A post-nuptial settlement (being a Jersey discretionary trust) was created by a husband and wife in 1986. The trust owns a Liberian company, which in turn owns a UK company that owns two UK companies. The main company assets are two UK retirement villages. The beneficiaries included the husband and wife and two minor children.
During divorce proceedings the wife applied for a variation of the settlement.
Over the course of proceedings the trustees of the Jersey trust and the companies were all joined as parties. In both cases no application was made for joinder and no notice given to the trustees, the companies or the husband. Counsel for wife simply produced a draft order providing for joinder at interim hearings. The minor beneficiaries were not joined.
The husband argued that unless the trustees and underlying companies were joined then a variation order would not be binding on them. The trustees took no part in proceedings.
The companies made an application to be dis-joined.
Held (the companies being dis-joined):
- (1) There is no need for the trustees to be joined in proceedings – the default position in a variation of settlement case is that the trustees are served but not automatically joined. It is then up to the trustees to decide how to proceed. If after being served the trustees do nothing then they are still bound by any variation order.
- (2) If trustees do not voluntarily participate as witnesses, and give proper disclosure, then they cannot complain if findings are made about the realities of the control of the trust and the likelihood of benefit for any particular beneficiary.
- (3) Enforcement of any court order is not dependent on whether trustees are joined to the proceedings.
- (4) It is mandatory for beneficiaries under the age of 18 to be joined unless the court can say that the proposed variation does not adversely affect them.
- (5) The applicant for joinder must show that either there is an existing dispute that cannot be resolved without the joinder of the proposed new party or there is a separate dispute between a party and the proposed new party and it is desirable to hear the matters together.
- (6) The prescribed procedure to join had not followed. The application for variation does not require the joinder of either the companies or the trust to be effectively resolve it. There is no separate dispute between the wife and the companies and trustees. There is no evidence that enforcement of any variation order would be better achieved if the trustees or companies were joined.
- (7) The interests of the minor beneficiaries were properly represented by their parents and grandparents and so they did not need to be joined.