In the recent case of In the Matter of the Banayou Trust, the Royal Court of Jersey set out helpful guidance regarding (1) distributions where there is no beneficiary; and (2) the publication of judgments of privately heard trust matters.
At issue was a trust settled by the National Bank of Yugoslavia, an institution of the Former Socialist Federal Republic of Yugoslavia. The bank was the sole beneficiary. In 1992, the Former Socialist Federal Republic of Yugoslavia dissolved and was succeeded by five states. Private international law advice before the Court stated the successor states were the successor beneficiaries entitled to share the trust assets. Those states eventually agreed on the distribution of the trust assets and the representor sought the Court’s blessing for the same.
The representor brought the application on the ground that the proposed distribution was within its powers but sought the Court’s blessing due to the momentous nature of the decision. The Court, however, questioned whether the proposal was within the representor’s powers: under the trust declaration, the representor’s dispositive powers were only exercisable on the instructions of the beneficiary – ie, the bank. With the bank no longer existing, the Court considered as a matter of Jersey law whether (1) the successor states were now the beneficiaries such that they could instruct the representor (the beneficiary route) or (2) there were no beneficiaries due to a failure or lapse of interest under Article 42 of the Trusts (Jersey) Law 1984 (the settlor route). While the outcome in this case would be the same, the Court preferred the settlor route: upon the bank ceasing to exist, there were no beneficiaries and the representor held the trust assets for the bank as settlor.
However, a further complication arose because the successor states’ agreement preceded the further splits of one of those states into Serbia and Montenegro, and then Kosovo from Serbia. The Court resolved this uncertainty by making a Benjamin order: where the court gives the trustees liberty to distribute on a particular footing, enabling the trust property to be distributed according to practical probabilities without varying or destroying beneficial interests. This meant the representor was free to distribute the trust assets as agreed by successor states, with Montenegro and Kosovo being free to make future claims against the other states for a share of the distribution.
The Court then considered publication of the judgment following the private, substantive hearing. Despite an earlier no publication order, the Court held it was not functus officio; the order was not final and could be reviewed under its inherent jurisdiction. There was a strong public interest in the judgment being published in full. On balance, the Court was satisfied the judgment did not disclose information of a confidential or sensitive nature provided to the Court by the convened parties in reliance upon a privacy order so publication would not undermine the Court’s ability to supervise trusts.