission that they had serious prospects of benefiting under the trust, and therefore, the Court had jurisdiction to make the order sought. B sought information for the purposes of holding the trustee to account, whereas the US Family sought disclosure in relation to elements of the trust structure which – by reason of the application of US ‘Controlled Foreign Corporation’ rules – were generating significant adverse tax consequences for the US Family. The existing beneficiaries of the W Trust opposed disclosure, including on the basis that the applicants did not come within the ambit of the proper purpose of the W Trust.

The primary legal question was whether the court could, and should, exercise its inherent supervisory jurisdiction to order disclosure in favour of individuals who are not currently beneficiaries, but may become beneficiaries via the exercise of a power of addition. The Royal Court of Guernsey ultimately dismissed the applications for disclosure, on the basis that:

  •  An applicant for disclosure who is not currently a beneficiary, but is the object of a power of addition, must have such an “overwhelmingly strong” claim to be added that they can safely be treated as having already been added as beneficiaries of the trust. While the applicants had a claim to be added as beneficiaries, it did not meet this exceptional threshold.
  •  The Court considered that disclosure was sought for purposes which were not sufficiently connected with the proper administration of the trust.

The judgment suggests that the Court’s inherent jurisdiction to supervise trusts does not extend easily to applications by non-beneficiaries who have a claim to be added, except under clear and compelling circumstances. The judgment also demonstrates that, following the judgment of the Privy Council in Grand View PTC v Wong (No 2) [2022] UKPC 47, the law relating to the proper exercise of fiduciary powers of addition remains uncertain.

A copy of the judgment can be found here.

Alan Steinfeld KC, Andrew Holden, James Bradford, and James Fennemore acted in the case assisting Guernsey Advocates from Ogier and Collas Crill.