Unlawful Flashcards
Q1. What does Article 11(3) say about unlawful purposes in a trust?
A1. If a trust has both lawful and unlawful purposes:
If those purposes cannot be separated, the entire trust is invalid.
If they can be separated, the court can strike out only the unlawful parts and leave the rest valid.
Q2. What happens if only part of a trust is invalid (e.g., a single asset or a single beneficiary clause)?
A2. The court can:
Declare which property remains trust property and which does not (Article 11(4)),
Order that invalid property reverts to the settlor or their estate (Article 11(6)).
Q3. How does Article 11(5) handle Jersey immovable property held in trust?
A3. If the trust directly applies to Jersey immovable property (banned by Article 11(2)(a)(iii)), the person holding legal title is not considered a trustee of that immovable. That portion is invalid as trust property.
Q4. Give an example where only some trust property is invalid for uncertainty.
A4. If the trust owns shares in Company A (clearly identified) and shares in Company B (uncertain/undefined), the latter portion is invalid. Shares in Company B revert to the settlor; shares in Company A remain in trust.
Q5. What if a trust grants a remainder interest to a nonexistent beneficiary?
A5. The life interest for the valid beneficiary stands, but the nonexistent “remainder” fails. At that stage, the property reverts to the settlor once the life interest ends.
Q6. Under Article 47E, how can the court set aside a disposition made under mistake?
A6. The court may declare the transfer voidable and:
Either no effect from the outset, or
Such effect as the court determines (partial unwinding).
Q7. According to Crociani v Crociani, what options can the court choose under Articles 47E/47G?
A7.
Declare the transfer void from the start,
Declare it void from inception but preserve some effects (e.g., trustee’s fees), or
Avoid it from a later date if that is just.
Q8. What extra power does Article 47I(3) give the court in mistake cases?
A8. It allows the court to make consequential orders to address practical issues (like investments made, fees paid, or administrative steps) that occurred before the trust/disposition was set aside.
Q9. In A v C [2018] JRC 174A, why did the court also set aside subsequent transfers and distributions?
A9. Because they flowed from the original mistake in creating or funding the new trust. The court took the view they all originated from the same mistaken step and so voided them together.
Q10. How did the court handle “administrative steps” in Link Trustee Services (Jersey) Limited v C [2018] JRC 043?
A10. The court set aside the core mistaken transfer/appointment but ratified administrative acts. It reasoned the trustee would have done those administrative steps under a correct arrangement anyway.
Q11. If a trust is declared never to have existed under Article 11, how can a trustee protect themselves regarding fees or liabilities?
A11. They might rely on:
Article 26 (exoneration),
Article 45 (relief from breach of trust),
Or the court’s inherent jurisdiction.
They must show honest, reasonable behavior to avoid personal liability.
Q12. Summarize how partial invalidity is handled under Article 11.
A12.
The court can separate valid and invalid parts.
Invalid segments revert to the settlor.
If valid and invalid are inseparable, the whole trust fails.
Q13. How does the remedy differ between Article 11 invalidity and Article 47 mistakes?
A13.
Article 11: The trust itself is invalid (fully or partially), with no direct statutory provision for consequential orders.
Articles 47E/G: Focus on voidable dispositions or exercises of power, giving the court flexible options (e.g., partial or retrospective relief) and Article 47I(3)’s power to order consequences.
