This Thesis Has Been Submitted in Fulfilment of the Requirements for a Postgraduate Degree (E.G. Phd, Mphil, Dclinpsychol) at the University of Edinburgh

This thesis has been submitted in fulfilment of the requirements for a postgraduate degree (e.g. PhD, MPhil, DClinPsychol) at the University of Edinburgh. Please note the following terms and conditions of use: This work is protected by copyright and other intellectual property rights, which are retained by the thesis author, unless otherwise stated. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This thesis cannot be reproduced or quoted extensively from without first obtaining permission in writing from the author. The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the author. When referring to this work, full bibliographic details including the author, title, awarding institution and date of the thesis must be given. THE TRUST LAWS OF JERSEY AND MALTA: A CIVILIAN INTERPRETATION Ph D The University of Edinburgh June 2015 Patrick J Galea 1 THE UNIVERSITY OF EDINBURGH This thesis has been submitted in fulfilment of the requirements for a postgraduate degree (e.g. PhD, MPhil, DClinPsychol) at the University of Edinburgh. Please note the following terms and conditions of use: • This work is protected by copyright and other intellectual property rights, which are retained by the thesis author, unless otherwise stated. • A copy can be downloaded for personal non-commercial research of study, without prior permission or charge. • This thesis cannot be reproduced or quoted extensively from without first obtaining permission in writing from the author. • The content must not be changed in any way or sold commercially in any format or medium without the prior formal permission of the author. • When referring to this work, full bibliographic details including the author, title, awarding institution and date of thesis must be given. Patrick J Galea 2 ACKNOWLEDGEMENTS A thesis is written over a long period. Situations and persons, including its writer, change over time. This project was born out of two factors: the first was the growing awareness by the author of the need of the law of Malta, following EU accession, to integrate with the newly acquired corpus of European Union Law – the EU was then in many ways a different reality from its contemporary situation. The second, going back in time, was the knowledge, developed through further research, of the influence that Scotland and Edinburgh had over the deveopment of the Maltese Codes, during the 18-19th century codification process. Malta could reach out to a comparable jurisdiction with a civilian heritage, within the then British Empire. The ‘ Noise of Time ’ (Julian Barnes, 2016) changes many situations. What started as a project on European private law of securities and guarantees, transmuted into an emerging European trust analysis and then in its current version. It can be stated, in fairness, that Jersey, Scotland and Malta are the only three European ‘mixed’ jurisdictions, hence the background of the thesis. There are too many people whose assistance I should acknowledge. If I have to, I will gratefully single out from St Hélier, Jersey, Jurat Geoffrey Fisher, Advocate Timothy Hanson, Mr Steven Meiklejohn, Ms Lorraine Wheeler, Dr David Marrani of the Institute of Law Jersey, the editorial board members of the Jersey and Gurensey Law Review and the Jersey Legal Information Board. The support of the University of Malta and of the University of Edinburgh are recorded. Professor Paul Matthews, Professor David Johnston and Mr James McNeil QC, all took the trouble to have invaluable discussions and conversations with me on the subject. I was also encouraged by succesful past PhD candidates and must mention Dr Rebecca MacLeod and Dr Ross Anderson. Two categories will always deserve special mention: first, the support of my family, and that of my father who paintstakingly proof-read for me, on occasions too many to count, the various versions of the script. I record my thanks to the intial supervisors, Professor Elspeth Reid and Dr Andrew Steven, under whose direction the project was conceived and its foundations were laid. The later supervisors who accompanied me to the end of the journey were Dr Daniel Carr and of course Professor George Gretton. To Professor Gretton, I acknowledge not only the depth of his knowledge and wisdom, wit and sense of humour, but also his challenging encouragement. I will always remain indebted to him for his support and later his friendship. 3 CONTENTS BIBLIOGRAPHY 13 TABLE OF ABBREVIATIONS 43 INTRODUCTION AND PLAN 44 CHAPTER I – HISTORY AND NATURE OF THE 46 TRUST JERSEY 47 A. Jersey Trusts 47 B1. Is the Jersey Trust a Usufruct? 52 B2. Or a Stipulation Pour Autrui ? 52 B3. Or a Deposit? 53 B4. Trusts and Mandate? 53 B5. Gestion d’Affaires d’Autrui ? 54 C. So what is the Jersey Trust? 54 MALTA 55 D. Malta Trusts 55 E. Nature and Characteristics 58 F. The Civil Law Trust – Separate Patrimonies, Division 62 into Legal and benefici al Ownership G. Is it a case of Duty-Burdened Rights? 63 4 CHAPTER II – TYPES OF TRUSTS AND NATURE 65 OF BENEFICIARY’S RIGHTS A. Scope of the Chapter 65 JERSEY 65 B. Types of Trusts and Creation thereof 65 (i) Express Trusts 65 (ii) Resulting Trusts 67 (iii) Co nstructive Trusts 67 (iv) Purpose Trusts 69 (v) Co mmon Intention Trusts 69 (vi) Trustee de son Tort 70 C. Settlor-Trustee Relationship 70 D.The Nature of the Beneficiary’s Right 71 E. Assessment 73 MALTA 74 F. Types of Trusts and Creation thereof 74 G. Settlor-Trustee Relationship 76 H. The Nature of the Beneficiary’s Rights 78 I. Assessment 81 CHAPTER III – THE POWERS OF TRUSTEES 83 A. Scope of the Chapter 83 B. Classificat ion and definition of Powers 83 C. General Powers of Trustees 84 D. Is there significance in the choice of term and concept 85 of “Natural Person”? E. The meaning and extent of application of the term 87 “Powers” European Private Law 88 F. Powers of Trustee vis à vis proprietary rights and 90 limitations thereof G. Capacity of the trustee 91 H. Acts by the trustee vis à vis third parties 92 5 Good Faith and Trustee Powers 95 I. Powers of appointment and trustee discretion 96 Jersey Regulation 97 Discretion and the TJL 99 Malta Regulation 103 J. Powers or discretions – Different questions to civil law 104 cultures and methods of reasoning in context of the Malta legislation K. Mistake and the implied exercise of powers 106 L. Powers of accumul ation and advancement 106 M. Powers of appropriation 109 N. Powers of investment 109 O. Delegation of powers by the trustees 110 P. Power to compromise 112 Q. Power to borrow and grant on loan 113 R. Concluding Assessment and Evaluati on 114 CHAPTER IV – THE DUTIES AND 115 RESPONSIBILITY OF THE TRUSTEE A. Scope of the chapter 115 B. The context of fiduciary duties 115 C. Fiduciary duties of the trustee in Jersey trust Law 118 D. Other Duties of the Trustee in Jersey Law 123 E. The Judgements of the Jersey Courts and beyond 125 F. Duties of trustee in Jersey law – general conclusions 126 and assessment G. Fiduciary and other duties in the Malta trus t context 129 H. The judgements of the Malta courts and beyond 131 I. Duties of trustee in Malta law – an assessment 133 J. Fiduciary Obligations on a Romanist basis? 136 K.The responsibility of the trustee 140 L. The nature of the trustee’s responsibility 141 M. Compensatory responsibility of the trustee – Jersey 145 N. Compensatory responsibility of the trustee – Malta 148 O. Other ramifications of trustee responsibility 149 Jersey 150 Malta 153 P. Loyalty and Disgorgement of Profits 153 Q. Trustee Responsibility Exemption Clauses 157 R. Unjustified Enrichment – is this linked to breach of 158 trust and trustee responsibility? 6 S. Other Remedie s? 161 T. Some reflections on the Draft Common Frame of 163 Reference U. Concluding Assessment – “Picking and choosing” or in 166 search of a principle? CHAPTER V – QUESTIONS OF JURISDICTION 170 AND CHOICE OF LAW A. Scope of the Chapter 170 B. The Jurisdictional Context 170 C. Trust Jurisdiction in Jersey 172 (i) Where the trust is a Jersey trust 173 (ii) Where a trustee of a foreign trust is resident in Jersey 175 (iii) Where any trust property of a foreign trust is situated 177 in Jersey (iv) Where the administration of any trust property of a 179 foreign trust is carried on in Jersey (v)The philosophy behind the jurisdictional grounds 180 (vi) Assessment 182 D. Trust Jurisdiction in Malta 184 (i) The Code of Civil Procedure and trusts 186 (ii) Brussels I and its Recast 190 E. Trust Jurisdiction Clauses in Jersey 195 (i) Jurisprudential sources 196 (ii) Various Implications 200 (iii) A general principle? 200 (iv) Are trust exclusive jurisdiction clauses treated as in 201 commercial contracts? (v) Deriving exclusive jurisdiction from choice of law? 202 (vi) Assessment 202 F. Trust Jurisdiction Clauses in Malta 204 (i) Assessment in context 207 (ii) Interaction between various sources 208 (iii) Non-exclusive jurisdiction clauses 209 (iv) Hague Convention on the Choice of Court 210 G. Choice of Law: some preliminary reflections 210 H. Choice of Law in the Jersey Trust Law 213 (i) Bases for choice of law policies 214 (ii) Supremacy of Jersey Law 219 (iii) Art 9 (2A) – Rigours somewhat tempered, perhaps 220 (iv) Was it a good job? Are the amendments consistent 221 with Art 9 (1)? 7 (v) Compatibility with the Hague Convention 222 (vi) Jersey law rules the trust all the way 223 (vii) Resistance to the English Courts 225 (viii) The ‘Firewall’ philosophy as a key to Jersey Trust 227 I.

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