Jersey's government has launched a consultation on amendments to the Trusts (Jersey) Law 1984 (the Trusts Law), some in direct response to recent judgements in Jersey and Guernsey. The consultation highlights the fact that trust law in offshore jurisdictions continues to evolve.
- A key amendment is intended to clarify that security created voluntarily over a trust fund (eg in favour of a lender) would have priority over the right of indemnity of trustees and former trustees where the trust has become insolvent. This is in response to the Privy Council's judgement in Equity Trust v Halabi and ITGL v Fort Trustees (2022 UKPC 36) which decided that the right of indemnity of trustees and former trustees carries a proprietary interest in the trust property.
- Another is in response to the decision in the Guernsey case of Rusnano (2019 GRC 011) which held that members of the class of beneficiaries of a discretionary trust can together terminate the trust provided they are of full age and capacity even if there is a power to add beneficiaries. This decision was reached on the basis of a provision in Guernsey trust law which is very similar to Article 43(3) of the Trusts Law. The proposal is to amend Article 43(3) so that the presence of a power to add in such a case would prevent the termination of the trust by the beneficiaries. In addition, this amendment will confirm that, if the beneficiaries do have a right to terminate the trust, they can also vary it.
- It is also proposed to make it clear that where the terms of the trust give a trustee power to resign by notice that power cannot be exercised by a sole trustee. It is already clear that the statutory power to resign by notice does not apply to a sole trustee (Article 19(1) Trusts Law) and the proposal is to amend Article 19 so that a sole trustee cannot resign by notice even if they purportedly have this power under the terms of the trust.
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The consultation paper also considers the concept of 'pure data trusts' and questions whether changes should be made to the Trusts Law to provide that a trust is not invalid solely on the grounds that the trust property comprises only data or information. A key issue here is that to create a valid trust, there needs to be certainty of subject matter (the trust assets), but historically unstructured data, pure information, has not constituted or attracted property rights. No specific proposal has been put forward here, instead the suggestion is to await the outcome of the Jersey Law Commission's consultation in this area which asks whether Jersey should "introduce a new category of property rights or otherwise recognise “data objects” (however defined) as capable of constituting movable property?” (Digital Assets Reform Project: Smart Contracts, Data Assets & DAO (24 March 2024)).
The consultation closes on 16 August, and it is anticipated that draft legislation will be published in the autumn.
