Jersey: Dealing With A Lack Of Beneficiaries - Benjamin Orders In Jersey

Last Updated: 24 May 2019
Article by Nigel Sanders and Fritha Ford

The Royal Court of Jersey has recently made a Benjamin Order, by which a Trustee was permitted to distribute the assets of a Jersey Trust to non-beneficiaries on the basis that they were entitled to the assets as a matter of private international law.

Background to the Application

In the Matter of the Banayou Trust [2019] JRC 078 concerned an application to the Royal Court, seeking its blessing of a decision to distribute the assets of a Jersey Law trust to various countries formed following the dissolution of the Former Socialist Federal Republic of Yugoslavia into five successor states (the Successor States).

The Trust was established in December 1988 as a means by which its only beneficiary (and economic settlor) the National Bank of Yugoslavia (NBY) could meet its various debt obligations. Over the years, various issues had arisen with the administration of the Trust, beginning in the early 1990s, with the establishment of the Successor States. A further issue arose as NBY no longer existed in its original form and the Instrument of Trust provided for the Trustee only to exercise its dispositive powers on the instruction of NBY. Directions as to the status of NBY and the identity of the beneficiaries of the Trust were given in January 1999, from which point the Trust was administered in accordance with the directions of the Royal Court.

In 2001, the Successor States entered into an agreement regulating the division of assets of the Former Socialist Federal Republic of Yugoslavia. After discussions lasting almost eighteen years, the Successor States finally reached an agreement vis à vis the Trust and a Deed of Appointment and Indemnity was put before Royal Court, for its approval. The Trustee considered the decision to enter into this Deed of Appointment and Indemnity to be momentous, given the long history of uncertainty relating to the beneficial class and the fact that the distribution would appoint out the entirety of the Trust fund (totalling some £9.9million at the date of the hearing).

Who are the beneficiaries?

The application was made under Article 51 of the Trusts (Jersey) Law 1984 (as amended), which provides that the Court may, if it thinks fit, make an order concerning a beneficiary or any person having a connection with the Trust. The advocate for the Trustee submitted that it was appropriate to grant a declaration as to the beneficial class, as it was wholly unsatisfactory for the Instrument of Trust to identify an entity which no longer exists in its original form as the sole beneficiary.

The Royal Court noted that in resolving the matter of the beneficial class, much reliance had been placed on matters of private international law (which pronounced the Successor States to be the beneficiaries), to the detriment of Jersey trust law. In particular, the Court was concerned as to whether or not the assets of the Trust were, in fact held for the settlor absolutely pursuant to Article 42 of the Trusts (Jersey) Law 1984 (as amended) on the basis that the only beneficiary's interest may have lapsed at the point that NBY ceased to exist. This would have had ramifications for the Trustee's duties, for example, in relation to investment, distribution and remuneration. However, in the present case, NBY was both the settlor and the beneficiary and the Trust had been administered under the directions of the Court since 1999.

A further element of doubt arose as to the beneficial class as private international law advice before the Court was last obtained in 2003 and thus did not take into account the further subdivision of one of the Successor States. The Court came to the conclusion that it would be both inappropriate and disproportionate to further delay matters and request further advice and it was therefore time for the structure to be wound up.

Does the Trustee have the power to distribute the funds?

Satisfied that the tests for the blessing of a momentous decision had been met (that the decision was formed in good faith, was reasonable and had not been vitiated by actual or potential conflict of interest), the Court then had to consider whether or not the Trustee had the power to distribute the assets of the Trust. This presented another issue, as the Instrument of Trust only allowed the Trustee's dispositive powers to be exercised on the instruction of the defined beneficiary, namely NBY.

The Court stated that whilst the Trust had been administered on the basis that the Successor States were beneficiaries of the Trust, in its view, the most likely route was that the Trust failed for want of certainty upon NBY ceasing to exist as a legal entity. Therefore, the Trustee was holding the assets of the Trust on bare trust for the settlor (NBY) absolutely. Private international law advice taken by the Trustee confirmed that the Successor States were the successors to the assets of NBY.

Benjamin Orders

The Court was left in no doubt that the assets held by the Trustee ought properly to be distributed to the Successor States. Whilst the Court itself expressed the view that the Successor States were not beneficiaries of the Trust, it acknowledged that the Royal Court had proceeded on the basis that they were. So as to enable the assets to be appointed out, the Court made what is known as a Benjamin Order, giving the Trustee liberty to distribute the assets of the Trust on the basis that the Successor States are the current beneficiaries of the Trust or are otherwise entitled to the Trust assets.

Publication of the Judgment

Although the convening Court had ordered that the hearings in relation to this matter be in private and no judgment published, the Royal Court considered that it was important to publish its judgment, as the assets of the Trust were, in substance, public monies. It held that the principles of open justice required publication and noted that no unfair prejudice would be caused to the parties as no confidential or sensitive information would be revealed. Further, the Court concluded that nothing in the publication of the judgment would undermine its ability to supervise trusts.


In the Matter of the Banayou Trust [2019] JRC078 is the first reported case of a Benjamin Order being granted in Jersey and serves to highlight the pragmatic approach that the Jersey Court takes when dealing with and supervising Jersey trusts. In allowing the Trustee to proceed on a particular footing, the Court was able to get comfortable with the assets of the Trust being distributed to the Successor States, notwithstanding the fact that in its view, they were not beneficiaries of the Trust.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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