The $350m family fight which may not be "really about money at all"

Tuesday 13 September 2022

A legal fight between the beneficiaries of trusts worth $350m which broke out following the sudden death of the settlor is one which “cries out for settlement”, the Royal Court has said.

Express looks into the complex case described as one which is probably not "really about money at all"...

'J' and his family

Twice-married 'J', who had two children per relationship, set up various structures to house the family wealth, recently-published judgment explains.

Unfortunately, difficulties in J’s second marriage came to a head and the parties separated in November 2018 with divorce proceedings being commenced that month.  

Those proceedings never reached fruition however, because of J’s untimely and sudden death on March 2019.

What has followed is a legal dispute over who is entitled to what.

"He tried so hard to avoid what has in fact come to pass"

The specific Jersey court case was a bid by one set of children to remove a trustee and appoint new ones.

In the judgment, Commissioner Sir William Bailhache, who was sitting with Jurats Robert Christensen and Kim Averty, notes: “It is ironic that J was obviously conscious of the potential for difficulty between the different members of his family and he tried so hard to avoid what has in fact come to pass.  

“Oddly enough, it seems to us that there is so much by way of available assets that the probability is that the argument is not really about money at all – because there is more than enough for all – but rather about perceptions of fairness in circumstances where perhaps some actual or perceived slights over the years have been magnified out of all proportion to their real significance.”

"Different ideas of fairness"

The Court added: “It is all but impossible to reconcile the different ideas of fairness.

"G [second wife] may take the view that if she and J had taken their divorce proceedings through to a conclusion, she would have received a third, a quarter or perhaps a half of the overall assets, and thus that she has been deprived by J’s death of that percentage.  

“By contrast B and C [children of first wife] might think that J would have managed to reach an agreement with her at much reduced but still significant figures, never disclosing in fact the true extent of the trust assets, as the instructions to his trustees in the various letter of wishes would seem to suggest.

“Indeed, we also think that one cannot ignore the possibility that the divorce might not actually have gone ahead at all – sometimes apparently warring spouses do at the last moment remember what drew them together and not what drove them apart.”

Pictured: Commissioner Sir William Bailhache was the judge in this civil case.

The judgment continues: “It is clear that J’s wish was to ensure that that G was properly provided for.

“That comes through loud and clear both from his lifetime and through his wishes expressed in the different trusts. 

“We have no doubt that he would have wanted this to be achieved not only because it met his own sense of obligation but also because he would not want his [second] children, H and K, thinking ill of him because of his treatment of their mother.

“Much has been made in the evidence we have read and heard of the need to ‘maintain [G’s] standard of living and lifestyle’. This is an area which clearly needs careful discussion and agreement."

The 'Trophy Assets'

It went on: “Had the divorce proceeded, it may be that G would not have had the use of the Monaco property, where she was no longer living at the time or indeed the other Trophy Assets.”

Other ‘trophy assets’ include a US$9.9m yacht and a house in Los Angeles.

The Court continued: “It appears to us that the lifestyle approach does not mean there can never be an alteration in her living accommodation, nor does it mean that the Trophy Assets must always be available to her.  

“G’s overall standard of living and lifestyle can be maintained without always providing the Trophy Assets to her, but there is no doubt that her lifestyle includes access to sumptuous housing arrangements. These considerations may form part of any discussions around the renewal or otherwise of the existing tenancy arrangements.

“The third important wish of J was that the trusts would provide not just for him and his wife and his children but at least his grandchildren and possibly a further generation as well. That is demonstrated, inter alia, by his wish that the trustees distribute relatively small amounts of the trust capital and, even then, not until beneficiaries had reached the age of 42.”

Time to reflect

The Royal Court supported a restructuring of the trusts, set in train by J before his death, and suspended the powers of their ‘protector and enforcer’ while the changes took place. 

In a postscript to its judgment, the Court added: “This case cries out for settlement. It would be most unfortunate if that became impossible because any party refused to engage on a rational basis because his or her position was currently protected or comfortable or because he or she had an unreasonably developed sense of grievance as to a perceived entitlement under the trusts.  

“The observations we have made are intended to encourage all the parties to reflect on their positions as not being so firm that discussions around restructuring are difficult or impossible to take forward. 

“A successful restructuring, like any settlement or compromise, is likely to leave all parties slightly uncomfortable.”