Havoc

The Blackberry Family Settlement (the Trust) is governed by Jersey law. The matter came before the Royal Court of Jersey to establish the validity of a Deed of Retirement and Appointment of Trustees (the DoRA) that was no in accordance with the terms of the Trust, which specified who could appoint trustees in order of priority. This was because the DoRA was drafted by reference to an earlier draft of the Trust, which contained a different order of priorities.

Notwithstanding the various explanations given the Court “… unhesitatingly accepted” that the DoRA was invalid. An application for the DoRA to be rectified was denied on the basis that it was hopeless the power of appointment never having vested in the sole appointor under the DoRA. Accordingly, the Trustees who purported to retire under the DoRA remain in place as their resignation was expressed as taking effect simultaneously with the appointment of the new trustee.

From a practical perspective the outcome was that the “trustee” appointed pursuant to the DoRA was a trustee de son tort who held the Trust’s assets as bare trustee for the trustees who had purported to retire.

The next matter to consider was ratification of the acts carried out by the trustee de son tort. Ratification has been considered in New Zealand by the Court of Appeal in Hansard v Hansard, where the Court of Appeal noted as follows at [45] to [47]:

What the case regarding the Blackberry Family Settlement highlights is the havoc that can result where appointor powers are not correctly exercised and the reality of being a trustee who thinks that the trustee has been released from all obligations, to then find out that is not necessarily the case.

References:

• Representation of Appledore Trustees Limited Re Blackberry Family Settlement 30-Aug-2022
• Hansard v Hansard [2014] NZCA 433
• Cadman v Visini [201]] NZHC 526