What Became Of Forever? The Rule Against Perpetuities’ Last Stand In Jersey – Trusts

Despite the Trusts (Jersey) Law 1984 (“Trusts
Law“) expressly providing against the rule against
perpetuities currently applying in Jersey, the Royal Court has
found the rule to form part of the underlying fabric of Jersey
trusts law. It therefore applies to trusts to which the Trusts Law
does not apply, in practise meaning trusts created before it came
into force.

The perpetuities question arose in Representation of Equiom
Trust (CI) Limited re Estate of Constantin Mattas
[2024]JRC068. This concerned a will that provided for various
trusts. The final disposal of residue was to a discretionary trust.
Under it, the Greek Government was to be trustee with discretion
how to employ income on the trust fund to provide interest free
loans to intelligent and promising young men of Greek Orthodox
faith born in Greece of Greek, Greek Orthodox parents, for the
purpose of them undertaking further university education in
specified countries (the “Intended
Trust“). The will also provided that the
testator’s grand-nephews and great-grand-nephews would have
priority to trust funds for further university education, and not
have to repay any sums advanced.

There was no trust period provided, nor terminal trust requiring
the trustee to distribute the trust fund. Instead, the terms of the
trust permitted the trustee to maintain the trust fund forever,
deciding whether or not to make a distribution (or rather, grant a
loan) at any time and never exhausting it. Even if all the income
were applied to making loans at any point, not only would they be
repaid (and so the trust assets contain the repayment rights as a
receivable) but also there was no provision permitting the advance
of any capital at all. Also, it followed that the Intended Trust
permitted the trustee not to use all the income and therefore to
accumulate income, potentially perpetually.

As the Trusts Law currently provides, this does not give rise to
any problem. Art 15 of the Trusts Law expressly provides that a
Jersey trust may continue in existence for any period, and no rule
against perpetuities or excessive accumulations shall apply to a
Jersey trust.

However, while Art 58 provides that the Trusts Law applies to
any trust whenever it was created, that is expressly subject to Art
59 which goes on to provide that nothing in the Trusts Law shall
affect the validity of any trust arising from a document taking
effect before the commencement of the Law. In Mattas, the
Intended Trust arose under a will taking effect when the testator
died in 1979. The current Art 15 could not therefore affect the
validity of the Intended Trust. Hence the question arose, but for
Art 15, is there any rule against perpetuities as a matter of
Jersey law?

The rule against perpetuities in English law

As it developed in English law, the rule against perpetuities
has three sub-rules:

• First, the rule against remoteness of vesting applies where
  there is a trust for beneficiaries or a class of beneficiaries; it
  requires that the trust property must vest in a person within the
  “perpetuity period”. Historically, this perpetuity period
  developed as a time period equal to a life in being at the creation
  of the trust (or death of a testator) plus 21 years.




• Secondly, the rule against non-alienation applies where there
  is a non-charitable purpose trust. It requires that the trust
  property must be capable of alienation from the trust within the
  perpetuity period.




• Finally, the rule against excessive accumulation requires that
  either trust, whether for a class or beneficiaries, or for a
  purpose, must not permit the accumulation of income for longer than
  the perpetuity period.

If any of these sub-rules applies and is broken, the trust is
invalid.

Jersey law approach to perpetuities

In Investec Trust (Guernsey) Ltd v Glenalla
Properties Ltd [2018] UKPC 7, [2019] AC 271 and again in
Equity Trust (Jersey) Ltd v Halabi [2022] UKPC
36, [2023] AC 877, the Privy Council has twice recently held that
the Jersey law of trusts is assumed to be the same as the English
law of trusts, except to the extent that any given English trusts
rule is inconsistent with the Trusts Law or any rule of customary
law developed in Jersey case law.

There are no prior cases on the rule against perpetuities either
way in Jersey law. The Court further accepted that what limited
customary law existed suggested, if anything, that Jersey customary
law also leant against perpetual restrictions on alienation: as far
back as the 18th century, there was local case law striking down
“substitutions” – terms in wills that tried to
provide how bequests were to pass on the death of the
beneficiary.

As a result, there was nothing in Jersey customary law
inconsistent with the English rule against perpetuities and so,
following Investec and Equity Trust, the Court
accepted arguments¹ that rule against perpetuities must
be held to apply as part of Jersey’s customary law.

However, as the Court noted in Mattas, in the vast
majority of situations, Art 15 of the Trusts Law will apply and the
question whether any given trust is void for infringing the rule
against perpetuities is unlikely to reoccur frequently in practice.
In this respect, it is notable that the issue has only arisen for
the decision for the first time in Mattas.

However, the case is significant for confirming that, but for
Art 15, the rule against perpetuities is part of Jersey and would
apply. As a result, it is significant for confirming the importance
of the Trusts (Jersey) Law 1984, and the express provision it makes
for Jersey trusts to operate free from some of the historical
complexities of English or other trust laws.

Footnote

1. Made by Richard Holden, James Turnbull and Craig
Macleod of Walkers (Jersey) LLP.

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