PTNZ v AS & Ors

In construing a trust instrument, the court must ascertain the objective meaning of the words used in their documentary and factual context. The same approach applies to lifetime settlements as to wills and contracts. Technical English concepts should not automatically be confined to persons holding an English grant where the settlement’s context shows that equivalent foreign office-holders were intended to qualify.

A protector’s consent power is a true power of veto where the trust instrument requires trustee powers to be exercised with the protector’s consent. It is not merely a power of review. The protector must act in good faith and for the purpose for which the power was conferred, but need not reach the same conclusion as the trustee.

The claimant corporate trustee sought the court’s blessing under CPR Part 64 for two momentous decisions concerning the restructuring of four English-law discretionary family trusts administered in Jersey. The first issue was whether the tenth defendant had been validly appointed protector by the deceased former protector’s heirs under Schedule 3, paragraph 1.3 of the trust deeds.

The remaining issues concerned whether the protector’s consent was required, the nature of that consent power, and the protector’s role at the subsequent blessing hearing. The court also considered the relevance of an earlier Jersey order and whether it had been surrendered or recognised in England.

1. Validity of appointment. The tenth defendant was validly appointed protector. The expression “executor, administrator or personal representative” in Schedule 3, paragraph 1.3 was construed objectively, in the context of the trust instrument and the circumstances known or reasonably contemplated when it was created. It was not confined to persons appointed or recognised by an English court.
2. The expression included a person holding a foreign office, or otherwise possessing legal characteristics equivalent to those of an English executor, administrator or personal representative. The deceased had no material English connection, was domiciled in Monaco, and had no English estate requiring administration. Requiring an English grant would create a gap in the protector’s succession and defeat the settlor’s objective intention. Under Monegasque law the heirs, as continuators and coparceners, had rights, powers and responsibilities equivalent to those of personal representatives.
3. Protector’s consent. The protector’s powers of consent had to be exercised in good faith and for the purposes for which they were conferred. The fraud on a power rule therefore applied. Properly construed, the requirement for written consent conferred a joint power and a power of veto, not a limited power of review. A trustee power requiring consent and exercised without it would be invalid.
4. The protector was not bound to follow the beneficiaries’ views or to reach the same conclusion as the trustee by the same route. The court did not need finally to classify the powers as fiduciary or restricted powers.
5. The court rejected the submission that the May 2017 Jersey order had rendered the protector’s consent unnecessary. The English proceedings sought a freestanding blessing and did not seek recognition of the Jersey order. The trustee could not selectively rely on the former protector’s alleged surrender of discretion while maintaining that the English court’s blessing was required.
6. The protector’s role at the blessing hearing was not restricted. He could be represented and draw relevant matters to the court’s attention.