Trust - reasons for not blessing the decision of the Representor
Before : |
Sir William Bailhache, Commissioner, and Jurats Dulake and Hughes |
Between |
Jemma Trust Company Limited |
Representor |
And |
B |
First Respondent |
|
C |
Second Respondent |
|
D |
Third Respondent |
|
Advocate Mark Seddon (for unborn and unascertained beneficiaries) |
Fourth Respondent |
Advocate F. J. Littler for the Representor.
Advocate G. C. Staal for First and Second Respondents.
Advocate N. M. Sanders for the Fourth Respondents.
The Third Respondent did not appear.
judgment
the COMMISSIONER:
1. This judgment concerns a Representation which, having been first presented to the Court on 30 August 2019 when orders were made for convening the parties, was heard on 2 August 2022. In the interim, the Third Respondent has disclaimed any interest in the trust which is the subject of the Representation, namely the V Trust, created by an Instrument dated 28 February 1974 (the "Trust") of which the Representor is the trustee. The settlor of the Trust is now deceased, and the economic settlor was E (senior), also now deceased, the husband of the First Respondent and father of the Second and Third Respondents. The Trust is a Jersey law discretionary trust, the beneficiaries of which are now the First and Second Respondents and the issue and remoter issue of the late E, excluding the Third Respondent who has disclaimed her interest.
2. As at August 2019, as remains the position today, the primary asset of the Trust was a share in real property London (the "Property") with an estimated value in 2015 of £2,750,000. The Trust's share in the Property is limited to 41.44% - the remaining interests are held by the First Respondent (21.82%) and her brother-in-law, F (36.74%) who was resident in Country A and who died suddenly on 1 January 2019. The evidence from the First Respondent is that F's wife, the sister of the First Respondent, is the heir to his estate who is entitled to his share in the Property. The First Respondent asserts that her sister is disabled has been badly affected by her late husband's sudden death and has had serious health issues, as a result of which his share in the Property has not yet been transferred to her sister, who has promised, when it is so transferred, to gift that share to her.
3. The Representor claims that as disclosed in the Trust accounts for the year ended 5 April 2019, there are net current liabilities of £228,627. These liabilities are said to include unpaid trustee's fees in the sum of over £91,000, expenses, including legal and tax advice, valuation fees and the fees of a process server, in the sum of approximately £26,500 and tax liabilities with interest and penalties totalling approximately £111,581, which liabilities have so far been discharged from the Representor's own funds.
4. The Representor asserts that following its acquisition of its interest in the Property, the First Respondent occupied it as a tenant pursuant to a Tenancy Agreement dated 14 October 1995. She paid rent to the Representor for the years 1995 to 2005, but it does not appear that any rent has been paid since then. According to the Representor, the First and Second Respondents have asserted that the Property was not occupied between 2005 and 2016, but that they currently reside at the Property. By contrast, in their affidavit evidence filed in these proceedings, the First and Second Respondents claim that the Property has always been their home. Advocate Staal told us that his instructions were that the First Respondent has lived in the Property since the 1970s.
5. The Representor asserts that on 5 August 2019, it determined, subject to the blessing of the Royal Court, that it should take steps to sell its interest in the Property, and, if necessary, should apply to the English Court for an order for the sale of the Property. It is that decision for which the Representor now seeks the Court's sanction in the event that the co-owners do not consent to a sale.
6. The Representor took the decision it did because the Trust has no liquid assets, and considerable liabilities are due to the Representor by way of trustee's fees and expenses as set out above. It thus becomes necessary to examine in more detail how this situation has come about.
7. The Representor asserts that until 1994, the Property was owned by the First Respondent subject to a first charge in favour of F, a second charge in favour of the First Respondent's mother and a third charge in favour of the trustee as trustee of the Trust pursuant to a Charging Order obtained in the High Court on 27 May 1994. These various charges were given to secure repayment of monies lent to her. At some point, the First Respondent is said to have transferred the Property to her mother, to F and to the trustee in unequal shares to satisfy the debts secured by way of charges over the Property. The transferees held those shares for themselves as beneficial tenants in common. Subsequently in March 2018, the Representor was informed by the First Respondent that her mother had agreed to transfer her interest in the Property to the First Respondent in 2014. That transfer was ultimately registered with the Land Registry in August 2018.
8. It appears that the Trust received little attention for many years. The First and Second Respondents assert that the trustee's fees were very reasonable, and the Representor itself does not assert that much if anything took place. Nothing turns on it, and the Court has proceeded on the basis that such liquidity as existed in those early years was in effect used to discharge the trustee's fees and expenses. Indeed, it may indicate the level of involvement that the Representor has had with the Trust that it employed a tracing agent to find the First and Second Respondents in 2017 - albeit those Respondents have asserted that this was money wasted because they had been living at the Property and could easily have been found there.
9. At some point in 2017/2018, the Representor came to appreciate that there were difficulties which the Trust faced as a result of which it gave the Trust more attention. The first may be said to be the tax issues affecting it. As the Trust had an interest in UK residential property, the trustee was theoretically liable for income tax on any rental profits. No income tax returns had been submitted as of 2018, and there may or may not have been an income tax liability at that stage, bearing in mind that the English solicitor for the First and Second Respondents accounted to the Representor for £10,000 in 2018 albeit it is unclear what that sum represented. However, the more difficult question concerned inheritance tax. Because the trustees held a direct interest in UK land, this is statutorily defined as 'relevant property' for the purposes of UK inheritance tax. The Representor acquired the interest in that Property in November 1995. There is a ten year charge, the first of which fell due on 28 February 2004 and the second on 28 February 2014. No returns were made to Her Majesty's Revenue and Customs and accordingly, as no payment has been made in respect of those periodic charges, there would be interest and possibly penalties to pay on top of the sum representing those charges.
10. As a result, the tax advice received in October 2018 was that the Representor should complete the relevant anniversary charge returns and submit those to HMRC, in order to reduce the penalties which might otherwise be due, under the 'requirement to correct' tax failures pursuant to the 2017 Finance Act. The Representor followed that advice and a breakdown of the tax liability prepared in July 2022 showed an overall liability to tax in the sum of £109,826.43, which it is said the Representor has paid out of its own funds, having borrowed the money to do so from its parent or associated company.
11. The second problem which emerged concerned the state of the Property. On 26 October 2016, the local council served a notice under Section 215 of the Town and Country Planning Act 1990 with a schedule describing the work which was required to deal with the exterior of the Property. On 7 November 2018, a further notice was served to the effect that there may have been a breach of planning control at the Property by the erection of unsightly scaffolding to the rear as well as the untidy nature of the building. On behalf of the Representor, Mr Mark Healey deposed that the Representor had requested access to the Property on multiple occasions during 2018, not only because of the condition of the Property which was alleged by the council, but also because it was necessary to have access to enable a valuation to take place in order to calculate the tax liability payable.
12. Given the illiquid nature of the Trust, the tax liabilities and the repair costs were naturally a concern to the Representor; in addition, dealing with these various issues resulted in a substantial increase in trustee fees, which again would be an obligation of the Trust.
13. The reason for the Representor's decision that in principle the interest in the Property - and thus in reality the Property, should be sold to meet these various liabilities was obvious. The Representor considered that it had no other option.
14. In essence, the First and Second Respondents assert that these various liabilities entirely arise from the Representor's dereliction of duty for several years - as a result of which there has been unnecessary difficulty as well as additional liability for the Trust. Furthermore, it is said that the First Respondent is anxiously seeking to obtain finance which will enable her to acquire the share in the Property of the Representor, that being the only share she needs to purchase because, once her brother-in-law's estate has been wound up, his interest in the Property will be gifted to her by her sister. It is said by the First and Second Respondents that the Representor is under a conflict of interest and has only taken the decision to seek a sale of the Property, or potentially of its interest in the Property, in order to pay itself outstanding fees to which it is not entitled, at least in part.
15. It is also said that the Representor is not entitled to be indemnified in relation to the Representation or to take any further steps in connection with it or with the Property because it has taken an approach that no reasonable trustee would ever take.
16. Furthermore, it is said that the trustee fees have increased exponentially in the last four years, the charges falling in a bracket of between £2,000 to £3,500 per annum between 2011 and 2015, and, suddenly, £11,000 for six months between 1 July and 31 December 2017. As far as the tax liabilities are concerned, the First and Second Respondents assert that, if the Representor had behaved as a competent and careful trustee should behave, there would not be penalties and interest on any outstanding taxes which were due. In their Skeleton Argument in July 2022, the First and Second Respondents say that 'having caused a breakdown in relations with the beneficiaries, through its inactivity and gross negligence, the trustee nonetheless continue to charge fees at an exorbitant level...'.
17. The First and Second Respondents therefore resist the application to the Court to have the Representor's decision to sell the Property or the Trust's interest in the Property blessed by the Court.
18. The Skeleton Argument filed on behalf of Advocate Seddon, representing the unborn and unascertained beneficiaries, indicates that Advocate Seddon supports the application of the Representor. In summary, it is said that:
(i) The decision to sell the sole asset of the Trust in context is a momentous decision. In considering the application to have that decision blessed, the Court should take account of the fact that the Representor is owed money in respect of unpaid trustee fees and Trust tax liabilities that have been paid by the Representor out of its own funds. The Representor is therefore a creditor of the Trust and prima facie in a position of conflict.
(ii) However, the Representor appeared to have acknowledged and addressed that conflict as part of its decision making process. Reference was made to a minute of meeting of trustees on 5 August 2019 which records:
"Ms Greave asked Advocate Pearmain whether it was acceptable for the Trustee to make any decision given their conflict but Advocate Pearmain advised that he considered in the circumstances that the Trustee was capable of making a valid decision but if the Court felt otherwise then Jemma could surrender its discretion and leave it to the Court to decide upon matters though this was not usually the preferred course of action, especially if a conflict had been identified, was being managed and there were other obvious good reasons to reach the decision in question.'
Accordingly, the Representor's position that it had fairly and reasonably been able to make a decision regarding the Property was not to be disregarded on the grounds of conflict of interest - the provisional decision had been reached recognising the conflict but with the conclusion that nonetheless it was in the best interests of the beneficiaries that the Property be sold.
(iii) The Property was clearly falling into disrepair and the continued deterioration of condition would lead to the Property becoming a wasting asset, the value of which would become unacceptably diminished.
(iv) The Trust suffered from chronic illiquidity, and it was therefore, as a matter of principle, in the best interests of the unborn and unascertained beneficiaries that the Property be disposed of, or at any event the interest of the Trust in the Property should be disposed of, with a distribution thereafter to the adult beneficiaries or the investment of monies received in such a way as would increase rather than depreciate the value of the Trust fund.
19. Advocate Seddon recognised that English Court proceedings would probably be necessary if the First and Second Respondents continued to resist the sale of the Property. That was not an ideal solution, but it had to be balanced against the adverse effect on the Trust caused by the wasting nature of the Property, which had to be addressed.
20. When it comes to blessing applications of this kind, the approach of this Court is well-established. It is summarised in the Court of Appeal decision on the Representation of the Otto Poon Trust [2015] JCA 109 where Bompas JA said this:
"14. Where a trustee has made a momentous decision, that is a decision of real importance for the trust, and seeks the Court's approval for the decision, the legal test to be applied by the Court is well-established in this jurisdiction. As explained in Re S Settlement [2001] JLR N37, the Court must satisfy itself (i) first, that the trustee's decision has been formed in good faith, (ii) second, that the decision is one which a reasonable trustee properly instructed could have reached, and (iii) that the decision has not been vitiated by any actual or potential conflict of interest. A similar approach is taken in England - see Public Trustee v Cooper [2001] WTLR 901."
21. It had been contended in the Court of Appeal in Otto Poon that the trustee must demonstrate that it had given proper consideration to the matter under scrutiny and had procedurally followed the appropriate steps. That submission was rejected by the Court of Appeal. Bompas JA continued:
"16. We do not consider that Madame Kan's submission as to the applicable law to be well founded. The English case law speaks with one voice in recognising the test outlined in paragraph 13 [sic] above, although different judges have expressed in different language the various ways in which a trustee might go about proving to the Court that that test has been satisfied in any given case. One necessary element of the test is that there has indeed been a decision of the trustee which the Court is being asked to approve, because after all it is a decision which the Court is being asked to approve. The decision must naturally be a 'proper' one. This indeed is inherent in the first limb of the test. But of course that decision may not be final, in that implementation of the decision may be conditional upon the Court's approval; and this, along with other circumstances of the particular case, may give colour to the degree of formality which the Court requires the decision to be proved and the degree of detail which the Court requires to be given.
17. We do not read the English case law as introducing a new and additional requirement that a trustee must in all cases prove anything other than that the three part test set out above has been satisfied. Furthermore, we consider that it is both unnecessary and undesirable to introduce a separate requirement for a trustee to prove in all cases precisely what it has done in giving consideration to the matter under scrutiny: a decision maker can consider matters carefully and still reach an irrational decision, and conversely an entirely rational decision can be reached on the basis of superficial thought processes.
18. When the Court has to give approval for a momentous decision the Court needs to be satisfied as to the rationality of the decision; the lengths to which the Court must go in examining the process by which the trustee has arrived at the decision must depend upon the particular decision. In some cases the decision may be a difficult and doubtful one, requiring fine judgment in the face of competing considerations; in others the decision may be obvious. In the former cases the quality of the decision making process will be more important than the later. For that reason we do not consider that the additional requirement for which Madame Kan contends should be introduced to the law of this jurisdiction, even if it were to be adopted in England.
19. That is not to suggest that the Court should take a lax approach, or that it should approve any trustee's applications without due consideration. There is a threshold that must be crossed: the Court is required properly to scrutinise the proposed exercise of the trustees' power on the evidence. As was pointed out in Re Y Trust [2011] JLR 464 (citing with approval Lewin on Trusts 18th Ed), at paragraph 29-299)... the result of the Court giving its approval is that the beneficiaries will be unable thereafter to complain that the exercise is a breach of trust or set it aside as flawed. Furthermore, when trustees are seeking approval for a decision they have already reached, the beneficiaries are unlikely to have the same advantages of cross-examination or disclosure of the trustees' deliberations as they would have in proceedings to challenge the exercise of the power once made. For that reason, the trustees should put before the Court all relevant considerations (supported by evidence) and they should explain their reasons for reaching the decision, even though they are not otherwise obliged to make disclosure to the beneficiaries. But the process by which the trustees satisfy the Court that the legal test has been met should not be confused with the substance of the test itself. Furthermore, each case will need to be decided on its own facts, and the degree of detail that is required from a trustee cannot be uniform in all circumstances. In some cases, a trustee's decision may come out of the blue, and if so it may require both the beneficiaries and the Court to be given the background and the context in considerable detail. In other cases, such as this, a trustee's decision may emerge from a situation that is well-known to the interested parties, and that is likely to have an impact on the degree of detail required from the trustee by the Court."
22. We have applied those considerations.
23. We deal first with the question of a conflict of interest. Both the Representor and the Fourth Respondent contend that the conflict of interest was adequately addressed by the Representor in taking its decision. They also point to comments of this Court in the matter of The Longthorne Trust [2019] JRC 223A where the Commissioner, Sir Michael Birt, said this:
"8. In this case there is a conflict of interest because, as we have said, the trustee is owed a substantial sum of money and the only way in which it is to be repaid, in the absence of further money from the settlor, is by sale of the Property. However, the trustee has acknowledged that conflict in its affidavit and has explained why, notwithstanding the conflict, the sale of the Property is in the best interests of the beneficiaries.
9. We accept that the conflict in this case is not an uncommon one and it is not so pervasive as to disable the trustee from taking the decision or as to require it to surrender its discretion to the Court. Furthermore as we have said, unlike in the case of Representation of Hawksford Jersey Limited Re H Trust [2018] JRC 171, the trustee has acknowledged the conflict of interest when reaching its decision and has taken that conflict into account.
10. We agree with the trustee that there is no realistic alternative to sale in this case and we note that the son who appeared before us this morning accepts that. The trust has no income with which to meet necessary expenditure, whether in relation to the Property, the company, or the trust itself, in the absence of further contributions from the settlor, and these have been irregular and insufficient in the past. In the absence of expenditure, the Property is likely to deteriorate even further and to devalue further in value. This would not be in the interests of the beneficiaries."
24. Not unnaturally, the Representor places considerable emphasis on the Court's decision in that case. The situation in the Re H Trust [2018] JRC 171 is accepted to be different because there, while some of the circumstances were similar to the instant case, the trustee did not appear to recognise that it had any conflict in taking its decision. Furthermore, the trustee did not appear to have considered, or taken advice upon, the tax consequences of its proposed course of conduct and it was not thought by the Court to be reasonable to insist upon a sale at that stage.
25. The first affidavit of Mr Mark Healey, on behalf of the Representor, sworn on 28 August 2019, says this in relation to conflict:
"60.3 The unpaid fees and expenses owed to the trustee give rise to a conflict of interest, but the existence of such conflict does not, necessarily, disable the trustee from making a decision to sell the trust's interest in the Property.
60.4 Given that the Property is owned jointly with B and F, sale of the Property is only possible with their consent or an order from the English Court under section 14 of the Trusts of Land and Appointment of Trustees Act 1996.
60.5 The prospects of obtaining an order for sale from the English Court are reasonably good because it is unreasonable to lock a 41% co-owner into a Property that is not generating any income and is accruing liabilities, and repairs are required for which there are no funds."
26. Mr Healey then goes into more detail later in his affidavit as follows:
"74. The trustee acknowledges that it is in a position of conflict: sale of the Property is in the interests of the trustee since it will receive payment of its outstanding fees and reimbursement of expenses incurred on behalf of the trust, from the proceeds of sale.
75. I understand that the existence of such conflict of interest does not necessarily mean that the trustee cannot reach a decision regarding the exercise of its powers in relation to the trust, provided it takes into account the conflict of interest when reaching the decision and is capable of reaching a decision of a reasonable trustee.
76. Notwithstanding the conflict, the trustee believes it is able to fairly and reasonably make a decision regarding the sale. For the reasons set out in this affidavit, the trustee does not consider that there is any viable alternative to sale of the Property. Sale will enable the value in the Property to be released; it will result in a cash fund that can be invested or distributed for the benefit of each of the beneficiaries, and it will ultimately dispose of an asset that is deteriorating, that requires an injection of cash, and that will attract liabilities in the future.
77. I further understand from the Jersey legal advice the trustee has received (referred to above) that trustees are not expected to administer trusts at their own expense and are justified in selling trust assets to meet expenses of the trust including the costs of repairing properties held on trust."
27. It is of interest to note that the only analysis in that affidavit as to the benefit accruing to the beneficiaries from a sale of the Property would lie in the provision of a cash fund, part of which would be used to reimburse the trustee with monies it claims to be due. There is no analysis or balancing of the benefits accruing to the two beneficiaries who were living in the Property at the time, one of whom had an equity stake in the Property herself. There is no recognition of the fact that the beneficiaries had been living there for considerable periods of time and might regard it - as they say now that they do - as their home. As will be seen later, it is not obvious that the condition of the Property was in fact deteriorating. That seems to have been assumed from the Council correspondence although in a further affidavit Mr Healey described the Property as he saw it in a further visit in the early part of 2022.
28. Interestingly, however, the minutes of the meeting of the Representor on 5 August 2019 do refer to the advice of Advocate Pearmain that the issue of one or more beneficiaries residing at the Property was a relevant factor, such that any decision of the Representor to sell the Property would be a momentous event and as a result the decision reached by the trustee should be on the basis that the implementation of any such decision would be subject to the blessing of the Royal Court. Those minutes also deal with the question of conflict - see paragraph 18(ii) above.
29. While this was an adequate statement of the law, there is no sign either from the minutes or from the affidavit evidence that the Representor had managed the conflict appropriately by considering all the factors which might militate against a sale of the Property. An important factor of course was the residence in the Property of the First and Second Respondents, and that was referred to in the minute. There were, however, other factors which were not considered:
(i) While there was reference to the claim which the Trust would face for the repayment of monies lent by the Representor or its holding or associated company, there is no recognition of the claim by the First and Second Respondents that the interest and penalties on the inheritance tax chargeable on the ten year rolling basis might be due to the negligence of the Representor.
(ii) More importantly, there is no reference to any potential claim that the beneficiaries might make that by reason of the inattention given to the structure between 2004 and 2014, the ten yearly rolling charge in 2014 was not avoided when perhaps it might have been.
(iii) As importantly, there is no reference to the unusual feature of this structure, namely that the interest in the Property was held directly by the trustee and not through an interposed company which might have provided a mechanism for alleviating the exposure to inheritance tax because the Trust holding would not have been in relevant property but instead in the shares of a company which held that property. Whether that would or would not have been effective is not a matter which is covered by any of the evidence which is before us; but what is particularly missing is any analysis of the ways in which the inheritance tax liability might have been avoided.
30. We consider that there was a clear conflict of interest on the part of the Representor here, and we are not convinced that it is a conflict which has been managed appropriately.
31. It is clear from the correspondence that there have also been complaints by the First and Second Respondents at the potential exposure to capital gains tax which might have been avoided by appropriate action being taken by the Representor.
32. This case is therefore different from the Longthorne Trust and other similar cases. It is not simply that there is an unresolved dispute over the fees due to the Representor, because as has been said in other cases, it might be possible to bless a decision to sell trust property and have the fee dispute resolved later. That approach would not be appropriate where there is potential for a more basic challenge to the actions of the trustee, as is hinted at, if not expressly stated, here.
33. Perhaps most significantly for the purposes of this decision, there is no analysis in the tax advice put before the Court of the extent to which, if at all, any of the parties to the present litigation would potentially carry responsibility for the tax consequences facing the Trust and the Representor. In our judgment, as recognised by the Court of Appeal in Otto Poon, that is a significant omission. It would not be right to bless the decision of the Representor in circumstances where there is an obvious conflict of interest, whether managed adequately by the Representor or not, if the result would be to release potentially any claims which the beneficiaries might have against the Representor.
34. For these reasons, we are not willing to bless the decision of the Representor to seek to compel a sale of the Property, if necessary by an application in the English Court.
35. We add that we are also not comfortable with the possibility that, if we had sanctioned the decision, that might have made the performance of the task by the English Court all the more difficult because it might have considered that this Court had gone through a similar process of balancing where the equity in the situation lay when giving such sanction.
36. We do not think it would be right to leave this matter there. There are two further points of significance which we think ought to be made.
37. First of all, we do not express any view as to whether the Representor has or has not been negligent in the performance of its duties, or indeed whether the Respondents have any claims against the Representor for breach of trust. One of the reasons for the decision which we have reached so far is, as indicated above, that we do not feel we have sufficient information as to why the Property is held directly by the trustee, nor indeed whether it would have made a significant difference if that had not been the case, albeit that the fact that the ten-year charge did not arise prior to the Trust holding relevant property might seem to suggest that. Any question of trustee liability is thus very much at large and nothing in this judgment is intended to indicate that we have reached any conclusions one way or another in that respect.
38. The second comment which we think needs to be made is that in our judgment the approach of the First Respondent has been little short of chaotic. If this were to be a case of a less than competent trustee, it is nonetheless to be added that it is also a case of some unreliable beneficiaries. It must have been obvious to the beneficiaries at an early stage that, with no cash in the Trust fund, there would sooner or later be a problem in maintaining the Trust without any income coming into it. That must have been recognised when it was agreed that rent should be paid in the period to 2005. It is not at all obvious to us that the First Respondent can have concluded that all would be well if she no longer paid rent for the Property, even if her mother and brother-in-law had accepted that should be the position. Yet she did nothing to raise that issue with the Representor.
39. We have reviewed carefully her five affidavits sworn in these proceedings. If one takes the contents of those affidavits at face value, it nonetheless remains the position that three and a half years after the death of her brother-in-law, no steps appear to have been taken to obtain a grant of probate to enable the transfer of the Property out of his name into the name of the First Respondent's sister, who is apparently entitled to it. It beggars belief that the First Respondent should have taken no steps to impress upon her sister, three and a half years after the death of the latter's husband, the need to make progress in dealing with his estate. We have no information as to any Country A taxes which might be due on her brother-in-law's death in respect of his share in the Property. If the First Respondent's sister is well enough to make a promise to transfer her interest in the Property to the First Respondent, it would seem she ought to be well enough to take steps to instruct someone to put that in hand. We do not feel confident that the First and Second Respondents have put all relevant material before us.
40. It is also apparent that the First Respondent was aware of the tax difficulties in relation to the Property from at least 2018. She must have appreciated that by 2024, if nothing were done to alter the ownership interests in the Property, a further tax demand would be due with the next ten-yearly recurring charge. It follows that there was - and is - an urgent need either to see the Property sold, which the First Respondent resists, or for her to raise finance to buy out the interest of the Trust. Her explanations in her affidavits as to why this has not happened to date are not convincing. It seems to us that the most generous conclusion to the First Respondent is that since 2017 onwards she has put her head in the sand in relation to the business of the Trust, and she cannot be surprised that the Representor should have taken the steps that it has because the present position is indeed unsustainable.
41. We are also not inclined to make any finding in relation to whether the Property is the home of the First and Second Respondents as they assert. Perhaps it is; but there are certainly unanswered questions in relation to the evidence from the Representor that it is not obvious from their attendance on site in 2022 that the Property was being occupied as a home at that time - the First Respondent apparently sleeping on a sofa, and the Second Respondent apparently sleeping on a mattress which was leaning against a wall in one of the rooms there, with no evidence of any facilities for cooking.
42. We have noted that although the apparent potential drop in value of the Property forms part of the rationale for the Representor's application, no adequate valuation evidence has been put before us, and no schedule of dilapidations or other evidence of necessary repairs. Instead, reliance has been placed on the notices served by the local council. Yet, amongst our papers, is an email exchange which shows that while the Council consider the Property does not look in a very good condition, the notices have been withdrawn and no further steps are being taken in that respect.
43. We remind ourselves that this Court is a Court of equity in dealing with trust matters. The parties need to come before us with clean hands - in the case of the trustee, making full and frank disclosure of everything material to the application, and in the case of the beneficiary, again putting forward any relevant material which might influence the Court in its approach to the application. At the end of the day, we are not convinced that either the Representor or the First and Second Respondent have discharged those various duties. The application calls from the Court a yes or no answer to the question of whether the proposed course of conduct by the trustee is to be blessed. In this case, for the reasons we have given, the Court has answered that question in the negative; but we are reinforced in that view by our conclusion that there is yet much to be argued between the Representor and the First and Second Respondents, and the equity in dealing with the present application lies in making it plain that, at this stage and without further evidence, it is impossible to form a view as to where justice lies.
44. We make one further point. We were much assisted by Advocate Sanders, appearing for the Fourth Respondent and we understand why he made the submissions on behalf of the unborn beneficiaries which he did, notwithstanding that those were unsuccessful. Advocate Sanders was able to help us in identifying documents swiftly. By contrast, it was not helpful that counsel for the trustee was working from a paper file with different indexing than that which was available to the Court, using Caselines. We emphasise that it is very desirable that all counsel should make their submissions to the Court by reference to the documents on Caselines, where that is in use, so that the Court and the parties are following the same filing and numbering system.
45. I will hear the parties in their submissions on costs when this judgment is handed down.
Authorities
Representation of the Otto Poon Trust [2015] JCA 109.